After a slack start to the year, China’s containerized exports will begin to pick up this quarter, helping lift average throughput growth at the nation’s ports to 9 percent in 2012, Macquarie Equities Research says.
The company’s analysts point out that Organization for Economic Cooperation and Development economic indicators, which typically lead Chinese exports by six months, bottomed out in September 2011. They also note that sub-indices for new orders and exports were buoyant in the latest official Chinese Purchasing Managers Index, and that indicators for U.S. housing sector, retail sales and consumer confidence are improving, suggesting accelerating trans-Pacific demand.
“Container ports offer direct exposure to trade flows, which we believe will have a cyclical upturn from the second quarter of 2012,” said the inaugural China Port Sector report, which examines the value of leading Chinese port operators such as Cosco Pacific and China Merchants Holdings.
“Although Asian exports to Europe may stagnate in 2012, we expect the U.S. to pick up the slack and intra-Asia to continue to post strong growth. We therefore forecast higher-than- consensus throughput growth of 9 percent this year,” the report said.
Macquarie said rising U.S. private demand for containerized imports, led by furniture and auto parts, which make up some 25 percent of U.S. import volumes, would be particularly strong.
After recovering this year, China’s export growth will remain healthy over the next three to five years, during which annual growth rates of 7 to 9 percent can be expected, driven by trade between China and other emerging markets such as India, ASEAN and the Middle East.
“China has grown less reliant on developed markets for export growth since the global financial crisis,” the report said. “Since 2009, containerized trade between India and China has grown at a CAGR of 14.7 percent, while the overall throughput growth was just 4 percent.
“We expect future export growth to be primarily driven by trade between China and other emerging markets.”
In the coming years, Macquarie believes Bohai Rim and Yangtze River Delta container terminals will benefit from the move of production away from the more expensive south and their better inland waterway connections and lower port handling charges.
“We assume Pearl River Delta throughput will grow 5 to 7 percent in the next five years, recovering from almost no growth in 2011, driven by a pickup in U.S. imports,” the report said. “However, there is a risk that production has structurally shifted away from Shenzhen and surrounding areas, leading to stagnation in the Pearl River Delta region in the long-term even if China’s exports recover cyclically.”
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