June Chinese Iron Ore Imports Reach 28.73 Mt
Preliminary data show that China imported 28.73 Mt of iron ore in June, the second-highest monthly total ever. Given the start of the Indian monsoon season, the June import figure is expected to have seen dominated by cargoes from Australia and Brazil. In May, Brazilian iron ore exports reached a new monthly all-time high of 21.2 Mt.
Chinese Steel Exports Reach 5.47 Mt in June
Reuters reports that China exported 5.47 Mt of steel (semi-finished and products) in June. If confirmed by Chinas Customs Statistics, this would be a record monthly high, surpassing the 4.17 Mt exported in May and would take the 1h06 total to 20.18 Mt (+3.78 Mt year-on-year). The higher level of exports this year has been accompanied by lower import levels, with monthly imports in the 1h06 expected at around 8.98 Mt.
China Develops Oil Reserve Facilities
China is set to complete construction of 4 strategic oil reserve facilities, with a total storage capacity of 10 to 12 million tons, by the end of this year, , reports Xinhua. 2 oil reserve bases will be located in the eastern province of Zhejiang, while the other 2 will be in Shandong and Liaoning provinces. The Minister of the National Development and Reform Commission, Ma Kai, also said construction of oil reserve facilities will accelerate between now and 2010, with second and third phases-each with a capacity of 28 million tons- already being planned. China, the world's second-largest oil consumer after the US, used around 318 million tons of oil in 2005, of which 40% were imported, reports Xinhua. Between Jan-May this year, China's crude imports have averaged 3m b/d, up from 2.6m b/d in 2005, according to Chinese Customs data.
Steel prices fall in China
Wire rod prices have fallen by more than $50/t since prices for Chinese wire rod reached their 2006 peak of $436/t at the beginning of June. Metal Bulletin reports that prices have also declined for other steel products in China including rebar and flat products. The fall in prices suggests either weaker demand from the country's construction industry or, more likely, overproduction. This raises the possibility of increased government intervention to slow the rate of expansion in the domestic steel capacity.
Effect of Weather and Strike Action on Colombian Coal Shipments
Coal exports from Colombia in May totalled 4.52 Mt, lower than the previous three months, according to McCloskey. Shipments had been affected during the month by heavy rain and also by the start of industrial action, which halted production and was not resolved until the end of June. Nonetheless, the export total for the first five months was 23.5 Mt, marking an increase of 0.6 Mt on the same period last year.
US Oil prices reach historical records
US oil prices hit record levels above $75 a barrel today as rising gasoline demand in the US and geopolitical concerns over supply surpassed an unexpected rise in US gasoline stocks of 700,000 barrels to 213.1 million as reported by US Department of Energy yesterday. Disputes over Iran's nuclear research, North Korea's missile tests and ongoing supply problems in Nigeria supported the hike in prices.
Meanwhile, FSU seaborne exports reached 62.8m t (2.6m b/d) in the first six months of 2006, reports Petroleum Argus. Exports from the Baltic region and Black Sea were 14% more than same time last year due to (1) changes in Russia's export duties in the first half of 2006, which increased more for crude than products, thus, encouraging product exports, (2) increased product output from Russian refineries and (3) favourable conditions on the international market. In June, total exports were 6% higher than in May, with big increases in fuel oil (+0.4m t) and gasoline (+0.2m t) shipments . Exports of gasoil, naphtha and vacuum gasoil were down.
Shipyard Demand Leads to Posco Capacity Expansion
Posco have announced plans to raise annual output of steel plate by 1.1 Mt by 2009 to meet demand from shipyards, according to media reports. This would lift plate production to 4.7 Mtpa. The South Korean steelmaker anticipates demand from Korean yards to reach 6 Mt this year, resulting in around 2 Mt of steel plate imports.
US Gasoline Stocks Rise, Crude Falls
US gasoline stocks were up 0.7m bbls at 213.1m bbl last week despite a 105k b/d increase in gasoline demand as gasoline imports climbed 313K
b/d to 1.27m b/d, the latest data from the US Department of Energy showed. Domestic gasoline output dipped 120k b/d to 9.2m b/d as refinery problems trimmed utilization rates from 93.8% to 93.1%. Crude stocks dipped 2.4m bbls to 341.3m bbls but remained 5% higher year-on-year. Crude imports were mostly unchanged at around 10.5m b/d.
Chinese Oil Demand Over 7m b/d In June
Chinese oil demand rose above 7m b/d for the first time in June, up 7.8% (or 504k b/d) year-on-year, according to preliminary data from Energy Intelligence. Overall, global oil demand in June was
mostly unchanged from a year ago, although up 1.47m b/d from May. While demand in industrializing countries was up 1.6% year-on-year,
for OECD nations it was down 1.4%. For Q2 as a whole, consumption in the OECD-30 countries was down 0.4% as 48.5m b/d but up 3.3% for
non-OECD countries at 35.4m b/d.
Chinese Steel Export Rebate Cut from August 1
VAT rebates on steel product exports from China will be reduced from 11% to 8% from August 1, according to a report from Macquarie Bank. The last cut was made in May 2005 when the rebate was lowered from 13% to 11% and was followed by a marked decline in quarterly steel exports from the 2q05 to the 3q05 of around 3 Mt. In May this year, Chinese steel exports reached a monthly record of 4.17 Mt (up 54% year-on-year). The changes will reportedly apply to lower-value products, with 23 types of high-end products excluded from the measure.
Car sales rise in China, drop in the US
China's demand for cars is booming as a result of strong growth in the Chinese market while high gasoline prices in the US, have led to falling car sales. The largest car makers in China saw a dramatic increase in first-half sales as car ownership begins to take-off due to a fall in car prices and increased consumer spending. The Financial Times reports that passenger car sales increased 44% yr-on-yr from January to May and sales in heavily populated inland areas of China are taking off, while consumers in Beijing and Shanghai are shifting to more modern and newer cars.
Largest US car makers saw their sales fall sharply in June as a result of prolonged high gasoline prices and slower sales of trucks and sports utility vehicles. Total US car sales fell 19% in June compared to a year ago, reports Bloomberg. The average price for regular gasoline has increased 32% from a year earlier to $2.93 a gallon.
Japanese Business Sentiment Rises Sharply
Business confidence in Japan appears to be rising sharply, according to the latest Tankan survey of major companies. The Financial Times reports that of the major companies surveyed, capital spending was set to grow 11% this year compared with the 3%-rise recorded in the March survey. Last week, the government released data showing unemployment in May at its lowest level for eight years.
Iraqs June Crude Exports Up 11% On May
Crude exports from Iraq in June averaged 1.66m b/d, up 11% on May, the countrys State Oil Marketing Agency said Monday, reported Dow Jones. The boost to exports came from the resumption of Iraqi shipments from Ceyhan. SOMO said around 1.55m b/d was exported through Iraqs
southern ports with the rest (roughly 110k b/d) exported through the north.
Chinese West African Crude Imports Up 42% Mth-on-Mth in May
Chinese imports of West African crude were up 42% month-on-month in May at 0.94m b/d due to record imports of Angolan crude, data from Chinese customs obtained by Reuters showed. Angolan supplies were of 0.75 m b/d in May while crude sourced from the Ivory Coast was
imported for the first time. According to Energy Intelligence, Chinese orders for West African crude in August are expected to be similar to June and July purchases, when they loaded around 20 cargoes, or 600k b/d. This was less than between March and May, when purchases had ranged from 26-31 cargoes of 950k bbls each.
IGC Lifts Coarse Grain Trade Forecast
The International Grains Council has raised its forecast for the 2006/07 (July-June) world coarse grain trade by 0.5 Mt to 104.9 Mt. This is mainly the result of greater price competitiveness of corn against wheat as animal feed and would mark an increase of 1.4 Mt on the estimated 2005/06 total. US coarse grain exports are now expected to rise to 58.3 Mt (+3.4 Mt year-on-year), while Argentinian exports are set to total 12.5 Mt (-0.1 Mt), shipments from Australia are forecast to hit 5.9 Mt (+0.5 Mt) and exports from the EU-25 are predicted at 3.9 Mt (unchanged).
Another High Month for US Steel Imports
The China-US steel trade, an important source of recent Handymax demand may soon face a two-way squeeze in the 2h06. Data from the American Iron and Steel Institute show that the US imported 3.48 Mt of steel imports in May, bringing the year-to-date total to 16.89 Mt, an increase of 32% over the same period last year. Significantly, the chair of the AISI, Louis Schorsch, was quoted in the latest monthly report referring to "dumped and subsidised imports", which could harm "healthy" industries, such as the US steel sector. Such language underlines the potential for fresh restrictions to be placed on steel imports into the country. The potential for restrictions on US imports may be accompanied by reduced steel exports from China, with reports suggesting that the tax rebate on steel exports, currently at 11%, will be reduced by an as yet undecided amount.
US Gasoline and Crude Stocks Fall
US gasoline stocks fell 1m bbl last week to 212.4m bbl, ahead of the Independence day holiday weekend when demand typically peaks, the latest data from the US Department of Energy shows. Demand was up 111k b/d at 9.54m b/d while imports dropped 126k b/d to 958k b/d, 7% lower year-on-year. Crude inventories declined 3.4m bbl from the previous weeks 8 year high to 343.7m bbl, with a 448k b/d fall in imports to 10.5m b/d contributing to the drop. Distillate stocks rose 1.8m bbl to 126.3m bbl despite a 20k b/d drop in imports to 264k b/d and a 4k b/d rise in demand. Refinery utilisation inched 0.5% higher to 93.8%.
Refineries Request Oil From SPR
ConocoPhillips, the second-largest US oil refiner, has asked for 500k bbl of oil from the strategic petroleum reserve to supply its Westlake refinery in Louisiana, reports Bloomberg. Citgo gained approval for a 250k bbl loan for its Lake Charles plant. The 2 plants, which account for almost 4% of U.S refining capacity, have reduced processing after crude shipments were cut off due to the closure of the Calcasieu Ship Channel following an oil spill. Between them they can process 679k b/d of oil and produce 186k b/d of gasoline.
Drummond's Colombian Operations Return to Full Production
Full production at Drummond's Colombian operations has already resumed, less than a week after a month-long strike halted output, McCloskey reports. However, a normal schedule of shipments is not expected for at least ten days. McCloskey adds that heavy rainfall in addition to industrial action has resulted in production losses of at least 3 Mt in the 2q06.
Indian Coal Imports Set Monthly Records
According to McCloskey, Indian coal imports in May climbed to their highest ever monthly level, reaching 4.80 Mt, compared with just 3.58 Mt in May 2005. The previous record import month was July 2005 with 4.12 Mt. Both coking and steam coal imports reached their highest level of the year: coking imports totalled 1.93 Mt, while steam coal reached 2.87 Mt. Shipments from Indonesia accounted for the majority of India's steam coal imports, comprising 8.59 Mt of the 11.43 Mt imported in the year to date.
Nigeria's Imports Set To Rise In 3Q06
Nigeria's gasoline imports are set to rise to 165k b/d in the 3q06, up from 99k b/d in the 1q06 and 123k b/d in the 2q06, reports Petroleum Argus. Gasoline consumption in 2005 was close to 200k b/d, suggesting that Nigeria will import over 80% of its gasoline in the 3q06, the majority of which will come from northwest Europe, offering support to Atlantic product markets. The increase follows the closure of the 125k b/d Warri and 110k b/d Kaduna refineries in March, which were shut down after crude stocks ran out due to the pipeline feeding them being sabotaged. The 2 refineries may not reopen this year due to threats against the technicians repairing the pipeline. The only refinery now operating is the 210k b/d Port Harcourt complex, which is processing around 110k b/d of crude as opposed to the usual 200k b/d throughput.
Iraq's Issues Tender For Iraqi Crude From Ceyhan
Iraq has issued a tender to sell 6m bbl of Kirkuk crude from Ceyhan, the first since Aug '05, as stocks have built with crude recently flowing through the pipeline from northern Iraq, reports Petroleum Argus. If the June tender is successful exports via Ceyhan could be boosted by 200k b/d in June and July. Exports from southern Iraq are set to start rising, with shipments from Khor al-Amaya expected to resume after a fire at the end of May closed the terminal. Loadings at the port were around 150k b/d in recent months.
Iraq's Oil Production Reaches 2.5m b/d
Iraq's oil production has reached 2.5m b/d, the highest since the U.S-led invasion in April 2003, and daily oil production is expected to rise to 2.6-2.7m b/d by the end of the year, reports Reuters. The country's new oil minister, Hussain al-Shahristani, announced Iraq hopes to raise production to 4mb/d by 2010, and 6mb/d by 2012, with the aim of challenging top oil exporter Saudi Arabia within a decade. Since the invasion, production has been around 2m b/d, with exports of 1.5m b/d, compared to pre-war output of nearly 3m b/d and exports of around 2mb/d.
Iron Ore Stockpiles Rising at China's Ports
While Chinas steel production has experienced robust growth in 2006, reaching a record monthly high of 35.9 Mt in May 2006, the latest market data from China indicate a slight softening in steel prices. Prices for wire rod, widely used in the construction industry, are now slightly down on the 2006 peak of $436/tonne to $428/t, although they are 17% higher than the mid-February level. Moreover, reports from China suggest that iron ore stockpiles at major iron ore ports have been rising steadily this year and now total 44 Mt, compared with 38.5 Mt at the beginning of March.
Mexican Crude Output Drops In May
Mexican crude output fell by 41k b/d in May month-on-month to nearly 3.33m b/d, down 0.4% on the year, reports Petroleum Intelligence Weekly. For the year to date, output has averaged at nearly 3.35m b/d. Exports of crude inched 2k b/d lower in May to 1.83m b/d, but remained 5.2% higher year-on-year. Exports have averaged 1.93m b/d over the year so far.