Australia Shipping Report Q3 2013 - New Study Released

From: Fast Market Research, Inc.
Published: Thu May 23 2013

The Australian economy continued to grow at the end of 2012 (0.6% quarter-on-quarter in seasonally adjusted terms) with this performance supported by the improvement in export performance. However, BMI does not expect external demand to remain resilient in 2013, impacting the country's shipping sector, and we believe that the soft domestic economy will also weigh on headline growth, which we expect to slow to 2.1%. That said, we see upside risks to 2013 GDP stemming from the potential for politicians to undertake more aggressive spending than we have pencilled in as the September elections draw closer.

Chinese demand remains a hugely important factor in determining the strength of Australia's shipping sector, with exports to the Asian powerhouse accounting for US$33.5bn in 2009, according to the IMF Direction of Trade Statistics. The weaker reading of China's Purchasing Managers' Index (PMI) in January, which continued its decline to 50.4 from 52.3 in December 2012, suggests that initial optimism surrounding a quick recovery may be unfounded.

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Furthermore, with China seeking to reintroduce a steel scrap tax rebate to reduce the steel industry's iron ore imports (see our online service, March 4, 'China's Firmer Grip On Iron Ore Warrants Price Weakness'), we see few reasons for the 2012 export performance to be repeated in 2013. As such, we forecast export growth to slow to 2.3% in 2013 from 6.3% in 2012, and its real contribution to GDP to fall to 0.5pp from 1.3pp over the same period.

In 2013, the ports of Melbourne and Brisbane are set to enjoy the highest rates of tonnage growth in yearon- year (y-o-y) terms - both forecast to come in at 3%. As for box throughput, the Port of Fremantle will see the largest y-o-y increase (5.50%).

Headline Industry Data

* 2013 Port of Melbourne tonnage throughput forecast to grow 3.00%.
* 2013 Port of Melbourne container throughput forecast to rise 1.31%.
* 2013 Port of Sydney tonnage throughput forecast to increase 0.43%.
* 2013 Port of Sydney container throughput forecast to increase 4.00%.
* 2013 total trade growth forecast to contract by 1.72%.

Key Industry Trends

Mining Infrastructure Back With Abbot Point Announcement: The state government of Queensland is on the lookout for interested parties to develop the first stage of its latest expansion plan for the Abbot Point port - a key port for coal exports within the state. BMI believes that the announcement of the project emphasises the renewed interest in developing mining-related infrastructure in Australia and the presence of political risks in the country's infrastructure sector.

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- Malaysia Shipping Report Q3 2013
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