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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, 26 November 13
EWP INVITES COAL BIDS FOR 2014 - 2018 DELIVERIES
COALspot.com: Korea East-West Power Co. Ltd (EWP) invited bids to supply 130,000MT of min 5,600kcal/kg (Sub)-bituminous Coal on NCV basis for March ...
Tuesday, 26 November 13
NEWCASTLE COAL EXPORTS SLIP 22.62% W-W
COALspot.com: In the week ended November 25, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totalled 2.26 ...
Monday, 25 November 13
THE SUB-BIT INDONESIA COAL SWAP MOVEMENT IN YEAR 2014 IS STILL FAR FROM PROMISING
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q1’ 14 delivery gained $ 2.54 pmt month on month on Friday 22 Novemb ...
Sunday, 24 November 13
CFR SOUTH CHINA COAL SWAPS FOR Q4' 14 DELIVERY PRICE SHOWS A NEGATIVE TREND WEEK ON WEEK AND FLAT ON D-D
COALspot.com : API 8 CFR South China Coal swaps for average Q1’ 14 delivery gained 0.13 percept d-d on Friday 22 November 2013. The CFR South ...
Sunday, 24 November 13
SUPRAMAX FREIGHT RATES REMAINED FIRM FROM INDONESIA TO INDIA AND CHINA - SOLYM
COALspot.com: The freight market was fairly steady except for the Supramax in SE Asia region which continued to remain firm. The BDI was down by 1.5 ...
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- Videocon Industries ltd - India
- CIMB Investment Bank - Malaysia
- CNBM International Corporation - China
- Interocean Group of Companies - India
- Romanian Commodities Exchange
- PowerSource Philippines DevCo
- Bukit Baiduri Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- IEA Clean Coal Centre - UK
- London Commodity Brokers - England
- Mercator Lines Limited - India
- European Bulk Services B.V. - Netherlands
- Parliament of New Zealand
- Sindya Power Generating Company Private Ltd
- Salva Resources Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Australian Coal Association
- Meenaskhi Energy Private Limited - India
- Manunggal Multi Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- ICICI Bank Limited - India
- Aboitiz Power Corporation - Philippines
- ASAPP Information Group - India
- PNOC Exploration Corporation - Philippines
- Altura Mining Limited, Indonesia
- Power Finance Corporation Ltd., India
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Vizag Seaport Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Minerals Council of Australia
- Krishnapatnam Port Company Ltd. - India
- Kobexindo Tractors - Indoneisa
- Global Coal Blending Company Limited - Australia
- Meralco Power Generation, Philippines
- Binh Thuan Hamico - Vietnam
- Ceylon Electricity Board - Sri Lanka
- Billiton Holdings Pty Ltd - Australia
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- Essar Steel Hazira Ltd - India
- Tamil Nadu electricity Board
- Savvy Resources Ltd - HongKong
- Trasteel International SA, Italy
- Kideco Jaya Agung - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Grasim Industreis Ltd - India
- VISA Power Limited - India
- Latin American Coal - Colombia
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Gujarat Sidhee Cement - India
- Sojitz Corporation - Japan
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Indian Energy Exchange, India
- Standard Chartered Bank - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Carbofer General Trading SA - India
- Sical Logistics Limited - India
- MS Steel International - UAE
- Ind-Barath Power Infra Limited - India
- The Treasury - Australian Government
- Karaikal Port Pvt Ltd - India
- Energy Development Corp, Philippines
- Larsen & Toubro Limited - India
- Central Electricity Authority - India
- Pipit Mutiara Jaya. PT, Indonesia
- Pendopo Energi Batubara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Formosa Plastics Group - Taiwan
- PetroVietnam Power Coal Import and Supply Company
- Energy Link Ltd, New Zealand
- Cement Manufacturers Association - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jaiprakash Power Ventures ltd
- Orica Mining Services - Indonesia
- The University of Queensland
- Mintek Dendrill Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bharathi Cement Corporation - India
- Medco Energi Mining Internasional
- Directorate General of MIneral and Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Planning Commission, India
- Kalimantan Lumbung Energi - Indonesia
- Straits Asia Resources Limited - Singapore
- TeaM Sual Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- GMR Energy Limited - India
- Metalloyd Limited - United Kingdom
- Sarangani Energy Corporation, Philippines
- Agrawal Coal Company - India
- Siam City Cement PLC, Thailand
- Port Waratah Coal Services - Australia
- Directorate Of Revenue Intelligence - India
- Wood Mackenzie - Singapore
- Kaltim Prima Coal - Indonesia
- Bhoruka Overseas - Indonesia
- Ambuja Cements Ltd - India
- Coal and Oil Company - UAE
- OPG Power Generation Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Sakthi Sugars Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- Bhatia International Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Marubeni Corporation - India
- Eastern Energy - Thailand
- Deloitte Consulting - India
- Banpu Public Company Limited - Thailand
- Ministry of Mines - Canada
- Semirara Mining and Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indo Tambangraya Megah - Indonesia
- Bangladesh Power Developement Board
- Renaissance Capital - South Africa
- IHS Mccloskey Coal Group - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Dalmia Cement Bharat India
- Simpson Spence & Young - Indonesia
- Maheswari Brothers Coal Limited - India
- GAC Shipping (India) Pvt Ltd
- Eastern Coal Council - USA
- Indogreen Group - Indonesia
- Aditya Birla Group - India
- Cigading International Bulk Terminal - Indonesia
- Timah Investasi Mineral - Indoneisa
- Electricity Authority, New Zealand
- GVK Power & Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- Siam City Cement - Thailand
- Indian Oil Corporation Limited
- Anglo American - United Kingdom
- Star Paper Mills Limited - India
- Toyota Tsusho Corporation, Japan
- Kohat Cement Company Ltd. - Pakistan
- PTC India Limited - India
- Economic Council, Georgia
- Rio Tinto Coal - Australia
- Bulk Trading Sa - Switzerland
- Heidelberg Cement - Germany
- Posco Energy - South Korea
- Chettinad Cement Corporation Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- New Zealand Coal & Carbon
- Merrill Lynch Commodities Europe
- Bhushan Steel Limited - India
- Wilmar Investment Holdings
- Lanco Infratech Ltd - India
- Edison Trading Spa - Italy
- Global Business Power Corporation, Philippines
- Petron Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Gujarat Mineral Development Corp Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- Intertek Mineral Services - Indonesia
- Thiess Contractors Indonesia
- Oldendorff Carriers - Singapore
- Singapore Mercantile Exchange
- Jindal Steel & Power Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Ministry of Transport, Egypt
- Rashtriya Ispat Nigam Limited - India
- Globalindo Alam Lestari - Indonesia
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- Africa Commodities Group - South Africa
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- Malabar Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Coalindo Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Xindia Steels Limited - India
- Uttam Galva Steels Limited - India
- Chamber of Mines of South Africa
- Indika Energy - Indonesia
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- AsiaOL BioFuels Corp., Philippines
- Kumho Petrochemical, South Korea
- Orica Australia Pty. Ltd.
- Commonwealth Bank - Australia
- Thai Mozambique Logistica
- Vedanta Resources Plc - India
- Asmin Koalindo Tuhup - Indonesia
- Australian Commodity Traders Exchange
- Antam Resourcindo - Indonesia
- Ministry of Finance - Indonesia
- Kepco SPC Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Georgia Ports Authority, United States
- Barasentosa Lestari - Indonesia
- Therma Luzon, Inc, Philippines
- South Luzon Thermal Energy Corporation
- Borneo Indobara - Indonesia
- Iligan Light & Power Inc, Philippines
- Electricity Generating Authority of Thailand
- SMG Consultants - Indonesia
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