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Wednesday, 01 October 14
FITCH: GLOBAL ECONOMY FACES MULTI-SPEED RECOVERY, MULTIPLE RISKS
 Fitch Ratings says in its latest Global Economic Outlook (GEO) that global growth will pick up in 2015 and 2016, but risks are weighted to the downside. The contribution of major advanced economies (MAEs) to global expansion will gradually increase, while growth will remain subdued in emerging markets (EMs) after the cyclical trough this year. Fitch’s latest forecasts for world GDP growth (weighted at market exchange rates) are 2.6% in 2014, accelerating to 3% in 2015 and 3.1% 2016.
The 2014 and 2015 forecasts are both 0.1pp lower than in the June GEO. The downward revisions, similar to previous quarters, are mainly due to emerging markets. For the US economy Fitch maintains its forecast of robust GDP growth of 3.1% in 2015 and 3% in 2016, up from 2.2% in 2014. The economy rebounded strongly in 2Q14 after a temporary setback in 1Q14. Private consumption growth is underpinned by improving household income, wealth and confidence.
Investment should be supported by high corporate cash piles and profitability, low financing costs, rising confidence and capacity utilisation. Monetary policy remains highly accommodative and the drag from fiscal consolidation is significantly smaller than it was in 2013. We forecast eurozone GDP growth of 0.9% in 2014, followed by 1.3% in 2015 and 1.5% in 2016, slightly weaker than in the June GEO. Output stagnated in 2Q14 following four quarters of insipid growth, due primarily to a sharp slowdown in Germany.
Over the forecast horizon growth will be supported by the US and UK recoveries, euro depreciation, ECB policy loosening and an easing in the pace of fiscal consolidation. However, faltering recent outturns suggest deleveraging and structural constraints remain formidable headwinds, eroding potential benefits from improving external conditions or policy stimulus. High unemployment will persist and remain above 11% until 2016. Fitch’s base case is for eurozone inflation to be low at 0.5% in 2014, 1% in 2015 and 1.3% in 2016, but for protracted deflation to be avoided. However, current low inflation, weak demand, a decline in market inflation expectations, policy challenges and the potential for self-reinforcing dynamics make deflation a meaningful and rising risk.
We forecast EM growth to slow sharply from 4.7% in 2013 to 4% in 2014, before recovering somewhat in 2015-16. Looming US monetary policy tightening, geo-political tensions and lower commodity prices pose downside risks. Brazil is now in recession and Russia close to it. Fitch expects both to see only a subdued recovery in 2015 and 2016, underperforming most MAEs over the forecast period.
Fitch expects China’s GDP growth to moderate to 7.2% in 2014, 6.8% in 2015 and 6.5% in 2016 as it gradually rebalances while seeking to contain leverage. India will be the only BRIC country where growth picks up in 2014 to 5.6% and accelerates further to 6.5% in 2015 and 2016, owing to an expected improvement in the business environment.
The underlying momentum of the Japanese economy is uncertain after sharper-than-expected contraction in 2Q14. We have revised down GDP growth to 1.4% in 2014, from 1.6% previously, and are maintaining our forecast of 1.3% for 2015 and 2016. Higher wage growth is central to Japan’s prospects of achieving sustainably higher real and nominal GDP growth. Growth in the UK has been strong and broad-based. Fitch is maintaining its forecast that growth will slow from 3% in 2014 to 2.5% in 2015 and 2.3% in 2016, as it moves to its medium-term potential rate of 2%-2.25%.
The base case is that nominal wage growth will pick up as the labour market slack is absorbed and the currently weak productivity growth will improve, in line with previous cyclical recoveries. The coming quarters will see increasing divergence of monetary conditions in MAEs after six years of synchronised, ultra-loose monetary stance.
Fitch expects the Fed and Bank of England to start gradually tightening policy over the next few quarters. Meanwhile, the ECB announced further easing measures at its September meeting and the Bank of Japan is continuing with its qualitative and quantitative easing strategy. The ECB and Bank of Japan are likely to keep interest rates unchanged until at least 2016. This GEO edition’s alternative scenario explores the global impact of a US interest rate shock. In this scenario the Federal Funds rate increases to 5% and the ten-year US yield reaches 6% by end-2016, triggered by an initial inflation shock as the economy runs out of spare capacity much sooner than policy makers and the markets currently expect.
Furthermore volatility spikes in global financial markets and leads to a 150 bps increase in global risk premium. Growth slows sharply in the US from mid-2015 and the economy stagnates in 2016. According to the simulation results the impact on MAEs is limited and stems mainly from lower US demand. Nevertheless the shock raises the risk of a new recession in the eurozone as the baseline recovery is so weak. In many EMs, central banks tighten monetary conditions due to the higher risk premium and inflation, despite the economic slowdown. Russia and Brazil would remain close to recession in 2015 and 2016, while India would slow sharply and China would be the least affected among the BRICs.
Source: Fitch Ratings
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Friday, 10 October 14
INDONESIA TO DEVELOP DOWNSTREAM COAL INDUSTRY - JP
The government is planning to launch a program to develop the downstream coal industry to increase the commodity’s added value, an official h ...
Friday, 10 October 14
U.S. PRODUCED 83.2 MMST OF COAL IN SEPTEMBER, SAYS EIA
COALspot.com – United States the world's one of largest coal producers, produced approximately 18.6 million short tons (mmst) of coal in ...
Thursday, 09 October 14
CAPESIZE MARKET HAS CONTINUED TO SHOW WEAKNESS - FEARNLEYS
Handy
We mentioned last week that after several weeks of rate increase for the Supras, the bigger Panamaxes started to snap up better paying Supr ...
Thursday, 09 October 14
SHIPPING REMAINS CHALLENGED AS GLOBAL GROWTH DISAPPOINTS - BIMCO
The global shipping industry finds no grace from much stronger economic activity going forward, as the global recovery remains fragile and uneven. ...
Wednesday, 08 October 14
CAPES RATE FOR THE W. AUSTRALIA TO CHINA VOYAGE MOVED TO BELOW $8/MT - INTERMODAL
The Dry Bulk market remained under pressure last week, with rates for Capes remaining on the red while those for Panamaxes managed to outperform th ...
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- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Riau Bara Harum - Indonesia
- Kobexindo Tractors - Indoneisa
- Electricity Generating Authority of Thailand
- Madhucon Powers Ltd - India
- Bukit Makmur.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- PetroVietnam Power Coal Import and Supply Company
- Directorate General of MIneral and Coal - Indonesia
- Larsen & Toubro Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMC Global Power, Philippines
- Globalindo Alam Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- Marubeni Corporation - India
- Petron Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Antam Resourcindo - Indonesia
- Kartika Selabumi Mining - Indonesia
- Posco Energy - South Korea
- Semirara Mining and Power Corporation, Philippines
- Indika Energy - Indonesia
- Uttam Galva Steels Limited - India
- Attock Cement Pakistan Limited
- Iligan Light & Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Heidelberg Cement - Germany
- Borneo Indobara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Semirara Mining Corp, Philippines
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Savvy Resources Ltd - HongKong
- Sojitz Corporation - Japan
- Ministry of Finance - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Wilmar Investment Holdings
- Indogreen Group - Indonesia
- Kumho Petrochemical, South Korea
- Deloitte Consulting - India
- TNB Fuel Sdn Bhd - Malaysia
- Bhatia International Limited - India
- OPG Power Generation Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Ind-Barath Power Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Renaissance Capital - South Africa
- San Jose City I Power Corp, Philippines
- Minerals Council of Australia
- Grasim Industreis Ltd - India
- Orica Mining Services - Indonesia
- Planning Commission, India
- Maheswari Brothers Coal Limited - India
- ASAPP Information Group - India
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Sree Jayajothi Cements Limited - India
- TeaM Sual Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
- Jindal Steel & Power Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Bhoruka Overseas - Indonesia
- Sarangani Energy Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Commonwealth Bank - Australia
- Global Green Power PLC Corporation, Philippines
- Parry Sugars Refinery, India
- India Bulls Power Limited - India
- Trasteel International SA, Italy
- Vizag Seaport Private Limited - India
- Bangladesh Power Developement Board
- CNBM International Corporation - China
- GN Power Mariveles Coal Plant, Philippines
- Port Waratah Coal Services - Australia
- Alfred C Toepfer International GmbH - Germany
- Tamil Nadu electricity Board
- Economic Council, Georgia
- Sakthi Sugars Limited - India
- Central Electricity Authority - India
- Chamber of Mines of South Africa
- Aditya Birla Group - India
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- CIMB Investment Bank - Malaysia
- Oldendorff Carriers - Singapore
- AsiaOL BioFuels Corp., Philippines
- Kaltim Prima Coal - Indonesia
- Edison Trading Spa - Italy
- Independent Power Producers Association of India
- The State Trading Corporation of India Ltd
- Rio Tinto Coal - Australia
- VISA Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Sical Logistics Limited - India
- Mercator Lines Limited - India
- Central Java Power - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Medco Energi Mining Internasional
- Coalindo Energy - Indonesia
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- Xindia Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- Singapore Mercantile Exchange
- Asmin Koalindo Tuhup - Indonesia
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Interocean Group of Companies - India
- White Energy Company Limited
- Salva Resources Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Altura Mining Limited, Indonesia
- Jaiprakash Power Ventures ltd
- Sindya Power Generating Company Private Ltd
- Mjunction Services Limited - India
- Formosa Plastics Group - Taiwan
- Karaikal Port Pvt Ltd - India
- McConnell Dowell - Australia
- European Bulk Services B.V. - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Goldman Sachs - Singapore
- PowerSource Philippines DevCo
- Binh Thuan Hamico - Vietnam
- LBH Netherlands Bv - Netherlands
- GAC Shipping (India) Pvt Ltd
- Ambuja Cements Ltd - India
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Videocon Industries ltd - India
- Siam City Cement PLC, Thailand
- Ceylon Electricity Board - Sri Lanka
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Aboitiz Power Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Makarim & Taira - Indonesia
- Romanian Commodities Exchange
- Ministry of Mines - Canada
- Energy Development Corp, Philippines
- Malabar Cements Ltd - India
- Coal and Oil Company - UAE
- Latin American Coal - Colombia
- Parliament of New Zealand
- Orica Australia Pty. Ltd.
- Coastal Gujarat Power Limited - India
- Ministry of Transport, Egypt
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- Kohat Cement Company Ltd. - Pakistan
- Africa Commodities Group - South Africa
- Siam City Cement - Thailand
- Mintek Dendrill Indonesia
- Kideco Jaya Agung - Indonesia
- Global Coal Blending Company Limited - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Tata Chemicals Ltd - India
- Meralco Power Generation, Philippines
- Essar Steel Hazira Ltd - India
- Samtan Co., Ltd - South Korea
- Wood Mackenzie - Singapore
- Anglo American - United Kingdom
- Indonesian Coal Mining Association
- Kalimantan Lumbung Energi - Indonesia
- Cement Manufacturers Association - India
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Mercuria Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Lanco Infratech Ltd - India
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Standard Chartered Bank - UAE
- Barasentosa Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- IHS Mccloskey Coal Group - USA
- GMR Energy Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- Power Finance Corporation Ltd., India
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- Banpu Public Company Limited - Thailand
- Chettinad Cement Corporation Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Dalmia Cement Bharat India
- London Commodity Brokers - England
- Pipit Mutiara Jaya. PT, Indonesia
- Star Paper Mills Limited - India
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Carbofer General Trading SA - India
- IEA Clean Coal Centre - UK
- Pendopo Energi Batubara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Australian Commodity Traders Exchange
- Indian Energy Exchange, India
- Sinarmas Energy and Mining - Indonesia
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
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