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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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Tuesday, 02 August 16
INDONESIAN CS COAL INDICES STAY POSITIVE
COALspot.com: Average 5000 GAR coal index of Indonesian origin rose 0.71% week over week to averaging $41.12 per ton this past week, shows CS (i) C ...
Monday, 01 August 16
4200 GAR INDONESIAN COAL PRICE MAY TOUCH $ 32/33 A TON LEVELS SOON
COALspot.com: Indonesian coal prices are likely surge further in 2016 as the recent price movement in Indonesian coal markets suggests that the mar ...
Monday, 01 August 16
BALTIC INDEX ENDED NEGATIVE NOTE THIS PAST WEEK ON WEAKER RATES ACROSS ALL LARGE VESSEL SEGMENTS
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities slide slightly as Cape, Panamax and Supramax segments end ...
Friday, 29 July 16
U.S. COAL OUTPUT SLIPS SLIGHTLY WEEK OVER WEEK
COALspot.com – U.S., the world’s second largest coal producers has produced approximately totalled an estimated 15 million short tons ( ...
Thursday, 28 July 16
FITCH RAISES CORPORATE OIL PRICE ASSUMPTION FOR 2016 TO USD42
Fitch Ratings has raised the 2016 oil price assumptions it uses when rating energy-sector corporates, but expects record high inventories to slow a ...
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- Baramulti Group, Indonesia
- Straits Asia Resources Limited - Singapore
- Metalloyd Limited - United Kingdom
- Aditya Birla Group - India
- Jorong Barutama Greston.PT - Indonesia
- Indian Energy Exchange, India
- Parliament of New Zealand
- Interocean Group of Companies - India
- Sarangani Energy Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Bhushan Steel Limited - India
- Power Finance Corporation Ltd., India
- Renaissance Capital - South Africa
- Central Java Power - Indonesia
- Toyota Tsusho Corporation, Japan
- Chettinad Cement Corporation Ltd - India
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Indian Oil Corporation Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coal and Oil Company - UAE
- Anglo American - United Kingdom
- Australian Coal Association
- GMR Energy Limited - India
- Gujarat Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- Edison Trading Spa - Italy
- Karbindo Abesyapradhi - Indoneisa
- Madhucon Powers Ltd - India
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- Africa Commodities Group - South Africa
- Kapuas Tunggal Persada - Indonesia
- PTC India Limited - India
- Port Waratah Coal Services - Australia
- Semirara Mining and Power Corporation, Philippines
- Semirara Mining Corp, Philippines
- Makarim & Taira - Indonesia
- CNBM International Corporation - China
- Formosa Plastics Group - Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Energy Link Ltd, New Zealand
- Vizag Seaport Private Limited - India
- Ministry of Transport, Egypt
- Intertek Mineral Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Ambuja Cements Ltd - India
- Borneo Indobara - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Indo Tambangraya Megah - Indonesia
- ICICI Bank Limited - India
- Timah Investasi Mineral - Indoneisa
- Electricity Generating Authority of Thailand
- PetroVietnam Power Coal Import and Supply Company
- Kartika Selabumi Mining - Indonesia
- Singapore Mercantile Exchange
- Carbofer General Trading SA - India
- Ministry of Finance - Indonesia
- Medco Energi Mining Internasional
- GN Power Mariveles Coal Plant, Philippines
- Bangladesh Power Developement Board
- Electricity Authority, New Zealand
- Bhatia International Limited - India
- Sakthi Sugars Limited - India
- Kumho Petrochemical, South Korea
- Essar Steel Hazira Ltd - India
- Global Business Power Corporation, Philippines
- Parry Sugars Refinery, India
- Malabar Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- Mintek Dendrill Indonesia
- Independent Power Producers Association of India
- London Commodity Brokers - England
- Planning Commission, India
- Barasentosa Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- India Bulls Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Bhoruka Overseas - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Jaiprakash Power Ventures ltd
- SMC Global Power, Philippines
- Deloitte Consulting - India
- Manunggal Multi Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
- Georgia Ports Authority, United States
- Riau Bara Harum - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- PowerSource Philippines DevCo
- IHS Mccloskey Coal Group - USA
- Meralco Power Generation, Philippines
- Larsen & Toubro Limited - India
- The Treasury - Australian Government
- Salva Resources Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Altura Mining Limited, Indonesia
- Savvy Resources Ltd - HongKong
- Ceylon Electricity Board - Sri Lanka
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercuria Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Economic Council, Georgia
- Petron Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Marubeni Corporation - India
- Agrawal Coal Company - India
- Tata Chemicals Ltd - India
- Globalindo Alam Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- McConnell Dowell - Australia
- White Energy Company Limited
- International Coal Ventures Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- LBH Netherlands Bv - Netherlands
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- Mjunction Services Limited - India
- Therma Luzon, Inc, Philippines
- Australian Commodity Traders Exchange
- Attock Cement Pakistan Limited
- Heidelberg Cement - Germany
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- Bulk Trading Sa - Switzerland
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- Coastal Gujarat Power Limited - India
- Coalindo Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Cement Manufacturers Association - India
- Indonesian Coal Mining Association
- Sojitz Corporation - Japan
- Energy Development Corp, Philippines
- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- Eastern Coal Council - USA
- Wood Mackenzie - Singapore
- Trasteel International SA, Italy
- Billiton Holdings Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Ministry of Mines - Canada
- Latin American Coal - Colombia
- Kalimantan Lumbung Energi - Indonesia
- Thai Mozambique Logistica
- Orica Australia Pty. Ltd.
- Indika Energy - Indonesia
- Bharathi Cement Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- Meenaskhi Energy Private Limited - India
- Tamil Nadu electricity Board
- Kohat Cement Company Ltd. - Pakistan
- Iligan Light & Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Xindia Steels Limited - India
- Uttam Galva Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asmin Koalindo Tuhup - Indonesia
- Minerals Council of Australia
- Dalmia Cement Bharat India
- Maheswari Brothers Coal Limited - India
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- Miang Besar Coal Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement - Thailand
- AsiaOL BioFuels Corp., Philippines
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Vedanta Resources Plc - India
- Grasim Industreis Ltd - India
- SMG Consultants - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- The University of Queensland
- Mercator Lines Limited - India
- Antam Resourcindo - Indonesia
- GAC Shipping (India) Pvt Ltd
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Kobexindo Tractors - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Videocon Industries ltd - India
- Lanco Infratech Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Rio Tinto Coal - Australia
- Commonwealth Bank - Australia
- GVK Power & Infra Limited - India
- Central Electricity Authority - India
- Aboitiz Power Corporation - Philippines
- Star Paper Mills Limited - India
- Pendopo Energi Batubara - Indonesia
- Ind-Barath Power Infra Limited - India
- The State Trading Corporation of India Ltd
- Indogreen Group - Indonesia
- Banpu Public Company Limited - Thailand
- South Luzon Thermal Energy Corporation
- Cigading International Bulk Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Posco Energy - South Korea
- Gujarat Sidhee Cement - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SN Aboitiz Power Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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