Please find below news about Southstar and Commodities.


Lines set to withdraw more capacity on Asia-Europe

Further capacity withdrawals are being planned on Asia-Europe shipping  routes as container lines predict a flat peak season and falling rates.

Forwarders have already been warned of reduced capacity after the hoped-for peak season has failed to kick off.

Few, if any, carriers have imposed a peak season surcharge this year, as many did in the past.

“Rates have been falling during the last eight weeks, due to the extra capacity that has come on the market,” said Purvinder Tesse, a director of forwarder FCL.

“This has been further affected by the lack of a peak season. We have therefore been warned that withdrawals would begin on 12 October.

“The lines hope that if they cut capacity now,rates will remain buoyant until after Chinese New Year [3 February 2011].”

According to another forwarder, the general feeling is that the capacity reintroduced in recent months will be taken back out, despite the introduction by some carriers of new mega-ships.

However, it is expected that fewer vessels will be laid-up, as they were in the early part of this year and late 2009. Instead, carriers will probably idle ships for one or two round-trip voyages, ensuring they are ready to meet any increased demand, should it occur.

In addition to a withdrawal of capacity, lines will rely on slow-steaming – much criticised by some shippers because of its effect on the supply chain. Manufacturers and retailers have to plan longer lead times and tie up capital in cargo not available for sale.

But lines claim they can react to demand much quicker now than they could, say, two years ago.

Speaking to IFW’s sister publication, Lloyd’s List, last month, Maersk CEO Eivind Kolding said that one of the main lessons carriers had learned from the recession was to adjust supply to demand at speed.

It would, he believed, take Maersk no more than four weeks to make the necessary adjustments, should demand sink well below capacity.

by IFW

Worst sugar crisis imminent: emergency meeting on September 16

by AAMIR MAJEED on Business Recorder
KARACHI (September 14 2010): The country may face worst sugar crisis in coming days as the local sugar stocks, lying with mills across the country, has completely exhausted, it is reliably learnt. The Ministry of Industries and Production (MoI&P), the Ministry of Food and Agriculture (Minfa) and the Ministry of Commerce (MoC) have called an emergency meeting on September 16 for devising a strategy to meet crisis.

The meeting would review the current situation, sugar stock lying with both sugar mills and Trading Corporation of Pakistan and import of the commodity. Officials in Pakistan Sugar Mills Association told Business Recorder that sugar mills across the country have completely exhausted and there would be no sugar available in the local market from next month. The association would also hold an emergency meeting shortly to review the situation, they added.

They said the sugar stock in the TCP godowns is only sufficient for this month. Two ships carrying 25,000 MT and 23,791 MT of sugar reached Port Qasim during the first week of this month while 150,000 MT of sugar is expected to arrive in the country by the end of this month, they said, adding that a total 48,791 arrived in September and rest of the sugar would arrive, shortly. They said there is total 225,000 MT of sugar in the TCP godowns, which is only sufficient for 20 days. Monthly consumption of the commodity in the country is 350,000 MT. The shortage of sugar can also result in escalation of its prices, they feared.

They said the sugar millers had advised the federal government to import 0.5 million tonnes duty-free raw sugar to avert crisis, but they failed to respond to our reservations. To a question, they said they have no idea about the meeting of MoI&P, MoC and Minfa representatives on September 16.

Criticising the government approach towards a serious issue, Iskandar M Khan, Chairman, PSMA said the government had not called sugar millers, an important stakeholder, in the meeting on September 16. The millers were crying for timely import of required sugar, but all in-vain, he added. He said sugar stock with mills of the country has been exhausted and the association has also called an emergency meeting to review the current situation.

Sugar Update


Compared to several other commodity markets, Sugar futures have held their bullish tone lately, due to concerns that Brazilian sugar cane production will be lower than expected due to dry conditions as the growing season nears the end. However, some recent changes in fundamentals might be signaling a price correction could be near. The back-up of ships at Brazilian ports is beginning to ease, which should allow Sugar supplies to reach buyers, helping to elevate current tight supplies. In addition, world Sugar supplies are expected to return to a surplus this season, with the International Sugar Organization expecting a Sugar surplus of just over 3 million tons in the 2010/11 marketing year. Production out of India, the world’s largest Sugar consumer, is expected to increase sharply after two consecutive years of well below normal production. Although Sugar demand from Russia and other Asian countries is expected to increase, the production gains expected this year look to be sufficient to meet any expected increases in demand. Speculative traders are still holding a large net-long position in Sugar, with the most recent Commitment of Traders report showing both large and small speculators net-long a total of 158,253 contracts as of August 24th. Although the net-long position is far short of the record 303,210 contracts speculators held back in early 2008, it is still a formidable position, and should prices begin to decline, long liquidation selling could spark a test of support near the 17.50 area.

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