Connect with us

Emerging Markets

China rethinks the Jack Ma model

Published

on


When China’s business regulator accused Alibaba Group Holding of selling counterfeit goods over the internet in a report five years ago, the ecommerce giant did not hesitate to fight back.

Alibaba openly challenged the investigation results, filing a formal complaint against a sub-department head responsible for the probe. Then, after a week-long public brawl, in which the company lambasted the State Administration for Industry and Commerce official as “irrational” and “biased”, the dispute ended with the regulator retracting the report.

The timing was crucial. The feud had broken out just a few months after Alibaba’s high-profile 2014 debut on the New York Stock Exchange — the biggest initial public offering ever at the time — which symbolised the arrival of China’s Big Tech era. In those days, Beijing balked at standing in the way of its internet champions, whose services have grown to reach hundreds of millions of users and boosted China’s prestige internationally.

But a half-decade later, the political winds have shifted. After years of bounding growth and shopping sprees for new assets, China’s biggest internet conglomerates extend into most sectors of the economy, from transportation to finance. But while they used to enjoy a free pass on regulatory issues, they are now under unprecedented scrutiny, and the state is asserting its dominance once again.

This article is from Nikkei Asia, a global publication with a uniquely Asian perspective on politics, the economy, business and international affairs. Our own correspondents and outside commentators from around the world share their views on Asia, while our Asia300 section provides in-depth coverage of 300 of the biggest and fastest-growing listed companies from 11 economies outside Japan.

Subscribe | Group subscriptions

The often outspoken Jack Ma, Alibaba’s founder, recently paid a high price for another public jab at regulators. Days after Mr Ma likened traditional banks to pawnshops and labelled the existing financial regulatory framework an “old people’s club”, regulators abruptly suspended the $34bn IPO of Ant Group, an Alibaba spin-off in which Mr Ma is a controlling shareholder.

Had the listing not been halted, it would have set a fresh record as the world’s largest. The decision to prevent that came from the highest level possible in China: as Nikkei Asia previously reported, the order to delay and probably cancel the IPO came from Xi Jinping, China’s president.

A month later, Daniel Zhang, Mr Ma’s successor as Alibaba CEO and chairman, made a contrite climbdown. He pledged loyalty to the authorities on behalf of the group in a government-led forum in Zhejiang. In humble tones, Mr Zhang called the new guidelines on internet companies “timely and necessary”. He also stressed the importance of government support in the company’s development.

Tencent Holdings CEO Pony Ma and Alibaba Group Holding Executive Chairman Jack Ma attend an event marking the 40th anniversary of China’s reform and opening up at the Great Hall of the People in Beijing
Tencent Holdings CEO Pony Ma and Alibaba Group Holding Executive Chairman Jack Ma attend an event marking the 40th anniversary of China’s reform and opening up at the Great Hall of the People in Beijing © Wang Zhao/AFP

“As part of China’s digital economy, we are both a constructor and a beneficiary,” said Mr Zhang, a former accountant. “We are very grateful for this era.”

China is clearly no stranger to meddling with the internet. The so-called Great Firewall, for example, blocks many foreign websites. But the hammer blow dealt to the Ant IPO signalled that a new era in regulation is nigh.

This was further underlined on November 10, when China’s anti-monopoly regulator, the State Administration for Market Regulation, put out a 22-page document of draft guidelines aimed at preventing large internet platforms from blocking competition. Since then, the share prices of Alibaba, Tencent, Meituan and JD.com have dropped between 9 per cent and 17 per cent.

The next move came on December 14, when SAMR fined Tencent Holdings Rmb500,000 (around $76,000). It alleged that the company had failed to seek regulatory approval when subsidiary China Literature acquired Chinese media and entertainment company New Classics Media in 2018. Alibaba was fined the same amount in connection with its investments in Intime Retail, a department store chain, between 2014 and 2018.

It has long been a requirement to report such deals. But regulators have declined to enforce it, an apparent effort not to obstruct the internet economy’s growth.

That mindset has changed. According to a revision to the current antimonopoly law, maximum fines could soon add up to 10 per cent of a companies’ revenue, a change expected to take effect next year. That could come to billions of dollars, based on last year’s earnings.

The lesson, according to Victor Shih, associate professor at the University of California, San Diego, is that China’s internet groups cannot count on government forbearance any more. “Even with all the things that make China look really good, the Chinese government can put a stop to it if it perceives that private entrepreneurs are not toeing the line of the party,” he said.

Mr Shih said the Chinese leadership has longstanding concerns about the Big Tech companies, and now the regulator has decided to “flex its muscle” in a sweeping crackdown on internet portals to demonstrate “who is in charge in China”.

Over the course of November, a number of different bodies rolled out new rules aimed at regulating the conduct of internet companies in different sectors, such as finance and media. Anti-competitive practices, overmarketing on live streaming platforms and illegal personal data collection of mobile apps are just a few of the practices targeted by the new rules.

“For large internet platforms, what they are facing now is a multidimensional regulatory tightening,” said Scott Yu, a Beijing-based lawyer who specialises in antitrust matters with Chinese law firm Zhong Lun.

A Meituan delivery person waits at a traffic light in Fuxin, Liaoning province, China. Tech newcomers like Meituan have followed the expansion playbook of the established giants, aggressively buying up smaller companies © Bloomberg

In antitrust enforcement in China, the government has often been uniquely tolerant of monopolies, which dominate industries from shipbuilding to telecoms. Previously, lax enforcement was seen as an expression of the Communist party’s conventional wisdom: domestically, monopolies are more manageable than a messily competitive market, and internationally, they are more competitive. But the vertiginous rise of China’s Big Tech companies has clearly spooked the government and triggered a rethink of its monopoly-friendly attitudes.

Zhu Ning, professor of finance and deputy dean at the Shanghai Advanced Institute of Finance, said many internet companies have expanded rapidly, supported by massive capital. Importantly, their influence has grown to an extent that they can sway government policy. “This concerns policymakers very much,” he said.

Long-established companies Alibaba, Tencent and Baidu, known collectively as BAT, have accumulated over a billion users each and expanded aggressively into new businesses partly by buying start-ups. Internet newcomers Pinduoduo (ecommerce), Meituan (food delivery), JD.com (ecommerce), Didi Chuxing (ride-hailing), and ByteDance (short videos) have largely followed in their footsteps. For example, Didi is now providing cloud services to corporations, and Meituan in 2018 bought the bicycle-sharing app Mobike.

“The winners in the internet economy not only dominate their own field, but they can also easily expand their reach into other areas and dominate more industries by leveraging consumer data,” said Mr Yu.

The proposed antitrust guidelines will give Chinese law enforcement bodies more space for discretion in determining abuse by companies. While some countries define monopolistic behaviour by market share, for example, China’s new guidelines for internet companies are more flexible. Regulators only need to prove that their conduct has hindered consumer interests to come in for enforcement.

For example, an ecommerce company with a large amount of purchasing data could conceivably manipulate the logistics industry by sharing the latest information on consumer demand with select operators to help them better organise routes and warehouses. Those who are not part of its information-sharing network, however, would be put at a disadvantage.

According to the 22-page consultation document — published one day ahead of Alibaba’s blockbuster annual Singles Day shopping event in November — practices such as selling goods below cost, price discrimination based on customer data analytics, and exclusive sales agreements would also be in violation of the proposed regulations.

Positive energy

One of the primary concerns to the Communist Party is that internet monopolies now host a vast amount of media that is difficult to censor. These include social media, news aggregation, livestreaming and short video, and accounted for more than half of the time Chinese internet users spent online, according to a survey conducted by the China Internet Network Information Center in April.

“The influence of some internet companies reaches as far as trying to manipulate social attitudes and media reporting. This steps into sensitive areas never touched by Chinese private companies,” Zhu Ning said.

Their influence grew even further during the pandemic, as people spend more time online. China’s internet users spent an average of 30.8 hours per week online as of March, up from 27.6 hours two years ago, the survey shows.

But unlike traditional media outlets with editorial control, new platforms generate a large amount of AI-tailored content for each user. Media regulators will have a harder time exercising control over the sharing of news and the formation of public opinion.

Such concerns prompted the National Radio and Television Administration, China’s media watchdog, to tighten the rules significantly for online streaming platforms in late November. It ordered broadcasters and their gift-givers — those who demonstrate approval by giving virtual gifts — to register real names and company affiliations, to hire more censors, and to livestream more programmes that spread “positive energy”.

Financial services is another area of contention, as Jack Ma’s ill-fated speech clearly showed. Until recently, internet companies were able to offer banking services on the cheap, backed by a fraction of the capital and governed by far fewer rules than retail banks. Newcomers insisted that their big-data technology would insure against any systemic risk to the financial sector. But their sprawling reach through the economy is now adding to the concerns of China’s banking regulator.

Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, warned during a forum on December 8 that some tech companies were becoming “too big to fail”, as the micropayment market they dominate involves substantial public interest.

“The fintech industry leads to many new phenomena and problems . . . It is necessary to . . . take timely and targeted measures to prevent new systemic risks,” he said.

Most internet companies consider financial services to be a low hanging fruit that can generate big profits. Even Didi, known for its ride-hailing mobile app, and Sina, known for microblogging platform Weibo, have started to provide online loans.

Alipay, the payment app of Alibaba, had more than 700m monthly active users as of June, while Tencent’s WeChat Pay had more than 800m in 2019. Tencent said about 79.4 per cent of small to mid-merchants in China were using its payment services for businesses as of January 2020.

However, Mr Guo’s speech is widely seen as a signal for more regulatory tightening in the fintech industry.

Regulators tend to be cautious as financial risks spread fast to other industries, said Zhu Wuxiang, a professor at Tsinghua University’s School of Economics and Management, though he noted the lower deposit ratio and higher leverage of online loan providers do not necessarily mean bigger default risks. Instead, Mr Zhu said the Big Tech companies are more capable of giving an accurate assessment of a person’s credit condition by cross-checking user information collected from different digital portals compared with the traditional banks.

However, “from the government’s point of view, it can’t tell the risks clearly at the moment”, he said.

Wild West

In China, a formerly totalitarian state where mass surveillance is still a fact of life, one could be forgiven for thinking that data privacy is not a huge priority.

It is surprising, then, that another priority for the government is the sanctity of personal data. A draft version of the nation’s first designated personal-data protection law was published in October and is undergoing public consultation. In further draft guidelines in December, China’s internet regulator, the Cyberspace Administration, also gave detailed instructions on what can be considered “required personal information for operations” for 38 types of apps.

“Traditionally, the Chinese app development space has approached user-data collection from the perspective [of]: I’m going to get everything I might need later,” said Kendra Schaefer, head of tech advisory practice at Beijing-based consultancy Trivium. This contrasts with western countries, where regulators require companies to collect only the data necessary for their operations, she said. But data collection in China has not been properly regulated because there is no regulation to follow, and the lack of rules has led to an anarchic internet sector rife with abuses.

Alibaba had more than 700 million monthly active users as of June, while Tencent’s WeChat Pay had more than 800 million in 2019
A customer scans an Alipay (R) QR payment code to pay for groceries at a market in Beijing. Alibaba had more than 700m monthly active users as of June, while Tencent’s WeChat Pay had more than 800m in 2019 © AFP

China’s Ministry of Industry and Information Technology has, since last year, reported dozens of mobile applications for practices including illegally collecting and using user information, sharing personal data with third parties without permission, and seeking excessive access authorisation to private information. Tencent, Sina, Baidu, Huawei Technologies and Xiaomi were among the developers behind the problematic apps.

A Nanjing-based software engineer who developed more than 20 mobile apps told Nikkei Asia that many applications were designed to grab as much personal data as possible from one’s smartphone without properly informing the user.

In some cases, programs will order apps to secretly turn on the microphone of the user and record daily conversations. The system will then use AI tools to analyse chat contents, often by capturing keywords, and make the app push relevant products or contents for the user, the 30-year-old engineer said, who only gave his last name as Wang. Some apps would also collect user’s real-time location information when users are not using the app, he added.

“These are very easy to achieve through existing technologies,” Mr Wang said. Big companies with many apps under their umbrellas often enjoy a disproportionate advantage, he said, as user data is often shared among these apps and the new products they developed are often more competitive thanks to the better market analysis backed by big data.

However, Mr Wang said the internet companies are now facing more restrictions on app designs. In recent years, smartphones have been upgrading their operating systems with more personal data protection measures, and Chinese regulators have also imposed more checks on those same apps.

A screen shows the value of goods being transacted during Alibaba Group's Singles' Day global shopping festival at a media center in Hangzhou, Zhejiang province, China November 11, 2020
A screen shows the value of goods being transacted during Alibaba Group’s Singles’ Day global shopping festival at a media centre in Hangzhou, Zhejiang province, China, November 11, 2020 © AFP

Samuel Yang, a lawyer specialising in personal privacy protection and cyber security at An Jie, a Beijing law firm, believes the pending legislation would have a big impact on the internet companies’ business.

“There is no doubt that the internet companies will be burdened with more compliance requirements,” Mr Yang said. But he believes the government will still try to strike a balance between economic growth and personal information protection.

Carlton Lai, an analyst with Daiwa Capital Markets, believes limiting internet companies’ data collection will hurt their competitiveness. Many rely on statistics from various digital channels to track ever-evolving user trends and business opportunities.

“Companies need to develop new businesses to keep up growth. Who knows when people will get bored of short videos?” he said.

Thin porridge

China’s new digital economy has created millions of new jobs, from software engineers to express delivery couriers. But the internet industry’s rapid evolution has also increased the risk of social disturbances, another area of concern for the CCP.

Experts say the internet companies’ pursuit of efficiency is not always in line with Beijing’s political agenda, where stability comes first.

More than 15m users of the bike-sharing app Ofo, for example, failed to get their deposit money back after the troubled start-up suffered a cash crunch in late 2018. Angry tenants at Chinese online apartment rental platform Danke Apartment clashed with unpaid landlords over forced eviction, after the company failed to pay rents on tenants’ behalf.

A dog walks past piled-up bicycles of bike-sharing company Ofo in Kunming, Yunnan Province on November 13, 2018
A dog walks past piled-up bicycles of bike-sharing company Ofo in Kunming, Yunnan Province on November 13, 2018 © REUTERS

Meanwhile, tens of millions of Chinese investors lost their savings during the collapse of peer-to-peer lending schemes that mushroomed a few years ago. The most infamous case was the 2016 collapse of online lender Ezubo, in which investors lost Rmb50bn. The platform’s two founders were sentenced to life in prison.

These bitter episodes are a constant reminder for the top leadership in China that the internet companies can cause immense trouble, and at a huge scale, if they are not kept in check.

“The internet, as a tool, redistributes the resources and wealth in the real economy. It does not create. It disrupts,” Andy Xie, an independent economist in Shanghai and former head of Morgan Stanley’s Asia-Pacific economics team, put it bluntly.

“In China, anything that works to the disadvantage of the party’s rule will inevitably be weakened,” he said.

While internet entrepreneurs crow about “disrupting” traditional offline industries, this has, in reality, meant lower revenues and higher unemployment. For example, Ye Jianqing, who runs a sunglasses manufacturing company in Wenzhou, said he has lost 30 per cent to 40 per cent of his clients because the smaller vendors turned to online platforms.

“The porridge is getting thinner and thinner,” he said.

Another example is that many internet companies have launched community group-buying services, which allow a group of residents within the same apartment compound to buy groceries and fresh produce in bulk at discounted prices. Professor Zhu Ning said the services will erode low-income jobs in cities, including street hawkers and supermarket salespersons.

Ecommerce companies are also looking to expand the so-called customer-to-manufacturer model, which directly connects end-producers and end-consumers, cutting out the middlemen.

“If that were to take hold, it will obviously cut down all the middlemen and vendors. That will potentially have a very severe negative impact on the real economy and on employment,” said professor Shih, “That would be a concern to the party.”

Solid foundation

In addition to the concerns of instability domestically, Ms Schaefer of Trivium believes another motivation for Beijing’s push for new internet regulations is to advance the fortunes of its companies internationally.

In other words, China may suddenly be interested in internet regulation because other countries are too. “It’s no secret that China aims to become a technological superpower in areas such as blockchain, AI, big data, etc. There is a growing awareness among top leadership that it cannot do that without a solid foundation of data governance principles,” she said.

Acquisitive internet conglomerates have recently come under scrutiny in many jurisdictions. Both Europe and the US have tightened the regulations on big internet platforms and launched an array of investigations or lawsuits against Big Tech companies including Google’s parent company Alphabet, Apple, Facebook, and Amazon.

Facebook CEO Mark Zuckerberg testifies before the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law in Washington, D.C. on July 29
Facebook CEO Mark Zuckerberg testifies before the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law in Washington, DC on July 29 © AFP

Since October, US state and federal authorities have announced lawsuits aimed at Google and now Facebook, aimed at checking their market dominance and possibly breaking them up. In March, Google was fined €1.49bn ($1.76bn) by the European Commission for abusing its market dominance in online advertising. The commission is also investigating Amazon, alleging it used independent seller data on its platform to benefit its own retail business over third party sellers.

Governments including those of Singapore, the US, France and Indonesia have started to hold social media operators such as Facebook and Twitter accountable for misinformation on their platforms — especially during election times — and to urge them to be more transparent on what is sponsored content.

“The anti-competitive legislation on internet platforms in China is in line with the international trend,” said Susan Ning, a lawyer at King & Wood Mallesons who has been involved in drafting China’s anti-monopoly law and its accompanying regulations and guidelines since the early 2000s.

China’s government may well be operating with two motives in mind: checking the power of the internet conglomerates, but also, bringing regulations on areas like data privacy and internet finance up to international standards. That would put their companies in a better position to compete abroad.

“China wants to empower its tech companies, and wants its tech companies to be strong enough to compete with the likes of Google and Facebook, Uber on foreign ground,” said Ms Schaefer. “But at the same time, their ultimate, ultimate goal is stability. They are free to innovate to a certain extent, but as soon as they stepped on [the party’s] toes, they are going to get jerked back. We see this going on and on for the past 20 years.”

A version of this article was first published by Nikkei Asia on December 16, 2020. ©2020 Nikkei Inc. All rights reserved.

Related stories



Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Emerging Markets

China lands spacecraft on Mars

Published

on

By


China has landed a spacecraft containing a rover on Mars, according to state media, in a further sign of its bold ambitions in the sphere.

The rover was part of the Tianwen-1 unmanned mission launched in July last year. Tianwen means “questions to heaven” and was named after a poem by Chinese poet Qu Yuan.

The mission, which was described by Chinese media as a “new major milestone” and the “first step in China’s planetary exploration of the solar system”, was intended to match the US by successfully landing on the red planet.

The Global Times reported that the lander and the rover from the Tianwen-1 probe reached a plain on Mars called Utopia Planitia on early Saturday morning local time, citing information from the China National Space Administration.

The Tianwen-1 probe’s lander and rover separated with the orbiter at about 4am, after which it had a three hour flight before entering Mars’ atmosphere, according to the newspaper.

The spacecraft then “spent around nine minutes decelerating, hovering for obstacle avoidance and cushioning, before its soft landing”. The rover is named Zhurong after a Chinese god of fire, and is 1.85m and weighs 240kg. It is expected to transverse the planet for about 92 days.

The probe was launched into space on July 23 by the Long March 5 rocket from the Wenchang launch pad in Hainan province, in the south of the country.

The achievement of the Mars landing is part of a wider expansion of China’s space programme. The country’s engineers launched the first part of its permanent space station into the Earth’s orbit late last month.

In 2018, China for the first time launched more vessels into orbit than any other nation.

The US views China’s efforts in space in strategic terms. “Beijing is working to match or exceed US capabilities in space to gain the military, economic and prestige benefits that Washington has accrued from space leadership,” according to the annual threat assessment published by the office of the US director of national intelligence.



Source link

Continue Reading

Emerging Markets

Iron ore sinks from record high on concerns over China crackdown

Published

on

By


The scorching rally that propelled the price of steel-making commodity iron ore to a record high came to a shuddering halt on Friday on concerns China will crack down on speculative activity.

The main iron ore futures contract in Singapore fell as much as 14 per cent to $190 a tonne before recovering to $209, while there were also big drops in China where the most active contract on the Dalian Commodity Exchange slumped almost 8 per cent.

The sell-off came as the local government in Tangshan, China’s main steel-making city, said it would examine illegal behaviour and suspend production at mills found to be manipulating market prices by spreading rumours and hoarding material, according to reports from Reuters and Bloomberg.

“China’s central government seems to be very concerned about this major input for its steel-intensive economy,” said Tom Price, head of commodities strategy at Liberum. “I think what the pullback reflects is the government trying to rein in prices.”

Line chart of $ per tonne showing Iron ore prices have fallen after a strong rally

Authorities in China have sought to cool hot commodity markets, with Premier Li Keqiang calling this week for stable prices. Iron was trading at $90 a tonne a year ago and hit a record high of $230 this week. Tangshan, which accounts for 14 per cent of China’s steel output, has introduced production curbs as part of a crackdown on pollution.

However, these measures have been slow to take effect as mills in the rest of the country have rushed to crank up output to take advantage of reduced capacity in Tangshan and cash in on record domestic steel prices. A decision to remove the export tax rebate for some steel products on June 1 has also led to other mills increasing production.

As a result, China’s steel production hit a record level in March, with output up 19 per cent year on year to 94m tonnes, according to financial group ANZ. The firm said production was even higher in April, with exports up 20 per cent year on year. That in turn boosted iron ore, which climbed 35 per cent over the past month.

“What the Chinese government is trying to do is incrementally contain the steel market, mindful of the fact they have spent a fortune resurrecting their economy over the past 12 months and they don’t want to kill the recovery,” said Price. “The measures are quite clever.”

Iron ore has led a broad advance in commodity markets over the past year, fanning talk that another “supercycle” — a long period of high prices — has arrived.

That has been a boon for big iron producers such as Anglo-Australian company BHP and its Brazilian rival Vale, which require a price of just $50 a tonne to break even.

However, most analysts think the iron ore market will remain tight and prices elevated for the rest of the year. That view is based on rising steel demand outside China as big economies accelerate and while important producers in Australia are operating at full capacity.

“While the price has been thumped in the past couple of days, demand remains robust, helped by the fantastic margins the steel industry is enjoying,” said Andrew Glass, Singapore-based founder of Avatar Commodities.

Elsewhere, copper was set for its first weekly loss in more than a month amid worries that a tightening of credit in China could hit demand for the metal, used in everything from household goods to electric vehicles. Copper, which started the week at $10,412 a tonne, was trading at $10,245 on Friday.



Source link

Continue Reading

Emerging Markets

Biden says ‘strong reason’ to believe pipeline hackers are in Russia

Published

on

By


Joe Biden said the US government has “strong reason” to believe the hackers behind a massive cyber attack that shut the Colonial petroleum pipeline were based in Russia, as he urged Americans to not panic over temporary fuel shortages.

“We do not believe the Russian government was involved in this attack. But we do have strong reason to believe that the criminals who did the attack are living in Russia. That is where it came from,” the US president said in a speech on Thursday afternoon at the White House.

“We have been in direct communication with Moscow about the imperative for responsible countries to take decisive action against these ransomware networks,” he added, noting he hoped to discuss the issue with Russia’s president Vladimir Putin.

The 5,500-mile pipeline system has capacity for 2.5m barrels a day of liquid fuels such as petrol diesel and jet fuel, which it carries from Gulf Coast refineries to major hubs in the north-east. The FBI has indicated that the shutdown was caused by a ransomware attack by hacking group DarkSide.

Cyber experts claim Russia tacitly allows ransomware gangs to operate in the country and will not prosecute them. In return, those criminals do not attack Russian companies and can be called upon to share their access to victims’ systems, experts say.

Last month, the US Treasury accused one of Russia’s intelligence services, the FSB, of “cultivating and co-opting” the notorious ransomware group Evil Corp, which has been sanctioned.

The Colonial pipeline — responsible for carrying almost half of the motor fuel used on the US east coast — began the process of fully reopening on Wednesday evening, five days after it was hit by a cyber attack that triggered a spate of panic-buying by motorists across the US south-east.

Biden said the US government expected a “region by region return to normalcy beginning this weekend and continuing into next week”. He urged Americans to avoid panic-buying petrol, and said he had called on state governors and local authorities to keep a lookout for any illegal price gouging by businesses.

“Don’t panic, number one. I know seeing lines at the pumps or gas stations with no gas can be extremely stressful, but this is a temporary situation,” Biden said. “Do not get more gas than you need in the next few days.”

Shortages at filling stations triggered by panic-buying continued on Thursday, with 70 per cent of stations in North Carolina running dry and about half in Virginia, Georgia and South Carolina, according to GasBuddy, a data provider.

The situation in some major urban hubs was beginning to improve, however. The amount of stations without fuel in Atlanta fell from a peak of 73 per cent overnight to 68 per cent by Thursday afternoon.

Colonial on Thursday morning said it had made “substantial progress” in bringing its operations back online and that all of its markets would begin receiving product by the afternoon.

Prices at the pump have continued to rise. National average petrol prices rose to $3.03 on Thursday, according to the AAA, an automobile association. They crossed the $3 a gallon threshold on Wednesday for the first time since 2014.

Gasoline futures retreated on the news of Colonial’s reopening, as traders anticipated supplies returning to normal. Contracts for June delivery slipped 7 cents to $2.08, their lowest level since April in Thursday afternoon trading.



Source link

Continue Reading

Trending