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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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Monday, 06 January 14
INDONESIAN COAL SWAPS SLIDE TO $ 61.25 FOR Q4' 14 DELIVERY
COALspot.com – Sub-Bit Indonesia coal swap (FOB) for average Q1’ 14 delivery lost $ 0.32 pmt month on month on Friday 3 January 2014. Th ...
Sunday, 05 January 14
API 8 CFR SOUTH CHINA COAL SWAP FOR Q3 DELIVERY CLOSED $ 80.05, A $ 0.90 LOWER THAN Q1 PRICE
COALspot.com : API 8 CFR South China Coal swaps for average Q1’ 14 delivery lost 1.40 percept day on day closed at US$ 80.95 per mt as o ...
Sunday, 05 January 14
CENTRAL BUREAU OF INVESTIGATION OF INDIA REGISTERS CASES IN CONNECTION WITH ALLEGED SUPPLY OF LOW QUALITY INDONESIAN COAL BY A PRIVATE COMPANY TO NTPC & NSPCL
COALspot.com: The Central Bureau of Investigation of India has registered two cases regarding alleged supply of low quality imported Indonesian coal ...
Saturday, 04 January 14
THE INDONESIAN GOVERNMENT TO DOWNSIZE ITS COAL PRODUCTION TARGET TO 400 MMT THIS YEAR
COALspot.com: Indonesia to downsize its coal production target to 400 million tons in 2014, lower than the production in 2013, which stood at 421 mi ...
Friday, 03 January 14
IN 2013 RBCT HAS, FOR THE FIRST TIME, EXPORTED MORE THAN 70 MILLION TONS OF COAL
COALspot.com: South Africa's Richards Bay coal terminal, the world’s largest single coal exporting terminal shipped 6.788 million tonnes of c ...
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- Intertek Mineral Services - Indonesia
- Cement Manufacturers Association - India
- Global Business Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Meralco Power Generation, Philippines
- CIMB Investment Bank - Malaysia
- Indonesian Coal Mining Association
- Electricity Authority, New Zealand
- Electricity Generating Authority of Thailand
- CNBM International Corporation - China
- GVK Power & Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Transport, Egypt
- Planning Commission, India
- Minerals Council of Australia
- London Commodity Brokers - England
- OPG Power Generation Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Pipit Mutiara Jaya. PT, Indonesia
- Straits Asia Resources Limited - Singapore
- VISA Power Limited - India
- PowerSource Philippines DevCo
- Alfred C Toepfer International GmbH - Germany
- Merrill Lynch Commodities Europe
- Kumho Petrochemical, South Korea
- Siam City Cement PLC, Thailand
- Commonwealth Bank - Australia
- Ambuja Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- Billiton Holdings Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Barasentosa Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Georgia Ports Authority, United States
- Agrawal Coal Company - India
- Deloitte Consulting - India
- AsiaOL BioFuels Corp., Philippines
- Singapore Mercantile Exchange
- Holcim Trading Pte Ltd - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Borneo Indobara - Indonesia
- Aboitiz Power Corporation - Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Siam City Cement - Thailand
- Gujarat Sidhee Cement - India
- Riau Bara Harum - Indonesia
- Economic Council, Georgia
- GAC Shipping (India) Pvt Ltd
- Thiess Contractors Indonesia
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- ICICI Bank Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
- Vizag Seaport Private Limited - India
- Mercator Lines Limited - India
- Heidelberg Cement - Germany
- Independent Power Producers Association of India
- Savvy Resources Ltd - HongKong
- Karaikal Port Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Renaissance Capital - South Africa
- Coal and Oil Company - UAE
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- Tata Chemicals Ltd - India
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- Price Waterhouse Coopers - Russia
- Indogreen Group - Indonesia
- Orica Mining Services - Indonesia
- Therma Luzon, Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Rio Tinto Coal - Australia
- Posco Energy - South Korea
- Salva Resources Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- White Energy Company Limited
- Krishnapatnam Port Company Ltd. - India
- Lanco Infratech Ltd - India
- Wilmar Investment Holdings
- Madhucon Powers Ltd - India
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Ministry of Mines - Canada
- Sakthi Sugars Limited - India
- Indo Tambangraya Megah - Indonesia
- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- McConnell Dowell - Australia
- The Treasury - Australian Government
- Oldendorff Carriers - Singapore
- Gujarat Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Binh Thuan Hamico - Vietnam
- Parliament of New Zealand
- Formosa Plastics Group - Taiwan
- Bulk Trading Sa - Switzerland
- IEA Clean Coal Centre - UK
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Trasteel International SA, Italy
- Global Coal Blending Company Limited - Australia
- Energy Link Ltd, New Zealand
- Ceylon Electricity Board - Sri Lanka
- International Coal Ventures Pvt Ltd - India
- Goldman Sachs - Singapore
- Coastal Gujarat Power Limited - India
- Africa Commodities Group - South Africa
- Petron Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Oil Corporation Limited
- Miang Besar Coal Terminal - Indonesia
- Vedanta Resources Plc - India
- Directorate Of Revenue Intelligence - India
- GN Power Mariveles Coal Plant, Philippines
- Mintek Dendrill Indonesia
- Eastern Coal Council - USA
- Tamil Nadu electricity Board
- PTC India Limited - India
- European Bulk Services B.V. - Netherlands
- Makarim & Taira - Indonesia
- SMC Global Power, Philippines
- TeaM Sual Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mercuria Energy - Indonesia
- MS Steel International - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Carbofer General Trading SA - India
- Ministry of Finance - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Sical Logistics Limited - India
- IHS Mccloskey Coal Group - USA
- Essar Steel Hazira Ltd - India
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- Romanian Commodities Exchange
- Latin American Coal - Colombia
- Central Electricity Authority - India
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Pendopo Energi Batubara - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Interocean Group of Companies - India
- Central Java Power - Indonesia
- Standard Chartered Bank - UAE
- Larsen & Toubro Limited - India
- Sojitz Corporation - Japan
- Energy Development Corp, Philippines
- India Bulls Power Limited - India
- Sree Jayajothi Cements Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jaiprakash Power Ventures ltd
- Rashtriya Ispat Nigam Limited - India
- Thai Mozambique Logistica
- Maheswari Brothers Coal Limited - India
- The University of Queensland
- Indian Energy Exchange, India
- South Luzon Thermal Energy Corporation
- PetroVietnam Power Coal Import and Supply Company
- New Zealand Coal & Carbon
- Bhatia International Limited - India
- The State Trading Corporation of India Ltd
- Jorong Barutama Greston.PT - Indonesia
- Australian Coal Association
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- Dalmia Cement Bharat India
- Uttam Galva Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Baramulti Group, Indonesia
- Leighton Contractors Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Sindya Power Generating Company Private Ltd
- Banpu Public Company Limited - Thailand
- Aditya Birla Group - India
- Bukit Makmur.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- ASAPP Information Group - India
- Kartika Selabumi Mining - Indonesia
- Bharathi Cement Corporation - India
- Wood Mackenzie - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Indika Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
- Semirara Mining Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Edison Trading Spa - Italy
- Eastern Energy - Thailand
- Antam Resourcindo - Indonesia
- Altura Mining Limited, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kobexindo Tractors - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Australian Commodity Traders Exchange
- Bayan Resources Tbk. - Indonesia
- SN Aboitiz Power Inc, Philippines
- Chamber of Mines of South Africa
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