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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, 09 October 13
PANAMAX: FIRM ; FIXING ACTIVITY INCREASED IN BOTH BASINS - INTERMODAL
This was another week of gains for the Dry Bulk market, albeit very modest ones compared to the previous ones. Charterers and owners struggled for t ...
Tuesday, 08 October 13
CHINA: INTENSE COMPETITION AMONG DOMESTIC COAL MINERS AS 2013 IMPORT DEMAND REMAINS STRONG - WOOD MACKENZIE
Prices will not fall under RMB500/t or risk supply availability to the coastal market
Despite China's lower economic growth, Wood Mackenzie says ...
Monday, 07 October 13
RICHARD BAY COAL TERMINAL SHIPPED 49.94 MMT OF COAL YTD
COALspot.com - Richards Bay Coal Terminal (RBCT), the world's single largest coal terminal has shipped 49,946,509 mt of coals YTD, according to por ...
Monday, 07 October 13
SOUTH AFRICA'S RBCT SHIPPED 7.94% MORE COAL IN SEPT' 13
COALspot.com - Richards Bay Coal Terminal (RBCT), the single largest coal export terminal in South Africa as well as in the world has shipped 7.94 p ...
Monday, 07 October 13
SGX - CFR SOUTH CHINA COAL SWAPS END ALMOST FLAT
COALspot.com : SGX has launched API 8 CFR South China Coal Swap on 29 April 2013 and SGX replaced the previous swap.
API 8 CFR South China Coal s ...
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- Indogreen Group - Indonesia
- LBH Netherlands Bv - Netherlands
- Wilmar Investment Holdings
- Siam City Cement PLC, Thailand
- Bhatia International Limited - India
- Coalindo Energy - Indonesia
- Sical Logistics Limited - India
- Orica Mining Services - Indonesia
- Billiton Holdings Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Agrawal Coal Company - India
- Borneo Indobara - Indonesia
- Indonesian Coal Mining Association
- Meenaskhi Energy Private Limited - India
- Meralco Power Generation, Philippines
- ICICI Bank Limited - India
- Bangladesh Power Developement Board
- CIMB Investment Bank - Malaysia
- Formosa Plastics Group - Taiwan
- Sinarmas Energy and Mining - Indonesia
- White Energy Company Limited
- Xindia Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Electricity Generating Authority of Thailand
- IHS Mccloskey Coal Group - USA
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Mercator Lines Limited - India
- Karaikal Port Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Australian Coal Association
- The Treasury - Australian Government
- Riau Bara Harum - Indonesia
- Indian Energy Exchange, India
- McConnell Dowell - Australia
- Chamber of Mines of South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aboitiz Power Corporation - Philippines
- Larsen & Toubro Limited - India
- Parliament of New Zealand
- Romanian Commodities Exchange
- Singapore Mercantile Exchange
- Parry Sugars Refinery, India
- Deloitte Consulting - India
- Makarim & Taira - Indonesia
- Kideco Jaya Agung - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Development Corp, Philippines
- Straits Asia Resources Limited - Singapore
- SMC Global Power, Philippines
- Maheswari Brothers Coal Limited - India
- Eastern Coal Council - USA
- Ministry of Finance - Indonesia
- Bharathi Cement Corporation - India
- European Bulk Services B.V. - Netherlands
- Samtan Co., Ltd - South Korea
- SN Aboitiz Power Inc, Philippines
- Cement Manufacturers Association - India
- Merrill Lynch Commodities Europe
- Australian Commodity Traders Exchange
- Lanco Infratech Ltd - India
- OPG Power Generation Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Global Coal Blending Company Limited - Australia
- Toyota Tsusho Corporation, Japan
- Edison Trading Spa - Italy
- Malabar Cements Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Leighton Contractors Pty Ltd - Australia
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- VISA Power Limited - India
- San Jose City I Power Corp, Philippines
- ASAPP Information Group - India
- Uttam Galva Steels Limited - India
- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
- Standard Chartered Bank - UAE
- Jindal Steel & Power Ltd - India
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sakthi Sugars Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Globalindo Alam Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- Commonwealth Bank - Australia
- Kobexindo Tractors - Indoneisa
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- Kapuas Tunggal Persada - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Posco Energy - South Korea
- The State Trading Corporation of India Ltd
- Manunggal Multi Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Global Business Power Corporation, Philippines
- MS Steel International - UAE
- AsiaOL BioFuels Corp., Philippines
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- Africa Commodities Group - South Africa
- Indo Tambangraya Megah - Indonesia
- Independent Power Producers Association of India
- Mintek Dendrill Indonesia
- Aditya Birla Group - India
- Kepco SPC Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- GMR Energy Limited - India
- Orica Australia Pty. Ltd.
- Ambuja Cements Ltd - India
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
- Coal and Oil Company - UAE
- Altura Mining Limited, Indonesia
- Planning Commission, India
- Thai Mozambique Logistica
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Carbofer General Trading SA - India
- Gujarat Mineral Development Corp Ltd - India
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
- Sarangani Energy Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Bhushan Steel Limited - India
- Sree Jayajothi Cements Limited - India
- Bukit Baiduri Energy - Indonesia
- Wood Mackenzie - Singapore
- India Bulls Power Limited - India
- Trasteel International SA, Italy
- Tata Chemicals Ltd - India
- Binh Thuan Hamico - Vietnam
- Directorate Of Revenue Intelligence - India
- Price Waterhouse Coopers - Russia
- Minerals Council of Australia
- Oldendorff Carriers - Singapore
- Sojitz Corporation - Japan
- Madhucon Powers Ltd - India
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- PTC India Limited - India
- GVK Power & Infra Limited - India
- Central Electricity Authority - India
- SMG Consultants - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Anglo American - United Kingdom
- Ministry of Transport, Egypt
- Baramulti Group, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- PNOC Exploration Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Ind-Barath Power Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Coastal Gujarat Power Limited - India
- Banpu Public Company Limited - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Power Finance Corporation Ltd., India
- Indika Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bank of Tokyo Mitsubishi UFJ Ltd
- Savvy Resources Ltd - HongKong
- Neyveli Lignite Corporation Ltd, - India
- Kartika Selabumi Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Latin American Coal - Colombia
- Eastern Energy - Thailand
- Kumho Petrochemical, South Korea
- Grasim Industreis Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Economic Council, Georgia
- Antam Resourcindo - Indonesia
- Petron Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Goldman Sachs - Singapore
- IEA Clean Coal Centre - UK
- Global Green Power PLC Corporation, Philippines
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- Georgia Ports Authority, United States
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- Tamil Nadu electricity Board
- PetroVietnam Power Coal Import and Supply Company
- Sindya Power Generating Company Private Ltd
- Maharashtra Electricity Regulatory Commission - India
- Medco Energi Mining Internasional
- Heidelberg Cement - Germany
- Semirara Mining Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Mercuria Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Chettinad Cement Corporation Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Interocean Group of Companies - India
- Mjunction Services Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Attock Cement Pakistan Limited
- Cigading International Bulk Terminal - Indonesia
- Marubeni Corporation - India
- Electricity Authority, New Zealand
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