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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, 02 April 14
CHINA: ARBITRATION CLAUSES IN BILLS OF LADING UNDER CHINESE LEGAL PRACTICE - SKULD
KNOWLEDGE TO ELEVATE
Successful incorporation of a charterparty arbitration clause into the bills of lading is not a straight forward matte ...
Wednesday, 02 April 14
BPI BREAKING BELOW THE 1,000 PSYCHOLOGICAL LEVELS - INTERMODAL
Any resistance put forth by the Dry Bulk market the week prior was succumbed this time round. All indices slid and losses were noted across the ...
Tuesday, 01 April 14
NEWCASTLE PORT SHIPPED 11.95 MILLION TONS OF COAL IN MARCH 2014
COALspot.com: In the week ended 31 March 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, total 2 ...
Monday, 31 March 14
SHIPPING CONFIDENCE HITS HIGHEST LEVEL SINCE 2008 - MOORE STEPHENS
Overall confidence levels in the shipping industry rose to their highest level for almost six years in the three-month period to February 2014, ...
Monday, 31 March 14
COAL SWAP FOR Q1 2015 DELIVERY HAS CLOSED 4.76% HIGHER COMPARED Q2 14 CLOSING
COALspot.com – Indonesia, the world’s largest exporter of the thermal coal's swaps for delivery April - June 2014 gained this pa ...
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- Malabar Cements Ltd - India
- Indika Energy - Indonesia
- Ministry of Mines - Canada
- Karaikal Port Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- Minerals Council of Australia
- Kartika Selabumi Mining - Indonesia
- Bharathi Cement Corporation - India
- Intertek Mineral Services - Indonesia
- Mercuria Energy - Indonesia
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- Georgia Ports Authority, United States
- The University of Queensland
- VISA Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Parliament of New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- ASAPP Information Group - India
- ICICI Bank Limited - India
- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PNOC Exploration Corporation - Philippines
- Medco Energi Mining Internasional
- Gujarat Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- SN Aboitiz Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Tamil Nadu electricity Board
- Karbindo Abesyapradhi - Indoneisa
- Essar Steel Hazira Ltd - India
- MS Steel International - UAE
- Electricity Authority, New Zealand
- Videocon Industries ltd - India
- Therma Luzon, Inc, Philippines
- LBH Netherlands Bv - Netherlands
- India Bulls Power Limited - India
- Banpu Public Company Limited - Thailand
- South Luzon Thermal Energy Corporation
- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- San Jose City I Power Corp, Philippines
- Ambuja Cements Ltd - India
- The State Trading Corporation of India Ltd
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- Standard Chartered Bank - UAE
- Savvy Resources Ltd - HongKong
- Rio Tinto Coal - Australia
- Chamber of Mines of South Africa
- GN Power Mariveles Coal Plant, Philippines
- Holcim Trading Pte Ltd - Singapore
- Kapuas Tunggal Persada - Indonesia
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Indo Tambangraya Megah - Indonesia
- Mercator Lines Limited - India
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Vijayanagar Sugar Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- McConnell Dowell - Australia
- Star Paper Mills Limited - India
- Global Green Power PLC Corporation, Philippines
- Petron Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Sical Logistics Limited - India
- Borneo Indobara - Indonesia
- Dalmia Cement Bharat India
- TNB Fuel Sdn Bhd - Malaysia
- Bulk Trading Sa - Switzerland
- Gujarat Mineral Development Corp Ltd - India
- Indian Energy Exchange, India
- Goldman Sachs - Singapore
- Independent Power Producers Association of India
- London Commodity Brokers - England
- Maheswari Brothers Coal Limited - India
- Indogreen Group - Indonesia
- Trasteel International SA, Italy
- Iligan Light & Power Inc, Philippines
- Central Electricity Authority - India
- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Electricity Generating Authority of Thailand
- Jindal Steel & Power Ltd - India
- Bhoruka Overseas - Indonesia
- GMR Energy Limited - India
- Makarim & Taira - Indonesia
- Bhushan Steel Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TeaM Sual Corporation - Philippines
- Renaissance Capital - South Africa
- Toyota Tsusho Corporation, Japan
- Kalimantan Lumbung Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Singapore Mercantile Exchange
- Semirara Mining and Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Parry Sugars Refinery, India
- Bahari Cakrawala Sebuku - Indonesia
- Indian Oil Corporation Limited
- Cement Manufacturers Association - India
- Semirara Mining Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Aditya Birla Group - India
- Energy Link Ltd, New Zealand
- Globalindo Alam Lestari - Indonesia
- Eastern Energy - Thailand
- Orica Australia Pty. Ltd.
- Wood Mackenzie - Singapore
- CNBM International Corporation - China
- Bangladesh Power Developement Board
- Petrochimia International Co. Ltd.- Taiwan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Eastern Coal Council - USA
- Billiton Holdings Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- White Energy Company Limited
- The Treasury - Australian Government
- PTC India Limited - India
- Bukit Baiduri Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Ministry of Finance - Indonesia
- Agrawal Coal Company - India
- Sindya Power Generating Company Private Ltd
- Romanian Commodities Exchange
- Africa Commodities Group - South Africa
- Kumho Petrochemical, South Korea
- Coastal Gujarat Power Limited - India
- Sree Jayajothi Cements Limited - India
- Mintek Dendrill Indonesia
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Sojitz Corporation - Japan
- Metalloyd Limited - United Kingdom
- GVK Power & Infra Limited - India
- Barasentosa Lestari - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Chettinad Cement Corporation Ltd - India
- Vizag Seaport Private Limited - India
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- SMG Consultants - Indonesia
- Siam City Cement PLC, Thailand
- Samtan Co., Ltd - South Korea
- Marubeni Corporation - India
- GAC Shipping (India) Pvt Ltd
- Commonwealth Bank - Australia
- Power Finance Corporation Ltd., India
- Kideco Jaya Agung - Indonesia
- Global Coal Blending Company Limited - Australia
- Orica Mining Services - Indonesia
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- Larsen & Toubro Limited - India
- Heidelberg Cement - Germany
- Ind-Barath Power Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Sinarmas Energy and Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- New Zealand Coal & Carbon
- Sarangani Energy Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Anglo American - United Kingdom
- Australian Coal Association
- OPG Power Generation Pvt Ltd - India
- Coalindo Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Straits Asia Resources Limited - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Lanco Infratech Ltd - India
- Baramulti Group, Indonesia
- Bhatia International Limited - India
- Oldendorff Carriers - Singapore
- Global Business Power Corporation, Philippines
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Ministry of Transport, Egypt
- IHS Mccloskey Coal Group - USA
- Thiess Contractors Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Latin American Coal - Colombia
- Wilmar Investment Holdings
- Riau Bara Harum - Indonesia
- SMC Global Power, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement - Thailand
- Salva Resources Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Simpson Spence & Young - Indonesia
- IEA Clean Coal Centre - UK
- Gujarat Sidhee Cement - India
- Edison Trading Spa - Italy
- Coal and Oil Company - UAE
- Madhucon Powers Ltd - India
- PowerSource Philippines DevCo
- Carbofer General Trading SA - India
- Ceylon Electricity Board - Sri Lanka
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