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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, 20 November 13
TAIPOWER TO IMPORT 0.825 MMT OF 5000 GAR COAL FOR Q2' 14
COALspot.com: Taiwan Power Company intends to procure 825,000 metric tons of general sub-bituminous coal with calorific value not lesser than 5,000 ...
Wednesday, 20 November 13
CAPES AND PANAMAXES SOFTENING; SMALLER SIZE SEGMENTS FIRMING FURTHER - INTERMODAL
Chartering (Wet: Firm+ / Dry: Stable- )
The BDI has closed off the week on the red, with rates for Capes and Panamaxes softening and those fo ...
Tuesday, 19 November 13
INDONESIAN GOVERNMENT'S DECLARED COAL PRICE REFERENCE UP 1.98% IN NOVEMBER
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia has increased government declared coal bench mark price by US$ 1.52 / MT ...
Tuesday, 19 November 13
WEEKLY COAL EXPORTS FROM NEWCASTLE PORT INCREASED BY 20.59%
COALspot.com: In the week ended November 18, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totaled 2.92& ...
Tuesday, 19 November 13
SHIP OWNER POUR MORE MONEY INTO DRY BULK CARRIER ACQUISITIONS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The recent dry bulk market's rally, coupled with an expected fall in oversupply and robust cargo demand has boosted ship owners' optimism on the l ...
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- Toyota Tsusho Corporation, Japan
- Kaltim Prima Coal - Indonesia
- Ind-Barath Power Infra Limited - India
- Ministry of Transport, Egypt
- OPG Power Generation Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Rio Tinto Coal - Australia
- GMR Energy Limited - India
- Central Electricity Authority - India
- Parliament of New Zealand
- Coalindo Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Karaikal Port Pvt Ltd - India
- Videocon Industries ltd - India
- Eastern Energy - Thailand
- SMC Global Power, Philippines
- European Bulk Services B.V. - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Vijayanagar Sugar Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Thiess Contractors Indonesia
- Singapore Mercantile Exchange
- PTC India Limited - India
- International Coal Ventures Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Binh Thuan Hamico - Vietnam
- Central Java Power - Indonesia
- Coastal Gujarat Power Limited - India
- Makarim & Taira - Indonesia
- Billiton Holdings Pty Ltd - Australia
- SMG Consultants - Indonesia
- Therma Luzon, Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Grasim Industreis Ltd - India
- The University of Queensland
- Vizag Seaport Private Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Petron Corporation, Philippines
- Vedanta Resources Plc - India
- Jaiprakash Power Ventures ltd
- McConnell Dowell - Australia
- The Treasury - Australian Government
- Oldendorff Carriers - Singapore
- Ministry of Finance - Indonesia
- Bukit Baiduri Energy - Indonesia
- Siam City Cement PLC, Thailand
- Bhushan Steel Limited - India
- Madhucon Powers Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Green Power PLC Corporation, Philippines
- Bharathi Cement Corporation - India
- South Luzon Thermal Energy Corporation
- Bulk Trading Sa - Switzerland
- Attock Cement Pakistan Limited
- ASAPP Information Group - India
- Altura Mining Limited, Indonesia
- Aboitiz Power Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- Energy Development Corp, Philippines
- Sical Logistics Limited - India
- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Independent Power Producers Association of India
- Global Coal Blending Company Limited - Australia
- Sarangani Energy Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- London Commodity Brokers - England
- Sojitz Corporation - Japan
- Mercator Lines Limited - India
- PowerSource Philippines DevCo
- Ministry of Mines - Canada
- Parry Sugars Refinery, India
- Medco Energi Mining Internasional
- Petrochimia International Co. Ltd.- Taiwan
- Dalmia Cement Bharat India
- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- Planning Commission, India
- Kohat Cement Company Ltd. - Pakistan
- Kobexindo Tractors - Indoneisa
- CIMB Investment Bank - Malaysia
- Sree Jayajothi Cements Limited - India
- Economic Council, Georgia
- Pendopo Energi Batubara - Indonesia
- Intertek Mineral Services - Indonesia
- Port Waratah Coal Services - Australia
- Africa Commodities Group - South Africa
- Power Finance Corporation Ltd., India
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- White Energy Company Limited
- Romanian Commodities Exchange
- Trasteel International SA, Italy
- ICICI Bank Limited - India
- Riau Bara Harum - Indonesia
- Bayan Resources Tbk. - Indonesia
- Coal and Oil Company - UAE
- Gujarat Electricity Regulatory Commission - India
- Karbindo Abesyapradhi - Indoneisa
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Miang Besar Coal Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Renaissance Capital - South Africa
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Carbofer General Trading SA - India
- Standard Chartered Bank - UAE
- Chettinad Cement Corporation Ltd - India
- Aditya Birla Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Eastern Coal Council - USA
- Kapuas Tunggal Persada - Indonesia
- CNBM International Corporation - China
- Directorate Of Revenue Intelligence - India
- Kartika Selabumi Mining - Indonesia
- Energy Link Ltd, New Zealand
- Uttam Galva Steels Limited - India
- Edison Trading Spa - Italy
- Ceylon Electricity Board - Sri Lanka
- Kepco SPC Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Commonwealth Bank - Australia
- Metalloyd Limited - United Kingdom
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Agrawal Coal Company - India
- Goldman Sachs - Singapore
- Global Business Power Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Gujarat Sidhee Cement - India
- PetroVietnam Power Coal Import and Supply Company
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- Georgia Ports Authority, United States
- PNOC Exploration Corporation - Philippines
- New Zealand Coal & Carbon
- Banpu Public Company Limited - Thailand
- Xindia Steels Limited - India
- Posco Energy - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Manunggal Multi Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Heidelberg Cement - Germany
- Indika Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Essar Steel Hazira Ltd - India
- Lanco Infratech Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Simpson Spence & Young - Indonesia
- Mercuria Energy - Indonesia
- Bangladesh Power Developement Board
- Deloitte Consulting - India
- Jorong Barutama Greston.PT - Indonesia
- Star Paper Mills Limited - India
- Globalindo Alam Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Bhoruka Overseas - Indonesia
- Indian Oil Corporation Limited
- Indonesian Coal Mining Association
- Wood Mackenzie - Singapore
- Minerals Council of Australia
- Gujarat Mineral Development Corp Ltd - India
- Kumho Petrochemical, South Korea
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- Semirara Mining and Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Cement Manufacturers Association - India
- Savvy Resources Ltd - HongKong
- Semirara Mining Corp, Philippines
- Indian Energy Exchange, India
- VISA Power Limited - India
- Larsen & Toubro Limited - India
- Sindya Power Generating Company Private Ltd
- Siam City Cement - Thailand
- Iligan Light & Power Inc, Philippines
- Formosa Plastics Group - Taiwan
- Malabar Cements Ltd - India
- Chamber of Mines of South Africa
- Neyveli Lignite Corporation Ltd, - India
- Ambuja Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- MS Steel International - UAE
- Borneo Indobara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- SN Aboitiz Power Inc, Philippines
- Barasentosa Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Mintek Dendrill Indonesia
- Marubeni Corporation - India
- Maheswari Brothers Coal Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Latin American Coal - Colombia
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