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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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Thursday, 26 September 13
DRY BULK MARKET KEEPS ON RALLYING ON THE BACK OF HIGH CAPESIZE DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market has kept its momentum over the course of the past week, on the back of increased demand for Capesizes and an improvement of mark ...
Wednesday, 25 September 13
RBCT'S COAL EXPORT DECLINES IN AUGUST
COALspot.com - Richards Bay Coal Terminal (RBCT) is the single largest coal export terminal in South African as well as in the world has shipped 16. ...
Wednesday, 25 September 13
CAPES TOUCHING RATES NO ONE BELIEVED COULD BE ACHIEVED IN 2013 - INTERMODAL
Chartering (Wet: Stable- / Dry: Firm+ )
The Dry Bulk market is the gift that keeps on giving these days. With rates for Capes touching numbers ...
Wednesday, 25 September 13
IS IT TIME AGAIN TO SUPERSIZE AGAIN? - GEORGE LAZARIDIS
After an early arrival of the seasonal rally in the Capesize market, things look to be on the upbeat for these dry bulk giants. With the Index reach ...
Monday, 23 September 13
AUSTRALIA'S NEWCASTLE PORT SHIPPED 3 PERCENT LESS COAL WEEK ON WEEK
COALspot.com: Power plant and semi-soft coking coal shipments from Australia's Newcastle port fell 3 per cent week on week to 2.92 million mt for t ...
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- Orica Mining Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Riau Bara Harum - Indonesia
- Renaissance Capital - South Africa
- Jaiprakash Power Ventures ltd
- Sojitz Corporation - Japan
- ASAPP Information Group - India
- Orica Australia Pty. Ltd.
- Meralco Power Generation, Philippines
- Semirara Mining Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Indian Oil Corporation Limited
- Leighton Contractors Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Transport, Egypt
- Marubeni Corporation - India
- Global Green Power PLC Corporation, Philippines
- New Zealand Coal & Carbon
- Siam City Cement PLC, Thailand
- Latin American Coal - Colombia
- CNBM International Corporation - China
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Petron Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Heidelberg Cement - Germany
- Essar Steel Hazira Ltd - India
- SN Aboitiz Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Siam City Cement - Thailand
- Kideco Jaya Agung - Indonesia
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Mines - Canada
- Singapore Mercantile Exchange
- Manunggal Multi Energi - Indonesia
- Timah Investasi Mineral - Indoneisa
- Ambuja Cements Ltd - India
- Chettinad Cement Corporation Ltd - India
- Lanco Infratech Ltd - India
- Oldendorff Carriers - Singapore
- MS Steel International - UAE
- Anglo American - United Kingdom
- Simpson Spence & Young - Indonesia
- Bayan Resources Tbk. - Indonesia
- Uttam Galva Steels Limited - India
- Chamber of Mines of South Africa
- Ceylon Electricity Board - Sri Lanka
- Malabar Cements Ltd - India
- San Jose City I Power Corp, Philippines
- Energy Link Ltd, New Zealand
- McConnell Dowell - Australia
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- Indian Energy Exchange, India
- Indonesian Coal Mining Association
- Indika Energy - Indonesia
- Power Finance Corporation Ltd., India
- Jindal Steel & Power Ltd - India
- Videocon Industries ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Star Paper Mills Limited - India
- Attock Cement Pakistan Limited
- Karaikal Port Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Romanian Commodities Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Parliament of New Zealand
- Price Waterhouse Coopers - Russia
- Wilmar Investment Holdings
- The Treasury - Australian Government
- Thai Mozambique Logistica
- Wood Mackenzie - Singapore
- Indogreen Group - Indonesia
- Interocean Group of Companies - India
- IEA Clean Coal Centre - UK
- International Coal Ventures Pvt Ltd - India
- Carbofer General Trading SA - India
- Jorong Barutama Greston.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Salva Resources Pvt Ltd - India
- Xindia Steels Limited - India
- The State Trading Corporation of India Ltd
- PTC India Limited - India
- Electricity Authority, New Zealand
- Altura Mining Limited, Indonesia
- London Commodity Brokers - England
- Minerals Council of Australia
- Planning Commission, India
- Mercuria Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Agrawal Coal Company - India
- PNOC Exploration Corporation - Philippines
- Antam Resourcindo - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Deloitte Consulting - India
- Edison Trading Spa - Italy
- Kartika Selabumi Mining - Indonesia
- Central Java Power - Indonesia
- Kobexindo Tractors - Indoneisa
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indo Tambangraya Megah - Indonesia
- Sakthi Sugars Limited - India
- Asmin Koalindo Tuhup - Indonesia
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Eastern Energy - Thailand
- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- Dalmia Cement Bharat India
- Aditya Birla Group - India
- Cement Manufacturers Association - India
- Neyveli Lignite Corporation Ltd, - India
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- Medco Energi Mining Internasional
- Bhoruka Overseas - Indonesia
- Samtan Co., Ltd - South Korea
- Vedanta Resources Plc - India
- Bangladesh Power Developement Board
- Globalindo Alam Lestari - Indonesia
- Tamil Nadu electricity Board
- Parry Sugars Refinery, India
- European Bulk Services B.V. - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Bharathi Cement Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Madhucon Powers Ltd - India
- Borneo Indobara - Indonesia
- Mintek Dendrill Indonesia
- GVK Power & Infra Limited - India
- VISA Power Limited - India
- Maheswari Brothers Coal Limited - India
- Intertek Mineral Services - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- India Bulls Power Limited - India
- Bhatia International Limited - India
- Global Business Power Corporation, Philippines
- Thiess Contractors Indonesia
- Global Coal Blending Company Limited - Australia
- Formosa Plastics Group - Taiwan
- Rashtriya Ispat Nigam Limited - India
- Eastern Coal Council - USA
- Kalimantan Lumbung Energi - Indonesia
- Sindya Power Generating Company Private Ltd
- SMG Consultants - Indonesia
- Merrill Lynch Commodities Europe
- Kapuas Tunggal Persada - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Sical Logistics Limited - India
- Port Waratah Coal Services - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Electricity Generating Authority of Thailand
- Directorate General of MIneral and Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Sinarmas Energy and Mining - Indonesia
- Bhushan Steel Limited - India
- Kaltim Prima Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Bulk Trading Sa - Switzerland
- Australian Coal Association
- The University of Queensland
- Binh Thuan Hamico - Vietnam
- Savvy Resources Ltd - HongKong
- TNB Fuel Sdn Bhd - Malaysia
- Coalindo Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Mercator Lines Limited - India
- Makarim & Taira - Indonesia
- Economic Council, Georgia
- Meenaskhi Energy Private Limited - India
- Central Electricity Authority - India
- GMR Energy Limited - India
- Holcim Trading Pte Ltd - Singapore
- Metalloyd Limited - United Kingdom
- Ind-Barath Power Infra Limited - India
- Banpu Public Company Limited - Thailand
- Goldman Sachs - Singapore
- White Energy Company Limited
- Energy Development Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Trasteel International SA, Italy
- Independent Power Producers Association of India
- Gujarat Sidhee Cement - India
- Australian Commodity Traders Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Mjunction Services Limited - India
- ICICI Bank Limited - India
- Commonwealth Bank - Australia
- Aboitiz Power Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Kepco SPC Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- Ministry of Finance - Indonesia
- SMC Global Power, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Therma Luzon, Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Rio Tinto Coal - Australia
- LBH Netherlands Bv - Netherlands
- GAC Shipping (India) Pvt Ltd
- Africa Commodities Group - South Africa
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