Venezuelan Daily Brief

Published in association with The DVA Group and The Selinger Group, the Venezuelan Daily Brief provides bi-weekly summaries of key news items affecting bulk commodities and the general business environment in Venezuela.

Friday, June 20, 2014

June 20, 2014

International Trade

Incoming cargo at Puerto Cabello
  • 25,000 tons of soy from Argentina for Consorcio Oleaginoso Portuguesa
  • 21,000 tons of chemicals from Russia
  • More than 14,000 tons of soy oil from Argentina for Granja Avícola Chichi, Alimentos Balanceados Tinaquillo, Consorcio Oleaginoso Portuguesa and Alibal
  • Over 14,000 tons of wheat from Terra World Trade for Molinos Carabobo.
  • 1,721 tons of milk and cream from Argentina, for CASA
  • Over 1,000 tons of vehicle parts from China
  • Over 1,544 tons of whole milk powder and skim milk powder from Uruguay of General Alimentos Nisa
  • 818 tons of corn from Argentina
  • 683 tons of tires from Brasil and China for Corporación de Automotriz ZGT
  • 492 tons of newsprint paper from Brazil for Industria Endógena Venezolana de Papel (INVEPAL)
  • 285 tons of margarine from Brazil, for CASA
  • 281 tons of electric transformers from Colombia for Corporación Eléctrica Nacional (CORPOELEC)
  • Over 216 tons of mozzarella and edam cheese from Uruguay
  • Bags and sacks for the Venezuelan Cement Corporation
  • Telephone parts and plastic parts


Logistics & Transport

No cargo to transport
Heavy load carriers say the drop in private imports, along with scarce spare parts, is hitting their trade heavily. José Petit, of the Puerto Cabello Container Cargo Association (ASOTRACONTAINER) says private imports have dropped by 80% so far this year. More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/No-hay-cargas-que-transportar-2181020/2014/06/18/333878)

Local industry faces a 60 to 80% loss in net worth over the next weeks due to rising import expenses after the National Port Authority (BOLIPUERTOS) adjusted its fees to the SICAD 2 rate and the Tax Authority (SENIAT) started basing import taxes on the type of exchange rate used to purchase goods. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39840&idc=3)


Oil & Energy

PDVSA’s revenues from the sale of crude oil and by-products dropped 8% inter-annually in 2013 from U$D 124.4 billion in 2012 to U$D 113.9 billion, according to its annual report. On the other hand, debts were up 28% (U$D 21.4 billion), compared to last year’s financial report. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39842&idc=4)


Commodities

Chemical industry may come to a standstill
Andrés Pérez, President of the Carabobo State Industrial Chamber, says the next industries to come to a halt in that region are those that produce chemical products such as resins, pigments, paint and adhesives. Polyurethane producing industries could also suffer the consequences. Polyurethane is used for the production of shoe soles, hoses, rubber for automobile parts, and mattresses. More in Spanish: (El Carabobeño, http://www.el-carabobeno.com/economa/articulo/83868/empresas-qumicas-podran-ser-las-prximas-en-paralizarse)

POLAR Food Division could be the next to shut down
POLAR's food division is working with remaining inventories and if they do not receive supplies they could be the next to shut down, according to Jhonny Magdaleno, of POLAR's Metal-graphic plant union. He said production has continued because the government made a partial payment to Brazil, but supplies from Germany will not arrive because purveyors have not been paid. José Ruiz, Secretary General of the POLAR Packaging Union says material for packing and aluminum lids are all imported. More in Spanish: (El Carabobeño; http://www.el-carabobeno.com/economa/articulo/83921/alimentos-polar-podra-ser-la-prxima-en-paralizarse)


Economy & Finance

BARCLAY'S: "Venezuela is facing economic collapse"
A report by BARCLAYS Capital says "the nation is facing economic collapse" as the government has lost the notion of urgency for economic reforms. It says FOREX continues to be scarce, along with currency devaluation and inflation, and now estimates economic growth to be -2.9%. It indicates the government's response seems to be more public spending. More in Spanish: (El Nacional; http://www.el-nacional.com/)

Ramírez claims Venezuela holds solid international reserves
Economic Affairs Vice President Rafael Ramírez claims the government has enough international reserves to meet debt obligations, imports and guarantee funds for social spending. "Contrary to media reports, Venezuela has maintained a perfectly manageable debt average, under 4% of income", he said in a press release, and added they would be soon reinforced by funds from the National Development Fund and the Chinese Fund. More in Spanish: (Agencia Venezolana de Noticias; http://www.avn.info.ve/contenido/venezuela-cuenta-s%C3%B3lido-volumen-reservas-internacionales)

Construction has dropped steadily over the last 17 quarters, says Construction Chamber head Jaime Gómez. He explains that 60,000-70,000 housing units have been usually built in one year, and “this year we won’t make it to 20,000.” As to expectations for the next year, Gómez says “the remainder of 2013 units will be finished because there are no new projects.” (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39839&idc=3)

Tourists must now prove legal purchase of bolivars
Foreign tourists who travel to Venezuela will be required to demonstrate that they obtained their local currency legally as the government seeks to clamp down on the black market. Hotels and travel agencies must require foreign tourists to provide a receipt that shows that any bolivars used are obtained on a legal exchange.  “The government is looking to force tourists to change currency at the official rate and capture dollars from tourism in the Sicad II market,” Asdrubal Oliveros, director of Caracas-based consultancy Ecoanalitica, said today by telephone. “The tourism sector generates very little revenue, and the measure will be difficult to enforce.” (Bloomberg, http://www.bloomberg.com/news/2014-06-19/venezuela-requires-tourists-to-prove-legal-purchase-of-bolivars.html)


Politics

Maduro fires Planning Minister Giordani, more devaluation predicted
In a move Bank of America Corp. says is a prelude to further devaluation, beleaguered President Nicolas Maduro has replaced long-time economic Planning Minister Jorge Giordani with Ricardo Menendez, a geographer and urban planner who is a former Minister of Industry. Giordani, a hard line Communist, masterminded the rigid system of price and exchange controls in place since 2003. "Unfortunately, Giordani's Marxist policies destroyed Venezuela's economy, but the destruction was only revealed after oil prices stopped their meteoric rise in the years before Chavez died," said Russ Dallen, head of Venezuela investment bank Caracas Capital Markets. “Giordani’s exit confirms the radical wing in the government has lost influence over economic policy,” says Bank of America’s Francisco Rodriguez, who adds that this increases the chances of a faster devaluation of the bolivar. Former opposition Presidential candidate Henrique Capriles says "ministers can change, but the model continues to be non-viable"; and Dallen adds: "Although getting rid of some of the more extreme Marxists is positive, it is like reorganizing the chairs on the deck of the Titanic." Economists say his ouster was designed to shore up an embattled president and give more influence over economic matters to the country's powerful energy minister and VP for Economic Affairs, Rafael Ramirez, and the military. Maduro also named General Hebert Garcia Plaza as Food Minister replacing General Felix Osorio. General Luis Graterol replaced Garcia Plaza as Air and Sea Transport Minister. (Latin America Herald Tribune: http://www.laht.com/article.asp?ArticleId=2340573&CategoryId=10717; El Universal, http://www.eluniversal.com/economia/140618/menendez-replaces-giordani-as-head-of-planning; Wall Street Journal: http://online.wsj.com/news/articles/SB10001424052702304034804579632750483503992?tesla=y&tesla=y&mg=reno64-wsj&url=http://online.wsj.com/article/SB10001424052702304034804579632750483503992.html)

Giordani's critical reaction to firing draws "traitor" charge by Maduro
In a highly publicized open letter, deposed Minister Jorge Giordani says Maduro "does not transmit leadership and there is a sense of a power vacuum in the President's office". He accused the President of out-of-control spending, saying Maduro is “giving out massive resources to everyone who is asking for them without a fiscal program based on socialist planning”. But he also admits public spending reached extreme heights during the 2012 campaign to reelect Hugo Chavez. Giordani claims private sector pressure "seems to be leading to reinstalling capitalist financial mechanisms", in an apparent reference changes in FOREX policies; and blasts the "independence of PDVSA from central control". Metropolitan Caracas Mayor Antonio Ledezma termed the letter "an atomic bomb". Former legislator María Corina Machado called it "the best example of the regime's moral degradation". Former National Assembly President Fernando Soto Rojas, an orthodox Marxist, said "debating ideas cannot be stopped", but regretted the government PSUV party did not know of the letter before it was published. But President Maduro spoke of "traitors" with "petty bourgeois egos" in an indirect reference to Giordani, while PSUV leader Jorge Rodríguez pleaded for unity in view of "hard times ahead".  (Bloomberg: http://www.bloomberg.com/news/2014-06-18/venezuela-s-maduro-replaces-giordani-in-cabinet-reshuffle.html; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39841&idc=2; El Universal, http://www.eluniversal.com/economia/140619/giordanis-removal-from-office-unveils-crisis-in-public-administration: and more in Spanish: Aporrea, http://www.aporrea.org/ideologia/a190011.html; Infolatam)

60% consider Maduro's performance to be negative
A recent poll by Alfredo Keller & Associates shows 60% of those interviewed consider President Maduro's performance negative, 67% say the nation's situation is also negative, and 68% believe the economy has worsened. 71% disagree with the Fair Cost and Price Law which establishes that any business may be expropriated whenever the government wants to. More in Spanish: (El Nacional; http://www.el-nacional.com/)

María Corina Machado is banned from leaving Venezuela after Judge Adriana López (the same judge who remanded Leopoldo López) issued a travel ban following a request from the Attorney General’s Office. Although nothing is a surprise within “revolutionary justice,” the travel ban is odd since Machado has not even been summoned to testify in the investigation into the violent events of February 12 which is the case assigned to López. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=39852&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/140618/court-bans-deputy-maria-corina-machado-from-leaving-venezuela)

German national killed in shooting in Caracas
Two people were reported dead at the doors of EUROBUILDING hotel in Caracas. A German national was reported to have come out of an armored vehicle when the shooting between his bodyguards and a group of criminals started. The foreigner, identified as Cristophorns Wihem Deuts Keuter, ended dead. The other victim was an at large criminal who allegedly attempted to rob Keuter and ended up confronting several bodyguards who were at the parking lot. President Maduro referred to the killers as "hired assassins". (El Universal, http://www.eluniversal.com/nacional-y-politica/140618/german-national-killed-in-shooting-in-caracas)


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.

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