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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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Thursday, 31 October 13
HANDY: ACTIVE; PANAMAX: QUIET; CAPESIZE: NO LIGHT
Handy
The handy market had an active week however not directly translated into the rates we´ve seen in the Pacific. We see more coal and baux ...
Wednesday, 30 October 13
INDONESIAN STATE OWNED COAL MINER HAS EXPORTED 7.02 MILLION TONS OF COAL IN 9 MONTHS
COALspot.com : PT. Bukit Asam, Indonesian state owned coal miner has sold 13.24 million tons of coal for the period January - September 2013. Accord ...
Wednesday, 30 October 13
DRY BULK MARKET HAS LOST FURTHER GROUND THIS PAST WEEK - INTERMODAL
Chartering (Wet: Firm+ / Dry: Stable-)
The Dry Bulk market has lost further ground this past week, as de-creased activity in both basins for both C ...
Wednesday, 30 October 13
CAPESIZE: DOWNWARD; SUPRAS AND HANDIES: STABLE - INTERMODAL
The Dry Bulk market has resumed its downward movement, noting another dip for a third week in a row. The larger size segments were responsible for p ...
Tuesday, 29 October 13
NEWCASTLE PORT SHIPPED 12.29 PER CENT MORE COAL W-W
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port up 12.29 per cent week on week to 3.61 million mt for ...
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- Siam City Cement - Thailand
- Kartika Selabumi Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Petron Corporation, Philippines
- Indonesian Coal Mining Association
- Jindal Steel & Power Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Sical Logistics Limited - India
- Globalindo Alam Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- McConnell Dowell - Australia
- Singapore Mercantile Exchange
- Baramulti Group, Indonesia
- Lanco Infratech Ltd - India
- The State Trading Corporation of India Ltd
- Bhatia International Limited - India
- Economic Council, Georgia
- Offshore Bulk Terminal Pte Ltd, Singapore
- SMG Consultants - Indonesia
- PowerSource Philippines DevCo
- International Coal Ventures Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- GAC Shipping (India) Pvt Ltd
- Sree Jayajothi Cements Limited - India
- Indika Energy - Indonesia
- Planning Commission, India
- Meenaskhi Energy Private Limited - India
- Latin American Coal - Colombia
- Pendopo Energi Batubara - Indonesia
- Interocean Group of Companies - India
- Sarangani Energy Corporation, Philippines
- Anglo American - United Kingdom
- Global Business Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Australian Coal Association
- Deloitte Consulting - India
- Renaissance Capital - South Africa
- Edison Trading Spa - Italy
- Aditya Birla Group - India
- Savvy Resources Ltd - HongKong
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- Orica Australia Pty. Ltd.
- Karbindo Abesyapradhi - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- South Luzon Thermal Energy Corporation
- Indogreen Group - Indonesia
- White Energy Company Limited
- Indian Energy Exchange, India
- Bukit Baiduri Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- The University of Queensland
- Romanian Commodities Exchange
- GVK Power & Infra Limited - India
- Directorate Of Revenue Intelligence - India
- Kepco SPC Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Chamber of Mines of South Africa
- Power Finance Corporation Ltd., India
- Antam Resourcindo - Indonesia
- Electricity Authority, New Zealand
- IHS Mccloskey Coal Group - USA
- Australian Commodity Traders Exchange
- Bayan Resources Tbk. - Indonesia
- Georgia Ports Authority, United States
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Uttam Galva Steels Limited - India
- Eastern Coal Council - USA
- Africa Commodities Group - South Africa
- Energy Link Ltd, New Zealand
- Minerals Council of Australia
- Wilmar Investment Holdings
- Straits Asia Resources Limited - Singapore
- Indo Tambangraya Megah - Indonesia
- Gujarat Sidhee Cement - India
- Star Paper Mills Limited - India
- Aboitiz Power Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- Maharashtra Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Videocon Industries ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Thiess Contractors Indonesia
- TeaM Sual Corporation - Philippines
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Medco Energi Mining Internasional
- Banpu Public Company Limited - Thailand
- Madhucon Powers Ltd - India
- Makarim & Taira - Indonesia
- Marubeni Corporation - India
- Carbofer General Trading SA - India
- Dalmia Cement Bharat India
- Goldman Sachs - Singapore
- Vedanta Resources Plc - India
- Kideco Jaya Agung - Indonesia
- Chettinad Cement Corporation Ltd - India
- Xindia Steels Limited - India
- Ministry of Mines - Canada
- Independent Power Producers Association of India
- Price Waterhouse Coopers - Russia
- MS Steel International - UAE
- Maheswari Brothers Coal Limited - India
- Bukit Makmur.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kobexindo Tractors - Indoneisa
- Binh Thuan Hamico - Vietnam
- Rashtriya Ispat Nigam Limited - India
- Ministry of Finance - Indonesia
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Parliament of New Zealand
- Essar Steel Hazira Ltd - India
- Metalloyd Limited - United Kingdom
- Timah Investasi Mineral - Indoneisa
- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Posco Energy - South Korea
- ASAPP Information Group - India
- Petrochimia International Co. Ltd.- Taiwan
- New Zealand Coal & Carbon
- Therma Luzon, Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Bhoruka Overseas - Indonesia
- Jaiprakash Power Ventures ltd
- European Bulk Services B.V. - Netherlands
- Intertek Mineral Services - Indonesia
- Heidelberg Cement - Germany
- Ind-Barath Power Infra Limited - India
- Coastal Gujarat Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Eastern Energy - Thailand
- Samtan Co., Ltd - South Korea
- Bhushan Steel Limited - India
- Bulk Trading Sa - Switzerland
- Kaltim Prima Coal - Indonesia
- Bharathi Cement Corporation - India
- Trasteel International SA, Italy
- SMC Global Power, Philippines
- Electricity Generating Authority of Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Malabar Cements Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Kapuas Tunggal Persada - Indonesia
- Coalindo Energy - Indonesia
- Central Electricity Authority - India
- PetroVietnam Power Coal Import and Supply Company
- San Jose City I Power Corp, Philippines
- Standard Chartered Bank - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Meralco Power Generation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- London Commodity Brokers - England
- Tamil Nadu electricity Board
- CIMB Investment Bank - Malaysia
- Sojitz Corporation - Japan
- Iligan Light & Power Inc, Philippines
- Altura Mining Limited, Indonesia
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
- Larsen & Toubro Limited - India
- Ambuja Cements Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Grasim Industreis Ltd - India
- Wood Mackenzie - Singapore
- Thai Mozambique Logistica
- Salva Resources Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Vizag Seaport Private Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- Gujarat Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Barasentosa Lestari - Indonesia
- Borneo Indobara - Indonesia
- PTC India Limited - India
- GMR Energy Limited - India
- Rio Tinto Coal - Australia
- Mjunction Services Limited - India
- Cement Manufacturers Association - India
- Tata Chemicals Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercator Lines Limited - India
- Agrawal Coal Company - India
- Jorong Barutama Greston.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- The Treasury - Australian Government
- Bangladesh Power Developement Board
- Gujarat Mineral Development Corp Ltd - India
- Energy Development Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Commonwealth Bank - Australia
- Ministry of Transport, Egypt
- SN Aboitiz Power Inc, Philippines
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