Iran Plays Hardball With European Oil Buyers, Slowing Exports

LONDON: Iran has managed to sell only modest volumes of oil to Europe since the lifting of sanctions seven weeks ago and several former buyers are staying away, citing legal complications and Tehran's reluctance to sweeten terms to win back customers.

Tehran had been unable to sell crude to European firms since 2012 when the EU imposed sanctions over its nuclear programme, depriving it of a market that accounted for over a third of its exports and leaving it relying completely on Asian buyers.

Since the restrictions were lifted in January, Iran has sold four tankers - 4 million barrels - to Europe, including to France's Total, Spain's Cepsa and Russia's Litasco, according to Iranian officials and ship-tracking data.

That equates to only around five days' worth of sales at the levels of pre-2012, when European buyers were purchasing as much as 800,000 barrels per day (bpd) from the country

Many former big buyers - including Anglo-Dutch major Shell, Italy's Eni, Greece's Hellenic Petroleum and trading houses Vitol, Glencore and Trafigura - are yet to resume purchases.

A lack of dollar clearing, the absence of an established mechanism for non-dollar sales and the reluctance of banks to provide letters of credit to facilitate trade have been obstacles since sanctions were lifted.

But some former major buyers also cited Tehran's unwillingness to loosen its selling terms from four years ago, and offer flexibility on pricing, despite the world having become oversupplied with oil and Iran's European market share seized by Saudi Arabia, Russia and Iraq.

"Iran is not flexible with terms. They still impose very old-fashioned destination clauses telling you where you can and cannot take your crude," said a senior oil trading executive, who asked not to be named due to the sensitivity of the issue.

"It was okay a decade ago but the world doesn't look like this anymore."

Iran, like top OPEC exporter Saudi Arabia, generally imposes destination clauses that forbid reselling of its crude, to retain control over who receives its supplies, and sets official selling prices for its crude grades every month.

By contrast, Iraq - the world's fastest-growing oil exporter in the past year - allows buyers to resell crude at prices below its official ones.

A spokesman for the state-run National Iranian Oil Company (NIOC) could not be immediately reached for comment.

But its oil export chief Mohsen Ghamsari told Reuters last week that European buyers were cautious about boosting trade immediately because of banking and ship insurance difficulties, and that he expected sales to rise from this month.

He ruled out applying discounts to monthly official selling prices but said he could consider improving the pricing mechanism on some cargoes to attract European buyers.

NO DISCOUNTS

Before 2012, Iran was exporting around 2 million bpd, with the bulk going to the Asian countries, which retained most rights to buy Iranian oil when the EU imposed sanctions but informally agreed to limit their collective purchases of Iranian crude to around 1.2 million bpd. Tehran has been banned from selling oil to the United States since the 1979 revolution.

NIOC aims to increase exports by 500,000 bpd this year, said Ghamsari. Other than Europe, its main targets for increased sales in Asia are China, India and South Korea, he added.

Iranian oil sales to Asia are estimated to have increased by around 100,000-200,000 bpd in February, after the end of sanctions, which paved the way for Iran to rejoin the global banking transaction network.

The terms being offered to Asian buyers are unchanged since before the lifting of sanctions, but companies in Asia face fewer obstacles than in Europe when buying Iranian oil.

"We looked at options of buying Iranian oil," said another senior executive, from a major trading house in Europe. "We saw that shipping complications made it around $1 per barrel more expensive than rival grades. But when we spoke about discounts - we were told it would not happen."

Olivier Jakob from Petromatrix consultancy said it was possible that Iran did not want to appear "distressed" by offering discounts.

"But maybe it is a sign that unlike Iraq they don't have a massive surplus of oil they need to sell urgently," he added. "When your oil is flowing fast and filling up tanks, you need to get rid of it quickly. So it remains unclear how fast Iran can ramp up output and exports after years of sanctions."

Iran and Saudi Arabia, whose status as the world's top exporter gives it more market clout, are the main oil producers to set their monthly official prices using the BWAVE index.

Iraq and its semi-autonomous region of Kurdistan set prices against dated Brent and Kuwait has also recently switched to dated Brent from BWAVE, citing requests from customers and the need to become more competitive.

Most European buyers say they prefer the dated Brent index to BWAVE, which has proven to be a more expensive option over the past year due to its calculation method.

Russian, Nigerian and Angolan crudes trade at daily changing differentials versus dated Brent, often giving buyers even more flexibility.

Ghamsari said he could consider selling some spot cargoes at dated Brent while sticking with BWAVE for its term contracts. Most buyers say, however, they haven't seen many spot cargoes being offered by Iran so far.

LESS FLEXIBLE

A third trading source suggested Iran may be waiting until oil prices - hovering at $40 per barrel, near lows seen during the 2008 financial crisis - pick up further before taking steps to regain market share.

"It is a very strange dynamic. As soon as Iran opened up they became less flexible. This is the wrong strategy with too much oil around," said the source.

"You could think the Iranians have no incentive to increase their production while the prices are low. They lived like it for years already - they can cope with another few months."

A source familiar with NIOC's thinking said it would not consider offering discounts to win back market share as it would mean an escalation of a price war and would not benefit Iran or its customers.

All in all, Iran seems to be taking its usual "slow and rather philosophical approach", according to another senior trading source.

"When you ask them: "Why are your prices so bad?", they tell you: "You see - you are asking and that means you are interested."

 

Source :economictimes.indiatimes.com

Renault Bets High On Mauritius As First Export Market For Kwid

Renault, which shipped the first lot of Kwid to Mauritius last month from Chennai port, is aggressively tapping the island country as its first export market for the hatchback.

The company had earlier said that it would begin exports of the Kwid to SAARC countries. While the carmaker has shipped some units to Sri Lanka, full-fledged exports have started to Mauritius, according to foreign trade data.

Sumit Sawhney, CEO and MD, Renault India, had earlier said that the company was initially looking to export the Kwid into foreign markets and would ramp up volumes later. A total of 37 cars were shipped to Mauritius on February 5.

Meanwhile, with increased domestic demand for the Kwid, the carmaker was finding it difficult to ramp up the export volumes.

Based on the CMF-A platform and developed by the Renault-Nissan Alliance, the Kwid has received a tremendous response from Indian customers and there is a waiting time of four-six months at present.

Given the overwhelming response, Renault India aims to ramp up production of Kwid to 10,000 units this month. The Renault-Nissan factory in Oragadam, near Chennai, will soon begin the third shift to increase the output of Kwid.

The alliance plant of Renault and Nissan will begin third shift operations to increase production of Renault cars-most of which are Kwid. At present the factory works in two shifts and rolls out 1,000 cars a day. The increase in production will bring down the current waiting period to three months from the current six to seven months.

Apart from the SAARC region, Renault India would also be exporting the Kwid to Brazil, Africa and other parts of Latin America through the CKD route.

Source :.business-standard.com

Low Production Likely To Shrink Pepper Exports

 Vietnam has pushed India to third position in the global pepper market and exporters now foresee competition from Sri Lanka and Brazil.

India's average production of pepper is 65,000 tonnes in the last three years and the country exports 20,000-22,000 tonnes a year. Unfavourable weather in Kerala and Karnataka may cause production to decline to 53,000 tonnes in 2015-16. Production in Vietnam may rise 10 per cent to 150,000 tonnes.

"Indian production has declined and competing nations have raised their output in recent years," said Jojan Malayil, chief executive officer at Bafna Enterprises, an export house in Kerala.

The Spices Board has estimated 53,000 tonnes of pepper production in 2015-16 against 65,000 tonnes a year ago and exports are likely to be 20,000 tonnes.

"Unfavourable weather in Kerala and Tamil Nadu caused the fall in production. Some parts of Karnataka, too, have faced a pest attack," said A Jayathilak, chairman of the Spices Board.

India consumes 80-85 per cent of its production but this year pepper prices have climbed, making exports unviable. "Lower production has raised Indian pepper to over $10,000 a tonne while Vietnam is offering the spice at $7,500 a tonne," Malayil said.

Low production likely to shrink pepper exports
The price of pepper has risen from Rs 630 per kg in December to Rs 700 now.

The Indian spice industry feels the country needs to import 20,000 tonnes of pepper to meet demand for value addition. "We need to import about 20,000 tonnes this year against 17,000 tonnes last year," said a Kochi-based spice trader.

Of the 10,000 tonnes black pepper imported between April and September, the major chunk is from Sri Lanka and Vietnam.

According to Jayathilak, the carry forward stock in world markets this year will be 17,000 tonnes lower because of rise in consumption. In India, the carry forward stock for next year will be 2,598 tonnes against 9,598 tonnes in the current year.

 

Soucre :.business-standard.com

Global Cues May Push Up Sugar Prices

Sugar prices are likely to move up in local markets following global trends and the possibility of exports incentives by the Maharashtra government.

Against a four per cent increase to Rs 33.5 a kg in the local wholesale markets so far in 2016, sugar prices are up 18 per cent in the world market.

If prices rise further, it would be a breather for crushing mills. Barring a couple of sporadic instances, prices have remained way below production cost during the past four years. Most mills incurred massive losses in the past few financial years. Both the central and state governments have announced incentives to save mills from going bankrupt.

“Of late, sugar prices in India have started following the global trend. Over the past few months, sugar prices have moved up significantly in global markets but lagged locally. From now on, sugar prices would move up in local markets,” said an analyst with one of the largest trading firms.

International Sugar Association and some other research organisations have forecast a global deficit of 2-4 million tonnes (mt) in 2016 due to crop damage in Brazil.

“So, this will give a chance to India to export a large quantity of sugar this year to which the government has fixed a cap of 3.2 mt. The quantity equivalent to export would reduce domestic availability and supply pressure thereupon. Since we have forecast sugar output in India to remain lower at 26 mt, exports are needed to reduce domestic supply pressure,” said Abinash Verma, director general, Indian Sugar Mills Association.

The sugar sector estimates 7.5 mt of carryover stocks from the last year. There would be a surplus production of 3 mt, which would result in 10.5 mt of overall supply for the current crushing season ending September 2016.

To reduce supply pressure, the Centre has announced Rs 4.5 per quintal of cane crushed production subsidy, which helped producers to contract 1.25 mt of white sugar for exports. Of this, 1 mt have moved out of factories.

The Centre recently held a meeting with state chief and corporation ministers briefing them about the lackadaisical performance of fulfilment of export quota by mills in Maharashtra, the largest producing state contributing 25 per cent of India’s sugar output.

 

 

source :.business-standard.com
 

Made-In-India Baleno Goes On Sale In Japan

Speaking at the launch ceremony held in Tokyo today, H.E. Sujan R Chinoy, Ambassador of India to Japan, said, “Maruti Suzuki exports to over 125 countries including those in Europe, which is proof of their quality. The Baleno is a state-of-the-art car developed and manufactured in India through Suzuki’s excellence. It will be exported to 100 global markets including Japan. I am confident that the Baleno will prove to be a huge success in Japan. I wish the launch complete success.”

Kenichi Ayukawa, MD and CEO, Maruti Suzuki India, said, “A landmark moment like this is a true testimony to the success of Indian government’s ‘Make in India’ campaign. The launch of the made-in-India Baleno in Japan is a proud moment for all of us. This reaffirms Maruti Suzuki’s manufacturing potential and growing importance of Maruti Suzuki India in Suzuki Motor Corporation’s global business strategies. I am confident our Baleno would be well accepted by Japanese customers as well.”

The made-in-India Baleno, which was shipped to Japan last month, will be offered in two variants — 1.0 Boosterjet direct-injection turbo engine (XT) and 1.2 Dual-jet naturally-aspirated engine (XG). While the 1.2-litre variant is on sale now, the 1.0-litre variant will be available from May 13.
japanes-baleno

SMC claims the Japanese-spec Baleno delivers fuel efficiency of 20 kilometres per litre (kpl) for the 1.0 Boosterjet variant and 24.6kpl for the 1.2 Dualjet variant. In comparison, Maruti Suzuki India claims the Indian-spec, 1.2-litre VVT petrol Baleno delivers 21.4kpl.  

Among the additional features available on the Japanese-spec model are Radar Brake Support (RBS) and Adaptive Cruise Control, similar to the left-hand-drive Balenos exported to Europe last month.

Autocar Professional had exclusively reported last month that the first export consignment of 1,760 made-in-India Balenos had reached Japan. The right-hand-drive, automatic (CVT-equipped) hatchbacks, which were despatched from Mundra Port in Gujarat, were unloaded at the Toyohashi Port on February 15.

This marks the first time that a domestic carmaker has exported an India-made car to the Japanese market. Maruti also plans on exporting the Baleno to over 100 markets worldwide. Initial volumes of 5,000-6,000 units a month are on the radar as exports to Japan and Europe.

Launched on October 26, 2015 in India, the Baleno has been a big hit in the Indian market and has managed to capture a significant share in the premium hatchback segment. Till January 2016, the carmaker had sold over 38,000 Balenos in the Indian market till date and is said to have over 100,000 bookings in the bag.

While the India-spec car is available in both petrol and diesel engine options, the 1.0-litre Boosterjet version (Baleno RS), showcased at the Auto Expo 2016, is set to be launched in India later this year.

 

Source :.autocarpro.in

Soya Meal Exports Hit New Lows In Feb

 

India’s soya meal exports are losing market to competing suppliers from North and South America. Exports from India dipped to a historic low at 1,127 tonnes for the month of February 2016, as against 64,515 tonnes in the same month last year.

The decline was due to sustained higher prices of the domestic soybean, which made meal production costly, thereby making it unviable to compete globally.

Currently, FOB/FAS Indian soybean meal is quoted at $480 per tonne against Argentina origin soybean meal CIF Rotterdam at $321 per tonne. Indian soybean meal is out priced by about $160 per tonne in the international market.

Davish Jain, Chairman of The Soybean Processors’ Association of India (SOPA), Indore, maintained that the rising cost has made it unviable to compete globally.

“We are completely out-priced by global competitors. Crushing activity has reduced and several millers have closed their operations because of the disparity in prices,” said Jain.

So far, during the current financial year up to February 2016, soya meal exports stood at 70,392 tonnes as compared to 5,99,818 tonnes in the same period last year, showing a drop of 88.26 per cent.

At Indore spot market, soya meal prices have come down from ?39,250 per tonne in May 2015 to about ?32,800 by February 2016. However, it continues to be costlier to export it to the key markets like Japan, the US and Iran, where the Indian soya meal commanded almost monopoly.

Meanwhile, in the current oil year (October 2015-September 2016), total exports of soya meal till February 2016 stood at 27,647 tonnes, as against 5,02,958 tonnes last year, down by 94.50 per cent.

Solvent Extractors’ Association of India (SEA) data put the total oil meal exports for February 2016 at 53,866 tonnes, as compared to 208,499 tonnes in the same month last year, indicating a drop of 47 per cent. Raising its concerns about dipping exports and its impact on crushing activity, the SEA noted that capacity utilisation has touched its lowest, and that the industry was experiencing a tough time with many plants operating at low capacity or even closing down.

The overall export of oil meals during the April 2015-February 2016 period, fell 52 per cent to 1,092,905 tonnes, against 2,256,436 tonnes during the same period of the last year. The same was 3,969,903 tonnes in 2013-14, a SEA statement said.

Rapeseed meal exports have also reduced to one-third of last year primarily due to high cost. Average FOB price continued to be higher for rapeseed meal which stood at $304 per tonne in February, which was $253 in March last year.

Among the oil meal complex, castorseed meal had encouraging export numbers, with growth registered over the last month. Castorseed meal exports grew to 414,311 tonnes in the April-February period, against 386,831 in same period last year.

 

Source :.thehindubusinessline.com