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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, 29 August 16
THE 5000 GAR THERMAL COAL INDEX HAS STRENGTHENED BY 9.90% SINCE JANUARY
COALspot.com: A rally in thermal coal prices over the past few months, after years of decline, is still continuing upward and it is expected to ral ...
Monday, 29 August 16
THE FREIGHT MARKET WAS STEADY AND FIRM THIS PAST WEEK; BCI ROSE 18.74%
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities rose and ending in a positive note this past week except ...
Friday, 26 August 16
WEEKLY US COAL OUTPUT UP 0.7% W/W TO 16 MMST: EIA
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 16 million short tons ...
Thursday, 25 August 16
SUPRAMAXES ARE BEING FIXED IN REGION OF $9000
Supramax
Due to Chinese coal imports which continues to source much of the tonnage in SE Asia combined with a good flow of mineral exports ex Aus ...
Wednesday, 24 August 16
MARKET INSIGHT
Brazil and the world bid farewell on Sunday to the first Olympic Games in South America in the midst of a finale meant to be both one last bash and ...
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Showing 2306 to 2310 news of total 6871 |
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- Lanco Infratech Ltd - India
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Renaissance Capital - South Africa
- Independent Power Producers Association of India
- White Energy Company Limited
- Semirara Mining and Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- The Treasury - Australian Government
- Eastern Coal Council - USA
- Barasentosa Lestari - Indonesia
- MS Steel International - UAE
- Commonwealth Bank - Australia
- Larsen & Toubro Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- Eastern Energy - Thailand
- Merrill Lynch Commodities Europe
- Energy Development Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Directorate Of Revenue Intelligence - India
- PowerSource Philippines DevCo
- Australian Commodity Traders Exchange
- Mintek Dendrill Indonesia
- Heidelberg Cement - Germany
- Kumho Petrochemical, South Korea
- Samtan Co., Ltd - South Korea
- Jindal Steel & Power Ltd - India
- Electricity Authority, New Zealand
- Vizag Seaport Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Indonesian Coal Mining Association
- Maheswari Brothers Coal Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ICICI Bank Limited - India
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Borneo Indobara - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- Bhushan Steel Limited - India
- Trasteel International SA, Italy
- Bhatia International Limited - India
- Sree Jayajothi Cements Limited - India
- Central Electricity Authority - India
- Intertek Mineral Services - Indonesia
- New Zealand Coal & Carbon
- Baramulti Group, Indonesia
- Formosa Plastics Group - Taiwan
- Bangladesh Power Developement Board
- Sindya Power Generating Company Private Ltd
- San Jose City I Power Corp, Philippines
- Chamber of Mines of South Africa
- Ambuja Cements Ltd - India
- Medco Energi Mining Internasional
- CNBM International Corporation - China
- Rio Tinto Coal - Australia
- Therma Luzon, Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Ministry of Mines - Canada
- Gujarat Mineral Development Corp Ltd - India
- Chettinad Cement Corporation Ltd - India
- LBH Netherlands Bv - Netherlands
- Xindia Steels Limited - India
- Australian Coal Association
- Interocean Group of Companies - India
- Pendopo Energi Batubara - Indonesia
- India Bulls Power Limited - India
- Edison Trading Spa - Italy
- Altura Mining Limited, Indonesia
- Mjunction Services Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Sojitz Corporation - Japan
- Coal and Oil Company - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- SMG Consultants - Indonesia
- Aditya Birla Group - India
- Billiton Holdings Pty Ltd - Australia
- Leighton Contractors Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Romanian Commodities Exchange
- PNOC Exploration Corporation - Philippines
- Agrawal Coal Company - India
- Karaikal Port Pvt Ltd - India
- Indika Energy - Indonesia
- Deloitte Consulting - India
- Star Paper Mills Limited - India
- Dalmia Cement Bharat India
- Parry Sugars Refinery, India
- Price Waterhouse Coopers - Russia
- Siam City Cement PLC, Thailand
- PetroVietnam Power Coal Import and Supply Company
- Wilmar Investment Holdings
- Makarim & Taira - Indonesia
- Iligan Light & Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- SMC Global Power, Philippines
- Timah Investasi Mineral - Indoneisa
- Riau Bara Harum - Indonesia
- Toyota Tsusho Corporation, Japan
- Simpson Spence & Young - Indonesia
- TeaM Sual Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- IEA Clean Coal Centre - UK
- Bharathi Cement Corporation - India
- Indo Tambangraya Megah - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Port Waratah Coal Services - Australia
- Power Finance Corporation Ltd., India
- SN Aboitiz Power Inc, Philippines
- Meralco Power Generation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- GAC Shipping (India) Pvt Ltd
- Marubeni Corporation - India
- Binh Thuan Hamico - Vietnam
- PTC India Limited - India
- Manunggal Multi Energi - Indonesia
- Videocon Industries ltd - India
- Kaltim Prima Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Coalindo Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bhoruka Overseas - Indonesia
- Grasim Industreis Ltd - India
- Thiess Contractors Indonesia
- Tamil Nadu electricity Board
- Antam Resourcindo - Indonesia
- Minerals Council of Australia
- Vedanta Resources Plc - India
- Semirara Mining Corp, Philippines
- Orica Mining Services - Indonesia
- Jaiprakash Power Ventures ltd
- Parliament of New Zealand
- IHS Mccloskey Coal Group - USA
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Madhucon Powers Ltd - India
- GVK Power & Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petron Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sical Logistics Limited - India
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Oldendorff Carriers - Singapore
- Salva Resources Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- GMR Energy Limited - India
- Mercator Lines Limited - India
- Alfred C Toepfer International GmbH - Germany
- Attock Cement Pakistan Limited
- Coastal Gujarat Power Limited - India
- Aboitiz Power Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Sakthi Sugars Limited - India
- Central Java Power - Indonesia
- Gujarat Sidhee Cement - India
- Kideco Jaya Agung - Indonesia
- Energy Link Ltd, New Zealand
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Essar Steel Hazira Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
- Ministry of Transport, Egypt
- Ministry of Finance - Indonesia
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Global Green Power PLC Corporation, Philippines
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Bukit Baiduri Energy - Indonesia
- Cement Manufacturers Association - India
- Carbofer General Trading SA - India
- Africa Commodities Group - South Africa
- The University of Queensland
- McConnell Dowell - Australia
- Indian Oil Corporation Limited
- Gujarat Electricity Regulatory Commission - India
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Wood Mackenzie - Singapore
- Miang Besar Coal Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Economic Council, Georgia
- CIMB Investment Bank - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Indogreen Group - Indonesia
- Krishnapatnam Port Company Ltd. - India
- VISA Power Limited - India
- Posco Energy - South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Georgia Ports Authority, United States
- Siam City Cement - Thailand
- Straits Asia Resources Limited - Singapore
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