Suez Canal Authority inks MoU with Maritime Anti-Corruption Network

According to Seartrade Maritime News, Suez Canal Authority (SCA) and the Maritime Anti-Corruption Network (MACN) have signed a Memorandum of Understanding to provide a framework for cooperation.

The Suez Canal is a blackspot for petty corruption involving vessels transiting the waterway and MACN has been building its engagement with SCA. The MoU aims to establish an official communication channel between the Authority and MACN.

Admiral Osama Rabie, Chairman of the Suez Canal Authority, stressed that the Authority spares no effort to work on the stability and sustainability of global supply chains to facilitate traffic in the Suez Canal amid a package of effective measures that guarantee transparency and impartiality, with the Authority’s readiness to provide all capabilities and overcome all obstacles to activate cooperation with all partners and organizations working in the field of maritime transport.

Cecilia Müller Torbrand, CEO of the Maritime Anti-Corruption Network, thanked the Chairman of the Suez Canal Authority Admiral Osama Rabie, and the Authority’s work team, stressing that the Suez Canal occupies a special place in the maritime community, highlighting the need for cooperation to promote effective and safe trade.

The memorandum was signed by the representative of the Suez Canal Authority, Engineer Gamal Abu Al-Khair, Director of the Transit Department.

The Suez Canal links east and west cutting out a lengthy transit via the Cape of Good Hope and over 22,030 ships transited through the canal during the fiscal year 2021-2022.

However, complaints over corruption by users of the waterway are longstanding. In MACN’s report on its first 10 years of reporting between 2011 and 2020 the Suez Canal topped global risk hotspots. A total of 1,795 incidents were reported in the canal during the 10-year period. Most of the incidents were petty corruption with 1,626 involving demands for cigarettes.

Pakistan Stock Exchange witnesses lackluster movement

The week ended on December 16, 2022 witnessed a range-bound movement of the benchmark index. The highlight of the week was Thursday when the market took a hit and the index posted 1.0%WoW decline to close at 41,301 points.

Economic uncertainty caused by enhanced delays in the 9th Review of the IMF program, along with rising interest rate led to a lackluster sentiment in the market. Further exasperating the sentiment is the critical level of the country’s foreign exchange reserves, having dropped to USD12.6 billion. Average daily trading volume decreased further by 9.9%WoW, down to 180 million shares.

Major news flows during the week were: 1) five financing pacts worth US$775 million inked with ADB, 2) IMF wants to observe 3 more quarters, examine flood rehab plan, 3) Saudi Arabia may increase the amount of oil supply to Pakistan on deferred payments to US$2.4 billion a year, 4) Reko Riq project got green signal with definitive agreement signed, 5) Jul-Nov workers’ remittances decline 9.8%YoY, 6) Fed raised rates by half percentage point, sees economy nearing stall, and lastly 7) Jul-Oct LSM sector output down 2.89%YoY.

The top performing sectors were: Miscellaneous, Tobacco, REIT, Textile Composite, and Vanaspati & Allied, while the least favorite sectors were: Leasing companies, Automobile Parts, Close-end Mutual Funds, Refineries, and Jute.

Stock-wise, top performers were: PSEL, PAKT, SYS, ENGRO, and DCR, while laggards included: PGCL, LOTCHEM, TGL, THALL, and MTL.

Flow-wise, Foreigners topped the net sellers, offloading US$9.6 million followed by Mutual funds (US$7.1 million), Individuals (US$2.5 million), Insurance Companies (US$1.4 million) and NBFC (US$0.1 million). While Banks, Companies, Other organizations and Brokers were on the buying side, with a net buy of US$12.8 million, US$6.2 million, US$1.5 million, and US$0.2 million respectively.

With the rising policy rate amid political uncertainty, the market remains in a state of indecisiveness. Incoming news regarding delays in IMF was bound to invoke some gloom; the longer is the delay the more the uncertainty is going to influence the market, keeping volumes away.

The local currency has started paring some of the gains it had made recently, depreciating to PKR225/USD as the foreign exchange slips to critical levels despite restrictions on the opening of L/Cs.

With the winters approaching, inflation is expected to remain persistent. The market participants expect another cumulative rate hike of 200 bps in FY23.

Port of Savannah to become containers only facility

The Port of Savannah is upgrading to become a container-only facility to meet booming demand after a year-long increase in cargo volumes.

The port plans a US$410 million overhaul of one of its sprawling terminals to make room for loading and unloading larger ships while focusing its business almost exclusively on cargo shipped in containers.

The Georgia Ports Authority approved the project recently under a plan to expand Savannah's capacity for cargo containers by more than 50% by 2025.

"We're taking the Georgia ports from a Southeast gateway to a global gateway," said Griff Lynch, executive director of the Georgia Port Authority, which has seen over a decade of explosive growth at the state-owned seaports in Savannah and Brunswick.

Ocean Terminal will be converted to handling cargo in containers, from consumer electronics to frozen chicken by ship, train, or truck.

The terminal's berths will be upgraded with room to service two large ships simultaneously using eight new ship-to-shore cranes, at an additional cost of US$163 million.

Mass traffic jams off the West Coast caused shippers to divert cargo to Savannah and other ports along the East and Gulf Coasts. That resulted in Savannah handling a record 5.8 million teu of imports and exports across its docks in the 2022 fiscal year to June 30. That volume was just shy of Savannah's current capacity of 6 million teu.

The port authority's plan to add capacity for an additional 3 million teu by 2025 would give Savannah more room when the next cargo crush arrives. As Ocean Terminal undergoes its transformation, a newly expanded cargo berth will open in the summer at Savannah's main container terminal.

The expanded Ocean Terminal berths will be built in phases, with the first opening in 2025 and the second in 2026, Lynch said. He said converting an existing terminal to handle large container ships will be more efficient than building a brand new one, which would take up to five years.

Work will begin with rebuilding the docks to provide 850 m of berth space, capable of serving two ships simultaneously. 

Breakbulk cargo will shift to the Colonel’s Island terminal at the Port of Brunswick, which has historically focused on handling high-volume ro-ro shipments. 

The Port of Savannah, the US’ fourth-busiest container port, experienced a substantial increase in throughput in the post-pandemic era. In 2021, a boom year for containerized freight.

GPA moved about 10% of all US containerized cargo volume. The pace of growth continued this year. In August, the port handled 575,000 teu, an 18.5% increase compared to the same month in 2021. In October the port moved 553,000 teus, up 9.6% compared to the same month last year.

US shale oil output to grow at snail's pace

Oil output from the Permian shale basin in January is set to touch a record 5.6 million barrels per day (bpd), said US forecast on Monday, but the increase is a third of September's pace.

Output in the biggest US shale oil basin is set to rise by about 37,000 bpd, the smallest gain in seven months, based on projections from the US Energy Information Administration (EIA) in its monthly drilling productivity report.

Gains slowed as some of the largest firms are warning of overworked oilfields and less productive new wells.

Overall US output is forecast to reach a record 9.32 million bpd in January, according to the EIA, up only 94,500 bpd over the prior month. In August, the month-over-month increase was 207,500 bpd.

Legacy oil production change, which excludes output from new wells, will show steeper declines in all major shale producing regions in January. Production from new wells, defined as one that began producing for the first time in the previous month, also is expected to fall.

In the Bakken region of North Dakota and Montana, the EIA forecast oil output next month will rise 21,000 bpd to 1.22 million bpd, the largest total since November 2020.

In the Eagle Ford shale in South Texas, output will rise 10,000 bpd to 1.24 million bpd in January, its highest total volume since April 2020.

Natural gas production also is expected to grow by 535 million cubic feet per day to a record 96.28 billion cubic feet of gas per day. US gas production is rising sharply amid growing global need for the fuel.

In the biggest shale gas basin, Appalachia in Pennsylvania, Ohio and West Virginia, January output will rise to 35.53 bcfd, the highest since hitting a record 36 bcfd in December 2021.

Gas output in the Permian and the Haynesville field in Texas, Louisiana and Arkansas will rise to record highs of 21.39 bcfd and 16.41 bcfd in January, respectively.

EIA said producers drilled 1,005 wells in November, the most since March 2020. Total drilled-but-uncompleted (DUC) wells rose by 22 to 4,443 in November, the first monthly increase since June 2020

 

US to witness erosion in stockpiles due to pipeline outage and rig count decline

An outage of the largest oil pipeline to the United States from Canada could affect inventories at a key US storage hub and cut crude supplies to two oil refining centers, analysts and traders said on Friday.

TC Energy's Keystone pipeline ferries about 600,000 barrels of Canadian crude per day (bpd) to the United States. It was shut late Wednesday after a breach spewed more than 14,000 barrels of oil into a Kansas creek, making it the largest crude spill in the United States in nearly a decade.

The main question continues to be the duration of the potential outage. The longer the duration can potentially tighter inventories erosion of Cushing or heavy crude on the Gulf Coast," said Michael Tran, Managing Director at RBC Capital markets.

The line runs directly to the Cushing, Oklahoma, storage hub, which is currently about a third full with nearly 24 million barrels in stock.

If the outage last for more than 10 days, it could push Cushing storage to near the operational minimum of 20 million barrels, said AJ O'Donnell, Director at pipeline researcher East Daley Capital.

Volumes in the fourth quarter will be materially affected," as Keystone likely will run at a considerably lower pressure at least for some time once it restarts, said Harshit Gupta, Arc Independent research.

Other pipelines between Canada and the United States are at or near capacity, East Daley and data analytics firm Wood Mackenzie estimates.

"There's nowhere near enough to take 600,000 barrels a day. There's just not enough pipeline right now," O'Donnell said.

The spill in Kansas took place downstream from a key junction in Steele City, Nebraska, where Keystone splits to run into Illinois. That stretch of the line could be restarted, but the other segment affected by the spill will not come back until regulators approve a restart.

TC Energy aimed to restart on Saturday a pipeline segment that sends oil to Illinois, and another portion that brings oil to Cushing on December 20, Bloomberg reported, citing sources. TC Energy said it was evaluating plans to return the pipeline to service.

Volumes to the Gulf from Cushing have already dropped. Volumes on TC Energy's Marketlink pipeline, which flows from Cushing to Nederland, Texas, fell by about 300,000 bpd to less than 500,000 bpd, Wood Mackenzie estimates, after the leak was discovered.

Gulf Coast refiners, which could suffer shortages of heavy Canadian crude, can draw on supplies from offshore Louisiana facilities and from Colombia, Mexico and Ecuador.

US physical crude oil grade prices were mixed on Thursday and O'Donnell at East Daley said he expects volatility to continue as long as Keystone remained offline.

Meanwhile, a lengthy shutdown of the pipeline could lead to Canadian crude getting bottlenecked in Alberta, and drive prices lower, although the market's reaction on Friday was muted.

Western Canada Select (WCS), the benchmark Canadian heavy grade, for December delivery last traded at a discount of US$27.70 per barrel to the U.S crude futures benchmark, according to a Calgary-based broker. On Thursday, December WCS traded as low as US$33.50 under US crude, before settling at around a US$28.45 discount.

Rig Count

US energy firms this week cut the number of oil and natural gas rigs operating for the first time in six weeks as oil prices fell to their lowest this year.

The US oil and gas rig count, an early indicator of future output, fell by four to 780 in the week ended December 09, energy services firm Baker Hughes Co. said in its closely followed report on Friday. Oil rigs fell two to 625 this week, while gas rigs declined by two to 153, their lowest since July.

US oil futures were trading around US$71 a barrel on Friday, down about 6% so far this year, after topping US$130 in March after Russia's invasion of Ukraine.

US crude production was on track to rise from 11.25 million barrels per day (bpd) in 2021 to 11.87 million bpd in 2022 and 12.34 million bpd in 2023, according to federal energy data. That compares with a record 12.32 million bpd in 2019.

 

 

 

Globalization almost dead, says TSMC Founder

Morris Chang , father of Taiwan's chip industry said geopolitics have drastically changed the situation facing semiconductor makers and warned that globalization and free trade are almost dead, and unlikely to come back, reports Nikkei Asia.

Morris Chang, Founder of Taiwan Semiconductor Manufacturing Company was speaking at an event in Phoenix, Arizona, where the company marked the symbolic first equipment installation at its new plant.

It is TSMC's first advanced chip plant in the United States in more than two decades, and Chang said a lot of hard work remains to make it a success.

He compared the current US$40 billion project to when TSMC built its first plant in the US in Camas, Washington, in 1995, just eight years after the world's biggest contract chipmaker was founded.

"Twenty-seven years have passed and the semiconductor industry witnessed a big change in the world, a big geopolitical situation change in the world," Chang said.

"Globalization is almost dead and free trade is almost dead. A lot of people still wish they would come back, but I don't think they will be back."

His comments come amid growing fears that tensions between the US and China over chips, splitting the global tech supply chain into two camps. Washington's crackdown on Beijing's chip ambitions, seen most recently in new restrictions rolled out in October, have made it increasingly difficult for companies like TSMC to serve clients in China.

Chang said he had always dreamed of building a chip plant, or fab, in the United States because of his own background. He was educated and worked in the US for several decades. But his first experience did not go smoothly.

"It was, I thought, a dream fulfilled," Chang said. "But the first plant ran into cost problems. We ran into people problems, we ran into cultural problems. The dream fulfilled became a nightmare fulfilled. It took us several years to untangle ourselves from my nightmare, and I decided that I needed to postpone the dream."

In the decades that followed, TSMC focused on building up cutting-edge chip production capacity in its home market, a strategy that helped the company keep costs down while continually honing its technological know-how.

Chang said the tool installation event -- an important milestone in building a chip plant -- signaled the end of one phase in making its US bid pay off.

"The romance of the beginning is lost and the initial excitement is gone. A lot of hard work remains," the industry veteran said.

But Chang added that TSMC is much more prepared than its first time building a chip plant in the US with the support of the US government.

A large delegation of top chip and tech industry CEOs attended the event, as did US President Joe Biden, who lauded the plant as a win for the US in its push to make cutting-edge chips domestically.

Washington has cited national security concerns and supply issues for wanting to bring vital semiconductor production back to its shores. Many industry executives agree that the era of globalization is retreating, and that sourcing locally is now a top priority.

Lisa Su, CEO of chip developer AMD, told Nikkei Asia on the sidelines of the event that supply chain continuity is now one of the top priorities for companies like hers.

"The entire semiconductor ecosystem is ready to step up and work together. ... The industry has been through so much in the past few years. Having more geographically diversified capacity is so important," Su said, referring to the unprecedented chip shortage. "At the end of the day, what we want to do is ensure that our most important chips have a resilient supply chain."

Apple CEO Tim Cook also embraced the idea of onshoring chip production despite his company for years relying on global suppliers to lower the costs of its designed in the US products.

"Over the past several years, the progress we've made with Apple silicon has transformed our devices. It has unlocked new levels of performance for our users, enabling them to do things they could never do before," said Cook at the event. "And now, thanks to the hard work of so many people, these chips can be proudly stamped 'Made in America.' This is an incredibly significant moment. It's the chance for the United States to usher in a new era in advanced manufacturing."

"Building fabs is clearly very hard work," Nvidia CEO Jensen Huang told Nikkei Asia on the sidelines. "Today's event is marking that TSMC will be a fundamental partner of every company's aim for supply chain resilience. It will make TSMC even stronger. As TSMC increases its own supply chain resilience by building a fab in the US, it will give us resilience, too."

Apple, AMD and Nvidia are set to be among the first customers for TSMC's Arizona plant.

 

 

Brittney Griner saga

Basketball star Brittney Griner was released from a Russian penal colony Thursday — and America’s reaction has been so polarized, it’s like watching a split-screen.

The bare facts are these:

Griner was arrested in February at a Moscow-area airport with vape cartridges containing marijuana oil in her luggage. She pleaded guilty at her subsequent trial and, last month, was moved to a penal colony with a grim reputation in the western region of Mordovia.

In order to get her out, the Biden administration agreed to release a notorious Russian arms dealer, Viktor Bout, who had been serving a 25-year sentence imposed in 2012 for crimes including conspiracy to kill Americans.

Importantly, the deal failed to spring from captivity another American in Russian detention, Paul Whelan, who was arrested in 2018 on espionage charges. Whelan proclaims his innocence despite having been convicted by a Russian court in 2020 and sentenced to 16 years in prison.

Griner is a Black, lesbian athlete whose plight became a cause celebre, especially in liberal circles and in the worlds of sport and popular culture. 

Whelan is a white, middle-aged former Marine whose family has struggled to get his case into the headlines at all. 

Bout, for his part, has a story lurid and macabre enough to inspire a Hollywood movie and earn him the nickname “The Merchant of Death.”

 “The entire decision to release Griner and then the response to it is emblematic of America,” said Tobe Berkovitz, a Boston University professor emeritus who specializes in political communication.

“One part of America is celebrating the release of an African American gay woman, and another part of America is bemoaning the continuing long imprisonment of a white Marine.”

There is also the broader backdrop of Russia’s war in Ukraine to consider, as well as the frayed nature of American political culture.

“This is really the perfect storm,” said Democratic strategist Joel Payne. He added that, within the case, there are “a number of thorny domestic cultural issues exploding, along with difficult geopolitical challenges outside the US … What happens when those things meet?”

Carlson, in a segment on his show Thursday — the day of Griner’s release — put the contrast between Griner and Whelan in especially stark terms.

“The former Marine, who has been there for four years already, gets left behind in Russia, while the celebrity athlete [who] gets busted with hash oil is championed by her celebrity media friends like Gayle King [of CBS News] and is home in just months,” Carlson complained.

 “If you are someone who thought Brittney Griner should have spent nine years in a penal colony, I think it probably says something about the value you put on her as a Black woman, an athlete and an LGBT woman.”

Cherelle Griner, Brittney’s wife, speaking alongside Biden at the White House on Thursday, said the couple “will remain committed to the work of getting every American home, including Paul, whose family is in our hearts today as we celebrate BG being home.”