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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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Monday, 10 March 14
THE FREIGHT MARKET WAS QUITE FIRM THIS PAST WEEK
COALspot.com: The freight market was quite firm this past week with BDI sharply increased by 22.65 pct week on week and closed at 1543 points, while ...
Saturday, 08 March 14
LETTERS OF INDEMNITY - SKULD
KNOWLEDGE TO ELEVATE
In today's trading market, owners are frequently requested to accept a letter of indemnity (LOI) in exchange for complying ...
Friday, 07 March 14
DRY BULK MARKET TO BENEFIT FROM CHINA'S GDP GROWTH TARGET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
With the dry bulk market freight rates finally making waves, China's aim of 7.5% GDP growth for 2014 mean once again positive news for the shipping ...
Friday, 07 March 14
RBCT, WORLD'S LARGEST COAL EXPORTING TERMINAL SHIPPED 1.78% LESS COAL MONTH ON MONTH
COALspot.com: South Africa's Richards Bay Coal Terminal (RBCT) the single largest export coal terminal in the world, shipped 4.487 million tons of ...
Friday, 07 March 14
INDONESIA SHIPPED 7% LESS COAL IN JANUARY 2014 COMPARED TO ITS DECEMBER EXPORTS
COALspot.com: Indonesia, the world 4th largest coal producer and the Global largest multi grade coal exporter shipped around $1.8* billion ...
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- Ind-Barath Power Infra Limited - India
- The University of Queensland
- Malabar Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Central Electricity Authority - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IEA Clean Coal Centre - UK
- Electricity Authority, New Zealand
- Goldman Sachs - Singapore
- Vedanta Resources Plc - India
- GMR Energy Limited - India
- Salva Resources Pvt Ltd - India
- Mercator Lines Limited - India
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- GN Power Mariveles Coal Plant, Philippines
- GVK Power & Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Mintek Dendrill Indonesia
- Meenaskhi Energy Private Limited - India
- Antam Resourcindo - Indonesia
- Sindya Power Generating Company Private Ltd
- Alfred C Toepfer International GmbH - Germany
- CNBM International Corporation - China
- Posco Energy - South Korea
- Global Green Power PLC Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- GAC Shipping (India) Pvt Ltd
- Eastern Coal Council - USA
- The Treasury - Australian Government
- Coal and Oil Company - UAE
- Standard Chartered Bank - UAE
- Global Coal Blending Company Limited - Australia
- Kepco SPC Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- Mjunction Services Limited - India
- PNOC Exploration Corporation - Philippines
- Energy Link Ltd, New Zealand
- Gujarat Sidhee Cement - India
- LBH Netherlands Bv - Netherlands
- Petron Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Carbofer General Trading SA - India
- Power Finance Corporation Ltd., India
- Vizag Seaport Private Limited - India
- Global Business Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- Meralco Power Generation, Philippines
- Karaikal Port Pvt Ltd - India
- Chamber of Mines of South Africa
- SMC Global Power, Philippines
- Georgia Ports Authority, United States
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Bukit Baiduri Energy - Indonesia
- Ministry of Mines - Canada
- Ministry of Finance - Indonesia
- Indogreen Group - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Thiess Contractors Indonesia
- Coalindo Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dalmia Cement Bharat India
- Heidelberg Cement - Germany
- Madhucon Powers Ltd - India
- Deloitte Consulting - India
- Xindia Steels Limited - India
- SMG Consultants - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Tata Chemicals Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Bukit Makmur.PT - Indonesia
- Central Java Power - Indonesia
- White Energy Company Limited
- SN Aboitiz Power Inc, Philippines
- Baramulti Group, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Star Paper Mills Limited - India
- Thai Mozambique Logistica
- Karbindo Abesyapradhi - Indoneisa
- MS Steel International - UAE
- Commonwealth Bank - Australia
- Gujarat Mineral Development Corp Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Directorate General of MIneral and Coal - Indonesia
- Australian Coal Association
- Semirara Mining and Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- Altura Mining Limited, Indonesia
- Maheswari Brothers Coal Limited - India
- Aboitiz Power Corporation - Philippines
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- Kartika Selabumi Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- London Commodity Brokers - England
- Therma Luzon, Inc, Philippines
- Parry Sugars Refinery, India
- Planning Commission, India
- Videocon Industries ltd - India
- South Luzon Thermal Energy Corporation
- Indian Oil Corporation Limited
- Cement Manufacturers Association - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhoruka Overseas - Indonesia
- Semirara Mining Corp, Philippines
- VISA Power Limited - India
- Formosa Plastics Group - Taiwan
- Uttam Galva Steels Limited - India
- Bangladesh Power Developement Board
- San Jose City I Power Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Eastern Energy - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Latin American Coal - Colombia
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement PLC, Thailand
- Indian Energy Exchange, India
- Wilmar Investment Holdings
- Edison Trading Spa - Italy
- Krishnapatnam Port Company Ltd. - India
- India Bulls Power Limited - India
- Romanian Commodities Exchange
- Larsen & Toubro Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parliament of New Zealand
- Metalloyd Limited - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Lanco Infratech Ltd - India
- Bhatia International Limited - India
- Manunggal Multi Energi - Indonesia
- Aditya Birla Group - India
- Oldendorff Carriers - Singapore
- The State Trading Corporation of India Ltd
- TeaM Sual Corporation - Philippines
- ICICI Bank Limited - India
- Renaissance Capital - South Africa
- Makarim & Taira - Indonesia
- Minerals Council of Australia
- Grasim Industreis Ltd - India
- Bayan Resources Tbk. - Indonesia
- Timah Investasi Mineral - Indoneisa
- Jaiprakash Power Ventures ltd
- Indonesian Coal Mining Association
- PTC India Limited - India
- Iligan Light & Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement - Thailand
- Ministry of Transport, Egypt
- McConnell Dowell - Australia
- New Zealand Coal & Carbon
- Essar Steel Hazira Ltd - India
- Wood Mackenzie - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Anglo American - United Kingdom
- Mercuria Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Bhushan Steel Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- Bulk Trading Sa - Switzerland
- Coastal Gujarat Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sakthi Sugars Limited - India
- Agrawal Coal Company - India
- Sical Logistics Limited - India
- Energy Development Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Straits Asia Resources Limited - Singapore
- OPG Power Generation Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- ASAPP Information Group - India
- Barasentosa Lestari - Indonesia
- Indika Energy - Indonesia
- Port Waratah Coal Services - Australia
- Kaltim Prima Coal - Indonesia
- Toyota Tsusho Corporation, Japan
- Attock Cement Pakistan Limited
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Commodity Traders Exchange
- Chettinad Cement Corporation Ltd - India
- Banpu Public Company Limited - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Generating Authority of Thailand
- Marubeni Corporation - India
- Africa Commodities Group - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Economic Council, Georgia
- Indo Tambangraya Megah - Indonesia
- Simpson Spence & Young - Indonesia
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