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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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Wednesday, 18 December 13
DEMOLITION ACTIVITY SCALED BACK AS FREIGHT RATES RISE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
It's always been the case that each time we witness a spike in freight rates, demolition activity is decreasing, as owners are looking for more car ...
Tuesday, 17 December 13
NEWCASTLE COAL EXPORTS UP 37.83% WEEK ON WEEK
COALspot.com: In the week ended December 16, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled 3.45 ...
Monday, 16 December 13
SUB-BIT FOB INDONESIA COAL SWAP LOST $ 0.53 IN A WEEK
COALspot.com – Sub-Bit Indonesia coal swap (FOB) for average Q1’ 14 delivery gained $ 0.91 pmt month on month on Friday 13 December 2013 ...
Monday, 16 December 13
API 8 CFR SOUTH CHINA COAL Q3' 14 DELIVERY PRICE CLOSED $1.63 LESSER THAN Q1' 14 PRICE
COALspot.com : API 8 CFR South China Coal swaps for average Q1’ 14 delivery gained 5.34 percept month on month as on Friday 13 December 2013. ...
Sunday, 15 December 13
SUPRAMAX'S FREIGHT RALLY COMES TO AN END THIS WEEK
COALspot.com: The BDI was up by 7 pct closing at 2,330 points week on week and the cape index was also up by 10.51 points and closed at 4,246 points ...
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- Gujarat Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- OPG Power Generation Pvt Ltd - India
- Parry Sugars Refinery, India
- Samtan Co., Ltd - South Korea
- Directorate Of Revenue Intelligence - India
- Siam City Cement PLC, Thailand
- Siam City Cement - Thailand
- Kapuas Tunggal Persada - Indonesia
- Indo Tambangraya Megah - Indonesia
- Indian Oil Corporation Limited
- Posco Energy - South Korea
- India Bulls Power Limited - India
- Deloitte Consulting - India
- Thai Mozambique Logistica
- Kumho Petrochemical, South Korea
- Mercuria Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- Dalmia Cement Bharat India
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Grasim Industreis Ltd - India
- Heidelberg Cement - Germany
- Price Waterhouse Coopers - Russia
- Pipit Mutiara Jaya. PT, Indonesia
- Meenaskhi Energy Private Limited - India
- Cement Manufacturers Association - India
- Bukit Makmur.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Latin American Coal - Colombia
- Malabar Cements Ltd - India
- Altura Mining Limited, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- MS Steel International - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Coal Association
- Indogreen Group - Indonesia
- Iligan Light & Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Sindya Power Generating Company Private Ltd
- Mintek Dendrill Indonesia
- Commonwealth Bank - Australia
- Romanian Commodities Exchange
- Bukit Baiduri Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Makarim & Taira - Indonesia
- Bhatia International Limited - India
- Uttam Galva Steels Limited - India
- The University of Queensland
- IHS Mccloskey Coal Group - USA
- Bhoruka Overseas - Indonesia
- Electricity Generating Authority of Thailand
- Billiton Holdings Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- PTC India Limited - India
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- Central Electricity Authority - India
- ASAPP Information Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Sarangani Energy Corporation, Philippines
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- Edison Trading Spa - Italy
- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- Ind-Barath Power Infra Limited - India
- Attock Cement Pakistan Limited
- Riau Bara Harum - Indonesia
- Videocon Industries ltd - India
- Trasteel International SA, Italy
- Ministry of Transport, Egypt
- Global Green Power PLC Corporation, Philippines
- GVK Power & Infra Limited - India
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Bulk Trading Sa - Switzerland
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Jindal Steel & Power Ltd - India
- Tamil Nadu electricity Board
- Lanco Infratech Ltd - India
- Chamber of Mines of South Africa
- Orica Australia Pty. Ltd.
- Bayan Resources Tbk. - Indonesia
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- Tata Chemicals Ltd - India
- Australian Commodity Traders Exchange
- PNOC Exploration Corporation - Philippines
- Central Java Power - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ministry of Finance - Indonesia
- Star Paper Mills Limited - India
- Carbofer General Trading SA - India
- Mercator Lines Limited - India
- Mjunction Services Limited - India
- Gujarat Sidhee Cement - India
- Savvy Resources Ltd - HongKong
- Semirara Mining Corp, Philippines
- New Zealand Coal & Carbon
- Ceylon Electricity Board - Sri Lanka
- Bhushan Steel Limited - India
- LBH Netherlands Bv - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Agrawal Coal Company - India
- AsiaOL BioFuels Corp., Philippines
- Goldman Sachs - Singapore
- Oldendorff Carriers - Singapore
- South Luzon Thermal Energy Corporation
- Intertek Mineral Services - Indonesia
- Coastal Gujarat Power Limited - India
- Toyota Tsusho Corporation, Japan
- Global Business Power Corporation, Philippines
- Indian Energy Exchange, India
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Sakthi Sugars Limited - India
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- Antam Resourcindo - Indonesia
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Karaikal Port Pvt Ltd - India
- Georgia Ports Authority, United States
- Coal and Oil Company - UAE
- Miang Besar Coal Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Globalindo Alam Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Metalloyd Limited - United Kingdom
- Bharathi Cement Corporation - India
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Bangladesh Power Developement Board
- Wood Mackenzie - Singapore
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Formosa Plastics Group - Taiwan
- Sree Jayajothi Cements Limited - India
- Thiess Contractors Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- Aditya Birla Group - India
- IEA Clean Coal Centre - UK
- Offshore Bulk Terminal Pte Ltd, Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- Orica Mining Services - Indonesia
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- GN Power Mariveles Coal Plant, Philippines
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Barasentosa Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Marubeni Corporation - India
- Borneo Indobara - Indonesia
- McConnell Dowell - Australia
- Economic Council, Georgia
- Xindia Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- CIMB Investment Bank - Malaysia
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- SN Aboitiz Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- VISA Power Limited - India
- The Treasury - Australian Government
- Independent Power Producers Association of India
- Anglo American - United Kingdom
- GMR Energy Limited - India
- Energy Development Corp, Philippines
- Ministry of Mines - Canada
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- Petron Corporation, Philippines
- Planning Commission, India
- Kaltim Prima Coal - Indonesia
- SMG Consultants - Indonesia
- Ambuja Cements Ltd - India
- Kobexindo Tractors - Indoneisa
- Madhucon Powers Ltd - India
- Sojitz Corporation - Japan
- SMC Global Power, Philippines
- Sinarmas Energy and Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indonesian Coal Mining Association
- White Energy Company Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Therma Luzon, Inc, Philippines
- Africa Commodities Group - South Africa
- Minerals Council of Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Straits Asia Resources Limited - Singapore
- London Commodity Brokers - England
- Vizag Seaport Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Power Finance Corporation Ltd., India
- Parliament of New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Merrill Lynch Commodities Europe
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