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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, 22 November 13
DRY BULK MARKET STILL LACKLUSTRE, DESPITE PROJECTIONS OF A NEW RALLY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
We might still be about six weeks far from the end of the year, but the projected by many analysts upcoming rally of the dry bulk market, hasn't ye ...
Friday, 22 November 13
US COAL PRODUCTION DOWN 1.3% W-W
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.5 million short tons (mmst) of coal in ...
Thursday, 21 November 13
TAIPOWER TO PROCURE 750K MT OF 5500 GAR BITUMINOUS COAL FOR MAY - AUGUST 2014
COALspot.com: Taiwan Power Company intends to procure 750,000 metric tons of bituminous coal with calorific value not lesser than 5,500 kcal/kg on a ...
Thursday, 21 November 13
CAPESIZE : THE DOWNWARD TREND HAS TURNED INTO NOTABLE SPOT AND PERIOD IMPROVEMENT - FEARNLEYS
Handy
The Atlantic market experienced a general rate increase for most trades this week. More cargoes in the market and chrts looking for prompt t ...
Wednesday, 20 November 13
PANAMAX MARKET RESUMED ITS NEGATIVE MOVEMENT FOR A SECOND WEEK IN A ROW - INTERMODAL
COALspot.com: The recovery noted the week prior in the dry Bulk market proved to be short-lived, as the BDI slipped back down to the low 1,500 point ...
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- Savvy Resources Ltd - HongKong
- The State Trading Corporation of India Ltd
- Bangladesh Power Developement Board
- Videocon Industries ltd - India
- PTC India Limited - India
- Pendopo Energi Batubara - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sindya Power Generating Company Private Ltd
- India Bulls Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Global Coal Blending Company Limited - Australia
- Mjunction Services Limited - India
- Aboitiz Power Corporation - Philippines
- Ministry of Finance - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Madhucon Powers Ltd - India
- ICICI Bank Limited - India
- Jindal Steel & Power Ltd - India
- SMG Consultants - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Baramulti Group, Indonesia
- GMR Energy Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- South Luzon Thermal Energy Corporation
- Krishnapatnam Port Company Ltd. - India
- Kapuas Tunggal Persada - Indonesia
- Deloitte Consulting - India
- New Zealand Coal & Carbon
- Ministry of Mines - Canada
- CNBM International Corporation - China
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Romanian Commodities Exchange
- Sinarmas Energy and Mining - Indonesia
- Makarim & Taira - Indonesia
- Tata Chemicals Ltd - India
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- Malabar Cements Ltd - India
- Barasentosa Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- GN Power Mariveles Coal Plant, Philippines
- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- Global Business Power Corporation, Philippines
- Ministry of Transport, Egypt
- Semirara Mining and Power Corporation, Philippines
- Anglo American - United Kingdom
- Kobexindo Tractors - Indoneisa
- Altura Mining Limited, Indonesia
- Vizag Seaport Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Power Finance Corporation Ltd., India
- Binh Thuan Hamico - Vietnam
- Oldendorff Carriers - Singapore
- Coal and Oil Company - UAE
- Essar Steel Hazira Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Agrawal Coal Company - India
- Parry Sugars Refinery, India
- Indian Oil Corporation Limited
- Xindia Steels Limited - India
- Bharathi Cement Corporation - India
- Kumho Petrochemical, South Korea
- Commonwealth Bank - Australia
- TeaM Sual Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- Georgia Ports Authority, United States
- Central Electricity Authority - India
- Bhoruka Overseas - Indonesia
- Therma Luzon, Inc, Philippines
- Latin American Coal - Colombia
- Coastal Gujarat Power Limited - India
- Minerals Council of Australia
- Bhushan Steel Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Marubeni Corporation - India
- Africa Commodities Group - South Africa
- Antam Resourcindo - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Samtan Co., Ltd - South Korea
- Independent Power Producers Association of India
- Vedanta Resources Plc - India
- Gujarat Electricity Regulatory Commission - India
- The Treasury - Australian Government
- Kepco SPC Power Corporation, Philippines
- Posco Energy - South Korea
- Manunggal Multi Energi - Indonesia
- Sakthi Sugars Limited - India
- Ambuja Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Economic Council, Georgia
- Port Waratah Coal Services - Australia
- GVK Power & Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Bhatia International Limited - India
- Price Waterhouse Coopers - Russia
- Karaikal Port Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Energy Development Corp, Philippines
- Rio Tinto Coal - Australia
- Sical Logistics Limited - India
- Larsen & Toubro Limited - India
- Chettinad Cement Corporation Ltd - India
- Orica Mining Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Electricity Authority, New Zealand
- Chamber of Mines of South Africa
- European Bulk Services B.V. - Netherlands
- Kohat Cement Company Ltd. - Pakistan
- Sarangani Energy Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Orica Australia Pty. Ltd.
- GAC Shipping (India) Pvt Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- PNOC Exploration Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Wilmar Investment Holdings
- The University of Queensland
- Formosa Plastics Group - Taiwan
- Mercuria Energy - Indonesia
- Australian Coal Association
- Bukit Baiduri Energy - Indonesia
- Mintek Dendrill Indonesia
- Sojitz Corporation - Japan
- Toyota Tsusho Corporation, Japan
- Interocean Group of Companies - India
- Ceylon Electricity Board - Sri Lanka
- Bukit Makmur.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Electricity Generating Authority of Thailand
- SN Aboitiz Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Indonesian Coal Mining Association
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Sidhee Cement - India
- Globalindo Alam Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Eastern Energy - Thailand
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- London Commodity Brokers - England
- Eastern Coal Council - USA
- Medco Energi Mining Internasional
- Riau Bara Harum - Indonesia
- Thai Mozambique Logistica
- Star Paper Mills Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Indian Energy Exchange, India
- SMC Global Power, Philippines
- Bulk Trading Sa - Switzerland
- Tamil Nadu electricity Board
- Bukit Asam (Persero) Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- San Jose City I Power Corp, Philippines
- Banpu Public Company Limited - Thailand
- Lanco Infratech Ltd - India
- Jaiprakash Power Ventures ltd
- Planning Commission, India
- IEA Clean Coal Centre - UK
- Semirara Mining Corp, Philippines
- Indogreen Group - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Goldman Sachs - Singapore
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- Rashtriya Ispat Nigam Limited - India
- Parliament of New Zealand
- MS Steel International - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- VISA Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- McConnell Dowell - Australia
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- Borneo Indobara - Indonesia
- ASAPP Information Group - India
- Alfred C Toepfer International GmbH - Germany
- Jorong Barutama Greston.PT - Indonesia
- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Timah Investasi Mineral - Indoneisa
- Standard Chartered Bank - UAE
- Simpson Spence & Young - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Cement Manufacturers Association - India
- Carbofer General Trading SA - India
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- Australian Commodity Traders Exchange
- Meralco Power Generation, Philippines
- Heidelberg Cement - Germany
- Metalloyd Limited - United Kingdom
- Energy Link Ltd, New Zealand
- IHS Mccloskey Coal Group - USA
- Trasteel International SA, Italy
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- PowerSource Philippines DevCo
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
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