Weekly News Round-Up: China Strengthens Oil Ties With Russia

Weekly News Round-Up: China Strengthens Oil Ties With Russia

Welcome to our weekly news round-up. In today’s blog, we’ll cover some of the latest goings-on in key markets, using related reports to give context to company deals and daily news. We’ll examine current and future trends and identify opportunities we think all market participants should be aware of.

Our stories today include yet another bid for Toshiba's chip unit, the latest in a string of deals between Russia and China and Mercedes' plan to bring 50 electric versions of its cars to our roads by 2022.

Mercedes-Benz to Offer Electric Version of Every Car by 2022

German auto giant Mercedes-Benz has revealed plans to offer electric versions of all its cars by 2022. Dieter Zetsche, chief executive of Mercedes-Benz owner Daimler, told investors that the company will sell at least 50 electric versions of its cars.

He said the models will be both hybrid and full-electric versions of the cars. The company has set a target of saving 4 billion euros ($4.8 billion) by 2025 to help offset the lower profitability of electric cars.

“In the beginning of the cycle we believe that we will have to face a significantly lower margin. For some vehicles half of the margin of the vehicles they replace,” Frank Lindenberg, Vice President of Finance and Controlling, said at the event in Sindelfingen. “We are still aiming for a 10 percent return on sales, but have to be prepared for a kind of transition, with a corridor of 8 to 10 percent.”

Market Insights - Analysts forecast the global high-performance electric vehicle market to grow at a CAGR of 37.6% during the period 2017-2021. According to the report, one of the major drivers for this market is stringent regulations on emissions and fuel efficiency. The development and adoption of green vehicles are considered to be major solutions to reduce GHG levels in the atmosphere to an acceptable level.

These vehicles run on alternative sources of energy such as only electricity, hybrid energy, and other power sources such as solar, wind energy, or biofuels.

CEFC China Energy Buys $9bn Stake in Rosneft

Chinese conglomerate CEFC has agreed to buy a minority stake in Russian oil company Rosneft worth around $9 billion. The privately held group has acquired a 14.16 per cent stake after purchasing  shares held by Switzerland’s Glencore and the Qatar Investment Authority

The deal comes as the United States imposes a new round of economic sanctions on Russia. It suggests Russia may be trying to show it could replace European and US capital with Chinese companies. Rosneft’s market capitalization stands at $57 billion and the deal makes it one of the largest investments ever made by China into Russia.

“By bridging Rosneft and the Chinese market and promoting the bilateral co-operation, CEFC China will better serve the energy demand of China,” said CEFC’s chairman Ye Jianming. “I strongly believe that the transaction will inject new energy into the economic and trade co-operation between China and Russia.”

Market Insights - Amid the OPEC’s decision to curtail output, US production growth and the changing dynamics of emerging economies like China and India, the Global Oil and Gas Supply market research report provides detailed analysis and outlook into global oil and gas markets.

It says with plans to increase natural gas role in energy mix and increasing shift towards floating LNG terminals, markets consuming natural gas are set to increase. In particular, demand from developing countries will account for significant amount of increase in demand. On the other hand, low oil prices continue to challenge rapid growth of natural gas.

Bain, SK Hynix Group Raise Bid for Toshiba Chip Unit

A consortium that includes Boston-based investment firm Bain Capital and South Korea’s SK Hynix has raised its previous offer for Toshiba Corp’s chip business to 2.4 trillion yen ($22.3 billion), according to reports.

Last week, Toshiba said it was considering three competing offers including one led Foxconn and one from Western Digital Corp, although sources suggest the latter has revised its offer. The Japanese conglomerate is desperate to sell the unit to cover losses from its U.S. nuclear business.

Under the terms of the new offer, Bain and SK Hynix would provide a combined total of around 567.5 billion yen, while American multinational Apple would provide a further 335 billion yen to the pot.

Toshiba’s board is due to meet on Wednesday to consider the offers, sources said.

Market Insights - Analysts forecast the global flash memory market to grow at a CAGR of 11.3% during the period 2017-2021. The latest trend gaining momentum in the market is the increasing demand for next-generation memory. The demand for fast, economical, and high scalable memory solutions is increasing exponentially across the globe.

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