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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, 13 January 14
INDONESIAN ORE BAN TO HAVE LIMITED IMPACT ON CHINESE ALUMINIUM PRODUCERS, FITCH RATINGS SAYS
COALspot.com: Fitch Ratings says today that Indonesia's ban on exports of unprocessed mineral ore will have limited impact on Chinese aluminium pro ...
Sunday, 12 January 14
THE FREIGHT MARKET CONTINUE TO REMAIN WEAK NEXT WEEK - SOLYM CARRIERS
Wish You A very Happy New Year
COALspot.com: The market has dropped quite a lot as expected due to holidays and probably also the effect of ban o ...
Friday, 10 January 14
DECISION ON ORE EXPORT BAN WILL BE MADE TOMORROW: INDUSTRY MINISTER, JG SAYS
Industry Minister M.S. Hidayat dismissed reports on Thursday that the government had made a decision on the matter. “We will only make a decis ...
Friday, 10 January 14
US COAL PRODUCTION UP 5.8% ON WEEK IN WEEK ENDED SATURDAY 4 JANUARY
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.8 million short tons (mmst) of coal in ...
Thursday, 09 January 14
THE INDONESIAN GOVERNMENT EASES ORE EXPORT BAN
COALspot.com: The Indonesian government has finally agreed to ease the ore-export ban just a few days before the Sunday deadline amid protests from ...
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- Australian Commodity Traders Exchange
- Miang Besar Coal Terminal - Indonesia
- The University of Queensland
- Sinarmas Energy and Mining - Indonesia
- Tamil Nadu electricity Board
- Aditya Birla Group - India
- Ministry of Finance - Indonesia
- Siam City Cement PLC, Thailand
- Jindal Steel & Power Ltd - India
- Orica Australia Pty. Ltd.
- Energy Link Ltd, New Zealand
- Alfred C Toepfer International GmbH - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Georgia Ports Authority, United States
- Mjunction Services Limited - India
- Eastern Energy - Thailand
- Tata Chemicals Ltd - India
- Global Coal Blending Company Limited - Australia
- PowerSource Philippines DevCo
- London Commodity Brokers - England
- Anglo American - United Kingdom
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- Aboitiz Power Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Coal and Oil Company - UAE
- Vedanta Resources Plc - India
- Orica Mining Services - Indonesia
- Semirara Mining Corp, Philippines
- Mintek Dendrill Indonesia
- Bukit Makmur.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Madhucon Powers Ltd - India
- Lanco Infratech Ltd - India
- Renaissance Capital - South Africa
- Romanian Commodities Exchange
- Jorong Barutama Greston.PT - Indonesia
- SMG Consultants - Indonesia
- Merrill Lynch Commodities Europe
- Cement Manufacturers Association - India
- Interocean Group of Companies - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Goldman Sachs - Singapore
- OPG Power Generation Pvt Ltd - India
- Borneo Indobara - Indonesia
- Posco Energy - South Korea
- Bhushan Steel Limited - India
- PTC India Limited - India
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- Central Electricity Authority - India
- Wilmar Investment Holdings
- Uttam Galva Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Essar Steel Hazira Ltd - India
- Carbofer General Trading SA - India
- Thiess Contractors Indonesia
- Kapuas Tunggal Persada - Indonesia
- Banpu Public Company Limited - Thailand
- Indika Energy - Indonesia
- Meralco Power Generation, Philippines
- Coalindo Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Antam Resourcindo - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Billiton Holdings Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Siam City Cement - Thailand
- MS Steel International - UAE
- Kohat Cement Company Ltd. - Pakistan
- Australian Coal Association
- AsiaOL BioFuels Corp., Philippines
- Global Business Power Corporation, Philippines
- Baramulti Group, Indonesia
- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- LBH Netherlands Bv - Netherlands
- Kepco SPC Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Parry Sugars Refinery, India
- Independent Power Producers Association of India
- Binh Thuan Hamico - Vietnam
- Indogreen Group - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Oldendorff Carriers - Singapore
- Commonwealth Bank - Australia
- Leighton Contractors Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Manunggal Multi Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- Mercator Lines Limited - India
- Edison Trading Spa - Italy
- Deloitte Consulting - India
- CIMB Investment Bank - Malaysia
- Sical Logistics Limited - India
- Altura Mining Limited, Indonesia
- Sindya Power Generating Company Private Ltd
- European Bulk Services B.V. - Netherlands
- Toyota Tsusho Corporation, Japan
- VISA Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Sakthi Sugars Limited - India
- SMC Global Power, Philippines
- Simpson Spence & Young - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Iligan Light & Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Global Green Power PLC Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Agrawal Coal Company - India
- Cigading International Bulk Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- Dalmia Cement Bharat India
- Metalloyd Limited - United Kingdom
- Medco Energi Mining Internasional
- Petron Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Wood Mackenzie - Singapore
- Eastern Coal Council - USA
- Star Paper Mills Limited - India
- The State Trading Corporation of India Ltd
- SN Aboitiz Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Salva Resources Pvt Ltd - India
- Heidelberg Cement - Germany
- Kalimantan Lumbung Energi - Indonesia
- ASAPP Information Group - India
- Parliament of New Zealand
- Makarim & Taira - Indonesia
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Central Java Power - Indonesia
- GVK Power & Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Planning Commission, India
- Asmin Koalindo Tuhup - Indonesia
- Africa Commodities Group - South Africa
- Port Waratah Coal Services - Australia
- Karbindo Abesyapradhi - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Thai Mozambique Logistica
- Straits Asia Resources Limited - Singapore
- CNBM International Corporation - China
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- IEA Clean Coal Centre - UK
- New Zealand Coal & Carbon
- Indonesian Coal Mining Association
- Maharashtra Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The Treasury - Australian Government
- McConnell Dowell - Australia
- Chamber of Mines of South Africa
- Barasentosa Lestari - Indonesia
- Ambuja Cements Ltd - India
- Samtan Co., Ltd - South Korea
- Indo Tambangraya Megah - Indonesia
- Videocon Industries ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rio Tinto Coal - Australia
- Indian Oil Corporation Limited
- Singapore Mercantile Exchange
- Chettinad Cement Corporation Ltd - India
- Sree Jayajothi Cements Limited - India
- Indian Energy Exchange, India
- Standard Chartered Bank - UAE
- Rashtriya Ispat Nigam Limited - India
- Therma Luzon, Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- Bhatia International Limited - India
- Energy Development Corp, Philippines
- Ministry of Mines - Canada
- GMR Energy Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- Xindia Steels Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Sidhee Cement - India
- Maheswari Brothers Coal Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- Trasteel International SA, Italy
- Minerals Council of Australia
- Holcim Trading Pte Ltd - Singapore
- PNOC Exploration Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Karaikal Port Pvt Ltd - India
- India Bulls Power Limited - India
- Savvy Resources Ltd - HongKong
- Electricity Authority, New Zealand
- Bhoruka Overseas - Indonesia
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- Kobexindo Tractors - Indoneisa
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