Eurozone manufacturing shrinks in December

BRUSSELS: Eurozone manufacturing activity contracted for a 17th month running in December, a key survey of business managers showed on Wednesday.

The Purchasing Managers Index (PMI) for the manufacturing sector, a leading indicator compiled by the Markit research firm, came in at 46.1 points in November, down from an earlier estimate of 46.3 points and down from November's 46.2 points.

Any score below 50 points indicates contraction, not growth.

Ireland, as has frequently been the case in recent months, posted a score of 51.4 points, indicating growth.

But Germany (46.0 points), France (44.6) and Italy (46.7) were all signalling contraction.

While manufacturing activity "may have suffered its worst contraction around October," said London-based IHS Global Insight analyst, "the December purchasing managers' surveys indicate that the sector is still stranded well into recessionary territory."

- AFP/de

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Rape accused should not be fielded in elections: Mayawati

LUCKNOW: BSP supremo Mayawati today said that her party agrees with the view that those accused of rape should not be fielded by political parties in elections.

"BSP agrees with the view 101% that rape accused should not be fielded as candidates in the elections and not be given importance," Mayawati told newpersons.

The former chief minister of Uttar Pradesh also approved of Union minister Shashi Tharoor's suggestion that the revised anti-rape law be named after Delhi gang rape victim.

"If the family of the victim has given its approval to the name being made public and law being named after the rape victim I have no objections to it... the Central government should convene an all-party meeting and take a decision in consensus with everyone," she said in response to a question.

She termed as unfortunate that Uttar Pradesh chief minister Akhilesh Yadav has remained silent over different rape incidents in the state while extending help to victims of cases of rape in other states.

BSP president said that though Delhi gang rape incident has created awareness, there has not been much change in the attitude of governments.

"The Delhi case has awakened the people of the country, but the attitude of Central and the state governments has still not changed," she said, adding that if change had taken place then there would not have been other rape cases after the gang-rape of the 23-year-old paramedical student.

The central government should take an initiative and make arrangements for immediate hearing in rape cases, she said.

Mayawati said that it was unfortunate that those sitting on top positions were merely criticizing and expressing sorrow over such incidents and "not taking any concrete step in this direction would also be a crime".

She suggested that family and society should initiate ways and means to impart good values besides advertisement and film industry should also be responsible regarding their content as an effort to check occurrence over such incidents.

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Brain image study: Fructose may spur overeating

This is your brain on sugar — for real. Scientists have used imaging tests to show for the first time that fructose, a sugar that saturates the American diet, can trigger brain changes that may lead to overeating.

After drinking a fructose beverage, the brain doesn't register the feeling of being full as it does when simple glucose is consumed, researchers found.

It's a small study and does not prove that fructose or its relative, high-fructose corn syrup, can cause obesity, but experts say it adds evidence they may play a role. These sugars often are added to processed foods and beverages, and consumption has risen dramatically since the 1970s along with obesity. A third of U.S. children and teens and more than two-thirds of adults are obese or overweight.

All sugars are not equal — even though they contain the same amount of calories — because they are metabolized differently in the body. Table sugar is sucrose, which is half fructose, half glucose. High-fructose corn syrup is 55 percent fructose and 45 percent glucose. Some nutrition experts say this sweetener may pose special risks, but others and the industry reject that claim. And doctors say we eat too much sugar in all forms.

For the study, scientists used magnetic resonance imaging, or MRI, scans to track blood flow in the brain in 20 young, normal-weight people before and after they had drinks containing glucose or fructose in two sessions several weeks apart.

Scans showed that drinking glucose "turns off or suppresses the activity of areas of the brain that are critical for reward and desire for food," said one study leader, Yale University endocrinologist Dr. Robert Sherwin. With fructose, "we don't see those changes," he said. "As a result, the desire to eat continues — it isn't turned off."

What's convincing, said Dr. Jonathan Purnell, an endocrinologist at Oregon Health & Science University, is that the imaging results mirrored how hungry the people said they felt, as well as what earlier studies found in animals.

"It implies that fructose, at least with regards to promoting food intake and weight gain, is a bad actor compared to glucose," said Purnell. He wrote a commentary that appears with the federally funded study in Wednesday's Journal of the American Medical Association.

Researchers now are testing obese people to see if they react the same way to fructose and glucose as the normal-weight people in this study did.

What to do? Cook more at home and limit processed foods containing fructose and high-fructose corn syrup, Purnell suggested. "Try to avoid the sugar-sweetened beverages. It doesn't mean you can't ever have them," but control their size and how often they are consumed, he said.

A second study in the journal suggests that only severe obesity carries a high death risk — and that a few extra pounds might even provide a survival advantage. However, independent experts say the methods are too flawed to make those claims.

The study comes from a federal researcher who drew controversy in 2005 with a report that found thin and normal-weight people had a slightly higher risk of death than those who were overweight. Many experts criticized that work, saying the researcher — Katherine Flegal of the Centers for Disease Control and Prevention — painted a misleading picture by including smokers and people with health problems ranging from cancer to heart disease. Those people tend to weigh less and therefore make pudgy people look healthy by comparison.

Flegal's new analysis bolsters her original one, by assessing nearly 100 other studies covering almost 2.9 million people around the world. She again concludes that very obese people had the highest risk of death but that overweight people had a 6 percent lower mortality rate than thinner people. She also concludes that mildly obese people had a death risk similar to that of normal-weight people.

Critics again have focused on her methods. This time, she included people too thin to fit what some consider to be normal weight, which could have taken in people emaciated by cancer or other diseases, as well as smokers with elevated risks of heart disease and cancer.

"Some portion of those thin people are actually sick, and sick people tend to die sooner," said Donald Berry, a biostatistician at the University of Texas MD Anderson Cancer Center in Houston.

The problems created by the study's inclusion of smokers and people with pre-existing illness "cannot be ignored," said Susan Gapstur, vice president of epidemiology for the American Cancer Society.

A third critic, Dr. Walter Willett of the Harvard School of Public Health, was blunter: "This is an even greater pile of rubbish" than the 2005 study, he said. Willett and others have done research since the 2005 study that found higher death risks from being overweight or obese.

Flegal defended her work. She noted that she used standard categories for weight classes. She said statistical adjustments were made for smokers, who were included to give a more real-world sample. She also said study participants were not in hospitals or hospices, making it unlikely that large numbers of sick people skewed the results.

"We still have to learn about obesity, including how best to measure it," Flegal's boss, CDC Director Dr. Thomas Frieden, said in a written statement. "However, it's clear that being obese is not healthy - it increases the risk of diabetes, heart disease, cancer, and many other health problems. Small, sustainable increases in physical activity and improvements in nutrition can lead to significant health improvements."

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Online:

Obesity info: http://www.cdc.gov/obesity/data/trends.html

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Marilynn Marchione can be followed at http://twitter.com/MMarchioneAP

Mike Stobbe can be followed at http://twitter.com/MikeStobbe

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Obama Hails 'Cliff' Deal, Warns of Next Fiscal Fight

Minutes after the House of Representatives approved a bipartisan Senate deal to avert the "fiscal cliff" and preserve Bush-era tax cuts for all Americans making less than $400,000 per year, President Obama praised party leaders and wasted little time turning to the next fiscal fight.

"This is one step in the broader effort to strengthen our economy for everybody," Obama said.

Obama lamented that earlier attempts at a much larger fiscal deal that would have cut spending and dealt with entitlement reforms failed. He said he hoped future debates would be done with "a little less drama, a little less brinksmanship, and not scare folks quite as much."

But Obama drew a line in the sand on the debt ceiling, which is set to be reached by March.

"While I will negotiate over many things, I will not have another debate with this Congress over whether they should pay the bills for what they've racked up," Obama said. "We can't not pay bills that we've already incurred."

An hour after his remarks, Obama boarded Air Force One to rejoin his family in Hawaii, where they have been since before Christmas.

AP Photo/Charles Dharapak

'Fiscal Cliff' Negotiations: Congress Reaches Agreement Watch Video

House Republicans agreed to the up-or-down vote Tuesday evening, despite earlier talk of trying to amend the Senate bill with more spending cuts before taking a vote. The bill delays for two months tough decisions about automatic spending cuts that were set to kick in Wednesday.

A majority of the Republicans in the GOP-majority House voted against the fiscal cliff deal. About twice as many Democrats voted in favor of the deal compared to Republicans. One hundred fifty-one Republicans joined 16 Democrats to vote against the deal, while 172 Democrats carried the vote along with 85 Republicans.

The Senate passed the same bill by an 89-8 vote in the wee hours of New Year's Day. If House Republicans had tweaked the legislation, there would have been no clear path for its return to the Senate before a new Congress is sworn in Thursday.

The vote split Republican leaders in the House. House Speaker John Boehner, R-Ohio, voted yes, and so did the GOP's 2012 vice presidential candidate, Rep. Paul Ryan, R-Wis.

But House Majority Leader Eric Cantor, R-Va., the No. 2 Republican in the House, voted no. It was his opposition that had made passage of the bill seem unlikely earlier in the day.

The deal does little to address the nation's long-term debt woes and does not entirely solve the problem of the "fiscal cliff."

Indeed, the last-minute compromise -- far short from a so-called grand bargain on deficit reduction -- sets up a new showdown on the same spending cuts in two months amplified by a brewing fight on how to raise the debt ceiling beyond $16.4 trillion. That new fiscal battle has the potential to eclipse the "fiscal cliff" in short order.

"Now the focus turns to spending," said Boehner in a statement after the vote. "The American people re-elected a Republican majority in the House, and we will use it in 2013 to hold the president accountable for the 'balanced' approach he promised, meaning significant spending cuts and reforms to the entitlement programs that are driving our country deeper and deeper into debt."

Republicans hope that allowing the fiscal cliff compromise, which raised taxes without an equal amount of spending cuts, will settle the issue of tax rates for the coming debates on spending.

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North Korean leader, in rare address, seeks end to confrontation with South

SEOUL (Reuters) - North Korean leader Kim Jong-un called for an end to confrontation between the two Koreas, technically still at war in the absence of a peace treaty to end their 1950-53 conflict, in a surprise New Year speech broadcast on state media.

The address by Kim, who took over power in the reclusive state after his father, Kim Jong-il, died in 2011, appeared to take the place of the policy-setting New Year editorial published in leading state newspapers.

But North Korea has offered olive branches before and Kim's speech does not necessarily signify a change in tack from a country which vilifies the United States and U.S. ally South Korea at every chance it gets.

Impoverished North Korea raised tensions in the region by launching a long-range rocket in December that it said was aimed at putting a scientific satellite in orbit, drawing international condemnation.

North Korea, which considers North and South as one country, the Democratic People's Republic of Korea, is banned from testing missile or nuclear technology under U.N. sanctions imposed after its 2006 and 2009 nuclear weapons tests.

"An important issue in putting an end to the division of the country and achieving its reunification is to remove confrontation between the north and the south," Kim said in the address that appeared to be pre-recorded and was made at an undisclosed location.

"The past records of inter-Korean relations show that confrontation between fellow countrymen leads to nothing but war."

The New Year address was the first in 19 years by a North Korean leader after the death of Kim Il-sung, Kim Jong-un's grandfather. Kim Jong-il rarely spoke in public and disclosed his national policy agenda in editorials in state newspapers.

"(Kim's statement) apparently contains a message that he has an intention to dispel the current face-off (between the two Koreas), which could eventually be linked with the North's call for aid (from the South)," said Kim Tae-woo, a North Korea expert at the state-funded Korea Institute for National Unification.

"But such a move does not necessarily mean any substantive change in the North Korean regime's policy towards the South."

The two Koreas have seen tensions rise to the highest level in decades after the North bombed a Southern island in 2010 killing two civilians and two soldiers.

The sinking of a South Korean navy ship earlier that year was blamed on the North but Pyongyang has denied it and accused Seoul of waging a smear campaign against its leadership.

Last month, South Korea elected as president Park Geun-hye, a conservative daughter of assassinated military ruler Park Chung-hee whom Kim Il-sung had tried to kill at the height of their Cold War confrontation.

Park has vowed to pursue engagement with the North and called for dialogue to build confidence but has demanded that Pyongyang abandon its nuclear weapons ambitions, something it is unlikely to do.

Conspicuously absent from Kim's speech was any mention of the nuclear arms program.

(Additional reporting by Sung-Won Shim; Editing by Nick Macfie)

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BCA to source for workers from Sri Lanka, Philippines

SINGAPORE: Sri Lanka and the Philippines have been identified as new source countries for construction workers.

The Building and Construction Authority (BCA) told MediaCorp that two test centres will be set up in Sri Lanka.

Approval is also being sought from the Philippine authorities to establish test centres there.

The BCA hopes to bring in skilled construction workers from Sri Lanka and Philippines to boost supply and diversify the source for foreign labour.

Demand for foreign construction workers is expected to remain strong in the years ahead.

The government is ramping up infrastructure development such as expanding the rail network and building more flats and health-care facilities.

In a recent report, the National Population and Talent Division expects the demand for foreign construction workers on low-skilled work permit holders to increase from some 250,000 in 2011 to about 280,000 in the next two to three years.

The main sources of foreign construction workers in Singapore are from China, India and Bangladesh.

The authorities want to be less reliant on these countries and have identified Sri Lanka and the Philippines as viable options.

Mr Neo Choon Keong, who is the Group Director of Manpower and Strategies Policy at the Building and Construction Authority, said: "What we are seeing now is that the major sources like China, India, because of the fast development the number of workers is actually coming down over time, because there are plenty of jobs there.

"So for resilience perspective, we are working with the industry to open up new sources to locate skilled workers. Notwithstanding our efforts to reduce the numbers of foreign workers overall through the adoption of technology as well as better building designs."

The BCA said most workers in Sri Lanka and Philippines speak English and this will help improve communication on the construction site.

Construction workers who want to work in Singapore have to go through a rigorous training regime in their country.

They have to stay in the training centre and undergo a full-time programme lasting between three and six months.

Only seven out of 10 of these workers would eventually pass the test.

After the training, potential workers have to go through a five hour practical test on essential craft skills as well as a one hour theory test on trade knowledge.

Currently, there are 26 overseas testing centres in China, India, Bangladesh, Thailand and Myanmar.

Potential workers can choose to be tested in 29 construction skills.

Construction company Progressive Builders will be operating one of the two new test centres in Sri Lanka.

Its managing director Ng Yek Meng said for a start, workers will be tested in 12 construction skills such as steel reinforcement work, tiling and plastering.

He said these tests are to ensure workers coming to Singapore are of a certain standard and quality, and could in turn help raise productivity.

Mr Ng said: "Some of the workers, especially if they come from agriculture, don't even know how to operate certain equipment. The test is quite stringent not only in Sri Lanka but for all source countries. Whoever can pass the test, I think they are of a certain quality. So this is how we can sieve the good ones and the bad ones."

The test centres in Sri Lanka are expected to be operational in six months' time.

Besides bringing in better quality construction foreign workers, the BCA also has a comprehensive training framework to continuously upgrade them.

Some 12,000 foreign construction foreign workers have upgraded their skills through these various programmes.

- CNA/fa

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Sushilkumar Shinde asks parties to give views on reviewing rape laws

NEW DELHI: The government has asked political parties to give their views on reviewing rape laws to Justice J S Verma Committee, set up to suggest amendments in the statute to provide speedier justice and enhanced punishment in cases of aggravated sexual assault against women.

In letters to leaders of all national and state political parties, home minister Sushilkumar Shinde said in the light of gang rape of a 23-year-old girl in Delhi, the government has given its anxious consideration to the need for reviewing the present laws relating to sexual assault of extreme nature against women.

The government had on December 23 constituted the Committee under the chairmanship of Justice (retd) Verma, former Chief Justice of India, to look into the possible amendments of the criminal law so as to provide for quicker trial and enhanced punishment to criminals in such cases.

"I shall be grateful if you could forward your views on the issue to the committee so that the committee can consider them while making their recommendations. I would urge you to communicate your views as early as possible as the committee has been asked to finalize its recommendations early," he said in the letter, a copy of which was made available today.

The three-member committee has been asked to submit its report to the government in 30 days. The other members of the committee are Justice (retd) Leila Seth, former Chief Justice of Himachal Pradesh high court, and former solicitor general Gopal Subramaniam.

Justice Verma committee has become fully operational and in located in Vigyan Bhavan Annexe in New Delhi and can be contacted at telephone no.- 011-23022031 and through email :- justice.verma@nic.in with suggestions and views.

Under the existing law, the maximum punishment for rape is life term but the nationwide outrage over the December 16 gang rape of the physiotherapy student in a moving bus here has sparked a demand for death penalty to rapists. The girl breathed her last on Saturday in a Singapore hospital.

Congress president Sonia Gandhi has stepped in to make some key suggestions to the government for stricter laws on sex crimes against women and enhanced punishment to the perpetrators.

BJP has favoured death for perpetrators of such heinous crimes and demanded a special session of Parliament for amending the laws.

The government has, however, brushed aside the opposition demand for an immediate special session, saying a decision on the issue could be taken only after the Justice Verma committee gives its report.

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Clinton receiving blood thinners to dissolve clot

WASHINGTON (AP) — Doctors treating Secretary of State Hillary Rodham Clinton for a blood clot in her head said blood thinners are being used to dissolve the clot and they are confident she will make a full recovery.

Clinton didn't suffer a stroke or neurological damage from the clot that formed after she suffered a concussion during a fainting spell at her home in early December, doctors said in a statement Monday.

Clinton, 65, was admitted to New York-Presbyterian Hospital on Sunday when the clot turned up on a follow-up exam on the concussion, Clinton spokesman Phillipe Reines said.

The clot is located in the vein in the space between the brain and the skull behind the right ear. She will be released once the medication dose for the blood thinners has been established, the doctors said.

In their statement, Dr. Lisa Bardack of the Mount Kisco Medical Group and Dr. Gigi El-Bayoumi of George Washington University said Clinton was making excellent progress and was in good spirits.

Clinton's complication "certainly isn't the most common thing to happen after a concussion" and is one of the few types of blood clots in the skull or head that are treated with blood thinners, said Dr. Larry Goldstein, a neurologist who is director of Duke University's stroke center. He is not involved in Clinton's care.

The area where Clinton's clot developed is "a drainage channel, the equivalent of a big vein inside the skull. It's how the blood gets back to the heart," Goldstein said.

Blood thinners usually are enough to treat the clot and it should have no long-term consequences if her doctors are saying she has suffered no neurological damage from it, Goldstein said.

Clinton returned to the U.S. from a trip to Europe, then fell ill with a stomach virus in early December that left her severely dehydrated and forced her to cancel a trip to North Africa and the Middle East. Until then, she had canceled only two scheduled overseas trips, one to Europe after breaking her elbow in June 2009 and one to Asia after the February 2010 earthquake in Haiti.

Her condition worsened when she fainted, fell and suffered a concussion while at home alone in mid-December as she recovered from the virus. It was announced Dec. 13.

This isn't the first time Clinton has suffered a blood clot. In 1998, midway through her husband's second term as president, Clinton was in New York fundraising for the midterm elections when a swollen right foot led her doctor to diagnose a clot in her knee requiring immediate treatment.

Clinton had planned to step down as secretary of state at the beginning of President Barack Obama's second term. Whether she will return to work before she resigns remained a question.

Democrats are privately if not publicly speculating: How might her illness affect a decision about running for president in 2016?

After decades in politics, Clinton says she plans to spend the next year resting. She has long insisted she had no intention of mounting a second campaign for the White House four years from now. But the door is not entirely closed, and she would almost certainly emerge as the Democrat to beat if she decided to give in to calls by Democratic fans and run again.

Her age — and thereby health — would probably be a factor under consideration, given that Clinton would be 69 when sworn in, if she were elected in 2016. That might become even more of an issue in the early jockeying for 2016 if what started as a bad stomach bug becomes a prolonged, public bout with more serious infirmity.

Not that Democrats are willing to talk openly about the political implications of a long illness, choosing to keep any discussions about her condition behind closed doors. Publicly, Democrats reject the notion that a blood clot could hinder her political prospects.

"Some of those concerns could be borderline sexist," said Basil Smikle, a Democratic strategist who worked for Clinton when she was a senator. "Dick Cheney had significant heart problems when he was vice president, and people joked about it. He took the time he needed to get better, and it wasn't a problem."

It isn't uncommon for presidential candidates' health — and age — to be an issue. Both in 2000 and 2008, Sen. John McCain, R-Ariz., had to rebut concerns he was too old to be commander in chief or that his skin cancer could resurface.

Two decades after Clinton became the first lady, signs of her popularity — and her political strength — are ubiquitous.

Obama had barely declared victory in November when Democrats started zealously plugging Clinton as their strongest White House contender four years from now, should she choose to take that leap.

"Wouldn't that be exciting?" House Democratic leader Nancy Pelosi declared in December. "I hope she goes. Why wouldn't she?"

Even Republicans concede that were she to run, Clinton would be a force to be reckoned with.

"Trying to win that will be truly the Super Bowl," Newt Gingrich, the former House Speaker and 2012 GOP presidential candidate, said in December. "The Republican Party today is incapable of competing at that level."

Americans admire Clinton more than any other woman in the world, according to a Gallup poll released Monday — the 17th time in 20 years that Clinton has claimed that title. And a recent ABC News/Washington Post poll found that 57 percent of Americans would support Clinton as a candidate for president in 2016, with just 37 percent opposed. Websites have already cropped up hawking "Clinton 2016" mugs and tote bags.

Beyond talk of future politics, Clinton's three-week absence from the State Department has raised eyebrows among some conservative commentators who questioned the seriousness of her ailment after she canceled planned Dec. 20 testimony before Congress on the deadly attack on the U.S. diplomatic mission in Benghazi, Libya.

Clinton had been due to discuss with lawmakers a scathing report she had commissioned on the attack. It found serious failures of leadership and management in two State Department bureaus were to blame for insufficient security at the facility. Clinton took responsibility for the incident before the report was released, but she was not blamed. Four officials cited in the report have either resigned or been reassigned.

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Associated Press writer Ken Thomas in Washington and AP Chief Medical Writer Marilynn Marchione in Milwaukee contributed to this report.

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Senate Approves 'Fiscal Cliff' Deal, Sends to House

Two hours after a midnight deadline for action, the Senate passed legislation early New Year's Day to avert the so-called "fiscal cliff" with an overwhelming vote of 89-8.

Senate passage set the stage for a final showdown in the House, where a vote could come as early as today.

"While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country and the House should pass it without delay," President Obama said in a statement shortly after the vote.

"There's more work to do to reduce our deficits, and I'm willing to do it. But tonight's agreement ensures that, going forward, we will continue to reduce the deficit through a combination of new spending cuts and new revenues from the wealthiest Americans," he added.

The bill extends Bush-era tax cuts permanently for people making less than $400,000 per year and households making less than $450,000.

The steep "sequester" budget cuts scheduled to go into effect with the New Year would be postponed for two months.

The deal also would affect taxes on investment income and estates, and extend unemployment benefits for a year.
Officials also decided at the last minute to use the measure to prevent a $900 pay raise for lawmakers due to take effect this spring.

'Fiscal Cliff': Lawmakers Scramble for Last-Minute Deal Watch Video

The failure of a deal to pass Congress by Jan. 1 technically triggers an income tax hike on all Americans and automatic spending cuts, though lawmakers could still prevent a tax hike by making retroactive any legislation that passes in the weeks ahead, experts said.

The deal at hand will not entirely solve the problem of the "fiscal cliff," however. In fact, it could set up a new showdown over the same spending cuts in just two months that would be amplified by a brewing fight over how to raise the debt ceiling beyond $16.4 trillion. That new fiscal battle has the potential to eclipse the "fiscal cliff" in short order.

In addition to extending current tax rates for households making $450,000 or less, the latest plan would raise the estate tax from 35 to 40 percent for estates larger than $5 million; and prevent the alternative minimum tax from hammering millions of middle-class workers.

Capital gains taxes would rise to 20 percent from 15 percent.

The deal would also extend for one year unemployment insurance benefits set to expire today for two million people, and avert a steep cut to Medicare payments for doctors.

"Working though the night and throughout the day we've reached an agreement with Sen. McConnell," Senate Majority Leader Harry Reid, D-Nev., said early Tuesday morning prior to the vote.

"I've said all along our most important priority is protecting middle class Americans, this legislation does that," Reid added.

He said he is "disappointed" they were not able to make the grand bargain and that more work needs to be done in the future.

"But we tried, if we did nothing the threat of a recession is very real," Reid concluded.

Speaking after Reid, Senate Minority Leader Mitch McConnell, R-KY., called the deal an "imperfect solution" and noted this should not be the model on how things get done in the Senate.

McConnell also thanked Vice President Joe Biden, who visited Capitol Hill late Monday night and brokered the deal with McConnell.

The House Democratic leader Nancy Pelosi issued a statement saying that when legislation clears the Senate, "I will present it to the House Democratic caucus."

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Singapore rigbuilders set for strong 2013: analysts

SINGAPORE : Singapore rigbuilders Keppel Offshore & Marine (O&M) and Sembcorp Marine have secured a slew of contracts this year.

Analysts have said the two companies could see another strong set of orders in 2013, driven by robust demand for ultra-deepwater rigs.

Keppel O&M booked about US$8 billion worth of contracts this year - its second highest on record.

This follows a record S$10 billion worth of contracts which Keppel O&M secured in 2011.

Keppel O&M said over 65 per cent (US$5.36 billion) of the orders in 2012 came from Brazil.

Looking ahead, Keppel said it is developing a new product that will enable drilling in deeper and harsher environments.

Tong Chong Heong, chief executive officer of Keppel Offshore & Marine, said: "There are also new frontiers, new areas where more rigs are required, and with the emergence of areas such as the Caspian, Black Sea, Mexico and many parts of Southeast Asia, demand for rigs has gone up."

Keppel O&M along with Sembcorp Marine are big players in the offshore rig building industry, accounting for some 70 per cent of the global market share for jack-up rigs.

Analysts said the growing demand for ultra-deepwater drilling vessels and equipment will continue to support business growth.

Low Pei Han, investment analyst at OCBC Investment Research, said: "O&M companies have seen very good order books, Keppel and Sembcorp Marine each secured about 10 billion dollars worth of orders this year.

"About 50 per cent of each came from Sete Brasil and Petrobras, which is what the market had more or less anticipated. Going into 2013, we expect Sete Brasil and Petrobras orders to remain about the same level as this year, which will be about S$4 billion to S$5 billion."

But the Singapore rigbuilders are likely to face stiffer competition from Korean and Chinese companies.

Analysts said some Chinese shipbuilders are offering similar products at a 20 per cent discount.

For example, earlier this month, Yangzijiang secured a US$170 million order for a jack-up rig, while a similar contract at Keppel O&M cost US$205 million.

According to the China Association of the National Shipbuilding Industry, China hopes to capture 20 per cent of the global market for rigs, production facilities and offshore products by 2015.

But some analysts said Singapore rig builders are not likely to lose their competitive edge anytime soon.

Janice Chua, head of equity research (Singapore) at DBS Vickers, said: "It is a tall order for the Chinese yards to try and get the global market share for rigs.

"In order for the Chinese yards to have a bigger market share globally, what is more important is the soft skills of project management, engineering, design expertise, as well as ensuring that they can deliver the projects on time and according to the clients specification. That will take at least three years to build for any of these offshore structures."

Increasing shale gas production in the US could also present a new competitive landscape for rigbuilders.

Jason Waldie, associate director at Douglas Westwood, said: "The wild card here is whether the US is going to export, or how much the US is going to export. Certainly I know the US government is planning to export a very good share of its gas to the market. Now what impact does that have for the yards?"

Analysts expect the demand for rigs to come under some pressure should the US decide to export a substantial amount of shale gas.

- CNA/ms

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