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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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Monday, 18 November 13
SUB-BIT INDONESIA COAL SWAP LOST ON WEEK; MARGINALLY GAINED ON DAY
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q1’ 14 delivery gained $ 1.25 pmt month on month on Friday 15 Novemb ...
Sunday, 17 November 13
Q4' 14 API 8 CFR SOUTH CHINA COAL SWAP CLOSED $ 3.43 PMT (4.34 %) HIGHER THAN Q1' 14 SWAP
COALspot.com : API 8 CFR South China Coal swaps for average Q1’ 14 delivery gained 0.05 percept d-d on Friday 15 November 2013. The CFR South ...
Saturday, 16 November 13
INDONESIA TO INDIA SUPRAMAX FREIGHT RATES FIRM DUE TO STRONG COAL ACTIVITIES
COALspot.com: The Cape and Panamax index was down this week and pulling down the BDI by about 5 pct. BDI was closed at 1507 points on Friday 1 ...
Friday, 15 November 13
DRY BULK MARKET STILL LINGERING ON, DESPITE PREDICTIONS OF NEW IMMINENT RALLY PRIOR TO THE YEAR'S END - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market hasn't yet managed to stage a new comeback after its retreat from the recent multiyear highs. Yesterday, the industry's benchm ...
Friday, 15 November 13
US COAL PRODUCTION UP 2.59% WEEK ON WEEK
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.8 million short tons (mmst) of coal in ...
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- Oldendorff Carriers - Singapore
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Mintek Dendrill Indonesia
- ASAPP Information Group - India
- CNBM International Corporation - China
- Port Waratah Coal Services - Australia
- Australian Commodity Traders Exchange
- Ambuja Cements Ltd - India
- Malabar Cements Ltd - India
- Bukit Baiduri Energy - Indonesia
- Directorate Of Revenue Intelligence - India
- Rashtriya Ispat Nigam Limited - India
- Meenaskhi Energy Private Limited - India
- Central Java Power - Indonesia
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- European Bulk Services B.V. - Netherlands
- Global Business Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Ministry of Mines - Canada
- Central Electricity Authority - India
- Romanian Commodities Exchange
- Xindia Steels Limited - India
- The State Trading Corporation of India Ltd
- Indogreen Group - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Formosa Plastics Group - Taiwan
- Kumho Petrochemical, South Korea
- Australian Coal Association
- Semirara Mining and Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Agrawal Coal Company - India
- Videocon Industries ltd - India
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Billiton Holdings Pty Ltd - Australia
- Star Paper Mills Limited - India
- Pendopo Energi Batubara - Indonesia
- Parry Sugars Refinery, India
- Cigading International Bulk Terminal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Edison Trading Spa - Italy
- GMR Energy Limited - India
- Banpu Public Company Limited - Thailand
- Carbofer General Trading SA - India
- Larsen & Toubro Limited - India
- ICICI Bank Limited - India
- Lanco Infratech Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Merrill Lynch Commodities Europe
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Mineral Development Corp Ltd - India
- Samtan Co., Ltd - South Korea
- Simpson Spence & Young - Indonesia
- Price Waterhouse Coopers - Russia
- Africa Commodities Group - South Africa
- Thiess Contractors Indonesia
- PTC India Limited - India
- Directorate General of MIneral and Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Sical Logistics Limited - India
- London Commodity Brokers - England
- Essar Steel Hazira Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Sakthi Sugars Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- AsiaOL BioFuels Corp., Philippines
- OPG Power Generation Pvt Ltd - India
- Sojitz Corporation - Japan
- Cement Manufacturers Association - India
- Gujarat Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Bhatia International Limited - India
- Holcim Trading Pte Ltd - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- Siam City Cement - Thailand
- Georgia Ports Authority, United States
- Power Finance Corporation Ltd., India
- MS Steel International - UAE
- Wood Mackenzie - Singapore
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
- Marubeni Corporation - India
- Attock Cement Pakistan Limited
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- IEA Clean Coal Centre - UK
- TeaM Sual Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Standard Chartered Bank - UAE
- Energy Development Corp, Philippines
- Gujarat Sidhee Cement - India
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- Interocean Group of Companies - India
- Aboitiz Power Corporation - Philippines
- Salva Resources Pvt Ltd - India
- The University of Queensland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Savvy Resources Ltd - HongKong
- Borneo Indobara - Indonesia
- Sindya Power Generating Company Private Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Electricity Authority, New Zealand
- Altura Mining Limited, Indonesia
- Commonwealth Bank - Australia
- Medco Energi Mining Internasional
- Barasentosa Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Dalmia Cement Bharat India
- Krishnapatnam Port Company Ltd. - India
- India Bulls Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meralco Power Generation, Philippines
- Straits Asia Resources Limited - Singapore
- Chamber of Mines of South Africa
- Jindal Steel & Power Ltd - India
- Baramulti Group, Indonesia
- Deloitte Consulting - India
- Bhoruka Overseas - Indonesia
- Tata Chemicals Ltd - India
- Siam City Cement PLC, Thailand
- CIMB Investment Bank - Malaysia
- Goldman Sachs - Singapore
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- Orica Australia Pty. Ltd.
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Madhucon Powers Ltd - India
- Kepco SPC Power Corporation, Philippines
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- The Treasury - Australian Government
- Bulk Trading Sa - Switzerland
- Economic Council, Georgia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercuria Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- SMC Global Power, Philippines
- Indian Oil Corporation Limited
- Indonesian Coal Mining Association
- Indian Energy Exchange, India
- Intertek Mineral Services - Indonesia
- Independent Power Producers Association of India
- Aditya Birla Group - India
- Pipit Mutiara Jaya. PT, Indonesia
- Mjunction Services Limited - India
- Coalindo Energy - Indonesia
- Heidelberg Cement - Germany
- Bharathi Cement Corporation - India
- San Jose City I Power Corp, Philippines
- Binh Thuan Hamico - Vietnam
- Sarangani Energy Corporation, Philippines
- Eastern Energy - Thailand
- Orica Mining Services - Indonesia
- New Zealand Coal & Carbon
- Bhushan Steel Limited - India
- PowerSource Philippines DevCo
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Indika Energy - Indonesia
- Minerals Council of Australia
- International Coal Ventures Pvt Ltd - India
- Posco Energy - South Korea
- Anglo American - United Kingdom
- Alfred C Toepfer International GmbH - Germany
- Kobexindo Tractors - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Riau Bara Harum - Indonesia
- Eastern Coal Council - USA
- Planning Commission, India
- PetroVietnam Power Coal Import and Supply Company
- IHS Mccloskey Coal Group - USA
- Globalindo Alam Lestari - Indonesia
- Tamil Nadu electricity Board
- Electricity Generating Authority of Thailand
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- Renaissance Capital - South Africa
- Coastal Gujarat Power Limited - India
- Global Coal Blending Company Limited - Australia
- Parliament of New Zealand
- Thai Mozambique Logistica
- Ceylon Electricity Board - Sri Lanka
- GAC Shipping (India) Pvt Ltd
- Bayan Resources Tbk. - Indonesia
- White Energy Company Limited
- Singapore Mercantile Exchange
- GVK Power & Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Jaiprakash Power Ventures ltd
- Toyota Tsusho Corporation, Japan
- Antam Resourcindo - Indonesia
- Therma Luzon, Inc, Philippines
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Coal and Oil Company - UAE
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