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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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- Tamil Nadu electricity Board
- Bangladesh Power Developement Board
- Chamber of Mines of South Africa
- Marubeni Corporation - India
- Therma Luzon, Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Samtan Co., Ltd - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- Indogreen Group - Indonesia
- Electricity Authority, New Zealand
- Ministry of Finance - Indonesia
- Port Waratah Coal Services - Australia
- Kumho Petrochemical, South Korea
- San Jose City I Power Corp, Philippines
- Coalindo Energy - Indonesia
- Sakthi Sugars Limited - India
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- Gujarat Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Goldman Sachs - Singapore
- Siam City Cement PLC, Thailand
- PNOC Exploration Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Vedanta Resources Plc - India
- Borneo Indobara - Indonesia
- Commonwealth Bank - Australia
- White Energy Company Limited
- Alfred C Toepfer International GmbH - Germany
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Standard Chartered Bank - UAE
- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bukit Makmur.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Georgia Ports Authority, United States
- India Bulls Power Limited - India
- GMR Energy Limited - India
- Binh Thuan Hamico - Vietnam
- Economic Council, Georgia
- Kepco SPC Power Corporation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- Pendopo Energi Batubara - Indonesia
- Global Business Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Altura Mining Limited, Indonesia
- Orica Mining Services - Indonesia
- Sojitz Corporation - Japan
- Makarim & Taira - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Merrill Lynch Commodities Europe
- Barasentosa Lestari - Indonesia
- The University of Queensland
- Sical Logistics Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Australian Commodity Traders Exchange
- Coastal Gujarat Power Limited - India
- Tata Chemicals Ltd - India
- Coal and Oil Company - UAE
- Africa Commodities Group - South Africa
- Wood Mackenzie - Singapore
- The State Trading Corporation of India Ltd
- Minerals Council of Australia
- PTC India Limited - India
- Global Coal Blending Company Limited - Australia
- Mercator Lines Limited - India
- CNBM International Corporation - China
- Straits Asia Resources Limited - Singapore
- Uttam Galva Steels Limited - India
- Indonesian Coal Mining Association
- Simpson Spence & Young - Indonesia
- Siam City Cement - Thailand
- Parry Sugars Refinery, India
- South Luzon Thermal Energy Corporation
- Gujarat Sidhee Cement - India
- Singapore Mercantile Exchange
- PetroVietnam Power Coal Import and Supply Company
- Aditya Birla Group - India
- SMC Global Power, Philippines
- Posco Energy - South Korea
- Bhoruka Overseas - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ind-Barath Power Infra Limited - India
- Cement Manufacturers Association - India
- Petrochimia International Co. Ltd.- Taiwan
- Rio Tinto Coal - Australia
- Indika Energy - Indonesia
- Banpu Public Company Limited - Thailand
- ICICI Bank Limited - India
- LBH Netherlands Bv - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Mercuria Energy - Indonesia
- Central Electricity Authority - India
- Energy Development Corp, Philippines
- Planning Commission, India
- Anglo American - United Kingdom
- Intertek Mineral Services - Indonesia
- Ministry of Transport, Egypt
- Kapuas Tunggal Persada - Indonesia
- Global Green Power PLC Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Videocon Industries ltd - India
- Sarangani Energy Corporation, Philippines
- Antam Resourcindo - Indonesia
- Vizag Seaport Private Limited - India
- Agrawal Coal Company - India
- Sree Jayajothi Cements Limited - India
- CIMB Investment Bank - Malaysia
- Globalindo Alam Lestari - Indonesia
- New Zealand Coal & Carbon
- Energy Link Ltd, New Zealand
- Indian Oil Corporation Limited
- SN Aboitiz Power Inc, Philippines
- Eastern Energy - Thailand
- London Commodity Brokers - England
- Kideco Jaya Agung - Indonesia
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- Jaiprakash Power Ventures ltd
- Independent Power Producers Association of India
- ASAPP Information Group - India
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- Meralco Power Generation, Philippines
- Kobexindo Tractors - Indoneisa
- Parliament of New Zealand
- Maharashtra Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Madhucon Powers Ltd - India
- Ministry of Mines - Canada
- Romanian Commodities Exchange
- Deloitte Consulting - India
- Renaissance Capital - South Africa
- Eastern Coal Council - USA
- Latin American Coal - Colombia
- Malabar Cements Ltd - India
- Attock Cement Pakistan Limited
- McConnell Dowell - Australia
- TeaM Sual Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- OPG Power Generation Pvt Ltd - India
- Petron Corporation, Philippines
- Semirara Mining Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Trasteel International SA, Italy
- Manunggal Multi Energi - Indonesia
- Ambuja Cements Ltd - India
- Kartika Selabumi Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Indian Energy Exchange, India
- Power Finance Corporation Ltd., India
- Iligan Light & Power Inc, Philippines
- Bhushan Steel Limited - India
- Aboitiz Power Corporation - Philippines
- Wilmar Investment Holdings
- Indo Tambangraya Megah - Indonesia
- Thiess Contractors Indonesia
- MS Steel International - UAE
- Mjunction Services Limited - India
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- Krishnapatnam Port Company Ltd. - India
- Timah Investasi Mineral - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- Rashtriya Ispat Nigam Limited - India
- GVK Power & Infra Limited - India
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Australia Pty. Ltd.
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Java Power - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bharathi Cement Corporation - India
- Bukit Baiduri Energy - Indonesia
- Xindia Steels Limited - India
- Metalloyd Limited - United Kingdom
- PowerSource Philippines DevCo
- Riau Bara Harum - Indonesia
- Oldendorff Carriers - Singapore
- Price Waterhouse Coopers - Russia
- Edison Trading Spa - Italy
- Heidelberg Cement - Germany
- Grasim Industreis Ltd - India
- Mintek Dendrill Indonesia
- Australian Coal Association
- Maheswari Brothers Coal Limited - India
- Bulk Trading Sa - Switzerland
- Sindya Power Generating Company Private Ltd
- Electricity Generating Authority of Thailand
- Kohat Cement Company Ltd. - Pakistan
- Lanco Infratech Ltd - India
- Interocean Group of Companies - India
- Star Paper Mills Limited - India
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