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Traders say business as usual at China-North Korea border as Beijing faces pressure to rein in Pyongyang
Jul 6, 2017 | The Straits Times
Trucks still line up bumper-to-bumper on the Sino-Korean Friendship Bridge to bring goods from North Korea into China even as Beijing faces massive pressure to strangle its ally economically. -
ANZ stung by nickel fraud: what we know
Jul 5, 2017 | Global Trade Review
By Finbar Bermingham
The trade finance industry is reeling from another high-profile warehouse receipts fraud, after ANZ was stung by a nickel fraud worth more than US $300mn. -
Weather plays havoc with China coal imports, prices: Russell
Jul 6, 2017 | Reuters
By Clyde Russell
Thermal coal prices in Asia have had a strong run recently, amid Chinese demand and supply disruptions in major exporters, but these factors point to a temporary boost rather than any structural change. -
Seeking to isolate North Korea, U.S. warns that diplomatic window is closing
Jul 5, 2017 | Chicago Times
By Julie Pace and Edith M. Lederer
President Donald Trump and other senior officials dangled the prospect of punishing countries that trade with North Korea — a threat aimed directly at China, Pyongyang's biggest benefactor. -
China Sees Opening Left by Trump in Europe, and Quietly Steps In
Jul 5, 2017 | The New York Times
By Steven Erlanger
The leader of the world’s other superpower, Xi Jinping of China, will also be in Hamburg, Germany, ready to slip quietly into the widening gap between Mr. Trump and longtime European allies and to position Beijing as the globe’s newest, biggest defender of a multilateral, rules-based system. -
Competition hotting up on Asia-Hawaii trade
Jul 5, 2017 | Journal of Commerce
By Greg Knowler
Fierce competition is coming to the Asia-Hawaii segment of the trans-Pacific trade with Japanese carrier NYK announcing it will increase the frequency of its Asia-Hawaii services just days after APL unveiled the launch of a new direct Honolulu service. -
Asia Tanker Rates to Remain Weak in 3Q
Jul 6, 2017 | World Maritime News
Weak supply side fundamentals as well as a seasonal lull in demand are expected to plague the Asian crude tanker market in the third quarter of 2017, the Ocean Freight Exchange (OFE) informed.
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US - China Relations
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Jul 6, 2017 | The Straits Times
DANDONG, CHINA (AFP) - Trucks still line up bumper-to-bumper on the Sino-Korean Friendship Bridge to bring goods from North Korea into China even as Beijing faces massive pressure to strangle its ally economically.
Some two dozen trucks awaited clearance to enter the border city of Dandong, through which 70 per cent of North Korea's trade passes, a day after Pyongyang successfully tested an intercontinental ballistic missile (ICBM) on Tuesday (July 4).
While United Nations sanctions do not ban all trade with North Korea, United States President Donald Trump has berated China for not doing more to cut off more sources of cash that have kept the reclusive regime afloat.
The US administration is now leading a new push at the UN to impose tougher sanctions on Pyongyang after Mr Trump complained that trade between China and North Korea had surged in the first quarter.
Traders in Dandong acknowledge that it is business as usual at the border, with taxi drivers saying they have not seen a dip in the number of North Korean merchants visiting the city in recent days.
Gold is among the raw materials from North Korea that are banned under UN sanctions.
But the manager of a store selling "North Korean speciality products" on the boardwalk of the Yalu River said her employees have had no trouble going across the border to buy gold and silver in recent months.
The manager, who refused to give her name, said the raw material is sent to factories in the southern city of Guangzhou, where it is made into rings and bracelets.
"It's cheaper to buy from North Korea, so the prices we offer shoppers are cheaper than what they can normally find in China," she said.
"We operate as normal. We have been working with the same North Korean suppliers for years."
A clerk in another gift shop down the street, which employs a similar business model for its gold jewellery, said she does not know about any disruptions.
"Most of our products are actually made in China, but items such as these traditional dresses are made by North Korean workers who have come over to Dandong to work in textile factories," said the Chinese clerk, surnamed Yan.
Mr Trump complained on Wednesday (July 5) that trade between China and North Korea grew almost 40 per cent in the first quarter.
Official Chinese customs data shows a 37.4 per cent rise in yuan terms and 30.6 per cent in US dollars. But China decided to stop buying North Korean coal in February and total imports from the North have steadily dropped every month from US$207 million (S$286 million) in January to US$99 million in April.
Riverboat operator Heng Ge, who brings tourists close to North Koreans on the shore, said that despite the precarious political environment, Chinese curiosity about their neighbours has not waned.
"Our tours are often packed. Chinese people really want to see what the lives of ordinary North Korean people are like, and want to see North Korean soldiers up close. This hasn't changed," Mr Heng said.
Dandong residents say they are grateful for the benefits the city reaps from acting as both a trade and cultural exchange point between the two countries.
"Other Chinese might have hostile feelings towards our Korean neighbours," said local souvenir vendor Peng Li. "But here in Dandong, we live together comfortably.
http://www.straitstimes.com/asia/east-asia/traders-say-business-as-usual-at-china-north-korea-border-as-beijing-faces-pressure
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ANZ stung by nickel fraud: what we know
Jul 5, 2017 | Global Trade Review
By Finbar Bermingham
The trade finance industry is reeling from another high-profile warehouse receipts fraud, after ANZ was stung by a nickel fraud worth more than US $300mn.
ANZ has filed court proceedings in California, vowing to pursue causes of action against “fraudsters, once their identities are known”, after the bank was left with ownership of 83 fraudulent warehouse receipts which pertain to cargoes of nickel stored at Access World warehouses in Singapore and South Korea.
In a statement issued to GTR, the bank says: “The exposure was fully accounted at our recent half year result and was significantly less than the total value of the payments due. Given the exposure was not material to the group it did not require a specific disclosure and was included in our general provisioning line. It’s also important to note our standard documents provide recourse for ANZ in the event of fraud.”
However, questions have already been raised about banks’ due diligence in metals trading in Asia, as well as the risk involved with issuing and endorsing warehouse receipts in Asia.
The case has raised the spectre of the Qingdao metals fraud of 2014, when banks including Citi and Standard Chartered were duped by multiple fraudulent warehouse receipts issued for single instances of cargo, stored in the Chinese port of Qingdao.
It also comes months after Access World, the metals warehousing arm of commodity trader Glencore, issued a warning over fraudulent warehouse receipts circulating under its name. There has yet to be any indication of who produced the fraudulent receipts, but in June, the French bank Natixis sued metals broker Marex Spectron for US$32mn. The bank claims to have lost the money in a fraud involving fake warehouse receipts at Access World warehouses.
What we know
ANZ had a repo deal with broker ED&F Man, whereby the bank was buying a consignment of nickel. ED&F Man had purchased the nickel on back to back terms, from two Hong Kong-based companies called Come Harvest and Mega Wealth.
These were non-obligated repos, meaning neither ED&F Man nor the two Hong Kong companies were obligated to buy them back. The total amount of nickel is reportedly more than 30,000 tonnes, which in today’s market is worth more than US$300mn.
These 31 purchase contracts between ED&F Man and ANZ were the subject of 84 warehouse receipts, purportedly issued by Access World. The receipts were first issued to a Singapore company called Straits, who subsequently endorsed them to Come Harvest and Mega Wealth. As the metal was sold on to ED&F Man, the warehouse receipts were endorsed again. This happened again when the receipts were endorsed to ANZ.
ED&F Man got wind that there was a problem with the authenticity of the warehouse receipts, at which point it told ANZ that it would not be buying them back (it had an option to do this, but no obligation). ANZ was at this point holding 84 receipts, which it brought to Access World, asking them to put the nickel on warrant to sell. At this stage, Access World saw that 83 of the receipts were fake and refused to accept them.
Part of the issue was that through all these chains of endorsements, the warehouse receipts were never presented to Access World – or any other warehouse operator – for inspection. A warehouse receipt is not a title of ownership, in the way that a bill of lading is. It only becomes so once the warehouse operator inspects it in the act of attornment.
The chain of endorsement can grow so long and continue on for months and months, before this act of attornment takes place, meaning there is ample opportunity for someone to forge them fraudulently, which is what seems to have happened here.
“If you run a repo chain where you rely upon repeated endorsements of the warehouse receipts and without ever having transferred the right of possession through an attornment of the warehouse receipt, then you clearly run an increased risk of a fraud either in the form of multiple pledging of the commodity or exposing the physical commodity itself disappearing. One can also look at having the warehouse receipts authenticated, but of course this presupposes you have the original warehouse receipts in the first place,” Peter Bennett, a trade and litigation partner at Stevenson Harwood, tells GTR.
ANZ, in its court filings, is quite clear that it believes someone in the endorsement chain created or was involved in creating fraudulent Access World receipts, and it has opted to chase the money and find out who is behind. This is one way in which this case differs from Qingdao.
How it differs from Qingdao
Because they are cases involving fraudulent warehouse receipts in the Asian metals trading world, the comparisons are inevitable. There are a number of key differences, however:
One of the major fallouts from the Qingdao fraud was the Citi vs Mercuria case, which was heard in London’s High Court. Both parties disputed the master agreement and argued over who was liable for the losses on the repo deal. However, in this case, ANZ and ED&F Man appear to be co-operating.
Rather than challenging the master agreement, they are looking further down the chain and attempting to uncover who committed the fraud and recoup their losses that way. ANZ has brought pre-action disclosure and discovery actions in Hong Kong, the US and Singapore with a view to finding out where the money has gone.
It was unclear (and thanks to the lockdown on warehouses in Qingdao Port, still is) whether the metals underpinned by the fraudulent warehouse receipts existed, or what quantities did exist.
Bennett, who along with Stephenson Harwood colleague Jonathan Spearing, represented Mercuria in the aforementioned case, says: “There is no suggestion that Access World don’t have the metal to honour the original warehouse receipt. The allegation here is that what has been produced to Access World by ANZ is a forged warehouse receipt and against which they are not obliged to deliver the nickel.
“ANZ had paid millions of dollars for the nickel under the terms of the master repo agreed with its seller MGM [the parent company of ED&F Man], and obviously assumed that with the transfer of endorsed receipts from its seller it had the right to possess the nickel as against Access World. However, as against what are believed to be forged warehouse receipts Access World have challenged that claim. Hence ANZ have turned their attention to the fraudsters.”
Could it have been prevented?
The post-Qingdao landscape has been full of soul searching and this will inspire even more.
One metals trader in an off-record exchange quipped this week: “Due diligence my ass at the banks, they want the quick money.”
This may be harsh, but it is a commonly held view in the industry. There’s no indication that ANZ has done anything wrong, but has it done everything right?
Certainly, being involved in the metals markets in China is risky. There are lots of shady operators waiting to seize opportunities to make a quick buck, and most banks will already be reviewing their business in this sector to see if it is worth keeping open, with many having already exited it.
Bennett says: “What can you do to try to control the risk? Bearing in mind that the risk of fraud can never be completely eradicated, there are some things that can be looked at.”
He explains how you can make sure the transaction is sound: “Undertake due diligence on the warehouse and its operations; due diligence on your counterparties; fully understand the means by which you are transferring your rights of possession to the repo commodity bearing in mind you will be transferring warehouse receipts which are not documents of title; check if the transfer will be by attornment or is something else envisaged?; check the contract terms under the warehouse receipt in terms of limitation and exclusion clauses, amongst other provisions; check the counterparty risk and whether a third party guarantee might be required, and finally, check that there is appropriate insurance in place.”
But that is not to say that it isn’t possible to do business in the sector. It happens legitimately every day.
Technology has been earmarked as a way of lowering the risks: LME Shield was developed as a direct response to Qingdao, but its use is limited. Blockchain would also be useful in restricting the use of duplicated documents, but widespread deployment seems a long time away.
Dominic Broom, head of trade sales at BNY Mellon and a member of the ICC’s Banking Commission, spoke to GTR on the back of the ICC’s latest Rethinking Trade Finance report, and said: “Ultimately technology is a very positive force for the industry. There have always been degrees of malfeasance on the fringes of trade. But you have to put that into context. The headlines are very loud when they happen, but meanwhile, day in and day out, billions of dollars’ worth of trade is happening without incident, often between counterparties that know each other very well. These supply chains and practices are deeply integrated.”
https://www.gtreview.com/news/asia/anz-stung-by-nickel-fraud-what-we-know/
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Weather plays havoc with China coal imports, prices: Russell
Jul 6, 2017 | Reuters
By Clyde Russell
Thermal coal prices in Asia have had a strong run recently, amid Chinese demand and supply disruptions in major exporters, but these factors point to a temporary boost rather than any structural change.
The price of spot cargoes from Australia's Newcastle port, the world's largest thermal coal export harbour, have jumped 23 percent since mid-May to close on Wednesday at $87.90 a tonne.
While still negative for the year, the recent rally has taken Newcastle coal close to the $93.50 a tonne it fetched at the end of last year.
The strong gains appear justified by supply and demand fundamentals, with vessel-tracking data showing a tightening of seaborne supplies in June to China, the world's top importer of the polluting fuel.
China's seaborne imports totalled 17.77 million tonnes in June, according to vessel-tracking and port data compiled by Thomson Reuters Supply Chain and Commodity Forecasts.
This figure is filtered to show only vessels that have discharged cargoes and the final numbers may vary slightly to account for ships that arrived before month-end and are still in the process of unloading.
The ship data also doesn't perfectly align with official customs figures given differences as to when cargoes are booked as having unloaded, but the vessel-tracking has proven to be an accurate indicator of trends in China's coal imports.
The June figure for seaborne imports is 3.35 million tonnes lower than the 21.12 million reported in May, and is the lowest monthly total since February, according to the data.
Shipments from Australia were largely steady in June at 7.84 million tonnes, compared to May's 7.81 million.
However, imports from number two supplier Indonesia were sharply lower, dropping to 6.31 million tonnes in June, from May's 9.47 million and April's 9.83 million.
While May and April were strong months for Indonesian shipments to China, the decline in June made it the weakest month since February, a month in which imports were affected by the Lunar New Year holidays.Weather's Starring Role
Exports from Indonesia, China's largest supplier of seaborne coal, were curbed by heavy rainfall in June, which caused flooding and disruptions to mining operations.
A short strike at mines owned by Glencore in Australia's Hunter Valley coal region contributed to sentiment driving prices higher, even if the labour action didn't have much material effect on coal exports.
On the demand side in China, a drop in output of as much as two-thirds from hydropower plants because of excessive rains pushing rivers to flood levels has boosted demand for coal-fired power as a replacement.
Chinese thermal coal prices have spiked higher in line with those in Australia, with the Zhengzhou Commodity Exchange futures gaining almost 16 percent from the recent low in early May to Wednesday's close of 588.2 yuan ($86.50) a tonne.
Spot coal at China's Qinhuangdao port has also moved higher, reaching 590 yuan a tonne on Wednesday, up 4.4 percent from the recent low of 565 yuan on June 14.
It's worth noting that Chinese domestic prices are below the Newcastle spot price, meaning that imports are now more costly, especially once the cost of freight and taxes is added in.
This suggests that the spike in Newcastle prices is unlikely to persist, especially if export volumes from Indonesia recover from weather disruptions.
At the same time, China is likely to be able to ramp up hydropower once the threat of flood damage recedes, which will likely lower demand for thermal power generation.
The rally in coal prices is likely more of a seasonal and temporary factor than a signal that higher prices will be sustained.
http://in.reuters.com/article/column-russell-coal-china-idINKBN19R0E8
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Seeking to isolate North Korea, U.S. warns that diplomatic window is closing
Jul 5, 2017 | Chicago Times
By Julie Pace and Edith M. Lederer
The United States warned Wednesday that North Korea was "quickly closing off" the prospect of a diplomatic resolution to its provocations, as the Trump administration launched a government-wide effort to identify options for confronting Pyongyang following its unprecedented intercontinental ballistic missile launch.
President Donald Trump and other senior officials dangled the prospect of punishing countries that trade with North Korea — a threat aimed directly at China, Pyongyang's biggest benefactor. In a tweet Wednesday morning, Trump questioned why the U.S. should continue what he sees as bad trade deals "with countries that do not help us."
His message was bolstered at the United Nations, where U.S. Ambassador Nikki Haley told an emergency meeting of the Security Council that the Trump administration was eyeing penalties against "any country that does business with this outlaw regime." She also raised the specter of military action, declaring that the U.S. was prepared to use force if necessary.
"Their actions are quickly closing off the possibility of a diplomatic solution," she said of North Korea's leaders.
Some administration officials are still holding out hope of persuading China to ratchet up economic pressure on Pyongyang, despite Trump's increasingly pessimistic attitude toward Beijing. Trump, who departed for Europe early Wednesday, is scheduled to meet Chinese President Xi Jinping on the sidelines of the Group of 20 summit in Germany.
Thus far, both China and North Korea have proven to be impervious to Trump's tough talk and threatening tweets. Pyongyang heightened tensions this week with the test of a missile capable of hitting the U.S., a step officials described as a worrisome escalation by an unpredictable regime and perhaps the most pressing threat facing a new U.S. president with little national security experience.
Following the launch, the White House, Treasury Department, State Department, Pentagon and intelligence agencies accelerated discussions on options for responding to Pyongyang's nuclear pursuits. The talks center in part on the same bucket of ideas prior administrations have considered, including direct diplomatic negotiations and pre-emptive military action.
Haley announced that the U.S. will put forward a new Security Council resolution in the coming days "that raises the international response in a way that is proportionate to North Korea's escalation."
She offered no details but said that if the council is united, the international community can cut off major sources of hard currency to North Korea, restrict oil to their military and weapons programs, increase air and maritime restrictions, and hold senior officials accountable.
South Korea's president said the world should look at tougher sanctions against North Korea and insisted the problems across his border should be addressed through diplomatic channels.
"I think that the North Korean question should be solved by peaceful means," said President Moon Jae-in, who will also meet Trump at the G-20 gathering.
The North Korean threat appears certain to hang over Trump's European trip, which opens in Poland. Trump is expected to use the trip to try to forge consensus with European Union partners, which could also put more financial pressure on North Korea.
As he flew to Warsaw on Air Force One on Wednesday, Trump also spoke by phone about North Korea with Egyptian President Abdel Fattah el-Sisi, emphasizing the need for countries to implement Security Council resolutions. The White House said Trump also discussed the need for nations to "stop hosting North Korean guest workers" — an issue Secretary of State Rex Tillerson also mentioned in his response a night earlier to the missile launch.
Restricting guest workers is one way the U.S. and other countries could try to reduce North Korea's access to foreign currency. Some 50,000 to 60,000 North Koreans work abroad, mostly in Russia and China, South Korea's spy service has said, including at about 130 restaurants North Korea operates overseas. The workers' mission involves earning money to bring into North Korea.
North Korea conducts about 90 percent of its trade through China, giving Beijing enormous sway over the reclusive government. Despite forging a friendly relationship with Xi, Trump has become increasingly dismayed at China's reluctance to take tougher action against North Korea. He asserted Wednesday that "trade between China and North Korea grew almost 40% in the first quarter."
In April, Chinese customs data said total two-way trade between China and North Korea increased 36.8 percent in the first quarter of this year compared with the same period a year earlier. However, raw data from the first quarter showed that total two-way trade increased by only 7.4 percent. It was unclear why the customs agency reported a higher rate.
Anthony Ruggiero, a North Korea expert at the Foundation for the Defense of Democracies, said the U.S. could try to prod Beijing to take a tougher line on North Korea by exploiting Chinese banks and other companies' desire for access to the U.S. dollar.
"The administration can give them a choice: Do business with North Korea or have access to the U.S. financial system," Ruggiero said.
The Trump administration signaled its willingness to take that approach last week when it announced it was blacklisting a small Chinese bank over dealings with North Korea.
China has long resisted intensifying economic pressure on neighboring North Korea, in part out of fear of the instability that could mount on its doorstep, including the possibility of millions of North Koreans fleeing into China. China has also been concerned that a reunited, democratic Korea — dominated by South Korea — would put a U.S. ally, and possibly U.S. forces, on its border.
http://www.chicagotribune.com/g00/news/nationworld/ct-us-china-trade-north-korea-20170705-story.html?i10c.referrer=
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China Sees Opening Left by Trump in Europe, and Quietly Steps In
Jul 5, 2017 | The New York Times
By Steven Erlanger
LONDON — Much of the world’s attention at the Group of 20 economic summit on Friday and Saturday will be on President Trump’s first meeting with his Russian counterpart, Vladimir V. Putin, with strenuous efforts to decipher the nature of the long-distance bromance between them.
But the leader of the world’s other superpower, Xi Jinping of China, will also be in Hamburg, Germany, ready to slip quietly into the widening gap between Mr. Trump and longtime European allies and to position Beijing as the globe’s newest, biggest defender of a multilateral, rules-based system.
Mr. Xi will have just concluded a state visit with Germany, including bilateral meetings and a small dinner Tuesday night in Berlin with the summit host, Chancellor Angela Merkel, who has made no secret of her differences with Mr. Trump.
Having helped Ms. Merkel open the Berlin Zoo’s new $10 million panda garden (complete with two new Chinese pandas), and watched a German-Chinese youth soccer match, Mr. Xi will have already made a mark.
He has cemented his closeness to Germany and Ms. Merkel, the woman many consider not just the most important leader in Europe, but also the reluctant, de facto leader of the West.
“The election of Trump has facilitated China’s aims in Europe,” said Angela Stanzel, an Asia scholar at the European Council on Foreign Relations in Berlin.
“Trump facilitates China’s narrative of being the new defender of multilateralism and especially global free trade, and China sees Germany as defending that, too, as a kind of sidekick,” she added. “And it fits into the Chinese idea of creating an alternative leadership to the United States.”
Even before this week, Mr. Xi has tried to take advantage of Mr. Trump’s nationalist and protectionist policies and open disdain for multilateral institutions, using a much-publicized speech in Davos, Switzerland, in January to proclaim himself a champion of global trade, much as the United States used to do.
Export-dependent Germany shares China’s view, with Mrs. Merkel defending everything from trade deals to the United Nations and the Paris climate accord, from which Mr. Trump has withdrawn.
And China recognizes how important Germany has become in influencing European Union policies toward China, including trade and human rights, especially after Britain’s vote to quit the bloc.
Speaking to Mr. Xi in Berlin on Wednesday, Mrs. Merkel said tellingly: “I am delighted to be able to welcome you in a period of unrest in the world, where China and Germany can make an effort to soothe this unrest a bit and to make a somewhat quieter world out of it.” The two countries have “a comprehensive strategic partnership,” she said.
Mr. Xi’s state visit follows another high-level trip to Germany, at the end of May, by the Chinese prime minister, Li Keqiang.
His visit also comes just after Mrs. Merkel, who is up for re-election in September, said that Mr. Trump’s America was no longer a reliably close ally and that Europe must “really take our fate into our own hands.”
In a measure of Mr. Trump’s increasing unpopularity in Germany, her party’s election material now refers to the United States as a “most important partner outside Europe” rather than, as four years ago, its “most important friend.”
There are tensions, of course, between China and Germany, and China and Europe, too, but largely over trade and access to markets.
In the last year especially, Ms. Stanzel said, German officials and the German public have become “more critical of Chinese economic patterns and investments in Germany, especially in key technologies and industries where Germany is known to have a global edge.”
Mrs. Merkel was particularly upset last year, German officials have said, when China bought the cutting-edge German robotics firm so important to manufacturing, Kuka Robotics. The Germans see China moving from demanding technical know-how from European investors to wanting to own the technology outright.
But these problems pale next to Mr. Xi’s fraught relations with Mr. Trump, whose public estimates of their relationship swing wildly.
The latest North Korean missile test is another strain, given Mr. Trump’s public desire that China and Mr. Xi restrain Pyongyang’s nuclear ambitions through stepped-up economic sanctions.
Only last week, Mr. Trump angered China by approving a $1.4 billion arms sale to Taiwan, sanctioning a Chinese bank for evading sanctions on North Korea, warning that America would act to restrict Chinese steel imports and sending an American warship off the coast of contested islands in the South China Sea that Beijing claims.
For all those reasons, suggested Robin Niblett, director of Chatham House, a research group based in London, Mr. Xi is likely to keep a low profile in Hamburg.
“While China would like to gradually ramp up the idea of its global leadership, it would be better in Hamburg to keep the attention on Trump and Putin and the aftermath of Brexit,” he said.
“The timing for Xi is not good,” Mr. Niblett said. “He will feel the risk that Trump may use foreign policy as a more fruitful appeal to his base. China-bashing, though it has some risks, is a pretty safe bet for rallying forces in the U.S.”
The world has shifted since Mr. Xi’s Davos speech, he said. “Xi would prefer nice clear water between a munificent China and an America focused on itself,” he said. “But there’s a lot of trouble out there, and China is getting wrapped up in Trump’s drama, while China likes minimal drama.”
Despite new worries in Europe about China becoming more of a competitor than a partner, Mr. Xi sees another advantage, and a challenge, in keeping the European Union sweet.
China favors regional hegemonies rather than American hyperpower and sees a world of regions, where China, Russia and Europe dominate their respective areas, Mr. Niblett said.
While trying to be dominant in East Asia, China has no interest in ruffling Russia’s feathers, especially with Mr. Putin in an election year and Russia as a permanent member of the United Nations Security Council.
So China will take a more watchful role in Hamburg, eager to get along with everyone, but especially the Europeans.
The Chinese see the European Union as “an essential partner for the kind of multilateral, globalized world China wants to see, where each region looks after itself and comes together flexibly to meet global challenges, like climate,” Mr. Niblett said.
“The last thing China wants,” he added, “is to get on worse with the E.U. now that the U.S. relationship is so fickle.”
https://www.nytimes.com/2017/07/05/world/europe/xi-merkel-trump-china-germany.html
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Competition hotting up on Asia-Hawaii trade
Jul 5, 2017 | Journal of Commerce
By Greg Knowler
Fierce competition is coming to the Asia-Hawaii segment of the trans-Pacific trade with Japanese carrier NYK announcing it will increase the frequency of its Asia-Hawaii services just days after APL unveiled the launch of a new direct Honolulu service.
NYK will increase the sailings of its Asia Hawaii Express (AHX) service from fortnightly to weekly from July 15, Alphaliner said. The AHX rotation is Shanghai, Busan, Yokohama, Honolulu, Yokohama, Shanghai and while it currently turns in six weeks, this will be cut to five weeks in July. Two 700-750 TEU ships will be added to the current three chartered ships of 1,200-1,400 TEU.
The weekly sailing by NYK follows CMA CGM subsidiary APL’s plans to start a new fortnightly service on July 25 that directly connects central China, Korea, and Japan to the Hawaiian market and allows shippers to avoid routing cargo via the US mainland. The Aloha Express (AEX) takes APL’s services on the trans-Pacific to 23, 18 of which are offered under the Ocean Alliance and five outside the vessel sharing agreement. APL’s Guam Saipan Express (GSX) service also calls at the ports of Busan, Yokohama, Guam, and Saipan every week.
“The AEX service introduces a new sea route in our portfolio to directly serve Asia and Hawaii. Instead of routing via the US mainland, shippers with Hawaiian-bound cargo will find a faster shipping alternative in the AEX service,” said Jesper Stenbak, APL senior vice president of trans-Pacific trade. AEX will deploy three ships of 700-1,000 TEU, with the first sailing from Shanghai of the 990 TEU APL Aloha scheduled for July 25.
Alphaliner said the Aloha Express will add a third direct connection on the niche Asia-Hawaii market, adding to the AHX and to Matson's China-Long Beach Express (CLX) services. The US-flag domestic service from the West Coast to Hawaii and Guam continues on to China. After calling Xiamen, Ningbo, and Shanghai, Matson’s expedited service arrives in Long Beach after 10 days.
However, the CLX only serves the Hawaii-Asia market in the westbound direction on its return leg from the US to China, with China-Hawaii eastbound containers doing first the full China-US trip and then the US-Hawaii segment. Also, the CLX does not call in Korea and Japan. Matson also operates the South Pacific Express (SPE) service to Samoa from the US West Coast — where it deployed a new and larger vessel recently.
http://www.joc.com/maritime-news/competition-hotting-asia-hawaii-trade_20170705.html
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Asia Tanker Rates to Remain Weak in 3Q
Jul 6, 2017 | World Maritime News
Weak supply side fundamentals as well as a seasonal lull in demand are expected to plague the Asian crude tanker market in the third quarter of 2017, the Ocean Freight Exchange (OFE) informed.
A more worrying trend is that, according to BIMCO, very large crude carrier (VLCC) orders between January and May this year hit their highest level in 9 years on the back of low newbuilding prices, which could delay a potential recovery in rates.
Rates for the benchmark AG/ Japan route have tumbled from w97.5 at the beginning of the year to current levels of w51, OFE said, adding that rates have been languishing at w50 to w52 for a month as the battle between handicapped vessels and modern tonnage rages on. A recent uptick in interest for short-term time charters for floating storage failed to move rates upwards.
On the demand side, the extension of the OPEC production cuts “remains a thorn in the side of the Asian VLCC market,” further compounded by the seasonal summer lull. OFE suggests that a boost in ton-mile demand due to more long-haul trades from the Americas “may offer some temporary respite to falling rates.”
“It is unlikely that we will see a substantial recovery in rates before end-September, when a pick-up in winter demand takes place,” according to the organization.
While the market was counting on the upcoming IMO Ballast Water Management Convention on September 8 to raise scrapping activity, the ongoing Marine Environment Protection Committee (MEPC 71) in London is currently discussing the possibility of a partial two-year delay.
Additionally, the Suezmax sector in Asia “is likely to continue to be weighed down by lower exports from Iran and Iraq in Q3.”
OFE concluded that the Asian Aframax segment is also expected to remain in the doldrums due to lower exports from Kozmino.
http://worldmaritimenews.com/archives/224415/ofe-asia-tanker-rates-to-remain-weak-in-3q/
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