While Democrats will control the U.S. House of Representatives next year, “bipartisan disapproval of China’s trade policies will sustain President Trump’s trade agenda,” A.T. Kearney says.
In another prediction, the consultants highlight a continuing “bromance” between Xi and Russian President Vladimir Putin, saying economic ties between the two countries are growing.
“As Russia remains under the weight of U.S. sanctions and China remains locked in an intensifying trade war with the United States, the two leaders are embracing their shared strategic interest in counterbalancing American influence,” it says.
This is reflected in a joint venture between Chinese e-commerce giant Alibaba and Mail.ru, Russia’s sovereign wealth fund, and the Russian telecom MegaFon to further develop the Russian e-commerce market as well as increase natural gas exports from Russia to China.
Russia is shipping liquefied natural gas to China from the Arctic using ice class LNG tankers through the port of Sabetta from the Yamal LNG project and Gazprom plans to open next year the “Power of Siberia” pipeline to provide China with natural gas.
Countries in Southeast Asia will likely benefit from the trade war as U.S. importers shift production and supply chains to avoid tariffs on Chinese good, and A.T. Kearney says this will begin “the long process of restructuring supply chains for many companies.”
A.T. Kearney believes “the global shipping industry will undergo a disorderly and disruptive transition” next year as it prepares for the International Maritime Organization’s new sulfur regulations.”
“With every month that passes, prices for a variety of fuel types — including high- and low-sulfur bunker fuel, diesel fuel and jet fuel — will be more volatile as refiners and fuel purchasers pursue a pricing advantage before the January 1, 2020 deadline.
“Higher seaborne freight costs for all goods will raise prices for companies and households around the world by the end of 2019. And while the disruption to the global shipping industry will begin in 2019, the drama will continue to unfold in 2020.”
“Two-thirds of construction material is concrete, which itself is composed of two-thirds sand. The global construction boom is therefore having a significant impact on global sand prices. To get a sense of scale, China used more sand between 2011 and 2013 than the United States did during the entire 20th century.”
The OpenSea.pro blog does not rank sand or aggregate separately in its list of minor bulk commodities, but it is shipped in some locations.
“In all fairness, it’s not a trade that means a lot to the industry. Larger Far Eastern owners/operators report from time to time that 3 percent of their cargoes are sand and gypsum,” says Peter Sand, the chief shipping analyst for BIMCO. He said it is shipped in handysize and handymax ships, mainly in the Far East.
A.T. Kearney said in 2019,“rising sand prices will put financial strain on the construction industry, particularly in emerging and frontier markets. This trend could lead to the slowing or cancellation of some projects. Countries such as Vietnam will be particularly sensitive, given that sand prices there rose about 200 percent in 2017 alone as the government seeks to eliminate illegal sand dredging.
“In rapidly urbanizing sub-Saharan Africa, increasing sand prices will continue to cause construction strains in countries such as Uganda, which has exhausted local supplies,” said A.T. Kearney.
Don Frost of Greenwich, Conn.-based D.B. Frost Associates, who has worked as a consultant, shipowner and broker for the sand and aggregate trade, said most sand is sourced near construction projects. For example, he says the original runways at JFK Airport in New York used sand dredged from Jamaica Bay off Long Island.
Sand sounds like a simple commodity, but he noted it has to be washed carefully to remove salt that can diminish the life of concrete. He said some early runways had to be rebuilt, but that in later construction the sand was carefully washed and inspected.
“I believe the Western World serves its need for sand and aggregate for cement and construction as such over land from domestic gravel pits,” said Sand.
He did not know current volumes, but said from the 1970s until the mid 1990s, it was a big commodity.