Prudhoe Bay To Resume Output
BP announced late on Friday it would restore most of its shut-in output at the Prudhoe Bay oilfield in Alaska this week, ahead of a previous target of end-October, after getting clearance from US pipeline regulators, reports Reuters. The oil major will add 150k b/d of output within the next week taking total production to 400k b/d, less than two months after it was forced to halve flows due to a corroded line. Prudhoe Bay is North Americas biggest field, representing about 8% of US output.
Rise in Russian Coal Exports
Shipments of coal in Russia were 49.9 Mt during Jan-August, 7 Mt more than during the same period last year, reports McCloskey. Shipments from ports in the Baltic and North Russia rose by 4.6 Mt to 29.3 Mt, with Tallinn shipping 4.8 Mt (+2.7 Mt) and Ust-Luga increasing shipments by 1.5 Mt to 1.9 Mt.
In the Far East, Vostochny shipped 9.9 Mt, a rise of 0.6 Mt year-on-year.
Meanwhile, Platts reports from industry sources that there is a severe shortage of railway wagons to transport coal to Baltic and Black Sea ports, possibly resulting from a misallocation of railway wagons to the Far East of Russia and higher-than-expected demand for Russian coal.
Africa Increases Crude Supply To The US
Canada remained the largest crude supplier to the US in July having provided 1.6m b/d, while Mexico exported 1.56m b/d to the US, 4.28% higher year-on-year, reports Energy Intelligence. Total volumes were little changed at 10.15m b/d but African suppliers increased their share to 23% from 19% last year. Supply from Angola rose over 200% to 666k b/d in July while Algeria provided 413k b/d, 27% more than last year. The Mideast share dropped to 21% from 24%, mainly due to a 16% fall in levels from Saudi Arabia. Venezuela also saw a 10% decline year-on-year to 1.2m b/d, reports Energy Intelligence.
German Coal Import Boost
German coal imports in the January-July period were 21.3 Mt, according to the latest trade data, representing an increase of 4.2 Mt on the same period last year. Excluding imports from Poland and the Czech Republic, Jan-July imports were 11.3 Mt (+1.7 Mt). The hot weather contributed to July imports of 3.2 Mt, the highest-ever July total. If imports maintain their current pace, this year will see a record 36.4 Mt of coal imports compared with 30.4 Mt in 2005.
North Sea Crude Production Falls
North Sea crude production dropped 5.4% month-on-month in August to 4.12m b/d having risen 4.7% in July to nearly 4.36m b/d, reports Petroleum Argus. The main decline was seen out of the UK where output fell 152k b/d on the month to 1.27m b/d. This was due to volumes from the Forties field falling a significant 198k b/d as a result of maintenance, reducing output from the North Sea's largest field to an average 294k b/d, more than a 100k b/d lower than in any month since it reached maturity. Production from Norway also decreased by 100k b/d to 2.47m b/d, reports Argus.
US Distillate Stocks Reach Highest For Over 7.5 Years
US distillate stocks grew another 4.1m bbl last week to reach 148.7m bbl, the highest since the week ending 8th January 1999, and 10.8% higher year-on-year, according to the latest data from the US Department of Energy. An 87k b/d rise in imports to 471k b/d contributed to the growth, while demand grew 86k b/d to nearly 4.14m b/d. Gasoline inventories increased 0.6m bbl to 207.6m bbl, 6.2% higher than the same week last year. The rise came despite a 285k b/d drop in imports to 799k b/d, the lowest since the week ending 25th November 2005, and 14.8% lower on the year. Demand continued to fall by another 139k b/d to 9.23m b/d. Crude stocks fell 2.8m bbl to 324.9m bbl despite import volumes remaining relatively unchanged at 10.6m bbl. Refinery utilisation was 0.4% higher at 93.4%.
Further Chinese Trade Records in August
Chinese steel exports continue to grow with 5.0 Mt exported in August alone, according to China's Customs Statistics. This made China a net steel exporter of 3.3 Mt in August and 16.7 Mt over the first eight months of the year. This contrasts with 2005, when China's net steel exports were just 0.4 Mt for the entire year. The data also confirm record monthly iron ore imports of 32.8 Mt, over 3 Mt higher than the previous historical high reported in March 2006. August was a record month for cement exports (4.26 Mt), taking the year-to-date total to 25.0 Mt, compared with 12.0 Mt during the same period last year. It was the second-highest month ever for soyabean imports (3.0 Mt), with the YTD total running 1.7 Mt higher on the Jan-Aug total in 2005.
De Rato: World Economic Cycle "Close to Peak"
The managing director of the IMF, Rodrigo de Rato, has cautioned that the global economic cycle may be close to its peak, the Financial Times reports. Speaking at a joint plenary session of the IMF and the World Bank, Mr de Rato expressed concern at current account imbalances and described the suspension of the Doha Round of trade talks as "damaging and disappointing." Last week, the IMF's latest World Economic Outlook raised it estimate for global GDP growth to 5.1% and forecast the world economy to expand by 4.9% in 2007.
Russia To Cut Crude Exports In Fourth Quarter
Russia plans to cut crude exports in the 4Q06 by around 80k b/d from its schedules in the third quarter to 3.85m b/d, reports Energy Intelligence. Russian crude exports via Black Sea ports are scheduled to rise to 1.3m b/d in the fourth quarter, up nearly 200k b/d from the previous one, in order to limit the damage on exports caused by the recent cut-off in supplies to Lithuania. The increase comes despite the inevitable arrival of shorter days, which cause steady traffic jams throughout winter at the daylight-restricted Turkish straits. Primorsk is set to handle a modestly lighter load of 1.35m b/d, but volumes will need to be kept high to cover the Lithuanian shutdown which is expected to continue until at least the end of January, reports Energy Intelligence.
More Delays Anticipated at Newcastle
According to the Hunter Valley Coal Chain logistics team chair, Graham Davidson, worsening congestion is in prospect at Newcastle, McCloskey reports. This raises the prospect of a vessel queue of over 40, after the queue reached 31 last week. The congestion has been attributed to recent bad weather (flooding on rail links and high seas), maintenance and an increase in cargoes to be shipped. The SSY Australian Coal Port Congestion Index currently stands at 7.7 days compared with an August average of 6.3 days.
Chinese Export Tax Rebate Cut
The new VAT rebate on exports of Chinese steel products will take effect from today (September 15), according to Bloomberg. The tax rebate will be cut from 11% to 8%. A report from Bloomberg comments that such a move (similar steps are in place for a variety of other exported goods) will help deflect criticism that China's currency is undervalued in order to boost exports. While the measure will make steel exports less profitable for producers, it may still be more economical for steelmakers to export than sell domestically. According to consultants World Steel Dynamics, the export price of hot-rolled band at Chinese ports is currently $460-470/t, however, the price for domestic deliveries is $390/t. Therefore, a small addition to exporting costs may not reduce exports appreciably. The rebate cut would make more of a difference to export volumes if the differential between exported and domestic prices were to narrow.
New signs that moderate El Ni
Argentinian Iron Ore Mine Restart Reported
Chinese owners of an Argentinian iron ore mine are reportedly restarting operations, hinting that the Chinese steel sector is not oversupplied with iron ore. Metal Bulletin reports that the Hiparsa mine, idled in 1989, is now in the possession of Chinese-owned Minera Sierra Grande (MSG). The as yet unconfirmed reports suggest that there are plans to lift output of 0.6 Mtpa of pellet to 1.8 Mtpa for both domestic and export purposes.
Global Oil Demand Forecast Down
US distillate stocks grew another 4.7m bbl last week to reach 144.6m bbl, the highest since the week ending 1st October 1999, and 8.5% higher year-on-year, according to the latest data from the US Department of Energy. The rise came despite a 138k b/d fall in imports to 384k b/d, partly due to a 117k b/d drop in demand to just over 4m b/d. Gasoline inventories inched another 0.1m bbl higher to 207m bbl, mainly due to a 57k b/d rise in imports to 1.08m b/d and a 254k b/d fall in demand following the end of the main summer driving season. Crude stocks dropped 2.9m bbl to 327.7m bbl (but remained 6.3% higher on the year) despite a 232k b/d rise in imports to 10.6m b/d, 16% above the same period last year. Refinery utilisation dipped 0.6% to
New Record for Chinese Iron Ore Imports
Preliminary data reveal that China imported a record 32.8 Mt of iron ore in August, a rise of 33% over July and up a massive 42% year-on-year. Reports indicate the growth has come from rising exports from Australia and Brazil rather than India, which would be consistent with the sharp jump in Capesize freight rates during the 3q.
Despite the huge rise in imports, iron ore stock levels at Chinas major ports have remained fairly steady, with the current figure of less than 43 Mt compared to 44 Mt towards the end of June. Domestic steel prices appear to have stabilised while the high rate of steel exports from China was also maintained in August, rebounding back to 5 Mt after Julys dip.
Global Oil Demand Forecast Down
In its latest monthly report the IEA revised its forecast for global oil demand down by 100k b/d to 84.7m b/d in 2006 and down by 160k b/d to 86.2m b/d in 2007. The declines came due to a downward revision in OECD demand of 87k b/d to 49.5m b/d, almost unchanged from 2005, largely due to revisions in N. American preliminary data, flat consumption in Europe, and continued low demand in the Pacific. Preliminary July 2006 data indicate that oil product demand in OECD Pacific fell 0.1% year-on-year, mostly due to higher than average rainfall and colder weather. The IEA said that world supply fell 400k b/d in August to 85.8m b/d, underpinned by lower output from the North Sea, Iran and Saudi Arabia, but was up 975k b/d year-on-year. Non-OPEC supply forecasts for 2006 and 2007 have been trimmed by 60k b/d and 145k b/d respectively, to 51m b/d and 52.8m b/d.
Newcastle Vessel Queue Reaches 31
The disruption caused by bad weather at Newcastle on Friday has led to a lengthening in the vessel queue. McCloskey reports that the queue reached 31, compared with 25 the previous week. The average waiting time for vessels this week is estimated at 14 days. As a consequence, the load rate is at its lowest since June. This week's SSY Australian Coal Port Congestion Index climbed to 7.9 days, compared with 5.7 days three weeks ago.
China Faces a Gasoil Shortage
China is facing gasoil shortfalls due to disparity between high international oil prices and the state-administered fuel pricing mechanism, reports Petroleum Argus. Chinese refiners' heaviest third-quarter maintenance programme since 2002 is tightening product supplies ahead of a peak demand period. The upcoming harvest season will boost agricultural gasoil demand, while the Golden Week holiday in October will further increase demand for diesel and jet fuel. As refiners are maximising gasoil output, this is maintaining record-high jet fuel imports this year (China imported an average 98k b/d in Jan-July '06 versus 53k b/d in the same period in '05) as refiners divert more of their jet cut into the distillate stream, reports Argus.
McCloskey reports that strong winds and heavy seas have closed Newcastle for most of today. According to McCloskey, the closure will cause further congestion at the port, where the vessel queue had reached 26 this week. Waiting times have reportedly increased to over ten days in some instances.
WORLD OIL TANKER TRENDS 2006 VOL 2
After a firm end to 2005, tanker earnings in the first half of 2006 were, as projected, generally softer on average when compared with 1H05. One significant exception was the VLCC spot market. The buoyancy in this sector was on the back of firmer than expected resilience of the global economy in the face of record nominal oil prices, very strong global refinery margins and a particular crude import surge into China. While some of the world's key economies, including the US, China, Europe and Japan expanded rapidly through the first half of 2006, of these, preliminary data suggests that only China saw an increase in its oil consumption.
SSY's latest World Oil Tanker Trends publication examines the drivers of the tanker markets for the first half of this year and reviews the changes that have emerged. This is both as a 'snap-shot' view on the earnings, cargo trades, newbuilding ordering and vessel values followed by a more in-depth look at each tanker sector, plus analysis of cargo demand and supply. The feature article looks ahead to the end of this decade with analysis of the IEA's medium term forecast and what this means for the tanker markets.
The publication also reviews the trends in the chemical market sector - where vessel earnings remained high by historical standards, supported by strong cargo demand. Meanwhile, activity in the vegoils trades is examined in view of the growing demand for biofules in response to environmental legislation and very high mineral oil prices.
For the gas sector, LNG trades continued to grow in 1H06, with India and Korea recording large increases in imports and China took in its first LNG shipment from Australia. The LNG and LPG sectors are examined in view of the continued optimism on the part of vessel owners about prospects for these trades.
"World Oil Tanker Trends" is available from SSY Consultancy & Research Ltd for an annual subscription of
Further Delays to Expansion Project at Richards Bay Coal Terminal
Richards Bay Coal Terminal has experienced more delays to its Phase 5 expansion, which was previously set to start by mid-2006 and end within the 2H08, reports Reuters. RBCT Chief Executive, Kuseni Dlamini, told Reuters that the project began on September 1 and is now expected to be completed by the 1H09. The delayed start date was due to difficulties in obtaining environmental assessment approvals and lease extension for the extra land. Mr Dlamini said that the new capacity will be 91 Mtpa. Currently, the RBCT has an export capacity of 72 Mt and, in 2005, it handled about 67 Mt.
US Distillate Stocks Reach 4.5 Year High
US distillate stocks grew 3.1m bbl last week to reach 139.9m bbl, the highest since the week ending 11th January 2002, and 4.1% higher year-on-year, according to the latest data from the US Department of Energy. The rise followed a 162k b/d increase in imports to 522k b/d, 86.4% higher on the year, and a 70k b/d drop in demand to under 4.2m b/d. Gasoline inventories rose 0.7m bbl to 206.9m bbl, up 8.8% on the year, despite a 156k b/d fall in imports to 1.03m b/d and a 12k b/d rise in demand to 9.62m b/d. Crude stocks fell 2.2m bbl to 330.6m bbl (but remained 5% higher on the year) partly due to a 788k b/d drop in imports from the previous week's high level to just under 10.4m b/d. Refinery utilisation inched 0.7% higher to 93.6%.
China's Economic Growth Forecast Raised
The Asian Development Bank has upgraded its economic growth forecast for China for 2006 to 10.4% due to strong growth in investment and foreign trade, reports China Daily. This significant upward revision from 9.5% growth forecast in April is due to faster-than-expected 10.9% growth in Chinese economy during the first half of 2006, despite government efforts to cool the economy. The bank also raised its growth forecast for Asia, excluding Japan, for the second time this year to 7.7%. However, it noted that a possible slowdown in the US economy could be a risk as demand for Asian goods and services may be affected.
Oil Prices Drop To 3-Month Low
Oil prices dropped to a 3-month low in New York on Wednesday amid speculation United Nations action to end Iran's nuclear program is unlikely to curb shipments from the world's fourth-biggest oil producer, while gasoline prices fell to a 6-month low, reports Bloomberg. Crude oil for October delivery fell to $67.82/bbl on the New York Mercantile Exchange, while Brent crude for October delivery was down to almost $67/bbl on the ICE Futures exchange. New York traded oil has fallen from a high of over $78/bbl in Aug as the US hurricane threat diminished, US gasoline stocks rose and a UN deadline on Iran's nuclear research passed without sanctions, reports Bloomberg.
Japanese Coal Imports
Japanese coal imports in July reached 15.8 Mt, the highest monthly total this year, according to official trade data. The majority of Japan's imports were sourced from Australia (8.9 Mt), with Indonesia accounting for 3.4 Mt and China 1.8 Mt. McCloskey reported last month that stoppages at some of the country's nuclear power stations may prompt utilities to boost electricity generation from other fuels such as coal.