December 9th, 2010

Economics, Trade & Business

Guasare coal declares force majeure -buyers

Venezuelan coal miner Guasare Coal International has declared force majeure on December shipments from the port of Maracaibo, European coal buyers said on Tuesday. Guasare, a joint venture between Venezuela's state-owned Carbozulia, U.S.-headquartered Peabody and Anglo American Plc, operates the Paso Diablo mine in Venezuela's western Zulia state. Paso Diablo produces around 6 million tonnes a year of high energy content coal, which is sold to industrial users and power plants in Europe, Brazil, Canada, the U.S. and Caribbean. (Reuters, 12-07-2010; http://www.reuters.com/article/idUSLDE6B61ND20101207)

Venezuelan Industrial sector closed the year down 3%

The industrial sector closed the year in a tailspin. Conindustria President, Carlos Larrazabal, reported yesterday that 2010 "concludes as we had anticipated, with a stagnant economy, estimating a further drop in manufacturing GDP of 3%." We have had six consecutive quarters of decline… so we've lost five years of growth." (Ultimas Noticias, 12-09-2010; http://www.ultimasnoticias.com.ve/Noticias/Industriales-cierran-el-ano-con-una-caida-de-3-.aspx)

Venezuela's consumption shrinks for second year in a row

Venezuela's consumption rate was characterized by a slowdown in 2010. After showing high levels of growth in previous years, it downsized for second year in a row. Luis Vicente León, the director of polling firm Datanálisis reported that domestic consumption has fallen 3.3 percent this year, similar to the drop in 2009, when the economic downturn amounted to 3.2 percent. This slowdown, which amounts to 7-8 percent in the past two years, has created pessimism in Venezuelan consumers who "consider they have lost their quality of life." (El Universal, 12-08-2010; http://english.eluniversal.com/2010/12/08/en_eco_art_venezuelas-consumpt_08A4830973.shtml)

Nationwide Consumer Price Index (NCPI) posted an accumulated increase of 923% in the 11 years and 10 months of Chávez’ administration, said private firm Capital Market Finance director Jesús Casique. The increase of prices of goods and services happened despite the controls enforced by the President at the beginning of 2003 and the appearance of the bolívar fuerte in 2008. (Veneconomy, 12-09-2010; http://www.veneconomy.com/site/index.asp?ids=44&idt=24245&idc=2)

Rains to boost inflation in agricultural products

Rains and floods have battered farmers, who so far have reported losses in crops of plantains, vegetables, cocoa and taro in 11 Venezuelan states. This will further undermine agriculture production, which is already insufficient, and acts as a catalyst for inflation. Data provided by the Central Bank of Venezuela (BCV) shows that, between January and November 2010, prices of agriculture products increased by 51.3 percent. Inflation has hit low-income families the hardest, since they spend more than half of their income on food. While the Venezuelan government could boost imports in order to increase the supply of products, such a move has proven unsuccessful in recent years. (El Universal, 12-09-2010; http://english.eluniversal.com/2010/12/09/en_eco_esp_rains-to-boost-infla_09A4834291.shtml)

Venezuelan Government to cancel debt of producers affected by rains

The Venezuelan Government will cancel the debts of the agricultural producers in the Sur del Lago region, in the Zulia state (Venezuela’s northwest), who lost their crops, homes and possessions due to the precipitations that fell in the country in the past weeks. The announcement was made by the President of Venezuela Hugo Chavez during an inspection by the affected zone. “I have decided to begin with a process to restructure the debts and credits to producers. Those who lost all their crops will not pay anything; therefore, we will evaluate farm by farm. I promise to cancel the debts of all the producers,” he explained. (AVN, 12-09-2010; http://www.avn.info.ve/node/33044)

Rains threaten to undermine economic rebound in 2011

Asdrúbal Oliveros, the director of Ecoanalítica, believes that the consequences will be felt in 2011 rather than in the fourth quarter this year. "The greater impact will come in the first quarter next year. Since agriculture has little weight in GDP, growth in trade, transport and storage would be most seriously hit." Official statistics show that agriculture accounts for less than 3 percent of GDP, while trade, transport and storage, overall, amount to 13.1 percent of GDP. (El Universal, 12-08-2010; http://english.eluniversal.com/2010/12/08/en_eco_esp_rains-threaten-to-un_08A4830055.shtml)

Venamcham presents the top 100 in Venezuela

Carlos Henrique Blohm, the president of the Venezuelan American Chamber of Commerce and Industry (Venamcham), announced the list of the Top 100 Companies in Venezuela. He said that the ten first companies are: Pdvsa, Cantv, Movistar, Mercantil, Banesco, Farmatodo, Provincial, Seguros Caracas, Digitel, Banco de Venezuela and Coca-Cola. In a survey of 287 companies that participated in the poll, 53 percent considered that there will be no changes in national expectations. (El Universal, 12-09-2010; http://english.eluniversal.com/2010/12/09/en_eco_art_venamcham-presents-t_09A4835057.shtml)

Politics

Venezuela govn’t takes stake in anti-Chavez TV

Venezuela's government has taken control of a fifth of the shares in Globovision, a sign of mounting pressure on the opposition television network opposed to President Hugo Chavez. Chavez has in the past threatened to close Globovision, which has a strong editorial line against his socialist policies and is seen by its supporters as a bastion of opposition to the many pro-government television stations. (Reuters, 12-07-2010; http://www.reuters.com/article/idUSN079924120101207)

Transport & Logistics

Sea Departure Restrictions Lifted

Motivated by improving sea conditions in the states of Sucre, Nueva Esparta and Falcon, the National Institute of Aquatic Spaces (INEA) lifted the restrictions on departures for smaller vessels (less than 150 gross tonnage units). The general manager of Harbor Master, Christopher Figueroa, reported that evidence such entities have clear skies, good visibility, calm seas and moderate winds. (Ultimas Noticias, 12-08-2010; http://www.ultimasnoticias.com.ve/Noticias/Inea-levanta-restriccion-de-zarpes.aspx)

Petroleum & Energy

Venezuela orders oil companies to lift output

Venezuela's oil minister has given oil companies including Chevron, Repsol, BP and Petrobras 30 days to raise production at more than 20 joint ventures, as the OPEC nation struggles with falling output of its main export, according to a letter seen by Reuters on Wednesday. In the letter, Oil Minister Rafael Ramirez gave the companies 30 days to present a new production plan and requested they seek their own financing. Several firms want another month, a company source said. The joint ventures have a combined output capacity of at least 400,000 barrels-per-day. (Reuters, 12-08-2010; http://www.reuters.com/article/idUSTRE6B756O20101208)

The following brief is a synthesis of the news as reported by a variety of media sources. As such, the views and opinions expressed do not necessarily reflect those of Duarte Vivas & Asociados and The Selinger Group.