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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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Friday, 06 December 13
INDONESIAN PARLIAMENT REJECTED A GOVERNMENT PROPOSAL TO EASE THE BAN ON EXPORTING UNPROCESSED ORE
COALspot.com: Indonesian House of Representatives rejected a proposal from Energy and Mineral Resources Minister Jero Wacik on to ease the ban on ex ...
Friday, 06 December 13
THE MINISTRY OF ENERGY & MINERAL RESOURCES OF INDONESIA FIXED DEC'13 HBA AT US$ 80.31
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia has increased government declared coal bench mark price by US$ 2.18 / MT ...
Friday, 06 December 13
US PRODUCED APPROXIMATELY 82.8 MILLION SHORT TONS OF COAL IN NOVEMBER 2013
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.00 million short tons (mmst) of coal in ...
Friday, 06 December 13
PANAMAXES HAVE BEEN THE ' WEAPON OF CHOICE' BY MOST DRY BULK SHIP OWNERS DURING 2013 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Low ship prices, the direct consequence of subdued freight rates for the larger part of 2013 have been the main driving force behind this year's ag ...
Thursday, 05 December 13
PANAMAX : THE FIRM TENDENCY CONTINUES - FEARNRESEARCH
Handy
It has been an active week for the Supramax and Handysize segment. USG is almost boiling and charterers looking to cover their December stems ...
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- Power Finance Corporation Ltd., India
- Eastern Energy - Thailand
- SMC Global Power, Philippines
- Bayan Resources Tbk. - Indonesia
- Bangladesh Power Developement Board
- Karaikal Port Pvt Ltd - India
- CNBM International Corporation - China
- Lanco Infratech Ltd - India
- McConnell Dowell - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- The State Trading Corporation of India Ltd
- Essar Steel Hazira Ltd - India
- Xindia Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Sojitz Corporation - Japan
- Siam City Cement - Thailand
- Indogreen Group - Indonesia
- Baramulti Group, Indonesia
- SN Aboitiz Power Inc, Philippines
- Coal and Oil Company - UAE
- Cement Manufacturers Association - India
- The Treasury - Australian Government
- Maheswari Brothers Coal Limited - India
- Carbofer General Trading SA - India
- Vijayanagar Sugar Pvt Ltd - India
- Indian Oil Corporation Limited
- Price Waterhouse Coopers - Russia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- Vedanta Resources Plc - India
- Global Coal Blending Company Limited - Australia
- ICICI Bank Limited - India
- Global Business Power Corporation, Philippines
- PowerSource Philippines DevCo
- Mercator Lines Limited - India
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Attock Cement Pakistan Limited
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Kepco SPC Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- IHS Mccloskey Coal Group - USA
- Thai Mozambique Logistica
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- New Zealand Coal & Carbon
- Rashtriya Ispat Nigam Limited - India
- LBH Netherlands Bv - Netherlands
- Straits Asia Resources Limited - Singapore
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- Bhushan Steel Limited - India
- Merrill Lynch Commodities Europe
- GVK Power & Infra Limited - India
- Mintek Dendrill Indonesia
- Vizag Seaport Private Limited - India
- Aditya Birla Group - India
- Medco Energi Mining Internasional
- Minerals Council of Australia
- Iligan Light & Power Inc, Philippines
- Parliament of New Zealand
- Gujarat Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- Agrawal Coal Company - India
- London Commodity Brokers - England
- Ind-Barath Power Infra Limited - India
- Tamil Nadu electricity Board
- Gujarat Mineral Development Corp Ltd - India
- Metalloyd Limited - United Kingdom
- Energy Link Ltd, New Zealand
- Coalindo Energy - Indonesia
- Dalmia Cement Bharat India
- Kumho Petrochemical, South Korea
- Trasteel International SA, Italy
- PTC India Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Latin American Coal - Colombia
- Samtan Co., Ltd - South Korea
- Simpson Spence & Young - Indonesia
- Electricity Generating Authority of Thailand
- The University of Queensland
- European Bulk Services B.V. - Netherlands
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- Therma Luzon, Inc, Philippines
- Edison Trading Spa - Italy
- Orica Mining Services - Indonesia
- Sindya Power Generating Company Private Ltd
- PetroVietnam Power Coal Import and Supply Company
- Larsen & Toubro Limited - India
- AsiaOL BioFuels Corp., Philippines
- Alfred C Toepfer International GmbH - Germany
- Pendopo Energi Batubara - Indonesia
- Marubeni Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Parry Sugars Refinery, India
- Intertek Mineral Services - Indonesia
- Eastern Coal Council - USA
- Antam Resourcindo - Indonesia
- Jaiprakash Power Ventures ltd
- Planning Commission, India
- Independent Power Producers Association of India
- VISA Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- Kobexindo Tractors - Indoneisa
- Semirara Mining Corp, Philippines
- Formosa Plastics Group - Taiwan
- Georgia Ports Authority, United States
- Sakthi Sugars Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Central Java Power - Indonesia
- Ministry of Transport, Egypt
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Global Green Power PLC Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- IEA Clean Coal Centre - UK
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- Mjunction Services Limited - India
- Banpu Public Company Limited - Thailand
- Wood Mackenzie - Singapore
- Petron Corporation, Philippines
- Riau Bara Harum - Indonesia
- Bharathi Cement Corporation - India
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- Meralco Power Generation, Philippines
- Indo Tambangraya Megah - Indonesia
- Meenaskhi Energy Private Limited - India
- Coastal Gujarat Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Central Electricity Authority - India
- Kohat Cement Company Ltd. - Pakistan
- Deloitte Consulting - India
- CIMB Investment Bank - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- Star Paper Mills Limited - India
- Jindal Steel & Power Ltd - India
- Sical Logistics Limited - India
- Chamber of Mines of South Africa
- Chettinad Cement Corporation Ltd - India
- Australian Coal Association
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- Anglo American - United Kingdom
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Port Waratah Coal Services - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Romanian Commodities Exchange
- Energy Development Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- GN Power Mariveles Coal Plant, Philippines
- GAC Shipping (India) Pvt Ltd
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- Savvy Resources Ltd - HongKong
- Goldman Sachs - Singapore
- Bukit Makmur.PT - Indonesia
- Standard Chartered Bank - UAE
- Videocon Industries ltd - India
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Bhatia International Limited - India
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- GMR Energy Limited - India
- Krishnapatnam Port Company Ltd. - India
- Madhucon Powers Ltd - India
- Globalindo Alam Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Makarim & Taira - Indonesia
- SMG Consultants - Indonesia
- Orica Australia Pty. Ltd.
- Commonwealth Bank - Australia
- Economic Council, Georgia
- Gujarat Sidhee Cement - India
- Bukit Asam (Persero) Tbk - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Thiess Contractors Indonesia
- Rio Tinto Coal - Australia
- Grasim Industreis Ltd - India
- Ministry of Finance - Indonesia
- Malabar Cements Ltd - India
- Indika Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- Ambuja Cements Ltd - India
- Mercuria Energy - Indonesia
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Manunggal Multi Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Uttam Galva Steels Limited - India
- Barasentosa Lestari - Indonesia
- India Bulls Power Limited - India
- White Energy Company Limited
- Salva Resources Pvt Ltd - India
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