BEIJING: China’s economy is on track to meet its official growth target for 2017, the head of the state planning agency said on Saturday, despite a punishing war on pollution which is expected to slash industrial output over the winter months.
China has forced 28 cities in smog-prone northern regions to reduce emissions of airborne particles known as PM2.5 by at least 15 percent from October to March 2017, with some cities expected to cut steel production by as much as 50 percent.
But officials with the National Development and Reform Commission (NDRC) said the world’s second-largest economy will remain on track.
“We expect to achieve the full-year growth target of about 6.5 percent,” He Lifeng, chairman of the National Development and Reform Commission (NDRC), told a briefing on the sidelines of China’s Communist Party Congress.
Most economists believe China’s actual growth should easily beat the target. The economy grew 6.8 percent in the third quarter of the year, and 6.9 percent in the first half. Last year’s growth rate of 6.7 percent was a 26-year low.
China’s economy has surprised global markets and investors with robust growth so far this year, driven by a renaissance in its long-ailing “smokestack” industries such as steel and stronger demand from Europe and the United States.
But economists with Societe Generale said in a recent note that the winter output cuts could slash industrial production growth by 0.6-0.8 percentage points and GDP growth by 0.2-0.25 percentage points in the next six months.
Industrial growth slowed to 6.3 percent in the third quarter, from 6.6 percent in the previous period, data showed last week, with the services sector taking up much of the slack.
Prices of commodities like steel, copper and iron ore have turned wildly volatile in China and in global markets recent weeks on fears of possible winter shortages.
China’s steel output dropped 3.7 percent in September from a record high the previous month as mills reduced production in line with Beijing’s campaign, and analysts predict further declines as winter curbs set in.
However, Zhang Yong, vice-chairman of the NDRC, told reporters that the direct impact was likely to be limited.
“Measures to fight pollution don’t have a big impact on economic growth,” he said. “Measures to treat pollution have a positive impact on economic development in the long term.”
The government has been pushing a restructuring program designed to “upgrade” its heavy industrial economy, cut pollution and tackle profit-sapping capacity gluts in sectors like steel and coal.
China says it has cut annual crude steel capacity by as much as 110 million tons over the last five years, with coal capacity slashed by as much as 400 million tons, though some analysts say much of the outdated, inefficient plants are merely being replaced with leaner, cleaner ones.
Ning Jizhe, vice head of the NDRC and also head of China’s National Bureau of Statistics, said the country would continue to crack down on steel overcapacity, prevent obsolete plants from restarting and promote more mergers in the sector.
China still on track to hit growth target despite pollution war — state planner
China still on track to hit growth target despite pollution war — state planner
European gas prices soar almost 50% as Iran conflict halts Qatar LNG output
- Analysts warn prolonged disruption could push prices higher
- Some shipments of oil, LNG through Strait of Hormuz suspended
- Benchmark Asian LNG price up almost 39 percent
LONDON: Benchmark Dutch and British wholesale gas prices soared by almost 50 percent on Monday, after major liquefied natural gas exporter Qatar Energy said it had halted production due to attacks in the Middle East.
Qatar, soon to cement its role as the world’s second largest LNG exporter after the US, plays a major role in balancing both Asian and European markets’ demand of LNG.
Most tanker owners, oil majors and trading houses have suspended crude oil, fuel and liquefied natural gas shipments via the Strait of Hormuz, trade sources said, after Tehran warned ships against moving through the waterway.
Europe has increased imports of LNG over the past few years as it seeks to phase out Russian gas following Russia’s invasion of Ukraine.
Around 20 percent of the world’s LNG transits through the Strait of Hormuz and a prolonged suspension or full closure would increase global competition for other sources of the gas, driving up prices internationally.
“Disruptions to LNG flows would reignite competition between Asia and Europe for available cargoes,” said Massimo Di Odoardo, vice president, gas and LNG research at Wood Mackenzie.
The Dutch front-month contract at the TTF hub, seen as a benchmark price for Europe, was up €14.56 at €46.52 per megawatt hour, or around $15.92/mmBtu, by 12:55 p.m. GMT, ICE data showed.
Prices were already some 25 percent higher earlier in the day but extended gains after QatarEnergy’s production halt.
Benchmark Asian LNG prices jumped almost 39 percent on Monday morning with the S&P Global Energy Japan-Korea-Marker, widely used as an Asian LNG benchmark, at $15.068 per million British thermal units, Platts data showed.
“If LNG/gas markets start to price in an extended period of losses to Qatari LNG supply, TTF could potentially spike to 80-100 euros/MWh ($28-35/mmBtu),” Warren Patterson, head of commodities strategy at ING, said. The British April contract was up 40.83 pence at 119.40 pence per therm, ICE data showed.
Europe is also relying on LNG imports to help fill its gas storage sites which have been depleted over the winter and are currently around 30 percent full, the latest data from Gas Infrastructure Europe showed. In the European carbon market, the benchmark contract was down €1.10 at €69.17 a tonne
