China’s Loan Growth, Inflation Probably Accelerated

China’s banks probably made more new loans in January than the previous three months combined as lenders anticipated a credit clampdown by policy makers seeking to stem rising inflation pressures.

 

New bank lending totaled 1.38 trillion yuan ($201 billion) last month, according to the median estimate of 16 economists in a Bloomberg News survey ahead of a government report scheduled for this week. Separate figures are projected to show consumer prices rose the most since 2008 and export gains accelerated.

 

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Growth Quickens

Economic growth accelerated to a 10.7 percent year-on-year pace last quarter, the fastest since 2007, responding to an unprecedented 9.59 trillion yuan of credit extended by banks in 2009 and a 4 trillion yuan two-year fiscal stimulus plan. The expansion “is probably stronger than Chinese policy makers would like,” Goldman Sachs Group Inc.’s Chief Global Economist Jim O’Neill said in Hong Kong today.

China January Passenger-Car Sales Surge on Stimulus

China’s passenger-car sales more than doubled in January after the government extended economic stimulus measures, helping boost demand for General Motors Co. minivans and Volkswagen AG sedans. Sales of cars, multipurpose vehicles and sport-utility vehicles increased to 1.32 million units, the China Association of Automobile Manufacturers said today. Total vehicles sales, which include buses and trucks, more than doubled to a record 1.66 million units.

 

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The Chinese government last year halved the sales tax on new vehicles to 5 percent and offered 5 billion yuan ($732 million) in cash to replace old ones, insulating the country from slumping global demand. China announced plans on Dec.10 to scale back the measures, which included raising the tax on new vehicles with engines of 1.6 liters or smaller to 7.5 percent. China’s vehicle sales rose 46 percent last year. Rising income in China is benefiting luxury carmakers such as Porsche SE, which expects the Asian nation to replace Germany as its second biggest market by 2012, Helmut Broeker, who heads Porsche’s China unit, said yesterday.

Abengoa Said to Raise $460 Million for Pemex Plant in Mexico

Abengoa SA, the Spanish engineering and recycling company, is borrowing $460 million to build a power plant in Mexico for oil company Petroleos Mexicanos, people with direct knowledge of the loan said. Banobras, a lender for infrastructure projects, is underwriting the 6½-year financing, according to the people, who declined to be named before the loan is complete. Banobras and Pemex, as the oil company is known, both are owned by Mexico’s government. Banco Santander SA of Spain is arranging the debt syndication, the people said.

Spain May Reduce Premium Price for Photovoltaic Power

Spain is considering cutting the premium price paid to power producers that use photovoltaic cells, reducing clean-energy incentives for the second time in three years, government and industry group officials said. The two sides are holding talks about reducing solar-power rates in 2012, in return for letting developers build more installations, according to notes from a Jan. 27 meeting prepared by the Asociacion de la Industria Fotovoltaica, a Madrid-based trade group. An industry ministry spokesman who declined to be named said meetings are under way.

 

Western European nations including Germany and France are cutting the rate offered to businesses and homeowners that put solar panels on their roofs after deciding they were too generous and too expensive for consumers, who pay the above- market tariffs to foster low-emissions electricity production.

Merkel’s Party May Delay Solar Subsidy Cut

Chancellor Angela Merkel’s Christian Democrats and their Christian Social Union allies will propose a reduction in subsidies for solar power from roof panels by 16 percent from June 1, the Mitteldeutsche Zeitung newspaper said, citing unnamed senior lawmakers from the two sister parties. The parties’ position in upcoming negotiations with their Free Democratic Party coalition partner differs from an earlier proposal, championed by CDU Environment Minister Norbert Roettgen, to reduce roof-panel subsidies by 15 percent starting April 1, the newspaper said.

Sugar Shortage May Turn ‘Acute’ in Third Quarter

A global sugar shortage, which drove prices to the highest level in three decades, may peak in the third quarter this year on demand from the U.S., Mexico, India and Pakistan, according to U.K.-based Tropix Capital Management.

 

“As we enter the second quarter, we enter the inter-crop period for South Brazil when export supply is minimal,” Sean Diffley, founder of the hedge fund and former head of sugar trading at ED&F Man Holdings Ltd., said by email. “Countries like Russia will return to the market in force. The acutest part of the deficit may not be apparent until the third quarter.”

 

India, China, Indonesia, Pakistan, Egypt and Russia are among countries planning to buy sugar to cool domestic prices, worsening a deficit that may reach 11.92 million tons in the year ending April 30, up from 8.32 million tons predicted in October, Kingsman SA said yesterday. The shortfall may be 5 million to 6 million tons this season, according to Tropix. “The world stocks-to-use ratio should reach 20 year lows in the second half of this year,” said Diffley, who worked for 16 years at ED&F Man, one of the biggest sugar trader.

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