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Thursday, 04 August 16
BREXIT: IMPLICATIONS FOR GLOBAL SHIPPING AND SEA TRADE - EVERSHEDS
 The buzzword for the post-Brexit landscape both in Europe and further afield is ‘uncertainty’. No-one really knows the long term effect that Brexit will have on local and global economies. However, as the dust settles following the referendum, market experts, industry analysts and businesses are assessing the position with cooler heads and so, whilst certainty may be a little way off, more concrete predictions and assertions of intent are beginning to emerge. This is evident daily in commentary and news from the shipping and sea trade sector.
Global impact
The international shipping market is fuelled by trade, which in turn depends on the health of the global economy. The Brexit vote landed at a time when the shipping market, particularly in certain sectors like bulk freight, was already extremely challenging. The factors which have contributed to dry bulk freight rates heading towards all-time lows in Q1 2016 reflect long term issues which would have persisted whatever the referendum result. These factors include oversupply of ships and the effect on global trade of the rebalancing of the Chinese economy following the boom of the last decade.
Sea trade in and out of the UK accounts for only a very small fraction of global shipping activity and therefore an isolated post-Brexit slowdown in the UK economy may be unlikely to impact dramatically on global freight volumes. This is reflected in some of the bullish reaction we have seen from industry players in recent weeks. Euronav’s chief executive was quoted in Lloyd’s List as saying, on a conference call for analysts: “It should be largely speaking something of a non-event in terms of impact on global trade for crude oil.” For companies with income denominated in US Dollars, which will be the case for many international shipping companies, it could be temporarily beneficial, particularly if costs are in euros and sterling. Others comment that potential constraints in available finance, arising from the Brexit vote, may contribute to a longer term upturn in the market, in terms of helping address the current oversupply of vessels.
However, not all commentators are as optimistic. Whilst there seems generally to be agreement that the Brexit vote alone will not be hugely impactful on world trade, the consequences could be amplified when combined with other matters currently playing themselves out on the world stage. Tradewinds reported this week that Wells Fargo analyst Michael Webber, who covers shipping stocks for the bank, said that the combination of the rise of Donald Trump as the Republican nominee to the White House, the Brexit vote, uncertainty around Italy’s banks and the coup attempt in Turkey could create “meaningful tail risk” for crude demand expectations in the second half of the year. If this prediction is accurate, it is likely to impact on demand for tanker shipping services and therefore freight rates.
The shipping industry, particularly the dry bulk and container sectors, is facing other macro threats to its existence in the longer term, which are completely unrelated to the Brexit vote. The rise of the digital economy and more widespread use of technology in logistics (for example drone deliveries) and the consumer sector (for example 3D printing) may impact on the longterm need for the same volume of goods to be carried by sea.
UK impact
UK trade will clearly be impacted by the Brexit vote. We saw an immediate effect on currency and share prices, although there are signs that the market is settling down after the initial post-vote furore. In terms of longer term impact, there are some matters which are already tolerably clear, for example that any changes to the cost of trade with the EU are likely to affect freight volumes at British ports. However, the precise nature and extent of the effect on UK trade will depend entirely on the form of relationship which is ultimately agreed both with the EU and with other trading partners. With the new British Prime Minister, Theresa May, looking to defer triggering Article 50 until 2017, that form of relationship remains pretty ‘uncertain’.
There are wider potential outcomes for shipping in the UK beyond the direct effect on trade volumes. In terms of the UK offshore industry, for example, Tradewinds reported recently that “when news of the UK’s decision to exit the EU hit the offshore sector, most analysts agreed that the longer-term damage for the sector would be from a possible slowdown in the world’s economy. However, some warned the immediate and near-term effect would be that oil companies would obviously put the brakes on much-needed investment in the UK. The UK continental shelf (UKCS) is already suffering from record low investment — at one-eighth the value of the annual average over the past five years — and the nation’s oil-and-gas sector is on course to have lost up to 140,000 jobs by the end of this year.”
There is also the UK’s position as a leading provider of maritime professional services to consider. The marine insurance industry is pushing hard to maintain the passporting rights currently enjoyed between EU member states, although whether this will be possible without full access to the single market (and the associated EU requirements for free movement of workers) is set to be the key topic in negotiations.
In terms of other professional services, such as legal and shipbroking services, there is some speculation that UK’s so called “stability premium” may have been affected by the vote. However, the UK’s long maritime history, the reputation of its courts (which rely on an extremely well established body of specialist case law) and institutions and the number of highly qualified individuals resident in the UK working in the sector should help ameliorate any effect on this premium at least whilst Brexit is negotiated. However, even if the premium remains intact the professional services sector may be rightly concerned about how services are dealt with in negotiating future trade deals. Such agreements traditionally focus on trade in goods and therefore may not be as advantageous to the services sector.
Conclusion
The global shipping market is experiencing challenging times, mainly due to factors which were set in train long before the brexit vote. However, the shipping industry is used to market cycles and draws resilience from the fact that global trade cannot function without international shipping. Regional issues like the Brexit vote certainly have the power to impact the market, but if ultimately they are not significant enough to affect global supply and demand for physical goods and commodities, they are unlikely to prove more than a drop in the ocean in terms of their individual impact on the global shipping market.
The impact of the vote is bound to be felt more locally, in the UK and European shipping industry. Particular markets, such as the UK offshore market and the UK marine professional services market, will be watching the negotiations unfold very carefully in order to evaluate both the issues and also the opportunities that brexit creates for them depending on the future structure of relations both between the UK and the EU and the UK and the rest of the world.
Source: Eversheds International | Hellenic Shipping News
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Wednesday, 10 August 16
THE INDONESIAN DRAFT NEW MINING LAW - AMENDMENTS TO THE 2009 MINING LAW
KNOWLEDGE TO ELEVATE
COALspot.com: A draft mining law published by Indonesia's Minister of Energy and Mineral Resources provides use ...
Tuesday, 09 August 16
CS50 COAL INDEX HITS NEW FIFTY-WEEKS HIGH
COALspot.com: Average 5000 GAR coal index of Indonesian origin rose 1.78% week over week to averaging $41.85 per ton this past week, shows CS (i) C ...
Tuesday, 09 August 16
HARD COAL PRODUCTION AND WORLD TRADE ON THE DECLINE FOR THE FIRST TIME IN YEARS - VDKI
Hard coal production and world trade on the decline for the first time in years – not a harbinger of a global energy turnaround
Worldwid ...
Tuesday, 09 August 16
BREXIT, BRITANNIA AND THE WAVES - TREVOR CROWE, CLARKSON RESEARCH
This week, the Bank of England put into place its action plan following the UK referendum on 23rd June, which indicated the British population&rsqu ...
Monday, 08 August 16
INDONESIA'S DRAFT MINING LAW HINTS AT FUTURE REGULATORY FRAMEWORK
KNOWLEDGE TO ELEVATE
COALspot.com: A draft mining law published by Indonesia's Minister of Energy and Mineral Resources provides use ...
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- South Luzon Thermal Energy Corporation
- Aboitiz Power Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Intertek Mineral Services - Indonesia
- PTC India Limited - India
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Dalmia Cement Bharat India
- Semirara Mining Corp, Philippines
- Planning Commission, India
- Goldman Sachs - Singapore
- Billiton Holdings Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Binh Thuan Hamico - Vietnam
- Bukit Makmur.PT - Indonesia
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- New Zealand Coal & Carbon
- Standard Chartered Bank - UAE
- Lanco Infratech Ltd - India
- Energy Development Corp, Philippines
- London Commodity Brokers - England
- ICICI Bank Limited - India
- Metalloyd Limited - United Kingdom
- Miang Besar Coal Terminal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Coal and Oil Company - UAE
- Mjunction Services Limited - India
- Barasentosa Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Energy Link Ltd, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
- Malabar Cements Ltd - India
- White Energy Company Limited
- Vizag Seaport Private Limited - India
- Gujarat Sidhee Cement - India
- Anglo American - United Kingdom
- Ambuja Cements Ltd - India
- Independent Power Producers Association of India
- Global Coal Blending Company Limited - Australia
- Central Electricity Authority - India
- Pipit Mutiara Jaya. PT, Indonesia
- Jaiprakash Power Ventures ltd
- Electricity Generating Authority of Thailand
- Aditya Birla Group - India
- Sojitz Corporation - Japan
- Toyota Tsusho Corporation, Japan
- Australian Commodity Traders Exchange
- IEA Clean Coal Centre - UK
- Kobexindo Tractors - Indoneisa
- Trasteel International SA, Italy
- PowerSource Philippines DevCo
- Ministry of Transport, Egypt
- Bhushan Steel Limited - India
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Simpson Spence & Young - Indonesia
- Marubeni Corporation - India
- Medco Energi Mining Internasional
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- Thiess Contractors Indonesia
- Indonesian Coal Mining Association
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Bhatia International Limited - India
- Georgia Ports Authority, United States
- Mercator Lines Limited - India
- Merrill Lynch Commodities Europe
- Ministry of Mines - Canada
- Holcim Trading Pte Ltd - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Coalindo Energy - Indonesia
- Borneo Indobara - Indonesia
- Thai Mozambique Logistica
- Chamber of Mines of South Africa
- Banpu Public Company Limited - Thailand
- Riau Bara Harum - Indonesia
- McConnell Dowell - Australia
- AsiaOL BioFuels Corp., Philippines
- Karaikal Port Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Madhucon Powers Ltd - India
- Altura Mining Limited, Indonesia
- Tamil Nadu electricity Board
- Wood Mackenzie - Singapore
- Posco Energy - South Korea
- The State Trading Corporation of India Ltd
- Latin American Coal - Colombia
- Baramulti Group, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Carbofer General Trading SA - India
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Grasim Industreis Ltd - India
- Kartika Selabumi Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- MS Steel International - UAE
- GMR Energy Limited - India
- Essar Steel Hazira Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bayan Resources Tbk. - Indonesia
- Attock Cement Pakistan Limited
- Sinarmas Energy and Mining - Indonesia
- Salva Resources Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Videocon Industries ltd - India
- VISA Power Limited - India
- Antam Resourcindo - Indonesia
- Formosa Plastics Group - Taiwan
- The Treasury - Australian Government
- Leighton Contractors Pty Ltd - Australia
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Romanian Commodities Exchange
- The University of Queensland
- ASAPP Information Group - India
- Bharathi Cement Corporation - India
- San Jose City I Power Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- Maheswari Brothers Coal Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mintek Dendrill Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Savvy Resources Ltd - HongKong
- Indian Oil Corporation Limited
- IHS Mccloskey Coal Group - USA
- Global Business Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Pendopo Energi Batubara - Indonesia
- Eastern Energy - Thailand
- India Bulls Power Limited - India
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Minerals Council of Australia
- PetroVietnam Power Coal Import and Supply Company
- Power Finance Corporation Ltd., India
- CNBM International Corporation - China
- Jindal Steel & Power Ltd - India
- Electricity Authority, New Zealand
- Agrawal Coal Company - India
- Uttam Galva Steels Limited - India
- Ind-Barath Power Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Vedanta Resources Plc - India
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- Kapuas Tunggal Persada - Indonesia
- Xindia Steels Limited - India
- Global Green Power PLC Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- Kalimantan Lumbung Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Sical Logistics Limited - India
- Eastern Coal Council - USA
- Sakthi Sugars Limited - India
- Makarim & Taira - Indonesia
- Indo Tambangraya Megah - Indonesia
- Interocean Group of Companies - India
- Asmin Koalindo Tuhup - Indonesia
- Kaltim Prima Coal - Indonesia
- Cement Manufacturers Association - India
- Bukit Baiduri Energy - Indonesia
- Deloitte Consulting - India
- Star Paper Mills Limited - India
- Manunggal Multi Energi - Indonesia
- Orica Mining Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Commonwealth Bank - Australia
- Bhoruka Overseas - Indonesia
- Australian Coal Association
- Wilmar Investment Holdings
- Ministry of Finance - Indonesia
- Mercuria Energy - Indonesia
- Oldendorff Carriers - Singapore
- Globalindo Alam Lestari - Indonesia
- Heidelberg Cement - Germany
- Directorate Of Revenue Intelligence - India
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coastal Gujarat Power Limited - India
- Petron Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement - Thailand
- Economic Council, Georgia
- Port Waratah Coal Services - Australia
- Siam City Cement PLC, Thailand
- Edison Trading Spa - Italy
- LBH Netherlands Bv - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Indian Energy Exchange, India
- Jorong Barutama Greston.PT - Indonesia
- Renaissance Capital - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Kideco Jaya Agung - Indonesia
- PNOC Exploration Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Parry Sugars Refinery, India
- Indogreen Group - Indonesia
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