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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, 01 October 13
DRY BULK MARKET POISED FOR RETREAT ON CHINA HOLIDAY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The start of a national weeklong in China as of Tuesday is expected to put a lid in the latest rally of the dry bulk freight market, as has always b ...
Monday, 30 September 13
NEWCASTLE'S COAL EXPORT VOLUME CONTINUES TO SLIP
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port fell 8.38 per cent week on week to 2.67 million mt fo ...
Monday, 30 September 13
PANAMAX CHARTER RATES TOUCHING US$ 18K FOR A TRIP TO NOPAC - CAPT. REDDY
COALspot.com : The freight market continued to remain firm, BDI and the Panamax index up week ended 27 September 2013.
The cape index was fell to ...
Sunday, 29 September 13
API 8 CFR SOUTH CHINA COAL Q3 2014 DELIVERY SWAP GAINED $1.19 M-O-M
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 ...
Sunday, 29 September 13
SUB-BIT INDONESIA COAL SWAP FELL ON MONTH AND WEEK
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q4 2013 delivery fell 3.93 percept month on month on Friday 27 September 2 ...
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- TNB Fuel Sdn Bhd - Malaysia
- GMR Energy Limited - India
- TeaM Sual Corporation - Philippines
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- Indika Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bulk Trading Sa - Switzerland
- Mintek Dendrill Indonesia
- Sree Jayajothi Cements Limited - India
- San Jose City I Power Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Timah Investasi Mineral - Indoneisa
- Savvy Resources Ltd - HongKong
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- Anglo American - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Meralco Power Generation, Philippines
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Bhoruka Overseas - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Sidhee Cement - India
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- Bharathi Cement Corporation - India
- Georgia Ports Authority, United States
- McConnell Dowell - Australia
- VISA Power Limited - India
- Romanian Commodities Exchange
- Salva Resources Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Oldendorff Carriers - Singapore
- Globalindo Alam Lestari - Indonesia
- White Energy Company Limited
- Electricity Authority, New Zealand
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Wood Mackenzie - Singapore
- Standard Chartered Bank - UAE
- Rio Tinto Coal - Australia
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Baramulti Group, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Coal Association
- Videocon Industries ltd - India
- Rashtriya Ispat Nigam Limited - India
- PTC India Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Aboitiz Power Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Coastal Gujarat Power Limited - India
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Ministry of Finance - Indonesia
- SMC Global Power, Philippines
- Global Coal Blending Company Limited - Australia
- Interocean Group of Companies - India
- Formosa Plastics Group - Taiwan
- Parry Sugars Refinery, India
- Gujarat Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Petron Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Bayan Resources Tbk. - Indonesia
- South Luzon Thermal Energy Corporation
- Vedanta Resources Plc - India
- SMG Consultants - Indonesia
- Meenaskhi Energy Private Limited - India
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- Coal and Oil Company - UAE
- ICICI Bank Limited - India
- Attock Cement Pakistan Limited
- Bhushan Steel Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thiess Contractors Indonesia
- Grasim Industreis Ltd - India
- Antam Resourcindo - Indonesia
- Samtan Co., Ltd - South Korea
- Carbofer General Trading SA - India
- Simpson Spence & Young - Indonesia
- Energy Link Ltd, New Zealand
- Siam City Cement PLC, Thailand
- Thai Mozambique Logistica
- Kepco SPC Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Energy Development Corp, Philippines
- Altura Mining Limited, Indonesia
- GVK Power & Infra Limited - India
- The Treasury - Australian Government
- Ind-Barath Power Infra Limited - India
- Parliament of New Zealand
- ASAPP Information Group - India
- Ministry of Transport, Egypt
- Karbindo Abesyapradhi - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Orica Australia Pty. Ltd.
- Sakthi Sugars Limited - India
- Eastern Energy - Thailand
- Wilmar Investment Holdings
- Jorong Barutama Greston.PT - Indonesia
- Jindal Steel & Power Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Billiton Holdings Pty Ltd - Australia
- Edison Trading Spa - Italy
- Sarangani Energy Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- International Coal Ventures Pvt Ltd - India
- Aditya Birla Group - India
- Kalimantan Lumbung Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Manunggal Multi Energi - Indonesia
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cigading International Bulk Terminal - Indonesia
- Mercator Lines Limited - India
- Sical Logistics Limited - India
- Price Waterhouse Coopers - Russia
- Economic Council, Georgia
- Xindia Steels Limited - India
- Planning Commission, India
- Orica Mining Services - Indonesia
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The University of Queensland
- Minerals Council of Australia
- Gujarat Mineral Development Corp Ltd - India
- Sojitz Corporation - Japan
- Eastern Coal Council - USA
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- The State Trading Corporation of India Ltd
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- Holcim Trading Pte Ltd - Singapore
- CNBM International Corporation - China
- Central Electricity Authority - India
- Agrawal Coal Company - India
- MS Steel International - UAE
- Bukit Makmur.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- AsiaOL BioFuels Corp., Philippines
- Asmin Koalindo Tuhup - Indonesia
- Barasentosa Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Semirara Mining Corp, Philippines
- Trasteel International SA, Italy
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- Tamil Nadu electricity Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Malabar Cements Ltd - India
- Directorate Of Revenue Intelligence - India
- Riau Bara Harum - Indonesia
- Iligan Light & Power Inc, Philippines
- Banpu Public Company Limited - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- Ministry of Mines - Canada
- IHS Mccloskey Coal Group - USA
- SN Aboitiz Power Inc, Philippines
- Goldman Sachs - Singapore
- Borneo Indobara - Indonesia
- Indogreen Group - Indonesia
- Kideco Jaya Agung - Indonesia
- Global Business Power Corporation, Philippines
- New Zealand Coal & Carbon
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- Renaissance Capital - South Africa
- Africa Commodities Group - South Africa
- LBH Netherlands Bv - Netherlands
- Tata Chemicals Ltd - India
- Makarim & Taira - Indonesia
- Independent Power Producers Association of India
- Lanco Infratech Ltd - India
- PowerSource Philippines DevCo
- Latin American Coal - Colombia
- Bangladesh Power Developement Board
- Posco Energy - South Korea
- Kartika Selabumi Mining - Indonesia
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- Neyveli Lignite Corporation Ltd, - India
- Port Waratah Coal Services - Australia
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- Ambuja Cements Ltd - India
- Intertek Mineral Services - Indonesia
- Cement Manufacturers Association - India
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- India Bulls Power Limited - India
- Central Java Power - Indonesia
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