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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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Friday, 19 August 16
U.S. YEAR-TO-DATE COAL PRODUCTION TOTALLED AN ESTIMATED 421.6 MMST
COALspot.com – U.S., the world’s second largest coal producers have produced approximately totalled an estimated 15.8 million short ton ...
Thursday, 18 August 16
CAPESIZE: AN EXTREMELY VOLATILE LAST WEEK, WHERE THE MAIN DRIVER HAS BEEN THE WEST AUSTRALIA MARKET
Supramax
The week has held up. After the most of the world is back at work there is some optimism again in the market. The Far East volume has in ...
Tuesday, 16 August 16
WEEKLY CS42 COAL INDEX SOARS 14.08% YEAR TO DATE AMID HIGH DEMAND
COALspot.com: Average 5000 GAR coal index of Indonesian origin rose 2.37% week over week to averaging $42.84 per ton this past week, shows CS (i) C ...
Monday, 15 August 16
DRY BULK: 2017 COULD MARK THE START OF LOWER SHIP DELIVERIES HELPING TONNAGE SUPPLY ISSUES IN THE MARKET, SAYS SHIPOWNER - HELLENIC SHIPPING NEWS
Dry bulk owner Pacific Basin, mainly active in the Handysize and Supramax trades appeared optimistic in its analysis of the prospects of the dry bu ...
Monday, 15 August 16
INDONESIAN COAL PRICES RALLYING; COAL OUTPUT REMAINS FLAT
COALspot.com: Global thermal coal prices, including Indonesian coal prices have risen sharply due to jump in imports from China as it curbs domesti ...
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Showing 2316 to 2320 news of total 6871 |
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- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- Holcim Trading Pte Ltd - Singapore
- Indian Oil Corporation Limited
- Bhushan Steel Limited - India
- Orica Australia Pty. Ltd.
- Ministry of Finance - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bharathi Cement Corporation - India
- Jaiprakash Power Ventures ltd
- SN Aboitiz Power Inc, Philippines
- Attock Cement Pakistan Limited
- South Luzon Thermal Energy Corporation
- New Zealand Coal & Carbon
- London Commodity Brokers - England
- IEA Clean Coal Centre - UK
- Toyota Tsusho Corporation, Japan
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- PowerSource Philippines DevCo
- Indika Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- CNBM International Corporation - China
- Central Java Power - Indonesia
- Minerals Council of Australia
- Sakthi Sugars Limited - India
- Ind-Barath Power Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Ministry of Mines - Canada
- Ambuja Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thai Mozambique Logistica
- Banpu Public Company Limited - Thailand
- The State Trading Corporation of India Ltd
- Jorong Barutama Greston.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Malabar Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Planning Commission, India
- Economic Council, Georgia
- Marubeni Corporation - India
- Savvy Resources Ltd - HongKong
- Billiton Holdings Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- Asmin Koalindo Tuhup - Indonesia
- Price Waterhouse Coopers - Russia
- Australian Commodity Traders Exchange
- Ceylon Electricity Board - Sri Lanka
- Romanian Commodities Exchange
- Coastal Gujarat Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- The University of Queensland
- Vizag Seaport Private Limited - India
- Medco Energi Mining Internasional
- Electricity Authority, New Zealand
- Aditya Birla Group - India
- Latin American Coal - Colombia
- Essar Steel Hazira Ltd - India
- Coalindo Energy - Indonesia
- Ministry of Transport, Egypt
- Posco Energy - South Korea
- Interocean Group of Companies - India
- SMG Consultants - Indonesia
- International Coal Ventures Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- India Bulls Power Limited - India
- Binh Thuan Hamico - Vietnam
- Oldendorff Carriers - Singapore
- Semirara Mining and Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Singapore Mercantile Exchange
- Kaltim Prima Coal - Indonesia
- Gujarat Sidhee Cement - India
- Siam City Cement PLC, Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Thiess Contractors Indonesia
- Bukit Makmur.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Central Electricity Authority - India
- Neyveli Lignite Corporation Ltd, - India
- European Bulk Services B.V. - Netherlands
- Heidelberg Cement - Germany
- Sinarmas Energy and Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Tamil Nadu electricity Board
- Sree Jayajothi Cements Limited - India
- Krishnapatnam Port Company Ltd. - India
- Leighton Contractors Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Vedanta Resources Plc - India
- Riau Bara Harum - Indonesia
- Xindia Steels Limited - India
- Makarim & Taira - Indonesia
- ICICI Bank Limited - India
- Georgia Ports Authority, United States
- Bukit Baiduri Energy - Indonesia
- PTC India Limited - India
- Bangladesh Power Developement Board
- Formosa Plastics Group - Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- White Energy Company Limited
- Samtan Co., Ltd - South Korea
- Indonesian Coal Mining Association
- Kepco SPC Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Grasim Industreis Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- Agrawal Coal Company - India
- Coal and Oil Company - UAE
- Standard Chartered Bank - UAE
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Siam City Cement - Thailand
- Eastern Coal Council - USA
- Dalmia Cement Bharat India
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indogreen Group - Indonesia
- Energy Link Ltd, New Zealand
- Pendopo Energi Batubara - Indonesia
- Bhatia International Limited - India
- Tata Chemicals Ltd - India
- Meralco Power Generation, Philippines
- Wood Mackenzie - Singapore
- Orica Mining Services - Indonesia
- Bulk Trading Sa - Switzerland
- Iligan Light & Power Inc, Philippines
- Cement Manufacturers Association - India
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- GN Power Mariveles Coal Plant, Philippines
- Manunggal Multi Energi - Indonesia
- ASAPP Information Group - India
- Kapuas Tunggal Persada - Indonesia
- Chettinad Cement Corporation Ltd - India
- Rio Tinto Coal - Australia
- Uttam Galva Steels Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sojitz Corporation - Japan
- Star Paper Mills Limited - India
- Trasteel International SA, Italy
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- Sarangani Energy Corporation, Philippines
- The Treasury - Australian Government
- Kalimantan Lumbung Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Indian Energy Exchange, India
- IHS Mccloskey Coal Group - USA
- GMR Energy Limited - India
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- Global Coal Blending Company Limited - Australia
- Intertek Mineral Services - Indonesia
- Lanco Infratech Ltd - India
- LBH Netherlands Bv - Netherlands
- GVK Power & Infra Limited - India
- Jindal Steel & Power Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- Deloitte Consulting - India
- Mintek Dendrill Indonesia
- Parliament of New Zealand
- Madhucon Powers Ltd - India
- Parry Sugars Refinery, India
- Petron Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Anglo American - United Kingdom
- Baramulti Group, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Alfred C Toepfer International GmbH - Germany
- PNOC Exploration Corporation - Philippines
- Mercator Lines Limited - India
- Kartika Selabumi Mining - Indonesia
- Renaissance Capital - South Africa
- Africa Commodities Group - South Africa
- Kumho Petrochemical, South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- Carbofer General Trading SA - India
- Straits Asia Resources Limited - Singapore
- Semirara Mining Corp, Philippines
- Australian Coal Association
- Chamber of Mines of South Africa
- Electricity Generating Authority of Thailand
- Altura Mining Limited, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Goldman Sachs - Singapore
- Globalindo Alam Lestari - Indonesia
- Energy Development Corp, Philippines
- Merrill Lynch Commodities Europe
- Antam Resourcindo - Indonesia
- Mjunction Services Limited - India
- McConnell Dowell - Australia
- Global Business Power Corporation, Philippines
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