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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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Tuesday, 03 December 13
PORT OF NEWCASTLE IN QUEENSLAND SHIPPED 1.22 MMT MORE COAL W-W
COALspot.com: In the week ended December 2, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled 3.49 ...
Tuesday, 03 December 13
U.S PRODUCED 900.80 MMST YEAR-TO-DATE
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.7 million short tons (mmst) of coal in ...
Monday, 02 December 13
SUB-BIT INDONESIA COAL SWAP DIFFERENCE BETWEEN Q1 AND Q3 DELIVERIES ARE VERY MARGINAL
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q1’ 14 delivery gained $ 1.67 pmt month on month on Friday 29 Novemb ...
Sunday, 01 December 13
API 8 CFR SOUTH CHINA COAL SWAP FOR Q2 AND Q3 DELIVERY SHOWS A DECLINE
COALspot.com : API 8 CFR South China Coal swaps for average Q1’ 14 delivery gained 0.63 percept d-d on Friday 29 November 2013. The CFR South ...
Sunday, 01 December 13
PANAMAX RATES HAVE REBOUNDED - CAPT. REDDY
COALspot.com: The freight market was quite firm last week with all the indices increased. Cape Index was gained highest this week which supports inc ...
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- Mintek Dendrill Indonesia
- Essar Steel Hazira Ltd - India
- VISA Power Limited - India
- Bharathi Cement Corporation - India
- Economic Council, Georgia
- The State Trading Corporation of India Ltd
- Meenaskhi Energy Private Limited - India
- Formosa Plastics Group - Taiwan
- Global Coal Blending Company Limited - Australia
- Central Electricity Authority - India
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- Marubeni Corporation - India
- Sarangani Energy Corporation, Philippines
- Ministry of Transport, Egypt
- Karbindo Abesyapradhi - Indoneisa
- Orica Australia Pty. Ltd.
- Trasteel International SA, Italy
- Energy Development Corp, Philippines
- Romanian Commodities Exchange
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- Commonwealth Bank - Australia
- Karaikal Port Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- TNB Fuel Sdn Bhd - Malaysia
- Wilmar Investment Holdings
- Siam City Cement - Thailand
- Maheswari Brothers Coal Limited - India
- Siam City Cement PLC, Thailand
- Grasim Industreis Ltd - India
- San Jose City I Power Corp, Philippines
- Merrill Lynch Commodities Europe
- Ind-Barath Power Infra Limited - India
- Altura Mining Limited, Indonesia
- Sojitz Corporation - Japan
- White Energy Company Limited
- Semirara Mining Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Vedanta Resources Plc - India
- Chamber of Mines of South Africa
- Kapuas Tunggal Persada - Indonesia
- SMC Global Power, Philippines
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- Minerals Council of Australia
- Electricity Authority, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- IEA Clean Coal Centre - UK
- Eastern Energy - Thailand
- Indo Tambangraya Megah - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GVK Power & Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- Mercator Lines Limited - India
- Sical Logistics Limited - India
- The University of Queensland
- Ambuja Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Mjunction Services Limited - India
- Rio Tinto Coal - Australia
- International Coal Ventures Pvt Ltd - India
- Tata Chemicals Ltd - India
- Thiess Contractors Indonesia
- PNOC Exploration Corporation - Philippines
- Standard Chartered Bank - UAE
- Globalindo Alam Lestari - Indonesia
- Parry Sugars Refinery, India
- New Zealand Coal & Carbon
- Ministry of Mines - Canada
- Interocean Group of Companies - India
- Neyveli Lignite Corporation Ltd, - India
- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Carbofer General Trading SA - India
- Indika Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- South Luzon Thermal Energy Corporation
- Therma Luzon, Inc, Philippines
- Madhucon Powers Ltd - India
- Orica Mining Services - Indonesia
- Posco Energy - South Korea
- Banpu Public Company Limited - Thailand
- Malabar Cements Ltd - India
- MS Steel International - UAE
- Xindia Steels Limited - India
- Samtan Co., Ltd - South Korea
- Bhatia International Limited - India
- Baramulti Group, Indonesia
- SN Aboitiz Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- GMR Energy Limited - India
- Indogreen Group - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Port Waratah Coal Services - Australia
- Dalmia Cement Bharat India
- Metalloyd Limited - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Australian Coal Association
- Oldendorff Carriers - Singapore
- Pendopo Energi Batubara - Indonesia
- Aditya Birla Group - India
- Cigading International Bulk Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Eastern Coal Council - USA
- Miang Besar Coal Terminal - Indonesia
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thai Mozambique Logistica
- SMG Consultants - Indonesia
- Bukit Makmur.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Coalindo Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Makarim & Taira - Indonesia
- Global Business Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TeaM Sual Corporation - Philippines
- Lanco Infratech Ltd - India
- Intertek Mineral Services - Indonesia
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Salva Resources Pvt Ltd - India
- Cement Manufacturers Association - India
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- Barasentosa Lestari - Indonesia
- LBH Netherlands Bv - Netherlands
- ASAPP Information Group - India
- Petron Corporation, Philippines
- Coal and Oil Company - UAE
- Borneo Indobara - Indonesia
- Gujarat Sidhee Cement - India
- Georgia Ports Authority, United States
- Sree Jayajothi Cements Limited - India
- Antam Resourcindo - Indonesia
- Goldman Sachs - Singapore
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- Parliament of New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Anglo American - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Singapore Mercantile Exchange
- IHS Mccloskey Coal Group - USA
- Holcim Trading Pte Ltd - Singapore
- Indian Oil Corporation Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sinarmas Energy and Mining - Indonesia
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- Straits Asia Resources Limited - Singapore
- London Commodity Brokers - England
- Videocon Industries ltd - India
- Jindal Steel & Power Ltd - India
- Jaiprakash Power Ventures ltd
- Indonesian Coal Mining Association
- Pipit Mutiara Jaya. PT, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Krishnapatnam Port Company Ltd. - India
- Heidelberg Cement - Germany
- Bhushan Steel Limited - India
- Latin American Coal - Colombia
- Bulk Trading Sa - Switzerland
- Mercuria Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wood Mackenzie - Singapore
- Coastal Gujarat Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- India Bulls Power Limited - India
- Sindya Power Generating Company Private Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Savvy Resources Ltd - HongKong
- Deloitte Consulting - India
- Bukit Asam (Persero) Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Vizag Seaport Private Limited - India
- Planning Commission, India
- Gujarat Mineral Development Corp Ltd - India
- Medco Energi Mining Internasional
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- Simpson Spence & Young - Indonesia
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- CIMB Investment Bank - Malaysia
- Larsen & Toubro Limited - India
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- PTC India Limited - India
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- European Bulk Services B.V. - Netherlands
- OPG Power Generation Pvt Ltd - India
- Star Paper Mills Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Kartika Selabumi Mining - Indonesia
- ICICI Bank Limited - India
- Semirara Mining and Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Toyota Tsusho Corporation, Japan
- Binh Thuan Hamico - Vietnam
- Alfred C Toepfer International GmbH - Germany
- Kaltim Prima Coal - Indonesia
- Tamil Nadu electricity Board
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