Connect with us

Markets

Boeing Bets China Will Need $1.1 Trillion in Planes Over Next 20 Years

Published

on

boeing
  • Boeing Bets China Will Need $1.1 Trillion in Planes Over Next 20 Years

Boeing Co. raised its 20-year forecast for aircraft demand in China as economic growth and an expanding middle class spur travel in the world’s most-populous nation.

China will need 7,240 new planes valued at almost $1.1 trillion in the two decades through 2036, Boeing said Wednesday. That compares with its projections last September for 6,810 aircraft through 2035.

The upward revision for China comes despite rising trade tensions between the Asian nation and the U.S. and a volatile geopolitical environment in the Korean peninsula. China is “a critical market,” where long-term economic growth, a recovering air-cargo market and the expansion of Chinese airlines support a more optimistic forecast this year, according to Randy Tinseth, vice president of marketing at Boeing Commercial Airplanes.

“We believe the Chinese carriers will carry more and more passengers to and from China so that they will grow their market share and as a result their fleet will expand,” Tinseth said.

China has become the world’s biggest source of outbound travelers, prompting authorities to ramp up efforts to build new airports and expand existing ones, not only in top-tier cities like Beijing, but also regional economic centers such as Chengdu and Xi’an. China accounts for almost 11 percent of Boeing’s revenue, according to data compiled by Bloomberg.

Narrow-body Jets

Narrowbody airplanes will make up 5,420, or three-quarters of the total plane deliveries to China during the period, as full-service and discount carriers expand routes for both leisure and business travel, Boeing said.

In June, Boeing raised its global forecast by about 4 percent to 41,030 planes worth $6.1 trillion.

Boeing is in the race with Airbus SE to sell passenger jets to Chinese carriers, which are hitting the prime of their expansion. State-owned carrier China Southern Airlines Co. is seeking to grow its fleet to more than 1,000 by the end of this decade, from about 700 planes now, while HNA-backed Hainan Airlines Holding Co. is bringing in Boeing’s Dreamliner to help it launch non-stop flights from smaller Chinese cities to global destinations.

China itself is likely to join the race in the next 20 years to supply passenger jets, with Commercial Aircraft Corp. of China having conducted the maiden test flight for its C919 narrowbody jet in May. The company says it has racked up more than 600 orders from Chinese carriers and lessors.

The country will need 180 new cargo freighters, worth $60 billion, in the next 20 years because of a boom in e-commerce, with another 440 passenger jets converted to freighters in this period, according to Boeing’s estimates.

Tinseth refrained from forecasting Boeing’s share of the Chinese market in the next 20 years, but said it is big enough even for a third player besides Airbus and Boeing, especially for narrowbody aircraft.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Continue Reading
Advertisement
Comments

Crude Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Published

on

Oil

Oil Dips Below $62 in New York Though Banks Say Rally Can Extend

Oil retreated from an earlier rally with investment banks and traders predicting the market can go significantly higher in the months to come.

Futures in New York pared much of an earlier increase to $63 a barrel as the dollar climbed and equities slipped. Bank of America said prices could reach $70 at some point this year, while Socar Trading SA sees global benchmark Brent hitting $80 a barrel before the end of the year as the glut of inventories built up during the Covid-19 pandemic is drained by the summer.

The loss of oil output after the big freeze in the U.S. should help the market firm as much of the world emerges from lockdowns, according to Trafigura Group. Inventory data due later Tuesday from the American Petroleum Institute and more from the Energy Department on Wednesday will shed more light on how the Texas freeze disrupted U.S. oil supply last week.

Oil has surged this year after Saudi Arabia pledged to unilaterally cut 1 million barrels a day in February and March, with Goldman Sachs Group Inc. predicting the rally will accelerate as demand outpaces global supply. Russia and Riyadh, however, will next week once again head into an OPEC+ meeting with differing opinions about adding more crude to the market.

“The freeze in the U.S. has proved supportive as production was cut,” said Hans van Cleef, senior energy economist at ABN Amro. “We still expect that Russia will push for a significant rise in production,” which could soon weigh on prices, he said.

PRICES

  • West Texas Intermediate for April fell 27 cents to $61.43 a barrel at 9:20 a.m. New York time
  • Brent for April settlement fell 8 cents to $65.16

Brent’s prompt timespread firmed in a bullish backwardation structure to the widest in more than a year. The gap rose above $1 a barrel on Tuesday before easing to 87 cents. That compares with 25 cents at the start of the month.

JPMorgan Chase & Co. and oil trader Vitol Group shot down talk of a new oil supercycle, though they said a lack of supply response will keep prices for crude prices firm in the short term.

Continue Reading

Crude Oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Published

on

Crude oil

Oil Prices Rise With Storm-hit U.S. Output Set for Slow Return

Oil prices rose on Monday as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation, just as demand recovers from the depths of the COVID-19 pandemic.

Brent crude was up $1.38, or 2.2%, at $64.29 per barrel. West Texas Intermediate gained $1.38, or 2.33%, to trade at $60.62 per barrel.

Abnormally cold weather in Texas and the Plains states forced the shutdown of up to 4 million barrels per day (bpd) of crude production along with 21 billion cubic feet of natural gas output, analysts estimated.

Shale oil producers in the region could take at least two weeks to restart the more than 2 million barrels per day (bpd) of crude output affected, sources said, as frozen pipes and power supply interruptions slow their recovery.

“With three-quarters of fracking crews standing down, the likelihood of a fast resumption is low,” ANZ Research said in a note.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centres.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

Continue Reading

Crude Oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Published

on

oil

Crude Oil Rose Above $65 Per Barrel as US Production Drop Due to Texas Weather

Oil prices rose to $65.47 per barrel on Thursday as crude oil production dropped in the US due to frigid Texas weather.

The unusual weather has left millions in the dark and forced oil producers to shut down production. According to reports, at least the winter blast has claimed 24 lives.

Brent crude oil gained $2 to $65.47 on Thursday morning before pulling back to $64.62 per barrel around 11:00 am Nigerian time.

U.S. West Texas Intermediate (WTI) crude rose 2.3 percent to settle at $61.74 per barrel.

“This has just sent us to the next level,” said Bob Yawger, director of energy futures at Mizuho in New York. “Crude oil WTI will probably max out somewhere pretty close to $65.65, refinery utilization rate will probably slide to somewhere around 76%,” Yawger said.

However, the report that Saudi Arabia plans to increase production in the coming months weighed on crude oil as it can be seen in the chart below.

Prince Abdulaziz bin Salman, Saudi Arabian Energy Minister, warned that it was too early to declare victory against the COVID-19 virus and that oil producers must remain “extremely cautious”.

“We are in a much better place than we were a year ago, but I must warn, once again, against complacency. The uncertainty is very high, and we have to be extremely cautious,” he told an energy industry event.

Continue Reading

Trending