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Unprecedented Brexit drug challenges; East Group shines in solar power

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Unprecedented Brexit drug challenges; East Group shines in solar power

The Supply Chain Daily provides a curated overview of Panjiva's research and insights covering global trade policy, the logistics sector and industrial supply chains and draws from global shipping and freight data.

Novo Nordisk, Sanofi highlight unprecedented Brexit supply chain challenges
With political uncertainty obscuring the actual date of Brexit, never mind the terms, drug supply chains likely face continued volatility.

The uncertainties of Brexit are creating new challenges from a logistics point of view, according to Novo Nordisk A/S, and Sanofi says that supply chain alternatives in response to Brexit and other upheavals will need time for testing and validating.

British imports of insulin, which were worth €434 million in the 12 months to July 31, are particularly exposed, with 99.9% of shipments coming from the EU. Of those, 64.9% came from Denmark, where Novo Nordisk is based, and 22.4% from France, including Sanofi. The volatility in British imports of insulin can be seen in a 99.0% year-over-year surge in the first quarter, followed by a 33.5% drop in the second quarter and a 17.6% slide in July.

(Panjiva Research - Health care)

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East Group, LONGi shine brightest in booming solar power market
U.S. solar power installations are expected to rise an estimated 17.3% year over year in 2019, according to industry association Solar Energy Industries Association with further projects available that could add 54.8% to the total. The expansion has come despite the imposition of tariffs of 30% in 2018.

The tariffs may have become less effective, with total imports up by 183.7% year over year in July and by 10.0% compared with the prior five-year average. U.S. imports are now dominated by shipments from Malaysia, which represented 42.1% of the $4.05 billion imported to the U.S. at end-July. In second place was Vietnam, accounting for 20.6% of shipments to the U.S.

Panjiva’s seaborne shipping data indicates that the largest importer from Malaysia and Vietnam was East Group Co.Ltd., with 6,660 20-foot equivalent units of shipments associated with the firm in the 12 months to Aug. 31. East Group’s shipments had grown 267% year over year in the three months to Aug. 31. In second and third places, respectively, are LONGi Green Energy Technology Co. Ltd., with 5,090 TEUs shipped, and JinkoSolar Holding Co. Ltd., with 4,800 TEUs shipped.

(Panjiva Research - Renewables)

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POSCO, Hyundai Steel may be caught up in India's SIMS
India’s Commerce Ministry has launched a steel import monitoring system. The move comes amid a widening globally of steel protectionism, which was kicked off by the U.S.’s section 232 duties in March 2018. India’s steel imports climbed 10.0% year over year in the second quarter of 2019, led by a 32.3% surge in shipments from South Korea as well as growth in imports from the U.S. and Indonesia.

According to Panjiva’s shipping data, the largest exporter from South Korea to India in the 12 months to June 30 may have been POSCO, with $745 million delivered, though that came after a 1.4% year-over-year decline in the second quarter. Hyundai Steel Co. recorded the fastest growth, with a 127.8% jump in shipments to India from South Korea in the second quarter.

(Panjiva Research - Metals & Mining)

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Abe loses leverage as Japanese trade activity slides
Japan’s international trade activity dropped 10.4% year over year in August after a 1.4% slip in July and included an 8.2% slide in global exports. The situation weakens the Japanese government’s leverage just as the closure of a restricted trade deal between the country and the U.S. is due to be signed by Prime Minister Shinzō Abe and President Donald Trump on Sept. 25. Exports to the U.S. fell 4.4%, including a 13.0% drop in shipments of autos.

Looking globally, Japan’s export downturn was widespread with all but one of the 18 sectors tracked by Panjiva seeing a drop. Of particular concern is a 12.3% slide in capital equipment machinery and an 8.1% decline in electricals, suggesting a sustained downturn in industrial demand for Japan’s exports.

(Panjiva Research - Policy)

India's Iranian rice problem may find a fix in Indonesia
The Indonesian government has reportedly agreed to facilitate additional imports of Indian rice in return for preferential access to India’s palm oil market. Indian rice exports need help, with exports to all countries falling 21.4% year over year in the second quarter.

The biggest contributor to the downturn was a 45.8% slump in shipments to the United Arab Emirates, though shipments to Iran may prove a bigger problem politically. Exports to Iran were worth $647 million in the 12 months to June 30 after a 15.6% year-over-year decline in the second quarter.

According to Panjiva’s shipping data, the leading exporters to Iran may have included Supple Tek Industries Pvt. Ltd, whose shipments fell 33.4%, while exports by GRM Overseas Ltd. and KRBL Ltd. climbed 43.6% and 55.3%, respectively.

(Panjiva Research - Agriculture)

Destination Maternity not alone in facing tough market, tariff tantrums
Destination Maternity Corp. has launched a strategic review after its sales fell 11.9% year over year in the second quarter. The U.S. retailer is not alone in facing a difficult market for maternity-related products. U.S. seaborne imports associated with the category fell 16.8% year over year in July after a 19.8% drop in the second quarter, though there was a small bump in August.

Imports are led by shipments from China, which represented 60.1% of the total in the 12 months to Aug. 31, suggesting that tariffs applied from Sept. 1 may exacerbate challenges for the sector. Destination Maternity’s imports were led in the past by shipments of specialty trousers and bras.

Panjiva’s shipping data shows other major importers of those products likely include J. C. Penney Co. Inc., which saw a 38.0% slide in imports of the two products — including non-maternity items — in the three months to Aug. 31. Shipments by PVH Corp. and H & M Hennes & Mauritz AB fell by 13.1% and 4.2%, respectively.

(Panjiva Research - Apparel)

Christopher Rogers is a senior researcher at Panjiva, which is a business line of S&P Global Market Intelligence, a division of S&P Global Inc. This content does not constitute investment advice, and the views and opinions expressed in this piece are those of the author and do not necessarily represent the views of S&P Global Market Intelligence.

The Supply Chain Daily has an editorial deadline of 5:30 a.m. ET. Some external links may require a subscription. Links are current at the time of publication. S&P Global Market Intelligence is not responsible if those links are unavailable later.