- Baltic/ICS Lunchtime Lectures: Singapore, London and now Shanghai & Athens
This month’s Lunchtime Lecture takes place on 28 March from 13:00. The London lecture will investigate effects of cyclical events and high tech trading tools to examine how the collective commercial decisions taken by traders and owners to stay ahead of the curve in 2017 impacted rates and played out in reality.
The lectures in Shanghai, Singapore and Athens will feature talks from P&I Club executives who will explain vessel and FDD cover in this unique form of insurance, taking attendees on the journey from charterparty to a casualty.
Click here for more info
- Freight and Commodities Forum – 25 April, Singapore Maritime Week
New speakers confirmed for the Singapore Maritime Week Forum (25 April) include Dr Martin Stopford, President of Clarksons Research and Ian Roper, GM, SMM Singapore.
The Forum will also feature presentations and open discussions on new Baltic initiatives, market benchmarks and impact of 2020 Sulphur Cap on the market.
Click here for more info.
- CMA reception – last chance
The Baltic drinks reception co-hosted with the Association of Ship Brokers & Agents USA (ASBA) during CMA takes place at the Hudson Grille in Stamford on Monday 12 March from 18:30.
If you would like to attend, please email email@example.com by close of business Thursday 8 March.
Click here click here to view flyer.
- Chairman’s Cocktail Party – 9 May
Attended by 600 members and their guests, this highlight of the Baltic’s social calendar will take place on 9 May at Christ Church, Spitalfields.
Email firstname.lastname@example.org to register your interest.
- Baltic training courses – USA
There are still places available on the Baltic Exchange’s next Freight Derivatives & Shipping Risk Management course in New York (16-17 April).
This popular course looks at freight rate risk management, derivative instruments, freight rate options, bunker and financial risk management, ship price risk management, Value at Risk and credit risk.
The course is led by Professor Nikos Nomikos and Professor Amir Alizadeh, both lecturers at the renowned Centre for Shipping, Trade & Finance at London’s Cass Business School.
See www.balticexchange.com/other-services/training-2/ for full details, including booking.
- A storm in a steel teacup?
The start of March saw US President Donald Trump unveil new tariffs on steel and aluminium imports into the country, putting importers of both into the country on alert. During a meeting with US metal industry representatives at the White House on March 1, President Trump declared that levies of 25% and 10% would be placed on steel and aluminium respectively, in his bid to rebuild the two industries within the US.
“We’ll be imposing tariffs on steel imports and tariffs on aluminium imports and you’re going to see a lot of good things happen,” President Trump said at the meeting. “You’re going to see expansions of the companies … Pretty much all of you will immediately be expanding if we give you that level-playing-field, if we give you that help. You’re going to hire more workers and your workers are going to be very happy. They’re going to be very, very happy. … What’s been allowed to go on for decades is disgraceful. It’s disgraceful. When it comes to a time when our country can’t make aluminium and steel … you almost don’t have much of a country, because without steel and aluminium, your country’s not the same, and we need it.”
The move has prompted strong reaction across the globe, with fears that the decision could spark a trade war between the US and other parties. In response to President Trump’s announcement, EU Commissioner for Trade Cecilia Malmström said that the EU was “looking at possibilities to retaliate, meaning we will also put taxes or tariffs on US imports to the European Union”.
European Commission president Jean-Claude Juncker has stated that retaliatory levies could be placed on bourbon, Levi’s jeans and Harley-Davidson motorbikes — some of the US’ most iconic brands. Canada and Australia have also voiced their disapproval of the proposed measures, while Mexico, Japan and Brazil have said they will consider retaliatory steps if President Trump goes ahead with the plan.
In the UK, Downing Street said that Prime Minister Theresa May had expressed “deep concern” about the tariffs in a phone call with the President, while in China, the spokesperson for the National People’s Congress Zhang Yesui said that the country would take “necessary measures” if its interests were negatively affected.
Just days after the President’s announcement, World Trade Organisation (WTO) director general Roberto Azevedo warned that WTO member states needed to “stop the fall of the first dominoes” of a trade war, saying that the world risked a “deep recession”, while the International Monetary Fund has also strongly criticised the decision. Even lawmakers and donors for President Trump’s own party, including Speaker of the US House of Representatives Paul Ryan, have disapproved of the tariffs. Following the President’s announcement, the Dow dropped over 500 points while Nasdaq and the S&P 500 each fell around 1.5%.
If the tariffs don’t trigger an ongoing retaliatory trade war, it will likely become clear that they are a US own-goal and will probably only have a small effect on global commodities
Despite the opposition, however, President Trump remains defiant. On March 5, he told reporters that he was not going to relent on his decision, repeating a previously-tweeted threat to place a retaliatory levy on EU car exports in response to a move by them.
The shipping perspective
Looking at the impact of the metal levies on global trade, however, it is important to take a more all-encompassing view, rather than be swayed by President Trump’s characteristically-bombastic manner of delivering news and responding to disapproval surrounding it. Clyde Russell, Asia commodities specialist at Thomson Reuters, believes that if the tariffs don’t trigger an ongoing retaliatory trade war, it will likely become clear that they are a US own-goal and will probably only have a small effect on global commodities. Much will hang, he claims, on the rest of the world’s reaction to the new impositions.
“Assuming a global trade war can be avoided, the effect of the US tariffs should be to make steel and aluminium more expensive inside the country, while making it relatively cheaper elsewhere in the world,” Mr Russell explains. “If countries that export to the United States find they can no longer ship the same volumes, they can either find new markets or cut production.” Mr Russell forecasts that China will likely be the least affected by the measures among Asia’s steel-makers as only a fraction of its exports go to the US. While Japan and South Korea may feel more of an impact, Mr Russell claims that the steel gluts in these countries will likely reduce costs for their automotive sectors — and therefore improve their export competitiveness.
Moody’s anticipates that the direct economic impact of the tariffs on Asia at the macro level will be limited due to the small amount of aluminium and steel exports to the US in comparison to exports or GDP. Counter to that, Mr Russell says that with Canada, Brazil and Mexico constituting some of the biggest steel exporters to the US, they are most at risk from the proposed levies as they will find it difficult to compete in Asian markets.
There will also be impacts on other commodities as the levies will indirectly affect the prices of LNG, coal and crude oil in the US as these industries use steel as an input. Past experience could come to bear here. Commentators have pointed to President George W Bush’s 2002 decision to increase steel tariffs, partly to safeguard West Virginia workers, a move which later analysis revealed had a negative impact on the US economy because it elevated costs so much in industries that used steel. Greater prices for US oil, coal and LNG producers will erode their margins against international competitors, but elevated steel costs will probably make only a tiny change to actual production costs of commodities that the US exports.
“Firstly, US commodity exporters that are currently enjoying good times in crude, LNG and coal are likely to be somewhat more cautious in planning capital expenditure,” says Mr Russell. “Secondly, buyers of US commodity exports, while still largely driven by price, may subtly change their buying patterns in favour of other suppliers given the increasing view in the rest of the world that Trump’s America isn’t a friendly place to do business with.”
As the President has not followed through with his threatened tariffs as yet, the world is left waiting to see which countries the White House identifies as being affected by the tariffs. Still, Mr Russell claims that the bad reaction to the levies may give the Trump Administration “pause for thought”, and that ultimately the impact of the charges may not be as significant as they might first appear.
- Baltic Exchange Rugby vs PWC
The Baltic Exchange Rugby Club take on PWC at the East London RFC on Wednesday 11 April at 18:00.
Those interested in joining the Rugby club distribution to take part in matches or support should email email@example.com.
- Member update
The following individuals have applied for Membership of an existing member company:
Mr R Saltofte, Dampskibsselskabet Norden A/S
Mr F Douleh, Western Bulk Chartering AS
Mr P W Tillott has applied for Retired Membership.
Any comments should be passed to Karen Karanicholas by 14 March 2018.
- Roger Tyrell CBE
Members will learn with regret of the death of Mr Roger Tyrell CBE on 24 February 2018.
Mr Tyrrell was elected a member of the Baltic Exchange in 1952. He represented Xcan Grain (Europe) Ltd between 1967 and 1985 and became a retired member in 1986. Mr Tyrrell served as a Baltic Director 1967-70 and 1974-79.
Funeral details are awaited.
- HFW wins $70m arbitration appeal in English High Court
HFW has successfully had a $70m London arbitration award against one of its clients set aside following an appeal to the English High Court.
A London arbitral tribunal had previously awarded substantial damages to ship owner Loki Owning Company Ltd, which alleged that HFW’s client, Chinese steel company Jiangsu Shagang Group Co Ltd, had guaranteed the performance of a time charter contract. HFW appealed to the English High Court under section 67 of the English Arbitration Act 1996, which allows parties to challenge an arbitral award on substantive jurisdiction. The High Court judge found that the tribunal lacked jurisdiction and set aside the award.
Commenting on the win, HFW disputes partner Trevor Fox said: “It is rare to successfully set aside a London arbitration award, but this is a case where it was appropriate. In its approach and in issuing this decision, the High Court has shown its ability and willingness to provide sophisticated support to international arbitration. We are very pleased to have been able to help our client obtain this result.”
Appeals on substantive jurisdiction are treated by the Court as a complete rehearing. On receiving documentary and oral evidence that was not before the Tribunal, the Court went on to make findings of fact and witness assessments that were markedly different from those reached by the Tribunal, including that it found Jiangsu Shagang’s witnesses to be highly credible.
The High Court has shown its ability and willingness to provide sophisticated support to international arbitration
The HFW team was led by Fox and shipping partner Julian Davies, who are both based in the firm’s Shanghai office.
HFW has one of the largest and most active disputes practices in the market, covering litigation – including commercial litigation – international arbitration and alternative forms of dispute resolution. The firm has specialist disputes teams in each of its 18 offices worldwide, and regularly handles high-value, complex, multi-party and multi-jurisdictional disputes. The firm’s expertise spans a wide range of sectors and industries, including aviation, commodities, construction, energy, insurance and shipping.
A recent report by UK trade publication The Lawyer revealed that HFW spent 70 days litigating in the UK Commercial Court in 2016 and 2017 – more than any other law firm. The Lawyer also recently ranked HFW as the fifth most active litigation firm among FTSE 100 clients.
The full High Court judgment can be seen here.
Update from March 14, 2018: The owners’ application for leave to appeal, made before Justice Carr in the London High Court on March 13, 2018, was refused. The judgement is therefore final.
HFW is a law firm that works with companies in the shipping, insurance, commodities, energy, aviation and construction sectors. For more information, visit www.hfw.com/Home.