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    Shipowners switch to smaller vessels as world trade reroutes from China

    Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The rerouting of global trade from China to ports elsewhere in Asia is leading shipowners to move on from the era of ordering ever-larger vessels and switch to smaller crafts instead.Just six container ships capable of carrying the equivalent of more than 17,000 20-foot containers, known in industry parlance as TEUs, are due to be delivered in 2025, against 17 delivered in 2020, according to shipbroker Braemar.At the same time, 83 mid-sized vessels measuring between 12,000 TEUs and 16,999 TEUs are set to be completed in 2025, almost five times the number five years earlier.“The 16,000-TEU ship will become the popular workhorse for liner companies,” said Jonathan Roach, container market analyst at Braemar, who added that “tepid” global trade and a saturation of “massive ships” had also reduced the appetite for these vessels.The threat of environmental regulations and trade disruptions — including last year’s attacks on ships in the Red Sea — have also hit demand for the bulkiest carriers, said industry insiders.That disruption is expected to continue with Donald Trump’s return to the White House this month. The incoming president has threatened to turbocharge tariffs on imports from China.“We definitely see increased interest away from sourcing only your products from China,” said Peter Sand, chief analyst at shipping market tracker Xeneta, who added that supply chains were spreading to smaller manufacturing hubs elsewhere in Asia.Sand added: “You can only make economic sense out of ships [of the largest] size if you have got the cargo to fill that up. If you don’t, you are losing money.”A senior executive at one of Asia’s biggest container shipping lines echoed Sand’s remarks. With manufacturing shifting to India and Vietnam, “it probably makes less sense to expect the largest vessels [to be] filled up in two or three ports”, he said.The shift follows decades of shipowners ordering ever-larger vessels as global trade boomed — a trend that came to widespread attention when the 220,000-tonne, 20,000-TEU Ever Given ship ran aground and blocked the Suez Canal for six days in 2021.Tugboats push the Ever Given container ship in the Suez Canal More

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    Job losses at Europe’s car parts suppliers soar as vehicle market slows

    Job losses at European car part suppliers more than doubled in 2024 as the slowdown in the continent’s automotive industry hit the fortunes of its manufacturing supply chain.Analysis from the European Association of Automotive Suppliers (Clepa) for the Financial Times showed that more than 30,000 jobs had been cut across the industry in 2024, compared with just over 15,000 in 2023. Job creation has also slowed and there have been more than 58,000 net job losses across the industry in Europe since 2020.Businesses ranging from French tyremaker Michelin to German manufacturer Bosch announced thousands of job cuts in the past year as sales of new vehicles by European producers have steadily fallen, leaving suppliers with excess capacity and little prospect of a rebound in sales. While larger companies have cut jobs and closed plants, some smaller businesses have been forced into bankruptcy or filed for insolvency. “If there is no more growth for European manufacturers, there is also no more growth for their equipment makers,” said Alexandre Marian, a director at consultancy AlixPartners.According to Clepa, car parts suppliers directly employ about 1.7mn people in the EU.Some content could not load. Check your internet connection or browser settings.The decline in demand has followed the Covid-19 pandemic, war in Ukraine and the subsequent inflation. These have dented the competitiveness of European industries at a time when Chinese rivals are pushing to increase market share.“Our estimate is that the little growth that we can have on the European market will be taken by the growth of imports, especially Chinese ones,” said Marc Mortureux, director-general of France’s Automotive & Mobility Industry Platform (PFA) industry body.While European suppliers were trying to work with local auto groups in China, the big concern was that Chinese brands would eventually assemble vehicles in Europe but with parts from China and other countries, he added.The relative high cost of EVs and reduction of subsidies for the vehicles in countries such as Germany have capped their widespread uptake, meaning companies investing in these technologies have not seen the demand they expected. A technician checks car injectors at a Bosch factory More

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    Gold set to rally further this year, say Wall Street banks

    Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The price of gold is set to rise further in 2025, say Wall Street analysts, although the pace of gains is likely to slow after last year’s bumper 27 per cent rally.Gold is expected to climb to about $2,795 per troy ounce by the end of the year, according to the average forecast by banks and refiners surveyed by the Financial Times. That is about 7 per cent above current levels.The yellow metal is expected to continue to benefit from buying by global central banks, which have been diversifying away from the dollar since the US imposed sanctions on Russia following its 2022 full-scale invasion of Ukraine. Interest rate cuts by the US Federal Reserve, concerns about growing US government debt levels under president-elect Donald Trump and conflicts in the Middle East and Ukraine are also forecast to lift prices. Such factors were behind bullion’s biggest annual gain since 2010 last year.“We think central bank interest will be a strong base for the buying next year,” said Henrik Marx, global head of trading at Heraeus Precious Metals, which forecast that gold could touch highs of $2,950 per troy ounce this year.He added that Trump’s second presidential term was also likely to be supportive for gold prices. “Whatever he announces will increase debt, leading to a weaker dollar and increased inflation. That is usually a nice mixture for gold.”The World Gold Council said in a report that this year’s growth would be “positive but much more modest”.The most bullish call among those surveyed is from Goldman Sachs, which expects prices to reach $3,000 by the end of 2025. The bank cites central bank demand and expected rate cuts by the Fed.The most bearish forecasts were from Barclays and Macquarie, which both expect gold to sink to about $2,500 per troy ounce by the end of the year — a roughly 4 per cent drop from current levels.“Our base case into 2025 is for gold to initially face ongoing pressure from US dollar strength, but be supported by improved physical buying and steady official sector demand,” wrote Macquarie analysts in their year-end outlook.Global central banks bought 694 tonnes of gold during the first nine months of 2024. The People’s Bank of China announced in November that it was resuming gold purchases after a six-month hiatus.Falling US interest rates have contributed to gold’s rally in the second half of last year, and the pace of further cuts could be crucial to the outlook for the yellow metal. Gold prices pulled back slightly after the Fed lowered rates in December but indicated that borrowing costs will fall more slowly than previously expected in 2025.Because gold is a non-yielding asset, it typically benefits from lower interest rates, because the opportunity cost of holding it is less.Trump’s election win in November has provided one of the most favourable scenarios for gold, due to the likelihood of elevated US fiscal spending and increased geopolitical uncertainty, said Michael Haigh, head of commodities research at Société Générale.“Momentum is taking back over, combined with geopolitical tensions, which is going to add more fuel to the fire,” said Haigh, who expected gold prices to rise to $2,900 per troy ounce at the end of 2025. More

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    Singapore economy grew 4.0% in 2024, advance estimate shows, fastest post-pandemic growth

    Gross Domestic Product (GDP) rose 4.3% in the fourth quarter from a year earlier, according to advance estimates from the trade ministry, above a median forecast of 3.3% in a Reuters poll of economists. On a quarter-on-quarter seasonally adjusted basis, GDP expanded 0.1% in the October-December period.Maybank economist Chua Hak Bin said: “Singapore is starting the year in a sweet spot, with growth on a high and inflation at below 2%.””Shifting supply chains to Southeast Asia and front-loading of shipments ahead of potential higher U.S. tariffs will continue to drive manufacturing growth in the first half of 2025,” Chua said.The trade ministry said in November it expected growth of 1.0% to 3.0% in 2025.OCBC economist Selena Ling said the cautious forecast was realistic given current external headwinds and “is likely due to Trump 2.0 tariffs and also possibly the fading of front-loading activities”.However, she said growth is unlikely to slow too significantly in 2025. “Assuming tariffs don’t impact Singapore directly, the 1% year-on-year floor should hold. My baseline is still about 2% given higher base”. November’s annual inflation rate of 1.9% was the lowest in almost 3 years, creating room for the central bank to ease monetary policy at its January review, though analysts believe it might wait until later in 2025 to assess the impact of incoming U.S. President Donald Trump’s policies.The Monetary Authority of Singapore held policy steady at its October review as data showed the pace of activity picking up. Its next review is due before the end of the month. More

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    Bank of Korea governor says monetary easing this year will be flexible

    “This year, conditions surrounding our economy will be more difficult than ever before,” Bank of Korea Governor Rhee Chang-yong said in a New Year’s address. “Monetary policy needs to be operated with flexibility and agility, as political and economic uncertainty is unprecedentedly high,” Rhee said. The pace of interest rate cuts ahead will be flexible, as trade-offs on growth, inflation, foreign exchange and household debt are expected to widen, Rhee added. At its final policy meeting of 2024, the BOK delivered the first back-to-back rate cut since 2009, as policymakers turned wary on trade risks from the incoming U.S. administration of President-elect Donald Trump. Rhee said downside risks to the central bank’s economic growth forecast of 1.9% for this year have risen, citing uncertainty over U.S. trade policy and domestic politics.On the won, which weakened more than 12% in 2024 to record the worst year since 2008, Rhee said volatility could persist for a considerable period of time. More

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    The EU’s impossible choice on trade and tariffs

    Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The EU, a political project conceived to remove trade barriers, has been raising tariff walls at its fastest rate in 15 years. But just as fast as the defences are built against cheap Chinese imports, fresh storms blow the bloc off balance again. Donald Trump’s threat to impose levies of up to 60 per cent on Chinese goods would, for instance, put an even higher tariff wall around the US than anything the EU has planned. The effect, if the US president follows through, would be to divert Chinese goods from the US to the EU — forcing Brussels to in turn consider hitting back with even tougher defensive measures.It is an impossible situation for a union that has taken pride in its free-trading instincts. Every barrier it erects can save some domestic jobs but will also reduce the competitiveness of other domestic industries by raising the price of imports.With China now accounting for 30 per cent of global industrial output, the ripple effects will be considerable on EU products ranging from electric vehicles to Italian tomato paste.Vulnerable industries, such as steel and glass fibre makers, complain the EU has not been building trade defences fast enough or high enough to save them. “We are close to a tipping point for many industries,” said Laurent Ruessmann, a partner with RB Legal and trade defence expert.   On the other hand, those who want cheap Chinese inputs to keep their own product prices down, such as paint makers, have lobbied against tariff measures. The EU has put duties on titanium dioxide, a key ingredient, leaving paint makers worried they will have to absorb the cost or lose sales. Simon Evenett, professor of geopolitics and strategy at IMD Business School, said tariffs always ended up costing consumers or other businesses.  “Europe’s dilemma is either to sacrifice jobs downstream by slapping tariffs on Chinese imports or watch EU producers shrink by doing nothing. When it comes to protectionism, someone’s ox always gets gored.”However, Aegis Europe, which represents heavy industries such as steel and chemicals, argued that the EU was sitting on the fence. Trade defence measures cover far less of its EU imports than other trading blocs, according to Aegis. The number of tariffs has grown to their highest level since 2009, with 141 in force in 2023. But rebased against total imports, the US, Australia and Canada have more than 10 times larger protective shields. “Claims that EU manufacturers use trade defence as a protectionist tool do not stand up to scrutiny,” it said in a report. Brussels has responded. In a move asked for by Aegis, it now automatically registers imports when a trade investigation is opened. It can then backdate tariffs if it wishes, deterring stockpiling during the months-long probe to beat the price rises.But even with tariffs in place, China has tended to find ways around them. Since the EU put anti-subsidy duties in 2010 on glass fibre — used in construction, wind turbines and other industries — Chinese producers have doubled their market share. After the tariffs were imposed, imports started surging from Egypt. China’s state-owned Jushi had opened a plant there, and Brussels eventually put tariffs on Egypt too. Ludovic Piraux, chief executive of producer 3B and president of Glass Fibre Europe, said the tariffs were ultimately too low. “Companies operating within a market economy like ours cannot withstand the relentless attacks from Chinese state-subsidised competitors,” he said.The steel industry is feeling the squeeze most — hobbled by weak demand, high energy costs and regulation forcing it to invest to eliminate carbon emissions.Steel production hit its lowest ever level — 128mn tonnes — in 2023, according to Eurofer, the lobby group. Trump put tariffs on the metal in his first term in an effort to protect his voters in the industrial heartland of the US, and could reactivate them within days of his return.Axel Eggert, Eurofer director-general, said: “We have to decide if we want a European steel industry or not.”Carmakers — themselves now partially protected by tariffs from a surge of cheap, allegedly subsidised Chinese electric vehicle imports — needed EU steel, Eggert argued. While they might be tempted by cheaper Chinese offerings to lower their costs, “as soon as we are gone, the Chinese will raise prices”. The EU might be tempted to reopen talks with the US on a “green steel club”, which would allow tariff free trade between members while those outside pay.This was once dismissed by Brussels as incompatible with World Trade Organization rules. But senior EU officials now hint that they could be flexible in interpreting the rules. In this hostile environment, even good students of trade multilateralism may find it impossible to stick to their principles. More

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    Macau 2024 casino revenues top official estimate but below pre-pandemic levels

    Gaming revenue last year reached 226.8 billion patacas ($28.35 billion), up 23.9% from 2023, according to data published by the Gaming Inspection and Coordination Bureau on Wednesday. That topped the government’s estimate of 216 billion patacas, but trailed the 292.5 billion patacas logged in 2019.Notably, revenue fell 2.0% in December, the only month registering a year-on-year decline in 2024.The drop coincided with tighter security surrounding a three-day visit by Chinese President Xi Jinping to mark a quarter century of Beijing’s rule. Macau returned to Chinese rule on Dec. 20, 1999, governed under the same “one country, two systems” system as nearby Hong Kong.During his trip, Xi urged Macau to have the “courage” to diversify its economy by establishing new industries and better connecting with the mainland’s national developing strategies. That includes increased economic integration with the Greater Bay Area, a region in the Pearl River delta linking cities such as Hong Kong and Guangzhou. To boost its global competitiveness, Xi said Macau should further promote cooperation with Portuguese-speaking countries and actively participate in Beijing’s Belt and Road Initiative, an ambitious infrastructure plan aimed at boosting trade between China and the rest of the world. Macau, a special administrative region of China, is the only place in the country where gambling is legal. Its economy is heavily reliant on casinos, which contributes about 80% of tax revenues.But China’s long-term anti-corruption drive has reined in gambling revenues from the high-roller VIP sector, which were further depressed during the pandemic years when strict travel restrictions sharply curtailed visits from mainland tourists. ($1 = 7.9990 patacas) More

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    Wolfe Research outlines five potential surprises for 2025

    1. Port workers strike: a possible port workers strike on Jan. 15 — stemming from unresolved issues regarding automation in port operations — disrupting supply chains and potentially impacting GDP by approximately $3.1 billion per day.2. Downward revisions to payrolls may force Fed pivot: The upcoming benchmark revisions could reveal a downward adjustment of around 68,000 jobs per month, indicating a slowing job growth rate that may prompt a dovish pivot from the Fed.3. Shake up at the Fed:  The potential resignation of Vice Chair for Supervision Michael Barr could lead to significant changes in leadership, with Governor Michelle Bowman poised to take over his role and Kevin Warsh potentially being appointed as a new governor.4. Broadening out of stock market rally unlikely: despite investor hopes for a broader market rally, concentration within the index may persist, Wolfe Research said. This trend reflects a longer-term pattern where the S&P 500 has outperformed the equal-weight index in seven of the last ten years.5. President-elect Trump may opt for less harsh tariffs: after initial market reactions to tariff headlines, Trump might end his pursuit of significant tariffs. This would defy widespread investor expectations, as many anticipate increased tariffs on Chinese goods and others. More