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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, 08 January 14
SHIPPING: THE ABSOLUTE BOTTOM OF THE CYCLE WAS REACHED AND PASSED - GEORGE LAZARIDIS
COALspot.com: To many in the industry 2013 has been the turning point in the market where the absolute bottom of the cycle was reached and passed.
...
Tuesday, 07 January 14
INDONESIA RAISES COAL PRICE THIS MONTH
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia has increased government declared coal bench mark price by US$ 1.59 / MT ...
Tuesday, 07 January 14
NEWCASTLE COAL TERMINAL'S COAL EXPORTS SLIDE TO 3.54 MMT W/E 30 DECEMBER 13
COALspot.com: In the week ended December 30, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled 3.54 ...
Tuesday, 07 January 14
US COAL OUTPUT SLIDES 9 PCT WEEK ON WEEK, EIA SAYS
COALspot.com – United States the world’s second largest coal producer, produced approximately 17.8 million short tons (mmst) of coal in ...
Monday, 06 January 14
ARGUS LAUNCHES SPOT CFR EAST COAST INDIA COAL ASSESSMENTS
COALspot.com: Global energy and commodity news and price reporting agency Argus has announced today that, the company has launched CFR coal assessme ...
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- Edison Trading Spa - Italy
- Directorate Of Revenue Intelligence - India
- Kalimantan Lumbung Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Borneo Indobara - Indonesia
- Energy Link Ltd, New Zealand
- Intertek Mineral Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Marubeni Corporation - India
- The State Trading Corporation of India Ltd
- Mercator Lines Limited - India
- Parry Sugars Refinery, India
- Banpu Public Company Limited - Thailand
- SN Aboitiz Power Inc, Philippines
- GMR Energy Limited - India
- GAC Shipping (India) Pvt Ltd
- The University of Queensland
- Eastern Coal Council - USA
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Altura Mining Limited, Indonesia
- Electricity Authority, New Zealand
- Jindal Steel & Power Ltd - India
- Essar Steel Hazira Ltd - India
- Ambuja Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bayan Resources Tbk. - Indonesia
- Lanco Infratech Ltd - India
- Electricity Generating Authority of Thailand
- Attock Cement Pakistan Limited
- Latin American Coal - Colombia
- International Coal Ventures Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Economic Council, Georgia
- Orica Mining Services - Indonesia
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sical Logistics Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Deloitte Consulting - India
- Renaissance Capital - South Africa
- Indo Tambangraya Megah - Indonesia
- Simpson Spence & Young - Indonesia
- Bhushan Steel Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Sakthi Sugars Limited - India
- Bharathi Cement Corporation - India
- Thai Mozambique Logistica
- Barasentosa Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- Manunggal Multi Energi - Indonesia
- Vizag Seaport Private Limited - India
- White Energy Company Limited
- Baramulti Group, Indonesia
- ASAPP Information Group - India
- Goldman Sachs - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Australian Coal Association
- Coastal Gujarat Power Limited - India
- Ministry of Transport, Egypt
- Heidelberg Cement - Germany
- Indian Oil Corporation Limited
- Georgia Ports Authority, United States
- Straits Asia Resources Limited - Singapore
- Kapuas Tunggal Persada - Indonesia
- Central Electricity Authority - India
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- PowerSource Philippines DevCo
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Posco Energy - South Korea
- Asmin Koalindo Tuhup - Indonesia
- Indogreen Group - Indonesia
- Grasim Industreis Ltd - India
- Ind-Barath Power Infra Limited - India
- Indonesian Coal Mining Association
- European Bulk Services B.V. - Netherlands
- GVK Power & Infra Limited - India
- Uttam Galva Steels Limited - India
- Bangladesh Power Developement Board
- Wood Mackenzie - Singapore
- Cement Manufacturers Association - India
- Interocean Group of Companies - India
- Rashtriya Ispat Nigam Limited - India
- Power Finance Corporation Ltd., India
- Bukit Makmur.PT - Indonesia
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Indian Energy Exchange, India
- Parliament of New Zealand
- Bukit Baiduri Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- Maheswari Brothers Coal Limited - India
- Larsen & Toubro Limited - India
- SMG Consultants - Indonesia
- Meenaskhi Energy Private Limited - India
- Bhatia International Limited - India
- OPG Power Generation Pvt Ltd - India
- Coalindo Energy - Indonesia
- Semirara Mining Corp, Philippines
- Antam Resourcindo - Indonesia
- Minerals Council of Australia
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Indika Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meralco Power Generation, Philippines
- Kumho Petrochemical, South Korea
- Videocon Industries ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Siam City Cement - Thailand
- Romanian Commodities Exchange
- McConnell Dowell - Australia
- VISA Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Commonwealth Bank - Australia
- Energy Development Corp, Philippines
- Ministry of Mines - Canada
- Timah Investasi Mineral - Indoneisa
- Bulk Trading Sa - Switzerland
- Kaltim Prima Coal - Indonesia
- Independent Power Producers Association of India
- PNOC Exploration Corporation - Philippines
- Mjunction Services Limited - India
- Planning Commission, India
- Kobexindo Tractors - Indoneisa
- Petron Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Australian Commodity Traders Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Riau Bara Harum - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tamil Nadu electricity Board
- London Commodity Brokers - England
- Trasteel International SA, Italy
- Salva Resources Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Tata Chemicals Ltd - India
- Cigading International Bulk Terminal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Toyota Tsusho Corporation, Japan
- CNBM International Corporation - China
- Vedanta Resources Plc - India
- India Bulls Power Limited - India
- MS Steel International - UAE
- Global Business Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Karaikal Port Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Xindia Steels Limited - India
- Semirara Mining and Power Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mintek Dendrill Indonesia
- Star Paper Mills Limited - India
- IEA Clean Coal Centre - UK
- Mercuria Energy - Indonesia
- Metalloyd Limited - United Kingdom
- ICICI Bank Limited - India
- Karbindo Abesyapradhi - Indoneisa
- San Jose City I Power Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Kartika Selabumi Mining - Indonesia
- New Zealand Coal & Carbon
- Medco Energi Mining Internasional
- Eastern Energy - Thailand
- The Treasury - Australian Government
- South Luzon Thermal Energy Corporation
- Formosa Plastics Group - Taiwan
- Savvy Resources Ltd - HongKong
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- Standard Chartered Bank - UAE
- Krishnapatnam Port Company Ltd. - India
- GN Power Mariveles Coal Plant, Philippines
- Aditya Birla Group - India
- Singapore Mercantile Exchange
- Samtan Co., Ltd - South Korea
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- SMC Global Power, Philippines
- Globalindo Alam Lestari - Indonesia
- Chamber of Mines of South Africa
- Orica Australia Pty. Ltd.
- Sarangani Energy Corporation, Philippines
- Africa Commodities Group - South Africa
- Directorate General of MIneral and Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Rio Tinto Coal - Australia
- AsiaOL BioFuels Corp., Philippines
- Therma Luzon, Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
- Global Coal Blending Company Limited - Australia
- Madhucon Powers Ltd - India
- Thiess Contractors Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Anglo American - United Kingdom
- Malabar Cements Ltd - India
- Agrawal Coal Company - India
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