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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, 16 October 13
NEW STRATEGIES AND OPPORTUNITIES IN A RAPIDLY EVOLVING COAL INDUSTRY
The 12th Annual Coal Markets assumes even more significance as the industry seeks more market information, inputs on trade strategies, supply and de ...
Wednesday, 16 October 13
CAPES: RATES DROPPED; PANAMAX: ADVANCED - INTERMODAL
After a month and a half of straight weekly positive closings, the BDI has finished the week in the red. Monday started slow as holidays in the East ...
Wednesday, 16 October 13
WILL THIS LATEST DRY BULK MARKET UPTREND PROVE TO BE AS LONG-LIVED OR JUST ANOTHER MOMENTARY SPIKE? - CHRISTOS MANZTIOS
COALspot.com: So here we are again facing the same old question: Will this latest market uptrend prove to be as long-lived as all owners hope or jus ...
Wednesday, 16 October 13
KOSEP TO IMPORT 0.49 MILLION TONS OF 4600 NAR COAL FOR JAN - FEB '14
COALspot.com - Korea South-East Power Co., a Korean generator and distributor of electricity on behalf of five Korean Gencos intends to procure 490, ...
Tuesday, 15 October 13
CHINA COAL IMPORTS TO KEEP GROWING IN THE YEARS TO COME, ALBEIT AT A SLOWER RATE - EVA TZIMA / NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
In its latest monthly report, shipbroker Intermodal highlighted the growing role of coal in the energy mix. According to Intermodal's research anal ...
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- Bharathi Cement Corporation - India
- Maharashtra Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Agrawal Coal Company - India
- Deloitte Consulting - India
- Asmin Koalindo Tuhup - Indonesia
- Marubeni Corporation - India
- IHS Mccloskey Coal Group - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Finance - Indonesia
- Oldendorff Carriers - Singapore
- Mjunction Services Limited - India
- Xindia Steels Limited - India
- Vizag Seaport Private Limited - India
- Mintek Dendrill Indonesia
- Latin American Coal - Colombia
- Wilmar Investment Holdings
- International Coal Ventures Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Sical Logistics Limited - India
- Bangladesh Power Developement Board
- Gujarat Sidhee Cement - India
- TeaM Sual Corporation - Philippines
- Vedanta Resources Plc - India
- Kalimantan Lumbung Energi - Indonesia
- Indika Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Energy Link Ltd, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Savvy Resources Ltd - HongKong
- Bukit Makmur.PT - Indonesia
- Ministry of Mines - Canada
- Sarangani Energy Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Makarim & Taira - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Rio Tinto Coal - Australia
- Bhoruka Overseas - Indonesia
- Chettinad Cement Corporation Ltd - India
- Global Green Power PLC Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Coal and Oil Company - UAE
- Altura Mining Limited, Indonesia
- Riau Bara Harum - Indonesia
- Edison Trading Spa - Italy
- Georgia Ports Authority, United States
- GN Power Mariveles Coal Plant, Philippines
- Antam Resourcindo - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Australia Pty. Ltd.
- Karbindo Abesyapradhi - Indoneisa
- Economic Council, Georgia
- Jaiprakash Power Ventures ltd
- Price Waterhouse Coopers - Russia
- Ambuja Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Independent Power Producers Association of India
- Power Finance Corporation Ltd., India
- CNBM International Corporation - China
- Trasteel International SA, Italy
- Indian Oil Corporation Limited
- ASAPP Information Group - India
- Leighton Contractors Pty Ltd - Australia
- Malabar Cements Ltd - India
- Eastern Coal Council - USA
- South Luzon Thermal Energy Corporation
- SMG Consultants - Indonesia
- Energy Development Corp, Philippines
- Heidelberg Cement - Germany
- Grasim Industreis Ltd - India
- CIMB Investment Bank - Malaysia
- Bayan Resources Tbk. - Indonesia
- Planning Commission, India
- Siam City Cement PLC, Thailand
- Coastal Gujarat Power Limited - India
- GVK Power & Infra Limited - India
- Intertek Mineral Services - Indonesia
- Australian Commodity Traders Exchange
- Goldman Sachs - Singapore
- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Bhushan Steel Limited - India
- Kumho Petrochemical, South Korea
- Barasentosa Lestari - Indonesia
- Videocon Industries ltd - India
- Gujarat Mineral Development Corp Ltd - India
- SMC Global Power, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Metalloyd Limited - United Kingdom
- PowerSource Philippines DevCo
- The Treasury - Australian Government
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Indogreen Group - Indonesia
- Essar Steel Hazira Ltd - India
- Sree Jayajothi Cements Limited - India
- Kartika Selabumi Mining - Indonesia
- Wood Mackenzie - Singapore
- Therma Luzon, Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Electricity Generating Authority of Thailand
- Commonwealth Bank - Australia
- Dalmia Cement Bharat India
- Straits Asia Resources Limited - Singapore
- Mercator Lines Limited - India
- Coalindo Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meralco Power Generation, Philippines
- Kobexindo Tractors - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Thai Mozambique Logistica
- Neyveli Lignite Corporation Ltd, - India
- Lanco Infratech Ltd - India
- Global Coal Blending Company Limited - Australia
- Interocean Group of Companies - India
- Banpu Public Company Limited - Thailand
- European Bulk Services B.V. - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- India Bulls Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- The State Trading Corporation of India Ltd
- Semirara Mining and Power Corporation, Philippines
- Africa Commodities Group - South Africa
- White Energy Company Limited
- Alfred C Toepfer International GmbH - Germany
- Eastern Energy - Thailand
- Renaissance Capital - South Africa
- Krishnapatnam Port Company Ltd. - India
- Indian Energy Exchange, India
- Romanian Commodities Exchange
- Kideco Jaya Agung - Indonesia
- Merrill Lynch Commodities Europe
- VISA Power Limited - India
- Ministry of Transport, Egypt
- Thiess Contractors Indonesia
- Holcim Trading Pte Ltd - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Aditya Birla Group - India
- Chamber of Mines of South Africa
- Central Electricity Authority - India
- Iligan Light & Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Larsen & Toubro Limited - India
- Miang Besar Coal Terminal - Indonesia
- Tata Chemicals Ltd - India
- Uttam Galva Steels Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Sojitz Corporation - Japan
- PTC India Limited - India
- McConnell Dowell - Australia
- The University of Queensland
- Petron Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- AsiaOL BioFuels Corp., Philippines
- Minerals Council of Australia
- London Commodity Brokers - England
- Samtan Co., Ltd - South Korea
- Star Paper Mills Limited - India
- Salva Resources Pvt Ltd - India
- Madhucon Powers Ltd - India
- Standard Chartered Bank - UAE
- Manunggal Multi Energi - Indonesia
- Orica Mining Services - Indonesia
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- Tamil Nadu electricity Board
- Port Waratah Coal Services - Australia
- Bhatia International Limited - India
- Mercuria Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indonesian Coal Mining Association
- Maheswari Brothers Coal Limited - India
- GMR Energy Limited - India
- Toyota Tsusho Corporation, Japan
- Siam City Cement - Thailand
- Carbofer General Trading SA - India
- LBH Netherlands Bv - Netherlands
- OPG Power Generation Pvt Ltd - India
- Attock Cement Pakistan Limited
- IEA Clean Coal Centre - UK
- Parry Sugars Refinery, India
- Central Java Power - Indonesia
- Karaikal Port Pvt Ltd - India
- Australian Coal Association
- Borneo Indobara - Indonesia
- Simpson Spence & Young - Indonesia
- Medco Energi Mining Internasional
- Pendopo Energi Batubara - Indonesia
- ICICI Bank Limited - India
- Singapore Mercantile Exchange
- MS Steel International - UAE
- Meenaskhi Energy Private Limited - India
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Jindal Steel & Power Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Electricity Authority, New Zealand
- Formosa Plastics Group - Taiwan
- Semirara Mining Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Bulk Trading Sa - Switzerland
- Parliament of New Zealand
- Baramulti Group, Indonesia
- Anglo American - United Kingdom
- Sakthi Sugars Limited - India
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