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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, 08 August 16
THE TURKISH GOVERNMENT HAS IMPOSED A $15 A TON DUTY ON POWER PLANT COAL IMPORTS - MEDIA
COALspot.com: The Turkish government has imposed a US$15 per ton duty on thermal coal imports for use in its power sector.
According to media ...
Monday, 08 August 16
THE BALTIC EXCHANGE, TRACKING RATES FOR SHIPS CARRYING DRY BULK COMMODITIES SLIDE SLIGHTLY
COALspot.com: The Baltic Exchange, tracking rates for ships carrying dry bulk commodities slide slightly as Panamax and Supramax segments ending in ...
Monday, 08 August 16
ARE EXPENSES INCURRED DURING NEGOTIATION OF A PIRATE RANSOM RECOVERABLE IN GENERAL AVERAGE? - CLYDE&CO
KNOWLEDGE TO ELEVATE
Facts
The laden chemical tanker LONGCHAMP was transiting the Gulf of Aden on passage to Vietnam. The ship was subject t ...
Saturday, 06 August 16
DRY BULK SHIPPING CHARTER RATES TO RISE ON UNEXPECTED DEMAND GROWTH - DREWRY
Increasing trade and contracting supply will support a recovery in charter rates on major dry bulk shipping routes, with the prospect of China impo ...
Friday, 05 August 16
WEEKLY U.S. COAL OUTPUT TOTALED AN ESTIMATED 16.1 MMST IN THE WEEK ENDED JULY 30 - EIA
COALspot.com – U.S., the world’s second largest coal producers has produced approximately totalled an estimated 16.1 million short tons ...
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- Parliament of New Zealand
- Port Waratah Coal Services - Australia
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Videocon Industries ltd - India
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- The Treasury - Australian Government
- GVK Power & Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining and Power Corporation, Philippines
- Thiess Contractors Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Orica Australia Pty. Ltd.
- Edison Trading Spa - Italy
- Bangladesh Power Developement Board
- Mercuria Energy - Indonesia
- Chamber of Mines of South Africa
- Sojitz Corporation - Japan
- ICICI Bank Limited - India
- White Energy Company Limited
- Rio Tinto Coal - Australia
- McConnell Dowell - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Agrawal Coal Company - India
- Power Finance Corporation Ltd., India
- Alfred C Toepfer International GmbH - Germany
- Georgia Ports Authority, United States
- Therma Luzon, Inc, Philippines
- Ministry of Transport, Egypt
- Neyveli Lignite Corporation Ltd, - India
- Sarangani Energy Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Directorate General of MIneral and Coal - Indonesia
- Vedanta Resources Plc - India
- Siam City Cement PLC, Thailand
- Trasteel International SA, Italy
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- GAC Shipping (India) Pvt Ltd
- Ambuja Cements Ltd - India
- Sical Logistics Limited - India
- Cement Manufacturers Association - India
- Meenaskhi Energy Private Limited - India
- European Bulk Services B.V. - Netherlands
- Romanian Commodities Exchange
- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- Sree Jayajothi Cements Limited - India
- Manunggal Multi Energi - Indonesia
- Orica Mining Services - Indonesia
- Indika Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Timah Investasi Mineral - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Oil Corporation Limited
- Indo Tambangraya Megah - Indonesia
- Samtan Co., Ltd - South Korea
- Kideco Jaya Agung - Indonesia
- Leighton Contractors Pty Ltd - Australia
- India Bulls Power Limited - India
- Bhushan Steel Limited - India
- Ministry of Mines - Canada
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- Kobexindo Tractors - Indoneisa
- Bayan Resources Tbk. - Indonesia
- Tamil Nadu electricity Board
- Coastal Gujarat Power Limited - India
- Vizag Seaport Private Limited - India
- Eastern Energy - Thailand
- Energy Development Corp, Philippines
- Price Waterhouse Coopers - Russia
- Mjunction Services Limited - India
- Holcim Trading Pte Ltd - Singapore
- Gujarat Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Indogreen Group - Indonesia
- Gujarat Sidhee Cement - India
- Larsen & Toubro Limited - India
- Malabar Cements Ltd - India
- Global Coal Blending Company Limited - Australia
- Bhatia International Limited - India
- CIMB Investment Bank - Malaysia
- Miang Besar Coal Terminal - Indonesia
- Petron Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Cigading International Bulk Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Sakthi Sugars Limited - India
- Energy Link Ltd, New Zealand
- Posco Energy - South Korea
- SMC Global Power, Philippines
- Planning Commission, India
- Madhucon Powers Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Dalmia Cement Bharat India
- Coalindo Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- Semirara Mining Corp, Philippines
- Electricity Authority, New Zealand
- Central Electricity Authority - India
- Australian Commodity Traders Exchange
- Thai Mozambique Logistica
- Independent Power Producers Association of India
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- Attock Cement Pakistan Limited
- Vijayanagar Sugar Pvt Ltd - India
- SMG Consultants - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Anglo American - United Kingdom
- Meralco Power Generation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- Uttam Galva Steels Limited - India
- Iligan Light & Power Inc, Philippines
- Savvy Resources Ltd - HongKong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Siam City Cement - Thailand
- Salva Resources Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- New Zealand Coal & Carbon
- Aboitiz Power Corporation - Philippines
- Binh Thuan Hamico - Vietnam
- Jaiprakash Power Ventures ltd
- Global Business Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Wilmar Investment Holdings
- Karaikal Port Pvt Ltd - India
- The University of Queensland
- Essar Steel Hazira Ltd - India
- Riau Bara Harum - Indonesia
- Antam Resourcindo - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Lanco Infratech Ltd - India
- Singapore Mercantile Exchange
- VISA Power Limited - India
- The State Trading Corporation of India Ltd
- Bhoruka Overseas - Indonesia
- Electricity Generating Authority of Thailand
- Kartika Selabumi Mining - Indonesia
- Australian Coal Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- Baramulti Group, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Interocean Group of Companies - India
- Banpu Public Company Limited - Thailand
- MS Steel International - UAE
- Asmin Koalindo Tuhup - Indonesia
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- Bulk Trading Sa - Switzerland
- Gujarat Mineral Development Corp Ltd - India
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- Ministry of Finance - Indonesia
- Ind-Barath Power Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- GMR Energy Limited - India
- Bukit Makmur.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Star Paper Mills Limited - India
- Africa Commodities Group - South Africa
- Maheswari Brothers Coal Limited - India
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- Grasim Industreis Ltd - India
- Deloitte Consulting - India
- PTC India Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Minerals Council of Australia
- Mercator Lines Limited - India
- Kapuas Tunggal Persada - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- London Commodity Brokers - England
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Heidelberg Cement - Germany
- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- IEA Clean Coal Centre - UK
- Indian Energy Exchange, India
- Wood Mackenzie - Singapore
- Krishnapatnam Port Company Ltd. - India
- South Luzon Thermal Energy Corporation
- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Parry Sugars Refinery, India
- Altura Mining Limited, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mintek Dendrill Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Aditya Birla Group - India
- Globalindo Alam Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- ASAPP Information Group - India
- Pendopo Energi Batubara - Indonesia
- Intertek Mineral Services - Indonesia
- Latin American Coal - Colombia
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