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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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Thursday, 23 January 14
30 DAYS LEFT TO REGISTER FOR PACIFIC BASIN COAL CONFERENCE
COALspot.com: (Press Release) : IHS Inc. (NYSE: IHS), the leading global source of information and analysis, will host the Pacific Basin Coal Confer ...
Wednesday, 22 January 14
HANDY/SMAX: TALK OF RATES INDICATES A STEADY TO FIRMING TREND - INTERMODAL
Last week closed off on the red once more for the Dry Bulk market, which continues to see freight rates trying to get steady feet. Nonetheless, with ...
Wednesday, 22 January 14
EXPORT BAN ON UNPROCESSED MINERALS EFFECTIVE 12 JANUARY 2014 - THREE - YEAR REPRIEVE FOR SOME, BUT UNCERTAINTY REMAINS: PWC
COALspot.com: On 11 January 2014, only hours before a long-debated ban on the export of unprocessed minerals was to come into effect, the Government ...
Wednesday, 22 January 14
DRY SECTOR: SENTIMENT REMAINS STRONG - INTERMODAL
As we have now entered 2014 and the Chinese are soon entering their Year of the Horse (sit tight for the ride!), it is a great opportunity to see ho ...
Wednesday, 22 January 14
SGX SUCCESSFULLY LAUNCHED FREIGHT FUTURES
COALspot.com: Singapore exchanged announced that, SGX Freight Futures were successfully launched on 20 January 2014, and the first trade ...
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- Holcim Trading Pte Ltd - Singapore
- Sree Jayajothi Cements Limited - India
- Electricity Generating Authority of Thailand
- Siam City Cement PLC, Thailand
- Gujarat Mineral Development Corp Ltd - India
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- Ministry of Finance - Indonesia
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- Singapore Mercantile Exchange
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- Trasteel International SA, Italy
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- Deloitte Consulting - India
- Toyota Tsusho Corporation, Japan
- Bulk Trading Sa - Switzerland
- Economic Council, Georgia
- OPG Power Generation Pvt Ltd - India
- Kumho Petrochemical, South Korea
- New Zealand Coal & Carbon
- Edison Trading Spa - Italy
- International Coal Ventures Pvt Ltd - India
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- GAC Shipping (India) Pvt Ltd
- Mercuria Energy - Indonesia
- Minerals Council of Australia
- Xindia Steels Limited - India
- CIMB Investment Bank - Malaysia
- Aditya Birla Group - India
- Carbofer General Trading SA - India
- Parliament of New Zealand
- Latin American Coal - Colombia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bharathi Cement Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Sinarmas Energy and Mining - Indonesia
- Altura Mining Limited, Indonesia
- Standard Chartered Bank - UAE
- Madhucon Powers Ltd - India
- Bayan Resources Tbk. - Indonesia
- The University of Queensland
- Manunggal Multi Energi - Indonesia
- Tata Chemicals Ltd - India
- Globalindo Alam Lestari - Indonesia
- Grasim Industreis Ltd - India
- Directorate Of Revenue Intelligence - India
- Bahari Cakrawala Sebuku - Indonesia
- Bhatia International Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Australian Coal Association
- Baramulti Group, Indonesia
- Chamber of Mines of South Africa
- Essar Steel Hazira Ltd - India
- Gujarat Sidhee Cement - India
- Parry Sugars Refinery, India
- Formosa Plastics Group - Taiwan
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Videocon Industries ltd - India
- Planning Commission, India
- PTC India Limited - India
- Mjunction Services Limited - India
- ICICI Bank Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Iligan Light & Power Inc, Philippines
- Renaissance Capital - South Africa
- The State Trading Corporation of India Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- LBH Netherlands Bv - Netherlands
- PNOC Exploration Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- Offshore Bulk Terminal Pte Ltd, Singapore
- Posco Energy - South Korea
- Kideco Jaya Agung - Indonesia
- TeaM Sual Corporation - Philippines
- Wood Mackenzie - Singapore
- White Energy Company Limited
- Kaltim Prima Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Merrill Lynch Commodities Europe
- Semirara Mining Corp, Philippines
- Borneo Indobara - Indonesia
- MS Steel International - UAE
- Sojitz Corporation - Japan
- Makarim & Taira - Indonesia
- Romanian Commodities Exchange
- Kohat Cement Company Ltd. - Pakistan
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Leighton Contractors Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement - Thailand
- Bangladesh Power Developement Board
- Central Java Power - Indonesia
- Aboitiz Power Corporation - Philippines
- Global Business Power Corporation, Philippines
- Central Electricity Authority - India
- Asmin Koalindo Tuhup - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Power Finance Corporation Ltd., India
- Africa Commodities Group - South Africa
- Miang Besar Coal Terminal - Indonesia
- Eastern Coal Council - USA
- Pendopo Energi Batubara - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Eastern Energy - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Thiess Contractors Indonesia
- Sindya Power Generating Company Private Ltd
- Kepco SPC Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- Electricity Authority, New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Antam Resourcindo - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- IHS Mccloskey Coal Group - USA
- Straits Asia Resources Limited - Singapore
- Ceylon Electricity Board - Sri Lanka
- Ministry of Mines - Canada
- Tamil Nadu electricity Board
- Commonwealth Bank - Australia
- AsiaOL BioFuels Corp., Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- CNBM International Corporation - China
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indo Tambangraya Megah - Indonesia
- Meenaskhi Energy Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Attock Cement Pakistan Limited
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Independent Power Producers Association of India
- Uttam Galva Steels Limited - India
- Thai Mozambique Logistica
- Bhoruka Overseas - Indonesia
- Banpu Public Company Limited - Thailand
- SMC Global Power, Philippines
- Rio Tinto Coal - Australia
- Petron Corporation, Philippines
- India Bulls Power Limited - India
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- GMR Energy Limited - India
- Larsen & Toubro Limited - India
- Malabar Cements Ltd - India
- Dalmia Cement Bharat India
- Directorate General of MIneral and Coal - Indonesia
- Cement Manufacturers Association - India
- Timah Investasi Mineral - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coal and Oil Company - UAE
- Georgia Ports Authority, United States
- Sarangani Energy Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Bhushan Steel Limited - India
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- Bukit Baiduri Energy - Indonesia
- Orica Australia Pty. Ltd.
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Karaikal Port Pvt Ltd - India
- Indika Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Price Waterhouse Coopers - Russia
- Global Green Power PLC Corporation, Philippines
- Australian Commodity Traders Exchange
- Star Paper Mills Limited - India
- Binh Thuan Hamico - Vietnam
- Barasentosa Lestari - Indonesia
- Vedanta Resources Plc - India
- Marubeni Corporation - India
- Meralco Power Generation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wilmar Investment Holdings
- Energy Link Ltd, New Zealand
- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
- VISA Power Limited - India
- McConnell Dowell - Australia
- Billiton Holdings Pty Ltd - Australia
- Indian Energy Exchange, India
- Coastal Gujarat Power Limited - India
- Coalindo Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Sakthi Sugars Limited - India
- Heidelberg Cement - Germany
- Indogreen Group - Indonesia
- Jindal Steel & Power Ltd - India
- Global Coal Blending Company Limited - Australia
- Port Waratah Coal Services - Australia
- SMG Consultants - Indonesia
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