Money & Business News 20/11/2008

Stocks set to extend losses


NEW YORK (CNNMoney.com) -- U.S. stocks were poised to extend losses Thursday, a
day after a rout on Wall Street sent the blue-chip Dow average below 8,000 for
the first time since 2003.
At 7:45 a.m. ET, Dow Jones industrial average, Standard & Poor's 500 and Nasdaq
100 futures were lower. However, they had pulled out of their earlier lows.
"The futures are headed a little bit lower, but we have regained some of the
steeper losses from earlier," said Peter Cardillo, analyst for Avalon Partners.
Stock futures measure current index values against perceived future performance
and give an indication of how Wall Street will open when trading begins in New
York.
U.S. stocks fell sharply Wednesday as economic fears and uncertainty about the
future of the auto industry pummeled the market. The Dow lost 5%, while the
Standard & Poor's 500 (SPX) index slid 6% to its lowest level since March 2003.
And the Nasdaq composite (COMP) lost 6.5% to settle at its lowest point since
April 2003.
"New lows in the S&P and Nasdaq were made yesterday," said Peter Cardillo,
analyst for Avalon Partners. "There's a continuation of negative news that is
going to continue to weigh on the market. Oil prices are hitting new lows, and
there's a flight to quality to gold."
Cardillo said the new multi-year lows for the stock indexes are a "major
negative setback, from a psychological effect."
Overseas markets took a cue from Wall Street. Major Asian markets posted heavy
losses, with Japan's Nikkei losing nearly 7%. European shares were solidly in
negative territory in morning trading.
Auto bailout: Senate Majority Leader Harry Reid called off a planned vote this
week on a $25 billion auto industry bailout.
The chiefs of General Motors (GM, Fortune 500), Ford Motors (F, Fortune 500)
and Chrysler have been on Capitol Hill this week to plead for aid. They have
found some support in Congress but have also faced heavy criticism.
Economy: A weekly report on jobless claims is due at 8:30 a.m. ET. First-time
unemployment claims are expected to fall in the week ended Nov. 15. For that
week, the Labor Department is expected to report 505,000 jobless claims,
according to a consensus of economist projections compiled by Briefing.com.
That's down from the prior week's figure of 516,000.
A reading on leading economic indicators comes out at 10 a.m. ET. For this
index on previously-announced economic reports, the Conference Board is
expected to report a 0.7% dip in economic activity in October, according to a
consensus of economists compiled by Briefing.com.
The Philadelphia Fed's survey of regional manufacturing activity is also due
out at 10 a.m. ET. The Philadelphia Federal Reserve Bank is expected to
announce a 35-point decline for its November index measuring industrial factors
like new orders and employment, according to a consensus of economist opinion
from Briefing.com.
Companies: The personal computer maker Dell (DELL, Fortune 500) is due to
report its financial results after the market close. The company is expected to
post a 9% drop in earnings to 31 cents per share, according to a consensus of
analysts surveyed by Briefing.com.
Money and oil: The U.S. dollar rose against the British pound, but slipped
versus the euro and the yen. Oil continues to plunge toward the $50 mark. Oil
prices fell $1.41 a barrel to $52.21.


US Futures cut losses after PepsiCo, Citi news


NEW YORK - US stock index futures cut losses after PepsiCo, a food and beverage
company, reaffirmed its 2008 profit and CNBC television reported that Saudi
Prince Alwaleed bin Talal planned to boost his stake in Citigroup to five per
cent, a day after the bank's shares plummeted.
Futures also got a lift as news of a surprise interest rate cut by the Swiss
National Bank helped European stocks pare some of their losses.
S&P 500 futures slipped three points, but were above fair value, a formula that
evaluates pricing by taking into account interest rates, dividends and time to
expiration on the contract. Dow Jones industrial average futures dipped 22
points, and Nasdaq 100 shed seven points.
Source: businessspectator.com


Japan economy expected to contract for two straight fiscal years


TOKYO - Japan's economy is expected to contract for two straight fiscal years
as the global financial crisis takes a toll on exports and corporate activity,
a Reuters poll showed.
The gloomy forecast comes after government data said on Monday the world's
second-largest economy slipped into its first recession in seven years in the
third quarter, meeting the widely used definition of two consecutive quarters
of contraction.
Japan's economy is expected to shrink 0.5 per cent in the current fiscal year
to next March, followed by a 0.3 per cent contraction in fiscal 2009/10,
according to the median forecast of 25 economists polled from Nov 17-19.
In the previous month's survey, economists forecast growth of 0.3 per cent for
the current fiscal year and a 1.1 per cent increase in the following year.
"Downward pressure on the economy are now at Japan's front door. The moment of
truth would come in the final quarter of this year and January-March next year,
when Japan will face a test of how resilient domestic demand is," Kyohei Morita
, chief economist at Barclays Capital Japan, said.
Economists see another three quarters of contraction in Japan's economy to come
, bringing the sequential decline to five straight quarters, or the longest on
record, as slowing global growth hampers the nation's export-reliant economy.
The financial turmoil has put most developed nations into recession. The euro
zone is already in recession and the US economy is widely expected to follow
after having shrunk in the third quarter.
Steady rates
Median forecasts show analysts expect the Bank of Japan to keep interest rates
on hold at 0.3 per cent until the second quarter of 2010.
But among the 65 economists polled on rates, six expect a cut in Japan's key
policy rate sometime by the end of this year - with three of them seeing rates
hitting zero. A total of 27 economists predict a rate cut sometime by the end
of next year.
"As the downturn is expected to deepen in the coming quarters due to sliding
exports, the BOJ may need to consider cutting interest rates further around the
start of 2009," said Takeshi Minami, chief economist at Norinchukin Research
Institute.
The Bank of Japan cut the overnight call rate by 20 basis points to 0.3 per
cent in October, its first rate reduction in over seven years, acknowledging
increased downside risks to the growth and slight waning of inflationary
pressure.
The monthly poll suggests Japan could teeter on the verge of deflation in the
next fiscal year, starting in April 2009, after emerging from persistent price
declines dating back to fiscal 2005/06.
Core consumer inflation is now seen sliding back into negative territory, at a
fall of 0.5 per cent, as early as the third quarter next year as demand for
crude oil and other resources is quickly declining in line with the slowdown of
the global economy.
Still, the median forecast for core consumer inflation in the current fiscal
year was at 1.5 per cent, while that for fiscal 2009/10 is for zero growth. In
the October poll, the median forecast for the core inflation was at 1.8 per
cent for fiscal 2008/2009 and at 0.9 per cent for fiscal 2009/2010.
Source: businessspectator.com


RBS shareholders vote on $30B bail-out


LONDON, England (CNN) -- Shareholders in Royal Bank of Scotland are Thursday
due to vote on whether to accept a $30 billion bail-out plan to survive the
credit crunch.
Under the deal, 60 percent of the UK bank, one of hardest hit by financial
turmoil in the wake of the collapse of the U.S. sub-prime mortgate sector,
could could be placed in government hands.
At a meeting in Edinburgh, shareholders are expected to approve the creation of
$22 billion worth of ordinary shares but at a price that only the government is
expected to be interested in buying them.
The move follows a $17.8 billion rights issue by RBS earlier this year as the
bank struggled in the wake of its acquisition of Dutch Bank ABN Amro -- turmoil
that cost chief executive Fred Goodwin his job.
RBS is expected to make its first full-year loss as a public company.
The UK Press Association reported that more than half of RBS investors have to
approve the latest fundraising exercise.


Behind newbuilding cancellations


FALLING freight rates have combined with the global economic downturn to cause
widening newbuilding cancellations.
?Shippers depend a lot on their freight rate,? Ken Tai, technical specialist
with KE Live Research, told reporters.
?These freight rates are actually declining and with the volume declines, trade
between countries start to decline. It's going to be a double whammy situation
for these shippers."
Jimmy Ng Hwee Khoon, head of Jenjosh, also pointed to the issue of falling
freight rates and their impact on yard cancellations.
He warned Fairplay that ?container vessels will be affected? in view of sector
corrections taking place in the sector.
The global fall in demand for goods, Fairplay understands, will also
potentially herald more layoffs in seafarers, because river ports such as China
and Vietnam are ill equipped to accommodate Capesizes.
But the market for niche vessels like AHTs and FPSOs is expanding, Fairplay was
told.
Source: Fairplay Shipping News


Politics to decide ?Panama lottery?


WHICH US ports reap the returns from Panama Canal expansion is being determined
by political influence, not sound economic policy, according to a leading port
finance consultant.
Speaking at the TOC Americas conference, independent consultant Laurie Mahon
cited the focus of US East and Gulf Coast ports on preparing for the canal
expansion in 2014.
?For many of these ports, the canal expansion is not an opportunity ? it is
actually a fear, because there is an absolute recognition that not every port
will win,? she said.
A vital factor for access to future canal trade will be whether US ports can
get channels dredged to 15m. As Mahon put it: ?Draught is the ticket to winning
the Panama sweepstakes.?
But she warned that scarce federal funding ?is being allocated on a purely
political basis. The question of who?s going to win is not being decided on
which ports are the best places economically to make investments.
"It?s being decided based on whether a port?s senator is on the appropriate
committee,? she said, arguing that funding allocations would be better served
by a national policy framework. WHICH US ports reap the returns from Panama
Canal expansion is being determined by political influence, not sound economic
policy, according to a leading port finance consultant.
Source: Fairplay Shipping News


Novorossiysk aims to beat crunch


A KEY RUSSIAN port is trying to offset declines in lower-value cargo tonnage by
increased handling of more lucrative cargoes.
A report issued by Moscow brokerage firm Troika Dialog said Russia's largest
publicly listed port company, Novorossiysk Commercial Seaport, will continue to
see rising volume and growth in revenues ? though at a slower pace than
expected before the global financial pinch.
Financial data for the first half of this year suggested that revenues earned
by boxes almost doubled to 10%; the share of oil products grew to 16% and the
share of ferrous metals to 19%.
Ten-month results by 31 October indicated aggregate tonnage handled by the port
company is up 8.6% from the same period of 2007.
But much larger year-on-year growth was posted for oil products, grain and
containers.
Kirill Kazanli, transport analyst for Troika Dialog, expects most cargo volumes
will remain flat in 2009.
The cement import boom, in which last month's tonnage jumped almost fourfold
from October 2007, has run its course.
Total tonnage projected for next year will be 83.9M tonnes, up 2%. Tariffs and
freight charges are expected to remain as they are, while the falling rouble
will add to the company's foreign exchange costs.
Assuming worst-case trading conditions next year, Kazanli predicted growth in
revenues by 19%, to $784M, and after-tax income by 27%, to $139M.
Source: Hellenic Shipping News


Fire halts Nigerian oil terminals


ROYAL Dutch Shell, which operates the Forcados terminals in Nigeria, has
advised that oil production has been cut back because of an explosion and fire
at one of their work sites which resulted in the loss of lives.
"Production has been cut back to allow investigation and repairs to take place.
There will be some delays to Forcados liftings, and the terminal operator is
working with offtakers to minimise delays," a GAC spokesman said.
Source: Fairplay Shipping News


EU calls for cleaner scrapyards


THE EU has called for a new scrapping strategy to reduce pollution and improve
working conditions for scrapyard workers.
EU Environment Commissioner Stavros Dimas told reporters in Brussels yesterday:
?The problem of ship dismantling remains acute. Workers in south Asia are being
exploited and their lives put at risk working in deplorable conditions, while
coastal areas are being polluted and ecosystems threatened.?
A great number of European ships are sent to yards in India, Pakistan and
Bangladesh, mainly because of a scarcity of scrapyards in the EU and
inexpensive fees.
Dimas proposed that the EU offers South Asian yards aid and technical help and
called for stricter procedures and checks on scrapyard-bound European ships.
New rules should include certification and compulsory inventories of hazardous
materials on ships, he added. THE EU has called for a new scrapping strategy to
reduce pollution and improve working conditions for scrapyard workers.
Source: Fairplay Shipping News


Denying pirates an AIS trace


SPOOKED by the piracy surge, South Korean companies are adopting new measures
to pre-empt attacks.
The maritime ministry is requiring ships to turn off their AIS power in pirate
waters to make them harder to detect and to hide log books.
The measures are to apply when ships pass the Sri Lanka-Gulf of Aden route in
the approach to the Suez Canal. The AIS power is turned off when ships sail
within 500 miles of coastal regions on the route.
But ships have also been warned to turn the AIS back on in the event of any
attack.
The ministry is also urging ships cruising at less than 15kt to post security
guards on deck, although other authorities view that move as likely to endanger
crews in firefights.
There has been no debate as yet on the effectiveness and legality of equipping
such vessels with sonic cannons, which create ear-splitting noises. A cruise
liner used them in 2005 to deflect a pirate attack. SPOOKED by the piracy surge
, South Korean companies are adopting new measures to pre-empt attacks.
Source: Fairplay Shipping News


GMAC files with Fed for bank holding status


NEW YORK (AP) -- GMAC Financial Services has applied to the Federal Reserve to
become a bank holding company, which would allow General Motors' financing arm
to be eligible for aid under the Treasury's $700 billion bank rescue plan.
GMAC says the change in status would shore up its capital position and allow it
to continue providing automotive and mortgage financing.
GMAC is majority owned by private equity firm Cerberus, which also owns most of
Chrysler. General Motors Corp., which itself is running out of cash, owns a 49
percent stake in GMAC.
GMAC also is launching cash tender offers to buy or swap debt held by its units
and mortgage business Residential Capital LLC for cash, new notes or preferred
stock, in a move to boost capital levels and reduce debt.


$25m - or else


Pirates who hijacked the Vela VLCC Sirius Star (built 2008) have demanded a
ransom of $25m to release the vessel and its 25 crew.
The cash must be handed over within 10 days, a man named Mohamed Said, who
claimed to be one of the gang, told the AFP news agency.
He warned of "disastrous" consequences unless the money was paid.
The ransom is a sizeable chunk of the $115m value of the 2m barrels of crude on
board, but add in P&I cover worth as much as $300m for the hull and crew and
the pay-out begins to seem less onerous.
The British foreign secretary, David Miliband, signalled that Britain would not
pay a ransom for the two British crew members held hostage.
Speaking to reporters, he said the international community must "stand firm"
against hostage-taking in all its forms. He insisted that making payments in
return for the release of hostages would only encourage further such incidents.

"There is a strong view of the British government, and actually the
international community, that payments for hostage-taking are only an
encouragement to further hostage-taking and we will be approaching this issue
in a very delicate way, in a way that puts the security and safety of the
hostages to the fore."
The 318,000-dwt Saudi VLCC was taken at the weekend more than 400 miles off
Kenya and moved to an anchorage off Somalia.
Source: Tradewinds.com


Credit buster!


Korean yard Samsung Heavy Industries has won a credit-crunch busting order for
two drillships worth $1.44bn.
The unnamed European owner will take delivery of the vessels by 31 March, 2012.

They will be used for drilling activities offshore Brazil, Samsung said. They
can drill as deep as 11 kilometres and have dynamic positioning systems (DPS)
that can keep them stable in waves of up to 16 metres and winds of up to 41
metres per second.
The shipbuilder expects to win more offshore orders by the end of the year and
is in talks with clients in the US and Europe for more drillships and other
vessels.
It has won new contracts worth $10.2bn for drillships, FPSOs and other offshore
units this year already ? more than for regular merchant ships for the first
time.
Source: Tradewinds.com


Spill fear passing


Fears of an oil spill from a vessel grounded in the Oslo Fjord appear to have
passed, the shipowner says.
The 4,556-dwt Crete Cement is now settled on the sea bed and divers are
exploring how best to remove fuel oil and diesel from the ship, a spokesperson
for Kristian Gerhard Jebsen Skipsreder tells TradeWinds.
He says an ROV unit has confirmed the 2002 built vessel is stable; with the
pumping away of pollutants expected to begin this afternoon.
?Planning on how best to salvage the vessel is going on now and there has been
no spill so far,? the spokesperson said.
?There are booms all around the ship, so should a few drops of oil escape it
will be catered for.?
Kristian Gerhard Jebsen has scheduled a press conference in Oslo this afternoon
where further details about the operation will be revealed.
The Crete Cement was beached at Fagerstrand, 20km south of Oslo, yesterday
after an earlier grounding had punctured its hull, TradeWinds reported.
All 12 crew and the Norwegian pilot were evacuated from the fully loaded vessel
, which has 150 tons of fuel oil and 19 tons of diesel on board.
Source: Tradewinds.com


Scan gets cash


Norwegian shipowner Scan Geophysical has bagged NOK 117.65m ($16.65m) from a
private placement to help cover newbuilding costs.
And it can add an extra NOK 20m to the pot if it takes an option to issue 20
million new shares to Deep Sea Supply.
Lars Johan Frigstad, CEO of Oslo-listed Scan, says the move is in response to
the failed sale-and-leaseback of three newbuildings to John Fredriksen?s Ship
Finance International.
The collapse of the SFI deal created an unexpected capital expenditure burden
for the company, he adds.
Scan originally hoped to collect between NOK 120m and NOK 150m from the
placement of 117.65 million shares. But Frigstad says the outcome is
satisfactory as it can take the additional NOK 20m from Deep Sea Supply if
required.
The private placement can only be completed if a replacement sale-and-leaseback
deal for the Scan Express, Scan Finder and Scan Superior is finalised with PFS
Shipping.
The issue to Deep Sea Supply is a substitute for committed cash payments
related to the delivery of the newbuildings, which are being built at India's
ABG Shipyard, Scan says.
Source: Tradewinds.com


Tamai triumphs


Japanese bulker owner Tamai Steamship has banked much more money in strong dry
cargo markets in the six months to 30 September.
It said net earnings were JPY 915m ($9.58m), against JPY 354m in the same half
of the previous year.
Revenue was JPY 4.37bn from JPY 3.23bn over the same period.
With bulker markets subsequently collapsing, the second half will inevitably be
less profitable. It is forecasting profit of JPY 1.18bn in the 12 months to 31
March next year.
But this will still beat the JPY 994m recorded in the previous full year.
Established in 1932, Tamai is primarily engaged in shipping mainly bauxite for
Nippon Light Metal, as well as vessel chartering and real estate rental.
Source: Tradewinds.com


Mermaid minted


Soaring revenue has fired full-year profit at Thai offshore operator Mermaid
Maritime.
Mermaid pocketed THB 1.16bn ($33.09m) in fiscal 2008, trumping the THB 553.29m
it snared last year by 117.9%.
The offshore unit of Thoresen Thai Agencies (TTA) says income picked up 28% to
THB 5.29bn.
It said: ?The higher revenues were primarily a result of a strong performance
in our subsea engineering group, including higher day ratesa and higher
utilization of our subsea assets, which was partially offset by lower than
expected contributions from our drilling group as a result of rig downtime.?
Operating profit for the quarter jumped 59.7% to THB 434.59m, helped by a THB
95.12m insurance claim following a fire at the end of last year.
Mermaid said: ?Although we have not yet directly experienced a fall out from
financial crisis or oil price reductions, there does exist a possibility that
some of the smaller oil and gas companies may have to reduce or postpone some
services.
?As both our subsidiaries provide services to the production arm of the
business, we feel less exposed than other companies.?
Source: Tradewinds.com


Up for grabs


Australia?s Dalrymple Bay Coal Terminal (DBCT), one of the world?s largest coal
export facilities, could be up for sale.
Owner Babcock & Brown Infrastructure Group (BBI) is examining the potential
sale to help cover its debt, according to Australian media reports.
BBI is said to have been approached by a consortium of miners interested in
buying DBCT and has issued confidentiality agreements to interested parties.
?Where we know there is strong interest, it?s appropriate that we test out
appetite and pricing for co-investing,? BBI managing director Jeff Kendrew was
quoted as saying.
The process could take three to four months and will probably attract interest
from financial players as well as users of the port.
Earlier this year BBI said it would seek to sell stakes in some of its
principal assets to cut borrowing and provide funds for investment.
BBI holds a 50-year leasing and development rights for Dalrymple, with an
option for a further 49 years.
Capacity at the port, which mostly exports coal for steelmaking, is being
expanded to 85m tons with an AUD1.3bn ($823m) investment.
BBI also counts a number of ports in Europe, including in Belgium, Spain,
Finland, Germany, Italy and Bulgaria, amongst its assets.
Shares in BBI, which is listed on the Australian Stock Exchange, have slumped
96% in the past six months.
Source: Tradewinds.com


Top breached loan


Top Ships warns it may be forced to sell ships or tap the money market if it
breaches further loan agreements.
Nasdaq-listed Top broke the covenants of one loan last year and is offering no
guarantees about the security of others due to the present dire market
conditions.
But new Top finance chief, Alexandros Tsirikos, tells TradeWinds there is no
need to panic as he expects such warnings will become standard practice for
shipping companies going forward.
In its third quarter report Top said: ?As of 31 December 2007, the company was
not in compliance with one of its financial covenants, but has obtained waivers
up to and including 31 December 2008.
?No assurance can be given with respect to future compliance with covenants.?
Top adds if it breaches debt covenants or derivatives agreements and is unable
to secure further waivers banks may step in and seize assets.
If this happens, ?there can be no assurance that the company will be able to
continue as a going concern,? it said.
Top added: ?The current significant decline in charter rates in the shipping
market coupled with the prevailing difficulty in obtaining financing for vessel
purchases has adversely affected vessel values.
?A continuation of these conditions would lead to a significant decline in the
fair market values of company's vessels, which may result in company's not
being in compliance with these loan covenants.?
If this happens and waivers or refinancing can?t be arranged, Top would ?have
to sell vessels and or seek to raise additional capital in the equity markets,?
it said.
Tsirikos was dismissive of the warning, stressing it was simply a sign of the
times.
He said: ?This sort of warning will become standard for shipping companies in
the coming quarters due to events in both the sale and purchase and charter
markets.?
Top posted a profit of $41.64m in the quarter, compared to a loss of $21.98m in
the corresponding period a year ago.
Tsirikos added: ?Overall we are happy. Compared to other companies we are in
good shape.?
Source: Tradewinds.com


Manila rejects training appeal


THE FAR East Maritime Foundation training centre has failed to have its
accreditation reinstated by the Philippines government.
Its accreditation was revoked in August 2007 because as a foundation, it was
ruled not entitled to offer training courses for a fee to non-members.
It responded that the government?s action had been politically and financially
motivated because of the role of a competing academy. But Manila rejected that
view.
Source: Fairplay Shipping News


Saudi prince increasing stake in Citigroup


NEW YORK (AP) -- Saudi Prince Alwaleed bin Talal says he plans to increase his
stake in Citigroup to 5 percent.
Prince Alwaleed, who currently holds less than a 4 percent stake, has been
buying shares of Citi believing they are undervalued and that the New
York-based bank has been taking necessary steps to improve its operations amid
the ongoing credit crisis.
Prince Alwaleed also provides full support for Citi's chief executive, Vikram
Pandit, in a statement.
Citigroup Inc. has been battered during the credit crisis, having posted four
consecutive quarterly losses. Earlier this week it said it plans to cut an
additional 53,000 jobs on top of 22,000 cuts previously announced.
Shares of Citi hit a 15-year low Wednesday.


Jobless claims reach 16-year high


NEW YORK (CNNMoney.com) -- The number of Americans filing new claims for
unemployment insurance surged to the highest levels in 16 years, and the number
of people continuing to collect benefits neared a 26-year high, the government
said Thursday.
The U.S. Department of Labor reported that initial filings for state jobless
benefits increased by 27,000 to 542,000 for the week ended Nov. 15. This marks
the third time in 16 years that initial claims have exceeded 500,000.
Claims are at the highest total since the week ended July 25, 1992, when 564,
000 initial claims were filed.
Economists surveyed by Briefing.com expected 503,000 claims. Last year, the
figure stood at 333,000.
The number of Americans collecting unemployment benefits for one week or more
surged by 109,000 to 4,012,000. The data comes from the week ended Nov. 8, the
most recent available. The last time the figure was this high was for the week
of Dec. 12, 1982, when it reached 4,381,000.
The four-week moving average of unemployment claims, used to smooth
fluctuations in the data, increased by 15,750 to 506,500. A reading above 400,
000 has been present during the past two recessions. This is the 18th week the
four-week moving average has exceeded that benchmark.
U.S. job losses have been mounting for months. Earlier this month, the Labor
Department reported the economy lost 240,000 jobs in October, bringing the
total number of jobs shed in 2008 to nearly 1.2 million. The unemployment rate
rose to 6.5%, a 14-year high, last month.


Imarex Daily Brief


Tankers
Crude
VLCC Ag/East: ws 70 ($53k/day)
Suezmax Wafr/Usac: ws 100 ($35k/day)
Turkish Straits Delays: 1.5 n / 1.5 s (unchanged)
Though the pirates are still in the headlines, V rates remain flat. We are at
the point in the fixing cycle where rates should have turned up?and of course
we are knee deep into Q4, as Afra magnate J Fitzgerald would phrase it. With
that said, tankers have held up well while the rest of the world faces a
barrage of whoopass. Suezmaxes have continued their slide. Again, their
earnings are good ? but in this business we are nothing but trend watchers, and
the trend is softer. Black gold is now below $51 ? and that loud scream you
just heard was the High Priest of the Orinoco demanding to know who kicked the
oil majors out of his country. His next move might be to nationalize an airline
, any airline ? but it seems Team Kirchner is a step ahead. I can understand
the smash-and-grab maneuver on private pensions, but why anyone would want to
steal something that is worth only a headache or two is beyond me. I thought
the goal of appropriating private assets was to take stuff that was worth
something. Maybe they will nationalize Detroit on our behalf.
It appears that more vessels are being taken for storage. While a handful of
ships might not provide for a market spike, each incremental ship taken out of
service helps Owners make their case for stronger rates.
The pirate story might also be playing a small role ? as the ton mile equation
is under the microscope.
As things stand now ? there doesn?t seem to be an effect on spot rates ? but
keep an eye on incremental changes in this story ? as well as the storage issue
. If we have learned anything the past few years, it is that tanker Owners are
simply alchemists with brass cajones.
Fairly good action on TD3 today as prices trade up. Dec gains 3 points to 75
while Jan adds 5 points tov 49. Even the Feb contract saw good volume and adds
one point to 45. My hunch is that the storage issue, combined with piracy, is
nudging forward prices up. Supply and demand don?t appear much different from
yesterday. TD5 Dec loses 4 points to 108.
Clean
37k Cont/Usac: ws 180 ($16.5k/day)
38k Caribs/Usac: ws 165 ($14k/day)
55kt Ag/East: ws 230 ($39k/day)
Plus c?est la meme chose, plus c?est la meme chose. Some Atlantic basin cgos
get fixed, some get failed ? and rates sit tight. On the macro front, the US
Department of Transportation announced that Americans drove 4.4 pct less in Sep
2008 than in Sep 2007. While this in itself does not portend Armageddon, it
does reinforce the concept that a general slowing is underfoot. The slow bleed
in the East continues as rates remain soft and softer. Today?s WSJ reports that
BASF will idle 80 plants worldwide and cut output as much as 25%.
TC2 still has not awoken from its slumber. Trading is thin, though we see the
Q1 add 1 point 139. In the East, paper is slow as well. TC5 Dec trades up 7
points to 200, some 25-30 points below spot.
Dry Bulk
BDI 847 down 12
BCI 976 down 13
BPI 927 down 51
BSI 623 up 17
BHSI 314 up 4
Here we go again. At one point recently, the Panamxes showed promise. Not big
promise, not even slightly-smaller-than-a-breadbox promise. But ? they showed
hope ? and now?they have faded once again. Too many ships, not enough cgos.
Commodore Landsberg: ?Easy come, easy go. Although Capesize rates peeked their
heads above the water yesterday, day rates for the big boys are back down again
. The old man at sea continues to play the same sad tune: credit crunch,
crashing equity markets, and declining steel and iron ore demand are all
contributing to very low dry bulk freight rates. To paint an even gloomier
picture, there are rumors of yet another bulk vessel being hijacked by pirates.
I doubt Edgar Allen Poe could have written a darker tale.
Optimists ? the few of you out there ? will continue to be comforted by China?s
infrastructure-intensive stimulus plan. In order to keep their domestic economy
afloat, China is supposedly planning on spending over $500 billion in the next
three to five years on rail, roads, and urbanization. At the end of the day,
dry bulk to a large degree is infrastructure and China. We?ll see if the
infrastructure plan can go off without a hitch.?
Dry Bulk FFAs
Contract Close Current Diff
======================================
BDI Nov 900 850 -50
BDI Q1 1850 1800 -50
BDI Q2 2550 1500 -50
CS4 Q1 $12,531 $12,000 -$531
CS4 Cal 09 $19,370 $18,250 -$1120
PM4 Q1 $12,625 $12,250 -$375
PM4 Cal 09 $15,723 $15,250 -$473
SM6 Q1 $9,594 $9,500 -$94
SM6 Cal09 $12,453 $12,250 -$203
Thin trading as prices move down a touch. Following from Justin Yagerman at
Wachovia (from Monday):
How Does The Long-Term Supply/Demand Outlook Impact Our Views On Dry Bulk Day
Rates? We believe current and near-term fundamentals illustrate a potential
?worst case scenario? for dry bulk day rates. Spot rates are below break-even
cash costs and even operating expenses for most owners; however profitability
is still possible in some cases in the thin period charter market, and players
remain hopefully for improvement, as reflected in the FFA curve and our
proprietary industry channel checks with owners, charterers, and brokers. While
current rates do appear oversold in our opinion, the hope of a return to better
times coupled with cash rich owners may keep ship orders on the books providing
enough swing capacity to cap potential longer-term day rate upside. However, as
rates remain at current levels we expect to see both increased scrapping and
orderbook cancellations, which may serve to alleviate some of the supply
headwind which is currently quite large.
Either way, we expect rates to remain in a lower band than we have seen in the
past few years with potentially shorter peak-to-trough cycles.
Equities
DS Norden: 1 BUY and 2 HOLD
- Lars Heindorff maintains a HOLD on DS Norden, though reduces target price to
$25 (from $30). He
sees current valuation as fair despite a bleak outlook.
- Johannes Moller maintains a HOLD on DS Norden (DKK 170), calling it ?Best in
Class, Worst Class Ever?. He also notes that should it slip below DKK 100, it
would look interesting.
- Natasha Boyden maintains a BUY on DS Norden, though she lowers her price
target to DKK 320 (from dkk 510). She cites a strong balance sheet and
significant industry presence, though mentions concerns of counterparty risk
and uncertain 2009 forecasts.
How Does The Long-Term Supply/Demand Balance Impact Our Views On Dry Bulk
Stocks? While we remain cautious on the group as a whole, we continue to favor
dry bulk companies with long-term charter coverage, clean balance sheets, and
limited paper and physical counterparty risk. Recent weakness, however, has
shown that a prolonged decline in the rate environment is detrimental to all
dry bulk stocks, regardless of charter coverage and counterparties, though we
have observed that less debt-laden companies such as DSX fare better in
plummeting rate environments. The recent weakness in day rates, leading into a
period of material supply growth, will likely force continued consolidation
within the sector, likely leading to fewer listed dry bulk companies, and
differentiation within the group?s trading patterns relative to fleet profiles
(age, quality of assets, etc) and chartering strategies (spot versus period,
etc). We believe this differentiation process has already started, as dry bulk
stocks with limited debt leverage have maintained relatively more value in the
difficult freight environment. That said, given the cascading weakness in day
rates and the likelihood of continued dividend cuts, we have recently
downgraded our ratings on the shares of EGLE ($8.71), ESEA ($4.37), and DSX
($10.59) to Market Perform, with a preference towards DSX due to its lower
leverage, high quality fleet, and transparent first-class counterparty roster.
We would look to get more constructive on the group if and when the freight
markets normalize and counterparty risk becomes less of an issue industry wide.
Source: files.irwebpage.com


BNP dismisses speculation over capital increase


LONDON (MarketWatch) -- BNP Paribas late Wednesday dismissed speculation it was
considering a move to strengthen its capital base, saying it met all the
standards required by regulators.
The French bank made the announcement after fears of a rights issue helped push
its shares down around 23% in the first three sessions of the week. The stock
was down roughly another 1% on Thursday, but outperformed heavier falls for the
rest of the European banking sector.
"BNP Paribas confirms that its capital ratios fully satisfy the requirements
set by its regulator, given its risk profile," the bank said in a brief
statement.
"As a consequence, no capital increase is currently under consideration," apart
from the issuance already announced to finance its acquisition of parts of
Fortis the bank added.
The French government has also agreed to inject around 10.5 billion euros into
the French banking sector, including 2.55 billion euros for BNP Paribas, in the
form of loans. The government, however, has said those loans are needed to
ensure banks continue lending to individuals and small businesses, rather than
to strengthen capital.
BNP's Tier 1 capital ratio was 7.6% at the end of September and had remained
roughly steady from six months earlier. The ratio is set to grow to around 9%
once the government loans have been completed, but that's still below the
levels being targeted in other European countries, which has led some analysts
to forecast further steps to reduce the gap.
"BNP's capital is well below that of its peer group. Over the medium term, we
see risk of BNP opting to correct this gap via measures which would be dilutive
for shareholders," said Marta Sanchez, an analyst at Ahorro Corporacion
Financiera, following the bank's third-quarter earnings earlier this month.


Oil dips below $50 a barrel


Prices fall as worry about the economy continues to drag on demand.
NEW YORK (CNNMoney.com) -- The plunge in oil prices continued Thursday with
prices falling below $50 a barrel as growing concern about the economy weighed
on demand.
In the final day of trading for the December contract, U.S. crude futures fell
$3.35 to $50.27 a barrel in electronic trading, but not before dipping as low
as $49.91.
Oil last dipped below $50 on Jan. 18, 2007, when it traded at $49.90, according
to CME Group, which operates the New York Mercantile Exchange.
A week of negative economic reports, combined with falling equities and
indecision from Congress on a bailout of major U.S. automakers GM (GM, Fortune
500) and Ford (F, Fortune 500), have painted a dismal picture of fuel demand.
The economic slowdown continues to weigh on oil demand, according to Phil Flynn
, senior market analyst with brokerage Alaron Trading in Chicago. News has been
"pretty doomy and gloomy on the oil outlook front," said Flynn.
On Thursday, the government reported that jobless claims reached a 16-year high
.
Earlier in the week, the government said its measurement of consumer prices had
fallen the most since 1947, adding to worries about falling demand for all
goods and services.
A read on new home construction also hit its lowest level since 1959, and the
struggling U.S. automobile industry continues to clamor for a government
bailout that will keep them, and the thousands they employ, above water.
Meanwhile equity markets, which many investors have been using to get a read on
the health of the economy, continued to retreat this week, with the Dow Jones
industrial average closing below 8,000 for the first time since March 2003 on
Wednesday.
Crude prices have been on the decline as investors worry about recession in
developed nations such as the United States, the world's largest oil consumer,
and in the developing world, where fuel demand had been rising the fastest.
Concern about demand for petroleum products has driven crude oil prices down
from a record high of $147.27 a barrel in mid-July. The decline has also driven
down the price of unleaded gasoline by over a half since July to $2.02 a gallon
, motorist group AAA reported Thursday.
Meanwhile the capture of a Saudi Arabian supertanker this week by pirates off
the Somalian coast has prompted many tanker companies to consider routing their
shipments around South Africa, avoiding the quicker route through Egypt's Suez
Canal.
Rerouting could add to the cost and the length of time it takes for oil
shipments to reach the U.S. from the Middle East.
Source: CNNMoney.com


Leading economic indicators decline in October


LEI, a predictor of the economy's future performance, fell more than expected
in October, says Conference Board.
NEW YORK (CNNMoney.com) -- An indicator of the economy's future performance
dropped in October, reversing a September gain, according to The Conference
Board.
The index of leading economic indicators, released by the business research
group Thursday, decreased by 0.8% in October. This brings the index down to 99.
6, from 100.4 in September.
This erases the gains from the prior month. The Conference Board initially
reported that the index rose 0.3% in September, but that was revised downward
to an increase of 0.1%.
The October figure was slightly worse than expected. According to a consensus
compiled by Briefing.com, economists had expected the index to drop 0.6%.
The Conference Board blamed the decline on "negative contributions" from stock
prices, building permits, consumer expectations and the index of supplier
deliveries.
This was in spite of "positive contributions" from real money supply and the
interest rate spread, the Conference Board said.
Before September, the index had been on the decline. It fell by 0.9% in August
and dropped 0.7% in July.
The index is designed to predict economic activity six to nine months in to the
future. It incorporates a variety of economic data including jobless claims,
manufacturers' orders and personal income.
Source: CNNMoney.com


Dow keeps dropping


Wall Street slides further as spike in jobless claims keeps recession fears
front and center.
NEW YORK (CNNMoney.com) -- Stocks plunged Thursday morning, after a report
showing U.S. jobless claims at a 16-year high gave investors a reason to extend
the selloff.
News that Citigroup's largest shareholder plans to up his stake in the company
failed to lift its shares or the broader market.
The Dow Jones industrial average (INDU), the Standard & Poor's 500 (SPX) index
and the Nasdaq composite (COMP) all dropped in the early going. The Dow was
down 160 points, or 2.13%, about 15 minutes into the session.
A rout on Wall Street Wednesday pushed the blue-chip average to close below 8,
000 for the first time since 2003.
Before the open, Saudi Prince and long-time Citigroup (C, Fortune 500) investor
Alwaleed Bin Talal said he increased his stake to 5% following the U.S.
government's $25 billion bailout for the troubled bank. Before the bailout, the
prince held a 4% stake.
Also, the Labor Department announced that first-time jobless claims during the
week ended Nov. 15 surged to 542,000, a 16-year high. This trumps expectations
of 505,000 jobless claims, from a consensus of economist projections compiled
by Briefing.com. In the prior week, jobless claims totaled 516,000.
U.S. stocks fell sharply Wednesday as economic fears and uncertainty about the
future of the auto industry pummeled the market. The Dow lost 5%, while the
Standard & Poor's 500 (SPX) index slid 6% to its lowest level since March 2003.
And the Nasdaq composite (COMP) lost 6.5% to settle at its lowest point since
April 2003.
"New lows in the S&P and Nasdaq were made yesterday," said Peter Cardillo,
analyst for Avalon Partners. "There's a continuation of negative news that is
going to continue to weigh on the market. Oil prices are hitting new lows, and
there's a flight to quality, to gold."
Cardillo said the new multi-year lows for the stock indexes are a "major
negative setback, from a psychological effect."
Overseas markets took a cue from Wall Street. Major Asian markets posted heavy
losses, with Japan's Nikkei losing nearly 7%. European shares were solidly in
negative territory in morning trading.
Auto bailout: Senate Majority Leader Harry Reid called off a planned vote this
week on a $25 billion auto industry bailout.
The chiefs of General Motors (GM, Fortune 500), Ford Motors (F, Fortune 500)
and Chrysler have been on Capitol Hill this week to plead for aid. They have
found some support in Congress but have also faced heavy criticism.
On Thursday, GMAC Financial Services, a subsidiary of General Motors which
holds 49% of its stock, applied to the Federal Reserve to become a bank holding
company. In this way, GMAC is trying to tap into the $700 billion bank bailout
from the Troubled Asset Relief Program, which has so far been denied to
automakers.
Economy: A reading on leading economic indicators comes out at 10 a.m. ET. For
this index on previously announced economic reports, the Conference Board is
expected to report a 0.6% dip in economic activity in October, according to a
consensus of economists compiled by Briefing.com.
The Philadelphia Fed's survey of regional manufacturing activity is also due
out at 10 a.m. ET. The Philadelphia Federal Reserve Bank is expected to
announce a 35-point decline for its November index measuring industrial factors
like new orders and employment, according to a consensus of economist opinion
from Briefing.com.
Companies: Dell (DELL, Fortune 500) is due to report its financial results
after the market close. The company is expected to post a 9% drop in earnings
to 31 cents per share, according to a consensus of analysts surveyed by
Briefing.com.
Money and oil: The U.S. dollar rose against the British pound, but slipped
versus the euro and the yen. Oil continues to plunge, momentarily dipping below
the $50 mark. At 9:37 a.m. ET, oil prices were trading about $2.61 lower to $51
.01 a barrel.
Source: CNNMoney.com


UPDATE 1-US weekly jobless claims surge to 16-year high


WASHINGTON, Nov 20 (Reuters) - The number of U.S. workers filing new claims for
jobless benefits surged last week to their highest level in 16 years, Labor
Department data showed on Thursday, as a harsh economic environment forces
employers to cut back on hiring.
Initial claims for state unemployment insurance benefits were a seasonally
adjusted 542,000 in the week ended Nov. 15 from a revised 515,000 the previous
week. That was higher than analysts' forecast for a reading of 505,000 new
claims.
U.S. stock futures tumbled on the data and Treasury debt prices edged higher,
attracting a safe-haven bid. The U.S. dollar deepened losses against the yen.
The latest data has added to fears that the U.S. economy faces a deep recession
and paints a gloomy outlook for the labor market.
"This report paints a pretty bleak job picture for mid-November and reinforces
the comments from the Fed yesterday almost guaranteeing a sizable Fed rate cut
at the next Fed meeting on Dec. 16," said Cary Leahey, economist at Decision
Economics in New York.
"It means we're probably facing another payroll employment report showing
November job losses in the vicinity of 200,000."
The Federal Reserve has slashed its economic growth outlook through 2009 to
minimal levels, minutes from the central bank's Oct 28-29 policy meeting
released on Wednesday showed.
A Labor Department official said there were no special factors influencing the
report.
The four-week moving average of new jobless claims, a better gauge of
underlying labor trends because it irons out week-to-week volatility, rose to
506,500 from 490,750 the week before, the highest since the start of 1983.
Continuing claims were 4.012 million in the week ended Nov. 8, the latest data
available, up from 3.903 million the prior week and the highest since December
1982.
Analysts estimated so-called continued claims would be 3.92 million. The
insured unemployment rate, a measure of the workforce receiving unemployment
benefits, was 3.0 percent in the week ended Nov 8, rising from 2.9 percent the
prior week.


Russia sending more ships in pirate crack down


(CNN) -- Russia will send additional ships to the Horn of Africa in an effort
to crack down on the recent wave of hijackings by Somalia-based pirates, its
navy chief said Thursday.
The Russian frigate Neustrashimy is already in the region and has helped repel
pirate attacks on at least two ships. Adm. Vladimir Vysotsky told the official
news agency Ria Novosti that more ships would be joining it soon.
"After Neustrashimy, Russia will be sending warships from other fleets to this
region," Vysotsky said. No additional details were provided.
A NATO-led international fleet has attempted to crack down on the attacks. An
Indian frigate battled a pirate ship in the Gulf of Aden on Tuesday, leaving
the ship ablaze and likely sunk, the country's defense ministry reported.
In September, Vysotsky said Russian ships would be operating on their own. But
the crews of the Neustrashimy and the British frigate HMS Cumberland teamed up
to chase off pirates who attacked a Danish ship in the gulf earlier this month.
More than 90 ships have been attacked off eastern Africa so far this year,
according to the International Maritime Bureau, which monitors piracy. The
pirates, who operate from largely lawless Somalia, still hold 17 vessels --
including the Saudi-owned supertanker Sirius Star, the largest ship captured to
date.
The pirates typically hold the ships and their crews for ransom, and Saudi
Foreign Minister Prince Saud Al-Faisal said Wednesday that the tanker's owners
were in talks with the hijackers.
"We do not like to negotiate with either terrorists or hijackers, but the
owners of the tanker are the owners of the tanker and they are the final
arbiters of what happens there."
Two of the 25 crew members aboard the Sirius Star are Britons, Peter French and
James Grady. The British Foreign Office released a statement on their families'
behalf Thursday, saying they "greatly appreciate the concern that has been
expressed."

Money blog.Money blogging.

Crisis in the shipping industry

Money and financial crisis has hardly hit the shipping industry as freight rates have collapsed with a warp speed!

Financial Times

Hopes ride on simpler payments to salvage dry bulk shipping rates
----------------
Radical steps to tackle the crisis in the shipping industry triggered by
a collapse in dry bulk freight rates will be proposed at emergency talks
in London today.

The conference will consider plans to simplify payments in the complex
chains of transactions whereby operators charter dry bulk ships from
owners, then charter them on to others.

Many in the industry believe shipowners' fears about the financial
stability of other parties in such long chains are exacerbating a crisis
of confidence that has seen many activities grind to a halt in the past
six weeks.

Banks are increasingly unwilling to finance vessel purchases, give
guarantees for payments to shipyards or guarantee payments for the goods
such as iron ore and coal that the sector handles.

Shortage of finance has combined with fading confidence and falling
demand to create a collapse in short-term dry bulk shipping rates. The
average rate to charter a Capesize dry bulk carrier, which hit a record
of $233,988 a day on June 5, has fallen 98.4 per cent to an average
$3,670, far below operating costs.

Bankruptcies among shipowners unable to service debts will worsen
conditions. Forced sales of vessels could push values down even more,
prompting banks to call in loans secured against ships. Two operators -
Ukraine's Industrial Carriers and London-based Britannia Bulk - have gone
into administration.

Freight Investor Services, a London-based shipping derivatives broker,
will make proposals to simplify payments to the conference, which has
been organised by the Baltic Exchange.

In a letter sent to clients and seen by the Financial Times, FIS suggests
an arrangement for dry bulk markets similar to one it has implemented to
settle freight futures contracts.

FIS suggests participants in its suggested pool for physical ships would
make a single net payment into or out of the pool every 15 days for all
the vessels they either chartered or owned.
///

Dry bulk goods growth to halt in 2009
---------------
The double-digit growth in seaborne trade of dry bulk commodities, such
as iron ore and grains, over the past few years will come to a halt in
2009 as economic growth in China and elsewhere slows down, commodity
analysts and shipbrokers say.

"We will see some growth next year, but nothing close to the strong
increases of the last few years," says Peter Norfolk, director of
research at London-based shipbrokers Simpson Spence and Young.

"It is a big slowdown," he adds.

The International Monetary Fund forecasts that the world's trade volumes
- including dry bulk, container shipping and services - will grow next
year by 2 per cent, the lowest rate since 2001, down from 4.6 per cent
this year.

The drop comes as the econ-omic slowdown spreads from the US into Europe
and Japan and also hits emerging economies such as China and India.

Analysts and shipbrokers are cautious about their forecast for dry bulk
commodities trade in 2009 because of changing economic conditions, but
most of them forecast little if any growth. Some foresee a decline in
trade.

UBS estimated seaborne iron ore trade would drop next year to 741m
tonnes, down 4.1 per cent from this year's record of 775m tonnes, because
of the slowdown in Chinese demand, which accounts for almost half of the
world's imports.

The Swiss bank forecast that trading in coking coal - another ingredient
in steelmaking - would also fall next year. It said about 222m tonnes of
coal would be shipped, down 2.4 per cent from this year's record 227m
tonnes.

But the drop in volumes transported could be also mirrored by shipments
being concentrated in a shorter time frame, supporting the market,
according to Philippe Van den Abeele of the shipping hedge fund Castalia.

The iron ore and coal markets - the two most important for dry bulk
commodities and critical for freight prices for large vessels such as
Capesize - will come with a reduction in grains such as corn and rice
trading, which are important for smaller vessels.

The United Nations' Food and Agriculture Organisation forecast that
global cereal trade would drop in the 2008-09 harvest season to 264m
tonnes, down 2.9 per cent from the 2007-8 -season.

"Reduced trade in coarse grains is the main reason for the world cereal
trade decline, although a small contraction in global rice transactions
is also anticipated," the Rome-based FAO said in its recent Food Outlook
report.

MONEY BLOG

MAKE MONEY - MAKE MONEY ONLINE - INTERNET BUSINESS - INTERNET BUSINESS BLOG

Money and business news 17/11/2008

Forecasters: tough road ahead for the economy


WASHINGTON (AP) -- The country is sinking deeper into the economic doldrums,
and it's likely to stay there for a while.
That's part of the latest outlook from forecasters in a survey to be released
Monday by the National Association for Business Economics, also known by its
acronym, NABE.
Approximately 96 percent of the economists polled believe that a recession has
started, and nearly three-fourths think it could persist beyond the first
quarter of 2009.
Under one definition, a recession happens when the economy shrinks for two
quarters in a row. The economy contracted 0.3 percent in the third quarter as
battered consumers cut back sharply on spending, the government reported last
month. It was the worst showing since 2001, when the country was last in a
recession.
NABE economists, among other experts, predict activity will continue to shrink
in both the final quarter of this year and the first quarter of next year as
weary consumers hunker down further under the stresses of rising unemployment,
shrinking nest eggs and falling home values.
"Business economists became decidedly more negative on the economic outlook for
the next several quarters as a result of the intensification of credit market
stresses and evidence of spillover to the real economy," said NABE president
Chris Varvares, president of Macroeconomic Advisers.
NABE economists are now forecasting the economy to shrink at a 2.6 percent pace
in the final quarter of this year and then at a 1.3 percent pace in the first
three months of 2009. The new projections marked downgrades from the
association's previous survey, which called for growth of just 0.1 percent in
the final quarter of this year and a 1.3 percent growth rate in the following
quarter.

Money bad news : Recession is here

For all of 2008, the association's economists are predicting the economy's
growth will slow to 1.4 percent, down from 2 percent in 2007. If the new, lower
projection proves correct, it would mark the weakest performance since the 2001
.
The picture would turn worse in 2009. The NABE economists are projecting the
economy will jolt into reverse, shrinking by 0.2 percent for all of next year.
If that happens, it would mark the worst showing since 1991, when the country
was starting to pull out of a recession.
With the economy losing traction, the nation's unemployment rate will climb to
7.5 percent by the end of next year, the economists predict. Other analysts
think it could rise to 8 percent at that time, or even hit 10 percent or higher
if a U.S. auto company were to go under.
The nation's unemployment rate bolted to 6.5 percent in October, a 14-year high
, the government reported earlier this month.
To cushion the fallout, the Federal Reserve has slashed a key interest rate,
dropping it to just 1 percent, a level seen only once before in the last
half-century.
Fed Chairman Ben Bernanke has warned that the country's economic weakness could
last for some time - even if the government's unprecedented $700 billion
financial bailout package and other steps do succeed in getting financial and
credit markets to operate more normally.
In a speech Friday, Bernanke left the door open to another rate reduction,
warning that financial markets remain under "severe strain."
Wall Street investors and economists believe the Fed probably will lower
interest rates again on Dec. 16, its last regularly scheduled meeting this year
, by one-quarter or even one-half percentage point.
The NABE survey of 50 forecasters was taken Oct. 28 through Nov. 7.
The raft of grim economic news prompted Sandra Pianalto, president of the
Federal Reserve Bank of Cleveland, to say in a speech Friday that the data to
date "tells me that the economy is now in a recession."
"At the moment, the signs point to a recession beyond just a 'garden variety'
downturn," she said. "The length and severity of the recession will depend on
how quickly credit markets return to normal."


Citigroup chairman doesn't deny job cuts are near


DUBAI, United Arab Emirates (AP) -- Citigroup's chairman is hinting the banking
giant will announce more job cuts Monday, and isn't ruling out the possibility
executives will follow peers at Goldman Sachs and forgo bonuses.
Various reports have suggested Citi may be looking to shed thousands of jobs
through layoffs and attrition.
Speaking briefly to The Associated Press in Dubai on Monday, Chairman Winfried
Bischoff said the company will make an announcement about its plans at 9 a.m.
New York time, an hour after a town-hall meeting for employees is scheduled.
He did not deny that job cuts are coming but declined to comment further.
Citigroup has been among the banks hardest hit by the ongoing credit crisis.
The New York-based bank has posted four consecutive quarterly losses including
a loss of $2.8 billion during the third quarter.
As part of its plan to return to profitability, Citigroup is already in the
midst of cutting 22,000 jobs worldwide. Through the end of the third quarter,
it shed 12,900 jobs and it expects to cut the remaining 9,100 jobs over the
next 12 months. Citigroup had about 352,000 employees at the end of the third
quarter.
The bank has a companywide meeting scheduled for 8 a.m. EST that is expected to
last about an hour. Citigroup spokeswoman Christina Pretto in New York declined
to elaborate on what would be said during the town hall meeting.
Bischoff's comments came shortly after he told attendees at the Leaders in
Dubai Business Forum that it would be irresponsible for Citi and other
companies not to look at staffing needs in the event of a prolonged economic
downturn.
"What all of us have done - and perhaps injudiciously - we've added a lot of
people over ... this very benign period," he said.
"If there is a reversion to the mean ... those job losses will obviously fall
particularly heavily on the financial sector," he added. "Certainly they will
fall particularly heavily on London and New York."
Some reports have suggested Citi could be eyeing cutbacks of up to 10 percent
of its work force. Bischoff said the company loses about 8 percent of its
employees annually through natural turnover.
In his comments to the AP, Bischoff did not rule out the likelihood that Citi's
leaders would go without bonuses this year - a move that would effectively
amount to a substantial pay cut for the company's executives.
"Watch this space," he said when asked about lost bonuses.
On Sunday, Goldman Sachs Group Inc. said seven top executives, including Chief
Executive Lloyd Blankfein, will not receive cash or stock bonuses for 2008 amid
the ongoing credit crisis.
The seven Goldman executives made the decision to not take bonuses themselves,
the compoany said.


China central bank says risk of downturn growing


BEIJING - The risks of a downturn in the Chinese economy are on the rise and
will require steps to ensure adequate liquidity in the banking system, the
central bank said on Monday.
In its third-quarter monetary policy report, the People's Bank of China (PBOC)
said that inflationary pressures had eased alongside falling commodity prices,
and that it would focus on preventing deflation in the short term.
The PBOC said it would use open market operations to help increase liquidity,
and would ensure that adequate credit is available in the financial system to
complement the government's fiscal stimulus policies.
"Uncertainties in the domestic economy are increasing, and the risk of an
economic downturn is getting bigger. China's macroeconomic controls are facing
a more complicated and fast-changing situation," the central bank said in the
report.
Annual economic growth slowed to nine per cent in the third quarter from 11.9
per cent all of last year, and indicators for October showed factory output and
investment slowing further.
The central bank singled out the property sector as one facing troubles,
cautioning that problems there could spread to other parts of the economy.
However, it did not provide specific economic forecasts.
The central bank's assessment follows the cabinet's announcement earlier this
month of a four trillion yuan ($US586 billion) fiscal stimulus package, which
came alongside a shift to an "appropriately relaxed" monetary policy.
The central bank has already cut interest rates three times since mid-September
to support growth, as well as encouraged banks to lend more to worthwhile
projects.
Deputy central bank governor Yi Gang signalled last Friday that the central
bank had shifted its focus to avoiding deflation, saying the risk of inflation
had virtually disappeared.
In its report on Monday, the PBOC cautioned that it had to tread carefully to
make sure that its current stimulative policies did not sow the seeds of
inflation down the road.
"Monetary policy should prevent deflation in the short term but prevent
inflation in the long run," it said, adding that rising labour costs and the
potential for a rebound in resource prices could eventually put upward pressure
on prices.
Lower inflation could provide more room for reform to the pricing of energy,
transport, power, gas and water, the central bank said. The government
currently controls such prices, which analysts say often leads to market
distortions.
The central bank noted that a global economic slowdown could strike a blow to
the export sector, which is an important driver of growth. Data in recent days
has confirmed that both Japan and the euro zone are technically in recession.
"The United States, Europe and Japan are facing recession, and emerging
economies are also seeing a bigger risk of slowing down, which may have a
relatively big impact on external demand for Chinese products," it said.
The central bank did not provide forward-looking comments on the yuan's
exchange rate, but it said that it would promote the currency's convertibility
on the capital account. It is currently not freely exchangeable for purely
financial transactions.
Source: businessspectator.com


Gold supported, but gains seen capped


LONDON - Physical demand helped support gold, but analysts say a higher dollar,
lower oil prices and receding inflationary worries will cap prices in the short
term.
However, analysts said that over the longer term, a substantial depreciation of
the dollar will help boost the precious metal. A weaker US currency makes gold
priced in dollars cheaper for holders of other currencies.
Spot gold
The dollar slipped on Monday, but it is higher than in July when it hit record
lows against the euro under $US1.60.
"We are quite bullish for gold the long term, primarily because we see the
dollar weakening substantially on all this liquidity being pumped into the
system," Dan Smith, analyst at Standard Chartered, said.
To ease the credit crunch and financial crisis, central banks around the world
have slashed interest rates and made available large amounts of cash to the
banking sector.
The realisation that financial problems would not be confined to the United
States has helped bolster the dollar.
But expectations of an acceleration of government debt issuance in the United
States is likely to hit dollar sentiment over the coming year, analysts said.
"Given ... the unprecedented demand for physical, particularly gold coins and
bars, and the possibility that the dollar strength is unsustainable longer term
, we believe that precious metals could outperform," UBS said in a note.
Struggle
Gold has struggled to maintain an uptrend since hitting a two-month high of
$US931 an ounce in early October. It is down nearly 30 per cent since hitting a
peak at $US1,030.80 in March.
Reasons for gold's tumble since March include an easing of fears about runaway
inflation, partly due to falling commodity prices, including oil, which is now
trading around $US56 a barrel from record highs above $US147 an ounce in July.
Also behind gold's fall has been investors' need for liquidity and cash to
cover losses on stock markets.
Gold is often used as a hedge against inflation and financial market
uncertainty, which was not allayed by a meeting of the Group of 20 countries
over the weekend.
Governments from Washington to Beijing agreed to a raft of fiscal and monetary
steps to rescue the global economy but it was left to individual countries to
tailor their responses to their particular circumstances and industries.
A major industry in trouble is the auto sector, which has reported a rapidly
deteriorating outlook and undermined confidence in the platinum market.
Prices of platinum, used to make autocatalysts, have collapsed by more than 60
per cent since a record high of $US2,290 an ounce in March.
The platinum market is looking ahead to a report on the platinum and palladium
markets from the world's top platinum refiner, Johnson Matthey, due on Tuesday.

Platinum was at $US823/843 an ounce from $US833.50 late in New York on Friday,
palladium at $US216/221 from $US213 and silver at $US9.56/9.64 from $US9.48.
Source: businessspectator.com


Oil falls to near two-year low, below $US56


LONDON - Oil fell more than $US1 to below $US56 a barrel on Monday, close to
its lowest in almost two years, after a meeting of the Group of 20 major
economies ended with few concrete proposals on dealing with global recession.
News that the Organization of the Petroleum Exporting Countries (OPEC) may wait
until its meeting on December 17, instead of the end of November, to make a
decision on whether to cut production targets again also weighed on prices.
US light crude for December fell $US1.55, or 2.7 per cent, to a low of $US55.49
a barrel before recovering a little to around $US55.79 by 2210 AEDT. Last
Thursday, US crude reached a low of $US54.67 a barrel, its weakest since
January 2007.
London Brent crude fell $US0.98 to $US53.26.
Simon Wardell, analyst at economic consultancy Global Insight, said the lack of
any solid action plan from the G20 had provided a weak undertone to the oil
market:
"The economic outlook is worrying and no solution has been found short term.
People are expecting things to get worse as the economic data continues to look
poor and, in the absence of anything else, that is helping to push prices lower
."
Governments from Washington to Beijing agreed on Saturday to a raft of fiscal
and monetary steps to rescue the global economy but it was left to individual
governments to tailor responses to their circumstances and troubled industries.

Although the package of economic rescue measures agreed by the G20 countries
sought to settle volatile markets and calm consumer anxieties about leaders'
ability to work together, the proposals did little to alleviate investors'
fears.
OPEC uncertainty
The worst financial crisis since the 1930s has pushed a growing number of
countries into recession, heightening fears of a sharp slowdown in near-term
world energy demand and accelerating oil's tumble from its July peak of over
$US147.
Japan provided more gloomy economic news on Monday with data showing the
world's second-biggest economy was in recession.
The Japanese economy shrank 0.1 per cent in the third quarter, marking its
first recession in seven years.
Oil fell over two per cent on Friday after news of a euro zone recession and
data showing a record decline in US retail sales stirred concerns of a further
drop in fuel demand.
OPEC may have to wait until December to take action to reach a preferred oil
price range of between $US70-$US90 a barrel because the effect of its latest
cut is not yet clear, the group's president said on Sunday.
Chakib Khelil said he saw a meeting of OPEC ministers in Cairo on November 29
as more of a brainstorming session that might formulate recommendations for
action at OPEC's gathering in Algeria on December 17.
Several OPEC members want another production cut in the face of falling
revenues. Iran wants OPEC to cut output by a further 1-1.5 million barrels per
day (bpd) when it meets in Cairo.
"Market focus in energy will again be on what OPEC will be up to," brokers MF
Global said in a note to clients. "We suspect that should the cartel put
through another 1.0-1.5 million bpd cut ... a good part of the current
supply/demand imbalance will be redressed. However it remains to be seen how
quickly this excess crude will be taken off the market."
Source: businessspectator.com


UK port workers threaten strike


WORKERS at the UK?s Port of Dover threatened today to strike for 48 hours over
a manning dispute.
Members of the UNITE union plan to walk out tomorrow over a harbour board
decision to outsource 190 jobs at the port, which employs 570 workers and staff
.
?We are transferring 190 jobs in the ferry mooring operations, trailer-handling
and security departments to third parties, which will mean the loss of a few
jobs,? a port spokesman told Fairplay.
Advisory service ACAS has been asked to arbitrate between the board and UNITE
members.
Source: Fairplay Shipping News


Historic UK shipyard reopens


ONE OF the great names in shipbuilding, Cammell Laird, has been revived by a
management team led by MD John Syvret.
"It has taken seven years of grit and determination, commitment and long hours
? to rebuild a thriving business here," Syret told Fairplay today.
The original Merseyside company was closed in 2001, but Syvret formed a new
company, Northwestern Shiprepairers & Shipbuilders, at the yard the same year.
In just seven years, the new company carved a niche in ship repair, conversion
and refits, with a full orderbook and forecast turnover of £90M ($134M). It
also has a defence contract worth £1Bn.
So now Syvret has decided it will be timely to revive the famous yard. The new
Cammell Laird yard has already forged an alliance with Europe?s largest
shipbuilder, Fincantieri of Italy.
Source: Fairplay Shipping News


Opec wants oil at $70-$90 a barrel


The Opec oil cartel wants oil prices of $70-90 a barrel, Chakib Khelil,
Algeria?s energy minister and the group?s president, said on Sunday, suggesting
the group would try to defend this level with further production cuts in the
coming months.
Opec no longer has an official price band, which it tries to maintain, but
several countries, including Venezuela, have pushed for its resurrection.
However, Saudi Arabia has so far resisted the idea, analysts and Opec delegates
said.
The group, which control?s 40 per cent of the world?s supplies, will next meet
this month in Egypt and in Algeria in mid-December.
Analysts have said the organisation would need to take 1-2m further barrels of
oil out of the market to rebalance supply with falling demand.
Iran at the weekend called for Opec to agree a 1-1.5m b/d cut when it meets
later this month.
Opec has already begun to cut its production in an effort to adhere to its
recent decision to reduce its output by as many as 1.8m a day from November 1.
Mr Khelil said: ?Our objective is to reach a price of $70-$90?Because it?s the
price of the marginal cost for new developments, whether that?s Canadian
bituminous sands, the Brazilian deep offshore or even Venezuelan heavy crude.
If we don?t have $70-$90 in the next few years then eventually we?ll go much
higher [in price] because we will have no production from these deep reserves,
from the bituminous sands or from the kind of reserves that need $70.?
Source: ft.com


Citigroup to cut another 53,000 jobs


NEW YORK (AP) -- Citigroup Inc. is cutting approximately 53,000 more jobs in
the coming quarters as the banking giant struggles to steady itself after
suffering massive losses from deteriorating debt.
The plans, posted on the company's Web site, are being discussed by CEO Vikram
Pandit at the company's town hall meeting in New York Monday with employees.
The company said total headcount is being reduced by 20 percent from its peak
of 375,000 at the end of 2007; the company had already announced in October
that it was eliminating about 22,000 jobs from those levels.
The New York-based bank has posted four straight quarterly losses, including a
loss of $2.8 billion during the third quarter.
Shortly before the town hall meeting in New York, Citigroup Chairman Win
Bischoff said at a business forum in Dubai, United Arab Emirates, that it would
be irresponsible for Citi and other companies not to look at staffing in the
event of a prolonged economic downturn.
"What all of us have done - and perhaps injudiciously - we've added a lot of
people over ... this very benign period," Bischoff said.
"If there is a reversion to the mean ... those job losses will obviously fall
particularly heavily on the financial sector," he added. "Certainly they will
fall particularly heavily on London and New York."
In his comments to the Associated Press, Bischoff did not rule out the
likelihood that Citi's leaders would go without bonuses this year - a move that
would effectively amount to a substantial pay cut for the company's executives.
"Watch this space," he said when asked about lost bonuses.
On Sunday, Goldman Sachs Group Inc. said seven top executives, including Chief
Executive Lloyd Blankfein, opted out of receiving cash or stock bonuses for
2008 amid the ongoing credit crisis.


Mundra Port to set up second dedicated automobile terminal


Developer and operator of the Mundra Port, Mundra Port & Special Economic Zone
Ltd (MPSEZ), is expected to announce a partnership with Wallenius Wilhelmsen
Logistics (WWL) and NYK Line this week to set up a dedicated automobile
terminal at the western coast port, according to an executive at the Adani
group. ?Wallenius Wilhelmsen Logistics, NYK Line and MPSEZ will sign a
memorandum of understanding in the next few days to set up a multi-user
dedicated automobile terminal at Mundra port,? said the executive who didn?t
want to be named ahead of the announcement, which could come as early as Monday
. ?We want to turn Mundra port into a hub for automobile exports.?
Being a private port, Mundra is free to set its own tariffs unlike the 11 Union
government-owned major ports.
The expected announcement of the partnership with WWL and NYK Line comes weeks
after Tata Motors Ltd picked Sanand near Ahmedabad as the site to manufacture
the Nano car.
A spokesperson for Adani Group, which is promoted by billionaire Gautam Adani,
declined to comment. WWL and NYK Line could not be reached for comment over the
weekend.
WWL, owned jointly by Swedish shipping firm Wallenius Lines AB and Oslo-listed
Norwegian shipping group Wilh. Wilhelmsen ASA, is a leading independent
provider of global factory-to-dealer transport solutions for the automotive,
agricultural and construction equipment industries. It operates about 65 pure
car and truck carriers and roll-on roll-off vessels. Tokyo-headquartered NYK
Line is one of the biggest pure car carriers, or PCC in the world.
In October, MPSEZ had signed an agreement with India?s largest car maker Maruti
Suzuki India Ltd to develop a dedicated Rs100 crore, 250,000-units-a-year car
export terminal, also to be managed by NYK Line. That terminal is expected to
start operations in December, and the car handling capacity will be raised by
an additional 400,000 units by 2010.
?Mundra will provide cost competitive support to Indian automobile industry for
international trade and our aim is to make Mundra a hub for automobile exports,
? Gautam Adani, MPSEZ?s chairman and managing director, had said in February
while signing the agreement with Suzuki.
The setting up of a new dedicated facility to handle automobiles is part of
Adani?s plan to expand Mundra?s cargo handling capacity to 50 million tonnes
(mt) by 2010, from 30mt now and further to 120mt by 2015, the same executive
said.
India is gradually becoming an export hub for small and mini cars, led by
Japan?s Suzuki Motor Corp. and Korea?s Hyundai Motor Co.
Currently, Mumbai and Chennai are the only two ports that have terminals to
handle export of automobiles. Pure car carriers and roll-on roll-off vessels
operated by NYK Line, Mitsui OSK Lines (MOL) and K-Line, regularly call at
these ports.
While Tata Motors, Suzuki, Ashok Leyland Ltd and Eicher Motors Ltd depend on
Mumbai owing to the proximity to their production centres, Hyundai and Ford
export cars through Chennai for the same reason. In October, Nissan Motor India
Pvt. Ltd had signed an agreement with union government-owned Ennore Port Ltd
near Chennai to export automobiles manufactured at its Oragadam plant, also
close to Chennai.
Source: Hellenic Shipping News


Gulftainer cracks the whip on idle cargoes at ports


Following the move of DP World, Gulftainer Company Limited is set to tighten
its rules over incoming full containers and increase demurrage rates at
Sharjah's terminals by as much as 275 per cent, starting next month, sources
told Gulf News last week. The new rates, intended to prevent congestion and
discourage use of the ports as long-term storage facilities, will cover imports
of full containers at Port Khalid, Khor Fakkan and Sharjah Inland Container
Depot. While it now appears that most major ports in the UAE are resorting to
higher demurrage rates to drive away long-term idle cargoes, ports in Fujairah
will keep their storage rates to a minimum.
Some cargoes reportedly spilled over in Sharjah recently, threatening to clog
the emirate's ports, even as Dubai's terminals at Jebel Ali were congested,
following the closure of Port Rashid months ago.
However, shipping companies interviewed by Gulf News said traffic at the Dubai
and Sharjah terminals has eased since DP World increased its storage rates.
Effective December 1, the free period at Sharjah's ports will be reduced from
10 days to 7. Daily rates for storage between the 8th and 12th days will
increase 275 per cent from Dh20 to Dh75 for every 20-foot container, and from
Dh40 to Dh150 per 40-foot container.
The same rates will be charged from the 13th to 17th days, but it will apply
from the first day, as the free use of port facilities will be forfeited. The
daily rates will go up further to Dh130 per 20-foot container and Dh260 per
40-foot container from the 18th day onwards.
Smooth traffic
Gulftainer clarified that cargo traffic at their terminals has always been
smooth, adding that the new tariff structure, which has not yet been finalised,
is intended to prevent future congestion.
"The Sharjah terminals are not currently congested. These new storage terms are
rather intended to prevent [future] congestion from occurring, particularly in
the light of the new rates being implemented in Dubai," Gulftainer commercial
manager Keith Nuttal told Gulf News.
"Congestion at the Dubai ports stemmed from the fact that many people wanted to
use the facilities as long-term storage facilities and the new storage terms
are intended to prevent this happening at the Sharjah terminals," Nuttal added.
In Fujairah port general manager Mousa Murad said they noticed a sizeable
increase in cargo business in recent weeks, but their policy has always been to
keep fees low.
"And that will not change. Our container terminals are very busy, but given the
current limited storing capacity, it's fair to say we do better with deliveries
which could be transferred immediately. From early next year we will have more
container terminals to handle increasing demand," Murad told Gulf News.
Shaji Lakshman, assistant operations manager of Seatrade Shipping, said some
ships spilled over to Khor Fakkan from Jebel Ali when Dubai's ports were
congested. However, traffic has eased since DP World decongested Jebel Ali's
ports.
"We had problems when Jebel Ali was clogged. Now we only have congestion on
certain days," Lakshman told Gulf News.
Source: Hellenic Shipping News


India: Secondary steel producers oppose move for 10% import duty


The tug of war between the primary and secondary steel manufacturers for
Government protection has flared up again ? this time on the issue of
imposition of import duty on steel products. The Cold Rolled Steel
Manufacturers? Association (Corsma), representing secondary steel producers,
has written to the Finance Ministry urging it not to go ahead with the Steel
Ministry?s recommendation of imposing a 10 per cent import duty on steel
products. The Steel Ministry has recommended the imposition of an import duty
following representations made by primary steel manufacturers seeking
protection against falling international prices and allegations that some CIS
countries and China are dumping steel in India.
Falling international prices encourages secondary producers to import since it
works out cheaper than domestic supplies.
Imposition of an import duty will make imports dearer and secondary
manufacturers would be pushed towards buying from domestic primary producers
who have piled up huge inventories.
Corsma had sent the letter to the Finance Ministry earlier this week following
the Steel Ministry?s recommendations made to the Finance Ministry last week.
Pointing out that India is committed to retain duty rates at ASEAN levels, the
communication from Corsma states that ?protection to any industry should be
provided only through statutory authorities which is the Anti-Dumping
Directorate rather than distortion and dislocation of the entire customs duty
structure?.
Falling prices and poor demand has forced all primary steel manufacturers to
reduce prices and cut down production in the last few weeks.
However, despite production cuts prices continue to slide as the glut situation
in the global market continues.
Domestic prices down
Domestic steel prices, which peaked in July to Rs 46,000 a tonne (excluding all
central, State and local taxes), is now down to Rs 36,000 a tonne in November,
while international prices are still lower.
Corsma, however, feels that reduction in global prices of steel and its raw
materials augurs well for developing countries such as India since it will
bring down costs of infrastructure and housing costs as well as for engineering
and manufacturing.
Urging the Finance Ministry not to go ahead with the duty proposals, the Corsma
letter states that the ?Government should not interfere to block reduction in
the prices of raw materials and steel to normal levels as availability of key
inputs at fair prices is key to industrial growth?.
Source: Hellenic Shipping News


Experts predict US coal market will cool off in 2009


It is reported that industry experts earlier speaking at the US Coal Imports
and Exports conference have predicted that the perfect storm of events that
caused a surge in coal prices and international demand this year and boosted
activity at the port of Hampton Roads probably will pass in 2009. Mr Ed Roarty
director of commercial fuels for Virginia Power Energy Marketing Inc said that
those conditions, including flooding in Australian mines, the weak dollar and
transportation shortages, are not sustainable. Mr Lloyd Kelly president of
Greenmont Energy Consulting added that as a result, coal exports from the
United States, including from Hampton Roads, probably will slow next year.
Mr Frank Kolojeski MD for TransGlobal Ventures Corporation, which hosted the
conference with The McCloskey Group commented that for the first time since the
event started in 2001, the conference included coal exports, reflecting changes
in the worldwide market.
Mr Kolojeski also said that if US coal exports fall softly, they'll return to
normal levels during the next few years, but in a sharp decline scenario, coal
exports could fall by more than 30 million tonnes in 2009 with prices also
dropping by as much as USD 100 per tonne.
Source: Hellenic Shipping News


Meltdown: Plunging Oil prices hit refinery projects


Finally the global recession has done it! The deepening economic crisis that
has gripped the world has pulled down crude oil prices back to the ground. It
is the lack of demand for energy in the aftermath of global credit crisis that
helped combat the ever increasing oil prices. Global oil prices have dropped
almost more than 200 percent from its high of $147 a barrel not long ago. The
prices now is hovering around $ 55 a barrel now a days. In which way could the
lower prices affect various refinery projects across the world just like the
way it affected some banks during the beginning of the credit crisis?
It was reported that more than four-out-of-five refinery construction projects
face cancellation as the worldwide collapse in fuel demand has wiped out all
but those developments with strong government backing.
Only 30 of the 160 refining projects announced since 2005, which should be
completed in the next two to seven years, would now go ahead. Until a few
months ago profit margins were strong and refiners were struggling to meet high
demand.
Of the 30 refineries still on track, almost all have the backing of large
national oil companies, which are set to provide 11 million of the 12 million
barrels of new refining capacity expected to come on stream.
The sharp drop in the number of new refineries is related to the collapse in
the refiner's profit margins, known in the industry as crack spreads. The scale
of the cutback is the starkest illustration yet of the severity of the collapse
in fuel demand and the effect on refining industry.
A widely touted supply bottleneck had been caused by the lack of investment in
refining in the lean years of the 1990s. Saudi Arabia's Saudi Aramco and
China's Sinopec will aggregate account for two million of those barrels.
This will significantly shift the balance of power in refining away from the
West, whose integrated oil companies and independent refiners have dominated
the sector from the start more than a century ago.
Two-thirds of the refining capacity additions are expected to be in Asia and
the Middle East, but even there, delays are being announced.
Source: Hellenic Shipping News


How low can it go? Economists ponder crude oil price's bottom


A little more than four months ago, there appeared to be no end in sight to
oil/s spectacular run, with some calling for prices to hit US$200 a barrel. But
crude has been on a steep, virtually uninterrupted downward slide since hitting
a record of US$147 on July 11. Crude for December delivery closed at US$57.04
per barrel Friday on the New York Mercantile Exchange _ a more than60 per cent
decline from its all-time high. Economists, who mere months ago struggled to
pinpoint crude/s peak, are now pondering just the opposite question: how much
lower can it go? The answer, they say, lies in how severe the current economic
downturn ends up being and how long it lasts.
Vincent Lauerman, president of energy consultant Geopolitics Central, said
prices are likely near their short-term lows and that there/s a good chance
they may recover somewhat in the next few months.
"But at the same time, where prices are ultimately going to land really depends
on how this global financial crisis plays out," he said.
Lauerman looks at two scenarios, dubbed "Love Thy Neighbour" and "Beggar Thy
Neighbour."
In the first case, world leaders work together to get a handle on the credit
crisis that has gripped global markets in recent months. Under that scenario,
oil prices would recover and average a sturdy US$80 for the next five years.
However, in the "Beggar Thy Neighbour" scenario, global players begin to work
against each other, tossing world markets into deeper and deeper turmoil. Crude
would be an average of US$40 for the next five years in that case.
"If the global economy really tanks, of course oil demand will tank right along
with it and we could end up with substantially lower prices than we/re seeing
even currently down the road," Lauerman said.
TD economist Derek Burleton says oil prices will likely fall to US$45 by early
next year, and perhaps even lower in the short term. Under a more pessimistic
scenario _ with global growth at 0.9 per cent rather than two per cent _ oil
could dip below US$30 periodically, he said.
"That/s going to be the near-term trend until we get some signs of firming in
the global economy and we/re a couple of quarters off from that occurring," he
said.
TD sees prices rising to the $70-$75-a-barrel range by the end of next year _
but not flirting with the US$150 mark again.
"Many of the factors that contributed to oil/s sharp rise in were an aberration
. We don/t see them being repeated nearly to the same extent going forward,"
Burleton said.
The world will likely not see the same feverish economic growth, especially
from China and other emerging economies, that ramped up demand.
Investors probably won/t stampede toward commodities to the same degree they
did ahead of the runup earlier this year and conservation measures will likely
stick around.
There are some factors that should, in theory, rein in the selloff as well.
Many institutional investors have been bailing out of their commodity positions
in droves as a means to raise cash recently. But that phenomenon should subside
as calm gradually returns to rattled markets, Burleton said.
There are also more production cuts expected by the Organization of Petroleum
Exporting Countries.
At a meeting three weeks ago, OPEC slashed its quotas by 1.5 million barrels a
day in an effort to buoy prices. Those cuts do not appear to have had much of
an effect, as the market focuses more on a gloomy demand picture than a more
bullish supply picture.
But when the organization holds another emergency meeting later this month in
Cairo, many expect further reductions.
As for what oil/s decline means for Canada/s economy, a report by the Bank of
Montreal last week said the picture looks quite grim.
Provincial and federal coffers had seen windfall corporate taxes and royalties
as a result of high commodity prices.
"The combination of rapidly deteriorating economic outlook and plunging
commodities threatens a broad based return to deficits in many jurisdictions,"
wrote deputy chief economist Douglas Porter, adding that he predicts Ottawa is
headed for a budget deficit of up to $7 billion in the next fiscal year.
Ontario has been slammed by cuts in the manufacturing and automotive sectors,
but a weaker loonie and lower energy costs could be a few positive by-products
of oil/s downturn, Porter wrote.
"However, recent developments are unambiguously bad news for Western Canada,
which had already been showing some signs of cooling even prior to the
commodity collapse."
Source: Hellenic Shipping News


RBS plans to lay off 15% of its investment bankers


Royal Bank of Scotland (RBS) is planning to cut about 3,000 jobs in its
investment banking division as the bank braces for a tough year. The cuts,
equivalent to about 15 per cent of the workforce of RBS' investment banking
division, come as rival banks are planning similar cutbacks in response to the
slowdown in financial markets. Nevertheless, the cuts are a further indictment
of RBS's previous strategy, most notably its participation last year in a
hostile break-up bid for ABN Amro, the Dutch lender.
The 71 billion euro (Dh330 billion) deal boosted RBS's investment banking
operations just as markets were beginning to seize up.
The move comes as Stephen Hester, RBS's new chief executive, embarks on a
fundamental review of the bank's operations in an effort to shrink the size of
its balance sheet.
RBS is expected to report a loss this year, largely because of heavy
write-downs on leveraged loans and other complex debt securities on its balance
sheet.
The bank is under pressure to scale back riskier and more capital-intensive
activities after raising A£20 billion (Dh109 billion) in fresh capital as part
of the UK government's rescue of the banking system. The bailout could give the
state a near-60 per cent stake.
The bank would not confirm details of the cuts, which came as no surprise in
the current market climate.
"We constantly review our business model to make sure its is appropriate for
the market conditions," RBS said.
The cuts are expected to fall relatively evenly across the division, which
operates in 50 countries, as a result of a general retrenching rather than any
decisions to get out of some business lines entirely.
The cuts will not affect RBS's retail banking operations.
The bank employs about 170,000 staff in total.
RBS had previously cut about 7,000 jobs, largely in its investment banking arm,
as part of the integration of ABN Amro.
The move comes as banks around the globe are trimming their investment banking
divisions as a result of the slowdown.
Last week, Morgan Stanley said it planned to chop about 2,000 jobs, or four per
cent of its workforce.
Source: Hellenic Shipping News


B&B/GPT joint venture faces up to $US82m loss


Babcock & Brown Ltd (B&B) says a joint venture fund the investment firm holds
with GPT Group Ltd in the United States faces up to a $US82 million loss from a
potential asset liquidation.
The news comes as Babcock's wind-energy subsidiary Babcock & Brown Wind
Partners sold its Portuguese business Enersis for ?1.2 billion ($A2.31 billion)
.
Babcock said a special purpose vehicle, which holds US loan asset investments
on behalf of the B&B/GPT joint venture, received a notice of acceleration under
a debt facility provided by Wachovia Bank after it failed to provide additional
collateral requested by the bank.
Discussions between the parties are ongoing but assets under management may
face liquidation if the matter is not resolved, B&B said in a statement.
B&B said the total amount of the Wachovia loan is about $US112 million, and its
joint venture has an exposure of around $US82 million.
"Babcock & Brown's maximum exposure to any potential loss will be equivalent to
50 per cent of the joint venture exposure or approximately $US41 million," B&B
said.
Babcock & Brown Wind Sells Enersis
Enersis, Portugal's largest wind power business, has been off-loaded to a group
of investors led by Iberia's leading private equity firm, Magnum Capital.
Magnum Capital will take over a portfolio of wind farms with installed capacity
of 515 megawatts and 156 megawatts under construction.
The private equity firm said in a statement on Sunday that it was the largest
deal in the European wind energy sector ever done by a private equity firm and
showed confidence remains in the alternative energy sector in spite of the
financial crisis.
"This transaction was concluded during the biggest global financial crisis and
highlights the consortium's investment capacity at a particularly complex
moment," the statement said.
Source: businessspectator.com


TMM could be de-listed


Slumping share prices have prompted the New York Stock Exchange (NYSE) to warn
Mexican owners Grupo TMM that its stock could be de-listed.
The NYSE says TMM, whose stock trades as American Depository Receipts (ADR), is
out of compliance with listing standards as its ADRs have fallen below an
average closing price of $1 over 30 days.
Reports say TMM's stock has been hit by worries over its financial health, a
sentiment which has kept its share price below the $1 mark for more than a
month now.
?The company has notified the NYSE that it intends to cure this deficiency,?
TMM has been quoted saying.
It added that it has six months to remedy the situation.
Earlier this month, the NYSE suspended the trading of shares in New
Jersey-based tanker owner US Shipping Partners.
The suspension came after US Shipping Partners' stock spent 30 consecutive
trading days below the minimum allowable market capitalisation of $25 million.
The company's share price had stayed below the $1 mark since October, after
plunging five months ago on reports that it would not be able to satisfy debt
commitments.
The NYSE also suspended trading in Britannia Bulk end-October, and is
reportedly working at present to de-list the company.
Source: TankerWorld.com


StealthGas pulls plug on suezmax newbuildings


Nasdaq-listed LPG specialists StealthGas Inc. is not exercising options for two
suezmax newbuildings from a Chinese yard.
The Greek owner entered the dirty tanker sector earlier this year with the
acquisition of two aframax product tankers and ordered four suezmaxes from
Jiangsu Rongsheng Heavy Industries in September.
It is understood that two of the new 156,000 dwt crude oil tankers were firm
orders with delivery slated for 2011 while the other two were options planned
for delivery in 2012.
?Although we are optimistic for the long-term prospects of the tanker market,
we have decided not to buy these ships and we are in official discussions to
cancel the options with zero penalties,? said company CEO Harry Vafias.
?By cancelling these options we could either re-buy the ships or other re-sales
for around 15%-20% lower,? he said.
?However, we aren't looking at other acquisitions until February next year at
the earliest depending on market conditions,? he added.
According to Vafias, ?around five banks will provide us [StealthGas] with
financing if we want, even if at more expensive rates.?
Source: TankerWorld.com


VLCC hijacked


Pirates have claimed their biggest scalp yet with the seizure of the 318,
000-dwt Vela VLCC Sirius Star in the Indian Ocean.
The US Navy reported the vessel ? only delivered by Daewoo in March ? was
attacked and taken more than 450 nautical miles south-east of Mombasa, Kenya,
on Saturday.
"The vessel is under the pirates' control," the spokesman for the US Navy 5th
fleet told the AFP news agency. The attackers had to scale the 10-metre sides
of the ship to hijack Sirius Star, he added
The tanker has 25 crew, including Croatians, two Britons, Filipinos, Poles and
Saudis.
Vela was not contactable on Monday afternoon in Dubai.
Source: Tradewinds.com


Spencer cleans up


Spencer Energy has taken its holding in Ocean HeavyLift to more than 90%
following a successful mandatory offer for the company.
It has paid NOK 36 ($5.99) per share to build its stake from 33.35% when the
bid began at the beginning of last month.
OHL says Spencer now owns 35,874,815 shares, which gives it a 92.58%
controlling stake in the heavylift specialist.
TradeWinds reported last week that Spencer had succeeded in buying out OHL?s
other leading shareholder, Awilco Offshore, despite it previously demanding
nearly double the offer price.
Awilco agreed to sell its 12.58 million shares, even though OHL was dallying
over whether to endorse Spencer?s bid.
OHL said the offer undervalued the company but it added the recent market
turmoil has muddied the water.
Source: Tradewinds.com


Odfjell exits Aden


Odfjell will no longer sail any of its vessels through the Gulf of Aden due to
the ever increasing pirate menace in the region.
>From today all Odfjell ships which would normally transit the Suez Canal will
be sent around the Cape of Good Hope, it says.
Terje Storeng, president and CEO of Odfjell, said: ?We will no longer expose
our crew to the risk of being hijacked and held for ransom by pirates in the
Gulf of Aden.
?Several chemical tankers have been hijacked at gunpoint, and although hostages
up to now reportedly have been released seemingly unharmed, we do not know if
this will be so in the future.
?We trust our customers will appreciate this decision which we have taken to
safeguard not only our crews and ships, but also the ships' cargo.?
He says the reroute will add time and significant additional costs to each
voyage, and the company expects its customers to make a contribution to this.
Jan Hammer, chief operating officer at Odfjell, says the level of extra cost
depends on the specific voyage, but he estimates the initiative will add
between six and 15 days to each job.
He told TradeWinds: ?We have no right to pass on the extra costs to our
customers but we will contact them and we hope they will support this
initiative with some compensation.
?We are sticking our neck out here and if we don?t succeed in gaining support
from customers we will end up footing the bill.?
Storeng added: ?Odfjell is frustrated by the fact that governments and
authorities in general seem to take a limited interest in this very serious
problem.
?The efforts that are being made do not seem to put an effective end to what
can best be described as ruthless, high level organised crime.?
Odfjell will only use the Gulf of Aden and the Suez Canal again when sufficient
protection is in place or action is taken to prevent attacks from pirates in
the area, he says.
Odfjell's move mimics salvage specialist Svitzer, which earlier this month
became the first company to route all of its vessels around the Cape instead of
using the Suez Canal.
Hammer says he hopes other shipowners will now route vessels around the Cape of
Good Hope. Such action would hit Suez Canal income and therefore ?wake up
Egypt? to do more in the fight against piracy in the region, he claims.
?Bringing in war ships does not solve the problem,? Hammer said. ?It just
increases the issue with an even greater risk of shootings and danger.?
Source: Tradewinds.com


Tokyo trick?


The Japan Ship Owners? Mutual Protection & Indemnity Association is to seek a
relatively modest general increase of 12.5%, but is also changing its
supplementary call system, so appears to be seeking a whopping 21.15% overall
rise in premium.
The Tokyo based club is increasing its supplementary call from 30% to 40% and
this will have a big impact on the total amount shipowners pay.
TradeWinds calculates the impact is an extra 8.65%, so shipowners insured by
the Japan Club face a total increase of 21.15%, which will likely be the
biggest at the February 2009 P&I renewals.
The Tokyo head office of the club has already closed while the London liaison
office said it was unable to comment on the extent of the increase in the total
premium to be paid by shipowners.
The Japan Club?s strategy is similar to that adopted by the Britannia Club a
year ago when a general increase of 15% was jacked up to 23.8% by a change from
30% to 40% in the supplementary call.
The general increase and change of supplementary call was agreed by the
shipowner directors of the Japan Club who met in Tokyo earlier today.
The increase is higher than last year?s straightforward 20% rate rise, although
the club also hit members at this time for a 30% excess call that cost an extra
$29m.
The Japan Club is telling members that turmoil in global financial markets, an
increasing claims trend and wider shipping industry issues such as higher
commodity prices and crew shortages are all having an impact.
The general increase applies to shipowners P&I cover with any rise in the
International Group?s collective reinsurance contract on top.
But there will be no general increase in premium for charterers or for freight,
demurrage and defence cover.
The club is closing the 2005 underwriting year and anticipates that the 2006
year, where there was the 30% cash call, can be closed in due course with no
further contribution. No call beyond the forecast 30% supplementary is expected
on the 2007 year.
The Japan Club which had a catastrophe reserve of JPY 10.6bn ($109m) at the
start of the current P&I year aims to lift its free reserve to JPY 20bn ($181m)
, equivalent to a year?s premium income by 2012.
Chaired by Mitsui OSK Lines president, Akimitsu Ashida, the Japan Club insures
an owners fleet of some 84m gross tons with some 13m gt of charterers entries
on top.
Source: Tradewinds.com


Profit bulks up


Jinhui Shipping and Transportation has seen its third quarter profit jump
28-fold to beat analysts? expectations.
Huge profits on vessel sales and an enlarged fleet helped the Oslo-listed
shipowner to record numbers in the three month period.
Jinhui says it banked $114.37m in the third quarter, smashing the $3.84m it
made a year ago.
One leading analyst called the results solid, with revenue of $119.78m and
operating profit of $117.26m both ahead of the projected figures.
Jinhui said: ?The increase in net profit for the quarter was partly
attributable to the gain of $59.91m on completion of the disposal of two motor
vessels whereas the net profit for the last corresponding quarter was partly
offset by the net loss on financial assets and financial liabilities at fair
value through profit or loss.
?Moreover, the excellent operating performance for the quarter in both turnover
and net profit were attributable to the expanded fleet size and higher charter
rates due to renewal of contracts.?
Its capesize vessels commanded rates of $91,997 per day in the quarter, beating
the $73,989 per day posted a year ago.
Time charter equivalent rates were also higher for its panamax and supramax
vessels, with respective figures rising to $54,473 and $35,168 per day from $37
,984 and $24,836 per day year-on-year.
Jinhui shares gained 5.45% to NOK 11.60 ($1.68) each this morning, valuing the
company at NOK 974.93m. Its stock has lost 81.97% of its value so far this year
.
Source: Tradewinds.com


Jadroplov down


Croatian bulker and boxship player Jadroplov has reported a dip in earnings for
the first three quarters despite revenues growing.
Net profit was HRK 43m ($7.6m) to 30 September, down from HRK 56m a year
earlier.
The Zagreb-listed company said total revenue reached HRK 332.5m, from HRK 270.
6m in 2007, while costs rose to HRK 289.5m, against HRK 214.7m over the same
period.
Earlier this month Jadroplov ordered a pair of 52,000-dwt bulker newbuildings
at Croatia?s Brodosplit Shipyard, which will join the five-strong dry cargo
fleet in 2009 and 2010.
The owner also has two 2,300-teu containerships built in 1993 and 1996.
Source: Tradewinds.com


Wall St: Dow Jones falls 1.66%, S&P dips 1.60%


The Dow Jones industrial average fell 141.38 points, or 1.66 per cent, to 8,355
.93.
The Standard & Poor's 500 Index dipped 14.00 points, or 1.60 per cent, to 859.
29.
The Nasdaq Composite Index was off 18.50 points, or 1.22 per cent, at 1,498.35.

Source: businessspectator.com


Mitsui O.S.K. Shares Fall as Rates Drop to Record Low


Mitsui O.S.K. Lines L