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Today's Headlines Philippines
The nickel price is expected to remain under pressure up to (at least) the second half of 2018 due to the structural oversupply in the world market. So far this year the nickel price has fallen 9.38 percent to USD $9,080 per ton (London Metal Exchange). Analysts of the Goldman Sachs Group Inc. say nickel - used in stainless steel - is the worst-performing metal so far this year.
Although Indonesian nickel miner Vale Indonesia saw its sales rise by 32.4 percent year-on-year (y/y) to USD $143.95 million in the first quarter of 2017 supported by the 24.1 percent (y/y) growth in the (average) nickel matte price in Q1-2017, the company is pessimistic about the direction of the nickel price in the remainder of 2017 as inventory levels remain high on the London Metal Exchange and Shanghai Futures Exchange.
The ten Indonesian hostages that were kidnapped by Al Qaeda-linked Abu Sayyaf militants in late March - when their coal vessel was sailing in Philippine waters - have been released, unharmed, on Sunday (01/05). It was reported in local media that tug boat operator Patria Maritime Lines agreed to pay the 50 million peso (approx. USD $1 million) ransom that had been demanded by the rebels. The ten Indonesian hostages arrived in Jakarta in the early hours of Monday (02/05).
Coal shipments between Indonesia and the Philippines are disrupted by the recent series of incidents that occurred in the seas off the coast of the southern Philippines. Two Indonesian coal ports are now (temporarily) disallowing Indonesian ships from transporting coal to the Philippines. Security concerns heightened after members of the militant Al Qaeda-linked Abu Sayyaf network (based in the southwestern part of the Philippines) captured 18 Indonesians and Malaysians in three separate ship hijackings in recent weeks. It is feared that the waters around the southern Philippines become the new Somalia.
Ten Indonesians have reportedly been taken hostage by Al Qaeda-linked Abu Sayyaf militants after their Indonesian vessel, en route from Banjarmasin (South Kalimantan) to the Philippines, was hijacked in Philippine waters. According to local media the Indonesian vessel (a tug boat) was found abandoned in the Philippines' Tawi-Tawi province and a USD $1 million ransom has been demanded in exchange for the crew's release. The incident apparently already happened on Saturday (26/03). Indonesia's Foreign Affairs Ministry and State Intelligence Agency (BIN) have confirmed the case.
Nippon Indosari Corpindo, Indonesia’s largest bread products producer (and the only bread products manufacturer that is listed on the Indonesia Stock Exchange), established a joint venture - named Sarimonde Foods Corporation - with Philippine-based food producer and distributor Monde Nissin Corporation (MNC). For Nippon Indosari Corpindo, known for its Sari Roti brand, this is a chance to expand into the lucrative market of the Philippines, the second-largest market in the ASEAN region.
The global coal industry is still plagued by pessimistic sentiment. Not only has the global supply glut in combination with sluggish global economic growth put serious pressure on coal prices (while China introduced stricter coal quality tests on thermal coal imports), but most countries are also placing more emphasize on cleaner energy sources, which further curtail demand for coal. Coal prices are currently heading for a decade-low with January 2016 coal futures now at USD $52.55 per metric ton on the ICE Futures Exchange.
In the past couple of weeks unusually dry weather in several parts of Southeast Asia has led to expectation that harvests of agricultural commodities in the region will be disappointing. More and more weather forecasters are convinced that the El Nino weather phenomenon (i.e. periodical warm ocean water temperatures off the western coast of South America that can cause climatic changes across the Pacific Ocean) is to return this year causing droughts in the key agricultural-producing countries.
Official data show that in 2014 China, the world’s largest consumer of industrial metals, imported the lowest amount of nickel ore since 2010. Apart from slowing economic growth in the world’s second-largest economy (China’s economic expansion having eased to 7.4 percent year-on-year in 2014), falling nickel ore imports are also caused by Indonesia’s ban on exports of unprocessed minerals (implemented in January 2014) and monsoon rains in the Philippines (limiting production and seaborne trade).
The national automotive industry of Indonesia recorded export growth of 10.4 percent in the first quarter of 2014 (year-on-year). Statistics Indonesia said that exports in the automotive industry (which includes automobiles and motorcycles) were worth USD $1.27 billion in the first three months of the year, compared to USD $1.15 billion in the same period in 2013. However, the automotive industry of Indonesia only contributes 3.49 percent to the country's total non-oil & gas exports.
Latest Columns Philippines
The global nickel price declined 5.1 percent on Tuesday (09/09) after it became known that the Philippines would not implement a ban on exports of this commodity yet. Similar to Indonesia, the Philippines was preparing to implement a ban on exports of unprocessed minerals in an attempt to boost revenues (by exporting mining products with added value). However, it may take seven years before such a policy is implemented. This implies that the occurrence of a possible shortage of nickel on the global market in the coming years has diminished.
The western banking collapse of 2008 did more than cost investors large sums of money, it exposed markets to a renewed sense of vulnerability in that is typically thought of as the world’s most stable financial institutions. But one of the unintended (or unforeseen) results of these events has been the upsurge in alternative retirement destinations for those that are ending their working careers. Perhaps most surprising is the upsurge in the number of retirees moving to the Asia-Pacific region.
Various factors contributed to the 2.30 percent decline of the Jakarta Composite Index (IHSG) on Tuesday (26/11). The index in fact fell below its support level. What were the main reasons for this weak performance? Firstly, the Indonesian rupiah exchange rate has been depreciating severely and causes concerns among market players. Secondly, most Asian stock indices fell as valuations climbed high and the Japanese Yen strengthened. Thirdly, European stock openings on Tuesday were weak. All these reasons together led to foreign net selling.
Emerging East Asian countries should use the window of opportunity opened by the delay in US monetary policy normalization to strengthen their economies and financial systems, the latest quarterly Asia Bond Monitor from the Asian Development Bank (ADB) urges. “A delay in US bond tapering gives the region a bit of extra time to make sure its economy and financial systems are resilient enough to face the likely market volatility ahead,” said Iwan J. Azis, Head of ADB’s Office of Regional Economic Integration which produced the report.
On the very last trading day of May (31/05), Indonesia's main stock index (IHSG) closed at 5,068.63 points. During the month, the index showed a volatile performance as it reached its peak at 5,251.29 and its low at 4,907.59 points. Overall, the IHSG continued to rise in May despite various negative sentiments. Foreign investors recorded a net sell of IDR 7.9 trillion (USD $806.12 million). However, optimistic domestic investors kept Indonesia's index in the green zone.
