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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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Friday, 06 December 13
INDONESIAN PARLIAMENT REJECTED A GOVERNMENT PROPOSAL TO EASE THE BAN ON EXPORTING UNPROCESSED ORE
COALspot.com: Indonesian House of Representatives rejected a proposal from Energy and Mineral Resources Minister Jero Wacik on to ease the ban on ex ...
Friday, 06 December 13
THE MINISTRY OF ENERGY & MINERAL RESOURCES OF INDONESIA FIXED DEC'13 HBA AT US$ 80.31
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia has increased government declared coal bench mark price by US$ 2.18 / MT ...
Friday, 06 December 13
US PRODUCED APPROXIMATELY 82.8 MILLION SHORT TONS OF COAL IN NOVEMBER 2013
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.00 million short tons (mmst) of coal in ...
Friday, 06 December 13
PANAMAXES HAVE BEEN THE ' WEAPON OF CHOICE' BY MOST DRY BULK SHIP OWNERS DURING 2013 - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Low ship prices, the direct consequence of subdued freight rates for the larger part of 2013 have been the main driving force behind this year's ag ...
Thursday, 05 December 13
PANAMAX : THE FIRM TENDENCY CONTINUES - FEARNRESEARCH
Handy
It has been an active week for the Supramax and Handysize segment. USG is almost boiling and charterers looking to cover their December stems ...
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- Indian Energy Exchange, India
- Neyveli Lignite Corporation Ltd, - India
- Electricity Generating Authority of Thailand
- Indo Tambangraya Megah - Indonesia
- Vedanta Resources Plc - India
- Siam City Cement PLC, Thailand
- IEA Clean Coal Centre - UK
- Xindia Steels Limited - India
- Energy Link Ltd, New Zealand
- Jindal Steel & Power Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Georgia Ports Authority, United States
- Sinarmas Energy and Mining - Indonesia
- The State Trading Corporation of India Ltd
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Bulk Trading Sa - Switzerland
- Rashtriya Ispat Nigam Limited - India
- Formosa Plastics Group - Taiwan
- Bukit Baiduri Energy - Indonesia
- Carbofer General Trading SA - India
- Kumho Petrochemical, South Korea
- London Commodity Brokers - England
- Timah Investasi Mineral - Indoneisa
- VISA Power Limited - India
- Jaiprakash Power Ventures ltd
- Central Electricity Authority - India
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- Agrawal Coal Company - India
- TeaM Sual Corporation - Philippines
- Sical Logistics Limited - India
- Africa Commodities Group - South Africa
- Borneo Indobara - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Manunggal Multi Energi - Indonesia
- LBH Netherlands Bv - Netherlands
- CNBM International Corporation - China
- Goldman Sachs - Singapore
- Rio Tinto Coal - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Aditya Birla Group - India
- Kohat Cement Company Ltd. - Pakistan
- Coal and Oil Company - UAE
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- South Luzon Thermal Energy Corporation
- Ambuja Cements Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Bangladesh Power Developement Board
- Iligan Light & Power Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Thai Mozambique Logistica
- Ind-Barath Power Infra Limited - India
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- OPG Power Generation Pvt Ltd - India
- Commonwealth Bank - Australia
- Bhoruka Overseas - Indonesia
- International Coal Ventures Pvt Ltd - India
- Power Finance Corporation Ltd., India
- White Energy Company Limited
- PowerSource Philippines DevCo
- The Treasury - Australian Government
- Petron Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Indonesian Coal Mining Association
- Ceylon Electricity Board - Sri Lanka
- Alfred C Toepfer International GmbH - Germany
- Orica Mining Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Sojitz Corporation - Japan
- Anglo American - United Kingdom
- Kideco Jaya Agung - Indonesia
- Electricity Authority, New Zealand
- Ministry of Mines - Canada
- Tamil Nadu electricity Board
- Global Green Power PLC Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Indogreen Group - Indonesia
- Independent Power Producers Association of India
- Singapore Mercantile Exchange
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Java Power - Indonesia
- Port Waratah Coal Services - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cement Manufacturers Association - India
- Star Paper Mills Limited - India
- Parry Sugars Refinery, India
- Metalloyd Limited - United Kingdom
- Savvy Resources Ltd - HongKong
- Kartika Selabumi Mining - Indonesia
- Chamber of Mines of South Africa
- Planning Commission, India
- Medco Energi Mining Internasional
- Australian Commodity Traders Exchange
- Directorate Of Revenue Intelligence - India
- Makarim & Taira - Indonesia
- Australian Coal Association
- Bukit Asam (Persero) Tbk - Indonesia
- New Zealand Coal & Carbon
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- MS Steel International - UAE
- GVK Power & Infra Limited - India
- Wood Mackenzie - Singapore
- European Bulk Services B.V. - Netherlands
- SMC Global Power, Philippines
- CIMB Investment Bank - Malaysia
- Leighton Contractors Pty Ltd - Australia
- The University of Queensland
- Indian Oil Corporation Limited
- PTC India Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Dalmia Cement Bharat India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Transport, Egypt
- Altura Mining Limited, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Renaissance Capital - South Africa
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Mercator Lines Limited - India
- Sarangani Energy Corporation, Philippines
- Attock Cement Pakistan Limited
- Energy Development Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- PNOC Exploration Corporation - Philippines
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- Straits Asia Resources Limited - Singapore
- Global Coal Blending Company Limited - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Price Waterhouse Coopers - Russia
- Deloitte Consulting - India
- Parliament of New Zealand
- Therma Luzon, Inc, Philippines
- Antam Resourcindo - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- Edison Trading Spa - Italy
- Uttam Galva Steels Limited - India
- Larsen & Toubro Limited - India
- Barasentosa Lestari - Indonesia
- Marubeni Corporation - India
- Heidelberg Cement - Germany
- ICICI Bank Limited - India
- Kaltim Prima Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- SMG Consultants - Indonesia
- Malabar Cements Ltd - India
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- Siam City Cement - Thailand
- Mercuria Energy - Indonesia
- Sakthi Sugars Limited - India
- Madhucon Powers Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Pendopo Energi Batubara - Indonesia
- Chettinad Cement Corporation Ltd - India
- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Thiess Contractors Indonesia
- Oldendorff Carriers - Singapore
- Samtan Co., Ltd - South Korea
- Lanco Infratech Ltd - India
- GAC Shipping (India) Pvt Ltd
- Kobexindo Tractors - Indoneisa
- Salva Resources Pvt Ltd - India
- ASAPP Information Group - India
- Posco Energy - South Korea
- Global Business Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Eastern Energy - Thailand
- Holcim Trading Pte Ltd - Singapore
- Bhushan Steel Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Intertek Mineral Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- Toyota Tsusho Corporation, Japan
- Directorate General of MIneral and Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Ministry of Finance - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- Trasteel International SA, Italy
- Mintek Dendrill Indonesia
- Coalindo Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Wilmar Investment Holdings
- Economic Council, Georgia
- Latin American Coal - Colombia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- GMR Energy Limited - India
- Semirara Mining Corp, Philippines
- Riau Bara Harum - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Indika Energy - Indonesia
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