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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, 06 January 14
INDONESIAN COAL SWAPS SLIDE TO $ 61.25 FOR Q4' 14 DELIVERY
COALspot.com – Sub-Bit Indonesia coal swap (FOB) for average Q1’ 14 delivery lost $ 0.32 pmt month on month on Friday 3 January 2014. Th ...
Sunday, 05 January 14
API 8 CFR SOUTH CHINA COAL SWAP FOR Q3 DELIVERY CLOSED $ 80.05, A $ 0.90 LOWER THAN Q1 PRICE
COALspot.com : API 8 CFR South China Coal swaps for average Q1’ 14 delivery lost 1.40 percept day on day closed at US$ 80.95 per mt as o ...
Sunday, 05 January 14
CENTRAL BUREAU OF INVESTIGATION OF INDIA REGISTERS CASES IN CONNECTION WITH ALLEGED SUPPLY OF LOW QUALITY INDONESIAN COAL BY A PRIVATE COMPANY TO NTPC & NSPCL
COALspot.com: The Central Bureau of Investigation of India has registered two cases regarding alleged supply of low quality imported Indonesian coal ...
Saturday, 04 January 14
THE INDONESIAN GOVERNMENT TO DOWNSIZE ITS COAL PRODUCTION TARGET TO 400 MMT THIS YEAR
COALspot.com: Indonesia to downsize its coal production target to 400 million tons in 2014, lower than the production in 2013, which stood at 421 mi ...
Friday, 03 January 14
IN 2013 RBCT HAS, FOR THE FIRST TIME, EXPORTED MORE THAN 70 MILLION TONS OF COAL
COALspot.com: South Africa's Richards Bay coal terminal, the world’s largest single coal exporting terminal shipped 6.788 million tonnes of c ...
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- Jindal Steel & Power Ltd - India
- Jaiprakash Power Ventures ltd
- Bhatia International Limited - India
- Energy Development Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Sical Logistics Limited - India
- Global Green Power PLC Corporation, Philippines
- Barasentosa Lestari - Indonesia
- ICICI Bank Limited - India
- Intertek Mineral Services - Indonesia
- Heidelberg Cement - Germany
- Samtan Co., Ltd - South Korea
- Port Waratah Coal Services - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Sree Jayajothi Cements Limited - India
- Australian Commodity Traders Exchange
- Asmin Koalindo Tuhup - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- Ministry of Mines - Canada
- Sojitz Corporation - Japan
- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- Ministry of Finance - Indonesia
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Bhoruka Overseas - Indonesia
- TeaM Sual Corporation - Philippines
- Parliament of New Zealand
- Gujarat Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Independent Power Producers Association of India
- Kartika Selabumi Mining - Indonesia
- Mjunction Services Limited - India
- Bangladesh Power Developement Board
- Essar Steel Hazira Ltd - India
- CNBM International Corporation - China
- Baramulti Group, Indonesia
- GAC Shipping (India) Pvt Ltd
- Makarim & Taira - Indonesia
- Vizag Seaport Private Limited - India
- Savvy Resources Ltd - HongKong
- Bukit Baiduri Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- PTC India Limited - India
- Eastern Coal Council - USA
- Indian Energy Exchange, India
- Indogreen Group - Indonesia
- Kumho Petrochemical, South Korea
- International Coal Ventures Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Cement Manufacturers Association - India
- Billiton Holdings Pty Ltd - Australia
- Marubeni Corporation - India
- GMR Energy Limited - India
- Thiess Contractors Indonesia
- Ministry of Transport, Egypt
- Merrill Lynch Commodities Europe
- Georgia Ports Authority, United States
- Iligan Light & Power Inc, Philippines
- SN Aboitiz Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- AsiaOL BioFuels Corp., Philippines
- Malabar Cements Ltd - India
- Carbofer General Trading SA - India
- Mercuria Energy - Indonesia
- PowerSource Philippines DevCo
- Electricity Generating Authority of Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Pendopo Energi Batubara - Indonesia
- Meenaskhi Energy Private Limited - India
- Anglo American - United Kingdom
- Formosa Plastics Group - Taiwan
- Global Business Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Bharathi Cement Corporation - India
- Salva Resources Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Petron Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Posco Energy - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Sakthi Sugars Limited - India
- Siam City Cement PLC, Thailand
- GN Power Mariveles Coal Plant, Philippines
- Mintek Dendrill Indonesia
- Timah Investasi Mineral - Indoneisa
- McConnell Dowell - Australia
- Simpson Spence & Young - Indonesia
- Banpu Public Company Limited - Thailand
- Oldendorff Carriers - Singapore
- Coal and Oil Company - UAE
- OPG Power Generation Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- The Treasury - Australian Government
- Tata Chemicals Ltd - India
- Uttam Galva Steels Limited - India
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- SMC Global Power, Philippines
- Gujarat Sidhee Cement - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Medco Energi Mining Internasional
- Goldman Sachs - Singapore
- Price Waterhouse Coopers - Russia
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Cigading International Bulk Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bhushan Steel Limited - India
- Riau Bara Harum - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Altura Mining Limited, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Krishnapatnam Port Company Ltd. - India
- Dalmia Cement Bharat India
- Siam City Cement - Thailand
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- Vedanta Resources Plc - India
- Chettinad Cement Corporation Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Planning Commission, India
- Karbindo Abesyapradhi - Indoneisa
- Orica Mining Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Borneo Indobara - Indonesia
- White Energy Company Limited
- Power Finance Corporation Ltd., India
- European Bulk Services B.V. - Netherlands
- Manunggal Multi Energi - Indonesia
- Attock Cement Pakistan Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thai Mozambique Logistica
- VISA Power Limited - India
- Meralco Power Generation, Philippines
- Global Coal Blending Company Limited - Australia
- The University of Queensland
- CIMB Investment Bank - Malaysia
- Semirara Mining Corp, Philippines
- South Luzon Thermal Energy Corporation
- Star Paper Mills Limited - India
- Electricity Authority, New Zealand
- Therma Luzon, Inc, Philippines
- Videocon Industries ltd - India
- Africa Commodities Group - South Africa
- IEA Clean Coal Centre - UK
- Rashtriya Ispat Nigam Limited - India
- Indian Oil Corporation Limited
- Renaissance Capital - South Africa
- Neyveli Lignite Corporation Ltd, - India
- London Commodity Brokers - England
- Wilmar Investment Holdings
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Mercator Lines Limited - India
- Leighton Contractors Pty Ltd - Australia
- Indika Energy - Indonesia
- Grasim Industreis Ltd - India
- Bukit Makmur.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- Central Electricity Authority - India
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- Vijayanagar Sugar Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Romanian Commodities Exchange
- Coastal Gujarat Power Limited - India
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- Lanco Infratech Ltd - India
- Wood Mackenzie - Singapore
- Sarangani Energy Corporation, Philippines
- Economic Council, Georgia
- Globalindo Alam Lestari - Indonesia
- Agrawal Coal Company - India
- SMG Consultants - Indonesia
- Edison Trading Spa - Italy
- Tamil Nadu electricity Board
- Pipit Mutiara Jaya. PT, Indonesia
- New Zealand Coal & Carbon
- Commonwealth Bank - Australia
- Aditya Birla Group - India
- Maheswari Brothers Coal Limited - India
- Energy Link Ltd, New Zealand
- Holcim Trading Pte Ltd - Singapore
- Indo Tambangraya Megah - Indonesia
- Coalindo Energy - Indonesia
- Deloitte Consulting - India
- Binh Thuan Hamico - Vietnam
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- IHS Mccloskey Coal Group - USA
- GVK Power & Infra Limited - India
- Larsen & Toubro Limited - India
- Karaikal Port Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- Minerals Council of Australia
- Xindia Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Kaltim Prima Coal - Indonesia
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