Boston, MA -- (SBWIRE) -- 08/28/2012 -- Despite relatively strong 2011 throughput results at Bulgaria's Port of Varna, BMI is holding with its bullish outlook for the facility in 2012. Our view that the port's total tonnage throughput growth will slow to 1.55% in 2012 from 13.8% in 2011 and that container volumes will slow to a year-on-year (y-o-y) increase of 2.07% - down from an estimated growth of 5.86% in 2011. This is due to Bulgaria's exposure to the eurozone, which is its main trade partner.

On the back of austerity packages in the region we forecast demand to slow. This will feed its way back up the supply chain to Bulgaria's export sector, and by extension lead to a slowing in throughput at the nation's ports.

On top of the depressed outlook, BMI highlights the risk to the downside for our current throughput forecasts from the extreme winter in Europe in Q112, which led to icy conditions so extreme that the Port of Varna was closed for part of February. Due to the fact that the port does not release monthly data, we cannot currently access the impact of the closure on port throughput, but any interruption in a port's workings traditionally has a negative impact on annual throughput.

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Over the medium term we believe that the Port of Varna will continue to play a minor role in the box shipping sector in the Black Sea. Out of the ports that we cover in the region, Varna currently holds the smallest market share of container throughput.

We hold the view that Varna's role will continue to be minor despite potential interest from China in the port over the quarter. We note that China has not committed to any specific investment plan and that Varna is just one of the Balkan ports that China has shown an interest in. Romania's Port of Constantza and Croatia's Port of Rijeka have also been identified as ports which Chinese companies are considering investing in. We also highlight that China is just one of the investors Bulgaria has sought for investment in Varna: Germany and Japan have also been offered the opportunity to invest in the port, but have so far not made any moves to do so.

Headline Industry Data

- 2012 Port of Varna tonnage throughput forecast to grow 1.55% to reach 9.29mn tonnes.
- 2012 Port of Varna container throughput forecast to increase 2.07% to reach 128,263TEUs.
- 2012 total trade growth forecast to rise 4.19%.

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