China’s oil demand and refinery runs rise in November
China’s implied oil demand rose 1.5% month-on-month in November to a five-month high of 9.94 mb/d, but was 5.1% down on the year, as two refineries returned from maintenance, reports Reuters. Overall, China’s implied oil demand in Jan-Nov 2013 has risen just 2.3% to 9.76 mb/d, down from 4.5% growth last year and the lowest growth rate since at least 2009. Refinery crude throughput during November was at 9.8 mb/d, 0.6% lower on the year but up 1% from October.
Chinese crude imports rebound in November
China imported 5.76 mb/d of crude oil in November, up by 930 kb/d from October’s 14 month low, according to the latest customs data. Last month’s imports were 46 kb/d higher year-on-year and represented the third highest monthly shipments so far in 2013, behind January and September’s all-time high. For the first eleven months of the year, Chinese crude imports have averaged 5.61 mb/d, up by 189 kb/d yoy.
Chinese Iron Ore Imports Hit Record High
According to preliminary Chinese customs data, Chinese imports of iron ore rose to a record high of 77.8 Mt in November, up from 67.8 Mt in October. This is 12.1 Mt higher than the November 2012 total. Iron ore imports from January to November 2013 were 746.9 Mt up 72.4 Mt from the same period in 2012.
November was also a strong month for Chinese soyabean imports. These rose to 6.0 Mt, some 1.8 Mt higher than the October total. This is also higher than the November 2012 total of 4.16 Mt. Chinese steel exports remained steady in November at 5.0 Mt. Steel exports in the year to November totalled 57.0 Mt and are 6.0 Mt higher than the equivalent volume in 2012.
Ecopetrol discussing crude pipeline to Colombia’s Pacific coast
Colombia’s state oil company, Ecopetrol, is in talks with Enbridge to build a pipeline to carry crude for export from the country’s Pacific coast, in order to better exploit Asian refiners’ demand for rising Colombian crude output, Bloomberg reports. Discussions are in their early stages, with no time-line or construction details in place. Currently, Colombia exports most of its crude from the Caribbean port of Covenas.
US grain exports
US soya (bean+meal) exports in October rose to a 3-year high of 8.3 Mt, according to data from the US Department of Agriculture. Increases in corn and soya shipments have lifted the country’s total grain exports to 13.3 Mt in October, the highest monthly level since November 2010.
Storm prompts reduction in North Sea operations
ConocoPhillips has reduced output from its Ekofisk oil field in the North Sea as a result of a severe storm, Reuters reports. The field was producing around 102 kb/d. Maersk has reduced output from its Tyra field, while other firms have moved non-essential personnel from platforms, without lowering production. Disruption is expected to be short-lived with the storm set to pass late on Thursday or early on Friday.
Australian Iron Ore & Coal Exports Hits New Highs
Australian coal exports hit a new monthly high of 33.1 Mt in October, rising from 30.2 Mt in September. Total coal exports for the year to October were 292.8 Mt compared with 256.3 Mt for the same period in 2012. October saw a monthly all-time high of 16.3 Mt for coking coal exports, up 1.0 Mt on September. October exports of steam coal and anthracite combined rose 1.8 Mt form September to 16.8 Mt.
Australian iron ore exports (wet basis) in October reached a monthly record of 56.1 Mt involving a monthly rise of 1.5 Mt and an annual rise of 10.8 Mt, according to trade statistics. Exports in the first ten months of the year climbed to 498.7 Mt, up a massive 79 Mt on the same period in 2012.
Crude deliveries along southern portion of Keystone XL to begin 3 January
The southern leg of TransCanada’s Keystone XL pipeline will begin delivering crude at Port Arthur, Texas on 3 January, according to the firm, Bloomberg reports. The line, that receives crude at Cushing, Oklahoma, will begin with a capacity of 700 kb/d, with the potential for this to be expanded to 830 kb/d. The line will combine with the existing 400 kb/d Seaway pipeline in delivering crude from Cushing to US Gulf refiners. The capacity of Seaway is expected to be expanded to 850 kb/d in 1h14.
Libyan Crude Production Increases to 224 kb/d
Libyan crude output is currently 224 kb/d, according to the country’s Oil Ministry, reports Reuters. Production has increased from around 172 kb/d two weeks ago following the end of a strike at the Mellitah terminal in the west of the country. Libya is now exporting around 130 kb/d, with crude streams diverted away from the eastern Brega terminal to the 120 kb/d Zawiya refinery. The refinery’s usual source of crude, the El Sharara field, has been offline since October following protests.
Asian Loadings of West African Crude to Reach Another Record High in December
Asian buyers will load close 2.1 mb/d of West African crude this month, a new record and up by 160 kb/d from November’s previous all-time high, according to Argus. Volumes lifted by Chinese firms will reach almost 1.3 mb/d, up by 100 kb/d month-on-month, with the rise attributed to continued filling of storage tanks. Indian loadings will reach nearly 600 kb/d, up by 150 kb/d from November, as refiners look for alternatives to Libyan grades at the same time as refineries return from maintenance. Liftings by other Asian firms will decline by 90 kb/d month-on-month from December.
Iron ore exports from Port Hedland remain at high levels
Iron ore shipments from Port Hedland remained above 28 Mt for the third successive month in November, according to port authority statistics. At 28.1 Mt the monthly total was 6.4 Mt higher than the year-ago level. Exports to China slipped 2.9 Mt from October’s record volume to 22.3 Mt in November.
Total iron ore throughput at Port Hedland in January to November of 288.5 Mt was 62.5 Mt higher than the corresponding period in 2012.
Kenyan product imports set for strong increase
The National Oil Corporation of Kenya expects the country’s product imports to reach 130 kb/d in the next two years, up from around 100 kb/d currently, Reuters reports. Increased car sales, higher industrial activity and a lack of domestic refinery capacity are cited as the reasons behind the expected rise. Processing at the country’s only refinery, a 32 kb/d facility in Mombasa, was halted earlier this year after a dispute between the NOC and partner Essar. Essar has since relinquished its stake in the facility, leaving the NOC to either find another partner or convert the plant into a storage terminal. According to the NOC, a new floating oil import jetty and an 800 KT storage facility in Mombasa is scheduled for completion in late-2015 or 2016.
Northern European steam coal imports
According to trade statistics from IHS McCloskey, German steam coal imports in the first nine months of 2013 reached 27.9 Mt, some 24% higher than in the corresponding period in 2012. The biggest year-on-year rise was from the US (+40% to 6.6 Mt). Meanwhile, UK steam coal imports of 29.3 Mt in the first three quarters of this year were 9% higher than the year-ago level. In terms of sourcing, the largest annual increase was also from the US, up 24% to 7.5 Mt.
EIA Weekly Data: US Crude Production Tops 8 mb/d
US crude output rose by 45 kb/d last week to reach 8.02 mb/d, a level 17.6% higher than during the same week last year and 39.7% higher than the five year average for the equivalent week, according to the latest preliminary data from the EIA. Crude imports fell by 145 kb/d from a week earlier to 7.72 mb/d, down by 4.9% yoy and by 12.0% versus the five year average. Crude runs at US refineries rose by 104 kb/d to 15.55 mb/d, up by 2.5% yoy and by 6.9% from the five year average. US commercial crude inventories ended last week at 391.4 MB, up by 4.6% yoy and by 13.4% versus the five year average.
World steel price
The world export price of hot rolled band edged up by $2/t to $559/t at the end of November, according to the latest SteelBenchmarker published by World Steel Dynamics. This marks the highest level since mid-September. By comparison, the current price is still $49/t lower than the year-to-date high seen in February.
In the last two weeks, the HRB price in the US stabilised, also up $2/t to the highest level since May 2012, at $736/t. However, prices in China and Western Europe both declined to $476/t ( down $6/t to a 5-month low) and $601/t (down $10/t to a 3-month low), respectively.
Discharging recommences at Qingdao
Discharging at the Qingdao crude terminal in eastern China restarted on 25 November, four days after a pipeline explosion, Reuters reports. Sinopec’s 200 kb/d Qingdao refinery will return to full operations in a week or two, having been operated at reduced rates since the incident. The affected pipeline supplied the 220 kb/d Qilu and 100 kb/d Jinana refineries, which are now relying on domestic crude delivered via a separate pipeline connected to the Shengli oilfield. Sinopec may cancel the export of two MR middle distillate cargoes per month from the Qingdao plant whilst their wider refining operations remain affected, according to trading sources.
US steel imports at 17-month high
US steel imports rose by 17% year-on-year and 8% month-on-month to 2.8 Mt in October, the highest level since May 2012, according to preliminary data from the US Census Bureau. However, total imports in the first ten months of 2013 of 24.5 Mt were still 1.2 Mt lower than the corresponding period in 2012.
EU Tanker Insurance Sanctions Lifted as Part of Iran Deal
As part of Sunday’s deal between Iran and the P5+1 group of countries, the European Union’s ban on insuring tankers carrying Iranian crude has been lifted, Bloomberg reports. The EU ban on importing crude from Iran remains in place, while the US State Department has stated that total Iranian crude exports will not be allowed to increase from current sanctioned levels, reports Reuters. The end of the EU tanker insurance sanctions may, however, make it easier for Iran’s Asian customers, particularly India, to receive its contracted volumes from Iran, according to a Bloomberg report. Indian refiners have struggled to transport Iranian crude as a result of insurance sanctions, reducing India’s imports from the country to levels below those permitted by US sanctions. Iran’s other major customers – China, Japan, and South Korea – have had less difficulty in receiving Iranian crude thanks to a mix of sovereign insurance cover and delivery deals with Iran. The IEA estimates that overall Iranian crude exports fell to a 20-month low of 715 kb/d in October.
Operations at Qingdao port halted after pipeline explosion
Operations at the Qingdao oil terminal in eastern China have been halted following the deadly explosion of a Sinopec crude pipeline connected to the port, Reuters reports. The blast occurred on Friday (22 November) morning, claiming 35 lives and injuring 166 people. The terminal was not damaged by the explosion, but tankers were instructed to sail away as a safety measure. The pipeline is connected to two Sinopec refineries as well as independent facilities. Sinopec’s trading arm, Unipec, has suspended crude and product purchases following the explosion.
IOC latest Indian refiner to buy Canadian crude
Indian Oil Company (IOC) has become the third Indian refiner, and the country’s first state-run firm, to purchase Canadian crude as reduced US import demand frees up volumes for export elsewhere, Reuters reports. IOC has purchased 1 MB of light, sweet White Rose crude, following on from private refiners, Reliance and Essar’s import of heavy Cold Lake in October 2012 and January 2013 respectively.
China’s iron ore imports by source
A breakdown of China’s October iron ore imports (67.8 Mt) by source reveals that annual growth of 11.4 Mt has been dominated by additional shipments of 8.6 Mt from Australia, taking the monthly total to 36.0 Mt and year-to-date total of 340.2 Mt, up 55 Mt from the corresponding period in 2012. Shipments from Brazil in the first ten months of 2013 reached 123.7 Mt, some 6.8 Mt lower than the year-ago level, while China only imported 9.4 Mt from India in Jan-Oct, which compares with 33.0 Mt in the same period last year.
Furthermore, annual growth in Chinese iron ore imports in January to October this year has also seen from Iran (+4.7 Mt to 18.6 Mt), Indonesia (+4.6 Mt to 13.9 Mt), Mexico (+5.2 Mt to 7.4 Mt) and Sierra Leone (+6.2 Mt to 9.7 Mt).
World crude steel production at 5-month high
October data from the World Steel Association show monthly global crude steel output at 134.3 Mt, the highest level since May, up 6.6% from the same month in 2012.
Several major steelmaking centres experienced significant annual increases in October. Production in China rose a massive 9.2% to 65.1 Mt, while Japanese steel output climbed 7.7% to a 5-month high of 9.5 Mt.
The data also revealed more positive developments for the EU-27, the US and South Korea, where January-October output had been lower than year-ago levels. EU-27 production in October, however, rose 4.0% year-on-year to 14.7 Mt, steel mills in the US produced 7.4 Mt, up 8.7%, while output in South Korea increased 5.2% to 5.9 Mt.
Loadings recommence at western Libyan port of Mellitah
Crude exports from the western Libyan port of Mellitah have restarted following the end of protests at the facility, Reuters reports. Demonstrations at the terminal ended on Saturday. One tanker has completed loading at the port with another in the process of doing so today. Once the second vessel has loaded, the 130 kb/d El Feel crude field, which is connected to Mellitah, will ramp up production. Output from the field was reduced last week after storage tanks at Mellitah reached capacity. Libya’s National Oil Corp. (NOC) expects to begin returning production from El Feel to over 80 kb/d from tomorrow.
OECD lowers global growth forecasts
The Organisation for Economic Cooperation and Development (OECD) lowered its global GDP growth estimate for 2013 to 3.1% from its previous projection of 2.7%. The Organisation also revised down the forecast for 2014 to 3.6% from 4.0% six months ago.
Eurozone GDP is expected to contract by 0.4% in 2013, with positive growth returning in 2014 (of 1.0%). Economic growth in Japan is anticipated to rise 1.8% this year and 1.5% next. Meanwhile, growth in the US is projected at 1.7% in 2013, compared with May’s forecast of 1.9%. However, the US economy is forecast to expand by 2.9% in 2014.
Paradip refinery delayed further
The start-up of IOC’s 300 kb/d Paradip refinery has been delayed by a further three months following flooding earlier this year, Argus reports. The plant is now scheduled to begin operations June next year, but secondary units will not start-up until later in 2014, possibly December. The facility had first been scheduled to open in March 2012, but was delayed by funding issues. When operational, Paradip will initially run West African and Middle Eastern crudes, but IOC is seeking term contracts with Latin American suppliers in order to feed the plant.