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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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Thursday, 28 July 16
LAST WEEK ENDING UP WITH BUSIER TONES FOR SUPRAMAXES NOW COOLING DOWN - FEARNLEYS
Supramax
Last week ending up with busier tones for Supramaxes now cooling down as with index being down to 684. Average daily earnings for Supram ...
Wednesday, 27 July 16
RATES FOR THE SMALLER SIZES OVER-PERFORMED THE MARKET LAST WEEK - INTERMODAL
The decline the BDI noted last week was somewhat expected given the fact that the market has been overall firming for almost a month no ...
Wednesday, 27 July 16
GLOBAL OIL SUPPLY IS EXPECTED TO REMAIN HIGHER THAN GLOBAL CONSUMPTION IN 2016 - CHRISTOPHER WHITTY
Global oil supply is expected to remain higher than global consumption in 2016, keeping oil prices at relatively low levels this summer compared wi ...
Tuesday, 26 July 16
NORTH P&I CLUB EXPLAINS HOW TO AVOID CLAIMS FOR SELF-COOKING SOYA BEANS
KNOWLEDGE TO ELEVATE
North P&I Club has advised its members to be extra vigilant during loading and transport of soya beans to ensure they ...
Monday, 25 July 16
STRONG BUYER DEMAND PUSHING UP INDONESIAN THERMAL COAL INDICES
COALspot.com: Average 5000 GAR coal index of Indonesian origin rose 0.73 percent week over week to averaging $40.83 per ton this past week, shows C ...
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- Leighton Contractors Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Edison Trading Spa - Italy
- PowerSource Philippines DevCo
- Siam City Cement PLC, Thailand
- Indo Tambangraya Megah - Indonesia
- Semirara Mining Corp, Philippines
- Savvy Resources Ltd - HongKong
- IEA Clean Coal Centre - UK
- Latin American Coal - Colombia
- Trasteel International SA, Italy
- Bhoruka Overseas - Indonesia
- Central Java Power - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- ICICI Bank Limited - India
- Bulk Trading Sa - Switzerland
- Maharashtra Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Holcim Trading Pte Ltd - Singapore
- Straits Asia Resources Limited - Singapore
- Meenaskhi Energy Private Limited - India
- GVK Power & Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- SMC Global Power, Philippines
- Indian Energy Exchange, India
- Marubeni Corporation - India
- IHS Mccloskey Coal Group - USA
- Orica Australia Pty. Ltd.
- Global Green Power PLC Corporation, Philippines
- Grasim Industreis Ltd - India
- Orica Mining Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- Thai Mozambique Logistica
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- Mjunction Services Limited - India
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- Jaiprakash Power Ventures ltd
- Oldendorff Carriers - Singapore
- Bhatia International Limited - India
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- Indonesian Coal Mining Association
- Intertek Mineral Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Indogreen Group - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Eastern Energy - Thailand
- Energy Development Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Meralco Power Generation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Renaissance Capital - South Africa
- Heidelberg Cement - Germany
- SN Aboitiz Power Inc, Philippines
- Agrawal Coal Company - India
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- Energy Link Ltd, New Zealand
- Dalmia Cement Bharat India
- Goldman Sachs - Singapore
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- Carbofer General Trading SA - India
- CNBM International Corporation - China
- Georgia Ports Authority, United States
- Xindia Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- Global Business Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Sakthi Sugars Limited - India
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- Port Waratah Coal Services - Australia
- Jindal Steel & Power Ltd - India
- Mercuria Energy - Indonesia
- Ambuja Cements Ltd - India
- Videocon Industries ltd - India
- Sical Logistics Limited - India
- LBH Netherlands Bv - Netherlands
- Salva Resources Pvt Ltd - India
- Bhushan Steel Limited - India
- Kohat Cement Company Ltd. - Pakistan
- PTC India Limited - India
- Ministry of Transport, Egypt
- Eastern Coal Council - USA
- Mercator Lines Limited - India
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- Indika Energy - Indonesia
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- South Luzon Thermal Energy Corporation
- Petron Corporation, Philippines
- Wood Mackenzie - Singapore
- The University of Queensland
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- Bukit Makmur.PT - Indonesia
- Price Waterhouse Coopers - Russia
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- Asmin Koalindo Tuhup - Indonesia
- Kaltim Prima Coal - Indonesia
- Coastal Gujarat Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Vizag Seaport Private Limited - India
- Kumho Petrochemical, South Korea
- Electricity Authority, New Zealand
- VISA Power Limited - India
- Coal and Oil Company - UAE
- Australian Commodity Traders Exchange
- Manunggal Multi Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- London Commodity Brokers - England
- Offshore Bulk Terminal Pte Ltd, Singapore
- Neyveli Lignite Corporation Ltd, - India
- Iligan Light & Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Metalloyd Limited - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- White Energy Company Limited
- Central Electricity Authority - India
- Maheswari Brothers Coal Limited - India
- Cement Manufacturers Association - India
- Bukit Baiduri Energy - Indonesia
- Independent Power Producers Association of India
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- Gujarat Mineral Development Corp Ltd - India
- Coalindo Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Lanco Infratech Ltd - India
- Cigading International Bulk Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Timah Investasi Mineral - Indoneisa
- Sarangani Energy Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Anglo American - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- Samtan Co., Ltd - South Korea
- Madhucon Powers Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Power Finance Corporation Ltd., India
- Electricity Generating Authority of Thailand
- Miang Besar Coal Terminal - Indonesia
- Commonwealth Bank - Australia
- GAC Shipping (India) Pvt Ltd
- Economic Council, Georgia
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- Borneo Indobara - Indonesia
- GMR Energy Limited - India
- Globalindo Alam Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Mines - Canada
- Deloitte Consulting - India
- Siam City Cement - Thailand
- Merrill Lynch Commodities Europe
- Aboitiz Power Corporation - Philippines
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Minerals Council of Australia
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- Interocean Group of Companies - India
- Karaikal Port Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Ind-Barath Power Infra Limited - India
- New Zealand Coal & Carbon
- PNOC Exploration Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tata Chemicals Ltd - India
- McConnell Dowell - Australia
- Pendopo Energi Batubara - Indonesia
- Australian Coal Association
- Planning Commission, India
- SMG Consultants - Indonesia
- MS Steel International - UAE
- CIMB Investment Bank - Malaysia
- Vedanta Resources Plc - India
- Kobexindo Tractors - Indoneisa
- Sojitz Corporation - Japan
- Toyota Tsusho Corporation, Japan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bangladesh Power Developement Board
- Standard Chartered Bank - UAE
- India Bulls Power Limited - India
- Wilmar Investment Holdings
- Gujarat Sidhee Cement - India
- Singapore Mercantile Exchange
- Malabar Cements Ltd - India
- Posco Energy - South Korea
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Star Paper Mills Limited - India
- Barasentosa Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
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