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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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Saturday, 30 November 13
NTPC STARTED IMPORTING COAL THROUGH NW1 FOR ITS FARAKKA POWER PLANT
COALspot.com: In a pioneering and path breaking operation, the very first consignment of about 69,060 metric tons of imported coal bought by MV HUAY ...
Friday, 29 November 13
DRY BULK MARKET BACK ON HIGHER GROUND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market is strengthening as a result of higher demand for Capesize vessels. The BDI (Baltic Dry Index) was up by 146 points yesterday, e ...
Wednesday, 27 November 13
DRY SEGMENTS EXCEPTION OF PANAMAXES, REMAINED OVERALL STABLE - INTERMODAL
COALspot.com : The Dry Bulk market closed off the week in the red, albeit the decrease noted was of short scale. With the exception of Panamaxes, th ...
Wednesday, 27 November 13
US WHEAT IMPORTS TO BRAZIL, REACHED A 35 - YEAR HIGH - EVA TZIMA
COALspot.com: As I am going through a number of dry market fixtures reported since the beginning of October, my eyes instinctively stop where they d ...
Wednesday, 27 November 13
SHIP OWNERS ONCE AGAIN TURN TO DRY BULK CARRIERS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING
Ship owners once again turned to more dry bulk carrier ordering over the course of the past week, as more and more appear convinced of the industry ...
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- Commonwealth Bank - Australia
- Siam City Cement PLC, Thailand
- Indian Energy Exchange, India
- Chettinad Cement Corporation Ltd - India
- GAC Shipping (India) Pvt Ltd
- Petron Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Ind-Barath Power Infra Limited - India
- GVK Power & Infra Limited - India
- Sical Logistics Limited - India
- Thai Mozambique Logistica
- Indian Oil Corporation Limited
- PTC India Limited - India
- India Bulls Power Limited - India
- Tata Chemicals Ltd - India
- Sindya Power Generating Company Private Ltd
- Romanian Commodities Exchange
- Global Business Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- Larsen & Toubro Limited - India
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- Mercuria Energy - Indonesia
- Therma Luzon, Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Salva Resources Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Australian Coal Association
- Malabar Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Energy Link Ltd, New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Vizag Seaport Private Limited - India
- ASAPP Information Group - India
- Videocon Industries ltd - India
- Aboitiz Power Corporation - Philippines
- Jindal Steel & Power Ltd - India
- Bhoruka Overseas - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Sree Jayajothi Cements Limited - India
- Oldendorff Carriers - Singapore
- Electricity Generating Authority of Thailand
- Semirara Mining and Power Corporation, Philippines
- Anglo American - United Kingdom
- Global Green Power PLC Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Kobexindo Tractors - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- PowerSource Philippines DevCo
- Coastal Gujarat Power Limited - India
- New Zealand Coal & Carbon
- Jaiprakash Power Ventures ltd
- Aditya Birla Group - India
- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Chamber of Mines of South Africa
- Parliament of New Zealand
- Maheswari Brothers Coal Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- CNBM International Corporation - China
- Samtan Co., Ltd - South Korea
- Orica Mining Services - Indonesia
- Australian Commodity Traders Exchange
- Wood Mackenzie - Singapore
- Tamil Nadu electricity Board
- Minerals Council of Australia
- Wilmar Investment Holdings
- Neyveli Lignite Corporation Ltd, - India
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Planning Commission, India
- Ambuja Cements Ltd - India
- Borneo Indobara - Indonesia
- Pendopo Energi Batubara - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- The State Trading Corporation of India Ltd
- Holcim Trading Pte Ltd - Singapore
- Ministry of Finance - Indonesia
- Sarangani Energy Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Standard Chartered Bank - UAE
- Alfred C Toepfer International GmbH - Germany
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- Indika Energy - Indonesia
- White Energy Company Limited
- Semirara Mining Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Altura Mining Limited, Indonesia
- TeaM Sual Corporation - Philippines
- IEA Clean Coal Centre - UK
- Attock Cement Pakistan Limited
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- Riau Bara Harum - Indonesia
- Vedanta Resources Plc - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Karbindo Abesyapradhi - Indoneisa
- Power Finance Corporation Ltd., India
- Kaltim Prima Coal - Indonesia
- Eastern Energy - Thailand
- Gujarat Sidhee Cement - India
- Medco Energi Mining Internasional
- International Coal Ventures Pvt Ltd - India
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- Renaissance Capital - South Africa
- Sakthi Sugars Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sinarmas Energy and Mining - Indonesia
- Port Waratah Coal Services - Australia
- Mercator Lines Limited - India
- GN Power Mariveles Coal Plant, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- San Jose City I Power Corp, Philippines
- Singapore Mercantile Exchange
- Bangladesh Power Developement Board
- Ceylon Electricity Board - Sri Lanka
- VISA Power Limited - India
- Savvy Resources Ltd - HongKong
- Central Electricity Authority - India
- Bhushan Steel Limited - India
- Siam City Cement - Thailand
- Kumho Petrochemical, South Korea
- Simpson Spence & Young - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Economic Council, Georgia
- Directorate Of Revenue Intelligence - India
- Heidelberg Cement - Germany
- Bharathi Cement Corporation - India
- Global Coal Blending Company Limited - Australia
- Miang Besar Coal Terminal - Indonesia
- Carbofer General Trading SA - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parry Sugars Refinery, India
- CIMB Investment Bank - Malaysia
- Lanco Infratech Ltd - India
- Metalloyd Limited - United Kingdom
- Indogreen Group - Indonesia
- Edison Trading Spa - Italy
- Bulk Trading Sa - Switzerland
- SMG Consultants - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Rio Tinto Coal - Australia
- Sojitz Corporation - Japan
- SMC Global Power, Philippines
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- Mjunction Services Limited - India
- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
- PNOC Exploration Corporation - Philippines
- GMR Energy Limited - India
- Indo Tambangraya Megah - Indonesia
- Straits Asia Resources Limited - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Trasteel International SA, Italy
- Marubeni Corporation - India
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- Interocean Group of Companies - India
- Bhatia International Limited - India
- Latin American Coal - Colombia
- AsiaOL BioFuels Corp., Philippines
- Ministry of Mines - Canada
- Meralco Power Generation, Philippines
- Kideco Jaya Agung - Indonesia
- South Luzon Thermal Energy Corporation
- Baramulti Group, Indonesia
- Karaikal Port Pvt Ltd - India
- Deloitte Consulting - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Formosa Plastics Group - Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Java Power - Indonesia
- Eastern Coal Council - USA
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- ICICI Bank Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Madhucon Powers Ltd - India
- The Treasury - Australian Government
- MS Steel International - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Cement Manufacturers Association - India
- Dalmia Cement Bharat India
- Xindia Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Billiton Holdings Pty Ltd - Australia
- Antam Resourcindo - Indonesia
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Orica Australia Pty. Ltd.
- Bukit Makmur.PT - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Electricity Authority, New Zealand
- Coalindo Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
- Uttam Galva Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Coal and Oil Company - UAE
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