Highlights from the EO print edition, No. 575, Jun 25, 2012

Costs of Financing in Steel and Petrochemical Industry Up
News, page 2
~ 1.1 billion yuan, this is the total profit of the more than 70 medium and large steel enterprises operating in China for the Jan to April period of this year.
~ 25.6 billion yuan, this is the total cost of financing these compnaies over the same period of time, the cost of financing has increased by almost 40 percent when compared to the same period last year.
~ The petrochemical industry also faces similar challenges. According to data released by the Ministry of Finance, in March this year the debt to asset ratio of China's state-owned petrochemical enterprises was 59.1 percent, the sales to profit ratio was 3.21 percent and financing costs had increased by 34.69 percent compared to the same period of last year.
~ Not only a large number of small and medium-sized enterprises in China facing difficulties raising capital, but some large state-owned enterprises including Baosteel and  Wuhan Iron and Steel (Group) Company are also confronting similar problems as the cost of financing their operations has increased dramatically in recent months.
~ Early in the second half of last year, Qu Xiuli (屈秀丽), the deputy secretary general of China Iron and Steel Association, noticed that the cost of financing in steel enterprises was increasing rapidly.
~ According to Qu's analysis, one of the main factors driving up financing costs were the additional fees - such as loan consulting fees and experts consultants fees - that banks have been charging enterprises. The increase has also been driven by other abnormal factors such as banks unilaterally deciding to lift interest rates.
~ A policy proposal aimed at addressing the issue of rising financing costs is currently being drafted by the National Development and Reform Commission, the Ministry of Industry and Information Technology (MIIT), the Ministry of Finance, the central bank and the China Banking Regulatory Commission.
~ An official from MIIT revealed on June 19 that reducing the unreasonable costs associated with bank lending will become one important part of the policy.
Original article: [Chinese]

Coal Builds Up at Ports
Nation, page 9
~ The Qinhuangdao Port（秦皇岛港), on China's eastern coast, is home to the world's largest port storage facilities for coal. There has been a steep increase in the amount of coal that is being stored at Qinhuangdao and fewer ships are arriving at the port, which functions as a major point on the supply chain connecting coal mined in Shanxi and Inner Mongolia to the energy hungry southern provinces of Hubei and Hunan.
~ Publicly available statistics reveal that by June 17, 9.42 million tons of coal were being stored at Qinhuangdao Port, in excess of the earlier record of 9.415 million tons which was set in 2008.
~ Power companies are also facing challenges in dealing with the excess coal. One source from the Hubei Energy Group told the Economic Observer that the company had run out of space to store the coal.
~ The more coal that is being stockpiled  the cheaper the price of the commodity. Since the beginning of May, the price of coal has been decreasing for seven consecutive weeks.
For the week ending June 20, the price of a metric tonne of 5500 Kcal/kg thermal coal sold for 729 yuan, down 23 yuan or about 3 percent on the previous week. While at the mines, 4500 Kcal/kg thermal coal was only fetching 160 yuan per metric ton, which according to one source that the EO spoke to, is 80 yuan less than it cost to produce it.
~ Qiao Long (乔龙), a coal analyst for the Necoal website (华诚煤网), an online platform for coal transactions, told the EO that, Chinese coal mines have been expanding capacity over recent years in order to meet rising demand. However, this rapid expansion in capacity has failed to keep track of the lag in demand, making it difficult for miners to reduce capacity when demand falls.
http://www.necoal.com/
Original article: [Chinese]

Electing Delegates to the 18th Party Congress
Nation, page 11
~ The Communist Party of China will hold its 18th Party Congress in the second half of this year. Currently, 38 of the 40 electoral units (24 provincial electoral units and 14 central financial units) have finished electing their delegates. The EO has noticed some particularly interesting points on the election.
~ There will be 2,279 delegates to the 18th Party Congress, representing more than 80 million party members. Though the number of party members has increased by more than a million times (the party started out with about 50 founding members in 1921), the number of delegates has only increased by 175 times.
~ From the published list of delegates, the EO has learned that for each province, the governor, two deputy governors and the director of the local organization department are sure to make it on to the list of party representatives. Meanwhile, the secretary of the local Discipline Inspection Commission, the president of local CPPCC and the secretary of the politics and law commission are more likely to be elected to the party congress than the director of the local United Front Work Department or the local propaganda department.
~ Mayors are rarely elected while more and more private entrepreneurs are becoming party representatives, such as Liang Wengen (梁稳根), director of SANY Group and board director of SANY Heavy Industry Co. Ltd.
~ While central authorities have called for transparency in the election of delegates, not all electoral units published the list of nominees. For example, only 26 of all the 28 provincial electoral units that have held their elections so far published the nomination lists. The Ministry of State Security (国家安全部) also did not publish a list of potential candidates.
Original article: [Chinese]