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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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Saturday, 12 October 13
PANAMAX: OWNERS ARE AT US$ 17-18.5K PER DAY; CHARTERERS ARE AT US$ 15.5-16K - CAPT. REDDY
COALspot.com - The futures market was heavily down on the cape size vessels and the physical average charterer rates on cape size vessels dropped by ...
Friday, 11 October 13
DRY BULK FREIGHT RATE POSITIVE MOMENTUM TO BE SUPPORTED BY HIGHER DEMAND SAYS BIMCO - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
BIMCO released its latest short term research on the shipping markets, estimating that the elevated level of Capesize TC average rates i ...
Friday, 11 October 13
US COAL PRODUCTION FALLS 7.70% IN SEPTEMBER
COALspot.com – United States the world’s second largest coal producer produced approximately 17.70 million short tons (mmst) of coal in ...
Thursday, 10 October 13
NPC AUSTRALIA SHIPPED 2.99 MILLION TONS OF COAL W-O-W
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port up 12.04 per cent week on week to 2.99 million mt for ...
Thursday, 10 October 13
SEVERAL PANAMAX FIXTURES FOR 1 YEAR TC HAVE BEEN REPORTED AROUND $13.5K/DAY - FEARNRESEARCH
Handy
The market is not much fancy as several holidays in the Far East last week. Tonnage side seems tight in SE Asia but there are many of them in ...
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- Binh Thuan Hamico - Vietnam
- Sindya Power Generating Company Private Ltd
- Bayan Resources Tbk. - Indonesia
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- VISA Power Limited - India
- Sree Jayajothi Cements Limited - India
- Central Java Power - Indonesia
- Aditya Birla Group - India
- Kobexindo Tractors - Indoneisa
- Rio Tinto Coal - Australia
- McConnell Dowell - Australia
- PetroVietnam Power Coal Import and Supply Company
- Bhatia International Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Intertek Mineral Services - Indonesia
- Latin American Coal - Colombia
- Heidelberg Cement - Germany
- Grasim Industreis Ltd - India
- Indika Energy - Indonesia
- Siam City Cement PLC, Thailand
- Independent Power Producers Association of India
- Timah Investasi Mineral - Indoneisa
- Ministry of Mines - Canada
- OPG Power Generation Pvt Ltd - India
- Eastern Coal Council - USA
- India Bulls Power Limited - India
- Parry Sugars Refinery, India
- Star Paper Mills Limited - India
- Gujarat Sidhee Cement - India
- CIMB Investment Bank - Malaysia
- Sical Logistics Limited - India
- Anglo American - United Kingdom
- Orica Mining Services - Indonesia
- Karaikal Port Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Meralco Power Generation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Petron Corporation, Philippines
- IEA Clean Coal Centre - UK
- Merrill Lynch Commodities Europe
- Global Business Power Corporation, Philippines
- Altura Mining Limited, Indonesia
- Eastern Energy - Thailand
- Planning Commission, India
- PTC India Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kideco Jaya Agung - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- European Bulk Services B.V. - Netherlands
- Sojitz Corporation - Japan
- Central Electricity Authority - India
- Jindal Steel & Power Ltd - India
- Thiess Contractors Indonesia
- GMR Energy Limited - India
- Deloitte Consulting - India
- Mjunction Services Limited - India
- Cement Manufacturers Association - India
- Tamil Nadu electricity Board
- Australian Commodity Traders Exchange
- Cigading International Bulk Terminal - Indonesia
- AsiaOL BioFuels Corp., Philippines
- TeaM Sual Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Therma Luzon, Inc, Philippines
- Romanian Commodities Exchange
- Sakthi Sugars Limited - India
- Mercator Lines Limited - India
- Globalindo Alam Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Port Waratah Coal Services - Australia
- Africa Commodities Group - South Africa
- MS Steel International - UAE
- Ambuja Cements Ltd - India
- Coalindo Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Manunggal Multi Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- LBH Netherlands Bv - Netherlands
- Thai Mozambique Logistica
- Carbofer General Trading SA - India
- Wood Mackenzie - Singapore
- Oldendorff Carriers - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Minerals Council of Australia
- Banpu Public Company Limited - Thailand
- Georgia Ports Authority, United States
- Larsen & Toubro Limited - India
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement - Thailand
- CNBM International Corporation - China
- Bukit Makmur.PT - Indonesia
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- Ministry of Transport, Egypt
- Borneo Indobara - Indonesia
- Price Waterhouse Coopers - Russia
- Kepco SPC Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- Kumho Petrochemical, South Korea
- Maheswari Brothers Coal Limited - India
- Formosa Plastics Group - Taiwan
- Pipit Mutiara Jaya. PT, Indonesia
- Simpson Spence & Young - Indonesia
- Pendopo Energi Batubara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indogreen Group - Indonesia
- Chettinad Cement Corporation Ltd - India
- Electricity Generating Authority of Thailand
- Semirara Mining and Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Bharathi Cement Corporation - India
- South Luzon Thermal Energy Corporation
- Vedanta Resources Plc - India
- Energy Link Ltd, New Zealand
- Bangladesh Power Developement Board
- Holcim Trading Pte Ltd - Singapore
- Gujarat Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Iligan Light & Power Inc, Philippines
- Standard Chartered Bank - UAE
- San Jose City I Power Corp, Philippines
- White Energy Company Limited
- Semirara Mining Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- SMC Global Power, Philippines
- Asmin Koalindo Tuhup - Indonesia
- GAC Shipping (India) Pvt Ltd
- Alfred C Toepfer International GmbH - Germany
- Electricity Authority, New Zealand
- Uttam Galva Steels Limited - India
- Marubeni Corporation - India
- Indian Oil Corporation Limited
- PowerSource Philippines DevCo
- Ind-Barath Power Infra Limited - India
- ASAPP Information Group - India
- Agrawal Coal Company - India
- Gujarat Mineral Development Corp Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Renaissance Capital - South Africa
- Chamber of Mines of South Africa
- Essar Steel Hazira Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Posco Energy - South Korea
- Videocon Industries ltd - India
- Dalmia Cement Bharat India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- Indonesian Coal Mining Association
- Bukit Asam (Persero) Tbk - Indonesia
- Meenaskhi Energy Private Limited - India
- The University of Queensland
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Global Green Power PLC Corporation, Philippines
- Interocean Group of Companies - India
- Indo Tambangraya Megah - Indonesia
- Aboitiz Power Corporation - Philippines
- Bhushan Steel Limited - India
- Antam Resourcindo - Indonesia
- Wilmar Investment Holdings
- Bhoruka Overseas - Indonesia
- ICICI Bank Limited - India
- The Treasury - Australian Government
- Parliament of New Zealand
- Energy Development Corp, Philippines
- Jaiprakash Power Ventures ltd
- Riau Bara Harum - Indonesia
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- International Coal Ventures Pvt Ltd - India
- Makarim & Taira - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Finance - Indonesia
- Barasentosa Lestari - Indonesia
- Attock Cement Pakistan Limited
- Mercuria Energy - Indonesia
- Mintek Dendrill Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Billiton Holdings Pty Ltd - Australia
- Bukit Baiduri Energy - Indonesia
- Salva Resources Pvt Ltd - India
- New Zealand Coal & Carbon
- Kapuas Tunggal Persada - Indonesia
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- Coal and Oil Company - UAE
- GVK Power & Infra Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kohat Cement Company Ltd. - Pakistan
- Vizag Seaport Private Limited - India
- Trasteel International SA, Italy
- London Commodity Brokers - England
- Straits Asia Resources Limited - Singapore
- Directorate Of Revenue Intelligence - India
- SMG Consultants - Indonesia
- Baramulti Group, Indonesia
- Singapore Mercantile Exchange
- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
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