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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, 24 October 13
PANAMAX: RATES SLIP ACROSS BOTH HEMISPHERES
Handy
We were back from holidays but still not much enquiries in the market. Overall future direction is uncertain. Currently, ships passing Singap ...
Thursday, 24 October 13
SHIP PRICES ARE INCREASING ON THE BACK OF IMPROVED MARKET SENTIMENT - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept on retreating from its recent highs, ending yesterday at 1,786 points, down 61 points on the day, with Capesizes leadin ...
Wednesday, 23 October 13
DRY BULK MARKET HAS SHOWN SIGNS OF STABILITY - INTERMODAL
Chartering (Wet: Stable+ / Dry: Stable-)
The Dry Bulk market has shown signs of stability this past week, with the sole exception of Capes, rates f ...
Wednesday, 23 October 13
MARKET SENTIMENT IN THE DRY BULK SECTOR REMAINS POSITIVE - YANNIS OLZIERSKY
Market sentiment in the dry bulk sector remains positive despite the latest correction in freight rates for the Capesize sector, which are sliding f ...
Tuesday, 22 October 13
NEWCASTLE PORT SERVED 38 OCEAN GOING VESSELS IN A WEEK
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port up 0.64 per cent week on week to 3.21 million mt for ...
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- Kartika Selabumi Mining - Indonesia
- Coal and Oil Company - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Savvy Resources Ltd - HongKong
- SMC Global Power, Philippines
- Simpson Spence & Young - Indonesia
- New Zealand Coal & Carbon
- Pipit Mutiara Jaya. PT, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Merrill Lynch Commodities Europe
- Cigading International Bulk Terminal - Indonesia
- Goldman Sachs - Singapore
- Electricity Authority, New Zealand
- ASAPP Information Group - India
- Larsen & Toubro Limited - India
- Globalindo Alam Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Binh Thuan Hamico - Vietnam
- Karbindo Abesyapradhi - Indoneisa
- Africa Commodities Group - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining Corp, Philippines
- London Commodity Brokers - England
- Australian Commodity Traders Exchange
- Bukit Baiduri Energy - Indonesia
- Madhucon Powers Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Mining Services - Indonesia
- Bulk Trading Sa - Switzerland
- Malabar Cements Ltd - India
- Intertek Mineral Services - Indonesia
- International Coal Ventures Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Australian Coal Association
- Bayan Resources Tbk. - Indonesia
- Kaltim Prima Coal - Indonesia
- Lanco Infratech Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Sical Logistics Limited - India
- The Treasury - Australian Government
- Georgia Ports Authority, United States
- Holcim Trading Pte Ltd - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Port Waratah Coal Services - Australia
- Eastern Energy - Thailand
- Rio Tinto Coal - Australia
- IHS Mccloskey Coal Group - USA
- Energy Development Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Metalloyd Limited - United Kingdom
- European Bulk Services B.V. - Netherlands
- Xindia Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- ICICI Bank Limited - India
- Posco Energy - South Korea
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- Latin American Coal - Colombia
- Wood Mackenzie - Singapore
- Borneo Indobara - Indonesia
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- Singapore Mercantile Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wilmar Investment Holdings
- GVK Power & Infra Limited - India
- Ambuja Cements Ltd - India
- McConnell Dowell - Australia
- Agrawal Coal Company - India
- Iligan Light & Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- MS Steel International - UAE
- Heidelberg Cement - Germany
- PTC India Limited - India
- Ind-Barath Power Infra Limited - India
- Marubeni Corporation - India
- Cement Manufacturers Association - India
- Parliament of New Zealand
- CIMB Investment Bank - Malaysia
- IEA Clean Coal Centre - UK
- Essar Steel Hazira Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Trasteel International SA, Italy
- Deloitte Consulting - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Renaissance Capital - South Africa
- Aditya Birla Group - India
- Chamber of Mines of South Africa
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- Electricity Generating Authority of Thailand
- Indian Energy Exchange, India
- Therma Luzon, Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Independent Power Producers Association of India
- Carbofer General Trading SA - India
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Tata Chemicals Ltd - India
- Sojitz Corporation - Japan
- Ceylon Electricity Board - Sri Lanka
- Sinarmas Energy and Mining - Indonesia
- Global Business Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
- SMG Consultants - Indonesia
- Economic Council, Georgia
- Makarim & Taira - Indonesia
- Antam Resourcindo - Indonesia
- Tamil Nadu electricity Board
- Kideco Jaya Agung - Indonesia
- The State Trading Corporation of India Ltd
- Central Java Power - Indonesia
- Siam City Cement PLC, Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Jaiprakash Power Ventures ltd
- Star Paper Mills Limited - India
- Bukit Makmur.PT - Indonesia
- The University of Queensland
- Coastal Gujarat Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- Price Waterhouse Coopers - Russia
- SN Aboitiz Power Inc, Philippines
- Ministry of Transport, Egypt
- Medco Energi Mining Internasional
- Orica Australia Pty. Ltd.
- Coalindo Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Rashtriya Ispat Nigam Limited - India
- South Luzon Thermal Energy Corporation
- Commonwealth Bank - Australia
- Central Electricity Authority - India
- Parry Sugars Refinery, India
- GN Power Mariveles Coal Plant, Philippines
- Meralco Power Generation, Philippines
- Chettinad Cement Corporation Ltd - India
- Siam City Cement - Thailand
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- Romanian Commodities Exchange
- Thai Mozambique Logistica
- San Jose City I Power Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Power Finance Corporation Ltd., India
- Anglo American - United Kingdom
- Mercator Lines Limited - India
- Oldendorff Carriers - Singapore
- Aboitiz Power Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Ministry of Mines - Canada
- Kalimantan Lumbung Energi - Indonesia
- Vizag Seaport Private Limited - India
- White Energy Company Limited
- Alfred C Toepfer International GmbH - Germany
- Thiess Contractors Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Energy Link Ltd, New Zealand
- PowerSource Philippines DevCo
- Standard Chartered Bank - UAE
- Indika Energy - Indonesia
- Indonesian Coal Mining Association
- Dalmia Cement Bharat India
- Vedanta Resources Plc - India
- Maheswari Brothers Coal Limited - India
- Formosa Plastics Group - Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- VISA Power Limited - India
- Bharathi Cement Corporation - India
- Karaikal Port Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- LBH Netherlands Bv - Netherlands
- Indogreen Group - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- AsiaOL BioFuels Corp., Philippines
- Uttam Galva Steels Limited - India
- Ministry of Finance - Indonesia
- Banpu Public Company Limited - Thailand
- Jindal Steel & Power Ltd - India
- Sarangani Energy Corporation, Philippines
- Mjunction Services Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhatia International Limited - India
- Indo Tambangraya Megah - Indonesia
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Eastern Coal Council - USA
- Kepco SPC Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- OPG Power Generation Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Minerals Council of Australia
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- Sree Jayajothi Cements Limited - India
- CNBM International Corporation - China
- Salva Resources Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Oil Corporation Limited
- Sindya Power Generating Company Private Ltd
- India Bulls Power Limited - India
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