Good morning, friends. We have a compact issue this morning with a hefty dose of earnings and some projects updates from around the region, but first, in trade news across the pond…

THE BIG STORY ABROAD- Biden is set to impose new tariffs on China this week: US President Joe Biden is expected to roll out a tariff update on Chinese imports including up to a quadruple hike on EVs as soon as tomorrow, sources told WSJ. The new tariffs will also cover Chinese semiconductors and solar equipment as the US grapples with China’s growing influence and stronghold on manufacturing amid the green transition. Talks of increased protective measures were first sparked by the US Trade Representative’s office weeks ago and internal deliberation has been ongoing since, possibly extending even beyond Tuesday.

Chinese car makers will likely push to set up shop abroad in response, and CNBC reports Thailand, which bills itself as the “Detroit of the East,” could benefit. Byd and rival Neta Auto could start producing in Indonesia soon, as we noted last week.

Sound like a familiar playbook? It’s effectively what Japanese automakers did in the 1980s to smooth-over tensions with the US as imports threatened the American car industry.

The story grabbed a lot of ink over the weekend: Reuters | AP | The Financial Times | Bloomberg | The Wall Street Journal | The Guardian | The New York Times | CNBC

CLOSER TO HOME- PIF-backed Saudi firm Alat will divest from China if the US requests, CEO Amit Midha told Bloomberg on Thursday. “So far the requests have been to keep manufacturing and supply chains completely separate, but if the partnerships with China would become a problem for the US, we will divest,” Midha said. KSA is looking to ramp up its production of semiconductors, leading US officials to advise their Saudi counterparts to choose between going with Chinese or American technologies, Bloomberg writes.

Part of a larger push: US tech giant Microsoft inked an agreement with the UAE’s International Holding Company-backed tech and AI group G42 last month, boosting an earlier partnership and opening the way for a USD 1.5 bn investment by Microsoft. The agreement was preceded by hushed talks between the US government and G42, which saw the outfit agree to cut its links with China amid growing concern about ties to blacklisted Chinese tech companies and the Chinese government.

HAPPENING THIS WEEK-

The Airport Show is kicking off tomorrow in Dubai and running through to Thursday. The event brings together airport suppliers, airport service providers, aviation executives, and regional decision makers to explore current innovations and new technologies.

IN ABU DHABI- The Pre-Loading Advance Cargo Information session will open its doors and conclude on Wednesday. The event gathers public officials from the UAE and abroad, airlines, freight forwarders, ground handlers, and cargo solution providers to examine regulatory developments, addressing obstacles to implementation and ensuring compliance.

HAPPENING NEXT WEEK-

Riyadh is hosting two major aviation events: The Future Aviation Forum (FAF) — where investment projects worth USD 100 bn will be up for grabs — and the International Civil Aviation Organization’s (ICAO) Facilitation 2024 Global Summit. The FAF is set to run from Monday, 20 May, through to Wednesday, 22 May, while the two-day ICAO summit is scheduled for kickoff on Tuesday, 21 May. Both events will be hosted at the King Abdulaziz International Conference Center.

Some 5k aviation executives from aviation majors including Boeing, Airbus, China’s Comac, and Embraer, along with industry experts, manufacturers and government officials are expected to arrive in the capital for both events. The FAF will be hosted and run by the General Civil Aviation Authority (Gaca).

In context: The events are part of the Kingdom’s aviation strategy, which the government hopes to turn into a USD 2 bn industry, and the country’s extending air connectivity to a total of 250 countries by 2030. FAF — headlined “Elevating global connectivity” — is expected to see the government draw back the curtain on how it plans to achieve these goals. This also plays into the government’s tourism target, which was more than doubled aiming to lure 150 mn tourist trips by 2030, after hitting an earlier target of 100 mn last year ahead of plan.

The breakdown potential investments on the table: Some USD 50 bn are earmarked for local airport development, and USD 40 bn for new aircraft orders, according to state news agency SPA. Some USD 5 bn are reserved for setting up special logistics zones in some of the airports in Riyadh, Jeddah, and Dammam, and the remaining USD 5 bn will be channeled towards other aviation-related projects.

On the agenda for FAF: Air mobility, travel safety, sustainable jet fuels, digitization, and the use of AI. You can check out the full {agenda (pdf) here} and watch the event live here or register to attend here.

PSA-

Road closures in Abu Dhabi: Maitha Bint Mohammed street in Al Ain will be partially closed from 12 May through to 16 June and Hazza Bin Sultan street will be partially closed from 12 May to 12 June, AD Mobility said in statements here and here on X.

WATCH THIS SPACE-

#1- Jordan has suspended crude oil imports from Iraq following the expiry of a bilateral MoU inked in April of last year, Petra reports, citing a statement by Jordan’s Ministry of Energy and Mineral Resources. The MoU expired on 5 April and Jordan has requested a three month extension to allow deliveries of contracted volumes, Director of Oil and Natural Gas at Jordan’s Energy Ministry Iman Awad said. Talks on a new MoU will follow once contracted deliveries have been met, Awad also said.

Iraq will remain committed to OPEC+ production cuts, Reuters reports, citing statements by Iraq’s oil minister Hayyan Abdul Ghani. “The oil ministry is keen on the cooperation of member states and working to achieve more stability in the global oil market by agreeing on voluntary reduction programmes,” Abdul Ghani said. The minister’s latest comments follow statements to reporters on Saturday that seemed to indicate that Iraq was not onboard with proposals to extend cuts, Bloomberg reported on Saturday. “We will not agree on any renewals to cut output in the next OPEC+ meeting,” Abdul Ghani had said. OPEC+ ministers are expected to extend voluntary production cuts into 2H 2024 at a 1 June meeting in Vienna, Bloomberg said.

REMEMBER- Iraq said that it would cap its oil exports to 3.3 mn barrels per day (bpd) in March, in a bid to compensate for producing above its agreed OPEC+ limits in the first two months of the year. OPEC’s second largest producer has a patchy record in terms of complying with production cuts.

#2- Australia is set to ban seaborne exports of live sheep from May 2028 on the back of strong objections from animal welfare groups, Reuters reported on Saturday, citing statements by the country’s agriculture minister Murray Watt. Some USD 107 mn will be spent over the coming five years as part of a support package for sheep farmers and others hit by the ban, the newswire said. Other livestock exports including live cattle shipments and exports of sheep via air will not be affected. Most of Australia’s sheep are transported to the Middle East, with the UAE, Kuwait, and Israel standing as top destinations for the exports.

A major livestock exporter to the region: Australia accounted for more than half of worldwide sheep meat exports in 2023 with MENA snapping up 51% of the exports, according to Sheep Central.

Recent incidents sparked outrage: Australian regulators blocked an Israel-bound livestock carrier from resuming its journey in early February after Red Sea disruptions caused the vessel to head back to its point of origin on the Australian coast. A month later the vessel was allowed to set off for Israel, with the period between the vessel’s original sailing date on 5 January and mid-February causing the deaths of 64 sheep and four cattle aboard.

#3- Ane Maersk docks in Dubai: Maersk’s first large green methanol-enabled vessel docked at Jebel Ali port on Wednesday, according to a statement. Ane Maersk is the first of 18 large vessels, each with a capacity of some 16k TEUs, fitted with dual-fuel engines that can be powered by methanol, biodiesel, and conventional bunker fuel. The vessel will operate the AE7 string connecting Asia and Europe, the statement said. The move comes in a bid to curb emissions as part of the carrier’s drive to achieve net zero GHG emissions by 2040. The newbuilds are set for delivery between 2024 and 2025.

#4- Boeing’s woes continue to pile on: An Air Senegal flight operating a Boeing 737-300 aircraft overshot the runway at Senegal’s International Airport while attempting to abort its takeoff, The New York Times reported on Thursday. 10 people on the flight, including the pilot, were injured in the incident. “Our plane just caught fire,” a passenger said on Facebook. The cause of the incident is under investigation, Senegal’s Minister of Infrastructure, Land Transport Malick Ndiaye said on X. “Carriers operate and maintain their airplanes for upwards of 30 to 40 years,” Boeing told the NYT in an emailed statement.

The second incident in less than a week: A Boeing 767 freighter operated by FedEx Airlines landed at Istanbul airport without its front landing gear last week, with no injuries noted. Turkey’s Transport Ministry launched a probe into the incident.

Boeing’s largest subcontractor Spirit AeroSystems denied claims of routinely shipping out aircraft fuselages with defective parts,BBC reported on Thursday. Whistleblower and former Spirit employee Santiago Paredes alleged he recorded up to 200 defects on fuselages scheduled to be shipped to Boeing while working at the firm between 2010 and 2022. These included missing fasteners, bent, and missing parts. Paredes was also pressured to be less stringent on safety checks, he told the BBC. Spirit has strongly denied the allegations, but Boeing has so far declined to comment. This latest development adds to a series of safety concerns that have been levied against the US planemaker and its suppliers.

And frustrations are growing as aircraft delivery delays stretch on: Compensations for late aircraft deliveries are expected but they won’t make up for seat shortages, Etihad Airways CEO Anotonoaldo Neves told The National last week on the sidelines of the Arabian Travel Market in Dubai. The carrier is set to receive about 15 planes from Boeing and Airbus this year, with those deliveries already between six months to a year late, Neves said. “Compensations are expected because they are contractual and they are going to come,” Neves explained, adding that the compensatory payments do not make up for lost ticket sales, citing surging demand for air travel and a shortage of capacity.

#5- Three ins. companies have rejected Chevron’s USD 57 mn claim for Iran’s seizure of a company-owned oil cargo,Reuters reported last week, citing a court complaint filed at a court in California. The companies — which include Zurich American Ins., Liberty Mutual Ins. and Great American Ins. — petitioned courts to uphold their decision not to compensate Chevron, saying that Iran’s seizure of the cargo does not constitute “warlike operations,” the firms told the court.

Background: Iran seized a tanker, dubbed Advantage Sweet, hauling a Chevron-owned oil cargo in March. The seizure was carried out on the basis of an Iranian court order.

MARKET WATCH-

#1- Oil prices fell this morning as the prospect of interest rate cuts by the Fed were hampered and weak fuel demand continues, Reuters reports. Brent crude futures dipped 0.3% to USD 82.53 a barrel by 00.25 GMT, while US West Texas Intermediate (WTI) crude futures slid 0.3% to USD 78.03 a barrel, the newswire said.


Goldman Sachs no longer thinks Opec+ will announce a partial unwind ofvoluntary production cuts in their next meeting, set to take place on 1 June in Vienna, the bank said in a note picked up by Reuters last week. The bank estimates only a 37% chance of a production increase, owing to inventories surprising to the upside. “We now expect Saudi crude supply to remain flat at 9 mn barrels per day in July (vs. 9.2 previously),” with Brent crude expected to range between USD 75-90 a barrel, and USD 82 in 2025.

#2- Drewry’s World Container Index (WCI) gained 16% to USD 3,159 per 40ft container for the week ending Thursday, and was up 81% y-o-y, maritime research and consultancy firm Drewry reported. The latest WCI index is also 122% greater than the average 2019 pre-pandemic rate of USD 1,420 per 40 ft container. Meanwhile, the average YTD composite index stands at USD 3,227, USD 512 above the USD 2,714 10-year average, Drewry said.

#3- Baltic Index dropped, but saw its best week in two months: The Baltic Exchange’s Dry Bulk Index — which tracks rates for the capesize, panamax, and supramax vessel segments — dropped 1.7% to settle at 2,129 points on Friday, Reuters reports. Despite falling for the day, the Baltic Index was up 13% for the week, marking its best weekly performance since 1 March. The capesize subindex tumbled 3.3% to 3,292 points, with the segment up 23% w-o-w, while the panamax segment rose by 6 points to settle at 2,026 points. The supramax index ticked down to 1,485 points, the newswire also said.

DATA POINT-

Saudi Ports Authority (Mawani) saw 8.58% y-o-y growth in cargo throughput tonnage in April 2024, hitting 27mn tons compared to 25 mn tons during the same month last year, according to a statement released last week. Total containers handled fell 19.54% y-o-y to 558k TEUs, while transshipment containers also decreased 53.49%, at 123k TEUs. Exported containers increased 3.72% during the period to 217k TEUs, while imported containers decreased by 0.68%, at 218k TEUs, Mawani said. The breakdown of the cargo handled includes 839k tons of general cargo, 4.1 mn tons of solid bulk cargo, 16 mn tons of liquid bulk cargo, and 658k heads of livestock, up 43.54% when compared to the same period last year. Maritime traffic declined 8.27% to 910 vessels, while cars handled at Mawani’s ports dropped 30.55% to 70k units.

CIRCLE YOUR CALENDAR-

Saudi Arabia will host the Saudi Maritime & Logistics Congress from Wednesday, 18 September to Thursday, 19 September in Dammam. The two-day event looks to gather up to 10k attendees and 200 exhibitors, and will discuss topics including interlinked logistics, developments in supply chains, digitalisation, decarbonisation, the energy transition, and workforce development.

Iran will host the International Exhibition of Rail Transportation and RelatedIndustries from Saturday 18 May to Tuesday 21 May in Tehran. The exhibition looks to attract domestic and international firms to showcase Iran’s local rail manufacturing capabilities and to acquaint industry players with developments made in the industry worldwide.

The UAE will host The Electric Vehicle Innovation Summit from Monday, 20 May to Wednesday, 22 May in Abu Dhabi. The event will see industry leaders come together to discuss sustainable mobility and tapping into groundbreaking advancements in electric vehicles while engaging with key decision-makers.

Saudi Arabia will host the Future Aviation Forum from Monday, 20 May to Wednesday, 22 May in Riyadh. The event, organized by the General Authority of Civil Aviation, will see the Kingdom showcasing some USD 100 bn worth of investment options in the aviation and logistics sector at large.

Barbados will hostUNCTAD’sGlobal Supply Chain Forum from Tuesday, 21 May to Friday, 24 May in Bridgetown. UNCTAD is holding the event in collaboration with the Government of Barbados, which aims to evaluate the role global supply chains have in supporting economic growth, creating jobs, and reducing poverty. Global industry leaders, policymakers and experts will convene to discuss forthcoming issues and explore innovative solutions.

Oman will host the Comex Technology Show from Monday, 27 May to Saturday, 30 May in Muscat. The event will see representation from industry leaders and decision makers to showcase buyer potential in innovative technology, in transportation, logistics, energy and healthcare sectors.

Egypt will host ProPak MENA from Sunday, 26 May to Tuesday, 28 May in Cairo. The conference will see F&B manufacturing industry professionals network and discover the latest equipment and logistic solutions for processing and packaging.

Check out our full calendar at the bottom of this email for a comprehensive listing of upcoming news events and news triggers.

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