Aurelia Butler

The plant will be constructed in two phases and Xiaomi will also built its auto unit’s headquarters, sales and research offices in the Beijing Economic and Technological Development Zone, the government-backed economic development agency Beijing E-Town said on its official WeChat account. Beijing E-Town said it anticipated the plant reaching mass production in 2024, a goal announced by Xiaomi’s Chief Executive Lei Jun in October.In March, Xiaomi said it would commit to investing $10 billion in a new electric car division over 10 years. The company completed the business registration of its EV unit in late August.The company has been opening thousands of stores to spur domestic sales growth for its smartphone business but eventually intends to use these shops as a channel for its plans to sell electric vehicles. More

Europe’s natural gas shortage is nearly certain to have more serious social and political impacts than the gasoline price increases that are proving uncomfortable for the Biden Administration. The problem is one that goes beyond an immediate threat of energy poverty, or even the possibility of rolling blackouts in the event of prolonged cold spells.Natural gas accounts for about 80 per cent of the variable costs of essential nitrogen fertiliser components such as ammonia. The ammonia price in Europe roughly tripled between January and March. Expensive fertiliser pressures food supplies.Freezing in the dark while hungry does not make happy voters. At best, over the next year or two European farmers will have to absorb large increases in the price of fertiliser, perhaps skimping on applications of it. That leads to lower crop yields and so higher food prices.If the prices for Europe’s natural gas imports remain high, part of its domestic fertiliser manufacturing industry could shut down for prolonged periods, or even close permanently. Already, in October, the choking gas market led to substantial temporary curtailments in European fertiliser production by companies including Yara, BASF, CF Industries and Fertiberia.And no, that capacity could not simply be replaced by more intensive recycling of food waste, sewage, or raw manure. European recycling is already quite efficient.It gets worse. The natural gas price increases and shortages affect the nitrogen-based components of farmer’s fertilisers. But there are now also significant price increases in other principal mineral fertilisers such as phosphate and potash, along with sulphur.Europe imports most of those raw materials, along with an increasing proportion of its natural gas. Foreign producers, though, have been limiting exports this year to support their domestic agriculture. China, which is the world’s largest phosphate producer, suspended or severely limited exports of phosphate-rich fertilisers starting in late July. The cuts are expected to last until June of next year.Russia has announced restrictions on nitrogen and phosphate fertiliser exports for six months effective from December 1. This in effect subsidises domestic farms, which both reduces the domestic prices of food and supports Russia’s grain exports.Some of the Russian and Chinese phosphate exports will be filled by OCP, the Moroccan phosphate monopoly. Even before that added demand, OCP’s earnings before interest, tax, depreciation and amortisation surged by 48 per cent in the first half.This is not the end of fertiliser trade restrictions that will affect Europe. Up to now, EU trade sanctions on the Lukashenko regime in Belarus have not included the higher grades of potash from the mines owned by Belaruskali, the state monopoly. On December 8, though, delayed US sanctions on Belarus kick in, which are intended to cut off nearly all its potash exports — about a fifth of the world supply.Much Belarusian potash is exported through highly visible dedicated port facilities in Lithuania. This makes it hard for Belarus to avoid sanctions through this outlet. Belarus could export through rail links in Russia, but the country has its own significant potash producer, Uralkali.One would guess that Uralkali and its friends will take care of their own interests first, which probably include avoiding the US sanctions regime. Along with any possible increase in Uralkali’s exports, some of the drop in Belaruskali’s market share could be made up by increased potash shipments from Nutrien, the Canadian fertiliser group which has huge potash resources in Saskatchewan.Nutrien’s third-quarter report, issued in October, disclosed that its ebitda from potash sales was already up 131 per cent this year. Anticipating the sanctions on Belarus, Nutrien said it would “surge production to an annualised run-rate of 17m tonnes during the fourth quarter”. Not for free, of course: Nutrien’s prices for potash products sold outside North America have risen 105 per cent this year.Of course fertiliser prices have surged in the past, only to decline again as producers increased capacity and farmers cut back on their fertiliser use. Spikes similar to what we are seeing now came in early 2008, peaking a few months before the global financial crisis.The difference this time, particularly in Europe, is that climate policy means there is no finance available for natural gas production expansion. Farmers can skimp on potash and phosphate applications for a season or two, but yields will decline quickly without nitrogen fertilisers.The conundrum of cutting carbon emissions while maintaining food production has not been solved. More

LONDON (Reuters) -Euro zone government bond yields dropped sharply across the board on Friday as investors reacted to a newly identified coronavirus variant spreading in South Africa by piling into safe haven assets.The variant was considered by scientists to be the most significant yet found, Britain said on Friday, adding that authorities needed to ascertain whether or not it rendered vaccines ineffective.”It’s a classical risk-off move into safe havens such as government bonds, with equities and other risky assets under pressure,” said Commerzbank (DE:CBKG) rates strategist Rainer Guntermann. “It is still early days, but going into year-end, investors may prefer to keep a bit more in safe havens and we also have to assess how it feeds into central bank risk assessments even if this variant turns out not to be of huge concern,” he said. “It’s a reminder that the pandemic could pop up again at virtually any time.” Safe havens, such as government bonds, the Japanese yen, the Swiss franc and gold were in demand, while Asian and European equity markets recorded losses. Germany’s 10-year government bond yield, the benchmark for the bloc, was down 9 bps at -0.33% at 1530 GMT. Other highly rated euro zone government bond yields were lower by around 8 bps. Italy’s 10-year government bond yield dipped below the 1% mark and was at 0.97%, down 9 bps on the day. U.S. Treasury yields slipped around 7-10 bps across the curve. Meanwhile, rate-hike expectations in the single currency bloc fell, with money-market investors pricing in a roughly 50% chance of a 10 basis point rate hike from the European Central Bank in December 2022, having fully priced in such a move earlier this week. ECB policymakers Ignazio Visco and Luis de Guindos said on Friday the euro zone economy was still rebounding but the pandemic was once again a source of worry.The central bank is still on course to end its Pandemic Emergency Purchase Programme in March, ECB vice-president de Guindos said.ECB President Christine Lagarde was quoted as saying to a German daily that the central bank expected inflation to fall from January. More

(Reuters) – Atlanta Federal Reserve President Raphael Bostic said on Friday he is hopeful that the momentum of the U.S. economy will carry it through the next wave of the coronavirus pandemic, and said he remains open to accelerating the pace of the central bank’s bond taper.Earlier on Friday, the World Health Organization said it was designating the new Omicron variant, first identified in South Africa, as being “of concern.”If the new Omicron coronavirus variant follows the pattern seen with previous variants, it should cause less of an economic slowdown than the Delta variant, Bostic said.”We have a lot of momentum in the economy right now,” Bostic said during an interview with Fox News, citing strong jobs growth. “And that momentum, I’m hopeful, will be able to carry us through this next wave, however it turns out.” Bostic reiterated that he is open to speeding up the pace at which the central bank slows down its asset purchases so officials can have greater flexibility to respond to surging inflation. It could be “reasonable,” Bostic said, for the Fed to potentially conclude its asset purchases by the end of the first quarter next year, or early in the second quarter, if the economy continues on the same trajectory. At the current pace, Fed officials would be done tapering purchases by the middle of next year. Policymakers will meet again on Dec. 14-15. The news of the Omicron variant spurred investors to lower their expectations on Friday for how quickly the Fed and other central banks may raise interest rates next year. According to CME’s FedWatch tool, money market traders were pricing in a 53.7% chance of at least one rate hike by the Federal Open Market Committee’s June meeting as of Friday afternoon, down from an 82.1% chance on Wednesday.Bostic said on Friday that he has not ruled out any possible actions and said it is “certainly possible” for the Fed to raise interest rates at least twice next year if inflation remains elevated. “We’re not going to let inflation get out of control,” Bostic said. More