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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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Sunday, 22 December 13
QUIET FREIGHT MARKET DUE TO LONG HOLIDAYS
COALspot.com: The market was soft this week with all indices down. However towards second half of the week the futures on segments was firming up.
...
Friday, 20 December 13
US PRODUCED 2.71% MORE COAL WEEK ON WEEK
COALspot.com – United States the world’s second largest coal producer, produced approximately 18.9 million short tons (mmst) of coal in ...
Friday, 20 December 13
DRY BULK MARKET SLUMPS AHEAD OF HOLIDAY SEASON - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As has been the case in recent years, the dry bulk market has been on a downward trend ahead of the Holiday Season for a large part of the world. Th ...
Thursday, 19 December 13
SHIPPING CONFIDENCE HITS THREE-YEAR HIGH - MOORE STEPHENS
Overall confidence levels in the shipping industry rose to their highest level for more than three years over the three-month period to November 201 ...
Wednesday, 18 December 13
SNP ACTIVITY IN CHINA SEEMS TO BE SLOWING DOWN - CHRISTOS TRAGEAS
Approaching the end of the year, SnP activity in China seems to be slowing down in comparison to the first half of this quarter, as most Chinese Shi ...
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- Romanian Commodities Exchange
- Essar Steel Hazira Ltd - India
- MS Steel International - UAE
- PTC India Limited - India
- Agrawal Coal Company - India
- Semirara Mining Corp, Philippines
- Meralco Power Generation, Philippines
- Wood Mackenzie - Singapore
- Indian Energy Exchange, India
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- Aditya Birla Group - India
- Salva Resources Pvt Ltd - India
- Oldendorff Carriers - Singapore
- New Zealand Coal & Carbon
- Simpson Spence & Young - Indonesia
- Manunggal Multi Energi - Indonesia
- Lanco Infratech Ltd - India
- Cement Manufacturers Association - India
- GMR Energy Limited - India
- Latin American Coal - Colombia
- Directorate General of MIneral and Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Meenaskhi Energy Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Baramulti Group, Indonesia
- Vedanta Resources Plc - India
- IHS Mccloskey Coal Group - USA
- Renaissance Capital - South Africa
- Sarangani Energy Corporation, Philippines
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- Australian Coal Association
- Orica Australia Pty. Ltd.
- Bukit Makmur.PT - Indonesia
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- Star Paper Mills Limited - India
- Savvy Resources Ltd - HongKong
- Anglo American - United Kingdom
- Georgia Ports Authority, United States
- SMC Global Power, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Dalmia Cement Bharat India
- Africa Commodities Group - South Africa
- Globalindo Alam Lestari - Indonesia
- Eastern Coal Council - USA
- Kepco SPC Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Medco Energi Mining Internasional
- Pendopo Energi Batubara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Timah Investasi Mineral - Indoneisa
- Central Electricity Authority - India
- Thiess Contractors Indonesia
- Bayan Resources Tbk. - Indonesia
- Ministry of Transport, Egypt
- South Luzon Thermal Energy Corporation
- Kobexindo Tractors - Indoneisa
- Carbofer General Trading SA - India
- European Bulk Services B.V. - Netherlands
- GAC Shipping (India) Pvt Ltd
- Xindia Steels Limited - India
- Bangladesh Power Developement Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Altura Mining Limited, Indonesia
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- PowerSource Philippines DevCo
- Indika Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
- Energy Development Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- Ambuja Cements Ltd - India
- Interocean Group of Companies - India
- Sinarmas Energy and Mining - Indonesia
- Global Business Power Corporation, Philippines
- Malabar Cements Ltd - India
- Siam City Cement - Thailand
- Central Java Power - Indonesia
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Port Waratah Coal Services - Australia
- Leighton Contractors Pty Ltd - Australia
- SN Aboitiz Power Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Bhatia International Limited - India
- Price Waterhouse Coopers - Russia
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Tata Chemicals Ltd - India
- Mintek Dendrill Indonesia
- Bharathi Cement Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Planning Commission, India
- Power Finance Corporation Ltd., India
- Miang Besar Coal Terminal - Indonesia
- Wilmar Investment Holdings
- Indo Tambangraya Megah - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Straits Asia Resources Limited - Singapore
- White Energy Company Limited
- TNB Fuel Sdn Bhd - Malaysia
- LBH Netherlands Bv - Netherlands
- TeaM Sual Corporation - Philippines
- ICICI Bank Limited - India
- Energy Link Ltd, New Zealand
- Coal and Oil Company - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Intertek Mineral Services - Indonesia
- Toyota Tsusho Corporation, Japan
- Maheswari Brothers Coal Limited - India
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- Alfred C Toepfer International GmbH - Germany
- Electricity Authority, New Zealand
- Parliament of New Zealand
- London Commodity Brokers - England
- Petron Corporation, Philippines
- IEA Clean Coal Centre - UK
- Rashtriya Ispat Nigam Limited - India
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Jaiprakash Power Ventures ltd
- San Jose City I Power Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Mjunction Services Limited - India
- Global Green Power PLC Corporation, Philippines
- ASAPP Information Group - India
- Grasim Industreis Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Thai Mozambique Logistica
- Directorate Of Revenue Intelligence - India
- Krishnapatnam Port Company Ltd. - India
- Antam Resourcindo - Indonesia
- Formosa Plastics Group - Taiwan
- Posco Energy - South Korea
- Economic Council, Georgia
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Oil Corporation Limited
- McConnell Dowell - Australia
- Eastern Energy - Thailand
- Bukit Baiduri Energy - Indonesia
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Ministry of Mines - Canada
- Global Coal Blending Company Limited - Australia
- Samtan Co., Ltd - South Korea
- SMG Consultants - Indonesia
- Vizag Seaport Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sree Jayajothi Cements Limited - India
- Chamber of Mines of South Africa
- Karaikal Port Pvt Ltd - India
- Trasteel International SA, Italy
- Mercator Lines Limited - India
- Commonwealth Bank - Australia
- Standard Chartered Bank - UAE
- Kaltim Prima Coal - Indonesia
- Therma Luzon, Inc, Philippines
- Uttam Galva Steels Limited - India
- Makarim & Taira - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bhushan Steel Limited - India
- Minerals Council of Australia
- Bhoruka Overseas - Indonesia
- Kartika Selabumi Mining - Indonesia
- Merrill Lynch Commodities Europe
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Singapore Mercantile Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- Iligan Light & Power Inc, Philippines
- Sical Logistics Limited - India
- Riau Bara Harum - Indonesia
- Heidelberg Cement - Germany
- Kalimantan Lumbung Energi - Indonesia
- Independent Power Producers Association of India
- Bahari Cakrawala Sebuku - Indonesia
- GVK Power & Infra Limited - India
- Indonesian Coal Mining Association
- Coastal Gujarat Power Limited - India
- Bulk Trading Sa - Switzerland
- Neyveli Lignite Corporation Ltd, - India
- Indogreen Group - Indonesia
- Aboitiz Power Corporation - Philippines
- Rio Tinto Coal - Australia
- Asmin Koalindo Tuhup - Indonesia
- VISA Power Limited - India
- Chettinad Cement Corporation Ltd - India
- PNOC Exploration Corporation - Philippines
- Orica Mining Services - Indonesia
- Barasentosa Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Binh Thuan Hamico - Vietnam
- India Bulls Power Limited - India
- The University of Queensland
- Marubeni Corporation - India
- Kideco Jaya Agung - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Edison Trading Spa - Italy
- Kumho Petrochemical, South Korea
- PetroVietnam Power Coal Import and Supply Company
- Maharashtra Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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