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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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Sunday, 02 March 14
THE FREIGHT MARKET WAS STEADY TO FIRM THIS PAST WEEK - CAPT. REDDY
COALspot.com: The freight market was steady to firm this past week. The BDI was up 7.06 pct and closed at 1258 points and the cape index was also fi ...
Friday, 28 February 14
PTBA TO INCREASE ITS COAL TERMINAL'S LOADING CAPACITY TO 25 MILLION TONS PER ANNUM BY JULY 2014
COALspot.com: PT. Bukit Asam (PTBA), the Indonesian government owned coal miner operates several coal mining units in Sumatera as well as in Kaliman ...
Friday, 28 February 14
U.S PRODUCED 1.9% LESS COAL WEEK ON WEEK
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.8 million short tons (mmst) of coal in ...
Friday, 28 February 14
DRY BULK MARKET SLOWLY BUT STEADILY FINDS ITS FOOTING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
The dry bulk market, hit by the low seasonal demand which is a typical characteristic of the first quarter of each year, is beginning to emerge from ...
Thursday, 27 February 14
PANAMAX : MARKET CONTINUED TO DECLINE IN THE ATLANTIC
Handy
The Atlantic handy/supra market experienced a downward trend this week but not a dramatic one. TA rates are down around USD 800 w-o-w lead b ...
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Showing 3826 to 3830 news of total 6871 |
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- Bharathi Cement Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Africa Commodities Group - South Africa
- Sinarmas Energy and Mining - Indonesia
- Australian Commodity Traders Exchange
- Globalindo Alam Lestari - Indonesia
- Thiess Contractors Indonesia
- Bangladesh Power Developement Board
- Electricity Authority, New Zealand
- GVK Power & Infra Limited - India
- Mercator Lines Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Standard Chartered Bank - UAE
- Meenaskhi Energy Private Limited - India
- Indonesian Coal Mining Association
- Global Coal Blending Company Limited - Australia
- Heidelberg Cement - Germany
- McConnell Dowell - Australia
- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Therma Luzon, Inc, Philippines
- Grasim Industreis Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Barasentosa Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Price Waterhouse Coopers - Russia
- Orica Mining Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- Port Waratah Coal Services - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Tamil Nadu electricity Board
- PowerSource Philippines DevCo
- Gujarat Mineral Development Corp Ltd - India
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- Ministry of Mines - Canada
- Global Green Power PLC Corporation, Philippines
- PTC India Limited - India
- Bhushan Steel Limited - India
- Kideco Jaya Agung - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- LBH Netherlands Bv - Netherlands
- South Luzon Thermal Energy Corporation
- Larsen & Toubro Limited - India
- Deloitte Consulting - India
- Renaissance Capital - South Africa
- PNOC Exploration Corporation - Philippines
- India Bulls Power Limited - India
- White Energy Company Limited
- Parry Sugars Refinery, India
- Kobexindo Tractors - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Toyota Tsusho Corporation, Japan
- Meralco Power Generation, Philippines
- Merrill Lynch Commodities Europe
- Neyveli Lignite Corporation Ltd, - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement PLC, Thailand
- Alfred C Toepfer International GmbH - Germany
- Lanco Infratech Ltd - India
- Timah Investasi Mineral - Indoneisa
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Bayan Resources Tbk. - Indonesia
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- Mintek Dendrill Indonesia
- Bhoruka Overseas - Indonesia
- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- Metalloyd Limited - United Kingdom
- Kaltim Prima Coal - Indonesia
- Minerals Council of Australia
- Uttam Galva Steels Limited - India
- Madhucon Powers Ltd - India
- Posco Energy - South Korea
- Tata Chemicals Ltd - India
- Commonwealth Bank - Australia
- Bukit Baiduri Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- London Commodity Brokers - England
- Binh Thuan Hamico - Vietnam
- Aboitiz Power Corporation - Philippines
- Vedanta Resources Plc - India
- Riau Bara Harum - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Manunggal Multi Energi - Indonesia
- Romanian Commodities Exchange
- Vizag Seaport Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- Central Java Power - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- VISA Power Limited - India
- ICICI Bank Limited - India
- Sree Jayajothi Cements Limited - India
- Kapuas Tunggal Persada - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bhatia International Limited - India
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Straits Asia Resources Limited - Singapore
- SN Aboitiz Power Inc, Philippines
- SMC Global Power, Philippines
- Savvy Resources Ltd - HongKong
- Ceylon Electricity Board - Sri Lanka
- Edison Trading Spa - Italy
- Indian Oil Corporation Limited
- Gujarat Sidhee Cement - India
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Billiton Holdings Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Petron Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Wood Mackenzie - Singapore
- Carbofer General Trading SA - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Semirara Mining Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Trasteel International SA, Italy
- Eastern Coal Council - USA
- Antam Resourcindo - Indonesia
- Thai Mozambique Logistica
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- Energy Development Corp, Philippines
- Mercuria Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Eastern Energy - Thailand
- Agrawal Coal Company - India
- Dalmia Cement Bharat India
- Marubeni Corporation - India
- IEA Clean Coal Centre - UK
- Parliament of New Zealand
- Kartika Selabumi Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Malabar Cements Ltd - India
- Star Paper Mills Limited - India
- SMG Consultants - Indonesia
- Indogreen Group - Indonesia
- Anglo American - United Kingdom
- CIMB Investment Bank - Malaysia
- Ind-Barath Power Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Planning Commission, India
- Banpu Public Company Limited - Thailand
- CNBM International Corporation - China
- Independent Power Producers Association of India
- Aditya Birla Group - India
- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Indika Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Sakthi Sugars Limited - India
- Cigading International Bulk Terminal - Indonesia
- New Zealand Coal & Carbon
- Sindya Power Generating Company Private Ltd
- Makarim & Taira - Indonesia
- Georgia Ports Authority, United States
- IHS Mccloskey Coal Group - USA
- Sojitz Corporation - Japan
- Economic Council, Georgia
- Energy Link Ltd, New Zealand
- Wilmar Investment Holdings
- ASAPP Information Group - India
- Directorate General of MIneral and Coal - Indonesia
- Medco Energi Mining Internasional
- Attock Cement Pakistan Limited
- Pendopo Energi Batubara - Indonesia
- International Coal Ventures Pvt Ltd - India
- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- Mjunction Services Limited - India
- Orica Australia Pty. Ltd.
- Bukit Asam (Persero) Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement - Thailand
- Chamber of Mines of South Africa
- The University of Queensland
- Baramulti Group, Indonesia
- Videocon Industries ltd - India
- Ministry of Finance - Indonesia
- Essar Steel Hazira Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Latin American Coal - Colombia
- Simpson Spence & Young - Indonesia
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Salva Resources Pvt Ltd - India
- Jindal Steel & Power Ltd - India
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