May 12, 2015

International Trade

 

Cargo that has arrived at Puerto Cabello:

• Over 3,000 tons of milk and beef from Centrolac S.A., Productos Lácteos La Perfecta, Industria Comercial San Martín, Eskimo S.A. and Nova Terra for state agency Corporación de Abastecimiento y Servicios Agrícolas (CASA)
• Over 1,500 tons of personal care items such as diapers, sanitary towels and shampoo from Procter & Gamble for its subsidiary in Venezuela
• 73 tons of auto parts from Ford Motor for its subsidiary in Venezuela

There are 8 vessels offloading at port, one carrying 30,000 tons of yellow corn for CASA. More in Spanish: (Notitarde; http://www.notitarde.com/La-Costa/Mas-de-3-mil-toneladas-de-leche-y-carne-llegaron-para-la-estatal-Casa-2412480/2015/05/10/510686/)

 

Bilateral Venezuela-Colombia trade is reported down 36% in Q1 2015

Trade between Venezuela and Colombia shrank 36% during the first quarter of 2015, compared to the same period in 2014. According to the Venezuelan-Colombian Economic Integration Chamber (CAVECOL) binational trade was US$ 343 million, compared to US$ 538 million in 2014, a 36%-decline. The report is based on figures provided by Colombia's Administrative Department of Statistics (Dane) and Venezuela's National Statistics Institute (INE). (El Universal, http://www.eluniversal.com/economia/150511/venezuela-colombia-trade-down-in-the-first-quarter)

 

Trade with the US also down 36% in Q1 2015

The US Department of Commerce also reports a 36% drop in bilateral trade with Venezuela during the first quarter of 2015. Imports and exports were US$ 6.259 billion as compared to US$ 9.893 billion the year before. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/intercambio-comercial-con-eeuu-cae-36-en-el-primer.aspx#ixzz3Zp86GLcC; El Mundo; http://www.elmundo.com.ve/noticias/economia/politicas-publicas/intercambio-comercial-con-eeuu-cae-36--en-el-prime.aspx)

 

 

Oil & Energy

 

Venezuela oil price rises for 7th straight week

Venezuela's weekly oil basket price continued to rise for a seventh week in a row as oil prices around the world went up as Saudi Arabia continued fighting against Iranian-backed rebels in neighboring Yemen at the mouth of the Persian Gulf, problems in Libya continued disrupting supply from that country, and U.S. stocks were unexpectedly drawn down.

According to figures released by the Venezuela Ministry of Energy and Petroleum, the average price of Venezuelan crude sold by Petroleos de Venezuela S.A. (PDVSA) during the week ending May 8 was US$ 56.74, up US$ 2.53 from the previous week's US$ 54.21. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2386899&CategoryId=10717)

 

 

Commodities

 

Ford to sell Venezuelan cars in greenbacks in dollarization

Ford Motor Co. will sell some of its cars in Venezuela in dollars to alleviate a shortage of greenbacks that has slashed its imports and paralyzed its plant, according to a labor union official. “Car sales will be in dollars,” Gilberto Troya, head of the Ford Motors de Venezuela union, said by telephone from Valencia, Venezuela. He said the company informed the union of the deal with the government April 28. “This could lead to a complete dollarization of the sector.” Under the deal, customers will give dealerships dollars, which will be used to import car parts to be assembled at the Valencia plant, Troya said. Customers could still buy some of the cheaper models such as the Fiesta in bolivars, he said. Dearborn, Michigan-based Ford spokeswoman Susan Krusel confirmed a deal has been reached with the Venezuelan government to restart production in an e-mailed response to questions, without providing further details. (Bloomberg: http://www.bloomberg.com/news/articles/2015-05-08/ford-to-sell-venezuelan-cars-in-greenbacks-in-slow-dollarization)

 

Health Minister confirms state control over medicines

Health Minister Henry Ventura has confirmed government control over the sale of medicines and refuted a report by the President of Venezuela's Medical Federation of 13,000 medical doctors migrating. He claims added state controls will make it possible to compare FOREX provided to importers and the quantity of medicine sold at each pharmacy. The system encourages patients to enroll at pharmacies in order to guarantee access to medicines. He said "anything Douglas Leon Natera (President of the Federation) lacks credibility because he does not go to hospitals", and claimed only 320 doctors have left in six years. (More in Spanish: Infolatam, http://www.infolatam.com/2015/05/11/venezuela-confirma-control-estatal-en-medicinas-y-niega-fuga-13-000-medicos/)

 

 

Economy & Finance

 

Already at a 12 Year Low, Venezuela Central Bank reserves fall another half-a-billion in one day

Venezuela's international reserves fell US$ 507 million dollars on Thursday, pushing toward crashing through the US$ 18 billion level and marking a new low since 2003. With heavy foreign debt burdens, falling crude production, falling crude production, increased domestic usage -- gasoline sells for less than a penny a gallon at the black market dollar rate -- Venezuela's foreign reserves have fallen to US$ 18.211 billion as of May 7. That is the lowest level since 2003. Reserves have now fallen US$ 4.101 billion since the beginning of the year. Not adding confidence to the accuracy of its numbers, on May 4, the Central Bank reported that reserves were US$ 19.799 billion but then erased that number and changed it to a full US$ 1 billion lower at US$ 18.799 a day later with no explanation. (Latin American Herald Tribune, http://www.laht.com/article.asp?ArticleId=2386906&CategoryId=10717)

 

Venezuela: A worthy investment for China?

As the future of Venezuela's economy continues to spiral downwards into chaos, its leaders have relied heavily upon China's financial support and mercy to stave off complete collapse. Until now, China has extended over US$ 50 billion dollars in loans to Venezuela, permitting the Venezuelan government to repay the loans through guaranteed deliveries of oil. Of the 600,000 barrels of oil the Venezuelan government exports to China daily, over half are exported in order to repay loans to various Chinese banks, not to generate new revenue. However the global drop in oil prices has gravely damaged the Venezuelan economy and thereby the country's ability to repay loans; unfortunately for Venezuela, China has other partnerships to uphold as well. Despite past financial leniency with Venezuela, Beijing feels reluctant to lend large sums of money to economically weak states, especially when dealing with so many foreign projects at once. Most foreign policy experts doubt China will attempt to become economically close with - let alone continue to lend to - Venezuela in the near future. Rather than simply loaning money, Chinese banks may instead provide funds for developmental projects in hopes of generating profit. But most bankers want to increase revenue, not spread a particular ideology. Nevertheless, in the event that China's government decides to increase its support of Maduro's government, such a decision would not end Venezuela's economic troubles. If anything, increased Chinese support may come to hurt Venezuela in the long run, encouraging Maduro and future Venezuelan leaders to look abroad for help rather than implement the painful economic reforms needed to turn the country around. If Venezuela's economy is to truly recover, change must come from within its borders. (The Huffington Post, http://www.huffingtonpost.com/china-hands/venezuela-a-worthy-invest_b_7250192.html)

 

Central Bank stops issuing domestic debt bonds

The Finance Ministry has stopped issuing domestic debt bonds planned for the second quarter this year until further notice. More in Spanish: (Ultimas Noticias, http://www.ultimasnoticias.com.ve/noticias/actualidad/economia/bcv-suspende-emision-de-bonos-de-la-deuda-publica-.aspx#ixzz3ZusA1Y3s; El Mundo, http://www.elmundo.com.ve/noticias/economia/mercados/bcv-suspende-emision-de-bonos-de-la-deuda-publica-.aspx)

 

Venezuelan sovereign debt and PDVSA’s bonds were up on Friday, compared to their closing rates the day before. In average, the sovereign bonds posted a 1 point weekly increase. Securities such as the Venz 2018, 7% coupon and the Venz 2025 and 2027 received the most demand, with increases over 0.50 points. (Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=43813&idc=2)

 

 

Politics and International Affairs

 

Venezuela parliamentary elections to be held in fourth quarter

Venezuela will hold parliamentary elections in the last quarter of this year and the exact date will be announced soon, according to the head of the National Electoral Council (CNE). President Nicolas Maduro is under growing pressure over the 2015 elections, especially after leftist ally and regional heavyweight Brazil on Thursday urged its neighbor to set a date. "We can say that in the last quarter of this year we'll have the elections. We're going to announce it very soon," Tibisay Lucena said in an interview with state television. Luis Emilio Rondon, a CNE official, said on Friday the elections will be held at the end of November or the beginning of December. (Reuters, http://www.reuters.com/article/2015/05/10/us-venezuela-election-idUSKBN0NV0TE20150510; Veneconomy, http://www.veneconomy.com/site/index.asp?ids=44&idt=43814&idc=1; El Universal, http://www.eluniversal.com/nacional-y-politica/150511/parliament-vote-to-be-held-in-the-last-quarter-in-venezuela)

 

Venezuela-US dialogue continues through embassies

The government of the United States is holding talks with the Venezuelan Ministry of Foreign Affairs to solve the impasse that started more than two months ago, on March 8, when President Nicolás Maduro ordered a cut in the US embassy staff in Caracas within 15 days. Venezuela started demanding visas for US tourists entering the country. "We are holding talks on this matter (of the US embassy staff cut) with the Venezuelan government through diplomatic means," a spokesperson of the US State Department told El Universal. (El Universal, http://www.eluniversal.com/nacional-y-politica/150511/venezuela-us-dialogue-about-embassies-continues)

 

Venezuela among the countries with the highest rate of violent deaths

Based on rates of violent murders recorded in 2012 in Honduras (90.2 violent deaths per every 100,000 inhabitants) and Venezuela (72.2), these two countries are listed behind Syria where a civil war started in 2011 among the most violent countries in the world. The rate of violent deaths in those two Latin American countries are over 10 times higher than the global average, which is 7.4 murders per every 100,000 people. The United Nations has revealed that one fourth of violent deaths in the world occur in countries that are home to only 4% of world population; among those countries, Syria, Honduras, and Venezuela, which experience the worst situation. (El Universal, http://www.eluniversal.com/nacional-y-politica/150509/venezuela-among-the-countries-with-the-highest-rates-of-violent-deaths)

 

 

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.