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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, 04 December 13
INDONESIAN COAL EXPORTS VOLUME AND REVENUE IN OCTOBER MARCHED TOWARDS NORTH
COALspot.com: Indonesia, the world's 4th largest coal producer and the largest multi grade coal exporter shipped over $1.76* billion worth of ...
Wednesday, 04 December 13
WEST AUSTRALIA IRON ORE FIXTURES ALSO CONTINUING TO PROVIDE A STEADY FLOW OF BUSINESS FOR CAPES - INTERMODAL
The Dry Bulk market has reversed course this past week, bringing back some of the lost excitement of the past month, as all size segments climbed hi ...
Wednesday, 04 December 13
THE BUYERS' DEMAND IS CONTINUOUSLY BULLISH - KONSTANTINOS KONTOMICHIS
The very low rates that prevailed for the bigger part of 2013 seem to have prepared the ground for buying opportunities for shipping investors. The ...
Wednesday, 04 December 13
SGX AND CFA TO COLLABORATE TO DEVELOP DERIVATIVES MARKETS IN CHINA AND SINGAPORE
Singapore Exchange (SGX) and the China Futures Association (CFA) are cooperating in the development of derivatives markets in China and Singapore.
...
Wednesday, 04 December 13
SGX'S MONTHLY VOLUMES REACHED A RECORD HIGH OF 705,000 MT IN NOVEMBER 2013
COALspot.com: SGX has announced that, it monthly volumes have reached a record high of 705 lots (705,000 mt) in November 2013 with month-end open in ...
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- Rio Tinto Coal - Australia
- Jindal Steel & Power Ltd - India
- SN Aboitiz Power Inc, Philippines
- Ministry of Finance - Indonesia
- IEA Clean Coal Centre - UK
- Global Coal Blending Company Limited - Australia
- Parry Sugars Refinery, India
- Renaissance Capital - South Africa
- Indo Tambangraya Megah - Indonesia
- Kapuas Tunggal Persada - Indonesia
- International Coal Ventures Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Malabar Cements Ltd - India
- Electricity Generating Authority of Thailand
- TeaM Sual Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- Gujarat Mineral Development Corp Ltd - India
- Independent Power Producers Association of India
- Directorate General of MIneral and Coal - Indonesia
- Coalindo Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bharathi Cement Corporation - India
- Wilmar Investment Holdings
- TNB Fuel Sdn Bhd - Malaysia
- Mercuria Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Xindia Steels Limited - India
- Simpson Spence & Young - Indonesia
- Commonwealth Bank - Australia
- Vijayanagar Sugar Pvt Ltd - India
- The University of Queensland
- Singapore Mercantile Exchange
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Marubeni Corporation - India
- Samtan Co., Ltd - South Korea
- Port Waratah Coal Services - Australia
- Indogreen Group - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- GMR Energy Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Kaltim Prima Coal - Indonesia
- Goldman Sachs - Singapore
- Mintek Dendrill Indonesia
- Agrawal Coal Company - India
- Attock Cement Pakistan Limited
- MS Steel International - UAE
- London Commodity Brokers - England
- South Luzon Thermal Energy Corporation
- European Bulk Services B.V. - Netherlands
- Ministry of Mines - Canada
- Videocon Industries ltd - India
- Chettinad Cement Corporation Ltd - India
- Bulk Trading Sa - Switzerland
- Bhatia International Limited - India
- Australian Commodity Traders Exchange
- Sakthi Sugars Limited - India
- Vedanta Resources Plc - India
- Global Business Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- PNOC Exploration Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Orica Mining Services - Indonesia
- Wood Mackenzie - Singapore
- Cigading International Bulk Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Minerals Council of Australia
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Transport, Egypt
- Grasim Industreis Ltd - India
- The State Trading Corporation of India Ltd
- White Energy Company Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Parliament of New Zealand
- Trasteel International SA, Italy
- Lanco Infratech Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Uttam Galva Steels Limited - India
- Straits Asia Resources Limited - Singapore
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Star Paper Mills Limited - India
- Sical Logistics Limited - India
- Interocean Group of Companies - India
- Madhucon Powers Ltd - India
- ICICI Bank Limited - India
- GVK Power & Infra Limited - India
- SMG Consultants - Indonesia
- Economic Council, Georgia
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Global Green Power PLC Corporation, Philippines
- VISA Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Thiess Contractors Indonesia
- Salva Resources Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- PowerSource Philippines DevCo
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Central Electricity Authority - India
- Eastern Coal Council - USA
- Posco Energy - South Korea
- Neyveli Lignite Corporation Ltd, - India
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Romanian Commodities Exchange
- Meenaskhi Energy Private Limited - India
- Standard Chartered Bank - UAE
- India Bulls Power Limited - India
- Africa Commodities Group - South Africa
- Larsen & Toubro Limited - India
- Orica Australia Pty. Ltd.
- Oldendorff Carriers - Singapore
- Bayan Resources Tbk. - Indonesia
- Pendopo Energi Batubara - Indonesia
- Indonesian Coal Mining Association
- Mercator Lines Limited - India
- Binh Thuan Hamico - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Maheswari Brothers Coal Limited - India
- Ind-Barath Power Infra Limited - India
- Borneo Indobara - Indonesia
- Medco Energi Mining Internasional
- Coal and Oil Company - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Edison Trading Spa - Italy
- Asmin Koalindo Tuhup - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Coastal Gujarat Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- Energy Link Ltd, New Zealand
- LBH Netherlands Bv - Netherlands
- Karaikal Port Pvt Ltd - India
- Central Java Power - Indonesia
- Iligan Light & Power Inc, Philippines
- Indian Energy Exchange, India
- Carbofer General Trading SA - India
- Barasentosa Lestari - Indonesia
- Mjunction Services Limited - India
- Cement Manufacturers Association - India
- Baramulti Group, Indonesia
- CIMB Investment Bank - Malaysia
- Formosa Plastics Group - Taiwan
- Jorong Barutama Greston.PT - Indonesia
- SMC Global Power, Philippines
- Sojitz Corporation - Japan
- Kohat Cement Company Ltd. - Pakistan
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Rashtriya Ispat Nigam Limited - India
- Anglo American - United Kingdom
- Therma Luzon, Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- CNBM International Corporation - China
- IHS Mccloskey Coal Group - USA
- Thai Mozambique Logistica
- Australian Coal Association
- Eastern Energy - Thailand
- Metalloyd Limited - United Kingdom
- Merrill Lynch Commodities Europe
- Riau Bara Harum - Indonesia
- Kumho Petrochemical, South Korea
- Georgia Ports Authority, United States
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- Heidelberg Cement - Germany
- Toyota Tsusho Corporation, Japan
- Bukit Baiduri Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- PTC India Limited - India
- The Treasury - Australian Government
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sree Jayajothi Cements Limited - India
- Indian Oil Corporation Limited
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petron Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- McConnell Dowell - Australia
- Aboitiz Power Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Bangladesh Power Developement Board
- Billiton Holdings Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Bukit Makmur.PT - Indonesia
- Tata Chemicals Ltd - India
- Electricity Authority, New Zealand
- Siam City Cement - Thailand
- Planning Commission, India
- New Zealand Coal & Carbon
- Manunggal Multi Energi - Indonesia
- Chamber of Mines of South Africa
- Siam City Cement PLC, Thailand
- Antam Resourcindo - Indonesia
- Altura Mining Limited, Indonesia
- Tamil Nadu electricity Board
- Intertek Mineral Services - Indonesia
- Bhushan Steel Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kideco Jaya Agung - Indonesia
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