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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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Thursday, 25 September 14
LACK OF COAL BUSINESS PUSHING DOWN PANAMAX EARNINGS IN PACIFIC
Handy
In the Atlantic we see rates steady climbing upwards. More coal cargoes out of USG and USEC are helping the TA market which is up some USD ...
Wednesday, 24 September 14
ADARO AGREED TO REDUCE ITS CONCESSION AREA TO 31,379.8 HECTARES
COALspot.com: PT Adaro Energy Tbk (Adaro Energy) today announced that, PT Adaro Indonesia (AI), its wholly owned subsidiary, entered into a M ...
Wednesday, 24 September 14
CAPESIZE: ACTIVITY IN BOTH BASINS WAS UNIMPRESSIVE
COALspot.com: The end of the week prior seems to have marked the tone for the days that followed, with the Dry Bulk market giving up a significant ...
Tuesday, 23 September 14
MEDCO TO INCREASE ITS COAL PRODUCTION NEXT YEAR
COALspot.com: PT Medco Energi Internasional is looking to increase its coal production next year, supported by the launch of operations at its Duta ...
Monday, 22 September 14
COAL SECTOR CHAOS - GENESIS TO REVELATION - DIPESH DIPU
COALspot.com: “Let there be light”, intends the government of India but the fuel side of the story paints a blackout. The recent Suprem ...
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- Malabar Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Intertek Mineral Services - Indonesia
- Meralco Power Generation, Philippines
- Trasteel International SA, Italy
- IHS Mccloskey Coal Group - USA
- Bangladesh Power Developement Board
- Neyveli Lignite Corporation Ltd, - India
- Simpson Spence & Young - Indonesia
- Aboitiz Power Corporation - Philippines
- Electricity Generating Authority of Thailand
- Samtan Co., Ltd - South Korea
- London Commodity Brokers - England
- Baramulti Group, Indonesia
- ICICI Bank Limited - India
- Semirara Mining Corp, Philippines
- ASAPP Information Group - India
- Directorate Of Revenue Intelligence - India
- Vedanta Resources Plc - India
- Toyota Tsusho Corporation, Japan
- Siam City Cement - Thailand
- Interocean Group of Companies - India
- GVK Power & Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Minerals Council of Australia
- Manunggal Multi Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Uttam Galva Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Parry Sugars Refinery, India
- Antam Resourcindo - Indonesia
- CNBM International Corporation - China
- AsiaOL BioFuels Corp., Philippines
- McConnell Dowell - Australia
- San Jose City I Power Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Merrill Lynch Commodities Europe
- The University of Queensland
- Thiess Contractors Indonesia
- Holcim Trading Pte Ltd - Singapore
- Bharathi Cement Corporation - India
- Timah Investasi Mineral - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Straits Asia Resources Limited - Singapore
- Carbofer General Trading SA - India
- Attock Cement Pakistan Limited
- Asmin Koalindo Tuhup - Indonesia
- Thai Mozambique Logistica
- Petrochimia International Co. Ltd.- Taiwan
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- GN Power Mariveles Coal Plant, Philippines
- Central Electricity Authority - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Energy Link Ltd, New Zealand
- Rio Tinto Coal - Australia
- Sinarmas Energy and Mining - Indonesia
- Georgia Ports Authority, United States
- Global Green Power PLC Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Sindya Power Generating Company Private Ltd
- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Banpu Public Company Limited - Thailand
- Sakthi Sugars Limited - India
- Petron Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Cement Manufacturers Association - India
- Commonwealth Bank - Australia
- Pendopo Energi Batubara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Coastal Gujarat Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Mines - Canada
- GAC Shipping (India) Pvt Ltd
- Mercuria Energy - Indonesia
- Grasim Industreis Ltd - India
- Wood Mackenzie - Singapore
- Essar Steel Hazira Ltd - India
- Siam City Cement PLC, Thailand
- SMG Consultants - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Australian Commodity Traders Exchange
- Tamil Nadu electricity Board
- PTC India Limited - India
- Global Coal Blending Company Limited - Australia
- Eastern Coal Council - USA
- Therma Luzon, Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Xindia Steels Limited - India
- Renaissance Capital - South Africa
- Kalimantan Lumbung Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Romanian Commodities Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Cigading International Bulk Terminal - Indonesia
- Maheswari Brothers Coal Limited - India
- Agrawal Coal Company - India
- Makarim & Taira - Indonesia
- Jaiprakash Power Ventures ltd
- Goldman Sachs - Singapore
- Sree Jayajothi Cements Limited - India
- Lanco Infratech Ltd - India
- New Zealand Coal & Carbon
- Vizag Seaport Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
- Bhoruka Overseas - Indonesia
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- Port Waratah Coal Services - Australia
- Gujarat Sidhee Cement - India
- SMC Global Power, Philippines
- Central Java Power - Indonesia
- Globalindo Alam Lestari - Indonesia
- Chamber of Mines of South Africa
- Barasentosa Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Mjunction Services Limited - India
- Coal and Oil Company - UAE
- Indonesian Coal Mining Association
- Price Waterhouse Coopers - Russia
- Indian Energy Exchange, India
- Kaltim Prima Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Australian Coal Association
- Power Finance Corporation Ltd., India
- The Treasury - Australian Government
- TeaM Sual Corporation - Philippines
- Altura Mining Limited, Indonesia
- Electricity Authority, New Zealand
- Ambuja Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Edison Trading Spa - Italy
- Krishnapatnam Port Company Ltd. - India
- Jorong Barutama Greston.PT - Indonesia
- VISA Power Limited - India
- Metalloyd Limited - United Kingdom
- PNOC Exploration Corporation - Philippines
- Riau Bara Harum - Indonesia
- Oldendorff Carriers - Singapore
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Planning Commission, India
- Mintek Dendrill Indonesia
- White Energy Company Limited
- Bukit Makmur.PT - Indonesia
- Orica Mining Services - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Orica Australia Pty. Ltd.
- Chettinad Cement Corporation Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Miang Besar Coal Terminal - Indonesia
- Salva Resources Pvt Ltd - India
- Anglo American - United Kingdom
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- Kideco Jaya Agung - Indonesia
- Sojitz Corporation - Japan
- Jindal Steel & Power Ltd - India
- PowerSource Philippines DevCo
- Indian Oil Corporation Limited
- International Coal Ventures Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- India Bulls Power Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indika Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Posco Energy - South Korea
- Independent Power Producers Association of India
- Kohat Cement Company Ltd. - Pakistan
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- Ministry of Transport, Egypt
- Singapore Mercantile Exchange
- South Luzon Thermal Energy Corporation
- Heidelberg Cement - Germany
- Energy Development Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Indo Tambangraya Megah - Indonesia
- IEA Clean Coal Centre - UK
- Aditya Birla Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PetroVietnam Power Coal Import and Supply Company
- Kobexindo Tractors - Indoneisa
- Star Paper Mills Limited - India
- Borneo Indobara - Indonesia
- Latin American Coal - Colombia
- Eastern Energy - Thailand
- Dalmia Cement Bharat India
- OPG Power Generation Pvt Ltd - India
- Madhucon Powers Ltd - India
- Ministry of Finance - Indonesia
- Wilmar Investment Holdings
- Videocon Industries ltd - India
- Ind-Barath Power Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Medco Energi Mining Internasional
- Bhushan Steel Limited - India
- Sarangani Energy Corporation, Philippines
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