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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, 20 November 13
TAIPOWER TO IMPORT 0.825 MMT OF 5000 GAR COAL FOR Q2' 14
COALspot.com: Taiwan Power Company intends to procure 825,000 metric tons of general sub-bituminous coal with calorific value not lesser than 5,000 ...
Wednesday, 20 November 13
CAPES AND PANAMAXES SOFTENING; SMALLER SIZE SEGMENTS FIRMING FURTHER - INTERMODAL
Chartering (Wet: Firm+ / Dry: Stable- )
The BDI has closed off the week on the red, with rates for Capes and Panamaxes softening and those fo ...
Tuesday, 19 November 13
INDONESIAN GOVERNMENT'S DECLARED COAL PRICE REFERENCE UP 1.98% IN NOVEMBER
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia has increased government declared coal bench mark price by US$ 1.52 / MT ...
Tuesday, 19 November 13
WEEKLY COAL EXPORTS FROM NEWCASTLE PORT INCREASED BY 20.59%
COALspot.com: In the week ended November 18, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, totaled 2.92& ...
Tuesday, 19 November 13
SHIP OWNER POUR MORE MONEY INTO DRY BULK CARRIER ACQUISITIONS - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The recent dry bulk market's rally, coupled with an expected fall in oversupply and robust cargo demand has boosted ship owners' optimism on the l ...
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Showing 4001 to 4005 news of total 6871 |
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- SN Aboitiz Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Indo Tambangraya Megah - Indonesia
- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Economic Council, Georgia
- San Jose City I Power Corp, Philippines
- Videocon Industries ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- IHS Mccloskey Coal Group - USA
- VISA Power Limited - India
- Bukit Baiduri Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Minerals Council of Australia
- Meenaskhi Energy Private Limited - India
- Simpson Spence & Young - Indonesia
- Eastern Energy - Thailand
- Parry Sugars Refinery, India
- Commonwealth Bank - Australia
- Kapuas Tunggal Persada - Indonesia
- Malabar Cements Ltd - India
- Price Waterhouse Coopers - Russia
- Jindal Steel & Power Ltd - India
- The Treasury - Australian Government
- GAC Shipping (India) Pvt Ltd
- GMR Energy Limited - India
- Krishnapatnam Port Company Ltd. - India
- Therma Luzon, Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Coastal Gujarat Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Jaiprakash Power Ventures ltd
- Binh Thuan Hamico - Vietnam
- Orica Mining Services - Indonesia
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- MS Steel International - UAE
- OPG Power Generation Pvt Ltd - India
- India Bulls Power Limited - India
- Eastern Coal Council - USA
- Lanco Infratech Ltd - India
- CNBM International Corporation - China
- Sojitz Corporation - Japan
- Heidelberg Cement - Germany
- Billiton Holdings Pty Ltd - Australia
- Energy Development Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Global Green Power PLC Corporation, Philippines
- Bharathi Cement Corporation - India
- Sical Logistics Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Maharashtra Electricity Regulatory Commission - India
- Chettinad Cement Corporation Ltd - India
- Anglo American - United Kingdom
- Global Business Power Corporation, Philippines
- Central Java Power - Indonesia
- Africa Commodities Group - South Africa
- Merrill Lynch Commodities Europe
- Gujarat Sidhee Cement - India
- Aditya Birla Group - India
- Metalloyd Limited - United Kingdom
- Formosa Plastics Group - Taiwan
- Central Electricity Authority - India
- Marubeni Corporation - India
- Renaissance Capital - South Africa
- Latin American Coal - Colombia
- Petron Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Sarangani Energy Corporation, Philippines
- Bulk Trading Sa - Switzerland
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GVK Power & Infra Limited - India
- Altura Mining Limited, Indonesia
- Manunggal Multi Energi - Indonesia
- Wood Mackenzie - Singapore
- Australian Coal Association
- Parliament of New Zealand
- Holcim Trading Pte Ltd - Singapore
- Ministry of Finance - Indonesia
- Romanian Commodities Exchange
- Essar Steel Hazira Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Oldendorff Carriers - Singapore
- Bayan Resources Tbk. - Indonesia
- Coalindo Energy - Indonesia
- Bangladesh Power Developement Board
- PNOC Exploration Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Karbindo Abesyapradhi - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Trasteel International SA, Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Electricity Authority, New Zealand
- Energy Link Ltd, New Zealand
- Indika Energy - Indonesia
- Bhushan Steel Limited - India
- SMC Global Power, Philippines
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Antam Resourcindo - Indonesia
- Dalmia Cement Bharat India
- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Carbofer General Trading SA - India
- Cigading International Bulk Terminal - Indonesia
- Georgia Ports Authority, United States
- Straits Asia Resources Limited - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Generating Authority of Thailand
- Bhatia International Limited - India
- Rashtriya Ispat Nigam Limited - India
- The State Trading Corporation of India Ltd
- The University of Queensland
- Agrawal Coal Company - India
- Rio Tinto Coal - Australia
- Sindya Power Generating Company Private Ltd
- Indogreen Group - Indonesia
- Baramulti Group, Indonesia
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- Mintek Dendrill Indonesia
- Ceylon Electricity Board - Sri Lanka
- McConnell Dowell - Australia
- Madhucon Powers Ltd - India
- Sakthi Sugars Limited - India
- ASAPP Information Group - India
- PTC India Limited - India
- Larsen & Toubro Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- Singapore Mercantile Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Makarim & Taira - Indonesia
- Timah Investasi Mineral - Indoneisa
- Mjunction Services Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Electricity Regulatory Commission - India
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Port Waratah Coal Services - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- White Energy Company Limited
- Riau Bara Harum - Indonesia
- Barasentosa Lestari - Indonesia
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- Cement Manufacturers Association - India
- Orica Australia Pty. Ltd.
- Meralco Power Generation, Philippines
- Posco Energy - South Korea
- London Commodity Brokers - England
- Kepco SPC Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Uttam Galva Steels Limited - India
- Interocean Group of Companies - India
- Attock Cement Pakistan Limited
- Neyveli Lignite Corporation Ltd, - India
- ICICI Bank Limited - India
- Directorate Of Revenue Intelligence - India
- Australian Commodity Traders Exchange
- Chamber of Mines of South Africa
- Medco Energi Mining Internasional
- Kumho Petrochemical, South Korea
- Grasim Industreis Ltd - India
- Bhoruka Overseas - Indonesia
- Power Finance Corporation Ltd., India
- Wilmar Investment Holdings
- Ambuja Cements Ltd - India
- Indonesian Coal Mining Association
- Indian Oil Corporation Limited
- Coal and Oil Company - UAE
- Thiess Contractors Indonesia
- Edison Trading Spa - Italy
- Siam City Cement PLC, Thailand
- Jorong Barutama Greston.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Goldman Sachs - Singapore
- Ministry of Transport, Egypt
- Iligan Light & Power Inc, Philippines
- Indian Energy Exchange, India
- TeaM Sual Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Planning Commission, India
- Savvy Resources Ltd - HongKong
- Samtan Co., Ltd - South Korea
- Borneo Indobara - Indonesia
- Standard Chartered Bank - UAE
- Kideco Jaya Agung - Indonesia
- Tata Chemicals Ltd - India
- Thai Mozambique Logistica
- Offshore Bulk Terminal Pte Ltd, Singapore
- PowerSource Philippines DevCo
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
- AsiaOL BioFuels Corp., Philippines
- Deloitte Consulting - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tamil Nadu electricity Board
- Maheswari Brothers Coal Limited - India
- Mercator Lines Limited - India
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