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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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Saturday, 30 November 13
NTPC STARTED IMPORTING COAL THROUGH NW1 FOR ITS FARAKKA POWER PLANT
COALspot.com: In a pioneering and path breaking operation, the very first consignment of about 69,060 metric tons of imported coal bought by MV HUAY ...
Friday, 29 November 13
DRY BULK MARKET BACK ON HIGHER GROUND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market is strengthening as a result of higher demand for Capesize vessels. The BDI (Baltic Dry Index) was up by 146 points yesterday, e ...
Wednesday, 27 November 13
DRY SEGMENTS EXCEPTION OF PANAMAXES, REMAINED OVERALL STABLE - INTERMODAL
COALspot.com : The Dry Bulk market closed off the week in the red, albeit the decrease noted was of short scale. With the exception of Panamaxes, th ...
Wednesday, 27 November 13
US WHEAT IMPORTS TO BRAZIL, REACHED A 35 - YEAR HIGH - EVA TZIMA
COALspot.com: As I am going through a number of dry market fixtures reported since the beginning of October, my eyes instinctively stop where they d ...
Wednesday, 27 November 13
SHIP OWNERS ONCE AGAIN TURN TO DRY BULK CARRIERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Ship owners once again turned to more dry bulk carrier ordering over the course of the past week, as more and more appear convinced of the industry ...
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- Formosa Plastics Group - Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Aditya Birla Group - India
- Sical Logistics Limited - India
- Orica Australia Pty. Ltd.
- International Coal Ventures Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Standard Chartered Bank - UAE
- Chamber of Mines of South Africa
- TeaM Sual Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Ministry of Mines - Canada
- Indika Energy - Indonesia
- Carbofer General Trading SA - India
- Orica Mining Services - Indonesia
- IEA Clean Coal Centre - UK
- Energy Link Ltd, New Zealand
- Romanian Commodities Exchange
- Mercator Lines Limited - India
- Central Java Power - Indonesia
- Deloitte Consulting - India
- Lanco Infratech Ltd - India
- Binh Thuan Hamico - Vietnam
- Georgia Ports Authority, United States
- Chettinad Cement Corporation Ltd - India
- Bhoruka Overseas - Indonesia
- Star Paper Mills Limited - India
- Leighton Contractors Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- Intertek Mineral Services - Indonesia
- Merrill Lynch Commodities Europe
- Singapore Mercantile Exchange
- Coalindo Energy - Indonesia
- Electricity Authority, New Zealand
- Kideco Jaya Agung - Indonesia
- Latin American Coal - Colombia
- Semirara Mining Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Manunggal Multi Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- South Luzon Thermal Energy Corporation
- Therma Luzon, Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- GVK Power & Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Coal and Oil Company - UAE
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Larsen & Toubro Limited - India
- ASAPP Information Group - India
- Thai Mozambique Logistica
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Uttam Galva Steels Limited - India
- Kumho Petrochemical, South Korea
- Kobexindo Tractors - Indoneisa
- Mercuria Energy - Indonesia
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- Thiess Contractors Indonesia
- Economic Council, Georgia
- Indo Tambangraya Megah - Indonesia
- Bukit Makmur.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Sojitz Corporation - Japan
- Petron Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Australian Coal Association
- Mjunction Services Limited - India
- Tata Chemicals Ltd - India
- Bharathi Cement Corporation - India
- Global Green Power PLC Corporation, Philippines
- Global Business Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- Medco Energi Mining Internasional
- Indogreen Group - Indonesia
- Vizag Seaport Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kalimantan Lumbung Energi - Indonesia
- Goldman Sachs - Singapore
- Power Finance Corporation Ltd., India
- VISA Power Limited - India
- Posco Energy - South Korea
- GMR Energy Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- Indian Oil Corporation Limited
- SN Aboitiz Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Meenaskhi Energy Private Limited - India
- Ministry of Transport, Egypt
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- Parry Sugars Refinery, India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Marubeni Corporation - India
- Bayan Resources Tbk. - Indonesia
- Sakthi Sugars Limited - India
- Straits Asia Resources Limited - Singapore
- India Bulls Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Kepco SPC Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Directorate Of Revenue Intelligence - India
- Altura Mining Limited, Indonesia
- Baramulti Group, Indonesia
- Eastern Energy - Thailand
- Savvy Resources Ltd - HongKong
- OPG Power Generation Pvt Ltd - India
- CNBM International Corporation - China
- Rio Tinto Coal - Australia
- Central Electricity Authority - India
- Jindal Steel & Power Ltd - India
- IHS Mccloskey Coal Group - USA
- Bangladesh Power Developement Board
- Samtan Co., Ltd - South Korea
- Aboitiz Power Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Anglo American - United Kingdom
- New Zealand Coal & Carbon
- Electricity Generating Authority of Thailand
- Grasim Industreis Ltd - India
- Globalindo Alam Lestari - Indonesia
- Mintek Dendrill Indonesia
- European Bulk Services B.V. - Netherlands
- Xindia Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Billiton Holdings Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Edison Trading Spa - Italy
- Port Waratah Coal Services - Australia
- Alfred C Toepfer International GmbH - Germany
- Ambuja Cements Ltd - India
- London Commodity Brokers - England
- Minerals Council of Australia
- Interocean Group of Companies - India
- Vedanta Resources Plc - India
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Africa Commodities Group - South Africa
- Eastern Coal Council - USA
- The University of Queensland
- Makarim & Taira - Indonesia
- Wilmar Investment Holdings
- Bank of Tokyo Mitsubishi UFJ Ltd
- Borneo Indobara - Indonesia
- GAC Shipping (India) Pvt Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Heidelberg Cement - Germany
- SMC Global Power, Philippines
- Cement Manufacturers Association - India
- Agrawal Coal Company - India
- Dalmia Cement Bharat India
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- Parliament of New Zealand
- Ministry of Finance - Indonesia
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- McConnell Dowell - Australia
- Malabar Cements Ltd - India
- Banpu Public Company Limited - Thailand
- ICICI Bank Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- Siam City Cement PLC, Thailand
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- AsiaOL BioFuels Corp., Philippines
- Kapuas Tunggal Persada - Indonesia
- The State Trading Corporation of India Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The Treasury - Australian Government
- Bhushan Steel Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- Ind-Barath Power Infra Limited - India
- SMG Consultants - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Siam City Cement - Thailand
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- Pendopo Energi Batubara - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- Coastal Gujarat Power Limited - India
- Videocon Industries ltd - India
- Timah Investasi Mineral - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- MS Steel International - UAE
- Planning Commission, India
- Gujarat Sidhee Cement - India
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- Indian Energy Exchange, India
- Bukit Baiduri Energy - Indonesia
- Meralco Power Generation, Philippines
- Jaiprakash Power Ventures ltd
- Salva Resources Pvt Ltd - India
- Attock Cement Pakistan Limited
- Madhucon Powers Ltd - India
- LBH Netherlands Bv - Netherlands
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