China reduces exposure to GCC imports
China reduces exposure to GCC imports
“China is the world’s highest energy consumer, and continues to rely on GCC countries for a large chunk of its oil supplies. Interestingly, in 2014, in line with the deceleration in China’s imports growth, the share of imports from GCC countries is also narrowing,” the report said.
In its report, Asiya Investments says that the importance of the countries of the Gulf as energy suppliers to China has been decreasing throughout 2014.
Imports from the GCC, which are almost exclusively fuel, accounted for 39.5 percent of Chinese fuel imports by May 2014.
Since the beginning of the year, the figure has gone down by 391 bps, breaking the positive trend of 2013.
As a share of total Chinese imports, the flow coming from the GCC decreased 53 bps, also changing the upward trend of the previous year.
Imports from GCC experienced a severe downturn since the beginning of 2014, falling more intensely than the overall fuel imports growth.
This is in clear contrast with the trend of 2013, since imports from the GCC experienced a growth consistently above Chinese imports of fuel.
Although imports from GCC rebounded in May 2014, their pace is still below that of fuel imports, and therefore the GCC keeps losing share. On further analysis of GCC countries, most of Chinese oil related imports comes from Saudi Arabia, forming about 20 percent of the total oil imports.
Saudi Arabia also weighs 46 percent of the total GCC imports basket, and is the main driver of the general slowdown in China’s oil imports from GCC.
Nevertheless, Saudi continues to play the role of an emergency supplier and changes in its exports could be explained by changes in Chinese imports.
Imports from Kuwait remain steadily low, while the UAE contribution is increasing.
In spite of the deceleration that is taking place in the region as a whole, Oman is still resilient and on a rise. The slowdown in oil imports is illustrated by the weaker demand in real terms from China.
Demand from the Asian giant and the evolution of prices determine the growth of GCC exports to China. The slowdown in demand from China already had a clear effect on the growth rate of imports from the Gulf.
Oil prices also play an important role in the equation and the moderation that took place after 2012 also contributed to the slowdown in GCC imports to China.
Looking forward, the Chinese economy is forecasted to slow down, but is very likely that growth rates will remain above 7 percent in the medium term.
Therefore, future growth rates of GCC exports to China could follow the trend that started in the beginning of 2014.
"It is also important to bear in mind that the Chinese government is still making efforts to diversify their energy sources geographically, and since Saudi Arabia is one of its major suppliers it is likely that the share of GCC imports will continue its downward trend,” the report added.
Harley-Davidson to move some production out of US to avoid EU tariffs
- The shift in production is an unintended consequence of Trump’s administration imposing tariffs on European steel and aluminum
- In response to US tariffs, the EU began charging import duties of 25 percent on a range of US products
Harley-Davidson Inc. said on Monday it would move production of motorcycles shipped to the European Union from the United States to its international facilities and forecast the trading bloc’s retaliatory tariffs would cost the company $90 million to $100 million a year.
The shift in production is an unintended consequence of US President Donald Trump’s administration imposing tariffs on European steel and aluminum early this month, a move designed to protect US jobs.
In response to the US tariffs, the European Union began charging import duties of 25 percent on a range of US products including big motorcycles like Harley’s on June 22.
In a regulatory filing https://bit.ly/2tA1ru0 on Monday, the Milwaukee, Wisconsin-based company said the retaliatory duties would result in an incremental cost of about $2,200 per average motorcycle exported from the United States to the European Union, but it would not raise retail or wholesale prices for its dealers to cover the costs of the tariffs.
The company expects the tariffs to result in incremental costs of $30 million to $45 million for the rest of 2018, the filing said.
“Harley-Davidson believes the tremendous cost increase, if passed onto its dealers and retail customers, would have an immediate and lasting detrimental impact to its business in the region,” the company said.
Struggling to overcome a slump in US demand, Harley has been aiming to boost sales of its iconic motorcycles overseas to 50 percent of total annual volume from about 43 percent currently.
In January, the company announced the closure of a plant in Kansas City, Missouri as part of a consolidation plan after its motorcycle shipments fell to their lowest level in six years.
In 2017, Harley sold nearly 40,000 new motorcycles in Europe which accounted for more than 16 percent of the company’s sales last year. The revenues from EU countries were second only to the United States.
Harley said ramping-up production at its overseas international plants will require incremental investments and could take at least nine to 18 months.
The company will provide more details of the financial implications of retaliatory EU tariffs and plans to offset their impact on July 24 when its second-quarter earnings are due, the filing said.
Trump vowed to make the iconic motorcycle maker great again when he took office last year.
In late April, Harley said Trump’s metal tariffs would inflate its costs by an additional $15 million to $20 million this year on top of already rising raw material prices that it expected at the start of the year.