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Peru Shipping Report Q4 2010
Business Monitor International, Sep 2010, Pages: 96
In August the authors cautioned that future LNG exports from Peru could be at risk if talks between protesters and the country's prime minister, Javier Velasquez, did not resolve the protesters' grievances. Civil unrest, road blocks and the possibility of attacks on a gas pipeline had all jeopardised the new industry in the preceding weeks. The authors expect the Americas to become a central focus for the LNG shipping sector, a view that was reinforced by the earlier opening of South America's first LNG plant, which is located in Peru's Melchorita region, 170km south of Lima. The liquefaction project, known as Peru LNG, has a nameplate send-out capacity of 4.45mn tonnes per annum.
In June, the first LNG carriers set sail from the port of Callao to Mexico's Manzanillo terminal, from where gas will be piped to the US market. The southern provinces are protesting that the natural gas that has begun to be exported to the US and Mexico is not being used to benefit the provinces that produce it. Protestors are also unhappy about the effect the gas extraction is having on indigenous communities and the local habitat - the gas field is located close to a number of national parks. The authors believe Peru's development as an LNG exporter will help to boost the region's shipping sector, but this may not be as easy as the country's carriers had hoped.
Peru's economy has continued to grow robustly during the course of 2010, supported by domestic demand. The authors believe that Peru remains on course for 5.9% GDP growth in 2010, providing a supportive environment for the ports and shipping sector. However, in the last quarter and running into 2011 we see external demand for Peruvian commodity exports beginning to flag as weaker Chinese growth has an impact on the Andean economy's exports. We are predicting slower growth in 2011, with GDP set to increase by 3.9%. Political risk will also increase as the general elections scheduled for April 2011 draw closer. Alan García, the unpopular incumbent president, cannot stand for re-election, and the authors believe the strongest contenders for the succession are in the political centre-ground, suggesting market-friendly policies may be ratified next year, another encouraging sign for the ports and shipping industry. That does not, however, exclude the possibility of strikes and protests of various types, particularly in the run-up to next year's elections.
At the port of Callao, the authors continue to forecast 8.4% growth in total tonnage in 2010, which follows an 8.7% contraction in 2009. Over 2010 the facility will handle 18.86mn tonnes, up from 17.39mn last year. Over 2011-2014 we believe Callao will achieve a respectable average annual growth rate in its tonnage of 7.6%. The Port of Paita, meanwhile, is unlikely to be able to shake off a heavy 33% contraction in tonnage volumes in 2009, with volumes forecast to grow by 12.7% y-o-y to 955,000 tonnes in 2010. Growth should remain steady, with an annual increase of 5.8% forecast over 2011-2014.
Peru Shipping Report provides industry professionals and strategists, corporate analysts, shipping associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Peru's shipping industry.
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