LITTLETON, Colorado, Sept 19 (Reuters) – The deepening debt crisis in China’s construction sector – a key engine of economic growth, investment and employment – may trigger an unexpected climate benefit in the form of reduced emissions from the cement industry.
Cement output and construction are closely correlated, and as China is by far the world’s largest construction market it is also the top cement producer, churning out roughly 2 billion tonnes a year, or over half the world’s total, data from the World Cement Association shows.
The heavy use of coal-fired kilns during manufacturing makes the production of cement a dirty business. China’s cement sector discharged 853 million tonnes of carbon dioxide in 2021, according to the Global Carbon Atlas, nearly six times more than the next largest cement producer, India.
The cement sector accounts for roughly 12% of China’s total carbon emissions, according to Fidelity International, and along with steel is one of the largest greenhouse gas emitters.
But with the property sector grinding to a halt due to spiralling debt worries among major developers, the output and use of cement are likely to contract over the next few months, with commensurate implications for emissions.
HOUSING SLUMP
The property markets account for roughly a quarter of China’s economy, and for years Beijing has used the sector’s substantial heft to influence the direction of the rest of the economy by spurring lending to would-be home buyers and fostering large scale construction projects.
But the big property developers racked up record debt loads in recent years that have forced borrowing levels to slow, stoked concerns among investors, and slowed spending across the economy.
China Evergrande Group, once the second largest developer, defaulted on its debt in late 2021, while top developer Country Garden has drained cash reserves to meet a series of debt payment deadlines in recent months.
Fears of contagion throughout the property industry has spurred households to rein in consumer spending, which has in turn led to deteriorating retail sales and further economic headwinds.
Beijing has stepped in with a slew of measures designed to right the ship, including easing borrowing rules for banks and lowering loan standards for potential home buyers.
But property prices in key markets remain under pressure, which has served to stifle interest among buyers and add to the pressure on investors and owners.
CEMENT CUTS
With construction activity across China slowing, and several major building sites stopped completely while tussles over debt payments among developers continue, cement output is likely to shrink to multi-year lows by the end of 2023.
During the March to August period, the latest data available, total cement output was 11.36 million short tons, down 2 percent from the same period in 2022 and the lowest for that period in at least 10 years, China National Bureau of Statistics data shows.
In addition to curtailing output in response to the bleak domestic demand outlook in the property sector, cement plants may be forced to curb output rates over the winter months as part of annual efforts to cap emissions from industrial zones during the peak season for coal heating.
Some cement producers will likely look to boost exports in an effort to offset lower domestic sales, and in July China’s total cement exports hit their highest since late 2019.
But Chinese firms will face stiff competition from lower-cost counterparts in Vietnam, which are by far the top overall cement exporters and already lifted overall cement shipments by close to 3% in the first half of 2023, data from the Vietnam National Cement Association (VNCA) shows.
Some Chinese firms may be prepared to sell exports at a loss for a spell while they await greater clarity over the domestic demand outlook.
But given the weak state of global construction activity amid high interest rates in most countries, as well as the high level of cement exports from other key producers such as India, Turkey, United Arab Emirates and Indonesia, high-cost Chinese firms may be forced to quickly contract output to match the subdued construction sector.
And if that’s the case, the sector’s emissions will come down too, yielding a rare climate benefit to the ongoing property market disruption.
The opinions expressed here are those of the author, a columnist for Reuters.
Reporting By Gavin Maguire; Editing by Miral Fahmy
Our Standards: The Thomson Reuters Trust Principles.
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
People walk along the beach on the Suffolk coast as the Sizewell B nuclear power station can be seen on the horizon, near Southwold, Britain, January 31, 2019. REUTERS/Russell Boyce Acquire Licensing Rights
LONDON, Sept 18 (Reuters) – Britain on Monday opened the search for private investment in the Sizewell C nuclear project, inviting potential investors to register their interest.
The building of the plant by French energy giant EDF in southeast England, capable of producing around 3.2 gigawatts of electricity or enough to power around 6 million homes, was approved in July 2022.
“The government, the Sizewell C Company and EDF, the project’s lead developer, are looking for companies with substantial experience in the delivery of major infrastructure projects,” a statement from the Department for Energy Security and Net Zero said.
The British government announced last year that it would support Sizewell C with around 700 million pounds ($895 million) while taking a 50% stake during its development phase.
“The launch of the formal equity raise opens another exciting phase for the project, following a positive response from investors during market testing,” said Sizewell C Company Joint Managing Director, Julia Pyke.
Reporting by Kylie MacLellan, writing by William James
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A gas pump is inserted inside an Audi vehicle at a Mobil gas station in Beverly Boulevard in West Hollywood, California, U.S., March 10, 2022. Picture taken March 10, 2022. REUTERS/Bing Guan Acquire Licensing Rights
WASHINGTON, Sept 13 (Reuters) – The U.S. Energy Department has talked to oil producers and refiners to ensure stable fuel supplies at a time of rising gasoline prices, Jared Bernstein, head of the White House Council of Economic Advisers, said on Wednesday.
Rising U.S. gasoline prices were largely behind the largest increase in U.S. consumer prices in 14 months in August.
Gasoline prices jumped 10.6% in August after climbing 0.2% in July, accounting for more than half the increase in the Consumer Price Index. Gasoline prices peaked at $3.984 per gallon in the third week of August, according to data from the U.S. Energy Information Administration, up from $3.676 per gallon during the same period in July.
Reporting By Jeff Mason and Jarrett Renshaw
Editing by Chris Reese and David Gregorio
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BOGOTA, July 27 (Reuters) – Colombian police have seized property and bank accounts worth 1.3 trillion pesos ($329 million), proceeds from the sale and export of stolen crude oil, officials said on Thursday.
The national police and Interpol have carried out seven investigations since 2016 into the theft and smuggling of oil by four criminal organizations, a police statement said. The enterprise managed to export 975,000 barrels of crude between 2020 and 2021, it said.
Thousands of barrels of oil are stolen from Colombia’s pipelines each day, often by criminal gangs who refine it into a bootleg fuel known as pategrillo for use in making cocaine or running machinery in illegal mining.
The practice of perforating pipelines and storing oil in pools in the jungle is an environmental disaster, Reuters reported last year, after visiting clandestine refineries in Narino province.
“Businessmen and technicians are involved and the National Liberation Army (ELN) is clearly linked due to its illegal activities of hydrocarbon theft and attacks against the Cano Limon-Covenas pipeline,” said independent energy analyst Katherine Casas, referring to a rebel group that regularly bombs pipelines.
Police seized houses, apartments, boats, vehicles and four refineries earlier this week, as well as 17 bank accounts – Colombian and international – valued at 20.3 billion pesos ($5.14 million).
To sell the stolen oil, criminal groups mixed it with legally-bought crude so it could be exported via front companies, police said.
Colombia’s majority state-owned oil company Ecopetrol (ECO.CN) was the main victim of the scheme, costing it 60 billion pesos, police added.
“From 2013 to 2023, 9,925 illegal valves have been removed from Ecopetrol Group’s transportation systems,” the company said in a statement, adding that it was working with the government and security forces to tackle illegal operations.
The gangs stole crude from Colombia’s Cano Limon-Covenas pipeline which runs parallel to the border with Venezuela. It was processed elsewhere before being sold nationally or smuggled to the Pacific port city of Buenaventura and exported.
Furthermore, “large quantities” of light Venezuelan crude were brought into Colombia before being mixed with Colombian oil and exported via the Cano Limon-Covenas pipeline, the statement said.
($1 = 3,951.10 Colombian pesos)
Reporting by Luis Jaime Acosta and Oliver Griffin; editing by Grant McCool
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KAMPALA, July 26 (Reuters) – France’s TotalEnergies (TTEF.PA) said on Wednesday it had begun commercial drilling this month at its Tilenga petroleum project in Uganda’s west ahead of an expected start of oil production in the east African country in 2025.
TotalEnergies has faced fierce resistance from environmental protection groups and green energy campaigners who say the Tilenga project, which is partly located in a national park, and a planned crude oil export pipeline are a disaster for the planet.
“Drilling of the Tilenga wells began in July 2023, with production scheduled to start in 2025. A total of 420 wells will be drilled at Tilenga,” a spokesperson for TotalEnergies said.
TotalEnergies and its partner, China’s CNOOC, have said production in Tilenga will hit a peak of 190,000 barrels per day.
Tilenga is one of Uganda’s two oil projects. Commercial drilling at Kingfisher, the second project – which is controlled by CNOOC – begun in January.
A coalition of environmental pressure groups said on Wednesday that drilling in the Murchison Falls National Park (MFNP) and the associated crude oil pipeline was detrimental to global efforts to cut reliance on fossil fuels and would devastate the park’s ecosystem.
“The decision by TotalEnergies and its partners to drill for oil within MFNP, while ignoring the biodiversity conservation, climate change and socio-economic risks … is a direct contradiction to the global urgency to protect our remaining wild spaces and reduce fossil fuel reliance,” they said in a statement.
The park, one of Uganda’s largest and most visited, is bisected by the River Nile and is famed for its spectacular vistas and rich biodiversity that includes wild animals such as elephants, giraffes, hippos and chimpanzees.
The park is also home to a wetland site designated to be of international importance under the Ramsar Convention – the Murchison Falls-Albert Delta Wetland System.
TotalEnergies says it is committed to protecting the park’s biodiversity and that development will be limited to an area that is less than 1% of the park land.
Reporting by Elias Biryabarema in Kampala and Benjamin Mallet in Paris; Writing by Elias Biryabarema; Editing by George Obulutsa and Mark Potter
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BEIJING, July 13 (Reuters) – China’s crude oil imports in June jumped 45.3% on the year to the second-highest monthly figure on record, customs data showed on Thursday, with refiners building up inventories despite tepid domestic demand.
Crude imports in June totalled 52.06 million metric tons, or 12.67 million barrels per day (bpd), the data from the General Administration of Customs showed.
It was a substantial increase on the 8.72 million bpd imported in June last year, when the economy was battered by widespread COVID-19 lockdowns.
Crude imports also held their upward momentum on a month-on- month basis, up 4.58% from May’s 12.11 million bpd.
Total imports for the first half were 282.07 million metric tons, up 11.7% from 252.52 million in the corresponding period last year.
Teapot refiners in the eastern province of Shandong stepped up runs as authorities lifted curbs on the import of diluted bitumen in late June, helping to ease inventory pressure at its ports.
More broadly, however, inventories continue to rise against an uncertain macroeconomic backdrop. Commodities consultancy Vortexa estimated onshore crude inventories at 980 million barrels at the end of June, just 20 million barrels below an all-time record in August 2020.
While kerosene demand is up strongly on the year, boosted by a resumption in flights after the removal of curbs on travel, weakness in the manufacturing and property sectors has hurt demand for diesel, despite government stimulus measures.
“The long-haul spot barrels were booked when (arbitrage) windows were open, despite soft demand when the cargos arrived in June,” said Emma Li, a China oil markets analyst at Vortexa in Singapore.
China imported 10.39 million metric tons of natural gas in June, up 19.2% from 8.72 million a year ago when importers cut spot purchases amid high global liquefied natural gas (LNG) prices. Total gas imports for the first half stood at 56.63 million metric tons, a 5.8% increase on last year.
Refined fuel exports rose 40.6% to 4.51 million metric tons from 3.21 million in June last year, but down from the previous month’s 4.89 million metric tons.
Reporting by Andrew Hayley; Editing by Himani Sarkar, Shri Navaratnam and Jamie Freed
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BEIJING, May 11 (Reuters) – China has decreased its second batch of export quota volumes for refined oil products, consultancies and trader sources said on Thursday, focusing on local demand during the refinery overhaul season and boosting domestic sales amid poor export margins.
The export volumes, comprising 9 million tonnes of refined products and 3 million tonnes of marine fuel, were allotted primarily to state-owned refiners, according to two refining sources and consultancies Longzhong and JLC.
China Petrochemical Corp (Sinopec) , China National Petroleum Corp , China National Offshore Oil Company <0883.HK> and Sinochem Group (600500.SS) were the main recipients of these quotas, taking around 92% of the total allocation.
Reuters has asked the four companies for comment.
In addition, private refiner Zhejiang Petrochemical Corp, a refinery subsidiary of state defence conglomerate Norinco and China National Aviation Fuel Company were assigned 1.01 million tonnes.
China’s Ministry of Commerce did not immediately respond to a faxed request for comment.
The quota was less than the first batch of 18.99 million tonnes in early January but double the allocation of 4.5 million tonnes issued around a year earlier, Reuters records show.
The smaller export quota comes as refiners stockpile products amid strong demand expectations for gasoline and diesel in the peak summer season.
China’s gasoline and diesel export volumes have fallen for three consecutive months as refiners kept more cargoes for the domestic market where they are earning better profit margins, despite overall slow domestic demand growth.
While refiners have been unwilling to export because of the stronger local margins, the year-on-year increase in quotas mean that they can still choose to export should domestic demand turn weak at some point in time.
Longzhong estimated refiners could lose about 482 yuan ($69.73) a tonne on gasoline exports and 734 yuan a tonne on diesel exports in the current market.
“This year, quota holders have greater flexibility to prepare export plans and capture arbitrage opportunities,” said Energy Aspects analyst Sun Jianan.
The 3 million tonnes of low-sulphur fuel export quotas in this second batch was down from 8 million tonnes in the first batch for this year.
However a trader from a state-owned Chinese oil company said the previous batch of low-sulphur fuel quotas had yet to be used up as marine bunkering demand was weak in the first quarter.
($1 = 6.9121 Chinese yuan renminbi)
Reporting by Andrew Hayley in Beijing and Muyu Xu and Trixie Yap in Singapore; Editing by Jacqueline Wong
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LAUNCESTON, Australia, May 4 (Reuters) – The strong start to the year for Asia’s imports of crude oil came to a halt in April, with arrivals dropping to a seven-month low as top buyers China and India trimmed purchases.
A total of 108 million tonnes, or 26.39 million barrels per day (bpd) was imported by Asia last month, according to data compiled by Refinitiv Oil Research.
This was down from March’s 27.6 million bpd, which in turn was lower than February’s 29.4 million bpd and the 29.13 million bpd in January.
The decline in April arrivals was led by China, the world’s largest crude importer, with Refinitiv estimating imports at 10.67 million bpd, down from the 34-month high of 12.37 million bpd in March.
It was always likely that China’s imports would pull back in April as that month and May are the peak season for refinery maintenance.
But after the strong start to the year for China’s crude oil imports, there are now several question marks over the outlook for coming months, as the rebound in the world’s second-biggest economy appears uneven.
The official manufacturing Purchasing Managers’ Index (PMI) dropped to 49.2 in April from 51.9 in March, slipping below the 50-level that demarcates expansion from contraction for the first time since December.
The PMI was also below market expectations for a positive outcome of 51.4.
Manufacturing is one of the key pillars of China’s economy from a commodity demand perspective, the others being construction and infrastructure.
The news here is somewhat mixed, with infrastructure investment rising 8.8% year-on-year in the first quarter, outpacing a 5.1 rise in overall fixed-asset investment, while property investment fell 5.8%.
There is also the question of crude prices and the lag between moves in these and imports, given the time between refiners ordering oil and its delivery can be as long as three months.
Crude oil prices were kicked higher at the start of April when the OPEC+ group of producers surprised the market by announcing an additional 1.16 million bpd of output cuts.
Benchmark Brent futures rose from just below $80 a barrel to a peak of $87.49 a barrel on April 12, but have since slipped back to end at $72.33 on Wednesday as concerns over global growth trumped fears of tighter supply.
Nonetheless, the rise in Brent futures, which was accompanied by higher official selling prices for May cargoes from Middle East exporters such as Saudi Arabia, may put a dampener on Chinese demand for May and June cargoes.
INDIA SLOWS IMPORTS
This could extend to other major buyers in Asia, with the region’s second-biggest importer India showing signs of moderating crude appetite in April.
Imports were estimated at 4.60 million bpd in April, down from the eight-month high of 5.02 million bpd in March.
It’s also worth noting that India’s refiners are continuing to switch to cheaper Russian crude, with arrivals in April at 1.68 million bpd, only slightly down from the record high of 1.72 million bpd in March.
Russia has become India’s largest crude supplier, displacing erstwhile OPEC+ ally Saudi Arabia, with India’s April imports from the kingdom dropping to the lowest since September 2021.
Russian crude is also winning against Saudi oil in China, with April arrivals of 2.10 million bpd beating out the 1.73 million bpd from the Middle East’s top exporter.
Outside of the two Asian heavyweights, there was a mixed picture with number three importer Japan recording arrivals of 2.77 million bpd, up slightly from March’s 2.52 million, while fourth-ranked South Korea saw imports slip to 2.56 million bpd in April, a 10-month low and down from 2.96 million bpd in March.
The overall view on Asia’s imports is that April showed a loss of momentum after a strong start to the year.
Whether the slower April imports are mainly because of technical and temporary factors such as refinery maintenance, or if they signal the soft global economy is starting to drag Asian demand will become clearer in May and June.
The opinions expressed here are those of the author, a columnist for Reuters.
Editing by Kim Coghill
Our Standards: The Thomson Reuters Trust Principles.
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
MEXICO CITY, May 2 (Reuters) – Mexico Pacific is set to build a natural gas pipeline and liquefaction plant in the northern state of Sonora for an investment of up to $14 billion, Mexican President Andres Manuel Lopez Obrador and his office said on Tuesday.
Lopez Obrador on Twitter first identified the company as Pacific Limited, though his office later told Reuters the company’s full name was Mexico Pacific Limited.
A representative for the company did not immediately respond to a request for comment.
Mexican Foreign Minister Marcelo Ebrard had told journalists earlier in the day they had met with Mexico Pacific to discuss “a considerable investment in liquefied natural gas.”
The company plans to ship “out of the Pacific, because its main market is in Asia,” Ebrard added.
According to its website, Mexico Pacific is already constructing a 14.1 million tonnes per annum liquefied natural gas (LNG) export terminal in Puerto Libertad, Sonora.
Lopez Obrador also said Tuesday that “cooperation agreements” had been reached with recently merged rail operator Canadian Pacific Kansas City (CPKC) regarding rail projects in Mexico’s south.
“The president would like (CPKC’s rail network) to connect with the south of the country,” Ebrard said.
CPKC’s network currently extends through Canada and the United States down through central Mexico, with stops on the county’s Pacific and Gulf coasts.
Reporting by Kylie Madry
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SYDNEY, March 28 (Reuters) – Brookfield Asset Management (BAM.TO) will spend about $13.3 billion over the next decade to replace Origin Energy’s (ORG.AX) Australian power generation infrastructure with new-build renewables and storage facilities, a senior executive said on Tuesday.
Origin Energy on Monday agreed to a A$15.35 billion ($10.21 billion) takeover offer from a consortium led by Canada’s Brookfield, nearing the conclusion of one of the country’s biggest private equity-backed buyouts.
Australia’s No. 2 power producer has been looking to speed up its transition to cleaner energy, accelerating the planned shutdown of the country’s biggest coal-fired power plant and selling its gas exploration assets.
“Our plan is to invest a further A$20 billion of capital to fully replace its power generation and its power purchases with green power that meets all of its customers requirements, and we propose to do that over a 10-year period well in advance of the 2050 goal,” Brookfield Asia Pacific CEO Stewart Upson told Reuters in an interview, referring to a target for net-zero direct and indirect emissions by 2050.
The Canadian firm enlisted Singaporean funds GIC and Temasek [RIC:RIC:TEM.UL] as co-investors in its bid, while MidOcean Energy will gain control of Origin’s 27.5% stake in Australia Pacific LNG (APLNG).
Upson said Brookfield currently has about $60 billion invested in Australia, but the Origin deal would represent a “step change”.
Argo Investments (ARG.AX) Senior Investment Officer Andy Forster said his firm, the ninth-biggest investor in Origin, was positive about the deal, even though it might take time to gain regulatory approvals from the Foreign Investment Review Board and the competition regulator.
“Brookfield seems very committed to making the deal happen,” he added.
Shares were trading 1% higher at A$8.255 on Tuesday morning, below the implied cash-and-scrip offer price of A$8.91 a share, as the deal is not expected to be finalised until early 2024.
The Brookfield-led consortium trimmed its offer for Origin by 1% last month after a government move to cap gas prices hit valuations in the sector.
“We had to take our time to assess all the different developments and make sure that we are comfortable it didn’t have an impact,” Upson said.
Banking industry volatility also slowed the deal, but the financing was fully committed and was not affected, he added.
($1 = 1.5031 Australian dollars)
Reporting by Praveen Menon and Scott Murdoch; Editing by Jamie Freed
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