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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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- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- SN Aboitiz Power Inc, Philippines
- Global Business Power Corporation, Philippines
- Sical Logistics Limited - India
- Karaikal Port Pvt Ltd - India
- Heidelberg Cement - Germany
- Leighton Contractors Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Globalindo Alam Lestari - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Africa Commodities Group - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Medco Energi Mining Internasional
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Georgia Ports Authority, United States
- Kepco SPC Power Corporation, Philippines
- Central Java Power - Indonesia
- Planning Commission, India
- Directorate Of Revenue Intelligence - India
- Parry Sugars Refinery, India
- PTC India Limited - India
- Energy Link Ltd, New Zealand
- Sakthi Sugars Limited - India
- Metalloyd Limited - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Sarangani Energy Corporation, Philippines
- Madhucon Powers Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Standard Chartered Bank - UAE
- India Bulls Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Malabar Cements Ltd - India
- ASAPP Information Group - India
- Karbindo Abesyapradhi - Indoneisa
- CIMB Investment Bank - Malaysia
- Pendopo Energi Batubara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Mercuria Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Videocon Industries ltd - India
- Petron Corporation, Philippines
- Agrawal Coal Company - India
- Economic Council, Georgia
- Vedanta Resources Plc - India
- Gujarat Sidhee Cement - India
- Indonesian Coal Mining Association
- Marubeni Corporation - India
- Kumho Petrochemical, South Korea
- VISA Power Limited - India
- Altura Mining Limited, Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhoruka Overseas - Indonesia
- Renaissance Capital - South Africa
- Meralco Power Generation, Philippines
- Antam Resourcindo - Indonesia
- Semirara Mining Corp, Philippines
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Mjunction Services Limited - India
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Finance - Indonesia
- Jindal Steel & Power Ltd - India
- Indogreen Group - Indonesia
- Deloitte Consulting - India
- Straits Asia Resources Limited - Singapore
- Semirara Mining and Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indo Tambangraya Megah - Indonesia
- Latin American Coal - Colombia
- Siam City Cement - Thailand
- Aditya Birla Group - India
- Central Electricity Authority - India
- SMC Global Power, Philippines
- Manunggal Multi Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- ICICI Bank Limited - India
- Borneo Indobara - Indonesia
- Barasentosa Lestari - Indonesia
- Dalmia Cement Bharat India
- Lanco Infratech Ltd - India
- Meenaskhi Energy Private Limited - India
- Sojitz Corporation - Japan
- Maheswari Brothers Coal Limited - India
- Salva Resources Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- Baramulti Group, Indonesia
- Mintek Dendrill Indonesia
- London Commodity Brokers - England
- Rio Tinto Coal - Australia
- San Jose City I Power Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Indika Energy - Indonesia
- Savvy Resources Ltd - HongKong
- OPG Power Generation Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Port Waratah Coal Services - Australia
- Electricity Authority, New Zealand
- Price Waterhouse Coopers - Russia
- Anglo American - United Kingdom
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- Intertek Mineral Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- MS Steel International - UAE
- Coalindo Energy - Indonesia
- Parliament of New Zealand
- Star Paper Mills Limited - India
- Indian Oil Corporation Limited
- Bangladesh Power Developement Board
- Wood Mackenzie - Singapore
- TeaM Sual Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Sindya Power Generating Company Private Ltd
- GN Power Mariveles Coal Plant, Philippines
- Australian Coal Association
- Chamber of Mines of South Africa
- Banpu Public Company Limited - Thailand
- Commonwealth Bank - Australia
- Ind-Barath Power Infra Limited - India
- Jaiprakash Power Ventures ltd
- Kapuas Tunggal Persada - Indonesia
- Romanian Commodities Exchange
- Tata Chemicals Ltd - India
- SMG Consultants - Indonesia
- Holcim Trading Pte Ltd - Singapore
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Orica Mining Services - Indonesia
- The University of Queensland
- South Luzon Thermal Energy Corporation
- Riau Bara Harum - Indonesia
- Iligan Light & Power Inc, Philippines
- Eastern Coal Council - USA
- Power Finance Corporation Ltd., India
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Sree Jayajothi Cements Limited - India
- Carbofer General Trading SA - India
- Makarim & Taira - Indonesia
- PNOC Exploration Corporation - Philippines
- Samtan Co., Ltd - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Edison Trading Spa - Italy
- Uttam Galva Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- The Treasury - Australian Government
- Kideco Jaya Agung - Indonesia
- Binh Thuan Hamico - Vietnam
- Interocean Group of Companies - India
- Siam City Cement PLC, Thailand
- Coal and Oil Company - UAE
- Vizag Seaport Private Limited - India
- Eastern Energy - Thailand
- Kobexindo Tractors - Indoneisa
- Energy Development Corp, Philippines
- Indian Energy Exchange, India
- Global Coal Blending Company Limited - Australia
- Wilmar Investment Holdings
- Trasteel International SA, Italy
- Sinarmas Energy and Mining - Indonesia
- Ministry of Mines - Canada
- Maharashtra Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- White Energy Company Limited
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Larsen & Toubro Limited - India
- Cement Manufacturers Association - India
- Thai Mozambique Logistica
- Bhushan Steel Limited - India
- GVK Power & Infra Limited - India
- Bhatia International Limited - India
- Kartika Selabumi Mining - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- New Zealand Coal & Carbon
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Billiton Holdings Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Mercator Lines Limited - India
- AsiaOL BioFuels Corp., Philippines
- Singapore Mercantile Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Miang Besar Coal Terminal - Indonesia
- LBH Netherlands Bv - Netherlands
- GMR Energy Limited - India
- Grasim Industreis Ltd - India
- Thiess Contractors Indonesia
- Ministry of Transport, Egypt
- Asmin Koalindo Tuhup - Indonesia
- Simpson Spence & Young - Indonesia
- Ambuja Cements Ltd - India
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Posco Energy - South Korea
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- IHS Mccloskey Coal Group - USA
- Jorong Barutama Greston.PT - Indonesia
- IEA Clean Coal Centre - UK
- Goldman Sachs - Singapore
- Bharathi Cement Corporation - India
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