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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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Saturday, 30 August 14
RECOVERY IN SIGHT FOR THE DRY BULK SHIPPING MARKET - DREWRY SHIPPING CONSULTANTS
Despite weak freight rates so far this year, Dry Bulk shipping earnings are forecast to recover as demand for both major and minor bulk commodities ...
Friday, 29 August 14
U.S. WEEKLY COAL PRODUCTION DROPS 1.3 PERCENT, EIA SAYS
COALspot.com – United States the world's second largest coal producer, produced approximately 19.40 million short tons (mmst) of coal in ...
Friday, 29 August 14
ADARO'S PROFITS SINK FURTHER AMID FALL IN COAL PRICES - JP
Adaro Energy, one of the country’s largest coal miners, has reported a 31 percent drop in net profit in the first half of this year as global ...
Friday, 29 August 14
CHINESE LIGNITE IMPORTS: QUANTITY OVER QUALITY? - CLARKSONS
In the first half of 2014, Chinese seaborne coal imports declined 0.4% y-o-y to 148mt, largely reflecting a 3.3% fall in imports of steam coal. Mea ...
Thursday, 28 August 14
PANAMAX: OWNERS CAN GET AROUND USD 16000 FOR A FRONTHAUL; PERIOD MARKET - VERY QUIET - FEARNLEYS
Handy
The activity and sentiment is improving in the Atlantic with the general TA rate is up about US$ 800 w-o-w. We see more South American carg ...
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- Indian Energy Exchange, India
- Anglo American - United Kingdom
- Central Electricity Authority - India
- Sical Logistics Limited - India
- Makarim & Taira - Indonesia
- International Coal Ventures Pvt Ltd - India
- The State Trading Corporation of India Ltd
- IHS Mccloskey Coal Group - USA
- Ministry of Transport, Egypt
- OPG Power Generation Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Renaissance Capital - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Jaiprakash Power Ventures ltd
- Semirara Mining and Power Corporation, Philippines
- GMR Energy Limited - India
- Indo Tambangraya Megah - Indonesia
- Kobexindo Tractors - Indoneisa
- Merrill Lynch Commodities Europe
- Miang Besar Coal Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Independent Power Producers Association of India
- Therma Luzon, Inc, Philippines
- Oldendorff Carriers - Singapore
- Aboitiz Power Corporation - Philippines
- Mercuria Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Bhatia International Limited - India
- Madhucon Powers Ltd - India
- Baramulti Group, Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Australian Coal Association
- SMC Global Power, Philippines
- Lanco Infratech Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhoruka Overseas - Indonesia
- Pendopo Energi Batubara - Indonesia
- Coastal Gujarat Power Limited - India
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
- Simpson Spence & Young - Indonesia
- Maheswari Brothers Coal Limited - India
- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
- Ind-Barath Power Infra Limited - India
- The Treasury - Australian Government
- Interocean Group of Companies - India
- Indika Energy - Indonesia
- PowerSource Philippines DevCo
- Thai Mozambique Logistica
- Trasteel International SA, Italy
- Siam City Cement PLC, Thailand
- Rashtriya Ispat Nigam Limited - India
- Gujarat Sidhee Cement - India
- Indogreen Group - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Ministry of Finance - Indonesia
- Eastern Energy - Thailand
- European Bulk Services B.V. - Netherlands
- Commonwealth Bank - Australia
- Singapore Mercantile Exchange
- Economic Council, Georgia
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Marubeni Corporation - India
- Tamil Nadu electricity Board
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Coal Council - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Sindya Power Generating Company Private Ltd
- Jindal Steel & Power Ltd - India
- Uttam Galva Steels Limited - India
- Ministry of Mines - Canada
- Formosa Plastics Group - Taiwan
- Timah Investasi Mineral - Indoneisa
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
- The University of Queensland
- Bangladesh Power Developement Board
- Chettinad Cement Corporation Ltd - India
- Edison Trading Spa - Italy
- Georgia Ports Authority, United States
- GN Power Mariveles Coal Plant, Philippines
- Directorate Of Revenue Intelligence - India
- Gujarat Mineral Development Corp Ltd - India
- Bayan Resources Tbk. - Indonesia
- LBH Netherlands Bv - Netherlands
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- Wood Mackenzie - Singapore
- Energy Development Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Aditya Birla Group - India
- Leighton Contractors Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Rio Tinto Coal - Australia
- IEA Clean Coal Centre - UK
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- Ambuja Cements Ltd - India
- Bukit Makmur.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Sojitz Corporation - Japan
- Agrawal Coal Company - India
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Meralco Power Generation, Philippines
- Grasim Industreis Ltd - India
- Port Waratah Coal Services - Australia
- PNOC Exploration Corporation - Philippines
- Heidelberg Cement - Germany
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- VISA Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Planning Commission, India
- Global Coal Blending Company Limited - Australia
- Kapuas Tunggal Persada - Indonesia
- CNBM International Corporation - China
- South Luzon Thermal Energy Corporation
- GVK Power & Infra Limited - India
- Semirara Mining Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ASAPP Information Group - India
- Mintek Dendrill Indonesia
- SN Aboitiz Power Inc, Philippines
- Wilmar Investment Holdings
- Iligan Light & Power Inc, Philippines
- Dalmia Cement Bharat India
- Cement Manufacturers Association - India
- Intertek Mineral Services - Indonesia
- Australian Commodity Traders Exchange
- Krishnapatnam Port Company Ltd. - India
- Tata Chemicals Ltd - India
- Central Java Power - Indonesia
- Malabar Cements Ltd - India
- Orica Mining Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Gujarat Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- Siam City Cement - Thailand
- Medco Energi Mining Internasional
- Star Paper Mills Limited - India
- Antam Resourcindo - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Global Business Power Corporation, Philippines
- Thiess Contractors Indonesia
- Neyveli Lignite Corporation Ltd, - India
- McConnell Dowell - Australia
- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
- Kumho Petrochemical, South Korea
- Posco Energy - South Korea
- Bulk Trading Sa - Switzerland
- Kepco SPC Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Parliament of New Zealand
- Mjunction Services Limited - India
- Toyota Tsusho Corporation, Japan
- Larsen & Toubro Limited - India
- Sinarmas Energy and Mining - Indonesia
- Karaikal Port Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- SMG Consultants - Indonesia
- Standard Chartered Bank - UAE
- Bharathi Cement Corporation - India
- Borneo Indobara - Indonesia
- Mercator Lines Limited - India
- India Bulls Power Limited - India
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- Indonesian Coal Mining Association
- Latin American Coal - Colombia
- Alfred C Toepfer International GmbH - Germany
- Energy Link Ltd, New Zealand
- Billiton Holdings Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Oil Corporation Limited
- Jorong Barutama Greston.PT - Indonesia
- Straits Asia Resources Limited - Singapore
- Coal and Oil Company - UAE
- Attock Cement Pakistan Limited
- Riau Bara Harum - Indonesia
- Price Waterhouse Coopers - Russia
- New Zealand Coal & Carbon
- Africa Commodities Group - South Africa
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- Salva Resources Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Sarangani Energy Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- London Commodity Brokers - England
- Coalindo Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Electricity Authority, New Zealand
- White Energy Company Limited
- Petrochimia International Co. Ltd.- Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Videocon Industries ltd - India
- Goldman Sachs - Singapore
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
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