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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, 25 December 13
SHIPPING : AS FAR AS THIS CYCLE IS CONCERNED, 'WE HAVE SEEN THE WORST....!' - JOHN N. COTZIAS
In a week’s time the year comes to an end. Having been a speaker in two seminars over the past 5 days I was able to see the year ending trends ...
Tuesday, 24 December 13
AUSTRALIAN NEWCASTLE PORT'S WEEKLY COAL EXPORTS UP 11.46% W-W
COALspot.com: In the week ended December 23, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled 3.84 ...
Tuesday, 24 December 13
SGX HAS LAUNCHED FREIGHT FUTURES
COALspot.com: Singapore Exchange (SGX) has announced the launch of freight future yesterday.
According to SGX’s press release, SGX has laun ...
Monday, 23 December 13
API 8 CFR SOUTH CHINA COAL SWAP FOR AVERAGE Q1' 14 CLOSED AT $ 82.80
COALspot.com : API 8 CFR South China Coal swaps for average Q1’ 14 delivery gained 2.97 percept month on month as on Friday 20 December 2013. ...
Sunday, 22 December 13
Q1' 14 DELIVERY COAL SWAPS CLOSING HIGH COMPARED TO Q4' 14 DELIVERY CLOSING
COALspot.com – Sub-Bit Indonesia coal swap (FOB) for average Q1’ 14 delivery gained $ 1.31 pmt month on month on Friday 20 December 2013 ...
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- Maheswari Brothers Coal Limited - India
- Altura Mining Limited, Indonesia
- Indonesian Coal Mining Association
- Latin American Coal - Colombia
- Deloitte Consulting - India
- Eastern Coal Council - USA
- VISA Power Limited - India
- Coastal Gujarat Power Limited - India
- Electricity Generating Authority of Thailand
- Meenaskhi Energy Private Limited - India
- Makarim & Taira - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Heidelberg Cement - Germany
- Central Java Power - Indonesia
- Central Electricity Authority - India
- Merrill Lynch Commodities Europe
- Bhatia International Limited - India
- Energy Link Ltd, New Zealand
- Globalindo Alam Lestari - Indonesia
- Goldman Sachs - Singapore
- Medco Energi Mining Internasional
- Baramulti Group, Indonesia
- The University of Queensland
- MS Steel International - UAE
- Maharashtra Electricity Regulatory Commission - India
- Sojitz Corporation - Japan
- Therma Luzon, Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Simpson Spence & Young - Indonesia
- Jaiprakash Power Ventures ltd
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
- McConnell Dowell - Australia
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- Uttam Galva Steels Limited - India
- Romanian Commodities Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- Orica Australia Pty. Ltd.
- Barasentosa Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Global Coal Blending Company Limited - Australia
- Aditya Birla Group - India
- Energy Development Corp, Philippines
- ICICI Bank Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Carbofer General Trading SA - India
- Savvy Resources Ltd - HongKong
- CIMB Investment Bank - Malaysia
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- Oldendorff Carriers - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Indogreen Group - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Timah Investasi Mineral - Indoneisa
- Petron Corporation, Philippines
- Malabar Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Price Waterhouse Coopers - Russia
- Salva Resources Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Sakthi Sugars Limited - India
- Formosa Plastics Group - Taiwan
- Edison Trading Spa - Italy
- PNOC Exploration Corporation - Philippines
- PowerSource Philippines DevCo
- Kartika Selabumi Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indian Oil Corporation Limited
- Bharathi Cement Corporation - India
- Indika Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Metalloyd Limited - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- Wood Mackenzie - Singapore
- Siam City Cement - Thailand
- Mercuria Energy - Indonesia
- Kumho Petrochemical, South Korea
- Kideco Jaya Agung - Indonesia
- GMR Energy Limited - India
- Sree Jayajothi Cements Limited - India
- Iligan Light & Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- Electricity Authority, New Zealand
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Independent Power Producers Association of India
- Bayan Resources Tbk. - Indonesia
- Karaikal Port Pvt Ltd - India
- Commonwealth Bank - Australia
- Wilmar Investment Holdings
- Port Waratah Coal Services - Australia
- Tata Chemicals Ltd - India
- Trasteel International SA, Italy
- IHS Mccloskey Coal Group - USA
- Riau Bara Harum - Indonesia
- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- Grasim Industreis Ltd - India
- Jindal Steel & Power Ltd - India
- Manunggal Multi Energi - Indonesia
- SMC Global Power, Philippines
- Xindia Steels Limited - India
- Semirara Mining Corp, Philippines
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- Straits Asia Resources Limited - Singapore
- Ambuja Cements Ltd - India
- Banpu Public Company Limited - Thailand
- The Treasury - Australian Government
- Australian Commodity Traders Exchange
- Jorong Barutama Greston.PT - Indonesia
- LBH Netherlands Bv - Netherlands
- Siam City Cement PLC, Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Renaissance Capital - South Africa
- Semirara Mining and Power Corporation, Philippines
- Anglo American - United Kingdom
- International Coal Ventures Pvt Ltd - India
- Planning Commission, India
- Global Green Power PLC Corporation, Philippines
- Ministry of Finance - Indonesia
- The State Trading Corporation of India Ltd
- Power Finance Corporation Ltd., India
- Gujarat Sidhee Cement - India
- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- London Commodity Brokers - England
- Posco Energy - South Korea
- Intertek Mineral Services - Indonesia
- Meralco Power Generation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- Antam Resourcindo - Indonesia
- Essar Steel Hazira Ltd - India
- Rio Tinto Coal - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Georgia Ports Authority, United States
- Eastern Energy - Thailand
- Madhucon Powers Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Orica Mining Services - Indonesia
- TeaM Sual Corporation - Philippines
- Africa Commodities Group - South Africa
- Tamil Nadu electricity Board
- Bulk Trading Sa - Switzerland
- Minerals Council of Australia
- Alfred C Toepfer International GmbH - Germany
- Bhushan Steel Limited - India
- GAC Shipping (India) Pvt Ltd
- Parliament of New Zealand
- Rashtriya Ispat Nigam Limited - India
- AsiaOL BioFuels Corp., Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Pendopo Energi Batubara - Indonesia
- Ministry of Transport, Egypt
- White Energy Company Limited
- Vedanta Resources Plc - India
- Vizag Seaport Private Limited - India
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Singapore Mercantile Exchange
- Bukit Baiduri Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Star Paper Mills Limited - India
- Ministry of Mines - Canada
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- Cigading International Bulk Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Parry Sugars Refinery, India
- Thai Mozambique Logistica
- ASAPP Information Group - India
- Economic Council, Georgia
- Bahari Cakrawala Sebuku - Indonesia
- Ind-Barath Power Infra Limited - India
- Cement Manufacturers Association - India
- India Bulls Power Limited - India
- Marubeni Corporation - India
- Global Business Power Corporation, Philippines
- SMG Consultants - Indonesia
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- Australian Coal Association
- Mintek Dendrill Indonesia
- Mercator Lines Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sarangani Energy Corporation, Philippines
- Agrawal Coal Company - India
- Neyveli Lignite Corporation Ltd, - India
- Dalmia Cement Bharat India
- Coalindo Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- CNBM International Corporation - China
- Attock Cement Pakistan Limited
- TNB Fuel Sdn Bhd - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Sinarmas Energy and Mining - Indonesia
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
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