Bad weather has hindered efforts to contain a tanker fire and oil spill off the coast of China, as environmental groups warned of a potential catastrophe.
The body of one sailor had been found and 31 others were missing after an Iranian-owned tanker collided with a container ship about 160 nautical miles east of Shanghai on Saturday evening. The Sanchi was carrying 136,000 tonnes of light crude oil or about 1m barrels.
However, strong winds, rain and waves up to four metres high were impeding efforts to contain the fire, locate the missing crew members and limit environmental damage, China’s transport ministry said. Rescuers onboard 13 vessels were searching an area of 900 sq nautical miles (3,090 sq km).
The tanker “is in danger of explosion and sinking, and the toxic gas … is very harmful to rescue workers on the scene”, officials said.
The Sanchi was loaded with condensate, a form of oil that only remains in liquid form under specific conditions and is more volatile compared with crude oil.
Nearly three days after the collision, as fires continue to burn, environmental concerns are ing.
“We are extremely concerned about the potential environmental impact of the collision and fire,” said Rashid Kang, a campaigner at Greenpeace. “Condensate oil contains much higher proportions of soluble and toxic chemicals. We are not expecting to see the kind of devastating thick oil slick associated with crude oil spills, but are worried about the toxic pollution that could be caused from leaks of condensate.”
Another concern is the impact on local wildlife. “The environmental impact of this disaster could be catastrophic,” said Dave Tickner, a freshwater adviser at the World Wide Fund for Nature. “The consequences will be far more severe if it affects a wide area of ocean or the Yangtze estuary, which is hugely important for wildlife, including significant numbers of migratory birds and a range of fish species. We need urgent action to clean up the spill and ensure the environmental consequences are limited.”
Chinese authorities were investigating the cause of the crash. The Sanchi, a Panamanian-flagged vessel owned by the National Iranian Tanker Company, was sailing to South Korea from Iran when it collided with a Hong Kong-flagged cargo ship, the CF Crystal, carrying 64,000 tonnes of grain. The Crystal’s 21 Chinese crew were rescued.
Global stock markets have roared ahead in 2017, with the MSCI index of bourses in 47 countries up by 22% and almost $9tn (£6.6tn) according to Reuters. This has been fuelled by a boom in growth among developed nations and Donald Trump’s plan to cut US corporate tax rates – which is expected to boost company profits in the world’s largest economy and returns to shareholders. China managed to maintain its rate of expansion, dispelling fears over a potential sharp slowdown as it matures after decades of rapid growth, while the eurozone also staged a recovery after years of uncertainty. In Britain, the FTSE 100, packed with companies that earn much of their profit in foreign currencies, has surged as a result of stronger global growth and the weak pound since the Brexit vote.
Buoyant global trade
The Baltic Dry index is used as a proxy for global growth because it measures dry freight costs for commodities such as coal, rice and wheat. When there is a jump in demand for shipping these products, it signals expansion for the world economy. This year it has risen to its highest levels in four years amid a recovery in global trade. Other barometers for growth, such as surveys of business activity from firms’ purchasing managers, have shown appetite for goods and services in rude health across developed economies in recent months. Still, fears linger over a breakdown in trade from rising protectionism in the US and Europe.
Investors stay relaxed
Known as Wall Street’s fear gauge, the Chicago Board Options Exchange Volatility Index is a measure of the stock market’s expectations for how much prices might swing by, up or down, over a 30-day period. The higher the index, the more likely it is investors will be in for a wild ride. This year, the barometer fell to its record low of below 9 points. Anything above 20 indicates that things are going awry, and is a common feature of falling markets.
Pound stages Brexit comeback
The pound has staged a recovery on global exchanges since the start of the year amid gradual progress in the Brexit negotiations. Although sterling is still about 10% below its level before the EU referendum, the currency has risen by almost 10% this year to stand at about $1.3505. Meanwhile, the dollar has struggled to benefit in 2017 from the Federal Reserve’s interest rate hikes in March, June and December, while the euro has gained ground amid a strengthening eurozone economy and as expectations grow for the European Central Bank to finally start tightening monetary policy by curbing its quantitative easing programme.
Eurozone on the mend
One of the biggest surprises this year was stability in the eurozone after years of tumult. After the election of Donald Trump, many market watchers expected the next countries to succumb to populist politics would be in the EU – which could have spelled doom for the single currency. Marine Le Pen failed to take power in France, as did anti-Islam, anti-EU populist Geert Wilders in the Netherlands and Alternative für Deutschland in Germany. Meanwhile, amid a more stable political backdrop, growth has roared ahead. Still, accommodative monetary policy that is expected to be gradually withdrawn has helped, with ECB governor Mario Draghi saying the recovery will still heavily rely on stimulus from the central bank for now.
Wage growth remains subdued
There has been tepid growth in the price of goods around the world, barring the UK, where the pound’s sudden devaluation following the Brexit vote led to surge in imported food and fuel costs. Wage growth in particular was missing in action in 2017, despite low rates of unemployment across most major developed economies. This has left many in the economics profession puzzled, because tight labour markets typically lead to greater levels of bargaining power among workers to demand higher wages. It also poses an additional challenge to central bankers – who would like to see stronger wage inflation before they raise interest rates, normalising the world economy after years of stimulus in the wake of the global financial crisis that started 10 years ago.
Productivity puzzle persists
The failure to drive up the productivity of workers has puzzled economists the world over this year, not least in the UK. Although the problem is particularly sharp in Britain, each of the G7 nations has experienced sluggish growth since the crash a decade ago. That’s a worrying sign for wage growth, because greater output per hour worked, or per worker, can help to support higher pay for that output. The culprit could be higher levels of employment, low interest rates, or low levels of investment in productivity boosting projects by governments and businesses. In the UK, weak productivity growth was behind a sharp downgrade to GDP growth alongside Philip Hammond’s budget in November. It’s also one of the key reasons why UK workers aren’t expected to see their wages after inflation go back above pre-crisis levels until the mid 2020s.
Oil bubbles up
The global oil price has recovered sharply in 2017, benefiting from increasing demand from factories around the world, particularly in China, amid a boom in economic activity. After crashing in late 2015 to spook global markets, this year has been one of calm and steady gains. Opec has reined in production to keep a lid on supply, while there have been no major escalations in tensions to drive up the price to unsustainable levels. One warning: US shale oil production may start to come back online at current prices, as the more expensive costs involved with extraction become economical once more. This could boost supply, leading prices to fall.
Bitcoin mania takes hold
Probably the financial story of the year. Even though there are fears of a coming crash, 2017 will go down as the year of the cryptocurrency. Bitcoin’s rise has been meteoric, beginning the year valued at about $1,000 and reaching almost $20,000 by the middle of December. There have been wild swings on the way, with the currency losing more than a quarter of its value in a single day this month, before staging a recovery. Economists think bitcoin has all the telltale signs of a bubble, with worrying parallels to the Tulip mania of the 17th century, when the price of bulbs crashed in spectacular fashion after a buying frenzy.
Chinese debt worries
China’s rapidly accumulating debt pile, having quadrupled since the financial crisis, became of increasing concern this year – although has not yet roiled the global markets. The International Monetary Fund warned that Chinese debt is now high versus international norms and that rapid growth may have led to an unwillingness among officials to let struggling firms fail. In September, Standard & Poor’s downgraded its credit rating citing the risks from total debts in, which have quadrupled since the financial crisis. While China has started taking steps to rein in debt without having affected growth so far, economists worry a wrong move by officials could upset the apple cart in the near future.
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