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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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Friday, 14 March 14
US, THE WORLD'S SECOND LARGEST COAL PRODUCER MINED 75.3 MMST OF COAL IN FEBRUARY; DOWN 10.88% M-M
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.7 million short tons (mmst) of coal ...
Thursday, 13 March 14
HANDY: THE FAR EAST MARKET IS IN AN UPWARD TREND - FEARNRESEARCH
Handy
Atlantic is a bit under pressure for spot tonnage, but the underlying sentiment is positive for the short medium future. 2-3 legs are do ...
Thursday, 13 March 14
MARKET INSIGHT - CHRISTOPHER T. WHITTY
By Christopher T. Whitty
Marketing Manager
Cotzias Intermodal Shipping Inc.
During the last year we have noticed that a fair number of ...
Wednesday, 12 March 14
ADARO ENERGY IMPROVES EFFICIENCY AND GENERATED STRONG EBITDA IN 2013
COALspot.com: PT Adaro Energy Tbk, Indonesia's single largest coal miner posted revenue of US$ 3.28 billion and cost of revenue of US$ 2.54 ...
Wednesday, 12 March 14
DGOMC OF INDONESIA REVISED DOWN THE BENCHMARK PRICES FOR COAL BY 4.26% IN MARCH
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia has revised down the government's declared coal bench mark price ...
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- Sree Jayajothi Cements Limited - India
- Timah Investasi Mineral - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Economic Council, Georgia
- Agrawal Coal Company - India
- SMC Global Power, Philippines
- Sindya Power Generating Company Private Ltd
- Vizag Seaport Private Limited - India
- Indogreen Group - Indonesia
- GVK Power & Infra Limited - India
- Manunggal Multi Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- Pendopo Energi Batubara - Indonesia
- Indika Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Central Java Power - Indonesia
- Minerals Council of Australia
- Indo Tambangraya Megah - Indonesia
- Mjunction Services Limited - India
- Bukit Makmur.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- TeaM Sual Corporation - Philippines
- The State Trading Corporation of India Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Coal Blending Company Limited - Australia
- Krishnapatnam Port Company Ltd. - India
- Coastal Gujarat Power Limited - India
- Singapore Mercantile Exchange
- Global Green Power PLC Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Standard Chartered Bank - UAE
- Madhucon Powers Ltd - India
- Aboitiz Power Corporation - Philippines
- Jaiprakash Power Ventures ltd
- Jorong Barutama Greston.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jindal Steel & Power Ltd - India
- Semirara Mining and Power Corporation, Philippines
- ICICI Bank Limited - India
- Eastern Coal Council - USA
- Aditya Birla Group - India
- Iligan Light & Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- LBH Netherlands Bv - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Ind-Barath Power Infra Limited - India
- PowerSource Philippines DevCo
- New Zealand Coal & Carbon
- Dalmia Cement Bharat India
- Ceylon Electricity Board - Sri Lanka
- Romanian Commodities Exchange
- Kartika Selabumi Mining - Indonesia
- CNBM International Corporation - China
- Miang Besar Coal Terminal - Indonesia
- Thiess Contractors Indonesia
- Anglo American - United Kingdom
- London Commodity Brokers - England
- MS Steel International - UAE
- PetroVietnam Power Coal Import and Supply Company
- Africa Commodities Group - South Africa
- Indian Energy Exchange, India
- Indian Oil Corporation Limited
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- Independent Power Producers Association of India
- Vedanta Resources Plc - India
- Energy Development Corp, Philippines
- Bangladesh Power Developement Board
- Semirara Mining Corp, Philippines
- Australian Coal Association
- PNOC Exploration Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Power Finance Corporation Ltd., India
- Attock Cement Pakistan Limited
- Petron Corporation, Philippines
- Bhushan Steel Limited - India
- Makarim & Taira - Indonesia
- Coalindo Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Latin American Coal - Colombia
- Wood Mackenzie - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- Maheswari Brothers Coal Limited - India
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- Riau Bara Harum - Indonesia
- Banpu Public Company Limited - Thailand
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- Kaltim Prima Coal - Indonesia
- Tata Chemicals Ltd - India
- Mintek Dendrill Indonesia
- Ministry of Transport, Egypt
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
- Ministry of Mines - Canada
- Orica Australia Pty. Ltd.
- Port Waratah Coal Services - Australia
- OPG Power Generation Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Essar Steel Hazira Ltd - India
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- Cement Manufacturers Association - India
- Borneo Indobara - Indonesia
- Bharathi Cement Corporation - India
- Goldman Sachs - Singapore
- Toyota Tsusho Corporation, Japan
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Posco Energy - South Korea
- Malabar Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Thai Mozambique Logistica
- Kalimantan Lumbung Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement PLC, Thailand
- Kobexindo Tractors - Indoneisa
- Tamil Nadu electricity Board
- Lanco Infratech Ltd - India
- White Energy Company Limited
- India Bulls Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Bhatia International Limited - India
- Bhoruka Overseas - Indonesia
- Salva Resources Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- McConnell Dowell - Australia
- Oldendorff Carriers - Singapore
- Sical Logistics Limited - India
- Chettinad Cement Corporation Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- The University of Queensland
- Baramulti Group, Indonesia
- Binh Thuan Hamico - Vietnam
- GMR Energy Limited - India
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- Bayan Resources Tbk. - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- VISA Power Limited - India
- Chamber of Mines of South Africa
- Deloitte Consulting - India
- Edison Trading Spa - Italy
- Orica Mining Services - Indonesia
- ASAPP Information Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Renaissance Capital - South Africa
- Mercuria Energy - Indonesia
- Larsen & Toubro Limited - India
- Meenaskhi Energy Private Limited - India
- Barasentosa Lestari - Indonesia
- Altura Mining Limited, Indonesia
- Parliament of New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Generating Authority of Thailand
- PTC India Limited - India
- Billiton Holdings Pty Ltd - Australia
- Kumho Petrochemical, South Korea
- Siam City Cement - Thailand
- Therma Luzon, Inc, Philippines
- Ministry of Finance - Indonesia
- Star Paper Mills Limited - India
- Coal and Oil Company - UAE
- Global Business Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Meralco Power Generation, Philippines
- Carbofer General Trading SA - India
- Grasim Industreis Ltd - India
- CIMB Investment Bank - Malaysia
- Rio Tinto Coal - Australia
- Sinarmas Energy and Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Planning Commission, India
- Straits Asia Resources Limited - Singapore
- SN Aboitiz Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Mercator Lines Limited - India
- Uttam Galva Steels Limited - India
- Medco Energi Mining Internasional
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Interocean Group of Companies - India
- Sarangani Energy Corporation, Philippines
- Sojitz Corporation - Japan
- European Bulk Services B.V. - Netherlands
- The Treasury - Australian Government
- IEA Clean Coal Centre - UK
- Commonwealth Bank - Australia
- Videocon Industries ltd - India
- Wilmar Investment Holdings
- Central Electricity Authority - India
- Georgia Ports Authority, United States
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