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Here's how China and India could emerge as the winners of US oil sanctions on Venezuela
Jul 31, 2017 | CNBC
By Sam Meredith
China and India could both emerge as unlikely winners from possible U.S. sanctions on Venezuela's vital oil sector, according to one oil analyst. -
China hits back at Trump criticism over North Korea
Jul 31, 2017 | Reuters
By Ben Blanchard and Elias Glenn
China hit back on Monday after U.S. President Donald Trump tweeted he was "very disappointed" in China following North Korea's latest missile test, saying the problem did not arise in China and that all sides need to work for a solution. -
Container lines set for strong year for volume and pricing
Jul 31, 2017 | Journal of Commerce
By Greg Knowler
Carriers on the AsiaEurope trade are heading for a vastly improved year as steady growth in container volume and European economies continues to hold up freight rates and drive up profitability. -
Carriers Getting Busier on Asia-Middle East Route
Jul 31, 2017 | World Maritime News
Spot rates in the Asia to Middle East market are seeing the most traction as container shipments on the route improved by 1.6% year-on-year in May, according to shipping consultancy Drewry. -
Iron Ore Made Comeback in 2016
Jul 31, 2017 | The Maritime Executive
Despite soft Chinese consumption and low prices for most of the year, a late surge meant the global iron ore industry saw gains in production and exports in 2016.
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Here's how China and India could emerge as the winners of US oil sanctions on Venezuela
Jul 31, 2017 | CNBC
By Sam Meredith
China and India could both emerge as unlikely winners from possible U.S. sanctions on Venezuela's vital oil sector, according to one oil analyst.
President Donald Trump vowed to take "strong and swift economic" action ahead of Venezuela's controversial election for a new Constituent Assembly on Sunday. President Nicolas Maduro won the contentious vote, while the opposition party – and several of the crisis-stricken nation's neighbors – refused to recognize the result.
Stephen Brennock, oil analyst at PVM Oil Associates, told CNBC on Monday that the ramifications of sanctions imposed on Venezuela's oil sector could be far reaching.
"Venezuela would lose out on much needed oil revenues, U.S. refiners would be negatively impacted by a drop in refining margins and U.S. motorists by an increases in gasoline prices.
"However, there is one potential silver lining... Other major crude-importing nations such as India and China may stand to gain if they are offered Venezuelan crude at steep discounts," Brennock explained via email.The 'big problem' with sanctions
Venezuela's economy is almost completely at the mercy of the oil industry as it contributes around 95 percent of the country's exports. But a lack of investment in the industry has made it less and less profitable and productive.
Alastair Newton, director at Alavan Business Advisory, told CNBC on Monday that Maduro would most likely "survive" potentially forthcoming oil sanctions from the U.S., and suggested it may even embolden his cause.
"The big problem with sanctions is the more sanctions the Americans impose, the more Maduro is going to be able to claim – with some degree of credibility – that he is actually fighting an American attempt at regime change," he argued.'Extreme economic duress'Meanwhile, a top commodities strategist told CNBC last week that Venezuela could become the first sovereign oil producer to "fully fail"if Maduro decided to move ahead and form a new legislative body.
Helima Croft, global head of strategy at RBC Capital Markets, said Venezuela would suffer "extreme economic duress" if the Trump administration decided to target the country's oil sector.
A crash in oil prices that started in late 2014 sent the economy into a tailspin. Now, the International Monetary Fund expects Venezuela's inflation rate to rise by a crippling 720 percent this year.
"With the country's foreign reserves recently having fallen below $10 [billion], (state oil company) PDVSA will be extremely hard pressed to avoid a disorderly default in the autumn or continue any semblance of regular salary payments," Croft said.
https://www.cnbc.com/2017/07/31/heres-how-china-and-india-could-emerge-as-the-winners-of-us-oil-sanctions-on-venezuela.html
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China hits back at Trump criticism over North Korea
Jul 31, 2017 | Reuters
By Ben Blanchard and Elias Glenn
BEIJING (Reuters) - China hit back on Monday after U.S. President Donald Trump tweeted he was "very disappointed" in China following North Korea's latest missile test, saying the problem did not arise in China and that all sides need to work for a solution.
China has become increasingly frustrated with American and Japanese criticism that it should do more to rein in Pyongyang. China is North Korea's closest ally, but Beijing, too, is angry with its continued nuclear and missile tests.
North Korea said on Saturday it had conducted another successful test of an intercontinental ballistic missile that proved its ability to strike the U.S. mainland, drawing a sharp warning from Trump and a rebuke from China.
Video of the latest missile test appears to show it breaking up before landing, indicating Pyongyang may not yet have mastered re-entry technology needed for an operational nuclear-tipped missile, a think tank reported on Monday.
Japanese Prime Minister Shinzo Abe spoke with Trump on Monday and agreed on the need for more action on North Korea just hours after the U.S. Ambassador to the United Nations said Washington is "done talking about North Korea".
A White House statement after the phone call said the two leaders "agreed that North Korea poses a grave and growing direct threat to the United States, Japan, the Republic of Korea, and other countries near and far".
It said Trump "reaffirmed our ironclad commitment" to defend Japan and South Korea from any attack, "using the full range of United States capabilities".
Trump tweeted on Saturday after the missile test that he was "very disappointed" in China and that Beijing profits from U.S. trade but had done "nothing" for the United States with regards to North Korea, something he would not allow to continue.
Asked by a reporter on Monday how he plans to deal with Pyongyang, Trump said at the start of a Cabinet meeting: "We'll handle North Korea... It will be handled."
China's Foreign Ministry, in a statement sent to Reuters responding to Trump's earlier tweets, said the North Korean nuclear issue did not arise because of China and that everyone needed to work together to seek a resolution.
Russia said on Monday the United States and other countries were trying "to shift responsibility for the situation to Russia and China" following the most recent missile test.
"We view as groundless attempts undertaken by the U.S. and a number of other countries to shift responsibility to Russia and China, almost blaming Moscow and Beijing for indulging the missile and nuclear ambitions of the DPRK (North Korea)," the Russian Foreign Ministry said in a statement.
At the United Nations in New York, China's U.N. ambassador said on Monday it is primarily up to the United States and North Korea, not Beijing, to reduce tensions and work toward resuming talks to end Pyongyang's nuclear weapon and missile programs.
The United States and North Korea "hold the primary responsibility to keep things moving, to start moving in the right direction, not China," China's U.N. Ambassador Liu Jieyi told a news conference to mark the end of Beijing's presidency of the U.N. Security Council in July.
"No matter how capable China is, China's efforts will not yield practical results because it depends on the two principal parties," Liu said.
Chinese Vice Commerce Minister Qian Keming told a news conference there was no link between the North Korea issue and China-U.S. trade.
"We think the North Korea nuclear issue and China-U.S. trade are issues that are in two completely different domains. They aren't related. They should not be discussed together," Qian said.
China, with which North Korea does most of its trade, has repeatedly said it strictly follows U.N. resolutions on North Korea and has denounced unilateral U.S. sanctions as unhelpful.
Nikki Haley, U.S. Ambassador to the United Nations, said in a statement China must decide if it is willing to back imposing stronger U.N. sanctions on North Korea over Friday night's long-range missile test, the North's second this month.
Any new U.N. Security Council resolution "that does not significantly increase the international pressure on North Korea is of no value", Haley said, adding that Japan and South Korea also needed to do more.
Abe told reporters after his conversation with Trump that repeated efforts by the international community to find a peaceful solution to the North Korean issue had yet to bear fruit in the face of Pyongyang's unilateral "escalation".
"International society, including Russia and China, need to take this seriously and increase pressure," Abe said. He added Japan and the United States would take steps towards concrete action but did not give details.
Abe and Trump did not discuss military action against North Korea, nor what would constitute the crossing of a "red line" by Pyongyang, Deputy Chief Cabinet spokesman Koichi Hagiuda told reporters.
"Pyongyang is determined to develop its nuclear and missile program and does not care about military threats from the U.S. and South Korea," state-run Chinese tabloid the Global Times said on Monday.
"How could Chinese sanctions change the situation?" said the paper, which is published by the ruling Communist Party's official People's Daily.
China wants both balanced trade with the United States and lasting peace on the Korean peninsula, its official Xinhua news agency added in a commentary.
"However, to realize these goals, Beijing needs a more cooperative partner in the White House, not one who piles blame on China for the United States' failures," it added.
The United States flew two supersonic B-1B bombers over the Korean peninsula in a show of force on Sunday in response to the missile test and the July 3 launch of the "Hwasong-14" rocket, the Pentagon said. The bombers took off from a U.S. air base in Guam and were joined by Japanese and South Korean fighter jets during the exercise.
"North Korea remains the most urgent threat to regional stability," Pacific Air Forces commander General Terrence J. O'Shaughnessy said in a statement.
"If called upon, we are ready to respond with rapid, lethal, and overwhelming force at a time and place of our choosing."
https://www.reuters.com/article/us-northkorea-missiles-idUSKBN1AG04F
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Container lines set for strong year for volume and pricing
Jul 31, 2017 | Journal of Commerce
By Greg Knowler
Carriers on the AsiaEurope trade are heading for a vastly improved year as steady growth in container volume and European economies continues to hold up freight rates and drive up profitability. The interim results of Hong Kongbased Orient Overseas Container Line revealed a huge increase in volume and revenue on Asia-Europe for the first six months of 2017 compared with the first half of 2016. OOCL reported AsiaEurope volume up 22.2 percent in the first half to 546,505 TEU, while revenue for the trade was up 48.5 percent yearoveryear to $525 million.
OOCL reported the higher volumes as the European economy, driven by strong retail sales and domestic demand, expanded 0.6 percent in the second quarter from the first, according to IHS Markit, which has revised upward its 2017 forecast for Eurozone GDP growth 0.1 percentage point to 2 percent. The three Japanese carriers – MOL, NYK Line, and “K” Line — also reported a strong improvement in their financial results as the container shipping business environment strengthened. NYK Line and “K” Line both swung back into the black in the first quarter of fiscal 2017 after incurring net losses a year earlier, while MOL saw its net profit nearly quadruple.
SeaIntel said while the yearoveryear comparisons on AsiaEurope were impressive, comparing 2017 with 2015 was a more realistic benchmark than 2016, forecasting that carriers on the trade stood to gain $1.2 to $1.7 billion The analyst said 2016 was a year plagued by a freight rate war that caused rates in the first six months to plunge to irrational levels, with some anecdotal evidence pointing to base rates below $100 per TEU, and in some cases even at zero. “Instead, a comparison to 2015 is more relevant,” SeaIntel said in its latest weekly newsletter.
“Even though 2015 also saw the industry struggle, it was not in the throes of a devastating freight rate war, and, more interestingly, the average fuel price levels for fullyear 2015 were in line with the levels we are seeing now.” However, SeaIntel said there was an additional factor to consider when comparing 2017 AsiaNorth Europe freight rate levels with 2015. The combination of increasing freight volumes and a variety of bottleneck effects related to the phasein of the new alliance networks resulted in a surge in freight rate levels on the backhaul from North Europe to Asia in 2017.
To include this effect in the rate level comparison, SeaIntel used the World Container Index that has rate level data for the headhaul and the backhaul routes in the period 2012 to 2017. The analyst concluded that if all cargo moved on spot rates, its upper profit estimate of $1.7 billion for the Asia-Europe trade comes into play.
However, SeaIntel said part of the cargo was under service contract, and if the volatility dampening effect this causes was applied, the analyst arrived at its lower estimate of an improvement in revenue, and profitability, of $1.2 billion. Even as carriers start to tally their profits, something else shaping up as good news for container shipping is the International Monetary Fund’s July update to its World Economic Outlook.
The outlook found that the global economy is showing signs of solid and steady growth, with China, India, Japan, and major economies from Europe to lead this development. “These figures speak quite well for the container shipping industry, and support the notion that 2017 could be a turning point for the carriers and their stressed financial situations,” SeaIntel said in its newsletter.
http://www.joc.com/maritime-news/trade-lanes/asia-europe/good-year-ahead-carriers-reach-turning-point-seaintel-says_20170731.html
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Carriers Getting Busier on Asia-Middle East Route
Jul 31, 2017 | World Maritime News
Spot rates in the Asia to Middle East market are seeing the most traction as container shipments on the route improved by 1.6% year-on-year in May, according to shipping consultancy Drewry.
Although volumes registered in the first five months of 2017 were down by 2.6% to 1.3 million TEU, freight rates were on the up as westbound shipments improve from Asia to the Middle East and in particular to South Asia. Drewry said that prices in both lanes “should at the very least hold firm over the coming months.”
Despite the lacklustre start to the year, annual trade growth could rebound back in 2017, by potentially as much as 3%.
The Asia to South Asia market continues to expand. The latest Container Trades Statistics (CTS) data puts westbound volumes up by 6.4% after five months, following a massive 16% jump in May. It is very possible that demand could rise by as much as 7% this year to surpass the 2016 growth rate of 4.9%.
“There will inevitably be some seasonal drop-off in cargoes in the third quarter in comparison to the second quarter but, with both Ocean and THE now including Asia to Middle East in their vessel-sharing agreements, an opportunity exists for a more co-ordinated approach to balance trade-level supply with demand,” Drewry said.
“Spot rates on the Asia to Middle East trade have been somewhat erratic with large monthly gains quickly snuffed out.”
That was the case in May when Shanghai to Jebel Ali 40ft spot rates shed USD 600 to wipe out most of April’s hike. Spot rates on the same corridor then spiked again in June to reach USD 1,920/40ft. Ignoring the volatility, rates have trended upwards for a year and June’s benchmark was double that of the same month last year.
Freight rates on the Asia to South Asia tradelane are also trending upwards, although they lack the wild swings of the Middle East, Drewry informed. The benchmark rate for Shanghai to Nhava Sheva hit a 30-month high in June, gaining over USD 200 in a month to USD 1,290/40ft. Again, this is more than double the price of the same one year ago.
http://worldmaritimenews.com/archives/226269/drewry-carriers-getting-busier-on-asia-middle-east-route/
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Iron Ore Made Comeback in 2016
Jul 31, 2017 | The Maritime Executive
Despite soft Chinese consumption and low prices for most of the year, a late surge meant the global iron ore industry saw gains in production and exports in 2016.
The improvement came after the slower growth, lower prices and squeezed profit margins suffered in 2015, according to the new UNCTAD Iron Ore Market Report. The report shows the key indicators of demand and supply, seaborne trade and price, all made gains through the year and says the market outlook is steady.
Although Chinese consumption remained relatively low, and prices did not improve for much of 2016, the market started to improve late in the year, with prices exceeding US$80/dry metric ton (dmt) in December 2016.
Global iron ore production grew five percent year-on-year in 2016, according to the report, hitting a total of 2,106 million tons (Mt). This was primarily driven by an additional 30 Mt of direct shipping ore from Australia, which was the major source of new fine-products entering the Chinese market.
Iron ore exports exceeded 1,513 Mt in 2016, compared with under 1,439 Mt in 2015, and the seaborne market was more or less balanced. The net increase in global trade was led by Australia, which contributed 44 Mt of incremental seaborne supply. The predominant products that entered the market were Pilbara blend fines and Carajas fines.
Producers of iron ore have reduced mining costs substantially over the past four years, says the report, and the mining industry as a whole now spends $22/dmt less than it did in 2013 due to tightened capital controls, renegotiated contracts and the exit of high cost supply. The production-weighted average cost for the seaborne market was only $34/dmt in 2016, and the lowest cost producer achieved $23/dmt.Iron ore exploration budgets fell in 2016 for the fourth consecutive year, with the estimated $685 million expenditure representing a decline of $460 million from 2015. Most of the fall can be attributed to Australia and China, which together accounted for almost half of the global decline. The annual exploration budget for iron ore is now down 83 percent from the peak of $3.98 billion in 2012.
https://www.maritime-executive.com/article/iron-ore-made-comeback-in-2016
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