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Thursday, 12 December 13
GREAT EXPECTATIONS SANCTIONED - EVA TZIMA
 News that sanctions on Iranian oil exports could be lifted sometime in the following months have shaken the markets recently. One of the world’s top oil suppliers historically and once OPEC’ s 2nd largest producer, Iran, has seen its exports squished since 2012, when both the U.S. and the European Union imposed additional sanctions against the country’s oil exports.
The sanctions that were imposed on the basis that Iran’s nuclear programme included enrichment of uranium, which if surpasses certain levels of purity can be used to develop nuclear weapons, affected extensively Iran’s economy. Following U.S.’s Comprehensive Iran Sanctions, Accountability, and Divestment Act (CIS ADA), a law passed in the summer of 2010 by the Congress, the E.U. also placed significant restrictions on foreign trade, financial services, energy sectors and technologies related to Iran. Additionally, the provision of insurance by firms incorporated in any E.U. member country, to Iranian-owned companies, was banned. With oil and gas production accounting for almost half of the local government’s income, the country’s current account surplus for 2012 has dropped more than 50% compared to 2011, while at the same time Iranian assets and funds were blocked due to the international sanctions.
With over 5% of the global sea borne exports coming from Iran up until 2012 and with domestic reserves placing the country at number four on the world’s largest oil reserves list, the knee jerk reaction was that lifting of these sanctions was great news for the tanker sector. Right when freight rates for the crude oil carriers have started catching a significant break, such development would come as the cherry on the top of a strengthening market and a possible recovery within 2014. As the noise has started to settle down though, it has become more evident that the outcome of all this is still very uncertain both for the timeframe during which sanctions will be lifted, as well as for the sort and scale of impact this could have on the fate of crude carriers.
The effects of Iran becoming a no-trade zone have been in tensely felt in the shipping industry, as the total restrictions for oil and gas exports have hurt seaborne trade in the region and elsewhere. On the one hand, European Union member states accounted for around 20% of Iran’s oil exports prior to the 2012 sanctions, while at the same time indirect restrictions were placed even for big importing countries of Iranian oil who didn’t impose sanctions themselves. In fact, as the U.S. targeted the country’s revenue from oil exports, it committed to cut off from the U.S. banking system any international financial institution that engaged into oil related transactions with Iran’ s central bank. That led the top importers of Iranian oil, like China, India, Japan and S. Korea, to reduce the number of Iranian crude in to their countries. This weighed further down on seaborne traded volumes and on top of that, any ship insurance cover from the sanction imposing countries was also rendered impossible; So, remove the sanctions and you get a healthier market back. Financial institutions are allowed to back up Iran related transactions, P&I clubs will start insuring cargoes and ships involved in the trade, Iranian funds t hat have been frozen all these years will be unblocked permitting for a significant liquidity boost in the oil market and crude exports both in the Med and Asia region will reach pre-2012 volumes again or even surpass them especially since Far East appetite for oil has been firing up again recently; Picture perfect for sure but don’t pop up the champagne just yet…
The reality is that the recent deal reached in Geneva will for now only allow “limited, targeted and reversible relief” from the existing sanctions. From Iran’s side, one of the main commitments involves halting enrichment of uranium over 5%. In return, world powers will put an end to specific sanctions involving the trade of petrochemicals, gold and the automotive sector, while they will also allow for $4.2bn of oil related funds to be transferred back to the country. This means that there is currently no commitment for oil related sanctions to be lifted in the near future and this is certainly a massive political hot potato for any world leader who decides to touch it, and one that cannot be easily reversed if a no sanctions path is carved. Businesses involved in sectors previously or currently affected by the sanctions will not jump to do business with Iran either. I would think that they will choose to wait for now and get involved only after a long period of time ha s passed, avoiding any back and forth on the sanction policy, as they wouldn’t want to risk seeing themselves or their funds being tainted in the process.
But irrespective of the developments surrounding the sanctions, as far as the trade of oil is concerned, the fact is that it has been the demand side of the trade driving the volumes rather than the supply. While the supply of crude coming from Iran has hit employment of tankers, in reality, the sector hasn’t suffered that long due to scarcity of cargoes but rather because of continuous subdued demand for the commodity, on the back of slowing down economies and increase in the price of oil itself. Nonetheless, the most worrying aspect in my opinion is the great expectations removal of sanctions can create in the market. The false sense of a possible demand spike that might o r might not happen, can lead to over optimistic expectations by owners and boost ordering in segments like that of VLs, the order book of which has been relatively healthy up until recently, leading to another vicious cycle of tonnage oversupply. Hopefully not.
Compiled by:
Intermodal Research & Valuations | research@intermodal.gr
Analysts:
Mr. George Lazaridis | g.lazaridis@intermodal.gr
Ms. Eva Tzima | e.tzima@intermodal.gr
Disclaimer and legal disclosure: For any further queries please do not hesitate to contact our Research & Valuations Department. The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no re-producing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
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Wednesday, 16 April 14
Q1 2014 : TERMS OF FREIGHT RATES THE PERFORMANCE IN THE DRY BULK MARKET HAS NOT MET THE HIGH EXPECTATIONS - INTERMODAL
This year the dates for the celebration of Easter will coincide for the Orthodox and the Catholic, so we are already seeing most people in the m ...
Tuesday, 15 April 14
NEWCASTLE SHIPPED MORE COAL WEEK ON WEEK
COALspot.com: In the week ended 07:00 hours 14 April 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensl ...
Monday, 14 April 14
SUB-BIT FOB INDO COAL SWAP FOR Q1' 15 DELIVERY CLOSED AT US$ 60.12 PER MT
COALspot.com: Indonesian coal swaps for average Q4’ 2014 gain on month and on week according to AsiaClear OTC coal swap's reports rele ...
Monday, 14 April 14
INDONESIA'S Q1 COAL PRODUCTION LITTLE CHANGED EVEN WITH PRICE DROP - INVESTOR DAILY
Indonesia’s coal production by volume in the first quarter remained little changed from the same period last year despite the decline in t ...
Monday, 14 April 14
API 8 CFR SOUTH CHINA COAL SWAPS GAIN FOR THE MONTH & WEEK
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 deliveries gained 4.61 percent month on month and closed at US$ 76.18 per mt as ...
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- Indian Oil Corporation Limited
- Chamber of Mines of South Africa
- Ministry of Mines - Canada
- London Commodity Brokers - England
- Pendopo Energi Batubara - Indonesia
- Latin American Coal - Colombia
- Neyveli Lignite Corporation Ltd, - India
- Karbindo Abesyapradhi - Indoneisa
- Price Waterhouse Coopers - Russia
- Samtan Co., Ltd - South Korea
- Mintek Dendrill Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- Aditya Birla Group - India
- Interocean Group of Companies - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indogreen Group - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Trasteel International SA, Italy
- Bangladesh Power Developement Board
- Sinarmas Energy and Mining - Indonesia
- Energy Link Ltd, New Zealand
- Planning Commission, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- PetroVietnam Power Coal Import and Supply Company
- Ambuja Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Global Green Power PLC Corporation, Philippines
- Cement Manufacturers Association - India
- Commonwealth Bank - Australia
- Kepco SPC Power Corporation, Philippines
- Africa Commodities Group - South Africa
- Deloitte Consulting - India
- Kapuas Tunggal Persada - Indonesia
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- Mercuria Energy - Indonesia
- Coal and Oil Company - UAE
- Attock Cement Pakistan Limited
- Edison Trading Spa - Italy
- CIMB Investment Bank - Malaysia
- Ind-Barath Power Infra Limited - India
- PTC India Limited - India
- Wilmar Investment Holdings
- Leighton Contractors Pty Ltd - Australia
- Marubeni Corporation - India
- Petron Corporation, Philippines
- The State Trading Corporation of India Ltd
- Central Electricity Authority - India
- Siam City Cement - Thailand
- Merrill Lynch Commodities Europe
- Jindal Steel & Power Ltd - India
- International Coal Ventures Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Renaissance Capital - South Africa
- GAC Shipping (India) Pvt Ltd
- Anglo American - United Kingdom
- Eastern Energy - Thailand
- Vizag Seaport Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Sidhee Cement - India
- Ministry of Transport, Egypt
- Siam City Cement PLC, Thailand
- India Bulls Power Limited - India
- New Zealand Coal & Carbon
- Toyota Tsusho Corporation, Japan
- Bhushan Steel Limited - India
- Thai Mozambique Logistica
- Bahari Cakrawala Sebuku - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Power Finance Corporation Ltd., India
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- Simpson Spence & Young - Indonesia
- Sakthi Sugars Limited - India
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- The Treasury - Australian Government
- Kobexindo Tractors - Indoneisa
- Straits Asia Resources Limited - Singapore
- Krishnapatnam Port Company Ltd. - India
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Uttam Galva Steels Limited - India
- CNBM International Corporation - China
- Electricity Authority, New Zealand
- Borneo Indobara - Indonesia
- OPG Power Generation Pvt Ltd - India
- SMC Global Power, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhatia International Limited - India
- Timah Investasi Mineral - Indoneisa
- Posco Energy - South Korea
- Global Coal Blending Company Limited - Australia
- Electricity Generating Authority of Thailand
- Madhucon Powers Ltd - India
- Essar Steel Hazira Ltd - India
- TeaM Sual Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Mjunction Services Limited - India
- Orica Australia Pty. Ltd.
- Bukit Baiduri Energy - Indonesia
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- Medco Energi Mining Internasional
- Oldendorff Carriers - Singapore
- Miang Besar Coal Terminal - Indonesia
- Tamil Nadu electricity Board
- Sojitz Corporation - Japan
- Videocon Industries ltd - India
- Minerals Council of Australia
- Agrawal Coal Company - India
- Maheswari Brothers Coal Limited - India
- Vedanta Resources Plc - India
- Binh Thuan Hamico - Vietnam
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- Indika Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Coastal Gujarat Power Limited - India
- Antam Resourcindo - Indonesia
- Wood Mackenzie - Singapore
- GMR Energy Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- Xindia Steels Limited - India
- The University of Queensland
- Thiess Contractors Indonesia
- White Energy Company Limited
- Australian Coal Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- Savvy Resources Ltd - HongKong
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Dalmia Cement Bharat India
- Larsen & Toubro Limited - India
- GVK Power & Infra Limited - India
- Global Business Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining Corp, Philippines
- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
- Independent Power Producers Association of India
- Singapore Mercantile Exchange
- Parliament of New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Manunggal Multi Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- MS Steel International - UAE
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Baramulti Group, Indonesia
- Directorate Of Revenue Intelligence - India
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- Chettinad Cement Corporation Ltd - India
- Meenaskhi Energy Private Limited - India
- Riau Bara Harum - Indonesia
- Orica Mining Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Intertek Mineral Services - Indonesia
- Standard Chartered Bank - UAE
- Malabar Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Coalindo Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sindya Power Generating Company Private Ltd
- Metalloyd Limited - United Kingdom
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- South Luzon Thermal Energy Corporation
- Lanco Infratech Ltd - India
- Kaltim Prima Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- SMG Consultants - Indonesia
- Georgia Ports Authority, United States
- Romanian Commodities Exchange
- Bulk Trading Sa - Switzerland
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indo Tambangraya Megah - Indonesia
- Indonesian Coal Mining Association
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
- Meralco Power Generation, Philippines
- Globalindo Alam Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- PowerSource Philippines DevCo
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Finance - Indonesia
- Eastern Coal Council - USA
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