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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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Monday, 08 August 16
THE TURKISH GOVERNMENT HAS IMPOSED A $15 A TON DUTY ON POWER PLANT COAL IMPORTS - MEDIA
COALspot.com: The Turkish government has imposed a US$15 per ton duty on thermal coal imports for use in its power sector.
According to media ...
Monday, 08 August 16
THE BALTIC EXCHANGE, TRACKING RATES FOR SHIPS CARRYING DRY BULK COMMODITIES SLIDE SLIGHTLY
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities slide slightly as Panamax and Supramax segments ending in ...
Monday, 08 August 16
ARE EXPENSES INCURRED DURING NEGOTIATION OF A PIRATE RANSOM RECOVERABLE IN GENERAL AVERAGE? - CLYDE&CO
KNOWLEDGE TO ELEVATE
Facts
The laden chemical tanker LONGCHAMP was transiting the Gulf of Aden on passage to Vietnam. The ship was subject t ...
Saturday, 06 August 16
DRY BULK SHIPPING CHARTER RATES TO RISE ON UNEXPECTED DEMAND GROWTH - DREWRY
Increasing trade and contracting supply will support a recovery in charter rates on major dry bulk shipping routes, with the prospect of China impo ...
Friday, 05 August 16
WEEKLY U.S. COAL OUTPUT TOTALED AN ESTIMATED 16.1 MMST IN THE WEEK ENDED JULY 30 - EIA
COALspot.com – U.S., the world’s second largest coal producers has produced approximately totalled an estimated 16.1 million short tons ...
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- Economic Council, Georgia
- Miang Besar Coal Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- Savvy Resources Ltd - HongKong
- Metalloyd Limited - United Kingdom
- LBH Netherlands Bv - Netherlands
- White Energy Company Limited
- Heidelberg Cement - Germany
- Therma Luzon, Inc, Philippines
- Indian Energy Exchange, India
- TNB Fuel Sdn Bhd - Malaysia
- Australian Commodity Traders Exchange
- Rio Tinto Coal - Australia
- Maheswari Brothers Coal Limited - India
- International Coal Ventures Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chamber of Mines of South Africa
- Antam Resourcindo - Indonesia
- Borneo Indobara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Energy - Thailand
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- Semirara Mining and Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Madhucon Powers Ltd - India
- Vizag Seaport Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Globalindo Alam Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Edison Trading Spa - Italy
- SMG Consultants - Indonesia
- Indogreen Group - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Uttam Galva Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Coalindo Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Posco Energy - South Korea
- Leighton Contractors Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Deloitte Consulting - India
- Ministry of Finance - Indonesia
- TeaM Sual Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- VISA Power Limited - India
- Mercator Lines Limited - India
- IEA Clean Coal Centre - UK
- Jaiprakash Power Ventures ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meenaskhi Energy Private Limited - India
- Parliament of New Zealand
- Sical Logistics Limited - India
- Gujarat Sidhee Cement - India
- ASAPP Information Group - India
- Ministry of Transport, Egypt
- Electricity Authority, New Zealand
- Ministry of Mines - Canada
- Siam City Cement - Thailand
- Bhushan Steel Limited - India
- San Jose City I Power Corp, Philippines
- Bharathi Cement Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Tata Chemicals Ltd - India
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- Latin American Coal - Colombia
- Kumho Petrochemical, South Korea
- The State Trading Corporation of India Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GN Power Mariveles Coal Plant, Philippines
- IHS Mccloskey Coal Group - USA
- Marubeni Corporation - India
- Interocean Group of Companies - India
- Kepco SPC Power Corporation, Philippines
- Mjunction Services Limited - India
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- Price Waterhouse Coopers - Russia
- Krishnapatnam Port Company Ltd. - India
- The University of Queensland
- European Bulk Services B.V. - Netherlands
- Australian Coal Association
- Formosa Plastics Group - Taiwan
- SN Aboitiz Power Inc, Philippines
- Coal and Oil Company - UAE
- Simpson Spence & Young - Indonesia
- Commonwealth Bank - Australia
- Parry Sugars Refinery, India
- Neyveli Lignite Corporation Ltd, - India
- Thai Mozambique Logistica
- Trasteel International SA, Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Oil Corporation Limited
- Kartika Selabumi Mining - Indonesia
- Indonesian Coal Mining Association
- Global Coal Blending Company Limited - Australia
- Global Green Power PLC Corporation, Philippines
- Mercuria Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- ICICI Bank Limited - India
- Africa Commodities Group - South Africa
- Ambuja Cements Ltd - India
- Malabar Cements Ltd - India
- Iligan Light & Power Inc, Philippines
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- Central Java Power - Indonesia
- Bulk Trading Sa - Switzerland
- Wilmar Investment Holdings
- Vijayanagar Sugar Pvt Ltd - India
- Bangladesh Power Developement Board
- Standard Chartered Bank - UAE
- Holcim Trading Pte Ltd - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Renaissance Capital - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- Essar Steel Hazira Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Riau Bara Harum - Indonesia
- Aditya Birla Group - India
- Sree Jayajothi Cements Limited - India
- Xindia Steels Limited - India
- Makarim & Taira - Indonesia
- Kobexindo Tractors - Indoneisa
- Agrawal Coal Company - India
- Indo Tambangraya Megah - Indonesia
- Timah Investasi Mineral - Indoneisa
- Karaikal Port Pvt Ltd - India
- Mintek Dendrill Indonesia
- Meralco Power Generation, Philippines
- Sojitz Corporation - Japan
- Toyota Tsusho Corporation, Japan
- PNOC Exploration Corporation - Philippines
- CNBM International Corporation - China
- Power Finance Corporation Ltd., India
- Petron Corporation, Philippines
- Semirara Mining Corp, Philippines
- Videocon Industries ltd - India
- Ceylon Electricity Board - Sri Lanka
- Port Waratah Coal Services - Australia
- Vedanta Resources Plc - India
- GAC Shipping (India) Pvt Ltd
- GMR Energy Limited - India
- Grasim Industreis Ltd - India
- Rashtriya Ispat Nigam Limited - India
- McConnell Dowell - Australia
- Sindya Power Generating Company Private Ltd
- Alfred C Toepfer International GmbH - Germany
- Indika Energy - Indonesia
- Oldendorff Carriers - Singapore
- Central Electricity Authority - India
- Kapuas Tunggal Persada - Indonesia
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- Anglo American - United Kingdom
- Sarangani Energy Corporation, Philippines
- Star Paper Mills Limited - India
- Baramulti Group, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- GVK Power & Infra Limited - India
- Tamil Nadu electricity Board
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Romanian Commodities Exchange
- Georgia Ports Authority, United States
- Directorate General of MIneral and Coal - Indonesia
- Goldman Sachs - Singapore
- London Commodity Brokers - England
- Orica Australia Pty. Ltd.
- Wood Mackenzie - Singapore
- Carbofer General Trading SA - India
- Coastal Gujarat Power Limited - India
- MS Steel International - UAE
- PTC India Limited - India
- Banpu Public Company Limited - Thailand
- Minerals Council of Australia
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement PLC, Thailand
- Aboitiz Power Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Cement Manufacturers Association - India
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- Energy Link Ltd, New Zealand
- Thiess Contractors Indonesia
- Independent Power Producers Association of India
- Kaltim Prima Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Dalmia Cement Bharat India
- SMC Global Power, Philippines
- Intertek Mineral Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Energy Development Corp, Philippines
- Electricity Generating Authority of Thailand
- Chettinad Cement Corporation Ltd - India
- South Luzon Thermal Energy Corporation
- Barasentosa Lestari - Indonesia
- Altura Mining Limited, Indonesia
- New Zealand Coal & Carbon
- Samtan Co., Ltd - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- Planning Commission, India
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