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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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Tuesday, 15 October 13
NEWCASTLE PORT SHIPPED 6.50% MORE COAL W-O-W
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port up 6.50 per cent week on week to 3.19 million mt for ...
Monday, 14 October 13
MEMR OF INDONESIA SETS THE COAL'S SPOT PRICE AT US$ 76.61 FOR OCT'13 DELIVERY
COALspot. com - The Indonesian government has revised down government declared coal bench mark price by US$ 0.28/ MT to US$ 76.61 for October 2013 d ...
Monday, 14 October 13
CARBON POLICIES UNLIKELY TO PREVENT A COAL-FUELLED WORLD - WOOD MACKENZIE
China will propel coal growth but US, Europe and Asia will sustain global demand.
At the World Energy Congress (WEC) today Wood Mackenzie's Pres ...
Sunday, 13 October 13
Q4'13 DELIVERY SUB-BIT INDO COAL SWAP FALLS SEVEN STRAIGHT WEEK
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q4 2013 delivery fell 1.72 percept month on month on Friday 11 October 201 ...
Sunday, 13 October 13
API 8 CFR SOUTH CHINA COAL - AVERAGE Q4 2013 DELIVERY FELL 0.30 PERCEPT ON WEEK
COALspot.com : API 8 CFR South China Coal swaps for average Q4 2013 delivery fell 0.30 percept week on week on Friday 11 October 2013. The CFR South ...
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- Cement Manufacturers Association - India
- Holcim Trading Pte Ltd - Singapore
- AsiaOL BioFuels Corp., Philippines
- Edison Trading Spa - Italy
- Ministry of Finance - Indonesia
- Thai Mozambique Logistica
- Minerals Council of Australia
- Riau Bara Harum - Indonesia
- ICICI Bank Limited - India
- New Zealand Coal & Carbon
- Binh Thuan Hamico - Vietnam
- Straits Asia Resources Limited - Singapore
- Merrill Lynch Commodities Europe
- Kalimantan Lumbung Energi - Indonesia
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Salva Resources Pvt Ltd - India
- Bhatia International Limited - India
- Globalindo Alam Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Tata Chemicals Ltd - India
- Tamil Nadu electricity Board
- GN Power Mariveles Coal Plant, Philippines
- Larsen & Toubro Limited - India
- Bulk Trading Sa - Switzerland
- Aboitiz Power Corporation - Philippines
- Singapore Mercantile Exchange
- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Indian Energy Exchange, India
- Central Java Power - Indonesia
- OPG Power Generation Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Heidelberg Cement - Germany
- Bharathi Cement Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- CNBM International Corporation - China
- SN Aboitiz Power Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Chettinad Cement Corporation Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Port Waratah Coal Services - Australia
- Electricity Generating Authority of Thailand
- Karbindo Abesyapradhi - Indoneisa
- Orica Australia Pty. Ltd.
- Sarangani Energy Corporation, Philippines
- Coalindo Energy - Indonesia
- Ambuja Cements Ltd - India
- Orica Mining Services - Indonesia
- McConnell Dowell - Australia
- Australian Coal Association
- Medco Energi Mining Internasional
- San Jose City I Power Corp, Philippines
- CIMB Investment Bank - Malaysia
- Metalloyd Limited - United Kingdom
- Vizag Seaport Private Limited - India
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- Therma Luzon, Inc, Philippines
- SMC Global Power, Philippines
- Wilmar Investment Holdings
- Banpu Public Company Limited - Thailand
- Kideco Jaya Agung - Indonesia
- Romanian Commodities Exchange
- Semirara Mining and Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indogreen Group - Indonesia
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Petron Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- The University of Queensland
- White Energy Company Limited
- GAC Shipping (India) Pvt Ltd
- Anglo American - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Chamber of Mines of South Africa
- Baramulti Group, Indonesia
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
- Neyveli Lignite Corporation Ltd, - India
- Cigading International Bulk Terminal - Indonesia
- Indian Oil Corporation Limited
- Sojitz Corporation - Japan
- GMR Energy Limited - India
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- Sical Logistics Limited - India
- Central Electricity Authority - India
- Wood Mackenzie - Singapore
- Agrawal Coal Company - India
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Renaissance Capital - South Africa
- Samtan Co., Ltd - South Korea
- Bhushan Steel Limited - India
- Siam City Cement PLC, Thailand
- Pendopo Energi Batubara - Indonesia
- Semirara Mining Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- The State Trading Corporation of India Ltd
- Grasim Industreis Ltd - India
- Borneo Indobara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- Parliament of New Zealand
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- Georgia Ports Authority, United States
- Kapuas Tunggal Persada - Indonesia
- Kumho Petrochemical, South Korea
- Power Finance Corporation Ltd., India
- Latin American Coal - Colombia
- Kobexindo Tractors - Indoneisa
- Siam City Cement - Thailand
- Gujarat Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- PTC India Limited - India
- Global Coal Blending Company Limited - Australia
- PowerSource Philippines DevCo
- Mercuria Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- Kartika Selabumi Mining - Indonesia
- Interocean Group of Companies - India
- Price Waterhouse Coopers - Russia
- Commonwealth Bank - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Aditya Birla Group - India
- Star Paper Mills Limited - India
- Meenaskhi Energy Private Limited - India
- Mercator Lines Limited - India
- The Treasury - Australian Government
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- Rashtriya Ispat Nigam Limited - India
- Manunggal Multi Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- SMG Consultants - Indonesia
- Trasteel International SA, Italy
- Electricity Authority, New Zealand
- Sree Jayajothi Cements Limited - India
- Thiess Contractors Indonesia
- Altura Mining Limited, Indonesia
- Bangladesh Power Developement Board
- Antam Resourcindo - Indonesia
- Carbofer General Trading SA - India
- Sakthi Sugars Limited - India
- Jindal Steel & Power Ltd - India
- Makarim & Taira - Indonesia
- Standard Chartered Bank - UAE
- Eastern Coal Council - USA
- Indika Energy - Indonesia
- Malabar Cements Ltd - India
- MS Steel International - UAE
- Independent Power Producers Association of India
- Savvy Resources Ltd - HongKong
- VISA Power Limited - India
- Global Green Power PLC Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Kohat Cement Company Ltd. - Pakistan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Planning Commission, India
- Maharashtra Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
- Asmin Koalindo Tuhup - Indonesia
- Iligan Light & Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Toyota Tsusho Corporation, Japan
- Goldman Sachs - Singapore
- IHS Mccloskey Coal Group - USA
- Eastern Energy - Thailand
- Global Business Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Uttam Galva Steels Limited - India
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Commodity Traders Exchange
- ASAPP Information Group - India
- TeaM Sual Corporation - Philippines
- India Bulls Power Limited - India
- Ind-Barath Power Infra Limited - India
- Videocon Industries ltd - India
- Ministry of Mines - Canada
- Vedanta Resources Plc - India
- Gujarat Sidhee Cement - India
- Directorate General of MIneral and Coal - Indonesia
- Rio Tinto Coal - Australia
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhoruka Overseas - Indonesia
- Energy Development Corp, Philippines
- Marubeni Corporation - India
- GVK Power & Infra Limited - India
- Mintek Dendrill Indonesia
- Jaiprakash Power Ventures ltd
- Formosa Plastics Group - Taiwan
- Maheswari Brothers Coal Limited - India
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