Asian arbitrage naphtha imports to rise
Asia’s long-haul naphtha imports for June delivery are expected to rise to 1.8-1.9Mt, up from an initial estimate of 1.7-1.8Mt, reports ICIS. The April volumes, which arrived from NWE, the Med, Russia and the US, were estimated at 1.6-1.8Mt. May volumes are now estimated higher due to cracker outages in Europe which is curbing domestic use. A cracker in Spain has been shut this week due to technical issues while one in Germany has been offline since early May due to a fire.
World Steel Production
World steel production fell 1.7% year-on-year in April to 135.4 Mt as a number of major producers saw output decline, according to the World Steel Association. The fall in US steel output continued in April, dropping 9.8% to 6.5 Mt, while Chinese (-0.7% to 68.9 Mt) Japanese (-6.1% to 8.4 Mt) and S. Korean (-6.6% to 5.8 Mt) production also fell. Growth in Indian steel output continued in April, albeit at a slower rate of 2.1%, to 7.4 Mt. EU production grew 0.3%, to 14.4 Mt, although output in Germany fell (-1.9% to 3.6 Mt).
Chinese Iron Ore Imports Breakdown
China imported 80.2 Mt of iron ore in April, of which 84%was sourced from Australia (51.4 Mt) and Brazil (15.7 Mt), with shipments from both countries up year-on-year, according to China Customs data. This is the highest proportion of monthly imports to come from the two countries ever. In contrast, imports from South Africa (3.7 Mt), Iran (1.4 Mt) and West Africa (1.4 Mt) all fell year-on-year.
Chinese Daily Steel Production Falls
Daily crude steel output at China Iron and Steel Association member mills fell to 1.78 Mt in the first ten days of May, down marginally from the seven-month high of 1.79 Mt/day achieved in the last ten days of April and a 3% decline year-on-year, according to data from the industry association reported by SteelFirst.
HSBC Flash China Manufacturing PMI
The HSBC Flash China Manufacturing Purchasing Mangers’ Index for May of 49.1, published by Markit, was up slightly from the final April reading, of 48.9. This would be the third successive month below the 50 benchmark that separates expansion from contraction. In addition, there was a sharp drop in the Flash China Manufacturing Output Index which fell to 48.4, down from a final April reading of 50.0.
Colombian Steam Coal Exports
Steam coal exports from Colombia fell to a ten-month low of 5.6 Mt in April, down 0.4 Mt year-on-year, according to data from IHS McCloskey. This was due to a 0.4 Mt fall in shipments to the Americas, to 1.7 Mt, although there was a small increase in cargoes to Europe to 3.9 Mt. Nevertheless, combined coal exports for the four months January-April were up 6.4 Mt on the same period in 2014 at 26.4 Mt.
MidEast crude producers turn down additional demand from China
Saudi Arabia, Kuwait and the UAE are turning down Chinese requests for extra oil as they hold back crude for their domestic needs, reports Reuters, citing trading sources. Saudi Arabia has turned down requests for extra crude for May and June loadings, forcing Chinese buyers to seek supplies from other sources such as West Africa, Oman and Russia. A rise in refining capacity in Saudi and the UAE has boosted their domestic needs while the region is entering its peak burning season in which it uses more crude to generate power for air conditioning.
Indonesian Coal Exports
Indonesia exported 36.1 Mt of coal (incl. lignite) in March, down 2.2 Mt year-on-year but still a ten-month high, according to Bank Indonesia data. Indonesia’s 1q15 coal exports totalled 98.2 Mt, down 5.3 Mt on the 1q14.
Brazilian Iron Ore Exports Breakdown
Of the 79.3 Mt of iron ore Brazil exported in the 1q15, 36.4 Mt was exported directly to China, down from 38.0 Mt (of a total 71.8 Mt) in the same period last year, according to official data reported by the Tex Report. In contrast, shipments to Japan and Europe rose 1.2 Mt and 1.5 Mt, to 7.2 Mt and 14.5 Mt, respectively. Exports to Malaysia increased to 5.2 Mt, up 3.9 Mt year-on-year, following the opening of Vale’s Teluk Rubiah terminal and distribution centre in the country in late 2014.
Canadian Iron Ore Exports
Canadian iron ore exports (excl. cargoes to the USA) rose to a three-month high of 3.1 Mt in March, up 45% year-on-year, according to the Tex Report. This was primarily due to rises in shipments to China and Europe. Iron ore exports in the 1q15 were up 3% on the same period in 2014 at 7.6 Mt.
Shougang Hierro Perú Strike
As part of a national strike over labour rights, workers at Peru’s sole iron ore miner, Shougang Hierro Perú, began an indefinite strike on 18 May, SteelFirst reports. Shougang Hierro Perú produced 2.3 Mt or iron ore in the 1q15, an increase of 12% on the same period in 2014.
Output increases from new Yasref refinery
Exports from the new 400 kb/d Yasref refinery in Yanbu are rising as production increases, reports Argus. Gasoil and gasoline output in April rose by 70 kb/d to 105 kb/d and by 25 kb/d to 65 kb/d respectively. At least 50 kb/d of gasoil and 25 kb/d of gasoline was shipped to domestic terminals, with exports reported to Egypt and the UAE. Meanwhile, gasoil and jet exports from the new 417 kb/d Ruwais 2 refinery are set to fall as a new catalytic cracker is fixed. Adnoc is unlikely to ship any spot gasoil and jet cargoes until at least mid-June, after exporting 50 kb/d of each since March. Crude runs have fallen below 50% of capacity due to technical issues.
Saudi crude exports highest in over 9 years
Saudi Arabia’s crude exports in March reached the highest since November 2005 at just under 7.9 mb/d as crude output hit a record 10.29 mb/d, according to the latest data from JODI. Exports were up 548 kb/d m-o-m and 771 kb/d higher y-o-y amid strong global demand. Saudi Arabia burns more crude to generate power for air conditioning heading into summer. The latest data shows direct crude burning was up 36 kb/d m-o-m at 351 kb/d, just 5 kb/d lower on the year. Last year crude burning rose steadily from March to reach a peak of 899 kb/d in July. It has also been feeding more crude into domestic refineries, however, refinery intake in March was down 175 kb/d m-o-m to the lowest since November.
Chinese Property Prices
Average new home prices in 70 major cities in China fell 6.1% year-on-year in April, the same rate as in March and the eight month in succession prices have fallen, according to National Bureau of Statistics data reported by Reuters. However, average new home prices were unchanged month-on-month from March, with some top-tier cities seeing prices increase on a monthly basis.
EU Steel Exports
EU steel exports rose to a five-month high of 2.5 Mt in March, up 8% year-on-year, according to data from Eurofer, the European Steel Association. Exports in the 1q15 totalled 6.5 Mt, up 1% on the same period in 2014.
South Korea’s crude imports increase y-o-y in April but Iranian demand falls
South Korea’s crude oil import imports in April increased by 10.7% y-o-y to 10.5MT (or 2.57M b/d), Reuters reports, citing South Korean customs data. However, imports from Iran fell by 6.5% y-o-y to 517KT (or 126K b/d).
Bonny Light crude export pipeline shut down
The Trans Nigeria Pipeline that carries Nigeria’s Bonny Light crude oil to an export terminal has been shut since May 12, Reuters reports, citing a spokeswoman for operator Shell. The reason for or the expected duration of the shutdown were not immediately available but so far loadings are estimated to have been delayed by up to four days over the last week.
Russia to Remove Wheat Export Duty
The Russian government has announced that it will lift the export duty on wheat shipments from 15 May, Reuters reports. The duty, imposed on 1 February, was initially set to run until 30 June and amounted to 15% of the customs price plus €7.50 to a minimum of €35.00/t. It was introduced as part of a package of measures intended to reduce exports which had surged in the face of a rapidly depreciating Rouble.
Chinese Iron Ore Stockpiles Fall Further
Chinese iron ore port stockpiles fell by 1.8 Mt week-on-week to 78.0 Mt in the week ending 15 May. This is now the lowest level since end 2013, according to U-metal data on 18 portside locations. Stockpiles have fallen by 6.5 Mt over the last two weeks.
Chinese Power Consumption
China consumed 441.5 billion kWh of power in April, up 1.3% year-on-year, according to National Energy Administration data, reported by Reuters. This followed a 3.7% fall in power consumption in March and took annual growth in January-April to 0.9%, to 1731.6 billion kWh. Hydropower output climbed 11% year-on-year in April, to 70.2 billion kWh, while there was a 2.8% drop in thermal power output, to 340.9 billion kWh, Reuters reports.
Japan's April naphtha imports jump 37% y-o-y
Japan's naphtha imports for petrochemical use in April increased by 37% y-o-y to 1.35MT (or 401K b/d), Reuters reports, citing data from the country's Ministry of Economy, Trade and Industry.
Petrobras expects to boost 2015 oil exports to 350K b/d
Brazil's state oil firm Petobras expects to raise its oil exports to 350K b/d in 2015, up from exports of 232K b/d in 2014, Reuters reports, citing crude oil manager Fernando Colares Nogueira. Output has so far this year been boosted largely by subsalt reserves south of Rio de Janeiro, while all of the firm's refineries are running at or near full capacity. China and India are expected to be the main destinations, with US imports declining in line with the country's higher domestic production.
IEA raises 2015 non-OPEC oil supply forecast despite US shale slowdown
The International Energy Agency (IEA) in its latest monthly oil market report has raised its forecast for non-OPEC oil supply growth in 2015 by 200K b/d from last month’s report to 830K b/d (or an average annual output of 57.8M b/d). The increase follows surprisingly strong output “in 1Q15 for a number of countries including Russia, China, Colombia, Vietnam and Malaysia”, with growth in the quarter up 2.2M b/d y-o-y. However, growth is expected to slow as the year progresses.
US crude stocks fall for second week in a row
US crude oil inventories declined by 2.2M bbls w-o-w to total 484.8M bbls in the week ending 8 May, according to the US Energy Information Administration. US crude refinery throughputs slipped by 379K b/d from the previous week to average 16.0M b/d. US crude imports rose by 340K b/d w-o-w to average 7.2M b/d. Product stocks also fell, with US gasoline stocks declining by 1.14M bbls from the prior week to 226.7M bbls and distillate fuel oil stocks dropping 2.5M bbls w-o-w to 128.3M bbls.
Chinese Steel Production
China’s crude steel output fell 0.7% year-on-year in April to 68.9 Mt, according to National Bureau of Statistics data. In the first four months of 2015 Chinese steel output was down 1.3% on the same period in 2014, at 270.1 Mt.