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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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Tuesday, 28 January 14
RESOURCE NATIONALISM OR PROTECTIONISM FOR THE MINING AND EXTRACTIVES INDUSTRY - JOHN WHITTAKER & MICHAEL SWANGARD
Resource nationalism or protectionism for the mining and extractives industry as well as soft commodities sector and the oil industry.
‘Res ...
Tuesday, 28 January 14
DRY BULK SHIP OWNERS RETREAT TO OLD 'HABITS', REFUSING TO DEMOLISH OLD VESSELS, THREATENING MARKET RECOVERY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
If one thing is clear as we reflect on the 2013 shipping markets, it's that ship owners took advantage of low prices, in order to acquire newer ton ...
Monday, 27 January 14
MERCATOR SINGAPORE REPORTS 52% INCREASE IN EBITDA FOR Q3 FY 2014 AS COMPARED TO PREVIOUS QUARTER
COALspot.com: Mercator Lines (Singapore) Limited, a leading Indian-owned international dry bulk shipping company that operates a fleet of fourteen d ...
Monday, 27 January 14
13TH CLEAN COAL FORUM 2014
COALspot.com: (Press Release) - Produced by CDMC Events, The 13th Clean Coal Forum 2014 will be held on June 12 &13 2014 in Beijing, China. We a ...
Monday, 27 January 14
Q3 & Q4 API 8 CFR SOUTH CHINA COAL SWAPS CONTINUE TO REMAIN WEAK
COALspot.com: API 8 CFR South China Coal swaps for average Q1 14 delivery lost 4.45 percent month on month and closed at US$ 79.05 per mt as on Frid ...
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- SMG Consultants - Indonesia
- Coalindo Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Eastern Energy - Thailand
- Deloitte Consulting - India
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- London Commodity Brokers - England
- Siam City Cement PLC, Thailand
- Anglo American - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Australian Coal Association
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- Straits Asia Resources Limited - Singapore
- Sinarmas Energy and Mining - Indonesia
- Bukit Makmur.PT - Indonesia
- Star Paper Mills Limited - India
- Edison Trading Spa - Italy
- Bhushan Steel Limited - India
- CIMB Investment Bank - Malaysia
- Kohat Cement Company Ltd. - Pakistan
- Wood Mackenzie - Singapore
- Dalmia Cement Bharat India
- PNOC Exploration Corporation - Philippines
- Bhatia International Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sical Logistics Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Formosa Plastics Group - Taiwan
- Ministry of Transport, Egypt
- Parry Sugars Refinery, India
- Semirara Mining and Power Corporation, Philippines
- Goldman Sachs - Singapore
- Cement Manufacturers Association - India
- Mercuria Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Baramulti Group, Indonesia
- Ministry of Finance - Indonesia
- Global Coal Blending Company Limited - Australia
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Rashtriya Ispat Nigam Limited - India
- Savvy Resources Ltd - HongKong
- Independent Power Producers Association of India
- Coastal Gujarat Power Limited - India
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- Medco Energi Mining Internasional
- Latin American Coal - Colombia
- Energy Development Corp, Philippines
- San Jose City I Power Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Indian Energy Exchange, India
- Videocon Industries ltd - India
- Intertek Mineral Services - Indonesia
- Bangladesh Power Developement Board
- Indika Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The State Trading Corporation of India Ltd
- Central Java Power - Indonesia
- Thiess Contractors Indonesia
- Coal and Oil Company - UAE
- PTC India Limited - India
- Thai Mozambique Logistica
- Miang Besar Coal Terminal - Indonesia
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- Siam City Cement - Thailand
- SMC Global Power, Philippines
- Eastern Coal Council - USA
- Chamber of Mines of South Africa
- Banpu Public Company Limited - Thailand
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Tamil Nadu electricity Board
- Heidelberg Cement - Germany
- The Treasury - Australian Government
- Australian Commodity Traders Exchange
- Madhucon Powers Ltd - India
- International Coal Ventures Pvt Ltd - India
- Marubeni Corporation - India
- Orica Australia Pty. Ltd.
- Commonwealth Bank - Australia
- Grasim Industreis Ltd - India
- Ambuja Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- India Bulls Power Limited - India
- Manunggal Multi Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Larsen & Toubro Limited - India
- LBH Netherlands Bv - Netherlands
- Makarim & Taira - Indonesia
- Bulk Trading Sa - Switzerland
- Kumho Petrochemical, South Korea
- Energy Link Ltd, New Zealand
- Sarangani Energy Corporation, Philippines
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- Orica Mining Services - Indonesia
- Samtan Co., Ltd - South Korea
- Tata Chemicals Ltd - India
- IEA Clean Coal Centre - UK
- ICICI Bank Limited - India
- Alfred C Toepfer International GmbH - Germany
- Petron Corporation, Philippines
- Semirara Mining Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- CNBM International Corporation - China
- Gujarat Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Sindya Power Generating Company Private Ltd
- IHS Mccloskey Coal Group - USA
- Maharashtra Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Bharathi Cement Corporation - India
- Karaikal Port Pvt Ltd - India
- Ministry of Mines - Canada
- Indonesian Coal Mining Association
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- Economic Council, Georgia
- Renaissance Capital - South Africa
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- Malabar Cements Ltd - India
- New Zealand Coal & Carbon
- SN Aboitiz Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Indogreen Group - Indonesia
- GAC Shipping (India) Pvt Ltd
- The University of Queensland
- Simpson Spence & Young - Indonesia
- Ceylon Electricity Board - Sri Lanka
- GVK Power & Infra Limited - India
- Georgia Ports Authority, United States
- Parliament of New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Aditya Birla Group - India
- Romanian Commodities Exchange
- PetroVietnam Power Coal Import and Supply Company
- OPG Power Generation Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Antam Resourcindo - Indonesia
- Meralco Power Generation, Philippines
- Iligan Light & Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Meenaskhi Energy Private Limited - India
- TeaM Sual Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Therma Luzon, Inc, Philippines
- Xindia Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Standard Chartered Bank - UAE
- Gujarat Sidhee Cement - India
- Binh Thuan Hamico - Vietnam
- Vizag Seaport Private Limited - India
- Africa Commodities Group - South Africa
- Central Electricity Authority - India
- Vedanta Resources Plc - India
- Ind-Barath Power Infra Limited - India
- PowerSource Philippines DevCo
- Essar Steel Hazira Ltd - India
- Maheswari Brothers Coal Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Kaltim Prima Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Electricity Authority, New Zealand
- Trasteel International SA, Italy
- Carbofer General Trading SA - India
- Leighton Contractors Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Metalloyd Limited - United Kingdom
- Kepco SPC Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Lanco Infratech Ltd - India
- Borneo Indobara - Indonesia
- Bhoruka Overseas - Indonesia
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Posco Energy - South Korea
- VISA Power Limited - India
- Planning Commission, India
- MS Steel International - UAE
- McConnell Dowell - Australia
- Uttam Galva Steels Limited - India
- Riau Bara Harum - Indonesia
- Interocean Group of Companies - India
- Toyota Tsusho Corporation, Japan
- Sojitz Corporation - Japan
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Attock Cement Pakistan Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercator Lines Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
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