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