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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, 30 December 13
INDONESIAN COAL TO BE PART OF INDEX DETERMINING POWER TARIFFS - BUSINESS STANDARD
In a significant move, power sector regulator CERC has decided to provide 50 per cent weightage for Indonesian coal in the benchmark index that is u ...
Friday, 27 December 13
THE EXPORT OF UNPROCESSED MINERALS WOULD NOT BE ALLOWED AFTER 12 JAN 2014 - INDONESIAN ENERGY MINISTER
COALspot.com: The government of Indonesia will implement Law No. 4 of 2009 on Mineral and Coal in full and consistently by January 12, 2014, said, m ...
Friday, 27 December 13
INDONESIA SHIPPED 15.75 PERCENT MORE COAL IN NOVEMBER
COALspot.com: Indonesia, the world's 4th largest coal producer and the largest multi grade coal exporter shipped over $2* billion worth of co ...
Thursday, 26 December 13
COAL & OIL GROUP SECURES US$ 250 MILLION FUNDING FOR ITS 1200MW THERMAL POWER PLANT IN INDIA
COALspot.com: Dubai-based Coal & Oil (C&O) Group has announced that it has secured additional funding of approximately Dhs. 1 billion (appro ...
Wednesday, 25 December 13
DRY BULK INDEX LOST SOME GROUND THIS PAST WEEK - INTERMODAL
Chartering (Wet: Firm+ / Dry: Softer - )
The Dry Bulk Index lost some ground this past week, on the back of activity slowing down befor ...
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- Formosa Plastics Group - Taiwan
- Madhucon Powers Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Eastern Coal Council - USA
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- Attock Cement Pakistan Limited
- Interocean Group of Companies - India
- SN Aboitiz Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Sindya Power Generating Company Private Ltd
- Uttam Galva Steels Limited - India
- Gujarat Sidhee Cement - India
- Renaissance Capital - South Africa
- Semirara Mining Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Lanco Infratech Ltd - India
- Kideco Jaya Agung - Indonesia
- Barasentosa Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Oldendorff Carriers - Singapore
- GVK Power & Infra Limited - India
- Parliament of New Zealand
- Australian Coal Association
- Standard Chartered Bank - UAE
- Toyota Tsusho Corporation, Japan
- Siam City Cement - Thailand
- Coal and Oil Company - UAE
- Price Waterhouse Coopers - Russia
- Wilmar Investment Holdings
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Central Electricity Authority - India
- LBH Netherlands Bv - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- India Bulls Power Limited - India
- McConnell Dowell - Australia
- Straits Asia Resources Limited - Singapore
- Meenaskhi Energy Private Limited - India
- Mjunction Services Limited - India
- The University of Queensland
- CIMB Investment Bank - Malaysia
- Sakthi Sugars Limited - India
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Chettinad Cement Corporation Ltd - India
- ASAPP Information Group - India
- London Commodity Brokers - England
- Indian Oil Corporation Limited
- Indo Tambangraya Megah - Indonesia
- Altura Mining Limited, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Heidelberg Cement - Germany
- IEA Clean Coal Centre - UK
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- Asmin Koalindo Tuhup - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Meralco Power Generation, Philippines
- Deloitte Consulting - India
- Global Business Power Corporation, Philippines
- White Energy Company Limited
- Agrawal Coal Company - India
- Karaikal Port Pvt Ltd - India
- Port Waratah Coal Services - Australia
- SMG Consultants - Indonesia
- ICICI Bank Limited - India
- Jaiprakash Power Ventures ltd
- Vijayanagar Sugar Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- Indogreen Group - Indonesia
- Thai Mozambique Logistica
- TeaM Sual Corporation - Philippines
- Borneo Indobara - Indonesia
- Aditya Birla Group - India
- Edison Trading Spa - Italy
- Marubeni Corporation - India
- Sree Jayajothi Cements Limited - India
- Mercuria Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Energy Exchange, India
- Kaltim Prima Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Medco Energi Mining Internasional
- Essar Steel Hazira Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Anglo American - United Kingdom
- Pendopo Energi Batubara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- Ministry of Finance - Indonesia
- Therma Luzon, Inc, Philippines
- CNBM International Corporation - China
- New Zealand Coal & Carbon
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Directorate Of Revenue Intelligence - India
- San Jose City I Power Corp, Philippines
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- Central Java Power - Indonesia
- Rio Tinto Coal - Australia
- Electricity Generating Authority of Thailand
- Xindia Steels Limited - India
- Mercator Lines Limited - India
- Ministry of Mines - Canada
- Independent Power Producers Association of India
- Gujarat Mineral Development Corp Ltd - India
- Carbofer General Trading SA - India
- Neyveli Lignite Corporation Ltd, - India
- Bayan Resources Tbk. - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- PowerSource Philippines DevCo
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Electricity Authority, New Zealand
- Holcim Trading Pte Ltd - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Singapore Mercantile Exchange
- Samtan Co., Ltd - South Korea
- MS Steel International - UAE
- Coastal Gujarat Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- Mintek Dendrill Indonesia
- AsiaOL BioFuels Corp., Philippines
- The Treasury - Australian Government
- Malabar Cements Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Larsen & Toubro Limited - India
- Semirara Mining and Power Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Power Finance Corporation Ltd., India
- Binh Thuan Hamico - Vietnam
- Makarim & Taira - Indonesia
- Petron Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Orica Australia Pty. Ltd.
- Sical Logistics Limited - India
- Star Paper Mills Limited - India
- International Coal Ventures Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Ministry of Transport, Egypt
- SMC Global Power, Philippines
- Energy Link Ltd, New Zealand
- Goldman Sachs - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- Siam City Cement PLC, Thailand
- Latin American Coal - Colombia
- European Bulk Services B.V. - Netherlands
- Commonwealth Bank - Australia
- PTC India Limited - India
- Bangladesh Power Developement Board
- Bukit Makmur.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Vedanta Resources Plc - India
- The State Trading Corporation of India Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Romanian Commodities Exchange
- Vizag Seaport Private Limited - India
- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
- Sarangani Energy Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Krishnapatnam Port Company Ltd. - India
- Orica Mining Services - Indonesia
- Thiess Contractors Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Videocon Industries ltd - India
- Timah Investasi Mineral - Indoneisa
- Cement Manufacturers Association - India
- GMR Energy Limited - India
- Indika Energy - Indonesia
- Planning Commission, India
- VISA Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jindal Steel & Power Ltd - India
- Antam Resourcindo - Indonesia
- Ambuja Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Posco Energy - South Korea
- Minerals Council of Australia
- Eastern Energy - Thailand
- Kartika Selabumi Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- Indonesian Coal Mining Association
- Economic Council, Georgia
- Georgia Ports Authority, United States
- Bhushan Steel Limited - India
- Kobexindo Tractors - Indoneisa
- Banpu Public Company Limited - Thailand
- Riau Bara Harum - Indonesia
- Grasim Industreis Ltd - India
- Tata Chemicals Ltd - India
- Leighton Contractors Pty Ltd - Australia
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