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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, 11 December 13
BDI REACHED A PEAK OF YEAR RECORD OF 2,237 POINTS WHICH IS A SIGNIFICANT CHANGE IN MARKET CONDITIONS
Getting closer to the end of 2013, it is important that we have a review of the course the market has taken these past 12 months by looking at the B ...
Tuesday, 10 December 13
HNL, AN INDIAN STATE-OWNED NEWSPRINT PAPER MAKER SEEKS 50K TONS OF INDONESIAN 5600 COAL
COALspot.com: Hindustan Newsprint limited (HNL), an Indian state owned news print paper producer invited bids to supply 50,000MT of min 5,200kcal/kg ...
Tuesday, 10 December 13
COLOMBIAN THERMAL COAL EXPORTS SLIPPED 25.54% M-M IN OCTOBER'13
COALspot.com: Colombia's Thermal coal exports in October dropped 25.54% month on month to 5,990,815.13 million mt, according to data from mining de ...
Tuesday, 10 December 13
NEWCASTLE COAL EXPORTS PLUNGE W-O-W
COALspot.com: In the week ended December 9, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled 2.50 ...
Monday, 09 December 13
SOUTH AFRICA'S RICHARDS BAY COAL EXPORTS IN NOVEMBER DECLINED 14.43% M-M
COALspot.com: South Africa's Richards Bay coal terminal exported 6.224 million tonnes of coal in November, declining by 1.05 million tons from the ...
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- CNBM International Corporation - China
- SMC Global Power, Philippines
- Globalindo Alam Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- LBH Netherlands Bv - Netherlands
- GMR Energy Limited - India
- Straits Asia Resources Limited - Singapore
- The Treasury - Australian Government
- Jindal Steel & Power Ltd - India
- Merrill Lynch Commodities Europe
- Vedanta Resources Plc - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PTC India Limited - India
- Aboitiz Power Corporation - Philippines
- Edison Trading Spa - Italy
- Meenaskhi Energy Private Limited - India
- Kobexindo Tractors - Indoneisa
- Eastern Energy - Thailand
- Posco Energy - South Korea
- Coastal Gujarat Power Limited - India
- Borneo Indobara - Indonesia
- VISA Power Limited - India
- Makarim & Taira - Indonesia
- Baramulti Group, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Ambuja Cements Ltd - India
- Global Business Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Price Waterhouse Coopers - Russia
- Indian Oil Corporation Limited
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Simpson Spence & Young - Indonesia
- Parliament of New Zealand
- Global Coal Blending Company Limited - Australia
- Rashtriya Ispat Nigam Limited - India
- Karaikal Port Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Authority, New Zealand
- Central Java Power - Indonesia
- Mercator Lines Limited - India
- Dalmia Cement Bharat India
- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Finance - Indonesia
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- Carbofer General Trading SA - India
- Romanian Commodities Exchange
- Standard Chartered Bank - UAE
- Siam City Cement - Thailand
- Iligan Light & Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Orica Mining Services - Indonesia
- Bangladesh Power Developement Board
- Latin American Coal - Colombia
- PowerSource Philippines DevCo
- Kapuas Tunggal Persada - Indonesia
- Pendopo Energi Batubara - Indonesia
- London Commodity Brokers - England
- San Jose City I Power Corp, Philippines
- Directorate Of Revenue Intelligence - India
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Ministry of Transport, Egypt
- Riau Bara Harum - Indonesia
- Georgia Ports Authority, United States
- Minerals Council of Australia
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- PetroVietnam Power Coal Import and Supply Company
- Chettinad Cement Corporation Ltd - India
- Coal and Oil Company - UAE
- India Bulls Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coalindo Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- McConnell Dowell - Australia
- Sojitz Corporation - Japan
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Renaissance Capital - South Africa
- Petron Corporation, Philippines
- Rio Tinto Coal - Australia
- GN Power Mariveles Coal Plant, Philippines
- Indo Tambangraya Megah - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Intertek Mineral Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Commonwealth Bank - Australia
- Semirara Mining and Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- Leighton Contractors Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Baiduri Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Lanco Infratech Ltd - India
- Bharathi Cement Corporation - India
- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- Malabar Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Thai Mozambique Logistica
- MS Steel International - UAE
- Indian Energy Exchange, India
- IHS Mccloskey Coal Group - USA
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- Semirara Mining Corp, Philippines
- Sree Jayajothi Cements Limited - India
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- Siam City Cement PLC, Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhoruka Overseas - Indonesia
- Indika Energy - Indonesia
- Deloitte Consulting - India
- Australian Coal Association
- Uttam Galva Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- Port Waratah Coal Services - Australia
- Vizag Seaport Private Limited - India
- Energy Link Ltd, New Zealand
- Indogreen Group - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- SMG Consultants - Indonesia
- ASAPP Information Group - India
- Bhatia International Limited - India
- Essar Steel Hazira Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Indonesian Coal Mining Association
- Holcim Trading Pte Ltd - Singapore
- Kepco SPC Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Petrochimia International Co. Ltd.- Taiwan
- The State Trading Corporation of India Ltd
- Chamber of Mines of South Africa
- Oldendorff Carriers - Singapore
- GAC Shipping (India) Pvt Ltd
- Sarangani Energy Corporation, Philippines
- Trasteel International SA, Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Videocon Industries ltd - India
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- SN Aboitiz Power Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Economic Council, Georgia
- Agrawal Coal Company - India
- Metalloyd Limited - United Kingdom
- Thiess Contractors Indonesia
- Timah Investasi Mineral - Indoneisa
- Australian Commodity Traders Exchange
- Bulk Trading Sa - Switzerland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Medco Energi Mining Internasional
- Kaltim Prima Coal - Indonesia
- Aditya Birla Group - India
- Wilmar Investment Holdings
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Barasentosa Lestari - Indonesia
- Planning Commission, India
- Bahari Cakrawala Sebuku - Indonesia
- Sical Logistics Limited - India
- Africa Commodities Group - South Africa
- Binh Thuan Hamico - Vietnam
- Interocean Group of Companies - India
- Billiton Holdings Pty Ltd - Australia
- White Energy Company Limited
- Sakthi Sugars Limited - India
- Parry Sugars Refinery, India
- Marubeni Corporation - India
- Banpu Public Company Limited - Thailand
- New Zealand Coal & Carbon
- Kumho Petrochemical, South Korea
- GVK Power & Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Orica Australia Pty. Ltd.
- Altura Mining Limited, Indonesia
- Gujarat Sidhee Cement - India
- Samtan Co., Ltd - South Korea
- The University of Queensland
- Madhucon Powers Ltd - India
- Singapore Mercantile Exchange
- Therma Luzon, Inc, Philippines
- IEA Clean Coal Centre - UK
- Ceylon Electricity Board - Sri Lanka
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Mines - Canada
- Cement Manufacturers Association - India
- Manunggal Multi Energi - Indonesia
- Larsen & Toubro Limited - India
- Mintek Dendrill Indonesia
- Goldman Sachs - Singapore
- Sinarmas Energy and Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Energy Development Corp, Philippines
- Mjunction Services Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercuria Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Independent Power Producers Association of India
- Global Green Power PLC Corporation, Philippines
- Bhushan Steel Limited - India
- Grasim Industreis Ltd - India
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