China, Malaysia to push forward bilateral ties

Malaysian Prime Minister Mahathir Mohamad is seeking to renegotiate, and perhaps cancel, billions of dollars worth of Chinese-invested projects entangled in domestic graft probes. (Reuters)
Updated 20 August 2018
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China, Malaysia to push forward bilateral ties

  • Mahathir Mohamad is seeking to renegotiate, and perhaps cancel, billions of dollars worth of Chinese-invested projects entangled in domestic graft probes
  • Ties have been strained since a stunning election victory returned Mahathir to power in May
BEIJING: China’s Premier Li Keqiang said on Monday his government is willing to promote bilateral ties and economic cooperation with Malaysia as Malaysian Prime Minister Mahathir Mohamad visited China to discuss trade and investment.
The agreements reached on Mahathir’s trip showed the two countries would remain friendly in the long term, Li told a joint news conference at Beijing’s Great Hall of the People.
Mahathir is seeking to renegotiate, and perhaps cancel, billions of dollars worth of Chinese-invested projects entangled in domestic graft probes.
Ties have been strained since a stunning election victory returned Mahathir to power in May and he then suspended unpopular Chinese projects authorized by former premier Najib Razak.
Najib courted Chinese investment and was a cheerleader for President Xi Jinping’s signature Belt and Road Initiative in Southeast Asia during his decade-long rule.
However, Mahathir has vowed to discuss the “unfair” deals on his visit.
The Malaysian premier said his trip had been fruitful and that he believed China would look sympathetically toward the problems both sides have to resolve.
Addressing Mahathir directly, Li asked if he believed they had consensus on upholding free trade.
“I agree with you that free trade should be the way to go but of course free trade should also be fair trade,” Mahathir said.
“We should always remember that the level of development of countries are not all the same. We do not want a situation where there is a new version of colonialism happening because poor countries are unable to compete with rich countries,” he said.


Asia’s refining profits slump as Mideast exports surge

Updated 23 February 2019
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Asia’s refining profits slump as Mideast exports surge

  • Since 2006, the Asia-Pacific has been the world’s biggest oil-consuming region, led by industrial users South Korea and Japan along with rising powerhouses China and India
  • However, overbuilding of refineries and sluggish demand growth have caused a jump in fuel exports from these demand hubs

SINGAPORE: Asia’s biggest oil consumers are flooding the region with fuel as refining output is exceeding consumption amid a slowdown in demand growth, pressuring industry profits.
Since 2006, the Asia-Pacific has been the world’s biggest oil-consuming region, led by industrial users South Korea and Japan along with rising powerhouses China and India.
Yet overbuilding of refineries and sluggish demand growth have caused a jump in fuel exports from these demand hubs.
Compounding the supply overhang, fuel exports from the Middle East, which BP data shows added more than 1 million barrels per day (bpd) of refining capacity from 2013 to 2017, have doubled since 2014 to around 55 million tons, according to Refinitiv.
Car sales in China, the world’s second-biggest oil user, fell for the first time on record last year, and early 2019 sales also remain weak, suggesting a slowdown in gasoline demand.
For diesel, China National Petroleum Corp. in January said that it expected demand to fall by 1.1 percent in 2019. That would be China’s first annual demand decline for a major fuel since its industrial ascent started in 1990.
The surge in fuel exports combined with a 25 percent jump in crude oil prices so far this year has collapsed Singapore refinery margins, the Asian benchmark, from more than $11 per barrel in mid-2017 to just over $2.
Combine the slumping margins with labor costs and taxes and many Asian refineries now struggle to make money.
The squeezed margins have pummelled the stocks of most major Asian petroleum companies, such as Japan’s refiners JXTG Holdings Inc. or Idemitsu Kosan, South Korea’s top oil processor SK Innovation, Asia’s top oil refiner China Petroleum & Chemical Corp. and Indian Oil Corp., with some companies dropping by about 40 percent over the past year. Jeff Brown, president of energy consultancy FGE, said the surge in exports and resulting oversupply were a “big problem” for the industry.
“The pressure on refinery margins is a case of death by a thousand cuts ... Refinery upgrades throughout the region are bumping up against softening demand growth,” he said.
The profit slump follows a surge in fuel exports from China, India, Japan, South Korea and Taiwan. Refinitiv shipping data shows fuel exports from those countries have risen threefold since 2014, to a record of around 15 million tons in January.
The biggest jump in exports has come from China, where refiners are selling off record amounts of excess fuel into Asia.
“There is a risk for Asian market turmoil if (China’s fuel) export capacity remains at the current level or grows further,” said Noriaki Sakai, chief executive officer at Idemitsu Kosan during a news conference last week.
But Japanese and South Korean fuel exports have also risen as demand at home falls amid mature industry and a shrinking population. Japan’s 2019 oil demand will drop by 0.1 percent from 2018, while South Korea’s will remain flat, according to forecasts from Energy Aspects.
In Japan, oil imports have been falling steadily for years, yet its refiners produce more fuel than its industry can absorb. The situation is similar in South Korea, the world’s fifth-biggest refiner by capacity, according to data from BP.
Cho Sang-bum, an official at the Korea Petroleum Association, which represents South Korean refiners, said the surging exports had “triggered a gasoline glut.”
That glut caused negative gasoline margins in January.