Malaysia GDP Growth Weakest in a Year Amid Global Slowdown By Bloomberg



(Bloomberg) — Malaysia’s economic growth eased in the third quarter to its slowest pace in a year amid declining exports and weaker factory output.

Gross domestic product rose 4.4% in the three months through September from a year ago, according to figures from the central bank. That matched the median expectation in a Bloomberg survey of economists.

The slower third-quarter print comes after Malaysia’s economy bucked the regional trend in the previous three months by expanding 4.9% — its fastest pace in more than a year — even as its neighbors’ growth slowed. Analysts are calling for Malaysia’s central bank to begin easing borrowing costs next year after a surprise cut last week to banks’ reserve ratio requirement hinted at the need to bolster growth.

“The weak growth figure in every sector means BNM will need to cut rates to support growth,” said Trinh Nguyen, senior economist at Natixis Asia Ltd. in Hong Kong, predicting the benchmark rate will be 50 basis points lower by the end of 2020. Inflation “is low and growth is decelerating, so the hurdles to a rate cut are low.”

Economy ‘Resilient’

Signs of strain have begun to show in Malaysia’s economy as exports slid in September by the most since 2016 and industrial production growth eased in the three months through September. The global downturn has put pressure on Prime Minister Mahathir Mohamad’s government, which widened its 2020 budget deficit target to support growth, delaying its goal of fiscal consolidation.

In slides accompanying the data release, Bank Negara Malaysia said the economy will remain “resilient” this year and next and that monetary policy “remains accommodative and supportive of economic activity.” The central bank is maintaining its full-year forecast of 4.3%-4.8% GDP growth for 2019, governor Nor Shamsiah Mohd Yunus told reporters.

“We think the economy is likely to lose more steam in the quarters ahead,” Alex Holmes, an economist with Capital Economics, wrote in a research note. “Looser monetary policy is likely to be offset by headwinds from elsewhere. Tighter fiscal policy is a key headwind as the government aims to bring down the budget deficit.”

Khoon Goh, head of Asia research at Australia & New Zealand Banking Group Ltd. in Singapore, said Friday’s data was neutral for the ringgit. The currency held its gains after the release, up 0.2% to 4.1483 per dollar.

The reserve-ratio cut earlier this month, coupled with signs that activity may be starting to recover, “suggest that there is no urgency” for the central bank to cut its benchmark rate, he said.

Infrastructure Projects

Data on Friday showed annual growth in GDP components slowed almost across the board compared to the second quarter. Domestic demand and a resumption of big-ticket transport projects will help support the economy going forward, while risks include the trade war and commodity-price volatility, the central bank said.

Despite the overall decline in exports as global growth slows, U.S.-China trade tensions have allowed Malaysia to ship an additional $1.4 billion of goods to the world’s two largest economies from January through August, the central bank said.

Asked if the reserve-ratio cut was a prelude to further adjustments to the benchmark rate, Shamsiah said the central bank is “not on a preset” course and will monitor incoming data. The central bank has cut rates once this year by 25 basis points, less than the easing carried out by many of its Southeast Asian peers.

(Adds analyst comments in fourth, seventh and ninth paragraphs; ringgit level in eighth paragraph)

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Indonesia waiting on major global aviation regulators for return of 737 MAX: official


FILE PHOTO: An aerial photo shows Boeing 737 MAX aircraft at Boeing facilities at the Grant County International Airport in Moses Lake, Washington, September 16, 2019. REUTERS/Lindsey Wasson/File Photo

JAKARTA (Reuters) – Indonesia will not approve the return of the Boeing Co (BA.N) 737 MAX to its skies until after aviation regulators in the United States, Europe, Brazil, Canada and China do so, an official at Indonesia’s aviation regulator said.

A Lion Air 737 MAX crashed shortly after take-off from Jakarta last year, killing all 189 people on board, and the model was grounded globally following a second deadly crash in Ethiopia in March this year.

Indonesian investigators last month released a final report into the Lion Air crash that included recommendations to Boeing, the U.S. Federal Aviation Administration (FAA) and the airline on improving safety practices.

Boeing has been working to secure regulatory approval for proposed changes to an anti-stall system linked to both crashes before the model can resume flying.

“Indonesia is waiting for FAA and other big countries to recertify MAX,” Sokhib Al Rokhman, head of the airworthiness and aircraft subdirectorate at the Directorate General of Civil Aviation (DGCA) told reporters in Jakarta on Wednesday.

“We are also increasing our cooperation with ASEAN countries once FAA publishes the recertification,” he said, referring to the Association of Southeast Asian Nations.

Boeing on Monday said it expected U.S. regulators to approve the 737 MAX’s return to commercial service in the coming weeks but Europe’s aviation regulator has indicated it will take longer.

Indonesia’s decision on when to let 737 MAX jets fly in its airspace could have implications beyond local operators Lion Air and Garuda Indonesia (GIAA.JK).

Singapore Airlines Ltd (SIAL.SI) has said approvals by Indonesia and China might be needed before it returns regional arm Silkair’s six 737 MAX jets to service, based on the routes they fly.

Reporting by Jessica Damiana in Jakarta, writing by Jamie Freed; Editing by Himani Sarkar



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Global optimism, UK spending promises lift long gilt yields to three-month high By Reuters


© Reuters. Global optimism, UK spending promises lift long gilt yields to three-month high

By David Milliken

LONDON (Reuters) – British long-dated government bond yields rose to their highest in more than three months on Thursday as a global improvement in risk appetite and the prospect of big increases in public spending overshadowed a more dovish Bank of England.

Ten-year gilt yields () peaked at 0.814%, up around 9 basis points on the day and the highest since July 16, and 20- and 30-year yields gained a similar amount () ().

By contrast, two-year yields () barely budged — pinned down by an unexpected split vote at the Bank of England — and the two-year/10-year yield curve rose to its steepest since July 15 at 24 basis points.

The steepening yield curve reflected countervailing forces at play for different maturities of gilts.

Markets received a shock earlier in the day when two BoE policymakers unexpectedly voted to cut rates, and the majority said a rate cut could become necessary if Brexit uncertainty and a global slowdown did not ease.

One measure of interest rate expectations now prices in a two thirds chance of a quarter-point BoE rate cut by the end of next year, compared with just over half on Wednesday, pushing down on two-year and five-year gilt yields, which are already well below the BoE’s 0.75% Bank Rate.

But the broader tone in markets on Thursday was negative for fixed income assets, bolstered by increased optimism about a trade deal between the United States and China.

German 10-year Bunds , like their British counterparts, rose to their highest since mid-July.

And for longer-dated gilts, there was added upward pressure on yields from the second day of Britain’s election campaign, in which both the Conservative Party and the Labour opposition promised big increases in spending if they win the Dec. 12 vote.

The fiscal news was “arguably more significant” for gilts than the BoE decision, Capital Economics analyst Oliver Allan wrote in a note to clients.

Labour’s would-be finance minister, John McDonnell, promised an extra 150 billion pounds ($192 billion) of infrastructure spending during the next five years, on top of 250 billion pounds he has already promised for the coming decade.

McDonnell’s Conservative counterpart, Sajid Javid, said he would spend an extra 100 billion pounds.

Both plans would require a significant increase in gilt issuance over the medium term, and could push up inflation or BoE rates if the spending hits the economy at a time when it is close to full capacity.

However, Capital said it expected the increase in British yields to be limited as any significant rise would attract foreign investors at a time when yields on much euro zone debt are below zero.

“Although UK yields are low historically, they are not particularly low relative to those elsewhere in the developed world,” Allen said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Domestic focus a ‘better choice’ for many Chinese companies: Harvest Global CIO


HONG KONG (Reuters) – Focusing on domestic consumers would be a “better choice” for many Chinese companies, even if the shift is forced by trade tariffs and weak worldwide growth, said Thomas Kwan, chief investment officer at Harvest Global Investments.

Thomas Kwan, chief investment officer at Harvest Global Investments, speaks for the Reuters 2020 Investment Outlook Summit, in Hong Kong, China November 5, 2019. REUTERS/Alun John

The U.S.-China trade war morphed into a broader conflict over the summer as Washington blacklisted some of China’s top technology companies. While the two sides are closing in on an initial trade deal, there are still many issues to resolve.

Even without the impact of tariffs, demand for Chinese exports had already been slowing in line with global growth, but that need not be bad news for the country’s companies, Kwan said at the Reuters 2020 Investment Outlook Summit.

“It’s lucky that in China we have a large domestic market… Leveraging the domestic opportunities may be a better choice for many companies,” he said.

With urbanization still underway and income growth benign, Kwan said sectors from education to healthcare would continue to perform.

Kwan heads up investment strategy in the offshore unit of Harvest Fund Management, one of China’s earliest asset managers with close to a trillion renminbi ($142.95 billion) under management at the end of 2018, according to its website.

In Hong Kong, where Kwan is based and anti-government protests have been under way for five months, a calming of tensions would afford Chinese companies listed in the city .HSCE some room to rebound in the near term, he said.

GOING LOW

As concerns over a global recession dissipate, the U.S. Federal Reserve has signaled an end to interest rate cuts, with global government bond yields soaring as investors dump low-risk safe-haven assets.

Benchmark 10-year U.S. Treasuries US10YT=RR were yielding 1.82% on Tuesday after touching 1.43% in September. Chinese 10-year yields have climbed as much as 36 basis points since September from their lowest level since 2016.

But beyond a short-term bounce, factors such as lacklustre economic growth in developed markets and shrinking population growth will keep rates lower for longer, said Kwan.

“Even in China, we are actually expecting the population to start to decline in 10 years’ time… So it’s difficult to envision we’re actually at the end of falling bond yields,” he said.

“Over the next five years, we can easily see 10-year bond yields in China drop to the 2% to 3% range.”

The yield has by and large been in a 3-4% range over the last three years.

Editing by Kirsten Donovan



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Fed Cuts Rates by Quarter Point Amid Concerns About Global Economy, Trade By Investing.com


© Reuters.

Investing.com – The Federal Reserve cut interest rates by 25 basis points Wednesday, in what was a widely expected decision, amid persistent concerns over the sluggish pace of inflation and the slowdown in the global economy.

The Federal Open Market Committee cut its to a range of 1.5% to 1.75% from a previous range of 1.75% to 2.00%.

In the accompanying monetary policy statement, the Fed said economic activity had been rising at a “moderate” rate, though it pointed to “muted inflation pressures” as one the reasons for cutting rates.

The (PCE) index, the Fed’s preferred measure of inflation, has remained shy of the central bank’s 2% target.

The first reading of third-quarter U.S. GDP, released earlier Wednesday, showed that the pace of economic growth slowed in the third quarter from the second, as ongoing strength in the consumer was offset by a slowdown in business investment.

The Fed acknowledged the two opposing forces on economic growth, saying that “although household spending has been rising at a strong pace, business fixed investment and exports remain weak.”

It was the third rate cut in as many meetings, with the Fed sticking to its guidance that it would “act as appropriate” to keep economic growth alive.

But the Fed has been quick to rein in investor expectations that a prolonged period of easing may follow, characterizing the previous rate cuts – in July and September – as an insurance policy against downside risks to its outlook.

That has done little to appease its detractors, who believe the central bank should accelerate rate cuts, potentially into negative territory.

“The Fed doesn’t have a clue! We have unlimited potential, only held back by the Federal Reserve,” President Donald Trump wrote on Twitter Tuesday.

In the lead-up to the Fed meeting, Scotiabank Economics said that since the central bank’s last meeting in mid-September there’s “increased evidence of a synchronous deterioration in global growth prospects and continued uncertainty toward Brexit and trade policy developments with as yet nothing resolved.”

Looking ahead, the Fed continued to suggest that it would monitor incoming economic data to assess future monetary policy action.

Traders are expected to shift attention to Fed Chairman Jerome Powell’s at 2:30 PM ET (18:30 GMT) for more insight into the central bank’s thinking on monetary policy.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

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Bank of Canada Hold Rates, Shifts to More Negative Tone on Global Risks By Bloomberg



(Bloomberg) — The Bank of Canada forecast a weaker outlook for the domestic economy amid heightened global downside risks, potentially giving itself more leeway to lower borrowing costs.

In a decision Wednesday, policy makers kept their current 1.75% unchanged for an eighth straight meeting, calling the level “appropriate” even as they cut their growth forecasts for the next two years.

But there were changes to the statement compared with the one from September that suggest officials have become less confident in the face of a weakening global economy. These include removing explicit references to Canadian rates being stimulative and to the nation’s economy operating close to potential. Wednesday’s statement also referred to the recent gain in the country’s dollar.

The central bank “is mindful that the resilience of Canada’s economy will be increasingly tested as trade conflicts and uncertainty persist,” policy makers led by Governor Stephen Poloz said in the statement. “In considering the appropriate path for monetary policy, the Bank will be monitoring the extent to which the global slowdown spreads beyond manufacturing and investment.”

Neutral Stance

The statement and the fresh batch of more pessimistic growth forecasts will raise questions about the central bank’s commitment to a neutral stance on rates, particularly in the face of global easing in many other countries that has made the Bank of Canada an outlier. If the Federal Reserve lowers its interest rates later today, as expected, the Bank of Canada would have the highest policy rate in the industrialized world.

As recently as last month, Deputy Governor Larry Schembri used a speech to note the central bank’s confidence in Canada’s resiliency to negative global shocks.

Before the statement, investors were pricing in less than a 50% percent chance of a rate cut over the next 12 months. The Canadian dollar dropped on the statement, falling 0.4% to C$1.3137 per U.S. dollar at 10:05 a.m. in Toronto trading.

“Bank of Canada held its target overnight rate unchanged, as expected, but with a slightly more dovish tilt,” Brett House, deputy chief economist at Scotiabank, said by e-mail. “While not entirely setting up a cut at its next meeting, this leaves open the door a bit further for a December cut.”

The next rate decision is Dec. 4.

Trade Tensions

In contrast, the central bank on Wednesday highlighted the impact of trade conflicts and uncertainty on global growth which officials said is hurting business investment, exports and commodity prices, even with global monetary easing.

The bank lowered its growth forecast for Canada to 1.7% next year, from a July estimate of 1.9%, and 1.8% in 2021 from a previous projection of 2%. It also forecast an outright decline in exports and business investment in the second half of this year, when growth is expected to average a sluggish 1.3%.

As a result, the level of economic output will be “slightly lower” at the end of 2021 than predicted in July.

Officials also noted — in a rare reference to the Canadian dollar in a rate statement — that “despite” lower commodity prices, the currency hasn’t weakened against the U.S. dollar and is actually stronger against other currencies.

At the same time, the central bank is projecting inflation will remain at the 2% target over the projection horizon, in part because of a small downward revision to its estimates for potential growth and expectations the “modest” output gap — primarily in oil-producing regions — will narrow.

Global financial conditions meanwhile have eased, helping offset the impact of growing trade uncertainty, officials said.

More Bullish

The Bank of Canada was more bullish on consumption and housing — which is being fueled by a robust labor market — with forecasts little changed or even higher for those sectors in 2020 and 2021.

Another source of future growth could be additional stimulus from Prime Minister Justin Trudeau’s re-elected Liberal government, which has promised to implement new spending and tax cuts next year.

The Bank of Canada “will pay close attention to the sources of resilience in the Canadian economy — notably consumer spending and housing activity — as well as to fiscal policy developments,” policy makers said in the statement.

©2019 Bloomberg L.P.



DP World reports lower quarterly global cargo volumes, Dubai down again By Reuters


© Reuters. Sultan Ahmed bin Sulayem, Chairman and CEO of DP World, speaks during a Reuters interview in Kigali,

DUBAI (Reuters) – Port operator DP World (DI:) reported on Tuesday a third quarter decline in cargo handled across its global portfolio as volumes fell in Dubai for a sixth consecutive quarter.

The operator said it handled 18 million twenty foot equivalent unit (TEU) containers in its ports in the three months to Sept. 30, down 1.6% on the same period a year ago.

It said a global trade row created a challenging environment. The United States and China have been locked in a trade row that has cast a shadow over global economic prospects.

At its flagship Jebel Ali port in Dubai, the Middle East’s largest trans-shipment hub, and the smaller Mina Rashid port volumes fell 1% to 3.6 million TEUs.

DP World Chairman Sultan Ahmed bin Sulayem said volumes at Jebel Ali had been stabilizing, adding: “We remain focused on profitable origin and destination cargo.”

Tensions in the Middle East have escalated in the wake of attacks on oil facilities in Saudi Arabia and tankers in Gulf waters, a key shipping artery for the global oil trade.

Global volumes were flat in the first nine months of the year, while those handled at Jebel Ali were down 5.5%.

(Official correction to include Mina Rashid in disclosed Dubai volumes, replaces paragraphs 4,5,6)

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Euro Could Have Further to Climb as Global Threats Begin to Fade By Bloomberg


(Bloomberg) — The ’s rally may have further to run with the shared currency likely to find support from a range of factors after uncertainty over Brexit clears.

The common currency touched its strongest level in seven weeks on Thursday after the U.K. and the European Union reached a deal on Brexit. While British lawmakers could reject the pact on Saturday, the possibility of increased government spending in Europe and further U.S. interest-rate cuts may help keep wind in the euro’s sails.

It will also receive a boost if the European Central Bank looks away from monetary easing and steps up its demands for fiscal stimulus. In recent months, the steady stream of poor economic data out of the region has intensified speculation that the ECB will add to its bond-buying stimulus. Yet its latest wave of quantitative easing faces internal opposition. ECB President Mario Draghi may repeat his call for governments to increase their spending at his final meeting later this month.

This time round, the plea may not fall on deaf ears.

German politicians are coming around to the concept of abandoning the much-heralded “black zero” — the country’s long-held commitment to a balanced budget — in case a downturn requires a powerful response. Chancellor Angela Merkel’s government cut its 2020 growth forecast to 1% recently, down from an earlier 1.5%, while China’s economic growth has slowed to levels last seen in the early 1990s.

On top of this, Draghi’s promise of open-ended quantitative easing is also coming into question. The interest rate for overnight loans between European banks, known as Eonia, has actually risen as banks prepare for the start of ECB’s tiered deposit rate system, which is designed to mitigate the cost of lower rates.

Reuters reported last week that the ECB has one year of German debt to buy before reaching its limit, and that policy makers would prefer bending the capital key and buying fewer German bonds instead of changing the issuer limit, also supporting the euro.

Outside the shared currency’s area, add to the mix weak U.S. data, which may force the Federal Reserve to make further cuts, enough in itself to set the euro up for further gains. Production at U.S. factories fell in September by the most in five months, retail sales unexpectedly posted the first decline in seven months, and a gauge of inflation expectations from the New York Fed fell last month to the lowest level since 2013.

Certainly, the euro isn’t out of the woods yet. Dollar liquidity may tighten toward year-end and trade tensions between U.S. and the EU could flare up. As ECB Chief Economist Philip Lane noted, the convergence of inflation toward its aim has recently slowed and partly reversed.

But as sentiment gets increasingly bullish for the euro — options traders need to pay a premium to own upside exposure across tenors now — risks are brewing that technical resistance around $1.12 may not be able to absorb buying pressure for long.

  • NOTE: Vassilis Karamanis is an FX and rates strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice

What to Watch:

  • The U.K. Parliament votes Saturday on U.K. Prime Minister Boris Johnson’s Brexit deal as the Oct. 31 deadline looms
  • Switzerland holds parliamentary elections on Sunday, Canada goes to the polls on Monday
  • The ECB announces its monetary policy decision after the final meeting of President Mario Draghi’s term on Thursday, Oct. 24; Riksbank and Norges Bank meet the same day
  • Policy maker speeches coming up include BOE Governor Mark Carney, Chief Economist Andy Haldane and Dallas Fed President Robert Kaplan
  • Economic releases include U.S. PMIs and durable goods; see data calendar
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Plastic bottles vs. aluminum cans: who’ll win the global water fight?


LONDON (Reuters) – Global bottled water giants are ramping up trials of easily recyclable aluminum cans to replace plastic that pollutes the world’s seas. Sound like a slam-dunk for the environment? Not entirely.

FILE PHOTO: A plastic bottle drifts on the waves of the sea at a fishing port in Isumi, east of Tokyo, Japan November 21, 2018. REUTERS/Issei Kato/File Photo

Aluminum cans might indeed mean less ocean waste, but they come with their own eco-price: the production of each can pumps about twice as much carbon into the atmosphere as each plastic bottle.

French group Danone (DANO.PA) has become the latest company to make a move, telling Reuters it had started to replace some plastic bottles with aluminum cans for local water brands in Britain, Poland and Denmark.

The shift, previously unannounced, comes as multinational rivals like Coca-Cola Co (KO.N), PepsiCo (PEP.O) and Nestle (NESN.S) are also launching some canned versions of water brands.

The beverage industry has been scrambling to react to public anger over scenes of huge piles of plastic waste contaminating oceans, pledging to step up recycling efforts.

However it’s not black and white on the green front. By increasing recycling via cans, companies could fall back in efforts to reduce their carbon footprints, illustrating the tough juggling act they can face to keep environmentally conscious investors, campaigners and consumers on-side.

“That’s the dilemma you’re going to have to choose between,” said Ruben Griffioen, sustainability manager of packaging materials at Heineken, adding the company was trying to reduce both plastic waste and emissions.

Recycling plastic is more complex, leads to degradation and has lower reuse rates than aluminum – so the metal has been heralded as a greener alternative. Cans have on average 68% recycled content compared to just 3% for plastic in the United States, Environmental Protection Agency data shows.

New water brands are also making a splash.

“Mananalu will rid the world of plastic water containers and start a wave of change,” says the website of the new canned water launched by Hollywood actor Jason Momoa, of Aquaman fame. Another entrant, Liquid Death, meanwhile, hails its “eco-friendly cans” and uses the hashtag #DeathtoPlastic.

“The aluminum industry can play on the fact that its product is infinitely recyclable, and they’re right,” said Martin Barrow, director of footprinting at UK-based non-profit consultancy the Carbon Trust.

“But primary aluminum uses huge amounts of electricity and it’s also got some chemical releases of greenhouse gas emissions.”  

Comparing the carbon footprints of aluminum and plastics is a complex calculation because making the metal with hydro power instead of fossil fuels reduces emissions while using recycled aluminum slashes it even further.

But when all types of metal are averaged out, however, cans still account for about double the greenhouse gases of plastic bottles, Barrow said, citing figures for Europe.

At aluminum’s most polluting level, a 330 ml can is responsible for 1,300 grams of carbon dioxide emissions, according to the analysis compiled for Reuters, roughly equating to the emissions produced by driving a car 7 to 8 km.

A plastic bottle of the same size, made from the polyethylene terephthalate (PET) plastic typically used, accounts for up to 330 grams.

‘NEVER THAT CLEAN’

Bruce Karas, an executive at Coca-Cola North America in change of environment and sustainability, acknowledged the conflicting environmental pressures at play.

“When we look at a different material, you look at all of the levers: the carbon footprint, consumer preference, energy, water,” he said. “There’s a mix, there are some things that are not that desirable, but if you have five good things and one that isn’t, we’ll all have to make decisions.

“It’ll never be that clean.”

So aluminum has a larger footprint in production because of the vast power needed in the smelting process. But, in a further example of the complexities of environmental impact, the overall carbon equation becomes more muddied when other issues such as logistics are taken into account.

“It’s a complex picture, certainly,” said Simon Lowden, an executive who leads Pepsi’s plastics drive. “You have to think about transport, secondary packaging, time in store, all those considerations come into play.”

Because aluminum is lightweight and cans make efficient use of space, less transport is usually needed than for plastics or glass, while less power is also needed to chill drinks in cans – particularly useful in tropical climes.

“That means in some markets aluminum would actually not produce as much greenhouse gas,” Lowden said.

(GRAPHIC: Carbon Footprint of Aluminum – here)

GRAPHIC: Carbon Footprint of PET Bottle – here)

PLASTIC STRIKES BACK

But while cans could well carve out a niche within the $19 billion-a-year bottled water industry, they are unlikely to sweep the board anytime soon, if ever, industry experts say.

Simple economics is a major factor; aluminum is more expensive than plastic – the raw material cost for a can is about 25-30% higher than a PET bottle of a similar volume, according to analyst Uday Patel at consultancy Wood Mackenzie.

A broad shift to aluminum cans would raise costs for drinks companies, also including new manufacturing infrastructure, some of which are likely to be passed on to consumers, thus hitting products’ competitiveness against plastic rivals.

Another key factor is consumer convenience.

How often do people down bottles of water in one go? While advances are being made in can technology, most cans are opened and stay open, while bottles can be recapped.

Plastic water bottles can also be sold in a range of sizes, while cans are more limited.

As a result of such factors, drinks giants are cautious.

“It’s not necessarily saying we’re pulling the plug on plastic, it’s really looking at how do consumers react to canned water,” said Coca-Cola’s Karas.

In an example of this toe-in-the-water approach, Coke is planning a limited launch of its top U.S. water brand Dasani in aluminum cans and aluminum resealable bottles later this year.

Even while companies are beginning to sell water in cans, to assuage pollution concerns, they are also embarking on a green makeover for plastic. Scientific efforts include creating new compounds that are biodegradable or more easily recyclable.

Danone told Reuters it was replacing some plastic with aluminum cans for its Flyte brand in Britain, Sparkles in Poland and Aqua d’or in Denmark.

But the company, which uses 400,000 tonnes of PET plastic bottles each year, is also focusing on increasing recycling of plastic and plans to use an average of 50% recycled material in its water bottles by 2025 and 100% for its Evian brand.

And while Pepsi is testing aluminum for its Aquafina water at food service outlets, it is also introducing a plastic bottle made of 100% recycled material for another brand, LIFEWTR.

“The consideration for aluminum is much higher on the list than it has been for the last few years (but) the hardest thing to change is infrastructure,” said Pepsi’s Lowden.

    “Hence our need to drive hard the recyclability of plastic as well as look at our mix of cans and glass.”

CAN SHORTAGES

Another obstacle to a large-scale shift from plastic bottles is that there may not be enough cans to go round, at a time when some beers and wines are also switching from glass to cans.

The world’s top can maker Ball Corp (BLL.N), which supplies the likes of Coke and Pepsi, is already scrambling to add capacity to meet demand.

“This is a level of growth that we haven’t seen in a long time. We’re looking at a number of speed-up projects, new can lines,” said Kathleen Pitre, chief commercial and sustainability officer for Ball’s global beverage packaging business.

Ball told investors it planned to add 4-5 billion additional cans of capacity by mid-2021 to its existing 105 billion, but this does not even include potential expansion in the water sector.

A shift of only 1% of global soft drinks, beer and bottled water from plastic and glass to cans, would mean a surge of 24 billion more cans, said the company, the third-biggest stock gainer among the S&P 500 index .SPX over the past 12 months.

Slideshow (7 Images)

That 1% change would increase aluminum demand by around 310,000 tonnes, according to Patel at Wood Mackenzie and further shifts could counter wider market weakness.

Major aluminum producers Alcoa (AA.N) and Norsk Hydro (NHY.OL) have cut estimates of global demand growth for aluminum recently, partly due to trade tensions between the United States and top metals consumer China. 

“You’re talking about billions and billions of water bottles, so there’s a potential revival for the aluminum can market,” said Patel. “But it’ll take three or four years to see if this is a real trend.”

Additional reporting by Polina Ivanova in Moscow; Editing by Veronica Brown and Pravin Char



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‘Driving force’ China accounts for nearly half global patent filings: U.N. By Reuters


‘Driving force’ China accounts for nearly half global patent filings: U.N.

By Stephanie Nebehay

GENEVA (Reuters) – China accounted for nearly half of global patent filings last year, with a record 1.54 million applications, led by telecoms and computer technology, the U.N.’s World Intellectual Property Organization (WIPO) said on Wednesday.

China’s share, up 11.6 percent from 2017, included requests received by China’s intellectual property office from foreign innovators and companies seeking patent protection there, representing one in 10 filings, it said.

The United States ranked a distant second, with nearly 600,000 patent applications, down 1.6 percent on the previous year and the first drop in a decade, WIPO said in a report.

In all, innovators worldwide filed 3.3 million patent applications, 14.3 million trademark applications, and 1.3 million industrial design applications, with Asia accounting for more than two-thirds.

China ranked first in all three categories and had as many patent filings as the next 10 places combined, including Japan (3rd), South Korea (4th) and the European Patent Office (5th).

Asia is “increasingly the global hub for international property applications”, WIPO director-general Francis Gurry said, noting “impressive increases” in India.

“China has been a major driving force and the volume of applications coming out of China or going into China, the volume of applications in the Chinese office is really quite extraordinary,” he told a news conference.

China and the United States are locked in a trade war over U.S. demands that Beijing improve protections of American intellectual property, end cyber theft and the forced transfer of technology to Chinese firms, curb industrial subsidies and increase U.S. companies’ access to largely closed Chinese markets.

U.S. Treasury Secretary Steven Mnuchin said on Monday that an additional round of tariffs on Chinese imports would likely be imposed if a trade deal has not been reached by Dec. 15, but added that he expected the agreement to go through.

Gurry, asked whether China was “playing the game” in terms of upholding respect for IP, declined comment, noting that the world’s top two economies were deep in negotiations.

“But here what you see is that China is a big, if not the biggest, user of the IP system in the world,” he said.

The United States remains first globally in seeking foreign protection for applications originating with American enterprises or individuals, Gurry said.

U.S.-based applicants filed some 230,000 patent filings overseas last year, signaling a push to expand markets, against 66,400 applications from China filed abroad, he said.