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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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Sunday, 22 December 13
QUIET FREIGHT MARKET DUE TO LONG HOLIDAYS
COALspot.com: The market was soft this week with all indices down. However towards second half of the week the futures on segments was firming up.
...
Friday, 20 December 13
US PRODUCED 2.71% MORE COAL WEEK ON WEEK
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.9 million short tons (mmst) of coal in ...
Friday, 20 December 13
DRY BULK MARKET SLUMPS AHEAD OF HOLIDAY SEASON - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As has been the case in recent years, the dry bulk market has been on a downward trend ahead of the Holiday Season for a large part of the world. Th ...
Thursday, 19 December 13
SHIPPING CONFIDENCE HITS THREE-YEAR HIGH - MOORE STEPHENS
Overall confidence levels in the shipping industry rose to their highest level for more than three years over the three-month period to November 201 ...
Wednesday, 18 December 13
SNP ACTIVITY IN CHINA SEEMS TO BE SLOWING DOWN - CHRISTOS TRAGEAS
Approaching the end of the year, SnP activity in China seems to be slowing down in comparison to the first half of this quarter, as most Chinese Shi ...
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- Coalindo Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Medco Energi Mining Internasional
- Antam Resourcindo - Indonesia
- Indian Oil Corporation Limited
- Chettinad Cement Corporation Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- Iligan Light & Power Inc, Philippines
- Bharathi Cement Corporation - India
- The Treasury - Australian Government
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Savvy Resources Ltd - HongKong
- Parry Sugars Refinery, India
- Energy Development Corp, Philippines
- Eastern Coal Council - USA
- Globalindo Alam Lestari - Indonesia
- Madhucon Powers Ltd - India
- VISA Power Limited - India
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Binh Thuan Hamico - Vietnam
- Sinarmas Energy and Mining - Indonesia
- Electricity Generating Authority of Thailand
- Bhatia International Limited - India
- Trasteel International SA, Italy
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- Karaikal Port Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Star Paper Mills Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bayan Resources Tbk. - Indonesia
- Interocean Group of Companies - India
- Lanco Infratech Ltd - India
- Tamil Nadu electricity Board
- Sakthi Sugars Limited - India
- Riau Bara Harum - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- The State Trading Corporation of India Ltd
- Wilmar Investment Holdings
- Ceylon Electricity Board - Sri Lanka
- Wood Mackenzie - Singapore
- Sindya Power Generating Company Private Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Australian Coal Association
- Bulk Trading Sa - Switzerland
- Thai Mozambique Logistica
- Karbindo Abesyapradhi - Indoneisa
- Mercuria Energy - Indonesia
- Ambuja Cements Ltd - India
- Bangladesh Power Developement Board
- Anglo American - United Kingdom
- McConnell Dowell - Australia
- Kalimantan Lumbung Energi - Indonesia
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Kobexindo Tractors - Indoneisa
- Grasim Industreis Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement PLC, Thailand
- Planning Commission, India
- TeaM Sual Corporation - Philippines
- Parliament of New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- SMG Consultants - Indonesia
- Aboitiz Power Corporation - Philippines
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- CIMB Investment Bank - Malaysia
- Altura Mining Limited, Indonesia
- Aditya Birla Group - India
- Orica Mining Services - Indonesia
- PTC India Limited - India
- IHS Mccloskey Coal Group - USA
- Borneo Indobara - Indonesia
- Kaltim Prima Coal - Indonesia
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- Cement Manufacturers Association - India
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- Indogreen Group - Indonesia
- White Energy Company Limited
- Directorate General of MIneral and Coal - Indonesia
- Central Electricity Authority - India
- Maharashtra Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- GVK Power & Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Posco Energy - South Korea
- Central Java Power - Indonesia
- SMC Global Power, Philippines
- Sojitz Corporation - Japan
- Baramulti Group, Indonesia
- Singapore Mercantile Exchange
- Therma Luzon, Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- Global Business Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- India Bulls Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Sical Logistics Limited - India
- Agrawal Coal Company - India
- ICICI Bank Limited - India
- Mercator Lines Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Vedanta Resources Plc - India
- Bukit Makmur.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Straits Asia Resources Limited - Singapore
- Romanian Commodities Exchange
- European Bulk Services B.V. - Netherlands
- Banpu Public Company Limited - Thailand
- Videocon Industries ltd - India
- Petron Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Jorong Barutama Greston.PT - Indonesia
- London Commodity Brokers - England
- San Jose City I Power Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Sarangani Energy Corporation, Philippines
- Deloitte Consulting - India
- Rashtriya Ispat Nigam Limited - India
- Pendopo Energi Batubara - Indonesia
- Toyota Tsusho Corporation, Japan
- Samtan Co., Ltd - South Korea
- Essar Steel Hazira Ltd - India
- Sree Jayajothi Cements Limited - India
- Kartika Selabumi Mining - Indonesia
- Larsen & Toubro Limited - India
- Global Green Power PLC Corporation, Philippines
- Latin American Coal - Colombia
- Merrill Lynch Commodities Europe
- Orica Australia Pty. Ltd.
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- Timah Investasi Mineral - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- Krishnapatnam Port Company Ltd. - India
- PNOC Exploration Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- New Zealand Coal & Carbon
- Pipit Mutiara Jaya. PT, Indonesia
- Independent Power Producers Association of India
- Asmin Koalindo Tuhup - Indonesia
- Marubeni Corporation - India
- IEA Clean Coal Centre - UK
- GMR Energy Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Power Finance Corporation Ltd., India
- Indika Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- CNBM International Corporation - China
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- Indian Energy Exchange, India
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Economic Council, Georgia
- Jaiprakash Power Ventures ltd
- Alfred C Toepfer International GmbH - Germany
- Ind-Barath Power Infra Limited - India
- The University of Queensland
- South Luzon Thermal Energy Corporation
- Maheswari Brothers Coal Limited - India
- ASAPP Information Group - India
- Renaissance Capital - South Africa
- Gujarat Electricity Regulatory Commission - India
- Meralco Power Generation, Philippines
- Price Waterhouse Coopers - Russia
- Ministry of Finance - Indonesia
- Australian Commodity Traders Exchange
- Goldman Sachs - Singapore
- Minerals Council of Australia
- Kumho Petrochemical, South Korea
- Bhushan Steel Limited - India
- Tata Chemicals Ltd - India
- Carbofer General Trading SA - India
- Kepco SPC Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Siam City Cement - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- PowerSource Philippines DevCo
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Indonesian Coal Mining Association
- Malabar Cements Ltd - India
- International Coal Ventures Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Georgia Ports Authority, United States
- Eastern Energy - Thailand
- Xindia Steels Limited - India
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