Thursday, September 21, 2017

Imports by competitors Sri Lanka and China increase; Darjeeling impact muted

Notwithstanding the loss of exports on account of the prolonged closure of the Darjeeling tea estates, India’s tea exports have increased 4.6% by volume in the first seven months of 2017, statistics showed.

Interestingly, two countries where Indian teas made major inroads were China and Sri Lanka — among India’s top rivals in the global tea arena. Exports increased 150% to the island nation and by 71% to China according to Tea Board statistics. “We hope to maintain the trend,” S. Soundararajan, secretary at the Board told The Hindu.

Total exports stood at 121.1 million kg in January-July 2017, against 115.8 million kg a year earlier. India exported 227 million kg last year.The more than 90-day closure of the Darjeeling tea industry by the Gorkha Janmukti Morcha, which is demanding a separate state, has harmed the interests of the premium and speciality teas but has not hampered India’s overall tea exports, either by volume or by value.Darjeeling produces about 8 million kg annually, of which about 6 million kg is exported. Production between January and June, in the 87 tea estates in Darjeeling halved from 4.1 million kg a year earlier to 2.1 million kg. No export figures are available, but exporters are facing order cancellations, enquiries revealed.Three countries have played a prominent role in the current year’s export scenario — China, Sri Lanka and Egypt. An erstwhile green-tea consumer and producer, China has, of late, taken to black tea production, of which there is increased demand from the youth segment. Sri Lanka has increased imports of Indian tea for blending, it was learnt.

Egypt’s imports rise

Egypt, a traditional market for Indian teas has almost doubled its imports in the period. India has also seen a rise in exports to Ukraine and Kazakhstan. Taken with Russia, the CIS region is India’s single-largest block for tea exports.

The Tea Board has facilitated several international expositions and delegations this year. While there was a delegation to Moscow this month, there were two delegations to the U.S. and to Chile in June.

Chilean fruit export volumes rose in 2016-17

U.S.-bound exports surged to further cement the country’s position as the leading market for Chilean fruit, while the Netherlands lost ground as the port of call in Europe.

Chilean fruit exports were up 4.3% in 2016-17 to reach almost 2.6 million metric tons (MT), but the campaign was marked by challenges arising from earlier harvests for most crops.

The Chilean Fruit Exporters Association’s (ASOEX) recently released figures show the United States continued to be the top market by country with growth of 9.7% to 869,296MT, followed by China (including Hong Kong) which saw a slight drop in volume down to 231,647MT.

The gap in export volumes between the country’s two leading fruit commodities, grapes and red apples, widened with the former increasing 6.5% to 732,498MT and the latter down 5.4% at 616,694MT.

Avocados rose from fifth to fourth place courtesy of a 36.5% year-on-year volume increase to 163,600MT, coming in behind kiwifruit which had a slight drop of 3.4% to 179,393MT.

Other fruits that saw export increases included pears (+17.1%; 148,940MT), blueberries (+13.7%; 103,897MT), cherries (+13.8%; 95,342MT), lemons (+13.1%; 82,526MT), oranges (+3.6%; 77,919MT), mandarins (+37.1%; 75,973MT) and nectarines (+8.2%; 62,107MT).

But the news of higher volumes, as is often the case in the fruit industry, was not entirely positive.

“Despite the fact that overall shipments were greater than in the previous year, the season was affected by adverse climatic conditions for the fruit industry, such as unexpected frosts and rains which had effects on production and overseas shipments,” ASOEX president Ronald Bown said in a release.

“To that can be added that in this campaign practically all fruit types had earlier harvests of between two to three weeks, which meant exports started earlier and because of that they coincided with local production and supply from other countries,” he said.

The executive highlighted this dynamic had a negative effect on the behavior of markets, and the situation was particularly complicated in the United States.

And while the figure was higher than last year, it was still short of the 2.65 billion MT achieved in 2012-13. The release did not provide details of export returns, as the association’s key focus for the report was the changes in shipment figures.
Market changes

Like the USA, the European market saw a sharp uptick in imports of Chilean fresh fruit, jumping 8.7% to 596,891MT. But shifts within the old continent were pronounced.

Leading European importer and re-exporter the Netherlands saw a 17% decline in volume arrivals to 186,704MT, giving way to sharp rises in Chilean fruit imports in other EU markets such as Germany (+144%; 57,181MT), Spain (+27.8%; 47,933MT), Italy (+12.7%; 39,693MT), France (+51%; 33,219MT) and Belgium (+116.9%; 11,214MT).

England retained its spot as the second-largest European market for Chilean fruit, holding steady with a 0.9% increase to 107,859MT, while Russia was the third-largest European market receiving 72,912MT representing a 29.2% rise.

Meanwhile, even though exports to Eastern markets were down slightly at 479,620MT, the 0.6% reduction was mainly due to reduced exports to the Chinese mainland and Hong Kong, and to a lesser extent India.

Upward movements were seen in Taiwan, China (+5.8%; 70,447MT), South Korea (+4.2%; 45,726MT), Japan (+15.5%; 33,909MT), Indonesia (+81.5%; 8,625MT) and Thailand (+13.9%; 6,119MT).

Exports to the Middle East were down 8% at 90,117MT, Latin America’s intake dropped 2.2% to 506,188MT mainly due to a sharp drop in exports to Brazil, while Canada’s imports rose 6.4% to 55,637MT.

In terms of export origin, there was a rather dramatic change in the ports where produce was shipped from in 2016-17.

Leading port Valparaiso increased its volumes by a whopping 40.1% to 1.59 million MT, while San Antonio’s volume was down 38.9% at 543,593MT.

Meanwhile, recovery from damages caused by an earthquake and subsequent tsunami led to a 200% uptick in exports from the port of Coquimbo, according to ASOEX.

In addition, the opening of a USDA-approved phytosanitary inspection site in Cabrero spurred a 30.5% uptick in exports from the Port of Coronel south of ConcepciĆ³n, which is close to a major region for the production of blueberries, cherries and apples.

Wednesday, September 20, 2017

Modi government finds a fix for India's big economic worries; remedial measures likely soon

NEW DELHI: The government may soon unveil a package of measures to speed up growth, generate employment, lift exports and step up investment in infrastructure.

A broad framework to boost the economy was discussed in a meeting of ministers and officials chaired by finance minister Arun Jaitley late Tuesday evening as the government grappled with a slump in growth.

Prime Minister Narendra Modi will take a final decision on the measures, according to people with knowledge of the deliberations. “We may need to take some specific, targeted steps... It's not as if there is a course correction,” a government official said.

There has been concern in government circles over growth slumping to a three-year low of 5.7% in the April-June quarter with disruption due to the rollout of goods and services tax (GST) and lingering impact of demonetisation being the primary cause. A rise in the current account deficit and inflation has added to worries. Some economists have argued that the decline is structural in nature and needs to be addressed appropriately.

Finance minister Jaitley is expected to consult other ministries before preparing a detailed plan that will be presented to the prime minister. The plan is expected to examine the reasons for the slowdown and the measures that can be taken to accelerate growth. A stocktaking meeting by the prime minister could not take place on Tuesday.

Chief economic advisor Arvind Subramanian had briefed the prime minister on the economic situation last week.

The meeting was attended by commerce and industry minister Suresh Prabhu, Niti Aayog vice chairman Rajiv Kumar, secretaries of key economic ministries and the additional secretary to the PM.

The Confederation of Indian Industry (CII) called for a 100 basis point reduction in interest rates to “inject huge growth impulse” and urged the Centre and states to ensure that public capital investment remains elevated even as it pointed to a rebound in many sectors. A basis point is 0.01percentage point. The Reserve Bank of India is set to make its next monetary policy statement on October 4.

State Bank of India’s Ecowrap said the economy has been in slowdown mode since the second quarter of FY17 and such prolonged slump cannot be called technical or transient.

Quarterly growth has declined from 7.9% in first quarter of FY17 to 5.7% in first quarter of FY18. SBI group chief economic advisor Soumya Kanti Ghosh said there is urgent need of a fiscal push to shore up growth. That may not be easy since the government has pledged to reduce fiscal deficit to 3.2% of GDP this year and 3% next year.

India’s exports have not picked up to the extent expected even as the global economy has rebounded. Export growth was 8.57% in the April-August period while imports rose 26.63%, worsening the trade deficit and the current account deficit.

The appreciation of the rupee has eroded India’s exports competitiveness while teething troubles with GST have not helped. Exporters met revenue secretary Hasmukh Adhia to present demands for relief.The sluggish growth has also led to worries about job creation.

Korea objects to curbs on gold imports

NEW DELHI: South Korea has objected to India’s move to restrict all forms of gold imports from the country, saying it is not compliant with the norms and that India should have discussed the issue first instead of unilaterally taking the decision. The objection comes ahead of a highlevel meeting of the trade ministers of the two countries in Seoul later this week to review the India-South Korea free trade agreement. On its part, India has reasoned that the move is justified as South Korea does not produce gold but was being used only to circumvent import duty on the metal.

On August 25, India had put all forms of gold import from South Korea in the restricted category wherein importers will need permission from the government before importing them.

“They have raised objections, saying the move is not compliant with norms,” said one official privy to the details. India's decision of a clamp down came in the wake of more than $1 billion worth of gold imports from South Korea between July 1and August 21.

India's FTA with South Korea is called the Comprehensive Economic Partnership Agreement (CEPA) under which the 10 per cent basic customs duty on gold has been eliminated. Under the goods and services tax (GST), the 12.5 per cent countervailing duty on gold imports was replaced by a 3 per cent integrated GST.

Hence, as per the present norms, gold imports from a country with which India does not have a trade pact attract a 10 per cent BCD and a 3 per cent GST, while those from the FTA channel have to pay only the 3 per cent GST.
This makes imports via treaty countries attractive. Another official aware of the development said that South Korea also complained that India could have discussed the issue during the review of the CEPA, which is scheduled for later this week.

Japan exports surge at fastest in nearly four years on global demand

TOKYO (Reuters) - Booming shipments of cars and electronics in August drove up Japan's exports at the fastest pace in nearly four years, further evidence that overseas demand is strong enough to support healthy economic growth.
The 18.1 percent annual increase in exports was the fastest since November 2013 and handily beat the median estimate for a 14.7 percent annual rise seen in a Reuters poll.

August's export result was well up on July's 13.4 percent, and marked a ninth straight month of expansion.
Export growth is seen likely to continue as the global economy remains on a solid footing, which should underpin policymakers' confidence in Japan's economic outlook.
The Bank of Japan is expected to keep monetary policy on hold at a meeting ending on Thursday as inflation remains confusingly low despite data pointing to solid economic growth.

"This data suggests that overseas demand will drive Japan's growth in July-September and make up for slight weakness in consumer spending," said Hiroaki Muto, economist at Tokai Tokyo Research Center.
"The global economy is healthy, so expect Japan's exports to accelerate even further."
Japan's exports rose 10.4 percent by volume in August from a year ago, following a 2.6 percent annual increase in July.
Export volumes rose the most since 2010 in August, suggesting that net trade should have started to support growth in the third quarter, Marcel Thieliant, Japan economist at Capital Economics, said in a research note.

A pickup in shipments of cars, car parts, and semiconductor manufacturing equipment increased Japan's year-on-year exports to the United States in August by 21.8 percent versus an 11.5 percent annual increase in the previous month.
The rise in Japan's exports to the United States in August was the fastest since December 2014, finance ministry data showed.
China-bound exports rose 25.8 percent year-on-year in August, faster than a 17.6 percent annual increase in July as Japan shipped more electronic screens panels and plastics.

Imports rose 15.2 percent in the year to August, versus the median estimate of an 11.8 percent increase.
The trade balance came to a surplus of 113.6 billion yen ($1.02 billion), versus the median estimate of a 93.9 billion yen surplus.
Capital Economics' Thieliant noted, however that: "The surge in the annual growth rates was driven by base effects. In seasonally-adjusted terms, both export and import values rose by a modest 1.2 percent month-on-month."

Tuesday, September 19, 2017

UM Lohia sees India as export hub for big bikes

UM Lohia Two Wheelers, a joint venture between US-based UM Motorcycles and Indian electric two-wheeler company Lohia Auto Industries, is planning an aggressive expansion in India and overseas.

It will make India an export hub for large bikes and ship India-built vehicles to Europe from next year. It sees favourable growth outlook for 300cc bikes in Europe. It has been exporting bikes made at Kashipur (Uttarakhand) plant (of Lohia Auto) to Nepal and Bhutan.

“We are developing bikes with ABS system, which is a requirement for the European market. The process is in final stages of validation and we will start exporting bikes to Europe from next year,” said Jose Villegas, Director, UM India Two Wheelers.

In the domestic market, it is looking to set up a new factory in the next 18 months and achieve close to 100 per cent localisation from the current 60-70 per cent. The company, which has just introduced two sub-300cc bikes — Renegade Commando Classic and Renegade Commando Mojave at ₹1.94 lakh and ₹ 1.85 lakh (ex-showroom, Chennai) respectively — expects to grow its annual volumes to 50,000-60,000 units by 2018-19 from 10,000 plus now.

“Presently, we have 57 dealers across the country and we hope to increase the number to 72 around Diwali,” said Ayush Lohia, Director, UM Lohia Two Wheelers, on the sidelines of the launch of the new bikes here.

The company expects its new bikes, particularly the Classic model, to fetch higher volumes as it bets on the cruiser category of mid-size super bike market.

“No other company is offering touring-ready cruisers with such features and equipment at this price like our Classic model. We started bookings a week ago and the response has been four times than we anticipated,” said Villegas, but declined to provide the numbers.

The company is simultaneously developing higher cc engines and platforms for India and other markets. Given that the growth in 300-350cc market is in India, the company expects all of these customers to mature to the next level and look at buying 700cc plus bikes in the next five years.

Monday, September 18, 2017

Vietnam loses $15mn from crude oil sales to China

The country exported 4.9 million tons of crude oil at $408 per ton to other markets but charged only $400 per ton for the 1.7 million tons it exported to China, according to the General Department of Vietnam Customs.
During the same period, Vietnam’s crude oil exports rose 2 per cent year-on-year to an estimated 4.748 million tons, or 143,000 barrels per day (bpd). Revenue in the eight-month period rose 24.5 per cent to $1.88 billion.
Oil product imports increased 9.1 per cent to an estimated 8.649 million tons, while the value of imports jumped 38.2 per cent to $4.46 billion.
Vietnam’s liquefied petroleum gas imports during the period increased 19 per cent from a year earlier, to 968,000 tons.
Reuters reported previously that August would mark the first month on record in which Vietnam was a net importer of crude oil, citing shipping data from Thomson Reuters Eikon.
The surge in overseas orders comes as Vietnam’s 200,000 bpd Nghi Son refinery, its second such facility, prepares to produce liquefied petroleum gas, gasoline, diesel, kerosene, and jet fuel, mainly for the domestic market, likely starting later this year or in early 2018.
With local oil production stalling, traders said the country, with over 90 million people and 6 per cent annual economic growth, would gradually increase its crude imports.
“We expect to send bigger and more frequent volumes of crude to Vietnam in the future,” a senior oil trading manager said.
“Vietnam is one of the key new centers of oil demand growth, and we wouldn’t want to miss this opportunity.”
Vietnam’s orders are still small compared with Asian’s top buyers, China and India, which import around 8 million and 4 million bpd, respectively.
“But in an environment of oversupply, this incremental new demand is very welcome for crude suppliers,” the trading manager said.
Prime Minister Nguyen Xuan Phuc approved a plan in July for the country’s total crude oil and oil product stocks to be at least 90 days’ worth of net imports by 2020, joining developing nations such as China and India in establishing an oil buffer that will enhance its energy security as imports have jumped while domestic production is on the decline.
The government said it planned to keep commercial oil stockpiles stable at 35 days of net imports while crude and oil products reserves at import terminals and those held by trading companies are expected to reach 20 days of the country’s net imports by 2025.
The country’s two refineries are estimated to meet about two-thirds of its demand when the Nghi Son refinery begins operations later this year or in 2018.