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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, 04 December 13
INDONESIAN COAL EXPORTS VOLUME AND REVENUE IN OCTOBER MARCHED TOWARDS NORTH
COALspot.com: Indonesia, the world's 4th largest coal producer and the largest multi grade coal exporter shipped over $1.76* billion worth of ...
Wednesday, 04 December 13
WEST AUSTRALIA IRON ORE FIXTURES ALSO CONTINUING TO PROVIDE A STEADY FLOW OF BUSINESS FOR CAPES - INTERMODAL
The Dry Bulk market has reversed course this past week, bringing back some of the lost excitement of the past month, as all size segments climbed hi ...
Wednesday, 04 December 13
THE BUYERS' DEMAND IS CONTINUOUSLY BULLISH - KONSTANTINOS KONTOMICHIS
The very low rates that prevailed for the bigger part of 2013 seem to have prepared the ground for buying opportunities for shipping investors. The ...
Wednesday, 04 December 13
SGX AND CFA TO COLLABORATE TO DEVELOP DERIVATIVES MARKETS IN CHINA AND SINGAPORE
Singapore Exchange (SGX) and the China Futures Association (CFA) are cooperating in the development of derivatives markets in China and Singapore.
...
Wednesday, 04 December 13
SGX'S MONTHLY VOLUMES REACHED A RECORD HIGH OF 705,000 MT IN NOVEMBER 2013
COALspot.com: SGX has announced that, it monthly volumes have reached a record high of 705 lots (705,000 mt) in November 2013 with month-end open in ...
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- Ministry of Finance - Indonesia
- Maheswari Brothers Coal Limited - India
- Rio Tinto Coal - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Carbofer General Trading SA - India
- Goldman Sachs - Singapore
- Malabar Cements Ltd - India
- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- Vedanta Resources Plc - India
- Energy Link Ltd, New Zealand
- Central Java Power - Indonesia
- Salva Resources Pvt Ltd - India
- New Zealand Coal & Carbon
- Bahari Cakrawala Sebuku - Indonesia
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Medco Energi Mining Internasional
- Sical Logistics Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- Global Business Power Corporation, Philippines
- The Treasury - Australian Government
- PNOC Exploration Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Latin American Coal - Colombia
- Maharashtra Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- India Bulls Power Limited - India
- Electricity Authority, New Zealand
- Mjunction Services Limited - India
- Australian Coal Association
- AsiaOL BioFuels Corp., Philippines
- Indian Oil Corporation Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Independent Power Producers Association of India
- Bhoruka Overseas - Indonesia
- Bhushan Steel Limited - India
- Sojitz Corporation - Japan
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Sidhee Cement - India
- Uttam Galva Steels Limited - India
- Bhatia International Limited - India
- Siam City Cement - Thailand
- IEA Clean Coal Centre - UK
- OPG Power Generation Pvt Ltd - India
- SMC Global Power, Philippines
- Cigading International Bulk Terminal - Indonesia
- Sakthi Sugars Limited - India
- VISA Power Limited - India
- Economic Council, Georgia
- Electricity Generating Authority of Thailand
- Billiton Holdings Pty Ltd - Australia
- The State Trading Corporation of India Ltd
- TeaM Sual Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- IHS Mccloskey Coal Group - USA
- Xindia Steels Limited - India
- PTC India Limited - India
- Bharathi Cement Corporation - India
- Savvy Resources Ltd - HongKong
- ICICI Bank Limited - India
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- Aditya Birla Group - India
- Bangladesh Power Developement Board
- Agrawal Coal Company - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Australian Commodity Traders Exchange
- Ambuja Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Larsen & Toubro Limited - India
- Star Paper Mills Limited - India
- Energy Development Corp, Philippines
- Anglo American - United Kingdom
- Kumho Petrochemical, South Korea
- Borneo Indobara - Indonesia
- Intertek Mineral Services - Indonesia
- Formosa Plastics Group - Taiwan
- Trasteel International SA, Italy
- Wood Mackenzie - Singapore
- Meenaskhi Energy Private Limited - India
- McConnell Dowell - Australia
- GAC Shipping (India) Pvt Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Eastern Energy - Thailand
- Aboitiz Power Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Jindal Steel & Power Ltd - India
- Parry Sugars Refinery, India
- Mintek Dendrill Indonesia
- Videocon Industries ltd - India
- Africa Commodities Group - South Africa
- Tamil Nadu electricity Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Metalloyd Limited - United Kingdom
- Barasentosa Lestari - Indonesia
- Marubeni Corporation - India
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- Heidelberg Cement - Germany
- Kepco SPC Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- GN Power Mariveles Coal Plant, Philippines
- Thiess Contractors Indonesia
- Karaikal Port Pvt Ltd - India
- Ministry of Mines - Canada
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Mining Services - Indonesia
- Dalmia Cement Bharat India
- Leighton Contractors Pty Ltd - Australia
- Orica Australia Pty. Ltd.
- London Commodity Brokers - England
- Interocean Group of Companies - India
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- Oldendorff Carriers - Singapore
- Jaiprakash Power Ventures ltd
- Toyota Tsusho Corporation, Japan
- South Luzon Thermal Energy Corporation
- Vijayanagar Sugar Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Standard Chartered Bank - UAE
- Simpson Spence & Young - Indonesia
- Chamber of Mines of South Africa
- Makarim & Taira - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate General of MIneral and Coal - Indonesia
- Kaltim Prima Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Ministry of Transport, Egypt
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- Power Finance Corporation Ltd., India
- PowerSource Philippines DevCo
- PetroVietnam Power Coal Import and Supply Company
- SN Aboitiz Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Globalindo Alam Lestari - Indonesia
- Meralco Power Generation, Philippines
- Madhucon Powers Ltd - India
- International Coal Ventures Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Coalindo Energy - Indonesia
- Baramulti Group, Indonesia
- Commonwealth Bank - Australia
- Lanco Infratech Ltd - India
- Merrill Lynch Commodities Europe
- LBH Netherlands Bv - Netherlands
- Essar Steel Hazira Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Global Coal Blending Company Limited - Australia
- Price Waterhouse Coopers - Russia
- Indogreen Group - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Kobexindo Tractors - Indoneisa
- Petron Corporation, Philippines
- Grasim Industreis Ltd - India
- Coastal Gujarat Power Limited - India
- ASAPP Information Group - India
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- The University of Queensland
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Indonesian Coal Mining Association
- Therma Luzon, Inc, Philippines
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Holcim Trading Pte Ltd - Singapore
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Vizag Seaport Private Limited - India
- Georgia Ports Authority, United States
- Karbindo Abesyapradhi - Indoneisa
- MS Steel International - UAE
- Siam City Cement PLC, Thailand
- Planning Commission, India
- Gujarat Mineral Development Corp Ltd - India
- Indika Energy - Indonesia
- Attock Cement Pakistan Limited
- European Bulk Services B.V. - Netherlands
- CNBM International Corporation - China
- Thai Mozambique Logistica
- Bukit Makmur.PT - Indonesia
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Binh Thuan Hamico - Vietnam
- Indian Energy Exchange, India
- GVK Power & Infra Limited - India
- Central Electricity Authority - India
- Singapore Mercantile Exchange
- Neyveli Lignite Corporation Ltd, - India
- Parliament of New Zealand
- Rashtriya Ispat Nigam Limited - India
- Romanian Commodities Exchange
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