U.S.-China trade war worries shippers and container makers
August 28, 2018 Category China News Round-up, Weekly
Singamas Container Holdings, the world’s second-largest maker of shipping containers, said its clients were turning cautious as a trade war escalated between the U.S. and China, and that the second half of the year could become increasingly challenging as the rhetoric heats up. Chairman and Chief Executive Teo Siong Seng told a briefing on the company’s first-half results that rising tensions between the world’s two biggest economies had not yet cut into shipping volumes or hurt the company’s business, but “people are watching it very carefully”.
“As long as the U.S. demand is there, the supply chain will be prolonged,” he said, adding that some shipping could be shifted from China to other countries in Southeast Asia, such as Vietnam, Cambodia or Myanmar. “If anything, the demand for boxes will go up,” he said. However he noted that while container orders were full up to September 2018, buyers had become more cautious when placing orders because of concerns over the trade war as well as rising interest rates and currency fluctuations. The company, a subsidiary of Singapore-based transport and logistics company Pacific International Lines, reported a loss of USD2.1 million in the first half of the year, compared with a profit of USD16.6 million in the first six months of 2017. The rising cost of materials sent its manufacturing segment, which accounted for more than 98% of its revenue, to a pre-tax loss in the first half.
Singamas warned in July that it would report a first-half loss because of an increase in the costs of raw materials, including corten steel, used to make its containers, and because of a rapid appreciation of the yuan against the dollar in the first few months of this year. The company has manufacturing facilities throughout mainland China. The yuan has since lost 8% of its value against the dollar since a peak in March, which Singamas said has helped moderate its costs recently. Revenue rose 63% to USD969.2 million in the first six months, compared with USD545 million in the first half of 2017. Shipping containers have been removed by the U.S. from its list of proposed tariffs, the South China Morning Post reports. A.P. Moller-Maersk, the world’s largest shipping company, warned that global trade could be reduced by 0.1% to 0.3% because of the trade tensions between the U.S. and China. But the impact could be much greater on the U.S., with imports from China reduced by up to 4% and U.S. exports to China cut by as much as 6%.
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