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