New Report Available: Argentina Shipping Report Q3 2013

From: Fast Market Research, Inc.
Published: Fri Jun 07 2013

BMI maintains its cautiously optimistic view on the Argentine port sector. The country enjoys a good commodities mix, but it continues to struggle with external headwinds as well as internal difficulties in the form of rising inflation and labour unrest. We forecast Argentine real GDP growth will slow to 0.9% in 2013 on the back of a poor business environment, weakening domestic demand, and high inflation - the result of a large currency devaluation. We see the potential for a more sound policy course and base effects to result in growth trending upward from 2014-2017.

Headline Industry Data

* Total volume at the Port of Buenos Aires is set to increase by 5.4% in 2013 to reach 11.6mn tonnes. Box handling at the port will rise by 4.8% to 1.1mn twenty-foot equivalent units (TEUs).
* The Port of Bahia Blanca will see 7.0% growth in volume to 15mn tonnes in 2013. Box handling at the port will also grow by 12.1% to 34,933TEUs.

Full Report Details at

Key Industry Trends

Vale Suspends Rio Colorado Project: Brazilian mining giant Vale announced in March that it had informed the Argentine government that it was suspending its Rio Colorado project to develop potash deposits in the province of Mendoza. According to the company, 'in the current macroeconomic environment the economics of the project are not in line with Vale's commitment to discipline in capital allocation and value creation'.

Southern Cross Buys Stake in Ultrapetrol - Private equity firm Southern Cross Group acquired a 78% stake in shipbuilder and riverboat operator Ultrapetrol, according to reports. The firm, owned by Argentine businessman Norberto Morita, paid US$220mn for the stake. Felipe Menendez, Ultrapetrol's president and chief executive officer, stated, 'This is a very important transaction that we believe will have a very positive effect for the company.'

Risks To Outlook

The key risks to our outlook are on the downside. We maintain our view that Argentina faces strong economic headwinds: soaring inflation, fiscal profligacy and growing government intervention, which means the Argentine economy will struggle to sustain its current growth trajectory, as investors become increasingly cautious of the economy.

A lack of investment in the port infrastructure has resulted in frequent bottlenecks and delays at ports. Argentina has a weak financial system and relatively weak legal and regulatory frameworks. A high level of perceived corruption damages the appeal of doing business in the country, possibly acting as a deterrent to foreign port operators.

Strikes are frequent at Argentine ports, and these present further downside risks to our throughput forecasts. We caution that strikes could impact upon future growth at the country's ports should shipping companies become wary with regards to the market.

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