International Trade On the Rise As Demand For U.S. Made Goods Increases

By  |  Market Overview
Advanced economies are projected to climb 1.8% in 2014 and 2.4% in 2015. These growth projections are considered crucial for global expansion as well as for the progress of emerging and developing nations. Emerging economies are predicted to grow by 4.6% in 2014 and 5.2% in 2015.

A chart displaying Gross Domestic Product (GDP) of the global economy as well as that of selected developed nations, including the U.S, Japan and the Eurozone, and emerging countries like China, India, Brazil and South Africa is provided below:

GDP Rates

GDP Rates

A spur in economic growth inducing more industrial activities is considered favorable for the expansion of the machinery industry. This direct correlation, right on the heels of the expected economic growth worldwide, makes us confident about the machinery industry. Across nations, the level of industrial activities is measured in terms of industrial production — output of the manufacturing, mining and utilities sectors.

A brief discussion on the prospects of the machinery industry in different nations has been provided below.

Prospects in the United States

International trade is on the rise. Export demand for U.S-made goods, especially automotive vehicles and parts, consumer articles, industrial supplies and materials, and food and beverages, increased by roughly $2 billion to $198 billion in July.

The world’s largest economy held nearly 16.5% of the global GDP on purchasing power parity (PPP) basis, in 2013. Over the last five years, the country’s GDP growth movement were in sync with its industrial production. With the IMF anticipating the economy to grow by 1.7% in 2014 and 3% in 2015, one can gather a fair idea about the growth prospects of the machinery industry.

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Why allowing crude oil exports has impacted U.S. economic growth

By Khyathi Dalal

U.S. to allow oil export

The U.S. Department of Commerce has decided to allow the first exports of U.S. crude oil since Congress imposed a ban on such sales, except to Canada since the 1970s. Ultra-light oil, often referred to as “condensate” by the energy industry, will be cleared to be exported abroad, according to a private ruling by the federal government. This move would help the U.S. economy resume oil sales abroad. It would allow the economy to reap the full benefits of the shale revolution that has propelled the U.S. back into the top ranks of global oil and gas production.

U.S. oil exports

The Department of Energy total U.S. crude oil exports data reflected that for the third week ending June 20, exports touched its 52 week high of 273—1,000 barrels per day—a significant surge from 74 in the previous week.

It’s important to note how the beginning of the U.S. crude oil exports might affect the Guggenheim Shipping ETF (SEA) and crude tanker owners such as Tsakos Energy Navigation Ltd. (TNP), Teekay Tanker Ltd. (TNK), Nordic American Tanker Ltd. (NAT), and Frontline Ltd. (FRO).

Outlook

Although the market believes that the condensate export volumes are likely to be limited and minimal, any increase in export volumes should have a net positive impact on the crude oil tanker market. Given the limited condensate field production in the U.S. and limited scope of approvals, U.S. exports of condensate are likely to be limited over the next 18 months. Also, any heavy condensate volumes exported out of the U.S. would be carried out on either Aframax crude oil tankers or Panamax crude oil tankers.

As a result of the Department of Commerce ruling, shipment of condensates could begin as soon as August. Initially, the shipments are likely to be smaller with the U.S. forecasted to export 300,000 barrels of condensate per day by the end of the year.