China Industry: February 10

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Feb. 10 – This is a regular series of relevant industry news from around China.

Air transport

• Air China said in January it had handled some 46.24 million passengers in 2010, an increase of 16.1 percent on an annual basis. Passenger load factor jumped 3.4 percent to 80.3 percent in 2010.

The airline transported some 1.15 million tons of mail and cargo last year, representing a year-on-year growth of 21.7 percent. Cargo load factor for the year rose 6.8 percent to 61 percent.

Air China’s passengers increased 8.8 percent to 3.53 million in December 2010. It carried 107,000 tons of mail and cargo, a 14.8 percent rise over the same month in 2009.

• Hong Kong Airlines has started flying daily between Hong Kong and Singapore. The airline operates the route using an Airbus A330-200 plane and may increase the frequency of the flights in the future.

The new service boosts the number of flights between the two destinations to 270 a week. Some 2.55 million passengers flew on the route between January and November 2010, an increase of 24 percent over the same period in 2009.

• Taiwanese China Airlines (CAL) said on January 17 that the company and Mandarin Airlines had signed a code sharing agreement with China Eastern Airlines and its subsidiary Shanghai Airlines. Under the agreement, CAL and China Eastern will jointly operate flight services between Taiwan and mainland China.

This code sharing cooperation includes flights between Taoyuan International Airport and Shanghai-Pudong, Xi’an, Qingdao, Nanjing and Ningbo, as well as between Taipei-Songshan and Shanghai-Hongqiao.

These routes are currently served by 26 weekly round-trip flights operated by CAL, as well as 30 weekly round-trip flights operated by China Eastern and another six weekly round-trip flights operated by Shanghai Airlines.

Following the recent launch of code sharing cooperation between CAL and China Southern Airlines and Xiamen Airlines, CAL had increased its weekly round-trip cross-strait flights to 31. The deal with China Eastern boosts the weekly round-trip flights to 36.

• UK power systems company Rolls-Royce said on January 20 it had got a long term maintenance support deal worth US$250 million from Hong Kong-based Cathay Pacific.

The company will provide long-term service support for Trent 700 engines that power eight new Airbus A330 aircraft. Rolls-Royce will also deliver up to 2013 enhanced engine refurbishment program for RB211-524 engines that power existing Boeing 747-400 aircraft.

Cathay Pacific is currently Rolls-Royce’s largest Trent 700 customer, operating 47 Airbus A330s with an additional seven deliveries scheduled up to 2013.

• U.S. Boeing said in January it has received final approval from the Chinese government confirming a US$19 billion aircraft deal.

China’s approval of 200 orders by airlines covers aircraft to be delivered between 2011 and 2013.

The agreement, comprising 737s and 777s, will be favorable for more than 100,000 jobs including those at Boeing and at its suppliers, the aircraft maker said.

• Chinese low-cost airline Spring Airlines said that it plans an initial public offering (IPO) in 2011 on the domestic A-share market.

Zhang Wu’an, the carrier’s spokesman, said as cited by Xinhua News Agency that the company has hired UBS for the listing and that it will use the IPO proceeds to purchase new aircraft.

The company’s net profit in 2010 surged by 240 percent year-on-year to US$71.4 million.

• The Airport Authority Hong Kong (AA) which runs the Hong Kong International Airport (HKIA) unveiled on January 25 the HK$7 billion first phase of its midfield development project.

The airport operator also said that it has completed an HK$4.5 billion facility enhancement project covering expansion and improvements at Terminal One and the airfield.

The Phase One development of the midfield includes the building of a new midfield concourse with 20 aircraft parking stands, a new cross-field taxiway and the extension of the existing automated people mover (APM) to the midfield concourse.

Construction works will commence in the third quarter of 2011. The project will create some 2,000 jobs and is expected to be completed by the end of 2015.

“To meet future demand, the new midfield concourse with 20 aircraft parking stands will ultimately enable about 10 million passengers a year to embark and disembark aircraft using air bridges at this concourse”, said Dr Marvin Cheung Kin-tung, chairman of the airport operator.

•Chinese jet fuel provider China National Aviation Fuel (CNAF) said on January 26 it aims to achieve sales of RMB350 billion a year by 2015.

The company also expects that its jet fuel sales volume will reach 50 million tons by 2015. CNAF also forecast gross assets of approximately RMB80 billion.

The company boosted its 2010 oil sales by 37 percent year-on-year to 28.8 million tons.

Solar power

• Chinese silicon wafer manufacturer GCL-Poly Energy Holdings Ltd said in January it had agreed to supply 5.2 GW of wafer and polysilicon products in the next five years to China-focused photovoltaic products maker Canadian Solar.

Deliveries under the agreement will be made from January 2011 to December 2015. Via the deal, Canadian Solar seeks to facilitate its global growth and maintain its competitiveness.
The company did not provide the value of the deal.

• DEK Solar, a global provider of photovoltaic (PV) metallization solutions, has expanded its production operations by adding a site in China.

The company said on January 13 that the move will boost its global footprint to service growing demand for its PV metallization platforms in Asia.

Set up in Shenzhen, the new DEK Solar manufacturing facility will initially focus on building the PV1200 platform, a full metallization solution for commercial-scale solar cell production.

Established in 2008, DEK Solar said that its PV1200 metallisation line is can deliver 1,200 wafers an hour throughput for high-speed, repeatable solar cell production.

• Chinese solar products maker Hanwha SolarOne Co., formerly known as Solarfun Power Holdings Co, said on January 18 it would build a 1GW cell and module factory in Chinese Jiangsu Province.

The company plans to spend US$500 million in three years to establish the plant. It is the first phase of a project to set up cell and module facilities with annual capacity of 2GW in Nantong, under the solar firm’s memorandum of understanding (MoU) with Nantong Economic and Technological Development Zone in Jiangsu Province.

“We are preparing to meet increased demand for our products as we expect the global shift towards green energy, especially solar energy, to increase sharply in the coming years,” Hanwha SolarOne President and CEO Peter Xie said, adding that the new plant would also reduce manufacturing costs.

In December the company said it would change its name from Solarfun Power Holdings to Hanwha SolarOne to reflect its partnership with South Korean firm Hanwha Chemical Corp, which owns 49.99% in it.

• US window films and photovoltaic backsheet maker Solar Gard said on January 23 it would invest US$12 million in a new production plant in Qingdao, eastern China, to meet rising global demand for its products.

The coating and laminating facility, to be operational in early 2012, will mainly cater for Solar Gard’s customers in China and across Asia. It is expected to contribute 25 percent revenue growth to the company’s local manufacturing arm Bekaert Specialty Films.

According to the Solar Energy Industries Association, by 2020 solar power facilities around the globe will amount to 980 GW.

Via the opening of the new factory, the company aims to supply its products to more and more solar companies in Asia in order to benefit from the projected growth of the sector. At present, more than 70 percent of all PV makers are based in Asia, Solar Gard said.

Solar Gard’s PV backsheet represents a bright white film designed to electrically insulate and protect PV cells from the environment.

The company’s window films on the other hand cut the carbon footprint of buildings by lowering energy use by as much as 30 percent via a reduction in solar heat gain through windows. In China there are over 2 billion square meters of existing urban glazing. The Chinese government last year agreed with 5,000 companies to scale down energy use and trim carbon emissions.

• Chinese clean energy technology firm SmartHeat Inc said on January 25 it had agreed to buy German heat pump maker Gustrower Warmepumpen from solar systems provider Conergy AG .

The parties agreed not to disclose the value of the transaction which is seen to close at the end of February, pending customary closing conditions.

SmartHeat said the acquisition was in line with its strategy to expand its clean technology heating solutions in the fast growing European and Chinese markets. The company does not anticipate the deal to contribute to its revenue or earnings per share for the current year.

After the acquisition, GWP will be a part of SmartHeat’s new Heat Pump division with offices in Germany and China.

Wind power
• Wind farms developer China Longyuan Power Group Co Ltd said in January it had registered a 49.5-MW wind farm project in Inner Mongolia under the clean development mechanism (CDM) of the Kyoto protocol.

This is the company’s first CDM registration for this year. China Longyuan now runs 56 CDM wind installations with a 2,904-MW capacity.

• Chinese A-Power Energy Generation Systems Ltd said on January 19 its unit Shenyang Ruixiang Wind Energy Equipment Co will benefit from a lower income tax as it has received a high-tech status from Liaoning province’s government.

The high-tech enterprise certificate, valid for three years, allows the company to qualify for a 15 percebt income tax rate during the period instead of the standard 25 percent.

According to A-Power, the high-tech status will also provide Shenyang Ruixiang with easier access to government support for its research and development activities.

• In 2010 China poured RMB300 billion in wind power projects and commenced construction of 378 large-scale wind farms, news site yicai.com reported, citing a domestic clean energy organization.

The country’s wind power potential available for exploration is valued at 700 GW to 1.2 TW. Wind power is seen to become one of the top three energy sources in China, with thermal and hydropower currently at the lead.

At the end of 2010 China for the first time beat the US in terms of total wind power capacity, according to a report by the American Wind Energy Association released earlier this week. China closed the year with 41,800 MW of working wind power facilities, up 62 percent year-on-year, while the US added 5,115 MW, or 15 percent more, bringing the total figure to 40,180 MW.

According to the source, biogas and waste incinerating capacity in China stood at 800 MW and 500 MW respectively, at the end of the past year. Nuclear power capacity is to be bolstered to 70 GW by 2020, bringing at least 8 percent of the energy mix. At present, solar power in the country is being used in remote rural areas and by special industries.

This industry report brief is courtesy of AII Data Processing.