THE WALL STREET JOURNAL. Friday, February 21, 2020 |B3
ferent label. The Gilroy, Calif.-
based company has reached
out to growers in Argentina,
Mexico and Spain to source
more garlic in light of the re-
cent China price surge, said
Ken Christopher, executive
vice president and grandson of
the farm’s founder.
“It’s hard to come by
and...it’s incredibly expensive,”
he said of Chinese garlic right
now. In China, wholesale garlic
prices rose 13% in the first two
weeks of February versus theing popularity in the U.S., and
it is commonly used in ethnic
cuisines from Asia to the Med-
iterranean. Some people also
add more garlic to their diets
because they believe it has
health benefits.
Christopher Ranch, one of
America’s largest garlic pro-
ducers and suppliers, grows
about 100 million pounds of
garlic a year on its farms in
California. It also buys garlic
from China and other coun-
tries and sells it under a dif-annual data available. Most of
it was for domestic consump-
tion, according to the United
Nations Food and Agriculture
Organization.
America imported 199 mil-
lion fresh pounds of garlic that
year. Of that, about 70% was
sourced from China, according
to U.N. Comtrade data.
The average American con-
sumes about 2 pounds of gar-
lic a year, according to a Mich-
igan State University report.
Garlic’s flavor has been gain-rector of integrated gas and
new energies.
It would be “imprudent” to
give any guidance on the vol-
umes affected, given the situa-
tion is continuing, Mr. Wetse-
laar said.
Earlier this month, China
National Offshore Oil Corp.,
which buys about 40% of
China’s LNG, declaredforce
majeureon cargoes supplied
by Total,BPPLC and Shell, ac-
cording to tanker brokers and
owners and a Chinese oil exec-
utive. At the time, Shell de-
clined to comment.
In its quest to improve air
quality, along with its growing
energy demand, China has be-
come the world’s largest gas
importer, with LNG imports
doubling in the two years to
the end of 2018. Electricity
generation from natural gas
emits roughly half the amount
of greenhouse gas emissions
as coal.
The Asian LNG price bench-
mark—the Korea Marker—re-
cently fell to below $3 per mil-
lion British thermal units,
hitting a record low on Friday
in the wake of the coronavirus.
The lower prices were helping
to attract buyers for LNG car-
goes previously destined for
China; “for example, India has
been a popular destination,”
said Mr. Wetselaar.
New York-based ship broker
Poten & Partners estimates
China will cut LNG imports by
49 cargoes, or 3.3 million tons,
between February and April.
Shell forecasts that gas and
renewables combined will sup-
ply around 80% of the growth
in global energy demand in
the coming 20 years.Royal Dutch ShellPLC, the
global leader in liquefied natu-
ral gas sales, said Thursday that
the coronavirus outbreak was
hurting demand for the super-
cooled fuel and prompting it to
reschedule or locate new buyers
for cargoes previously allocated
to the Chinese market.
The global LNG market is
more balanced after a four-year
wave of new supply, the energy
giant said, even with the new
coronavirus crimping demand
and sending prices to record
lows since the outbreak began.
Growth in LNG production
will halve this year,Shellsaid
in its annual LNG outlook, fore-
casting an additional 20 mil-
lion tons of supply, after a re-
cord 40 million tons was added
in 2019. The effects of the cor-
onavirus weren’t included in its
projections, the company said.
The coronavirus has caused
a slowdown in industrial activ-
ity in China, as well as hitting
energy demand for travel and
logistics.
China—one of the top three
global importers of LNG—had
been expected to absorb up to
six million tons, or around
one-third of the additional
supplies in 2020 before the
outbreak of the virus. This vol-
ume is now expected to be
lower, Shell said, without giv-
ing revised figures.
Shell accounts for around a
fifth of the world’s LNG supply
and, alongside Qatar Petroleum
andTotalSA, is one of China’s
top suppliers of the fuel.
“We are affected and han-
dling the situation,” said
Maarten Wetselaar, Shell’s di-
BYSARAHMCFARLANE
Shell Expects Hit From
Chinese LNG Demand
But that has left them badly
exposed to major disruption in
China. As the epidemic wors-
ened, many foreign airlines, in-
cluding U.S. carriers, com-
pletely halted flights to Chinese
destinations last month.
China’s own airlines have
become some of the world’swhich have expanded direct
services to Chinese destina-
tions in recent years, some of-
fering dozens of flights a week.
American Airlines Group
Inc.’s namesake carrier, for ex-
ample, normally operates 28
weekly flights between the U.S.
and China.connecting Bangkok with Seoul
and Singapore, as regional
customers lose their appetite
for travel.
China’s rise to the world’s
second busiest aviation market
after the U.S. has been a
strong source of growth for all
the world’s major airlines,hard, the Chinese air-travel
sector has since grown 10-fold.
The airline industry stands
to lose $5 billion in revenue in
the first quarter, the Interna-
tional Civil Aviation Organiza-
tion estimates. As of Feb. 14
Chinese airlines had refunded
over $2.85 billion to passen-
gers unable to take canceled
flights, according to the CAAC.
While China’s three big
state-run carriers—Air China
Ltd.,China Eastern Airlines
Corp. andChina Southern Air-
linesCo.—are strong finan-
cially, some smaller players will
struggle to sustain the crip-
pling of their operations for
long, said Paul Yong, an analyst
at DBS Bank in Singapore.
Hainan Airlines is espe-
cially vulnerable, he said,
thanks to the well-publicized
debt struggles of its parent,
HNA GroupCo. The govern-
ment could take the crisis as
its cue to intervene and allow
the big three to carve up Hai-
nan Airlines’ routes—a move
that was the subject of indus-
try rumors long before the cor-
onavirus epidemic began.
—Yin Yijun
contributed to this article.biggest, with a global footprint.
All have slashed services over
the past month as the country
battles the epidemic, which by
Wednesday had infected 74,576
and killed 2,118 people in main-
land China, according to the of-
ficial count.
With millions of Chinese
people facing travel restric-
tions and many others simply
avoiding nonessential travel,
regional demand for flights has
collapsed, forcing carriers to
cancel over 25,000 flights a
week in total, according to avi-
ation data companyOAG.
The number of seats avail-
able on domestic Chinese
flights fell 63% year-over-year
to 5.4 million in the second
week of February, OAG said.
And many of those seats were
empty, with daily passenger
numbers down 91% on year as
of Monday, according to the
Civil Aviation Administration
of China.
“No event that we remem-
ber has had such a devastating
effect on capacity,” OAG’s se-
nior analyst John Grant wrote
in a Feb. 17 commentary. While
the SARS outbreak of 2003
also hit aviation companiesBUSINESS NEWS
Airlines around the world
are counting the cost of the
coronavirus that has led to
thousands of China flights be-
ing canceled, with several
Asian airlines teetering on the
brink of ruin if the nation’s
shutdown persists.
Many carriers have taken
emergency measures in hope of
offsetting expected losses re-
sulting from the continuing
slump in global traffic. In Hong
Kong,Cathay Pacific Airways
Ltd.—already feeling the im-
pact of the city’s antigovern-
ment protests—has asked all
its staff to take three weeks’
unpaid leave, whileHong Kong
AirlinesLtd. has sacked more
than 400 workers.Asiana Air-
linesInc., South Korea’s sec-
ond largest carrier, also asked
thousands of staff to take un-
paid leave.
Australia’sQantas Airways
Ltd. said Thursday it was re-
ducing services to Hong Kong
and Singapore in addition to
suspending flights to mainland
China until at least the end of
May, whileThai Airways In-
ternationalPCL has cut flights
BYTREFORMOSS
Coronavirus Wreaks Havoc on Airlines
Norwegian Cancels
Asia Cruises Till FallNorwegian Cruise Line Hold-
ingsLtd. said it has canceled its
voyages in Asia across three
brands through the end of Sep-
tember as the coronavirus epi-
demic weighs on its bottom line.
The cruise operator said it
has scrapped, modified or rede-
ployed 40 voyages, including 24
voyages on Norwegian Cruise
Line, 10 on Oceania Cruises and
six on Regent Seven Seas
Cruises. The company said it
won’t deploy vessels in Asia
through the end of the
third quarter.
The company expects the
epidemic, which has disruptedtravel, to hurt full-year adjusted
earnings by 75 cents a share. It
sees capacity growth of 8.1% for
the full year, down from its pre-
vious guidance of 8.7%. Norwe-
gian on Thursday also reported a
drop in fourth-quarter earnings
as expenses rose, though results
topped expectations.
Outside of Asia, the epidemic
has led to an increase in cancel-
lations and significant slowdown
in new bookings, Chief Executive
Frank Del Rio said on a call
with analysts.
Carnival Corp.’s Diamond
Princess turned into a quarantine
for more than 600 coronavirus
patients, and some of its 3,700
passengers and crew still remain
aboard at the ship’s dock near
Tokyo two weeks after their
voyage was scheduled tohave ended.
The media coverage of the
Diamond Princess helped fuel
trepidation among customers,
Mr. Del Rio said.
“Nothing is permanent,” Mr.
Del Rio said. “Customers do have
a relatively short memory—
thank God.”
The epidemic is “easily a big-
ger deal than anything since 9/11
to the travel industry,” Wedbush
Securities Inc. analyst James
Hardiman said, adding that
“cruise customers are remark-
ably resilient.”
Royal Caribbean Cruises Ltd.
has said the epidemic would
shave 65 cents a share off its
per-share earnings in 2020 as it
canceled sailings in Southeast
Asia and modified itineraries.
—Dave Sebastianup 60% since the start of the
year, USDA data showed. In
contrast, prices for other agri-
cultural commodities—such as
soybeans and cotton—have
fallen because of expectations
for lower Chinese demand.
Garlic production in China
has slowed since authorities
sounded alarms over the
spread of the virus just before
the start of the Lunar New
Year holiday in late January.
Many transportation and
shipping routes have been hin-
dered by lockdowns in cities
affected by the outbreak, in ad-
dition to quarantine measures
in other areas. Farms and lo-
gistics companies are facing la-
bor shortages because millions
of workers have yet to return
to their jobs after the holiday,
say agricultural analysts.
It takes about nine months
to grow garlic before it can be
harvested, which typically hap-
pens once a year during the
summer. The bulbs are then
sold over the following year.
China produced about 49
billion pounds of garlic in
2018, which is the most recentGarlic prices are rising as
the widening coronavirus out-
break is causing disruptions in
the supply chain in China, the
world’s largest producer of the
vegetable.
In recent years, China has
been responsible for as much
as 80% of the global garlic
supply. More than two-thirds
of the fresh garlic that the U.S.
imports comes from China, ac-
cording to the United Nations’
Comtrade database.
U.S. retail prices of garlic
are at their highest levels
since 2018, driven by concerns
that supplies could run short
in coming months. A sleeve of
garlic—which typically con-
tains five bulbs—cost an aver-
age of $1.425 in stores during
the first two weeks of Febru-
ary, up 29% from a year ear-
lier, according to the U.S. Agri-
culture Department.
Wholesale prices have
jumped even more. A 30-
pound bag of white Chinese
garlic imported into California
recently sold for $85 to $87,
BYLUCYCRAYMER
Garlic Price Jumps
Amid Disruption
In China Supplies
Workers packed garlic in China in 2016. U.S. retail prices of garlic are the highest since 2018.GUO XULEI/XINHUA/ZUMA PRESSaverage price in January, ac-
cording to government data.
John Milan, who owns five
U.S. farms that grow garlic,
said tariffs helped buoy the
prices of homegrown garlic.
He expects prices to climb fur-
ther this summer when he
sells his next batch of crops.Source: U.S. Agriculture DepartmentGarlicisbecomingmorecostly
inU.S.storesaspricesof
Chinesecloveshavesurged.
Retail prices
$1.500.800.901.001.101.201.301.40for a bag of five bulbs’20Monthly
2019Median price of imported
Chinese garlic in Los Angeles
$9050607080for a 30-pound box of garlic2019 ’20DailyEXTRACT OF THE NOTICE OF CALL OF EXTRAORDINARY SHAREHOLDERS’ MEETING
(pursuant to Article 125-bis, paragraph 1, of Legislative Decree 58/1998)The Extraordinary Shareholders’ Meeting of Intesa Sanpaolo S.p.A. is convened,on single call, at the New
Headquarters in Torino, Corso Inghilterra no. 3, at 10:00 a.m.on 27 April 2020, to discuss and pass resolu-
tions on the followingAgenda:- Proposal to grant the Board of Directors, pursuant to Art. 2443 of the Civil Code, with the power, to be
exercised by 31 December 2020, to increase the share capital of the Company, in one or more tranches
and in a divisible form, without pre-emption right pursuant to Art. 2441, paragraph 4, first sentence,
of the Civil Code, and with issuance of maximum no. 1,943,823,435 ordinary shares, with no par value,
having the same characteristics as the outstanding shares, whose issuance price shall be determined by
the Board of Directors pursuant to the provisions of law, to be paid up by way of contribution in kind
functional to a prior public exchange offer (offerta pubblica di scambio preventiva) on all the ordinary
shares of Unione di Banche Italiane S.p.A.; subsequent amendment of Art. 5 of the Company’s by-laws;
related and consequent resolutions.
Information on the share capital and on:- participating and casting votes in the Shareholders’ Meeting (in this regard, please note that the re-
cord date is 16 April 2020), - participating and casting votes in the Shareholders’ Meeting by proxy and through the Appointed
Representative (Computershare S.p.A.), - exercising the right to add items to the agenda, the right to submit new proposals for resolution and
the right to ask questions on the items on the agenda, - the availability of the documents concerning the items on the agenda and the documentation relating
to the Shareholders’ Meeting,
is set forth in the full notice of call available on the website group.intesasanpaolo.com (“Governance”/
“Shareholders’ Meeting”).
This extract is published in the daily newspapers “Il Sole 24 Ore”, “La Stampa”, “Corriere della Sera”,
“Financial Times” and “The Wall Street Journal”.for the Board of Directors
The Chairman - Gian Maria Gros-PietroIntesa Sanpaolo S.p.A.Registered Office: Piazza S. Carlo, 156 10121 Torino Italy Secondary Registered Office: Via Monte di Pietà, 8
20121 Milano Italy Share Capital Euro 9,085,663,010.32 Torino Company Register and Fiscal Code No. 00799960158 “Intesa Sanpaolo”
VAT Group representative Vat Code No. 11991500015 (IT11991500015) Included in the National Register of Banks No. 5361 ABI Code
3069.2 Member of the National Interbank Deposit Guarantee Fund and of the National Guarantee Fund and Parent Company of the
banking group “Intesa Sanpaolo” included in the National Register of Banking Groups.