China’s stealthy shake-up of rice market

China’s stealthy shake-up of rice market
Updated 02 November 2012

China’s stealthy shake-up of rice market

China’s stealthy shake-up of rice market

CHICAGO: China’s growing influence in the grain and oilseed market has been well covered in recent years, with the country’s increasing share of global corn, soybeans and
(recently) wheat trade exhaustively scrutinized by market trackers.
But less well publicized has been China’s emerging dominance in the rice market, brought about by soaring domestic prices which sparked a wave of import buying lately that has catapulted China from seventh to second in the world rice import rankings and altered the trade flow across Asia of one of the world’s most popular dietary staples.
A massive population and trade surplus has provided the Chinese government with both the motivation and the means to delve into the world’s raw material markets to secure an array of commodity supplies in recent years. Indeed, global commodity trade over the past five to 10 years has largely been defined by the giant tonnages of metals, energy products and crops that flow across the planet to China.
But while China’s presence as a top importer of items such as soybeans and iron ore have become an established ‘fact of life’ over the past decade, the country still has the tendency to disrupt other key markets from time to time whenever its own reserves of that particular commodity fall short of its continually expanding requirements.
The corn market has been subject to such disruption over the last two years as China made rare forays onto the import stage to supplement domestic supplies — even though it is the world’s second largest producer of that crop.
But a more significant disruption may be under way in rice, which is roughly half the size of the corn market and is traditionally a commodity where China is considered to be wholly self sufficient given it is the world’s top producer by a significant margin and reportedly holds more than 40 percent of the world’s reserves.
But it is clear from China’s domestic price trends and commodity import flows so far in 2012 that the country’s rice supplies may not be as abundant as it might like, as of all the grains the country imports the trend in rice purchases has displayed the most significant deviation from the trend seen over the past several years.
The first indication that China’s rice supply situation may not be quite as abundant as official inventory estimates may suggest was when domestic rice prices established and then built on a premium over the rice export prices from nearly all key rice supplier nations.
The price of medium-short milled rice in China has frequently traded above exporter values in recent years, but early-harvest large grain rice has only developed a premium
since 2011, indicating that cost-sensitive Chinese consumers are running out of affordable options when it comes to dietary staples.
But the more dramatic indication that something unusual was afoot in the Chinese rice arena was the country’s aggressive buying spree on the export market since the beginning of the year, and the fact that such buying marked a stark deviation from China’s normal rice import buying patterns seen over the preceding six years.
And China’s importing actions were not just unusual for China itself. The hefty tonnages involved (more than 1.8 million metric tons as of the end of September, and forecast to top 2 million by year-end) served to reshape the global import stage, catapulting China from seventh in world rice import rankings in the 2010/11 crop year to second by the end of 2011/12. The country is projected to solidify its place as the number two rice importer behind Nigeria this year.
The fact that the world’s top rice grower, consumer and inventory holder has now also become the second largest importer of that crop should start to send warning signals to other large rice importers, especially those with little to no production capabilities of their own.
Indeed, China’s aggression on the world crop import market in general should give other potential grain buyers cause for concern, especially in light of China’s already-dominant positions in the corn, wheat and soy markets in recent years.
Time and again Chinese traders have shown an oftentimes intimidating mix of market savvy and aggression designed to replenish domestic inventories of key commodity staples and ensure that the country has the ability to tap into additional supplies in due course should domestic production totals miss the mark.
With China now established as a top-level consumer, importer and/or stock holder of all of the world’s main edible staples, its traders will be perceived to have a competitive advantage on the world crop buying stage due to the sheer tonnages they look to acquire and the frequency with which they do it. At the very least, few other importing nations will relish having to compete with China to secure their own access to food and feed crops
given China’s experience and sophisticated commodity acquisition network.
But this wide reach across the entire grain and oilseed spectrum also provides Chinese grain suppliers with enviable flexibility during periods when the price of one particular crop outpaces others for any particular reason.
Having access to all the major grains allows for the potential ability to substitute — in ‘China-scale’ quantities — one grain staple for another, and could actually set the stage
for a retraction in China’s import purchases of certain crops over time as the country’s grain supply merchants seek to balance and distribute a blend of crop inventories appropriately across the country.
But for the time being China appears to be in a buying mood, and just added close to record-sized amounts of rice to its grocery list.
— Gavin Maguire is a Reuters market analyst. The views expressed are his own.


Dubai plastic waste-to-clothes startup looks to KSA

Dubai plastic waste-to-clothes startup looks to KSA
Updated 10 min 21 sec ago

Dubai plastic waste-to-clothes startup looks to KSA

Dubai plastic waste-to-clothes startup looks to KSA
  • The company converts plastic bottles — collected from schools, events and businesses across the city — into clothes
  • The UAE produces at least 10 million recyclable bottles per day

ABU DHABI: A Dubai company that makes clothing from plastic water bottles plans to expand in Saudi Arabia and Egypt after the pandemic forced a complete rethink of its business model.

DGrade was established by Kris Barber in 2010 to address the vast amount of plastic water bottles being produced in the UAE.

The company converts plastic bottles — collected from schools, events and businesses across the city — into clothes.

(DGrade website)

But when the pandemic closed schools across the country, DGrade was forced to rethink how it operates. It also provided the impetus for the company to consider moving into new regional markets.

The clothes-making process begins by putting the plastic through hot and cold washing until it turns into flakes.

“Once we have the flakes, they’re then put through an extrusion process and turned into a fiber,” Emma Barber, managing director of DGrade, told Arab News. Its plant takes about 150,000 bottles per hour and 75 million bottles per month, she added.

Dubai British School event. (Dgrade Website)

Before the pandemic, the team used to collect plastics from schools and events around Dubai, Barber said. But with the closure of schools and a ban on events, DGrade was faced with a potential halt in its raw material.

Despite the closures, it still managed to collect 1 million bottles in the 2019-2020 school year.

“A lot of children have been collecting plastics at home, bringing them to schools and dropping them off,” Barber said.

Simply Bottles Al Mamzar Clean-up, November 2018. (DGrade website)

“We’re planning to expand in Saudi Arabia because of the huge population and also the amount of plastic.”

She said Egypt is also attractive because of its huge population, plastic waste issues and an already well-established textiles sector.

DGrade also plans to import plastic from Gulf countries. It is coordinating with companies in Saudi Arabia, Kuwait and Qatar to bail plastic and bring it to the UAE, Barber added.

Simply Bottles Green Fair, ENOC head office. (DGrade website)

On financial support from the banks, she said: “We’ve been looking for some working capital in terms of bridging loans. It has been difficult because the banks are unable to give you that kind of money due to local legislation and restrictions.”

But she said DGrade will soon announce a second round of investment with a large European company that plans to take an equity share.

“Without the investment that we managed to obtain, it would’ve been almost impossible to fund what we’ve done so far on our own,” Barber added.

To expand the business further, she said it coordinated with some companies to place outdoor bins at private events, which are chargeable at 100 UAE dirhams ($27.23) per month, in order to collect as many bottles as possible.

“We’re talking to ministries, waste management companies and private sector organizations to see if we can place larger cages into residential and community areas so people can place plastic at their convenience,” she added.

Dubai Chamber Sustainability Network. (DGrade website)

Like many companies large and small, DGrade was forced to slash costs during the pandemic. It moved to a smaller office, reduced staff wages and made half of their team redundant, Barber said.

The UAE produces at least 10 million recyclable bottles per day and the output is 18 million kg per year of recycled flake, she added.

Multiple companies have switched back to bottled water and away from dispensers in order to keep their staff safe, she said.

DGrade targets uniform or work-wear companies across all sectors. It has developed 200 types of fabric, all from recycled polyester.

Expo 2020 Dubai T-shirts @Expo 2020 Winter Festival Sale, December 2019. (DGrade website)

“The traditional fashion industry is highly polluting and damaging to the environment,” said Barber. “Traditional fabrics, such as cotton, are highly water- and land-intensive. They also use pesticides and fertilizers.”

Every year, 100 billion garments are produced worldwide and 92 million tons become waste, according to a 2021 BBC Earth report.

DGrade’s aim is not to promote the use of plastic, but to ensure that when it is used it is being responsibly managed and recycled, Barber said.

“In 99 percent of cases, recyclable plastic is the greenest packaging option available. It’s far better for the environment to use plastic than glass, aluminum or paper,” she added.

DGrade’s process of converting plastic to clothes produces 55 percent fewer carbon emissions, and uses 20 percent less water (which it recycles and reuses) and 50 percent less energy, she said.


Qatar wealth fund says no investment in cryptocurrencies until they mature

Qatar wealth fund says no investment in cryptocurrencies until they mature
Updated 24 June 2021

Qatar wealth fund says no investment in cryptocurrencies until they mature

Qatar wealth fund says no investment in cryptocurrencies until they mature
  • Crypto currencies are currently too volatile, QIA CEO says
  • QIA seeks to boost investment in Asia and US

DOHA: Qatar’s wealth fund avoids investing in cryptocurrencies due to their extreme volatility, Bloomberg reported.

Cryptocurrencies “need a bit of maturity before we make our view about investing in that space,” QIA CEO Mansoor Bin Ebrahim Al-Mahmoud said at the Qatar Economic Forum.

Instead of crypto assets, the QIA will focus on continuing to boost investments in Asia and the US as it looks to balance out a concentration of European assets in its portfolio, Al-Mahmoud said.

The fund is also going to be investing more into warehouses in response to the impact of the coronavirus pandemic on retail and office real estate, he said.

Qatar Investment Authority (QIA) is one of the world’s largest sovereign wealth funds with assets estimated at over $360 billion, according to Global SWF.

Bitcoin has lost more than 50 percent from its mid-April high of almost $65,000. The coin started 2021 trading around $29,000 following a fourfold increase in 2020. It bounced back on Wednesday after earlier whipsawing investors with a dip below the $30,000 level.

This year the fund will also look to formalize the process of factoring in environment, sustainability and governance (ESG) considerations into its investment criteria, the Al-Mahmoud said.

“We have been investing in ESG initiatives and projects for quite some time, and this year it will be institutionalized,” he said. “We will embed ESG into our investment process,” he said.


IMF approves one year $5.2bn stand-by arrangement for Egypt

IMF approves one year $5.2bn stand-by arrangement for Egypt
Updated 24 June 2021

IMF approves one year $5.2bn stand-by arrangement for Egypt

IMF approves one year $5.2bn stand-by arrangement for Egypt
  • IMF authorizes Egypt to withdraw $1.7bn after reform program review

RIYADH: The International Monetary Fund (IMF) approved a 12-month stand-by arrangement for Egypt, with access equivalent to 3.76 billion Special Drawing Rights (SDR) equivalent to about $5.2 billion.

After a strong track record of successfully completing a home-grown economic reform program supported by the IMF’s Extended Fund Facility in 2016-2019, Egypt was one of the fastest growing emerging markets prior to the COVID-19 outbreak, the IMF said in a statement on Wednesday.

The new arrangement aims to help Egypt cope with challenges posed by the COVID-19 pandemic by providing IMF resources to meet Egypt’s balance of payments needs and to finance the budget deficit. It will be allowed to withdraw $1.7bn after its reform program has been reviewed.

“Over the past few years, Egypt saw strong growth, falling unemployment, moderate inflation, buildup of strong reserve buffers, and significant reduction in public debt,” said Deputy Managing Director and Acting Chair Antoinette Sayeh.

Sayeh emphasized Egypt’s commitment to broaden and deepen structural reforms, and refocus to address the economic health crisis during the pandemic.


Egyptian president approves July pension and wage increases

Egyptian president approves July pension and wage increases
Updated 24 June 2021

Egyptian president approves July pension and wage increases

Egyptian president approves July pension and wage increases
  • Pensions to be raised 13 percent at cost of 31 billion Egyptian pounds
  • Minimum wage to rise from 2,400 Egyptian pounds from 2,000

RIYADH: Egypt’s official gazette published President Abdel Fattah El-Sisi’s decision to increase pensions as of the beginning of July, Al Arabiya reported.

Pensions will be raised 13 percent at a cost of 31 billion Egyptian pounds ($1.9 billion) and minimum monthly wages will be increased from 2,000 Egyptian pounds to 2,400 Egyptian pounds at a cost of 37 billion Egyptian pounds.

This decision will complete the total of the pension, subsidies and increases to minimum wages, local papers reported.

Egyptians’ salaries have jumped more than 240 times in about 41 years, according to data compiled by Al Arabiya.

Egypt’s budget, to be implemented in early July, also includes two bonuses at a cost of about 7.5 billion Egyptian pounds, and an increase in stimulus at a total cost of about 17 billion Egyptian pounds.


Reliance expects Aramco deal to formalize this year amid $10bn energy push

Reliance expects Aramco deal to formalize this year amid $10bn energy push
Employees work at the Reliance Industries Petrol pump in Navi Mumbai. (AFP)
Updated 24 June 2021

Reliance expects Aramco deal to formalize this year amid $10bn energy push

Reliance expects Aramco deal to formalize this year amid $10bn energy push
  • Plan to invest $10bn in a new energy business over three years
  • Reliance had announced a sale of a 20 percent stake in its oil-to-chemicals business for $15 billion in 2019 to Aramco

BENGALURU: Reliance Industries said on Thursday it hopes to formalize its partnership with Saudi Aramco this year and its Chairman Yasir Al-Rumayyan will join the Indian conglomerate’s board as an independent director.
“Al-Rumayyan joining our board is also the beginning of internationalization of Reliance,” Chairman Mukesh Ambani told shareholders on Thursday.
Reliance had announced a sale of a 20 percent stake in its oil-to-chemicals business for $15 billion in 2019 to Aramco, the world’s top oil exporting firm.
However, the deal stalled after oil prices and demand crashed last year due to the pandemic.
Separately, Reliance Industries said it would invest 750 billion Indian rupees ($10.10 billion) in a new energy business over the next three years, Ambani said.
Reliance will build solar manufacturing units, a battery factory for energy storage, a fuel cell-making factory and an electrolyzer unit to produce green hydrogen as a part of the business, Ambani said.
As a part of the new business — called the Dhirubhai Ambani Green Energy Giga Complex — Reliance will also build solar capacities of at least 100 GW by 2030, Asia’s richest man told his shareholders at the meeting which was held virtually due to COVID-19.
That would account for over a fifth of India’s renewable energy target of installing 450 GW by 2030. India wants green energy sources to make up 40 percent of electricity generated by the end of this decade.