S&P Global — 22 October 2024
Daily Update: October 22, 2024
Winning the Supply Chain Game
By Nathan Hunt
Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy
For emerging economies, becoming a link in global supply chains is fraught with pitfalls. Some emerging markets fall into the commodity trap, in which they provide raw materials but never play a part in the lucrative, job-rich sectors of refining or manufacturing. Other emerging markets end up competing based on cheap labor, exposing them to competition from low-cost frontier markets. Some emerging markets successfully compete on the cost of labor for a time but are eventually priced out by rising salaries. Increasingly, some are threatened by mechanization, in which robotics and additive manufacturing, boosted by machine vision and other AI tools, enable developed economies to reshore manufacturing and shorten their supply lines.
Winning the supply chain game requires emerging economies to create differentiated strategies, some of which are covered in “Competing with the future: Creating supply chain competitive advantage,” an article that is part of S&P Global’s Look Forward report on emerging markets.
For decades, China has been the world’s manufacturing hub. But supply chain challenges during the COVID-19 pandemic and geopolitical tensions have led many Western companies to shorten their supply chains through reshoring, nearshoring or friendshoring. This has created an opportunity for some emerging markets to develop manufacturing capabilities and maintain friendly trading relationships across different regions. Companies have begun to assess supply chain locations based on comparative risks from disruptions and regulatory risks.
The authors of the article focused on Malaysia, Indonesia and India to identify their competitive advantages and strategies for securing a place in global supply chains.
Malaysia’s approach has been to focus on ease of doing business, light-touch regulation, low operational risks and a willingness to sign trade deals. The country has attracted chipmakers, who increasingly depend on a highly skilled workforce for advanced manufacturing.
Indonesia has found ways to turn its sought-after natural resources into processing and manufacturing jobs through trade restrictions. By banning the export of nickel ore, the country has built up its refining capacity for nickel and other metals. In addition, Indonesia has been working on developing the ability to manufacture batteries and vehicles from its metals.
India has an advantage like China: a massive domestic market of potential customers. This means that India can balance tariffs and trade incentives to build domestic demand. The challenge for India is that too much trade management may create market uncertainty and lead trading partners to relocate.
Today is Tuesday, October 22, 2024, and here is today’s essential intelligence.
COP29 Climate Talks In Focus
This report explores the key themes of COP29, focusing on climate finance and carbon markets. As UN talks unfold in Baku, the report highlights the stark divisions between developed and developing countries on the scope and structure of a global finance framework and also looks at ongoing negotiations around Article 6 of the Paris Agreement.
—Read the report from S&P Global Commodity Insights
Default Risk Eases For Most US Market Sectors In Q3 2024
Default risk for most public US companies ticked lower at the end of the third quarter compared to the second quarter.
Median probability of default scores dropped across seven of 11 market sectors, with the remaining four — healthcare, utilities, real estate and financials — all roughly flat as of Sept. 30 compared to June 30, according to S&P Global Market Intelligence's RiskGauge model.
—Read the article from S&P Global Market Intelligence
China Property Watch: Charting A Path To Stabilization
S&P Global Ratings thinks China's property sales could stabilize toward the second half of 2025 as prices in higher-tier cities and overall sales volumes steady. This will depend on the government's continued support for funding conditions for developers and efforts to reduce inventories.
—Read the article from S&P Global Ratings
India Mulls MEP Removal On White Rice Exports Amid Stiff Competition From Pakistan
The restrictions on Indian rice exports are set to ease further, as the current minimum export price of $490/mt FOB on white rice exports is expected to be removed soon, sources told S&P Global Commodity Insights Oct. 17. The move is likely to enhance the competitiveness of Indian white rice in the global market leading to an expected boost in exports and trade activities, sources said.
—Read the article from S&P Global Commodity Insights
Listen: What Is Driving The Counter-Seasonal Strength In European Fuel Oil Markets?
As high sulfur fuel oil cracks in Europe hover at year-to-date highs outside of their traditional summer peaks, reporters Tommy Petrou and Takis Gounaris join Joel Hanley to delve into the fundamentals that are providing a firm footing for fuel oil markets in Europe as heightened tensions in the Middle East stir up volatility across the commodities complex.
—Listen and subscribe to the podcast from S&P Global Commodity Insights
October 2024 Light Vehicle Production Forecast
As we enter the fourth quarter of 2024, slower growth in significant regions and uncertainties surrounding battery electric vehicle (BEV) adoption continue to challenge the production outlook. This month's forecast notably revises Europe downward due to reduced demand and mandated fleet emissions requirements, while Greater China sees a modest improvement thanks to government stimulus.
—Read the article from S&P Global Mobility
Webinar: Sustainable Evolution In New Age Vehicle Manufacturing - A Drive Towards A Greener Economy (Nov. 7, 2024)
Join us in this webinar to hear about the evolution of trends in manufacturing technologies for vehicles. We will focus on the rapid shift to Battery Electric Vehicles (BEVs) and how Original Equipment Manufacturers (OEMs) have developed new processes within production to accommodate this shift. These new processes have a direct impact on the overall profit per vehicle.
—Register for the webinar from S&P Global Mobility