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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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Monday, 18 November 13
SUB-BIT INDONESIA COAL SWAP LOST ON WEEK; MARGINALLY GAINED ON DAY
COALspot.com – Sub-Bit Indonesia coal swap (FOB ) for average Q1’ 14 delivery gained $ 1.25 pmt month on month on Friday 15 Novemb ...
Sunday, 17 November 13
Q4' 14 API 8 CFR SOUTH CHINA COAL SWAP CLOSED $ 3.43 PMT (4.34 %) HIGHER THAN Q1' 14 SWAP
COALspot.com : API 8 CFR South China Coal swaps for average Q1’ 14 delivery gained 0.05 percept d-d on Friday 15 November 2013. The CFR South ...
Saturday, 16 November 13
INDONESIA TO INDIA SUPRAMAX FREIGHT RATES FIRM DUE TO STRONG COAL ACTIVITIES
COALspot.com: The Cape and Panamax index was down this week and pulling down the BDI by about 5 pct. BDI was closed at 1507 points on Friday 1 ...
Friday, 15 November 13
DRY BULK MARKET STILL LINGERING ON, DESPITE PREDICTIONS OF NEW IMMINENT RALLY PRIOR TO THE YEAR'S END - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market hasn't yet managed to stage a new comeback after its retreat from the recent multiyear highs. Yesterday, the industry's benchm ...
Friday, 15 November 13
US COAL PRODUCTION UP 2.59% WEEK ON WEEK
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.8 million short tons (mmst) of coal in ...
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- Global Green Power PLC Corporation, Philippines
- Orica Mining Services - Indonesia
- Cement Manufacturers Association - India
- Central Electricity Authority - India
- Ministry of Mines - Canada
- Oldendorff Carriers - Singapore
- CIMB Investment Bank - Malaysia
- Marubeni Corporation - India
- Parry Sugars Refinery, India
- MS Steel International - UAE
- Energy Link Ltd, New Zealand
- Iligan Light & Power Inc, Philippines
- Australian Coal Association
- Interocean Group of Companies - India
- PowerSource Philippines DevCo
- Coal and Oil Company - UAE
- Wilmar Investment Holdings
- San Jose City I Power Corp, Philippines
- PTC India Limited - India
- Lanco Infratech Ltd - India
- Anglo American - United Kingdom
- Indonesian Coal Mining Association
- Chamber of Mines of South Africa
- The State Trading Corporation of India Ltd
- Gujarat Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asmin Koalindo Tuhup - Indonesia
- Agrawal Coal Company - India
- Sree Jayajothi Cements Limited - India
- Maheswari Brothers Coal Limited - India
- Eastern Energy - Thailand
- Standard Chartered Bank - UAE
- India Bulls Power Limited - India
- Baramulti Group, Indonesia
- Mercator Lines Limited - India
- CNBM International Corporation - China
- Therma Luzon, Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
- Power Finance Corporation Ltd., India
- Goldman Sachs - Singapore
- Star Paper Mills Limited - India
- Miang Besar Coal Terminal - Indonesia
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Global Coal Blending Company Limited - Australia
- Petrochimia International Co. Ltd.- Taiwan
- White Energy Company Limited
- GAC Shipping (India) Pvt Ltd
- Borneo Indobara - Indonesia
- Siam City Cement - Thailand
- Rio Tinto Coal - Australia
- Sarangani Energy Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- South Luzon Thermal Energy Corporation
- Vizag Seaport Private Limited - India
- Xindia Steels Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Vedanta Resources Plc - India
- Africa Commodities Group - South Africa
- Petron Corporation, Philippines
- Sakthi Sugars Limited - India
- Antam Resourcindo - Indonesia
- Semirara Mining Corp, Philippines
- Australian Commodity Traders Exchange
- Ministry of Finance - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indika Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Formosa Plastics Group - Taiwan
- Coalindo Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Latin American Coal - Colombia
- Timah Investasi Mineral - Indoneisa
- Karbindo Abesyapradhi - Indoneisa
- The University of Queensland
- Wood Mackenzie - Singapore
- Carbofer General Trading SA - India
- GMR Energy Limited - India
- Pendopo Energi Batubara - Indonesia
- Renaissance Capital - South Africa
- Bayan Resources Tbk. - Indonesia
- Mercuria Energy - Indonesia
- Coastal Gujarat Power Limited - India
- European Bulk Services B.V. - Netherlands
- Bhoruka Overseas - Indonesia
- Edison Trading Spa - Italy
- IEA Clean Coal Centre - UK
- Barasentosa Lestari - Indonesia
- Makarim & Taira - Indonesia
- Medco Energi Mining Internasional
- Sindya Power Generating Company Private Ltd
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- Gujarat Sidhee Cement - India
- GN Power Mariveles Coal Plant, Philippines
- ASAPP Information Group - India
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- Parliament of New Zealand
- Jaiprakash Power Ventures ltd
- McConnell Dowell - Australia
- Straits Asia Resources Limited - Singapore
- Indian Oil Corporation Limited
- Bukit Baiduri Energy - Indonesia
- Aditya Birla Group - India
- Bhushan Steel Limited - India
- Energy Development Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Tata Chemicals Ltd - India
- Samtan Co., Ltd - South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- OPG Power Generation Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- London Commodity Brokers - England
- Uttam Galva Steels Limited - India
- Kideco Jaya Agung - Indonesia
- Bhatia International Limited - India
- Ceylon Electricity Board - Sri Lanka
- Bulk Trading Sa - Switzerland
- IHS Mccloskey Coal Group - USA
- Singapore Mercantile Exchange
- Thai Mozambique Logistica
- Jindal Steel & Power Ltd - India
- Price Waterhouse Coopers - Russia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Minerals Council of Australia
- LBH Netherlands Bv - Netherlands
- VISA Power Limited - India
- Banpu Public Company Limited - Thailand
- Rashtriya Ispat Nigam Limited - India
- Kartika Selabumi Mining - Indonesia
- Ministry of Transport, Egypt
- Orica Australia Pty. Ltd.
- PNOC Exploration Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Electricity Generating Authority of Thailand
- Manunggal Multi Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Posco Energy - South Korea
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Heidelberg Cement - Germany
- Planning Commission, India
- Leighton Contractors Pty Ltd - Australia
- New Zealand Coal & Carbon
- TeaM Sual Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- GVK Power & Infra Limited - India
- Trasteel International SA, Italy
- Merrill Lynch Commodities Europe
- Bangladesh Power Developement Board
- International Coal Ventures Pvt Ltd - India
- SMG Consultants - Indonesia
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Attock Cement Pakistan Limited
- Billiton Holdings Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- ICICI Bank Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- SMC Global Power, Philippines
- Mintek Dendrill Indonesia
- Independent Power Producers Association of India
- Larsen & Toubro Limited - India
- Siam City Cement PLC, Thailand
- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- Karaikal Port Pvt Ltd - India
- Bharathi Cement Corporation - India
- Madhucon Powers Ltd - India
- Kumho Petrochemical, South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Malabar Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- AsiaOL BioFuels Corp., Philippines
- Sojitz Corporation - Japan
- Kepco SPC Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Romanian Commodities Exchange
- Globalindo Alam Lestari - Indonesia
- Economic Council, Georgia
- Kalimantan Lumbung Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
- Riau Bara Harum - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Sical Logistics Limited - India
- Krishnapatnam Port Company Ltd. - India
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Georgia Ports Authority, United States
- Directorate Of Revenue Intelligence - India
- The Treasury - Australian Government
- Indian Energy Exchange, India
- Toyota Tsusho Corporation, Japan
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