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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, 09 December 13
SUB-BIT INDONESIA COAL SWAP FOR Q3' 14 DELIVERY CLOSED $ 0.57 LESSER THAN Q1 CLOSING
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q1’ 14 delivery gained $ 1.49 pmt month on month on Friday 6 Decembe ...
Sunday, 08 December 13
SOUTH CHINA COAL SWAPS SHOW A DECLINE TREND IN Q2 & Q3' 14
COALspot.com : API 8 CFR South China Coal swaps for average Q1’ 14 delivery gained 6.76 percept month on month as on Friday 6 December 2013. T ...
Sunday, 08 December 13
RBCT SHIPPED 63.446 MMT OF COALS YTD
COALspot.com - Richards Bay Coal Terminal (RBCT), the world's single largest coal terminal has shipped 63,446,232 mt of coals YTD, according to por ...
Saturday, 07 December 13
SUPRAMAX SHIPS FOR EC INDIA TO CHINA ROUTE BEING FIXED AT AROUND US$ 13K - SOLYM
COALspot.com: The freight market continued to be firm due to high Iron ore demand. The cape index was up by almost 25 pct this week. The grain seaso ...
Saturday, 07 December 13
A RARE TIME IN RECENT SHIPPING MARKET HISTORY: BOTH DRY BULK AND VLCC TANKER EARNINGS ARE ON THE RISE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Around this time of year, back in 2008, i.e. five years ago, the shipping markets were plagued with the aftermath of the global financial crisis tha ...
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- Semirara Mining Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Wood Mackenzie - Singapore
- Binh Thuan Hamico - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- International Coal Ventures Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Posco Energy - South Korea
- Krishnapatnam Port Company Ltd. - India
- GN Power Mariveles Coal Plant, Philippines
- Metalloyd Limited - United Kingdom
- Sical Logistics Limited - India
- Indika Energy - Indonesia
- Samtan Co., Ltd - South Korea
- Bukit Baiduri Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Essar Steel Hazira Ltd - India
- Bulk Trading Sa - Switzerland
- India Bulls Power Limited - India
- Larsen & Toubro Limited - India
- Leighton Contractors Pty Ltd - Australia
- Central Java Power - Indonesia
- Tata Chemicals Ltd - India
- Global Coal Blending Company Limited - Australia
- The University of Queensland
- Ambuja Cements Ltd - India
- Savvy Resources Ltd - HongKong
- Karbindo Abesyapradhi - Indoneisa
- Eastern Coal Council - USA
- PetroVietnam Power Coal Import and Supply Company
- Mjunction Services Limited - India
- Mintek Dendrill Indonesia
- Africa Commodities Group - South Africa
- Indonesian Coal Mining Association
- Kumho Petrochemical, South Korea
- Rio Tinto Coal - Australia
- Rashtriya Ispat Nigam Limited - India
- Sinarmas Energy and Mining - Indonesia
- Videocon Industries ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Energy Link Ltd, New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Power Finance Corporation Ltd., India
- CIMB Investment Bank - Malaysia
- Minerals Council of Australia
- Salva Resources Pvt Ltd - India
- Chamber of Mines of South Africa
- Thiess Contractors Indonesia
- Kaltim Prima Coal - Indonesia
- Directorate Of Revenue Intelligence - India
- Jaiprakash Power Ventures ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Carbofer General Trading SA - India
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Bhoruka Overseas - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- New Zealand Coal & Carbon
- Directorate General of MIneral and Coal - Indonesia
- Latin American Coal - Colombia
- White Energy Company Limited
- IEA Clean Coal Centre - UK
- Lanco Infratech Ltd - India
- Bukit Makmur.PT - Indonesia
- PowerSource Philippines DevCo
- Meenaskhi Energy Private Limited - India
- Dalmia Cement Bharat India
- Altura Mining Limited, Indonesia
- OPG Power Generation Pvt Ltd - India
- Agrawal Coal Company - India
- Parliament of New Zealand
- Meralco Power Generation, Philippines
- Sarangani Energy Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- San Jose City I Power Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Planning Commission, India
- Banpu Public Company Limited - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Orica Mining Services - Indonesia
- Bangladesh Power Developement Board
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Bharathi Cement Corporation - India
- Central Electricity Authority - India
- Coal and Oil Company - UAE
- Indogreen Group - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Deloitte Consulting - India
- Global Green Power PLC Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Ministry of Mines - Canada
- Interocean Group of Companies - India
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Antam Resourcindo - Indonesia
- London Commodity Brokers - England
- GMR Energy Limited - India
- Bhatia International Limited - India
- Sree Jayajothi Cements Limited - India
- Kapuas Tunggal Persada - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Oil Corporation Limited
- Medco Energi Mining Internasional
- Edison Trading Spa - Italy
- Goldman Sachs - Singapore
- Xindia Steels Limited - India
- Formosa Plastics Group - Taiwan
- Eastern Energy - Thailand
- Sakthi Sugars Limited - India
- Makarim & Taira - Indonesia
- Aboitiz Power Corporation - Philippines
- Port Waratah Coal Services - Australia
- Mercator Lines Limited - India
- Madhucon Powers Ltd - India
- Intertek Mineral Services - Indonesia
- Orica Australia Pty. Ltd.
- Sojitz Corporation - Japan
- Petrochimia International Co. Ltd.- Taiwan
- Ind-Barath Power Infra Limited - India
- Coastal Gujarat Power Limited - India
- European Bulk Services B.V. - Netherlands
- Australian Coal Association
- Electricity Generating Authority of Thailand
- SMC Global Power, Philippines
- The Treasury - Australian Government
- Vedanta Resources Plc - India
- IHS Mccloskey Coal Group - USA
- Maharashtra Electricity Regulatory Commission - India
- Electricity Authority, New Zealand
- Heidelberg Cement - Germany
- LBH Netherlands Bv - Netherlands
- Commonwealth Bank - Australia
- Kobexindo Tractors - Indoneisa
- South Luzon Thermal Energy Corporation
- The State Trading Corporation of India Ltd
- Star Paper Mills Limited - India
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Barasentosa Lestari - Indonesia
- Ministry of Transport, Egypt
- SMG Consultants - Indonesia
- Malabar Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Billiton Holdings Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- Global Business Power Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Maheswari Brothers Coal Limited - India
- ICICI Bank Limited - India
- Economic Council, Georgia
- PTC India Limited - India
- Straits Asia Resources Limited - Singapore
- Petron Corporation, Philippines
- Anglo American - United Kingdom
- Siam City Cement PLC, Thailand
- PNOC Exploration Corporation - Philippines
- Parry Sugars Refinery, India
- Indian Energy Exchange, India
- Singapore Mercantile Exchange
- Bukit Asam (Persero) Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- VISA Power Limited - India
- Georgia Ports Authority, United States
- Aditya Birla Group - India
- CNBM International Corporation - China
- Thai Mozambique Logistica
- Bhushan Steel Limited - India
- Kartika Selabumi Mining - Indonesia
- Australian Commodity Traders Exchange
- GAC Shipping (India) Pvt Ltd
- Pendopo Energi Batubara - Indonesia
- Romanian Commodities Exchange
- Chettinad Cement Corporation Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Jindal Steel & Power Ltd - India
- Riau Bara Harum - Indonesia
- Cement Manufacturers Association - India
- Asmin Koalindo Tuhup - Indonesia
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Attock Cement Pakistan Limited
- Tamil Nadu electricity Board
- Timah Investasi Mineral - Indoneisa
- Standard Chartered Bank - UAE
- Independent Power Producers Association of India
- TNB Fuel Sdn Bhd - Malaysia
- Globalindo Alam Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Gujarat Sidhee Cement - India
- GVK Power & Infra Limited - India
- Energy Development Corp, Philippines
- Borneo Indobara - Indonesia
- McConnell Dowell - Australia
- Grasim Industreis Ltd - India
- Oldendorff Carriers - Singapore
- Manunggal Multi Energi - Indonesia
- Wilmar Investment Holdings
- Simpson Spence & Young - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Jorong Barutama Greston.PT - Indonesia
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