Elaine Kurtenbach at the Associated Press reports that foreign direct investment into China was down 22.5% in April from a year previous to $5.89 billion, according to data released today by the Commerce Ministry. There was a 9.5% annual rate of decline in FDI in March.
"Actual direct foreign investment in January-April fell 21% to $27.7 billion, as companies canceled or postponed spending on factories and other assets due to weakening trade and financial conditions.The sharpest declines in investments came from South Korea, the United States and Hong Kong. (Hong Kong remains the largest source of funds, accounting for 45% of all FDI into China in April.)
April's figure was distorted somewhat by the high level of investment in April 2008, when such commitments jumped nearly 53% from a year earlier."
In the meantime, John Liu at Bloomberg reports that the China Securities Journal today reported that Chinese electricity generation was down 3.9% in early May from a year earlier. The Journal--state-owned media--cited an anonymous official at the China State Grid Corp.
2. EUROZONE GDP CONTRACTS 2.5% IN Q1
Matthew Satlmarsh at the New York Times reports that the economy of the euro-zone, or the 16 nations that comprise the monetary union within the EU, contracted by 2.5% in the first quarter from the fourth.
3. GERMAN GDP SHRINKS 3.8% IN Q1 FROM Q4
Edward Hugh at Fistful of Euros reports that the German Federal Statistics Office this morning released data showing the economy shrank by 3.8% in the first quarter from the fourth, "equivalent to a 15.2% contraction at an annualized rate." This marks the fourth consecutive quarter of contraction for Germany, and a contraction of 6.7% from the first quarter of 2008. Hugh notes that there are many signs that the rate at which the German economy is shrinking has slowed, but it is bottoming out at fairly low levels. Industrial output is at levels last seen in 1999/2000--
"Perhaps the worst casualty of all this will be German public finances. German tax revenue for 2009 is now projected to decline by more than an additional €300 billion as compared with previous estimates."Long, but very detailed with a wealth of data--worth a look.
4. FRENCH GDP CONTRACTS 1.5% IN Q1 FROM Q4
Eurointelligence reports that the French statistical office's latest estimate released today shows GDP declining by 1.5% in the first quarter from the fourth, the worst rate of decline on record since 1974. "[T]he contraction of capital stocks [is especially notable] with -0.6%, much higher than in any other euro zone country or the US or Japan."
5. ITALIAN GDP CONTRACTS 2.4% IN Q1 FROM Q4
Edward Hugh at Fistful of Euros reports that preliminary data from the Italian national statistics office [Istat] released today show that Italian GDP fell by 2.4% in the first quarter from the fourth. Annualized, the quarter-on-quarter contraction would translate to a 9.6% rate of decline. From the first quarter in 2008, 2009 first quarter GDP fell by 5.9%, "the sharpest drop since Istat’s most recent data series start in 1980." Industrial production fell by 23.8% in March from a year previous. Hugh's graph:
"Italy effectively entered recession in third quarter of 2008, and the economy now looks bound to shrink the most in more than half a century this year. The International Monetary Fund forecast on April 22 that the jobless rate will reach 8.9% this year and 10.5% in 2010. At the same time, Italian inflation has been slowing and hit a record low of 1.1 % in March, so if the contraction continues the deflation threat is real and present."Gross government debt is expected to climb to 113% in 2009 and 116.1% in 2010 from 105.8% in 2008. Again, long but detailed and with a wealth of data--well worth a look.
6. RUSSIAN GDP CONTRACTS 23% IN Q1 FROM Q4
Alex Nicholson at Bloomberg reports that the Russian Federal Statistics Service announced on its website today that first quarter GDP shrank by 23% from the fourth. The contraction is the worst seen in 15 years--an annual rate of decline of 9.5%.
"'The big dip in industrial production jumps in your face,' said Tatiana Orlova, a Moscow-based economist with ING Groep NV, who plans to lower her forecast for a 2.7% contraction this year. 'The government should be worried. It’s very easy to come up with headlines announcing bailout measures, but the situation shows that you have to adjust them. It’s hard to do these things fast.'"7. PUTIN MEETING WITH BERLUSCONI IN SOCHI REGARDING SOUTH STREAM, GAZPROM OFFERS TO PURCHASE ALL AZERI FEEDSTOCK FOR NABUCCO, TURKISH PM TO ARRIVE IN SOCHI TOMORROW
BBC News' Steven Eke reports that Russian Prime Minister Vladimir Putin is meeting in Sochi with Italian PM Silvio Berlusconi and top energy officials from Greece, Bulgaria and Serbia, to discuss joint ventures for the construction of the South Stream pipeline.
Meanwhile, Torrey Clark and Stephen Bierman at Bloomberg report that Gazprom Deputy Chief Executive Officer Alexander Medvedev said in a Moscow interview with Bloomberg TV that "[Gazprom is] ready to buy the whole volume of Shah Deniz II."
"The second phase of Shah Deniz could add 12 billion to 14 billion cubic meters of annual gas output in three to five years once a market is found and transit for the fuel ensured, Azeri President Ilham Aliyev said on April 18."Shah Deniz II is a critical possible source of natural gas for the proposed Nabucco pipeline. Last week the EU signed an energy cooperation deal with Azerbaijan regarding a southern transit corridor--but failed to get Turkmenistan or Kazakhstan to join in, other key sources of supply in the potential pipeline, that is, outside of Iran. Indeed, Kazakhstan inked a law on Wednesday committing more volumes through the Russian Central Asia-Center pipeline system. Last week the Obama Administration envoy for energy, Richard Morningstar, was rumored to have backed off from support for Nabucco, suggesting that South Stream would work just as well--see Daily Sources 5/13 #5. In his remarks on the 8th in Prague published today by the State Department, Morningstar says:
"The United States shares the view expressed in the Joint Declaration that interconnections are a "basic prerequisite" for developing the Southern Corridor. Interconnectivity maximizes the potential of Southern Corridor projects, such as Nabucco and ITGI; likewise, when these projects add diverse sources and routes to an interconnected market, they act as protection against supply disruptions. Nabucco opens up many possibilities for enhancing European energy security, though it is not a cure-all. Nabucco, of course, will also contribute to the development of countries in the region.
Azerbaijani gas is the only realistically available gas in the short term, but accessing it requires agreement with Turkey on transit terms. We must also concentrate on other sources, such as Turkmenistan, Iraq, Kazakhstan, Uzbekistan, Egypt, and other related countries."
On the other hand, Robert M. Cutler in the Asia Times reports that two key problems were solved last week in Prague regarding Turkey's participation in Nabucco:
"The two problems that were solved in Prague last week involved pricing and the legal regime for Turkish consumption of gas flowing through the pipeline. The EU had insisted that Turkey pay the equivalent of European prices; Turkey had proposed a figure 15% less than that. The common-sense resolution that was adopted provides for Turkey's price to be based on the cost of transportation: the gas consumed in Turkey will hardly go all the way to Baumgarten, so it will cost less. As for the legal regime, the EU has abandoned its insistence that the norms of its acquis communautaire apply in Turkey, a non-member of the European body, and a middle ground within Turkish law has been found."Turkish Prime Minister Recep Tayyip Erdogan will be in Sochi to join the discussions with Putin tomorrow.
8. IOC SECURES RUPEE DENOMINATED LOAN TO BUILD 300 KB/D REFINERY IN FACE OF WALL OF NEW REFINING CAPACITY IN THE REGION
Vandana Hari at Platts reports that Indian Oil Corporation--state-owned--has secured a rupees 149 billion ($2.97 billion) loan from a consortium of 21 domestic banks to build a grassroots refinery project at Paradip with nameplate capacity of 15 million
mt/year (or 300 kb/d). The loan is denominated in rupees, which is about the only thing that makes any sense about the decision, given an avalanche of new refining capacity in the region. Meanwhile, Eric Watkins at the Oil & Gas Journal report that Kuwait and Sinopec have finalized the terms for a 300 kb/d new refinery at Zhanjiang in Guangdong province, with Sinopec taking a 50% share, Kuwait Petroleum International 30%, 10% for Dow Chemical Co, and 10% for Shell. And, Osamu Tsukimori at Reuters reports that TonenGeneral Sekiyu, Exxon Mobil's Japan group refiner, announced today that its oil product exports in the first quarter rose 5% from a year earlier, led by a 22% gain in middle distillate exports. Oil demand has been steadily declining in Japan on an aging and shrinking population. The recent restart of nuclear power plants shuttered by earthquakes should put a further dent in oil and gas demand in the island nation as its industrial production tanks.
"Japan's oil product exports last year increased 123% last year to 34 million kilolitres (584,000 barrels per day), equal to about 12% of the nation's refining capacity."
9. CUBA TO TAKE MORE ACTIVE ROLE IN PETROCARIBE, CHÁVEZ AND KIRCHNER TO SIGN AGREEMENT ON GASIFICATION PLANT IN ARGENTINA TODAY, CHÁVEZ TO SHUT DOWN OPPOSITION TV STATION
Eric Watkins at the Oil & Gas Journal report that the Cuban-Venezuela joint oil shipping line--Transportes del Alba (TransAlba)--has received its second vessel, the 490,000 barrel capacity tanker, Sandino.
"The tanker, built in China by New Times Shipbuilding Co., is the second of two 72,700-dwt ships funded under a 15-year, $122 million credit extended by Venezuela's state-run national economic and social development bank Bandes.The joint venture is considering the purchase of a third, smaller, tanker which would be able to unload at smaller Caribbean and Central American ports as it looks like Havana will take a more active role in Chávez's PetroCaribe initiative. Meanwhile, Charles Newbery at Platts reports that Chávez indicated that he was set to sign an agreement with his Argentine counterpart, Cristina Fernandez de Kirchner, agreeing on the location and start date for construction of an LNG regasification terminal in Argentina. A natural gas liquefaction plant in Venezuela is scheduled to begin operations in two years.
In February, TransAlba acquired its first tanker, the 72,700-dwt Petion, which will transport crude from Venezuela's Puerto La Cruz refinery to Cuba's Camilo Cienfuegos refinery."
"Enarsa and PDVSA, the state energy companies of Argentina and Venezuela, respectively, have created a joint venture for building the LNG import terminal, which would have the capacity to deliver between 10 million cu m/d and 20 million cu m/d (353,000 Mcf/d to 706,000 Mcf/d) to the Argentine market. A likely location for the terminal is Bahia Blanca, where US-based Excelerate Energy is unloading LNG cargoes from Trinidad and Tobago at a floating regasification terminal."And Juan Forero at the Washington Post reports that the Chávez Administration has taken steps to close Globovisión, an anti-government cable station. The government has accused the station of inciting panic in its coverage of the May 4 earthquake that hit the country.
"Venezuela has not closed any media outlets during Chávez's decade in power. But in May 2007, Chávez refused to renew the broadcast license of a stridently anti-government station, RCTV, accusing it of plotting against him. Harangues and threats against journalists are common, press-freedom groups say, and the state has made the creation of a parallel, pro-government media apparatus a priority."Last Sunday, Chávez also reportedly publicly declared that "no land is private."
10. PYONGYANG TO PUT US JOURNALISTS ON TRIAL FOR SPYING IN JUNE
Blaine Harden at the Washington Post reports that Pyongyang will put two US reporters on trial for spying in June.
"The announcement, coming in the same week as Iran's release of a US reporter who had been convicted of spying, led to speculation that television reporters Laura Ling and Euna Lee might also be set free after trial as part of North Korea's diplomatic gamesmanship with the United States.11. BP AND STATOILHYDRO TAKE MORE SUPERTANKERS FOR CRUDE STORAGE; BIODIESEL SALES AT ZERO IN GERMANY
Ling and Lee, who work for former vice president Al Gore's San Francisco-based Current TV, were arrested March 17 along North Korea's border with China. They have been accused of illegal entry and 'hostile acts,' which in North Korea are punishable by five to 10 years in a labor camp.
In one sentence on its state news service, North Korea said its central court has 'decided to try the American journalists on June 4 according to the indictment of the competent organ.'"
On news that entities with crude in storage were likely to start unloading their cargo--see Daily Sources 5/14 #9--Pradeep Rajan at Platts reports that StatOilHydro and BP have both secured a VLCC--or supertanker capable of carrying two million barrels of crude--for possible crude storage.
"Some of the players storing crude on sea include Shell with around 17 vessels, Vitol with 14, Koch at seven, Total with six, ConocoPhillips at four and BP and StatoilHydro with one vessel each. NITC, Clearlake, ST Shipping, Repsol and Valero are also reported to have vessels on storage."In a related story, after Europe raised duties on US biodiesel imports effectively shutting off 85% of the US biodiesel market--see Daily Sources 5/5 #5 and Daily Sources 3/12 #10--Michael Hogan at Reuters reports that German bioenergy company Verbio announced yesterday that biodiesel sales have come to a halt in that country.
"Biodiesel is currently more expensive than fossil diesel in Germany following a further tax rise on green fuels this year and a fall in crude oil prices.12. MEXICAN EMIGRATION DOWN BY 25%, ANECDOTAL REPORTS THAT MANY IMMIGRANTS RETURNING TO MEXICO, EFFECTS ASIAN AND HISPANIC GROWTH IN THE US
'Tax increases in combination with the falling prices for fossil diesel have brought the B-100 (petrol station) market to a virtual standstill,' Verbio said.
Verbio said its biodiesel production in the first quarter of 2009 fell to 78,866 tonnes from 93,907 tonnes a year earlier. It has capacity to produce about 450,000 tonnes annually."
Julia Preston at the New York Times reports that Mexican census data suggests that emigration has fallen by 25% in the year ended August 2008 from the year prior. All told, about 226,000 less people emigrated from Mexico during that time than the year previous. The vast majority of Mexican immigrants emigrate to the US.
"The trend emerged clearly with the onset of the recession and, demographers say, provides new evidence that illegal immigrants from Mexico, by far the biggest source of unauthorized migration to the United States, are drawn by jobs and respond to a sinking labor market by staying away."This comes on top of reports seen in California in March that many Mexican immigrants in the US are choosing to return to Mexico in the midst of the crisis.
For example, on March 6, Cindy Carcamo at the Orange County Register reported that "anecdotal evidence and informal surveys" suggest that both "legal and illegal immigrants" are returning to their relatives in Mexico.
"In the Mexican heartland of Cerrito de Agua Caliente, where many have traditionally migrated to Orange County, about a third of those who visited their families during the holidays decided to stay put, said Cuerámaro City Clerk Cesar Torres.Ms. Carcamo also reports that bus drivers and ticket clerks have seen a surge in one-way tickets to Mexico. Her story is well worth reading in full for a variety of details. Both stories are on top of the story yesterday by Sam Roberts in the New York Times that Asian and Hispanic minorities in the US are still growing, but at a substantially reduced rate.
Hundreds of miles north, at the central bus station in Tijuana, more than half of the passengers arriving on a Crucero bus line from the US during a two-week period earlier this year were in the process of returning home for good, according to a passenger survey.
And, at a rental property office in Anaheim, a manager says her vacancies have spiked partly because of immigrants returning to Mexico.
'There is no work,' says Baltazar Saldaña, shaking his head. 'That's the problem.'"
"The latest census estimates found that the minority population--other than non-Hispanic whites--grew by 2.3% from July 1, 2007, to July 1, 2008, compared with 2.4% the year before.With the pace of immigration slowing down, a larger portion of that increase comes from regular population growth. (I imagine that it is likely that a similar process is happening in demographic trends in Europe, where job prospects are similarly becoming more scarce.)
Ethnic and racial minorities (mostly blacks, Hispanic and Asian people) now account for 34% of the nation’s population.
The Hispanic population grew by 3.2% and Asians by 2.7%, a slight decrease from the year before. But those figures were down sharply from the beginning of the decade, when the Hispanic population grew by 4% and Asians by 3.7%, according to an analysis by the Population Reference Bureau, a private research group."
13. RAILWAY DATA SHOWING DEEP DECLINES IN FREIGHT TRAFFIC
The weekly Railfax Report from Atlantic Systems Inc. for the week ended May 9 which plots total freight traffic via rail in the US shows an 18.1% year over year decline:
The breakdown of major commodities groups is especially interesting, note the nearly 50% decline in metal conveyance year over year.
Also the relatively small reduction in coal freight is interesting--the drop in industrial production should be having a large effect on coal just as it has on natural gas. (h/t CP at Credit Bubble Stocks via Yves Smith at naked capitalism.)
14. APRIL CONSUMER PRICES DOWN 0.7% ON YEAR, FLAT ON MONTH, APRIL INDUSTRIAL PRODUCTION DOWN 0.5% ON MONTH, 12.5% ON YEAR, MANUFACTURING CAPACITY RUNNING AT 65.7%
Jack Healy at the New York Times reports that the Labor Department announced today that the consumer price index was flat in April from March and down 0.7% on the year.
"The so-called core rate of inflation, which excludes volatile food and energy prices, rose a seasonally adjusted 0.3%, slightly more than its increases of 0.2% for each of the first three months of the year."Much of that increase is apparently due to an increase in the cost of tobacco. Healy also reports that the Fed announced today that industrial production was down 0.5% in April from March, after having declined (a revised downward an additional 0.2%) 1.7% in March from February. The Fed's industrial production index showed a 12.5% decline in April from the year previous. Manufacturing capacity was running at 65.7% in April, down 0.1% from March. The manufacturing sector of the production index in April was down 0.3% from March and down 14.5% from the year previous. The Federal Reserve's statistical release on industrial production and capacity utilization can be found here. Rebecca Wilder's summary of global economic data for the week shows that the fall in industrial production mirrors what is happening generally all over the globe:
Ms. Wilder notes that inflation is volatile on food and energy costs, but suggests that it will continue to fall globally as well. The post is worth a look.
15. CALIFORNIA TO SELL $6 BILLION IN BONDS TO COVER BUDGET SHORTFALL, FIRE 5,000 EMPLOYEES
On the analysis yesterday--see Daily Sources 5/14 #13--that the government is the only organization hiring, but that state budgets are in crisis all over the country, Michael B. Marois and William Selway at Bloomberg report that California Governor Arnold Schwarzenegger has proposed selling $6 billion in bonds.
"Schwarzenegger’s proposal includes plans to fire 5,000 state employees, mostly prison workers and personnel from health and services agencies. The state employs about 200,000 people."