jueves, 27 de agosto de 2015

jueves, agosto 27, 2015

World shipping slump deepens as China retreats

Ports across the world suffer worst hit since the Lehman crisis as emerging markets wilt, but trade may not matter so much to global GDP any longer

By Ambrose Evans-Pritchard

stranded cargo vessel Rena grounded on the Astrolabe Reef, on October 12, 2011 in Tauranga, New Zealand.
Shipping has been hit by the gathering storm in global trade Photo: Getty
 
 
World shipping has fallen into a deep slump over the late summer, dashing hopes of a quick recovery from the global trade recession earlier this year and heightening fears that the six-year economic expansion may be on its last legs.

Freight rates for container shipping from Asia to Europe fell by over 20pc in the second week of August, even though trade volumes should be picking up at this time of the year. The Shanghai Containerized Freight Index (SCFI) for routes to north European ports crashed by 23pc in five trading days.
 
The storm in the shipping industry comes as the New York state manufacturing index for July plummeted to a recessionary low of minus 14.9, the lowest since the Great Recession and one of the steepest one-month drops ever recorded.

 

The new shipments component fell to -13.8, and new orders to -15.7. A similar drop occurred in 2005 and proved to be a false alarm but the latest fall comes at a delicate moment for the world economy.
 
There is now a full-blown August storm sweeping through global markets. The Bloomberg commodity index dropped to a fresh 13-year low on Monday and the MSCI index of emerging market equities touched depths not seen since August 2009.

A closely-watched gauge of emerging market currencies has fallen for the eighth week – the longest run of unbroken declines since the beginning of the century - led by the Malaysian Ringgit, the Russian rouble and the Turkish lira.



Asian currencies have dropped against the dollar over the last year
 
China’s surprise devaluation last week continues to send after-shocks through skittish global markets, already on edge over a likely rate rise by the US Federal Reserve in September - though this is now in doubt.

The currency move was widely taken as a warning that the Chinese economy is in deeper trouble than admitted so far, a menacing prospect for exporters of raw materials and for trade competitors in Asia. It threatens to transmit a fresh deflationary impulse through the global system.

The great worry is that companies in emerging markets will struggle to service $4.5 trillion of US dollar debt taken out in the boom years when quantitative easing by the Fed flooded the world with cheap money, much of it at irresistible real rates of 1pc. This is up from $1 trillion in 2002.

The monetary cycle has gone into reverse since the Fed ended QE in October 2014 and cut off the flow of fresh liquidity. While the first rate rise in eight years has been well-telegraphed, nobody knows for sure what will happen once tightening starts in earnest.

This stress-test could prove even more painful if China really has abandoned its (crawling) dollar peg and is seeking to protect export margins by driving down its currency.

The yuan has risen by 60pc against the Japanese yen and 105pc against the rouble since mid-2012. Yet China nevertheless has a trade surplus of 6pc of GDP.

Data from the Port of Hamburg released on Monday show much damage this currency surge may be doing to Chinese companies. Axel Mattern, the port’s chief executive, said a 10.9pc drop in trade with China was the chief reason why volumes of container cargoes passing through the port fell 6.8pc in the first six months.

“During the first six months of the years the euro was on average 19 percent lower than the yuan, making purchase of Chinese goods costlier for European importers,” he said.

If so, this is grist to the mill of those arguing that China timed its switch to a market-driven exchange rate in order to disguise what is really “currency warfare”, or a beggar-thy-neighbour strategy as it used to be known. The Chinese central bank has dismissed such claims as “nonsense”. It has intervened to stabilize the yuan over the last three days.

The port of Hamburg said trade with Russia collapsed by 36pc, the latest evidence that the rouble crash and deepening recession has forced Russian consumers to cut back drastically on purchases of imported cars and heavy goods.

The Dutch CPB index of world trade fell in both April and May in absolute terms, culminating five months of dire shipping activity. It had been widely-assumed that the worst was over.



World trade has slumped

Yet more recent data from Container Trades Statistics shows that global volumes fell 3.1pc in June from the already depressed levels the month before. This has come as shock: the period from June to August is typically the strongest time of the year, boosted by pre-shipments for the Christmas season.

What is even more disturbing is that fresh port data from Asia suggest that the downturn dragged on into July, and may even have deteriorated.

Singapore – the world’s second largest entrepot – saw a 13.3pc contraction in container volumes from a year earlier, the worst performance since the sudden-stop in trade after the Lehman crisis.
 
The growth in cargo shipments for all the major ports in East Asia (that have reported so far) fell to a new cycle-low of 0.6pc in July, according to tracking data collected by Nomura. “The clock is ticking on the third quarter. We remain sceptical of those trying to “call a bottom”,” it said.

It is still unclear how much of this weakness reflects recessionary conditions, and how much stems from a more benign shift in the structure of the global economy.

China’s reliance on imported components for its export industry has fallen to 35pc from 75pc in 1992 as the country moves up the technology ladder. The Communist Party is deliberately weaning the economy off heavy industry and mass production, shifting to a more mature service economy that relies less of trade.



At the same time, the US and Europe have been “re-shoring” manufacturing plant from China as Asian labour costs rise, reversing the process of globalisation.

These changes mean that the “trade-intensity” of the global economy is falling. The trade share of world GDP was 40pc in 1990. It rose to a peak of 61pc in 2011, and has since drifted down to below 60pc.

A recent study by the International Monetary Fund said the expansion of global supply chains driven by the US and China in the early 2000s is “exhausted”.

The implication is that trade is no longer the pulse of the global economy. Other indicators are less worrying.

Both credit and key measures of the money supply are rising briskly in Europe, the US, and latterly in China as well, pointing to a recovery later this year. These forces may prove to be more powerful in the end. `

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