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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, 11 December 13
BDI REACHED A PEAK OF YEAR RECORD OF 2,237 POINTS WHICH IS A SIGNIFICANT CHANGE IN MARKET CONDITIONS
Getting closer to the end of 2013, it is important that we have a review of the course the market has taken these past 12 months by looking at the B ...
Tuesday, 10 December 13
HNL, AN INDIAN STATE-OWNED NEWSPRINT PAPER MAKER SEEKS 50K TONS OF INDONESIAN 5600 COAL
COALspot.com: Hindustan Newsprint limited (HNL), an Indian state owned news print paper producer invited bids to supply 50,000MT of min 5,200kcal/kg ...
Tuesday, 10 December 13
COLOMBIAN THERMAL COAL EXPORTS SLIPPED 25.54% M-M IN OCTOBER'13
COALspot.com: Colombia's Thermal coal exports in October dropped 25.54% month on month to 5,990,815.13 million mt, according to data from mining de ...
Tuesday, 10 December 13
NEWCASTLE COAL EXPORTS PLUNGE W-O-W
COALspot.com: In the week ended December 9, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled 2.50 ...
Monday, 09 December 13
SOUTH AFRICA'S RICHARDS BAY COAL EXPORTS IN NOVEMBER DECLINED 14.43% M-M
COALspot.com: South Africa's Richards Bay coal terminal exported 6.224 million tonnes of coal in November, declining by 1.05 million tons from the ...
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- Eastern Coal Council - USA
- CIMB Investment Bank - Malaysia
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Directorate General of MIneral and Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Rio Tinto Coal - Australia
- Indian Oil Corporation Limited
- Straits Asia Resources Limited - Singapore
- India Bulls Power Limited - India
- Central Electricity Authority - India
- Ambuja Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- Energy Link Ltd, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- Holcim Trading Pte Ltd - Singapore
- White Energy Company Limited
- Kumho Petrochemical, South Korea
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
- Price Waterhouse Coopers - Russia
- PowerSource Philippines DevCo
- Attock Cement Pakistan Limited
- Ceylon Electricity Board - Sri Lanka
- Sindya Power Generating Company Private Ltd
- Bayan Resources Tbk. - Indonesia
- ASAPP Information Group - India
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Singapore Mercantile Exchange
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- Eastern Energy - Thailand
- Bharathi Cement Corporation - India
- Uttam Galva Steels Limited - India
- Posco Energy - South Korea
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Intertek Mineral Services - Indonesia
- Baramulti Group, Indonesia
- SMG Consultants - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Leighton Contractors Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Thai Mozambique Logistica
- OPG Power Generation Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Petron Corporation, Philippines
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Indo Tambangraya Megah - Indonesia
- Independent Power Producers Association of India
- LBH Netherlands Bv - Netherlands
- The Treasury - Australian Government
- CNBM International Corporation - China
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- Sree Jayajothi Cements Limited - India
- Coalindo Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Altura Mining Limited, Indonesia
- GMR Energy Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Minerals Council of Australia
- Kideco Jaya Agung - Indonesia
- Chamber of Mines of South Africa
- Gujarat Sidhee Cement - India
- Toyota Tsusho Corporation, Japan
- Cigading International Bulk Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- London Commodity Brokers - England
- Kartika Selabumi Mining - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- IHS Mccloskey Coal Group - USA
- Bhushan Steel Limited - India
- Alfred C Toepfer International GmbH - Germany
- Sarangani Energy Corporation, Philippines
- Larsen & Toubro Limited - India
- Indonesian Coal Mining Association
- Salva Resources Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Karaikal Port Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- Mintek Dendrill Indonesia
- Therma Luzon, Inc, Philippines
- Bhatia International Limited - India
- The University of Queensland
- Riau Bara Harum - Indonesia
- Madhucon Powers Ltd - India
- PNOC Exploration Corporation - Philippines
- IEA Clean Coal Centre - UK
- Standard Chartered Bank - UAE
- Bukit Makmur.PT - Indonesia
- Wilmar Investment Holdings
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- Semirara Mining Corp, Philippines
- Romanian Commodities Exchange
- Deloitte Consulting - India
- Star Paper Mills Limited - India
- Global Green Power PLC Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Trasteel International SA, Italy
- TeaM Sual Corporation - Philippines
- Lanco Infratech Ltd - India
- Barasentosa Lestari - Indonesia
- Parliament of New Zealand
- Commonwealth Bank - Australia
- Timah Investasi Mineral - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- VISA Power Limited - India
- Latin American Coal - Colombia
- Bukit Asam (Persero) Tbk - Indonesia
- Borneo Indobara - Indonesia
- New Zealand Coal & Carbon
- Kaltim Prima Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
- Bulk Trading Sa - Switzerland
- Videocon Industries ltd - India
- Mercator Lines Limited - India
- Wood Mackenzie - Singapore
- Essar Steel Hazira Ltd - India
- GVK Power & Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Merrill Lynch Commodities Europe
- Malabar Cements Ltd - India
- Indogreen Group - Indonesia
- Agrawal Coal Company - India
- Indika Energy - Indonesia
- Aditya Birla Group - India
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Global Coal Blending Company Limited - Australia
- GAC Shipping (India) Pvt Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- Australian Coal Association
- The State Trading Corporation of India Ltd
- San Jose City I Power Corp, Philippines
- Jindal Steel & Power Ltd - India
- Antam Resourcindo - Indonesia
- Grasim Industreis Ltd - India
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- Manunggal Multi Energi - Indonesia
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- Indian Energy Exchange, India
- Renaissance Capital - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Iligan Light & Power Inc, Philippines
- Central Java Power - Indonesia
- Sakthi Sugars Limited - India
- Global Business Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement - Thailand
- Kepco SPC Power Corporation, Philippines
- Electricity Authority, New Zealand
- Ministry of Transport, Egypt
- Carbofer General Trading SA - India
- Vedanta Resources Plc - India
- Simpson Spence & Young - Indonesia
- Kapuas Tunggal Persada - Indonesia
- SMC Global Power, Philippines
- Tamil Nadu electricity Board
- ICICI Bank Limited - India
- Bangladesh Power Developement Board
- Goldman Sachs - Singapore
- Orica Mining Services - Indonesia
- Economic Council, Georgia
- Coastal Gujarat Power Limited - India
- Parry Sugars Refinery, India
- Binh Thuan Hamico - Vietnam
- Gujarat Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Marubeni Corporation - India
- PTC India Limited - India
- Georgia Ports Authority, United States
- MS Steel International - UAE
- Port Waratah Coal Services - Australia
- Ministry of Mines - Canada
- Kohat Cement Company Ltd. - Pakistan
- Thiess Contractors Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vizag Seaport Private Limited - India
- Oldendorff Carriers - Singapore
- Savvy Resources Ltd - HongKong
- Krishnapatnam Port Company Ltd. - India
- Mjunction Services Limited - India
- Samtan Co., Ltd - South Korea
- Energy Development Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
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