Tesla China Rival NIO Is Bullish About Domestic Market Growth

NIO Inc. founder William Li said the long-term growth potential of China’s electric-vehicle market remains in place, boding well for his company even as competition from the likes of Tesla Inc. intensifies.

The country’s auto market has started to recover from the depths of the coronavirus pandemic, and the minuscule market share of electric cars means they have a chance to grab sales from gas guzzlers, Li said in an interview on Bloomberg Television.

But he has his work cut out. Electric-car sales have declined for 10 straight months in China and are forecast to drop 14% this year to fewer than 1 million units, according to BloombergNEF. Meanwhile, global electric-car leader Tesla started deliveries from its massive new Shanghai plant around the start of the year.

“We do compete against each other, but in general we are allies,” Li said, stressing both are trying to win users from gasoline rivals. “In fact, our sales kept growing since Tesla started production in Shanghai.”

NIO predicted Thursday that its deliveries and revenue this quarter will more than double from a year earlier, as well as from the first three months of 2020. The company also reported a narrower first-quarter loss after curbing spending.

In April, the company struck a definitive pact for a 7 billion yuan ($1 billion) investment from entities led by the Hefei municipal government in China, alleviating concerns that it is running out of cash. That funding and potential future financings have put NIO on a solid footing, Li said.

“We are confident to have secured sufficient funding for the company’s development,” Li said.

The April fundraising effort paves the way for more Chinese financing for New York-traded NIO, Li said. That could prove helpful as U.S.-China tensions are heating up, with Chinese companies listed in the U.S. facing a threat of being forced out. The company now meets the criteria for a local Chinese listing, though it has no concrete plans for one, he said.

“This isn’t a challenge for NIO only,” Li said. “We wouldn’t exclude any potential options.”

Shares of NIO have lost more than a third of their value since the company’s 2018 initial public offering in New York.

Li also described Volkswagen AG’s plans, announced last week, to deepen its relationship with a Chinese EV partner in the Hefei region as “very positive news” for NIO. The move signals that the area is emerging as a powerhouse in the EV industry, and Li said NIO is also seeking to increase cooperation with local partners and encourage its suppliers to invest more in the region.

— With assistance by Charlie Zhu, Selina Wang, and Chunying Zhang

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Only a Few Hedge Funds Made Money in March and April. Here’s How

Father-of-six Nicolas Bryon didn’t get much sleep in March but it wasn’t family duties keeping him up. As global markets crashed, the Sydney-based hedge-fund manager rose every hour to check on his positions and execute trades.

After weeks of broken sleep, his Atlantic Pacific Australian Equity Fund was up 23.6% for March and April, making it one of the rare hedge funds globally that made money in both periods. The two wildly different months messed with even some of the biggest money managers. In March, several bears reaped fortunes by betting on falling markets, only to lose money in April when government stimulus revived stocks.

Globally, just 13% of hedge funds made money in both months, according to data compiled by Bloomberg. A number of those that did exhibited similar traits: an ability to trade across different geographies or asset classes and a hyper-vigilance toward monitoring positions.

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“I’m generally quite conservative,” Bryon said, who manages around A$33 million ($22 million). He favors firms with solid fundamentals that have restructured their costs and recapitalized through stock issues or loans.

Bryon said he watches 24/7 for any signs the virus may shut down economies that have just started to reopen, like China. That attentiveness allowed him to quickly tip out and in out of stocks such as gaming giant Aristocrat Leisure Ltd., whose shares plunged 36% in March only to bounce 20% in April.

AVM Global Opportunity Fund Chief Investment Officer Ashvin Murthy has delivered annualized returns of 9.9% since the fund’s inception in 2016, below the outsized gains of some peers. But he sees no shame in being boring and produced a 3.02% increase in March and another 3.14% in April.

Sleep Better

For Murthy, who manages around $50 million for clients including family offices in Europe and Asia, making smaller than his usual bets in the right direction has resulted in larger payouts thanks to market volatility. He currently owns a lot of government bonds, and cash.

In late February, he made money by shorting equities and going long on the U.S. dollar. By late March, when the Federal Reserve had started pushing through measures to add liquidity, he snapped up gold and investment-grade bonds.

“Most hedge funds that get the spotlight are the ones that are super levered so in a bull market, they all look sexy,” Singapore-based Murthy said, adding that he doesn’t invest more than he’s willing to lose — a risk-averse strategy quite different from the high-volatility plays Asia often sees. “I’m okay with being boring, I probably sleep better at night.”

Other funds that did well in both March and April had China to thank.

Pinpoint Asset Management Ltd.’s nearly $1.1 billion Pinpoint Multi-Strategy Master Fund increased 0.3% in March and almost 1% in April by holding onto its investments in some of China’s leading companies.

5G, Education

“Covid-19 has negatively affected many industries,” Pinpoint’s Hong Kong-based investor relations manager Jennifer Wong said. “It’s our belief that industry leaders, who have better access to resources, finances and human capital, will continue to gain market share at the expense of weaker peers.” She declined to disclose specific names.

Pinpoint is bullish on stocks linked to China’s 5G telecommunications network roll-out as well as online and offline education firms, including those that provide extra-curricular tutoring.

Panview Capital Ltd.’s Asia hedge fund also excelled in part due to China, rising less than 1% in March and about 4.5% in April. The Hong Kong-based firm, which began trading with external capital in January, cut India investments and shifted some of its portfolio to China instead, a person familiar with the matter said, declining to be identified because the details are private.

Here are a few others that made money in both March and April.

  • Ocean Arete Ltd., a Hong Kong-based manager that oversees $1 billion. It returned 2.1% in March and 3.4% in April. Its macro hedge fund started March owning risky assets, including global stock indexes, but cut those positions as equity markets began to plunge. As government stimulus measures kicked in toward the end of March, it rebuilt long positions in U.S. and Chinese stocks to ride the April rebound wave
  • CloudAlpha Capital Management Ltd.’s hedge fund advanced 1.9% in March and 4.2% in April, taking this year’s gain to almost 49%, according to a client newsletter. That was thanks to a bullish position in Tesla Inc. and some well-timed shorting of Luckin Coffee Inc.
  • Infini Capital Management Ltd.’s multistrategy hedge fund surged 33% in March and rose another 25% in April
  • The $650 million Snow Lake Asia Fund was up 1.9% in March and 12.3% in April. The firm’s $1.5 billion China fund returned 4.4% in March and 9.9% in April
  • WT Asset Management Ltd., the $1.5 billion firm led by Wang Tongshu, gained 1.9% in March and more than 3% in April

— With assistance by Suzy Waite, and Anuvi Godha

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U.S. Hits Back at China’s Alleged Attempts to Restrict Airlines

Growing tensions between the U.S. and China have expanded to the airline industry as the Transportation Department accused its counterpart in Beijing of blocking American carriers’ attempts to resume service there.

The DOT late on Friday announced that China had violated a bilateral agreement allowing airline service between the two countries by failing to respond to requests by Delta Air Lines Inc. and United Airlines Holdings Inc.

China “impaired the operating rights of U.S. carriers and denied them the fair and equal opportunity to exercise their operating rights,” the department said in a notice posted to a government website.

The order stopped short of imposing any restrictions or penalty on the four airlines from China serving U.S. markets, but is a warning after repeated objections by the U.S. failed to get action, the government said. It requires the Chinese carriers to notify the department of their schedules and any proposed changes they intend. China’s embassy in Washington didn’t immediately respond to an email requesting comment.

The Covid-19 pandemic has led to an increasing rift between the U.S. and China. President Donald Trump has repeatedly blamed China for the virus’ spread and both nations have taken actions aimed at the other, such as expelling journalists.

Starting in February, the U.S. began restricting arrivals of people from China to prevent the spread of the virus. Flights between the two countries fell from about 325 per week in January to only a few dozen.

‘Making It Impossible’

Earlier this year, China set March 12 as a baseline for resumption of service between the two countries. Because Delta, United and American Airlines Group Inc. had already halted service to the Asian nation by then, it put them at an unfair disadvantage, the DOT said.

“The department is taking this step because Chinese aviation authorities have imposed restrictions on U.S. carriers that are making it impossible for them to resume passenger services between the US and China and operate those services at levels that they have a right to operate under the U.S.-China air transport agreement,” the department said in a statement on Saturday.

United had no comment on the DOT order, spokesman Frank Benenati said in an email. “We look forward to resuming those flights — to the benefit of our customers and communities in the U.S. and China — when the regulatory environment allows us to do so,” he said.

Delta didn’t immediately respond to a request for comment.

The DOT order was earlier reported by Reuters.

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Xi Says China Won’t Return to Planned Economy, Urges Cooperation

Chinese President Xi Jinping said he won’t let the world’s second-largest economy return to its days as a planned economy, pushing back against U.S. criticism that the nation has failed to deliver on promised reforms.

“We’ve come to the understanding that we should not ignore the blindness of the market, nor should we return to the old path of a planned economy,” Xi told political advisers gathered in Beijing for their annual legislative sessions on Saturday, according to the official Xinhua news agency. He reiterated the government’s stance that markets should play a “decisive role” in the economy.

The comments come as China faces mounting pushback from the Trump administration on a range of issues from trade to its handling of the coronavirus outbreak. The White House this week issued a broad critique of China’s economic and military policies in a report to Congress, including accusations of intellectual property theft and economic protectionism.

Xi said the virus has put considerable pressure on China’s economy, and the country should seek “development in a world that is increasingly unstable and uncertain” as he listed risks ahead including a deepening global recession, a significant drop in trade investment, financial market turmoil, reduced international interactions and rising geopolitical tensions.

Chinese lawmakers on Friday abandoned their usual practice of setting a numerical target for economic growth this year due to the turmoil caused by the virus, breaking with decades of Communist Party planning habits in an admission of the deep rupture that the disease has caused.

They’re also using the legislative meeting to pass a bill establishing “an enforcement mechanism for ensuring national security” for Hong Kong, prompting swift pushback from pro-democracy activists in the city and condemnation from American politicians.

Xi didn’t address the legislation in his speech, but stressed that China should “stand on the right side of history,” adhere to multilaterism and maintain an “open, cooperative” attitude despite rising protectionism.

— With assistance by Sharon Chen, and Jing Li

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China’s New Outbreak Shows Signs the Virus Could Be Changing

Chinese doctors are seeing the coronavirus manifest differently among patients in its new cluster of cases in the northeast region compared to the original outbreak in Wuhan, suggesting that the pathogen may be changing in unknown ways and complicating efforts to stamp it out.

Patients found in the northern provinces of Jilin and Heilongjiang appear to carry the virus for a longer period of time and take longer to recover, as defined by a negative nucleic acid test, Qiu Haibo, one of China’s top critical care doctors, told state television on Tuesday.

Cases in the northeast also appear to be taking longer than the one to two weeks observed in Wuhan to develop symptoms after infection, and this delayed onset is making it harder for authorities to catch cases before they spread, said Qiu, who is now in the northern region treating patients.

Second Waves That Are Hard to Trace Plague Asia’s Virus Recovery

“The longer period during which infected patients show no symptoms has created clusters of family infections,” said Qiu, who was earlier sent to Wuhan to help in the original outbreak. Some 46 cases have been reported over the past two weeks spread across three cities — Shulan, Jilin city and Shengyang — in two provinces, a resurgence of infection that sparked renewed lockdown measures over a region of 100 million people.

Scientists still do not fully understand if the virus is changing in significant ways and the differences Chinese doctors are seeing could be due to the fact that they’re able to observe patients more thoroughly and from an earlier stage than in Wuhan. When the outbreak first exploded in the central Chinese city, the local health-care system was so overwhelmed that only the most serious cases were being treated. The northeast cluster is also far smaller than Hubei’s outbreak, which ultimately sickened over 68,000 people.

Coronavirus Newsletter: The mutation question

Still, the findings suggest that the remaining uncertainty over how the virus manifests will hinder governments’ efforts to curb its spread and re-open their battered economies. China has one of the most comprehensive virus detection and testing regimes globally, and yet is still struggling to contain its new cluster.

Researchers worldwide are trying to ascertain if the virus is mutating in a significant way to become more contagious as it races through the human population, but early research suggesting this possibility has been criticized for being overblown.

Northeast Differences

Qiu said that doctors have also noticed patients in the northeast cluster seem to have damage mostly in their lungs, whereas patients in Wuhan suffered multi-organ damage across the heart, kidney and gut.

Officials now believe that the new cluster stemmed from contact with infected arrivals from Russia, which has one of the worst outbreaks in Europe. Genetic sequencing has showed a match between the northeast cases and Russian-linked ones, said Qiu.

Among the northeast cluster, only 10% have turned critical and 26 are hospitalized.

Over 100 Million in China’s Northeast Face Renewed Lockdown

China is moving aggressively to stem the spread of the new cluster ahead of its annual political gathering in Beijing scheduled to start this week. As thousands of delegates stream into the capital to endorse the government’s agenda, China’s central leadership is determined to project stability and control.

The northeast provinces have ordered a return of lockdown measures, halting train services, closing schools and sealing off residential compounds, dismaying residents who had thought the worst was over.

“People should not assume the peak has passed or let down their guard,” Wu Anhua, a senior infectious disease doctor, said on state television on Tuesday. “It’s totally possible that the epidemic will last for a long time.”

— With assistance by Sharon Chen, Claire Che, and Jason Gale

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China Ambassador to U.S. Urges End to ‘Blame Game’ Over Pandemic

China’s ambassador to Washington called for an end to the “blame game” over the coronavirus, in the country’s most high-profile response since U.S. President Donald Trump escalated his criticism of Beijing.

Ambassador Cui Tiankai said in a column published in the Washington Post that allegations blaming China for the outbreak’s spread risked “decoupling” the world’s two largest economies. Increased suspicions also threatened to hurt U.S.-China cooperation to fight the disease and restart the global economy.

“It is time to end the blame game,” Cui said. “It is time to focus on the disease and rebuild trust between our two countries.”

Trump and his top aides have increasingly faulted China for the coronavirus’s deadly expansion across the U.S. and around the world. The pathogen has killed more Americans than the Vietnam War, pushed the U.S. economy toward recession and clouded Trump’s re-election prospects.

‘Conspiracy Theories’

While Trump has accused China of a cover-up and trying to hurt him politically, U.S. Secretary of State Michael Pompeo has gone further, claiming there is “enormous evidence” that the virus escaped from a high-security virology laboratory near the first known outbreak in Wuhan. Pompeo has advanced the theory despite Chinese denials and a lack of consensus among U.S. intelligence agencies examining the virus’s origins.

As Trump Blames China, Beijing Directs Fury at His Top Diplomat

Although Cui made no mention of the lab claim, he denounced “conspiracy theories” about China’s geopolitical intentions. He also rejected calls for China to pay reparations for the damage wrought by the virus, saying similar responsibility wasn’t laid on countries where H1N1 or AIDS originated.

“There is no denying that the first known case of Covid-19 was reported in Wuhan,” Cui said. “But this means only that Wuhan was the first victim of the virus. To ask a victim for compensation is simply ridiculous.”

Cui has been seeking to ratchet down tensions with the U.S. which have steadily escalated since he became ambassador in 2013. In March, Cui criticized a foreign ministry spokesman’s tweets about whether the virus was introduced to Wuhan by U.S. Army athletes. Last month, he urged cooperation in a similar column published in the New York Times.

Cui’s latest op-ed closed with a reference to the Republican Party’s first president, Abraham Lincoln, who Trump has been invoking as his re-election campaign heats up. “As President Abraham Lincoln called for ‘the better angels’ in his inauguration speech, I hope that the wisdom of preceding generations will guide us to choose the right side of history and work for our shared future together,” Cui said.

— With assistance by Peter Martin

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Global stock markets buoyed as Brent crude tops $30 a barrel

Oil prices have jumped more than 13% after reports that China’s stuttering recovery was beginning to make ground.

Stock markets also made gains, despite a decision by the German constitutional court that appeared to undermine efforts by the European Central Bank (ECB) to orchestrate a eurozone-wide stimulus plan.

The price of Brent crude surged 13.05% to $30.75 a barrel on Tuesday, to continue a week-long increase from below $20.

What are the UK government’s ‘five tests’ for ending lockdown restrictions?

The UK government has said that these five tests have to be met before they will consider easing coronavirus lockdown restrictions:

  • The NHS has sufficient capacity to provide critical care and specialist treatment right across the UK
  • A sustained and consistent fall in daily deaths from Coronavirus
  • Reliable data to show that the rate of infection is decreasing to manageable levels across the board
  • Operational challenges including testing and personal protective equipement (PPE) are in hand with supply able to meet future demand
  • Confident that any adjustments to the current measures will not risk a second peak of infections that overwhelms the NHS

Analysts said while the better news from China had improved the outlook for oil consumption, there was still a glut of oil on world markets and prices were likely to stay low for the rest of the year.

Chinese manufacturers have found it difficult to increase production while the rest of the world remains in lockdown, but figures from the central bank showing borrowing levels increasing, along with rising expectations that more countries will lift their lockdowns, helped push up oil prices.

Shares in big oil companies rose after the increase in crude, helping to push up stock markets in Europe and the US by more than 1%. The FTSE 100 index of leading UK shares was up 1.7%, Germany’s Dax index rose 2.5% and France’s Cac rose 2.4%.

Global stocks are now 24% above their March lows, mostly after investors piled into internet and IT stocks, including Facebook, Amazon and Microsoft.

Bjarne Schieldrop, the chief commodities analyst at the Nordic bank SEB, said: “There is no doubt that the world to a large degree moved to an almost standstill for a while and that oil demand has been hurt badly.

“The key question is how badly, and how quickly it will recover. The uncertainty over demand is huge, the range is wide and the magnitude of the demand shortfall for any of the estimates are all off the historical scale.”

Germany’s constitutional court jolted eurozone investors and hit the value of the euro after judges warned that the ECB’s plans to flood the financial system with cheap credit could breach German law.

The ruling by the court in Karlsruhe came after judges agreed that Germany’s central bank must stop cooperating with the ECB’s long-running stimulus scheme within the next three months unless the ECB could prove it was not excessive.

Analysts said the decision highlighted the constraints on the ECB as a lender of last resort compared with the more independent US Federal Reserve, the Bank of Japan and the Bank of England, as it wrestled with the biggest economic crisis in peacetime after the Covid-19 outbreak.

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Coronavirus Lingers in Air of Crowded Spaces, New Study Finds

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The new coronavirus appears to linger in the air in crowded spaces or rooms that lack ventilation, researchers found in a study that buttresses the notion that Covid-19 can spread through tiny airborne particles known as aerosols.

At two hospitals in Wuhan, China, researchers found bits of the virus’s genetic material floating in the air of hospital toilets, an indoor space housing large crowds, and rooms where medical staff take off protective gear. The study, published Monday in the journal Nature Research, didn’t seek to establish whether the airborne particles could cause infections.

The question of how readily the new virus can spread through the air has been a matter of debate. The World Health Organization has said the risk is limited to specific circumstances, pointing to an analysis of more than 75,000 cases in China in which no airborne transmission was reported.

But as the virus fans across the globe and infections near 3 million, scientists are trying to understand exactly how contamination occurs.

People produce two types of droplets when they breathe, cough or talk. Larger ones drop to the ground before they evaporate, causing contamination mostly via the objects on which they settle. Smaller ones — those that make up aerosols — can hang in the air for hours.

The researchers, led by Ke Lan of Wuhan University, set up so-called aerosol traps in and around two hospitals in the city that was home to the pandemic’s first steps.

They found few aerosols in patient wards, supermarkets and residential buildings. Many more were detected in toilets and two areas that had large crowds passing through, including an indoor space near one of the hospitals.

Especially high concentrations appeared in the rooms where medical staff doff protective equipment, which may suggest that particles contaminating their gear became airborne again when masks, gloves and gowns are removed.

The findings highlight the importance of ventilation, limiting crowds and careful sanitation efforts, the researchers said.

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IMF Warns Of Worst Recession Since Great Depression

The global economy is set for a severe recession that is going to be the worst since the Great Depression of the 1930s, as coronavirus, or Covid-19, pandemic claims thousands of human lives and the containment measures adopted to slow the outbreak hamper economic activity, the International Monetary Fund warned Tuesday.

World GDP is set to contract 3 percent this year, thanks to the lockdowns imposed by countries across the world, the IMF said in its latest World Economic Outlook report. The lender expects the global GDP to grow 5.8 percent next year.

In a January update to the WEO, the IMF had predicted 3.3 percent global growth this year and 3.4 percent expansion for next year. In 2019, the world economy grew 2.9 percent.

These projections are based on a scenario that assumes the pandemic will fade in the second half of 2020 and the containment measures can be gradually unwound as economic activity normalizes.

“The risks for even more severe outcomes, however, are substantial,” the IMF warned.

“It is very likely that this year the global economy will experience its worst recession since the Great Depression, surpassing that seen during the global financial crisis a decade ago,” IMF Chief Economist Gita Gopinath said in the foreword to the report.

More severe outcomes are likely “if the pandemic and containment measures last longer, emerging and developing economies are even more severely hit, tight financial conditions persist, or if widespread scarring effects emerge due to firm closures and extended unemployment,” Gopinath said.

China, where the Covid-19 pandemic started, is forecast to grow a modest 1.2 percent this year, but rebound with a growth surge of 9.2 percent next year.

All advanced economies are expected to log severe declines in GDP this year. Advanced economies as a whole are forecast to contract 6.1 percent this year and expand 4.5 percent next year.

The US economy is expected to contract 5.9 percent this year, but grow 4.7 percent in 2021. The country is one of the worst hit by the coronavirus outbreak.

Eurozone is projected to witness a GDP decline of 7.5 percent this year. In 2021, the euro area economy is forecast to grow 4.7 percent.

Italy, Spain and France are among the worst hit euro area member states. Italy is forecast to log a GDP decline of 9.1 percent this year, the worst outcome in the developed world.

In Asia, the Indian economy is expected to grow 1.9 percent this year, a sharp slowing from the 4.2 percent expansion logged last year. Next year, India’s GDP is expected to jump 7.4 percent.

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China’s ‘Green Zone’ Coal Price Tested as Virus Fight Continues

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China’s coal prices have sunk to levels that threaten state intervention, but this time policy makers may refrain from doing so as they continue efforts to buttress the economy hurt by the coronavirus pandemic.

The government will try to keep power prices low as it pushes to restart the economy, according to analysts. That goal will be helped by the decline in benchmark prices to just above 500 yuan a ton, the lower end of a range that Beijing generally tries to maintain.

“I don’t think the government will intervene too much as lowering energy costs could be one of the objectives during the Covid-19 period,” said Dennis Ip, an analyst at Daiwa Capital Markets Hong Kong Ltd.

29,861 in U.S.Most new cases today

-18% Change in MSCI World Index of global stocks since Wuhan lockdown, Jan. 23

-1.​013 Change in U.S. treasury bond yield since Wuhan lockdown, Jan. 23

China is the top user and producer of the fuel, and has sought to balance the needs of its power enterprises and miners by securing a “green zone” price of between 500 and 570 yuan. In the past few years, spot prices have mostly held above that range due to stricter scrutiny of local mines, elimination of old capacity and clampdowns on imports to spur demand for domestic coal.

This year, prices have fallen as new capacity ramps up. With Beijing pushing to get the economy back up again after weathering the worst of the coronavirus outbreak, miners are urged to expedite output resumption. Demand, however, hasn’t quite kept pace.

Government controls and the fear of going outside curtailed the speed of recovery previously. Now there’s a growing threat from slumping external demand as the virus has put many other countries in lockdown.

Morningstar analyst Jennifer Song estimates that the downstream sector has resumed about 75% of normal operations according to daily coal consumption data, whereas miners would have fully restarted.

Market Mismatch

“There’s a mismatch in the recovery pace of supply and demand,” she said. “Based on this, we would think the government may need to wait for more clarity on the supply-demand balance before making any policy move.”

Furthermore, coal miners would have made quite a tidy sum between 2016 and 2019 when prices were elevated, Song added. This should help them to cope with the recent price declines.

Spot coal at Qinhuangdao port retreated for the past seven weeks to 509 yuan a ton as of April 7, the lowest since September 2016, according to China Coal Resource. Futures on the Zhengzhou Commodity Exchange are trading below 500 yuan.

Should authorities intervene to stem the rout, tightening import controls may be the preferred course of action over mandating production cuts, said Zeng Hao, deputy general manager at China Coal Resource.

The government in 2016 forced miners to cut output to revive low prices and help them manage debt. Those policies were so effective that it sent prices soaring and officials scrambling to reverse some of the impact.

Import Controls

Then in mid-2017, Beijing banned some incoming shipments to manage the nation’s coal supply and prices. Since then, it has frequently turned to its import policy to steer the domestic market, limiting the amount of competing coal from overseas when it wants to bolster local miners, and relaxing those curbs to tame price rallies.

Recently, some southern ports have cut import quotas amid weak demand from extended factory shutdowns caused by the virus. This follows a 33% year-on-year surge in January and February shipments.

If the restrictions are extended, prices of Asian seaborne supply could be further hit. Australian Newcastle coal futures tumbled to $59.40 a ton as of Thursday, the weakest since July 2016.

“The government will target coal imports first; if that’s not enough, they may resort to cutting domestic output,” Zeng said. “Prices that stay low for too long won’t be healthy for the industry.”

— With assistance by Jasmine Ng, and Jing Yang

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