Chinese battery maker plans to build first factory in Europe

A man walks past a sign of SVOLT Energy Technology Co in Baoding, Hebei province, China July 9 2019. (Reuters)
Updated 09 July 2019

Chinese battery maker plans to build first factory in Europe

  • "The global plan is to reach a capacity of 100 GWh by 2025"

BAODING, BEIJING: A Chinese battery maker carved out of the country's biggest sport utility vehicle manufacturer, Great Wall Motor Co Ltd, on Tuesday said it is planning its first overseas manufacturing base in Europe.
SVOLT Energy Technology Co Ltd, which became independent in 2018, also said it is making "good progress" on developing a cobalt-free lithium-ion battery - a goal of battery producers aiming to eliminate the pricey and increasingly scarce mineral.
"We plan to have five production bases worldwide, including in the United States, but it will take time," said SVOLT general manager Yang Hongxin at an event in the Chinese city of Baoding. "The global plan is to reach a capacity of 100 GWh by 2025."
The move comes as Asian battery makers deepen cooperation with automakers in Europe, where limited means of making the cells that power electric vehicles has raised concern of over-reliance on Asian manufacturers.
Chinese battery maker Contemporary Amperex Technology Co Ltd (CATL) is building a 14 GWh production site in Germany and will supply batteries to local automaker BMW AG .
CATL was identified as a strategic partner by Volkswagen AG when the German automaker said it will buy 50 billion euros ($56.05 billion) worth of cells. Volkswagen also named South Korea's SK Innovation Co Ltd, LG Chem Ltd and Samsung SDI Co Ltd, as well as Sweden's Northvolt AB.
SVOLT plans to build a base in an as yet undecided European country, featuring a research centre and factories for battery materials, cells and modules with initial capacity of 20 GWh, its general manager, Yang told Reuters in an interview.
Investment will be around 2 billion euros ($2.24 billion), Yang said. As part of that, SVOLT aims to seek about 1 billion yuan ($145.34 million) in its next fundraising round this year. It will raise more funds to support construction which begins in the second half of next year, with production starting in 2022.
Production capacity will be around 24 GWh by 2025, senior SVOLT official Cao Fubiao said in the interview. The plant's first customer will likely be Great Wall Motor, and SVOLT is in talks to supply "German and French car manufacturers," Cao said, declining to identify the automakers.
Great Wall has previously said it would form a new-energy vehicle joint venture with BMW.
The European plant would add to SVOLT's first factory under construction in Changzhou, Jiangsu province. The Chinese plant will have initial capacity of 12 GWh, and will eventually exceed 70 GWh. ($1 = 0.8921 euros) ($1 = 6.8803 Chinese yuan renminbi)


Tankers defer retrofits to cash in on freight rates

Updated 19 October 2019

Tankers defer retrofits to cash in on freight rates

  • The rates for chartering a supertanker from the US Gulf Coast to Singapore hit record highs of more than $17 million and a record $22 million to China earlier this week

SINGAPORE: Tankers that had been scheduled to install emissions-cutting equipment ahead of stricter pollution standards starting in 2020 have deferred their visits to the dry docks to capitalize on an unexpected surge in freight rates, three trade sources said.

US sanctions on subsidiaries of vast Chinese shipping fleet Cosco in September sparked a surge in global oil shipping rates as traders scrambled to find non-blacklisted vessels to get their oil to market.

The rates for chartering a supertanker from the US Gulf Coast to Singapore hit record highs of more than $17 million and a record $22 million to China earlier this week.

By comparison, prior to the sanctions, shipping crude from the US Gulf to China cost around $6 million-$8 million.

The extraordinary spike in freight rates proved too good to miss for some shipowners who were due to send vessels to the dry docks for lengthy retrofitting and maintenance work.

“We can confirm several owners have postponed dry docking earlier scheduled for the months of October and November to take advantage of the skyrocketing freight rates,” said Rahul Kapoor, head of maritime and trade research at IHS Markit in Singapore.

The shortage of ships to move crude oil was so acute that some shipowners also switched from carrying so-called “clean” or refined fuels like gasoline to “dirty” cargoes that include crude oil, despite the costs of having to clean them later.

“Current rate levels are a no-brainer for pushing back scrubber retrofitting,” said Kapoor.

Starting Jan. 1, 2020, the International Maritime Organization (IMO) requires the use of marine fuel with a sulfur limit of 0.5 percent, down from 3.5 percent currently, significantly inflating shippers’ fuel bills.

Only ships fitted with expensive exhaust cleaning systems, known as scrubbers, which can remove sulfur from emissions, will be allowed to continue burning cheaper high-sulfur fuels.

Ships must be sidelined for up to 60 days for fitting these, according to IHS Markit and DNV GL.

While freight rates have abruptly come off their recent highs, shipowners can still profit from the higher charges.

“One cargo loading at current elevated rate levels can not only finance the scrubber capex, but also account for extra costs incurred to install the scrubber at a later date,” said Kapoor, referring to the capital expenditure of fitting the scrubber.

Freight rates are expected to hold firm for the rest of the year.

“With seasonal demand support and tanker supply deficit still pronounced, we expect (fourth-quarter) tanker freight rates to stay elevated and end the year on a high note,” Kapoor said.