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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, 09 January 14
CAPESIZE: WEST AUSTRALIA FREIGHT IS NOW DOWN IN THE $8S AND STILL DROPPING - FEARNLEYS
Handy
In the Atlantic we see rates sliding slowly for the start of 2014. Several players cvrd over the holidays and the rate decline was som ...
Thursday, 09 January 14
THE SHIPPING MARKET IN 2013 AND LOOKING FORWARD GLOBAL ECONOMY: STEADY AS SHE GOES UPWARDS - BIMCO
Over the past year, developed economies have gained traction while developing and emerging economies have suffered from slower growth. Despite key e ...
Wednesday, 08 January 14
DRY BULK MARKET PROSPECTS LOOKING BRIGHTER DESPITE SLOW START TO THE NEW YEAR - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Despite the fact that the dry bulk market's benchmark, the BDI has been on a fall since the start of 2014, ending yesterday's session down to 1,87 ...
Wednesday, 08 January 14
AUSTRALIAN NEWCASTLE PORT'S WEEKLY COAL EXPORTS FALL
COALspot.com: In the week ended January 6, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled 3.27 m ...
Wednesday, 08 January 14
THE DRY BULK MARKET HAS LOST SOME OF ITS STEAM THESE PAST COUPLE OF DAYS: INTERMODAL
Chartering (Wet: Softer- / Dry: Softer- )
The Dry Bulk market has lost some of its steam these past couple of days although hires, espe ...
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- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Commonwealth Bank - Australia
- Bukit Makmur.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Salva Resources Pvt Ltd - India
- Bharathi Cement Corporation - India
- Semirara Mining Corp, Philippines
- Electricity Generating Authority of Thailand
- Malabar Cements Ltd - India
- Mercator Lines Limited - India
- Interocean Group of Companies - India
- Indian Energy Exchange, India
- Vijayanagar Sugar Pvt Ltd - India
- Energy Development Corp, Philippines
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- Romanian Commodities Exchange
- Sinarmas Energy and Mining - Indonesia
- Sical Logistics Limited - India
- Ministry of Finance - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Planning Commission, India
- Chamber of Mines of South Africa
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- Kartika Selabumi Mining - Indonesia
- Australian Commodity Traders Exchange
- Intertek Mineral Services - Indonesia
- Agrawal Coal Company - India
- Central Java Power - Indonesia
- SMG Consultants - Indonesia
- TeaM Sual Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Vedanta Resources Plc - India
- Krishnapatnam Port Company Ltd. - India
- Toyota Tsusho Corporation, Japan
- Trasteel International SA, Italy
- Mjunction Services Limited - India
- Economic Council, Georgia
- Thiess Contractors Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- International Coal Ventures Pvt Ltd - India
- White Energy Company Limited
- Aboitiz Power Corporation - Philippines
- Posco Energy - South Korea
- AsiaOL BioFuels Corp., Philippines
- Oldendorff Carriers - Singapore
- Carbofer General Trading SA - India
- SMC Global Power, Philippines
- Heidelberg Cement - Germany
- Bulk Trading Sa - Switzerland
- Essar Steel Hazira Ltd - India
- Georgia Ports Authority, United States
- OPG Power Generation Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Sojitz Corporation - Japan
- Directorate Of Revenue Intelligence - India
- Sakthi Sugars Limited - India
- Xindia Steels Limited - India
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- London Commodity Brokers - England
- Indian Oil Corporation Limited
- The State Trading Corporation of India Ltd
- IHS Mccloskey Coal Group - USA
- Eastern Energy - Thailand
- Kaltim Prima Coal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Uttam Galva Steels Limited - India
- San Jose City I Power Corp, Philippines
- Jaiprakash Power Ventures ltd
- The University of Queensland
- Sree Jayajothi Cements Limited - India
- Gujarat Electricity Regulatory Commission - India
- Maheswari Brothers Coal Limited - India
- Wood Mackenzie - Singapore
- GMR Energy Limited - India
- Indika Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Africa Commodities Group - South Africa
- ICICI Bank Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Energy Link Ltd, New Zealand
- Global Green Power PLC Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Binh Thuan Hamico - Vietnam
- Bhatia International Limited - India
- Ambuja Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Parry Sugars Refinery, India
- Metalloyd Limited - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Central Electricity Authority - India
- VISA Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Petron Corporation, Philippines
- Singapore Mercantile Exchange
- Simpson Spence & Young - Indonesia
- Orica Mining Services - Indonesia
- CIMB Investment Bank - Malaysia
- Minerals Council of Australia
- Mintek Dendrill Indonesia
- Renaissance Capital - South Africa
- European Bulk Services B.V. - Netherlands
- India Bulls Power Limited - India
- Marubeni Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Siam City Cement PLC, Thailand
- Ceylon Electricity Board - Sri Lanka
- Kobexindo Tractors - Indoneisa
- Antam Resourcindo - Indonesia
- Medco Energi Mining Internasional
- Mercuria Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Orica Australia Pty. Ltd.
- Banpu Public Company Limited - Thailand
- Global Coal Blending Company Limited - Australia
- Dalmia Cement Bharat India
- Tamil Nadu electricity Board
- Manunggal Multi Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Kideco Jaya Agung - Indonesia
- PowerSource Philippines DevCo
- Bangladesh Power Developement Board
- Miang Besar Coal Terminal - Indonesia
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Edison Trading Spa - Italy
- Star Paper Mills Limited - India
- Riau Bara Harum - Indonesia
- Merrill Lynch Commodities Europe
- Samtan Co., Ltd - South Korea
- Eastern Coal Council - USA
- Cement Manufacturers Association - India
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- The Treasury - Australian Government
- Jindal Steel & Power Ltd - India
- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Borneo Indobara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Madhucon Powers Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Rio Tinto Coal - Australia
- Electricity Authority, New Zealand
- Australian Coal Association
- Bhushan Steel Limited - India
- Lanco Infratech Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Kumho Petrochemical, South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Mines - Canada
- Anglo American - United Kingdom
- McConnell Dowell - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Videocon Industries ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Thai Mozambique Logistica
- ASAPP Information Group - India
- New Zealand Coal & Carbon
- Latin American Coal - Colombia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- Independent Power Producers Association of India
- GVK Power & Infra Limited - India
- Barasentosa Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- MS Steel International - UAE
- Kalimantan Lumbung Energi - Indonesia
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- Standard Chartered Bank - UAE
- Attock Cement Pakistan Limited
- Deloitte Consulting - India
- Tata Chemicals Ltd - India
- Indogreen Group - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Parliament of New Zealand
- Vizag Seaport Private Limited - India
- Price Waterhouse Coopers - Russia
- Sarangani Energy Corporation, Philippines
- Meralco Power Generation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Indo Tambangraya Megah - Indonesia
- IEA Clean Coal Centre - UK
- CNBM International Corporation - China
- Altura Mining Limited, Indonesia
- Aditya Birla Group - India
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement - Thailand
- Kapuas Tunggal Persada - Indonesia
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