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FILE PHOTO: Chancellor of the Exchequer Philip Hammond attends the IMF and World Bank’s 2019 Annual Spring Meetings, in Washington, April 13, 2019. REUTERS/James Lawler Duggan
April 16, 2019
LONDON (Reuters) – British finance minister Philip Hammond plans to attend China’s 2019 Belt and Road forum later this month, the Treasury said, subject to a clear parliamentary schedule.
Hammond met the Chinese Minister of Finance, Liu Kim on Friday at an IMF meeting. The two will also discuss British-China bilateral economic and financial cooperation when Hammond is in Beijing.
The first summit for Belt and Road — which envisions rebuilding the old Silk Road to connect China with Asia, Europe and beyond with massive infrastructure spending — was in 2017.
(Reporting by William Schomberg; writing by Kate Holton; editing by Andy Bruce)
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FILE PHOTO: Pigs nearing market weight stand in pens at Duncan Farms in Polo, Illinois, U.S. April 9, 2018. REUTERS/Daniel Acker
April 16, 2019
By Chris Prentice and Tom Polansek
NEW YORK/CHICAGO (Reuters) – China would likely lift a ban on U.S. poultry as part of a trade deal and may buy more pork to meet a growing supply deficit, but it is not willing to allow a prohibited growth drug used in roughly half the U.S. hog herd, two sources with knowledge of the negotiations said.
The United States and China are trying to hammer out a deal to end a months-long trade war that has cost the world’s two largest economies billions and roiled global financial markets and supply chains.
U.S. President Donald Trump’s administration is pressing Beijing to address concerns over Chinese practices on intellectual property rights, forced technology transfer and industrial subsidies.
Washington is also pushing for greater market access for agricultural products by seeking to reduce tariffs, lift bans and overhaul regulatory processes. The United States has asked Beijing to lift its bans on the drug ractopamine, which some U.S. pork producers use to boost hog growth, and on U.S. poultry, said two sources briefed on the discussions who spoke on condition of anonymity.
China’s negotiators have resisted lifting the ractopamine restriction even though Beijing may boost imports of U.S. pork as its own hog herd is devastated by disease, the sources said.
Huge losses in China’s hog herd due to African swine fever have left the world’s largest pork market facing a protein deficit, stoking hopes among U.S. pork and poultry producers.
“I think that China will do anything possible to make it easier for them to import protein,” said Bob Brown, an independent U.S. livestock market analyst. “This is such a gigantic thing,” he said of African swine fever.
Up to 200 million pigs could be culled or die from infections as the disease spreads through China, reducing the nation’s pork output by 30 percent from 2019, according to Rabobank.
Iowa State University agricultural economist Dermot Hayes said he expects China will import about 4 million to 6 million tonnes of pork in 2020, following losses in Chinese herds. The amount imported from the United States will depend on a trade deal, because Beijing maintains tariffs on shipments of American pork and has alternative suppliers, he said.
The Chinese poultry market also “has tremendous potential” for U.S. producers, said Jim Sumner, president of the USA Poultry and Egg Export Council in Stone Mountain, Georgia, valuing it at $500 million.
“With China’s situation with African swine fever, they’re going to have a real protein shortage in the near future,” he said.
The U.S. Department of Agriculture projects China’s total chicken imports will surge 68 percent this year to 575,000 tonnes, not including popular chicken feet, as African swine fever spurs consumers to turn to proteins other than pork. The disease is fatal to pigs but not harmful to humans.
Beijing has banned all U.S. poultry and eggs since January 2015 due to an avian influenza outbreak, which has been over for years. That caused imports to tank after the United States shipped $390 million worth of poultry and products to China in 2014. The following year, shipments were less than a fifth of that, at $74 million.
China lifted a similar restriction on poultry from France last month, and last year dropped duties on U.S. white-feathered broiler chickens. A total lifting of the ban would reopen the gates for U.S. poultry to compete in the world’s largest, and best-paying, market for products like chicken feet, and benefit companies such as Sanderson Farms Inc..
While it looks increasingly likely China may lift its ban on U.S. poultry, Beijing is seeking a “two-way street” and would want to be able to export some poultry products to the United States as well, two sources said.
China’s Ministry of Agriculture and Rural Affairs did not respond to a request for comment. A spokeswoman for the U.S. Trade Representative’s office declined to comment.
A U.S. meat exporter said officials from the USTR indicated that China will not drop its ban on ractopamine, though trade talks are still ongoing.
Chinese authorities blocked the use of ractopamine in livestock in 2002. They say it can cause health problems in people and is too similar to clenbuterol, an illegal additive in pig feed used to keep meat lean. The European Union also prohibits ractopamine, although the United States and other countries say it is safe.
Keeping the ban on ractopamine could benefit companies such as Smithfield Foods, a subsidiary of Hong Kong-listed WH Group Ltd that already raises most of its hogs without the drug. WH Group declined to comment. Smithfield Foods did not respond to request for comment.
Other U.S. pork producers that use the drug could benefit if China dropped its ban.
“It’s unfortunate news,” Christine McCracken, senior protein analyst with Rabobank in New York, said of the likely continuance of the ractopamine ban.
(Reporting by Chris Prentice in Washington and Tom Polansek in Chicago; Additional reporting by Dominique Patton in Beijing; Editing by Caroline Stauffer and Dan Grebler)
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FILE PHOTO: A Mercedes Benz logo is pictured at a Mercedes Benz branch in Stuttgart, Germany, April 15, 2019. REUTERS/Ralph Orlowski/File Photo
April 16, 2019
BEIJING (Reuters) – Germany’s Daimler has suspended a local sales franchise for its Mercedes-Benz brand in China after a customer complaint about service from the dealership went viral on social media.
Daimler said in a statement on Tuesday that the dealership in Xi’an city in the northwestern province of Shaanxi had reached an agreement with the customer and was investigating its customer service and business operations, and had suspended the franchise in the meantime.
It made no further comment about the move, which came after a video emerged on Chinese social media showing an unhappy Chinese customer protesting at a dealership, and which also prompted a critical response from regulators.
In the video, the customer complained that a car she had recently bought was leaking oil and that she was subsequently treated poorly by the dealer, highlighting poor consumer rights in the world’s second largest economy.
She also said she had paid a “financial service fee” of 15,000 yuan ($2,235) to an employee at the dealership when she bought the car.
China’s banking and insurance regulator has asked Mercedes-Benz’s car finance unit to investigate its dealership arrangements, state media said on Tuesday.
Car dealers should not be allowed to collect so-called financial services fees and should make efforts to protect customers’ rights, China National Radio quoted Pang Xuefeng, an official from China’s Banking and Insurance Regulatory Commission, as saying.
(Reporting by Min Zhang and Sun Yilei in Beijing and Lee Chyen Yee in Singapore; Editing by David Holmes)
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FILE PHOTO: A map illustrating China’s silk road economic belt and the 21st century maritime silk road, or the so-called “One Belt, One Road” megaproject, is displayed at the Asian Financial Forum in Hong Kong, China January 18, 2016. REUTERS/Bobby Yip/File Photo
April 16, 2019
ZURICH (Reuters) – Switzerland will sign an accord backing China’s Belt and Road Initiative when President Ueli Maurer visits China this month, cementing ties with a major trading partner as other Western countries view the gargantuan project with scepticism.
President Xi Jinping’s new Silk Road initiative has been controversial particularly in Washington, which views it as a way to spread Chinese influence abroad and saddle countries with unsustainable debt, a charge Beijing rejects.
Locked in a trade war with China, the United States has been particularly critical of Italy’s decision to sign up to the plan, the first for a G7 nation. Others in the West are less keen to jump aboard, although many have kept an open mind.
Neutral Switzerland sees the BRI accord to be signed during Maurer’s trip as a way to support economic development, especially in central Asia.
“The aim of the memorandum is for both parties to intensify cooperation on trade, investment and project financing in third markets along the routes of the Belt and Road Initiative”, the finance ministry said on Tuesday without giving more details.
Maurer, who is also finance minister, will attend the second Belt and Road summit next week which is expected to draw around 40 foreign leaders.
The first summit for Belt and Road — which envisions rebuilding the old Silk Road to connect China with Asia, Europe and beyond with massive infrastructure spending — was in 2017.
Xi has also invited Maurer for a state visit on April 28 and 29, his ministry said. Swiss business and financial leaders will accompany Maurer on his eight-day China trip.
Switzerland, one of the first Western states to recognize the People’s Republic, was the first country in continental Europe to reach a free trade agreement with China, its largest trade partner after the European Union and United States.
Xi made a state visit to Switzerland in 2017.
(Reporting by Michael Shields, editing by Ed Osmond)
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FILE PHOTO: Headquarters of the People’s Bank of China (PBOC), the central bank, is pictured in Beijing, China September 28, 2018. REUTERS/Jason Lee
April 16, 2019
SHANGHAI (Reuters) – China’s bond market sold off sharply this week as a slew of unexpectedly strong economic indicators prompted investors to ask if country’s latest round of monetary easing may be drawing to a close.
The first sign of trouble came when Chinese 10-year Treasury futures for June delivery, the most-traded contract, fell as much as 0.7 percent in initial deals on Monday.
While they recovered slightly by Tuesday afternoon, they were still down 0.6 percent from Friday’s closing price.
The yield on benchmark 10-year government bonds has risen more than 7 basis points so far this week, according to Refinitiv data, the latest stage of a rout that has pushed the yield up around 33 basis points since the end of March.
At 3.40 percent, the 10-year yield has now retraced to levels last seen in December.
The latest selling pressure came after robust March credit data on Friday raised hopes that China’s economy may be starting to stabilize.
Hit by a multi-year financial deleveraging campaign and the trade war with the United States, China’s economic growth slowed to a near 30-year low of 6.6 percent in 2018.
Data due on Wednesday is expected to show the weakest first-quarter economic expansion in at least 27 years.
But March readings to be released at the same time (0200 GMT) are expected to show faster growth in industrial output, investment and retail sales, suggesting a flurry of policy support measures in recent months are starting to kick in.
“The stronger-than-expected credit expansion together with a rebound (in the) inflation reading reinforced market concerns that China may put easing monetary policy on hold,” said Tommy Xie, head of Greater China Research at OCBC Bank in Singapore.
China’s campaign to shore up slowing growth has seen it roll out billions of dollars worth of additional tax cuts and infrastructure spending this year.
That fiscal stimulus has been accompanied by five cuts to banks’ reserve requirement ratio (RRR) over the past year as the People’s Bank of China (PBOC) worked to encourage lending and reduce borrowing costs for small and private firms.
Economists polled by Reuters before Friday’s credit data had expected three more RRR cuts this year in the current quarter and the next two, in line with previous surveys. Many had penciled in the next cut for this month, though Xie said after the strong lending data that there was no urgency to roll out more measures at the moment.
A summary of a quarterly meeting of the central bank’s monetary policy committee published late on Monday suggested a more cautious approach.
The PBOC said it would maintain control of money supply “floodgates”, a term absent from the previous quarter’s statement.
“When the central bank reiterates risk prevention, the easing cycle of monetary policy might be ending,” said Qu Qing, chief economist at Jianghai Securities.
The policy signal conveyed by the PBOC meeting suggested that tightening is on the way, and a near-term reduction in reserve requirement ratio (RRRs) or interest rates is unlikely, he said.
Nomura said in a note on Tuesday that there is much less room for easing and stimulus in China this time because of surging debt, but added it would be too early to start withdrawing easing measures as a sustainable recovery is still in question.
Still, expectations of tightening pushed benchmark five-year interest rate swaps (IRS) up to a high of 3.25 percent on Tuesday, up from 3.12 percent at last week’s close.
Frances Cheung, head of macro strategy for Asia at Westpac in Singapore, also cautioned that any signs of a bottoming out in the economy were “preliminary”.
“At this junction, policymakers would not want to suffocate growth and would not like to see funding costs materially higher,” she said.
However, some traders and market watchers said that liquidity conditions were likely to tighten in mid-April as companies make first-quarter tax payments, boosting demand for cash and sucking funds out of the market.
Such liquidity concerns earlier this month had prompted some analysts to predict an imminent cut to banks’ reserve requirements.
Iris Pang, an economist at ING in Hong Kong, said she maintains her expectation for an RRR cut this month.
“As trade war uncertainties linger on, there is a need to keep the fast yuan loan growth to help small private firms survive. An RRR cut is needed to facilitate fast credit growth,” Pang said in a note.
“China may not need such fast ongoing credit injection into small private firms. That said, we believe that the central government will allow speedy credit growth to continue for some time, at least until it is satisfied that the job market is stable.”
Investors looking for indications of a policy shift will be closely watching the PBOC’s actions when medium-term lending facility (MLF) loans with a value of 366.5 billion yuan ($54.65 billion) expire on Wednesday.
A total of 1.1855 trillion yuan worth of the loans is due to mature in the second quarter, according to Reuters calculations based on official data.
(Reporting by Winni Zhou and Andrew Galbraith; Editing by Kim Coghill)
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FILE PHOTO: The headquarters of the European Central Bank (ECB) are illuminated with a giant euro sign at the start of the “Luminale, light and building” event in Frankfurt, Germany, March 12, 2016. REUTERS/Kai Pfaffenbach
April 16, 2019
By Balazs Koranyi
FRANKFURT (Reuters) – Several European Central Bank policymakers think the bank’s economic projections are too optimistic as growth weakness in China and trade tensions linger, four sources with direct knowledge of discussions said.
A “significant minority” of rate-setters in last week’s policy meeting expressed doubt that a long projected growth recovery is coming in the second half of the year and some even questioned the accuracy of the ECB’s projection models, given their long history of downward revisions, the sources said.
With the ECB using the these projections as a key input into policy decision, more cuts in growth and inflation forecasts would raise the chance that the bank’s first post crisis rate, now seen next year, is delayed even longer.
An ECB spokesman declined to comment.
The central bank has so far maintained that many of the factors holding down growth are temporary, so the economy would rebound in the second half, after waning exports and eroding confidence nearly dragged Germany into recession late last year.
ECB President Mario Draghi said over the weekend there were signs that these factors were waning, even if political uncertainty loomed large.
But some of his fellow Governing Council members were not as confident and argued that the growth hurdles were far from temporary, so there was no reason to project any significant rebound, the sources said.
While Germany’s vast car sector did take a one-off hit from an adjustment to new emissions-testing methods, more permanent factors could include shifting consumption habits, a move away from diesel and weak Chinese demand, some governors argued, according to the sources.
WEAK GROWTH, TRADE WARS
The policymakers added that weak global trade growth also appears to be more permanent, trade wars now look to be the norm rather than the exception and even if Chinese growth looks to be stabilizing, demand from Beijing is unlikely to surge.
Some governors went as far as saying that the ECB’s forecasting methodology may need to be reviewed since projections are persistently too optimistic and are regularly cut quarter after quarter, the sources said.
The ECB now sees 2019 growth at 1.1 percent but projected 1.7 percent just three months ago.
While others are also prone to forecasting errors, the U.S. Federal Reserve does not publish a single projection, even if individual governors make their forecasts public. And while Fed governors also erred on growth recently, their projections on inflation have been relatively solid.
Some ECB policymakers thought there may be an inherent bias in the bank’s forecasts as they always show inflation on an upward slope, moving toward the ECB’s target and growth returning to trend.
The sources added that ECB President Mario Draghi appeared open to discussing the concerns but showed little interest in doing a deep dive into forecasting methodology just month before the end of his term.
Others told the colleagues at the policy meeting that the key reason for the forecast misses was simply an incorrect assessment of slack in the labor market, the sources said.
The euro zone has created around 10 million jobs since the worst days of its debt crisis and more people are at work than ever before.
Yet inflation is not moving up the way record high employment would warrant, suggesting that the labor market is more flexible than in the past and the natural rate of unemployment has declined.
(Reporting by Balazs Koranyi; Editing by Andrew Heavens)
Source: OANN
FILE PHOTO: Employees work on the production line of a factory manufacturing fashion accessories in Sihong county, Jiangsu province, China March 27, 2019. REUTERS/Stringer
April 16, 2019
BEIJING (Reuters) – China’s stimulus measures will shore up economic growth this year and next but may undermine the country’s drive to control debt and worsen structural distortions over the medium term, the OECD said in a report on Tuesday.
Beijing has stepped up fiscal stimulus to prevent a sharper slowdown in the world’s second-largest economy, which is being squeezed by weaker domestic demand and a trade war with the United States.
Local governments will be allowed to issue 2.15 trillion yuan ($320.60 billion) worth of special purpose bonds in 2019 to fund infrastructure projects, a jump of 59 percent from last year.
But S&P Global Ratings estimated last year that local governments were already sitting on hidden debt that could be as high as 40 trillion yuan.
“Infrastructure stimulus could lift growth over the projection horizon, but it could lead to a further build-up of imbalances and capital misallocation, and thereby weaker growth in the medium term,” the OECD said in its latest survey on China’s economy.
“The stimulus risks increasing once again corporate sector indebtedness and, more generally, reversing progress in deleveraging,” it said.
China’s corporate debt has fallen to about 160 percent of gross domestic product (GDP) due to a multi-year clampdown on riskier types of financing and debt, but the level was still higher than in other major economies, the OECD said.
The government in March announced tax and fee cuts of 2 trillion yuan for companies this year, which will lift its budget deficit to 2.8 percent of GDP this year from 2.6 percent in 2018.
China’s fiscal stimulus could be as high as 4.25 percent of GDP this year, up from 2.94 percent in 2018, the OECD added.
Easier monetary policy should help reduce the risk of liquidity strains which could put further pressure on businesses, said Ludger Schuknecht, deputy secretary-general of the OECD.
But he said Beijing should prevent any policy “overshooting”.
Fiscal policy should aim to support the economy while avoiding any side-effects, he added.
“I’m sure government authorities and the PBOC are monitoring this carefully. It’s a matter of implementing it (stimulus) in the right way,” he told an event ahead of the release of the report.
New bank loans rebounded more than expected in March, and totaled a record 5.8 trillion yuan for the quarter, as policymakers pushed lenders to support struggling smaller, private companies, which are seen as higher credit risks than state-controlled firms.
But there are concerns that looser lending standards may fuel a further rise in bad loans as well as inefficient investment and speculation, particularly in the property market.
Underscoring the OECD’s warning about debt risks, data on Tuesday showed growth in new home prices accelerated in March after cooling since November 2018.
Average new home prices in China’s 70 major cities rose 0.6 percent, quickening from a 0.5 percent gain in February, according to Reuters calculation of data released by the National Bureau of Statistics (NBS).
Home prices in China are expected to rise more this year than predicted just a few months ago, a recent Reuters poll showed, as the government urges banks to increase lending and lower interest rates to support the economy.
The People’s Bank of China (PBOC) has already slashed banks’ reserve requirement ratio (RRR) five times over the past year and is widely expected to ease policy further in coming quarters to spur lending and reduce borrowing costs.
But top officials have repeatedly vowed not to open the floodgates in an economy already saddled with piles of debt – a legacy of massive stimulus during the global financial crisis in 2008-09 and subsequent downturns.
China’s economic growth is likely to slow to 6.2 percent this year – the weakest pace in nearly 30 years, and growth is expected to cool further to 6.0 percent in 2020, the OECD said. The economy expanded 6.6 percent in 2018.
In March, the OECD cut its 2019 growth forecast from 6.3 percent.
The OECD’s outlook on China’s economy was in line with a Reuters poll published last week.
Growth of China’s exports of goods and services could slow to 4.5 percent this year from 5.1 percent in 2018, amid trade frictions with the United States, the OECD predicted.
China’s current account may swing to a deficit of 0.1 percent of GDP this year from a small surplus in 2018, amid its rebalancing towards domestic demand, the OECD added.
(Reporting by Kevin Yao; Editing by Kim Coghill)
Source: OANN
FILE PHOTO: The HNA Group logo is seen on the gate of HNA Plaza building in Beijing, China July 4, 2018. REUTERS/Elias Glenn
April 16, 2019
By Kane Wu
HONG KONG (Reuters) – CWT International Ltd, a unit of indebted HNA Group Co Ltd, on Tuesday said it defaulted on a HK$1.4 billion ($179 million) loan, and that it has less than 24 hours to pay funds due or lose assets pledged as collateral.
CWT, in a filing to the Hong Kong stock exchange, said it has not paid accrued interest and fees worth HK$63 million to lenders, who will take possession of the assets if the amount due is not paid by 9 AM (0100 GMT) on Wednesday.
Among assets pledged is wholly owned CWT Pte Ltd, a holding firm for HNA’s commodity marketing, engineering, finance and logistics services. Other assets pledged include properties in Britain and the United States and golf courses in China.
One property, 17 Columbus Courtyard in London’s Canary Wharf development – with tenants including Credit Suisse Group AG – was bought in July 2016 for 131 million pounds ($172 million). In 2018, it was on sale with a value of HK$1.3 billion ($166 million).
CWT International, which operates in 90 countries, also owns a portfolio of golf courses in the U.S. city of Seattle, stock exchange filings showed.
The Chinese aviation-to-financial services conglomerate bought the Singapore-based firm for $1 billion in December 2017 via wholly owned subsidiary HNA Belt and Road Investments Singapore. It then merged the firm with one of its Hong Kong-listed units and named the resulting entity CWT International.
Since late last year, HNA has been in talks with banks to find a buyer for CWT, as it divests assets to pay off debt.
HNA declined to comment on Tuesday.
CWT’s assets were worth HK$24.6 billion at the end of 2018, when it posted a loss of HK$557.3 million. Late last month, it said it would be unable to repay the borrowed HK$1.4 billion in full as scheduled in October unless it sells assets – which it said has been challenging – or refinances the loan.
Trading of CWT shares has been suspended since April 10.
(Reporting by Kane Wu; Additional reporting by Jennifer Hughes; Editing by Christopher Cushing)
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FILE PHOTO: Visitors check NIO ES8 displayed during a media preview of the Auto China 2018 motor show in Beijing, China April 25, 2018. REUTERS/Damir Sagolj
April 16, 2019
By Norihiko Shirouzu, Paul Lienert and Nick Carey
BEIJING/DETROIT (Reuters) – It took one 330 kilometer trip from Chongqing to Chengdu in his Nio ES8, a seven-seater all-electric SUV, for its owner Wang Haichun to be consumed with buyer’s remorse.
Despite being billed as capable of going 335 km on a single full charge, the ES8 didn’t get anywhere near that when driving on freeways at speeds above 100 km per hour (60mph), he said, adding that after 180 km, there was only 50 km of range left.
“We had to recharge the car once and drove with a high level of anxiety throughout, constantly having to keep an eye on the range meter,” the 44-year-old manager of a property firm said. Toward the end of the trip, he shut off the air conditioner and audio system to preserve power.
“I wouldn’t want to do that kind of trip again – ever.”
So unhappy was Wang, who paid 481,000 yuan ($71,700) for the vehicle, he sold it. He and his wife have since bought a Lexus NX300h gasoline-electric SUV.
Asked to comment on Wang’s experience, Nio Inc said in an e-mailed statement the ES8 can travel more than 200 km when constantly driven at a 100 km per hour and that battery swap stations are available for quick recharging. The statement did not address Nio’s advertising of 335 km on a single full charge.
In real world conditions, all-electric cars can sometimes fall far short of advertised ranges, car engineers say. That’s particularly so when driving at length on freeways or hilly terrain and in hot or cold weather.
The problem adds to drawbacks which have hindered wider acceptance – EVs have shorter driving ranges than gasoline vehicles anyway, are more expensive and take a long time to recharge.
China, Europe and the U.S. state of California have set ambitious requirements for automakers to dramatically increase EV sales over the next 5-10 years, but those goals are at risk unless EVs can come close to matching gasoline engine cars in cost and ease of use.
CHINESE AMBITIONS
In China, the country most aggressively pursuing the adoption of EVs and home to the world’s largest auto market, some of the industry’s biggest names believe pure battery electric cars will be as cheap as gasoline counterparts by 2025.
Those making that prediction include Ouyang Minggao, executive vice president of the EV100 forum, a think tank which is widely seen as the de facto voice of government policy.
“The turning point is coming. We believe that around 2025, the price of pure electric vehicles will achieve a big breakthrough,” he said in a speech in January.
Ouyang cited a reduction in battery costs to $100 per kilowatt hours from $150-$200 currently and a planned tightening of emissions rules in China which will make gasoline vehicles there more expensive.
But others in the EV industry are less optimistic.
“Chinese policymakers think EVs will become more like conventional gasoline cars as early as 2025. But that’s naive and all automaker engineers would agree with me,” said a veteran EV engineer at Honda Motor Co.
“Sure, there’s an EV boom but hybrids and plug-in hybrids will be needed as bridging technologies,” he said.
The engineer was one of five interviewed by Reuters for this article who believe it will take a decade before battery EVs achieve cost and performance parity with gasoline cars. Most were not authorized to speak to media and declined to identified when describing the shortcomings of EV technology.
But pressure to deliver parity will only grow as China rolls back subsidies while setting quotas for sales of new energy vehicles (NEVs). China wants NEVs – which also include hybrids, plug-in hybrids and hydrogen fuel cell vehicles – to account for a fifth of auto sales by 2025 compared with 5 percent now.
CUTTING COBALT
For most automakers, battery cells cost around $200/kWh, the engineers said, although costs for Tesla Inc are believed to be around $150/kWh, partly due to its much greater scale of production. Tesla declined to comment.
To cut costs, firms are working on slashing the use of cobalt, the most expensive part in lithium-ion batteries.
Firms such as China’s Contemporary Amperex Technology Co Ltd (CATL), BYD Co Ltd and South Korea’s SK Innovation Co Ltd are developing NMC 811 technology.
It uses 80 percent nickel, 10 percent manganese, 10 percent cobalt, while a conventional lithium-ion battery uses 60 percent nickel, 20 percent manganese and 20 percent cobalt. NMC 811 also delivers more energy density, meaning batteries will cost and weigh less.
Others are developing similar technologies with slightly different ratios. Batteries jointly produced by Tesla and Panasonic Corp substitute manganese with aluminum and use less cobalt than NMC 811.
Less cobalt and more nickel increases the risk that a battery cell will catch fire – a problem still being worked on. Even so, South Korean battery makers say the next generation of batteries due in three years or so will cost much less and offer much greater driving ranges.
But the engineers who spoke with Reuters caution that even if battery unit costs are brought down to $100/kWh, this would not necessarily translate into a steep decline in vehicle costs.
That’s because the investment to improve battery quality needs to be factored in, while the cars also need sophisticated battery management systems to prevent overheating and overcharging – adding thousands of dollars to their cost.
Toyota Motor Corp, which does not have a pure EV on the market currently, says it is concerned about battery durability. Battery capacity can drop by half over 5-10 years – the reason for low EV resale values, said Shigeki Terashi, executive vice president in charge of Toyota’s EV strategy.
“Falling EV battery capacity is not a major issue in China now because sales there have only recently begun, but in time this problem will likely become more evident,” he told Reuters in a interview.
RECHARGING TIMES
A longer term effort to improve batteries are solid state batteries, where the liquid or gel-form electrolyte in a lithium-ion battery is replaced with a solid. That could help double a battery’s energy density.
“That’s the holy grail,” says consultant Jon Bereisa, a former GM engineering director who spearheaded much of the automaker’s early lithium-ion battery development.
Many in the industry believe the technology is at least a decade away from mass-market commercial use.
“There are a lot of limitations to solid state drive..it will be very difficult to adopt the technology in the automotive applications used by the general public,” said YS Yoon, president of SK Innovation’s battery business.
Advances in recharging are also key to making electric vehicles mainstream. A big obstacle is heat, which increases resistance and in turn reduces the current.
Most EVs can get a partial charge in under half an hour, although several models due out in the next year can get close to a full charge in 20 minutes.
TE Connectivity is working with automakers to cut charging time to as little as 5 minutes and Chief Technology Officer Alan Amici says that goal may be attained in five years.
But others are sceptical. Bereisa thinks battery costs could achieve parity with gasoline cars by the late 2020s but his verdict on fast fueling parity is “maybe never”.
“It’s physics,” he said, adding that to charge an EV with the same amount of energy in the same amount of time as a gasoline car, you’d need a charger powerful “enough to run a small city”.
($1 = 6.7119 Chinese yuan)
(Reporting by Norihiko Shirouzu in Beijing, Paul Lienert and Nick Carey in Detroit; Additional reporting by Yilei Sun and Beijing newsroom; Joe White, Hyunjoo Jin and Heekyong Yang in Seoul, Naomi Tajitsu, Maki Shiraki and Makiko Yamazaki in Tokyo; Editing by Edwina Gibbs)
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FILE PHOTO: U.S. dollars and other world currencies lie in a charity receptacle at Pearson international airport in Toronto, Ontario, Canada June 13, 2018. REUTERS/Chris Helgren/File Photo
April 16, 2019
By Daniel Leussink
TOKYO (Reuters) – Major currencies remained confined to well-trodden ranges on Tuesday, as markets look next to European and Chinese data for more evidence that the worst may be over for the global economy.
The yen remained close to 2019 lows against the U.S. and Australian dollars after investors reduced exposure to the safe-haven currency to seek higher yields elsewhere.
The Japanese currency has fallen against both units after rising to recent highs in late March, said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.
“That’s probably because the market’s concern about the global economy is easing and also the U.S.-China trade war will not intensify further,” he said.
The dollar was unchanged at 112.00 yen, holding above its 200-day moving average for the fourth straight session.
It traded less than a sixth of a percent off the year’s high of 112.135 yen hit in early March.
The Aussie was basically flat at 80.35 yen, also trading above its 200-day moving average, for the third session, after last breaching the key technical level in December last year.
The data in focus includes Germany’s ZEW economic index for April, due around 0900 GMT, and China’s gross domestic product set for Wednesday, which is expected to offer more insight on the health of the world’s second-largest economy. Chinese exports and credit data last week signaled some stabilization, prompting markets to adjust their outlook on global growth.
Market participants eyed European manufacturing data due on Thursday for cues on whether growth in that region is improving.
The euro was steady at $1.1307 after inching up less than a tenth of a percent overnight.
The dollar index last stood at 96.932 after ending the previous session basically unchanged.
Investors also kept their focus on trade issues, including talks between Japanese Economy Minister Toshimitsu Motegi and U.S. Trade Representative Robert Lighthizer.
Motegi said late on Monday both sides had confirmed that new bilateral trade talks would proceed based on the two nations’ joint statement issued last September. Motegi and Lighthizer are slated to continue their talks on Tuesday.
Meanwhile, U.S. Treasury Secretary Steven Mnuchin said over the weekend he hoped Sino-U.S. trade negotiations were close to their final round.
Reuters reported on Sunday that U.S. negotiators had tempered demands that China curb industrial subsidies as a condition for a trade deal after strong resistance from Beijing.
The Australian dollar, a barometer of investor sentiment, was unchanged at $0.7174, hovering close to a near seven-week high brushed on Friday.
Mizuho’s Yamamoto said traders were unwinding bets on two interest rate cuts in 2019 by Australia’s central bank to counter the country’s slowing economic growth.
“The unwinding of that expectation is happening now. That’s why it’s supporting the Australian dollar,” he said.
(Editing by Jacqueline Wong)
Source: OANN
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