China Boosts Renewable Power Subsidies 7.5% to $13 Billion

Bloomberg News 6/18/2020

(Bloomberg) — China boosted its budget for renewable power subsidies to 92.36 billion yuan ($13 billion), 7.5% more than it spent last year.

Solar power is the big winner, with incentives set to rise 14% compared to last year’s level, while wind payments will be 3.2% lower, the Ministry of Finance said on its website on Wednesday. The subsidy budget would cover existing projects plus any new developments that meet eligibility criteria. a screenshot of a cell phone: China Renewable Subsidies © Bloomberg China Renewable Subsidies

Solar’s allocation was higher than expected, which is “positive for both the photovoltaic equipment value chain as well as solar farm operators,” said Tony Fei, an analyst at BOCI Research Ltd. in Hong Kong. But “wind farm operators might see a slight marginal decline in subsidies for existing projects.”

Solar projects will get 42.84 billion yuan, while wind will get 35.69 billion. The remainder of the budget is for biomass power and funding to local governments for grid companies.

Applications for new solar power projects that will compete for national subsidies rose 36% to 33.5 gigawatts in 2020, the National Renewable Energy Information Management Center said separately. Last year China decided to subsidize 22.8 gigawatts of the 24.6 that were submitted.

Last year China spent 85.92 billion yuan total on renewable subsidies. The payments are financed by a surcharge on electricity bills.

Even with the increased budget, there won’t be enough money to go around, said Robin Xiao, an analyst at CMB International Securities Ltd.

China has subsidized renewable energy for years, which allowed it to add more capacity than anywhere else in the world. Based on the subsidized tariffs it offered, and the amount of power expected to be produced, the total bill for renewable subsidies should be about 200 billion yuan this year, Xiao said.

Most of China’s renewables are developed by state-owned firms, but that gap between subsidies owed and paid has hurt valuations of companies traded publicly outside mainland China. China Datang Corp. Renewable Power Co. and China Longyuan Power Group Corp. trade below their book value in Hong Kong, in part because they are owed so much by the government, according to Xiao.

The government is also trying to reduce the number of new projects that are eligible for subsidies, as it wants them to be able to compete against dominant coal power on price alone. Subsidies for onshore wind will be phased out after this year, with offshore wind following from 2022.

https://www.msn.com/en-us/money/markets/china-boosts-renewable-power-subsidies-7-5-to-13-billion/ar-BB15E9sk

July 22, 2020

China Update

INSIGHT: China petrochemical demand stays weak; supply to increase near term

Author: Yvonne Shi

2020/07/22

SINGAPORE (ICIS)–China’s overall petrochemical demand has weakened in July while supply is projected to increase, dimming the market outlook in the near term.

Inventories of major chemicals such as benzene, polyolefins, ethylene glycol, acetone and toluene all posted increases in the week ended 17 July, according to ICIS data.

Softer demand was reflected in spot market prices as tracked by the ICIS China Petrochemical Index. The index fell to 877 on 17 July, down from 898 on 8 July, and lower than the June average of 888.6.

The index tracks movement of domestic prices of a wide array of organic and plastics products, including methanol, purified terephthalic acid (PTA), polypropylene (PP), polyethylene (PE), monoethylene glycol (MEG), mixed xylene, benzene, toluene, acetic acid, styrene, phenol, acrylonitrile, acetone, n-butanol, 2-ethylhexanol (2-EH), acrylic esters and propylene oxide (PO).

END-DEMAND STILL WEAK
Spot petrochemical purchases have slowed down due to a combination of recent price spikes, high stocks and poor end-demand.

For propylene oxide (PO), recent market gains have driven up prices of downstream polyether polyols, whose producers have had to struggle with limited margins due to inability to fully pass on increased costs to end-users.

Downstream sectors, such as automobile, furniture and fabrics, are still in the process of a slow recovery.

Producers of polybutylene terephtalate (PBT) – downstream of butanediol (BDO) – may have to reduce output, with end-users holding sufficient inventories less willing to purchase raw materials at increased prices.

For purified terephthalic acid (PTA), limited exports of downstream clothing and textiles hamper market gains although downstream polyester plants are running at high rates.

PTA inventory among producers and downstream end-users alike has remained high, while the government is trying to help out exporting companies survive by re-directing their products to the domestic market.

Polyolefin downstream manufacturers, meanwhile, are also currently holding large inventories of raw materials and products.

Buying of polypropylene (PP) turned more cautious after recent price gains, while some small downstream factories have halted operations due to high feedstock costs.

Demand for bisphenol-A (BPA) was hit as downstream polycarbonate (PC) producers cut output following heavy losses caused by poor end-demand and high feedstock prices.

Scheduled turnarounds at another major downstream – liquid epoxy resins (LER) – will also further weaken demand for BPA. The LER market, nonetheless, is relatively healthy on the back of government’s subsidy on its downstream wind power industry.

Petrochemical end-users in general are also hesitant to buy as new capacity coming on stream will boost domestic supply in the third quarter.