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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, 28 October 13
API 8 CFR SOUTH CHINA COAL FOR Q3'14 DELIVERY LOST ON D-D,W-W & M-M
COALspot.com : API 8 CFR South China Coal swaps for average Q4 2013 delivery fell 0.22 percept M-M on Friday 25 October 2013. The CFR South China Co ...
Monday, 28 October 13
COAL SWAP FOR Q3' 2014 DELIVERY LOST ON D-D, W-W AND M-M
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q4 2013 delivery gained 0.46 percept month on month on Friday 25 October 2 ...
Saturday, 26 October 13
PANAMAX CHARTER RATES FROM INDONESIA TO INDIA STAY FIRM - SOLYM
COALspot.com: The freight market showed tendency of softness with Cape and Panamax futures and physical soft.
The BDI was down by 12 pct week end ...
Saturday, 26 October 13
DRY BULK MARKET KEEPS ON RETREATING, BUT NEW BUILDING ORDERS KEEP ON PILING - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market kept on retreating this week, with the industry's benchmark, the Baltic Dry Index (BDI) falling to 1,708 points, down 78 on the ...
Friday, 25 October 13
U.S. YEAR-TO-DATE COAL PRODUCTION REACHED TOTALLED 803.1 MMST
COALspot.com – United States the world’s second largest coal producer produced approximately 19.10 million short tons (mmst) of coal in ...
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- Central Java Power - Indonesia
- Vedanta Resources Plc - India
- Essar Steel Hazira Ltd - India
- Riau Bara Harum - Indonesia
- PTC India Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- IHS Mccloskey Coal Group - USA
- Bukit Asam (Persero) Tbk - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Indian Oil Corporation Limited
- Globalindo Alam Lestari - Indonesia
- Australian Coal Association
- Kalimantan Lumbung Energi - Indonesia
- White Energy Company Limited
- Indogreen Group - Indonesia
- Global Green Power PLC Corporation, Philippines
- Global Business Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Lanco Infratech Ltd - India
- The Treasury - Australian Government
- The University of Queensland
- MS Steel International - UAE
- Indo Tambangraya Megah - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Larsen & Toubro Limited - India
- Indika Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Borneo Indobara - Indonesia
- Price Waterhouse Coopers - Russia
- Edison Trading Spa - Italy
- Siam City Cement - Thailand
- Standard Chartered Bank - UAE
- Kartika Selabumi Mining - Indonesia
- Marubeni Corporation - India
- ASAPP Information Group - India
- IEA Clean Coal Centre - UK
- Wilmar Investment Holdings
- Petron Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Semirara Mining Corp, Philippines
- Directorate Of Revenue Intelligence - India
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bhushan Steel Limited - India
- Jindal Steel & Power Ltd - India
- GAC Shipping (India) Pvt Ltd
- Latin American Coal - Colombia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kepco SPC Power Corporation, Philippines
- Star Paper Mills Limited - India
- Sakthi Sugars Limited - India
- India Bulls Power Limited - India
- Indonesian Coal Mining Association
- South Luzon Thermal Energy Corporation
- LBH Netherlands Bv - Netherlands
- Gujarat Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Sarangani Energy Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- McConnell Dowell - Australia
- Thiess Contractors Indonesia
- Central Electricity Authority - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sical Logistics Limited - India
- Vizag Seaport Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Baramulti Group, Indonesia
- Makarim & Taira - Indonesia
- San Jose City I Power Corp, Philippines
- Romanian Commodities Exchange
- Trasteel International SA, Italy
- Asmin Koalindo Tuhup - Indonesia
- Bukit Baiduri Energy - Indonesia
- Cement Manufacturers Association - India
- Formosa Plastics Group - Taiwan
- Anglo American - United Kingdom
- The State Trading Corporation of India Ltd
- Billiton Holdings Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jaiprakash Power Ventures ltd
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Antam Resourcindo - Indonesia
- Medco Energi Mining Internasional
- OPG Power Generation Pvt Ltd - India
- Chamber of Mines of South Africa
- Binh Thuan Hamico - Vietnam
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Minerals Council of Australia
- Merrill Lynch Commodities Europe
- Salva Resources Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Economic Council, Georgia
- Malabar Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Rio Tinto Coal - Australia
- Posco Energy - South Korea
- Coastal Gujarat Power Limited - India
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
- Tata Chemicals Ltd - India
- Parliament of New Zealand
- Heidelberg Cement - Germany
- Therma Luzon, Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Global Coal Blending Company Limited - Australia
- Bangladesh Power Developement Board
- Uttam Galva Steels Limited - India
- Port Waratah Coal Services - Australia
- Indian Energy Exchange, India
- Bharathi Cement Corporation - India
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- SMC Global Power, Philippines
- Eastern Energy - Thailand
- Tamil Nadu electricity Board
- Ministry of Mines - Canada
- Bulk Trading Sa - Switzerland
- Videocon Industries ltd - India
- Barasentosa Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ambuja Cements Ltd - India
- Altura Mining Limited, Indonesia
- Attock Cement Pakistan Limited
- Dalmia Cement Bharat India
- Iligan Light & Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Planning Commission, India
- Sindya Power Generating Company Private Ltd
- SMG Consultants - Indonesia
- Kaltim Prima Coal - Indonesia
- Singapore Mercantile Exchange
- Orica Australia Pty. Ltd.
- Africa Commodities Group - South Africa
- Banpu Public Company Limited - Thailand
- New Zealand Coal & Carbon
- Aboitiz Power Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- Kumho Petrochemical, South Korea
- Interocean Group of Companies - India
- Agrawal Coal Company - India
- Siam City Cement PLC, Thailand
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Energy Link Ltd, New Zealand
- Grasim Industreis Ltd - India
- PowerSource Philippines DevCo
- CIMB Investment Bank - Malaysia
- GMR Energy Limited - India
- GVK Power & Infra Limited - India
- Straits Asia Resources Limited - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Mintek Dendrill Indonesia
- Coalindo Energy - Indonesia
- Mercuria Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- Chettinad Cement Corporation Ltd - India
- Mercator Lines Limited - India
- Krishnapatnam Port Company Ltd. - India
- Pipit Mutiara Jaya. PT, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Oldendorff Carriers - Singapore
- Sojitz Corporation - Japan
- PNOC Exploration Corporation - Philippines
- VISA Power Limited - India
- Ministry of Finance - Indonesia
- Cigading International Bulk Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Carbofer General Trading SA - India
- Aditya Birla Group - India
- Sinarmas Energy and Mining - Indonesia
- Gujarat Sidhee Cement - India
- Deloitte Consulting - India
- Ind-Barath Power Infra Limited - India
- Power Finance Corporation Ltd., India
- Metalloyd Limited - United Kingdom
- SN Aboitiz Power Inc, Philippines
- Renaissance Capital - South Africa
- Xindia Steels Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Coal Council - USA
- Semirara Mining and Power Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Bayan Resources Tbk. - Indonesia
- Mjunction Services Limited - India
- ICICI Bank Limited - India
- Meenaskhi Energy Private Limited - India
- London Commodity Brokers - England
- Kohat Cement Company Ltd. - Pakistan
- Australian Commodity Traders Exchange
- Miang Besar Coal Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Commonwealth Bank - Australia
- Karaikal Port Pvt Ltd - India
- CNBM International Corporation - China
- Georgia Ports Authority, United States
- Bukit Makmur.PT - Indonesia
- Thai Mozambique Logistica
- Kapuas Tunggal Persada - Indonesia
- Savvy Resources Ltd - HongKong
- Wood Mackenzie - Singapore
- Independent Power Producers Association of India
- Coal and Oil Company - UAE
- Bhatia International Limited - India
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