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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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Wednesday, 10 August 16
THE INDONESIAN DRAFT NEW MINING LAW - AMENDMENTS TO THE 2009 MINING LAW
KNOWLEDGE TO ELEVATE
COALspot.com: A draft mining law published by Indonesia's Minister of Energy and Mineral Resources provides use ...
Tuesday, 09 August 16
CS50 COAL INDEX HITS NEW FIFTY-WEEKS HIGH
COALspot.com: Average 5000 GAR coal index of Indonesian origin rose 1.78% week over week to averaging $41.85 per ton this past week, shows CS (i) C ...
Tuesday, 09 August 16
HARD COAL PRODUCTION AND WORLD TRADE ON THE DECLINE FOR THE FIRST TIME IN YEARS - VDKI
Hard coal production and world trade on the decline for the first time in years – not a harbinger of a global energy turnaround
Worldwid ...
Tuesday, 09 August 16
BREXIT, BRITANNIA AND THE WAVES - TREVOR CROWE, CLARKSON RESEARCH
This week, the Bank of England put into place its action plan following the UK referendum on 23rd June, which indicated the British population&rsqu ...
Monday, 08 August 16
INDONESIA'S DRAFT MINING LAW HINTS AT FUTURE REGULATORY FRAMEWORK
KNOWLEDGE TO ELEVATE
COALspot.com: A draft mining law published by Indonesia's Minister of Energy and Mineral Resources provides use ...
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- The Treasury - Australian Government
- Carbofer General Trading SA - India
- Vedanta Resources Plc - India
- Bhushan Steel Limited - India
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- Jorong Barutama Greston.PT - Indonesia
- Kepco SPC Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Global Coal Blending Company Limited - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sindya Power Generating Company Private Ltd
- Jindal Steel & Power Ltd - India
- Salva Resources Pvt Ltd - India
- ICICI Bank Limited - India
- Oldendorff Carriers - Singapore
- Standard Chartered Bank - UAE
- Thiess Contractors Indonesia
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- Bulk Trading Sa - Switzerland
- Kideco Jaya Agung - Indonesia
- The University of Queensland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sical Logistics Limited - India
- Africa Commodities Group - South Africa
- Trasteel International SA, Italy
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aditya Birla Group - India
- Billiton Holdings Pty Ltd - Australia
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- San Jose City I Power Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
- CIMB Investment Bank - Malaysia
- Marubeni Corporation - India
- Central Java Power - Indonesia
- SMG Consultants - Indonesia
- Medco Energi Mining Internasional
- Larsen & Toubro Limited - India
- Latin American Coal - Colombia
- Deloitte Consulting - India
- Wood Mackenzie - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Edison Trading Spa - Italy
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Bhoruka Overseas - Indonesia
- Karaikal Port Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Generating Authority of Thailand
- Barasentosa Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Anglo American - United Kingdom
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Economic Council, Georgia
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- Essar Steel Hazira Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Mercator Lines Limited - India
- Holcim Trading Pte Ltd - Singapore
- Parliament of New Zealand
- Wilmar Investment Holdings
- Australian Coal Association
- OPG Power Generation Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Eastern Coal Council - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Minerals Council of Australia
- Petron Corporation, Philippines
- Romanian Commodities Exchange
- Iligan Light & Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Global Green Power PLC Corporation, Philippines
- Singapore Mercantile Exchange
- Bhatia International Limited - India
- Altura Mining Limited, Indonesia
- Ceylon Electricity Board - Sri Lanka
- PetroVietnam Power Coal Import and Supply Company
- Lanco Infratech Ltd - India
- Sakthi Sugars Limited - India
- CNBM International Corporation - China
- GVK Power & Infra Limited - India
- Rio Tinto Coal - Australia
- Renaissance Capital - South Africa
- TeaM Sual Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Port Waratah Coal Services - Australia
- Tata Chemicals Ltd - India
- Mjunction Services Limited - India
- Ind-Barath Power Infra Limited - India
- Grasim Industreis Ltd - India
- Bukit Baiduri Energy - Indonesia
- Indonesian Coal Mining Association
- Coalindo Energy - Indonesia
- Chamber of Mines of South Africa
- GMR Energy Limited - India
- Videocon Industries ltd - India
- Indo Tambangraya Megah - Indonesia
- Borneo Indobara - Indonesia
- Coal and Oil Company - UAE
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Dalmia Cement Bharat India
- Central Electricity Authority - India
- Vizag Seaport Private Limited - India
- Orica Australia Pty. Ltd.
- Thai Mozambique Logistica
- Kartika Selabumi Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Meralco Power Generation, Philippines
- Power Finance Corporation Ltd., India
- Goldman Sachs - Singapore
- London Commodity Brokers - England
- Australian Commodity Traders Exchange
- International Coal Ventures Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Mintek Dendrill Indonesia
- Cigading International Bulk Terminal - Indonesia
- Commonwealth Bank - Australia
- Rashtriya Ispat Nigam Limited - India
- PTC India Limited - India
- ASAPP Information Group - India
- Ambuja Cements Ltd - India
- Bangladesh Power Developement Board
- GAC Shipping (India) Pvt Ltd
- VISA Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement - Thailand
- Posco Energy - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- Ministry of Finance - Indonesia
- PNOC Exploration Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- Gujarat Mineral Development Corp Ltd - India
- McConnell Dowell - Australia
- Georgia Ports Authority, United States
- Indian Energy Exchange, India
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- Simpson Spence & Young - Indonesia
- Formosa Plastics Group - Taiwan
- SN Aboitiz Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Kumho Petrochemical, South Korea
- PowerSource Philippines DevCo
- South Luzon Thermal Energy Corporation
- Antam Resourcindo - Indonesia
- Metalloyd Limited - United Kingdom
- New Zealand Coal & Carbon
- Riau Bara Harum - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indian Oil Corporation Limited
- Vijayanagar Sugar Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Jaiprakash Power Ventures ltd
- Samtan Co., Ltd - South Korea
- MS Steel International - UAE
- Uttam Galva Steels Limited - India
- India Bulls Power Limited - India
- LBH Netherlands Bv - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Planning Commission, India
- Tamil Nadu electricity Board
- Kalimantan Lumbung Energi - Indonesia
- Manunggal Multi Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Parry Sugars Refinery, India
- The State Trading Corporation of India Ltd
- Coastal Gujarat Power Limited - India
- Toyota Tsusho Corporation, Japan
- Semirara Mining Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Orica Mining Services - Indonesia
- Cement Manufacturers Association - India
- Indogreen Group - Indonesia
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Energy Link Ltd, New Zealand
- Sojitz Corporation - Japan
- Madhucon Powers Ltd - India
- Savvy Resources Ltd - HongKong
- Chettinad Cement Corporation Ltd - India
- Bharathi Cement Corporation - India
- Pendopo Energi Batubara - Indonesia
- Energy Development Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- Sree Jayajothi Cements Limited - India
- Straits Asia Resources Limited - Singapore
- White Energy Company Limited
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