Forecasts for Long-Term Chinese Steel Price Rebound
The price of Chinese rolled steel will rebound in late June, according to the deputy secretary-general of the China Iron & Steel Association, the People's Daily reports. The newspaper also quotes Chen Kexin from the Zhongshan logistics information centre, who argues that the price of domestic rolled steel will probably climb in the long run, but may continue to decline during the rest of this year. Mr Chen argues that robust growth both in China and the rest of the world will maintain high demand for rolled steel over the long run and suggested that Chinese steel mills focus on making high value steel products in the future.
China Aims to Boost Domestic Demand and Lower Investment
The governor of China's central bank, the People's Bank of China, has announced that economic policy will concentrate on boosting domestic demand and lowering investment, the Financial Times reports. Such a policy would increase imports and reduce the country's trade surplus. Zhou Xiaochuan also described international calls for an immediate revaluation of the yuan as often political, despite the prediction made by US Federal Reserve Chairman Alan Greenspan that a move on the renminbi would come "relatively soon."
US Crude Oil Stocks Fall
US crude stocks fell more than expected Wednesday, down 3m bbl at 330.8m bbl, the latest data from the US Department of Energy showed.
Crude imports slipped 478kb/d to 10.2mb/d while refinery runs were at 94.9% of capacity compared with 96.2% the previous week. Gasoline inventories were down marginally by 0.1m bbl at 216.6m bbl while imports were down 179kb at 836mb/d. Gasoline demand was little changed
from the previous week, down 10kb/d at 9.45mb/d.
Australian Wheat Crop Forecast Cut
Australian analysts Abare have revised down their forecast for Australia's 2005/06 winter wheat crop to 16 Mt from their March projection of 22.6 Mt, Bloomberg reports. Abare had been expected to peg their winter (Oct-Jan) crop forecast at 19.5 Mt. The downward revision is the result of a drought across the country's south-eastern states. The March-May autumn was reportedly the driest since records began.
Azeri Light Crude Exports To Rise
Exports of Azeri Light crude are set to rise by around a quarter in July to 213Kb/d, following the launch of shipments through the Black Sea port of Batumi, reports Petroleum Argus. Azeri Light normally loads at Supsa but the Batumi route is being used to accomodate rising production from Azerbaijan.
Brazil's Soyabean Exports Down in May
Trade data show that soyabean exports from Brazil in May reached 2.3 Mt - down 14% year-on-year, the American Soybean Association reports. This is also down on Aprils total of 2.7 Mt. However, agricultural analysts are arguing that many Brazilian farmers are not putting their produce on the market as the soyabean price is currently low. The latest US Department of Agriculture forecast for Brazilian soya exports (including both soyabean and soya meal) in the 2004/05 trade year (Oct-Sep) is 35.1 Mt - still 0.5 Mt higher than the 2003/04 total.
US Employment Data Below Expectations
The latest official US employment data show that job growth was the slowest for 21 months, the BBC reports. Only 78,000 new jobs were created in May, well below the anticipated figure of 185,000. However, employment growth was unusually strong in April when 274,000 new jobs were created, beating the 150,000 jobs required every month to keep up with population growth.
China Urged to Boost Domestic Demand
A report by China's State Information Centre recommends a loosening of credit controls to boost domestic demand, China Daily reports. The report also expresses concern at the economy's perceived reliance on exports, warning of a risk to China's GDP growth should economic growth elsewhere falter. The report proposes a moderate cut in "the degree of credit tightening to bring about sustained, appropriate and stable growth in domestic demand, allowing the economy to maintain its vigour." Earlier this week a senior monetary policy advisor with China's central bank argued that China was vulnerable to external shocks due to its high exports.
US Crude, Gasoline Inventories Rise
US inventories of both crude and gasoline rose last week, according to data released by the US Department of Energy Wednesday. Crude oil
stocks rose 1.4m bbl to 333.8m bbl, with a rise in crude imports of 387kb/d to 10.7mb/d. Refinery throughput increased to 96.2% of capacity compared with 94.6% the previous week. Gasoline stocks climbed 1.3m bbl to 216.7m bbl with gasoline output increasing by 94kb/d to 9.1mb/d. Imports, though, were down 78kb/d at 1mb/d.
Vessel Waiting Times at Newcastle Now Negligible
Vessel waiting times at Newcastle are now negligible, McCloskey reports. The vessel queue last week reportedly comprised just one, with the port operator Port Waratah Coal Services estimating waiting times of under 24 hours. Last week, throughput reached 1.45 Mt, some 84.6% of the ports rated capacity.
Japanese Iron Ore Imports Down in April
Japanese iron ore imports in April totalled 10.47 Mt compared with 12.61 Mt in March, marking a month-on-month fall of 17%, according to The Tex Report. As the March total was one of the highest monthly import totals recorded, the 17% month-on-month fall suggests stockbuilding by Japan's iron ore purchasers ahead of the increase in iron ore contract prices effective from April 1. In the January-April period, Japanese iron ore imports were 44.21 Mt -- down from 45.61 Mt in the same period last year.
South Koreas Crude Imports Fell In April
South Koreas crude imports fell 1.5% (or 33Kb/d) year-on-year in April to 2.09mb/d as refiners kept their purchases low due to refinery maintenance work, reports Petroleum Intelligence Weekly. Saudi Arabia remained the top supplier to South Korea but imports from there slipped 5% to 634kb/d. In the first four months of this year, Koreas crude imports averaged 2.31mb/d, up 4.7% on a year ago.
World Wheat Trade Forecast to Rise in 2005/06
The first projection from the International Grains Council for wheat exports in 2005/06 (July-June) put world wheat exports at 106.5 Mt compared with the 2004/05 estimate of 103.5 Mt. The IGC expects drought conditions in North Africa to limit the wheat crop, so boosting import demand in the process. The IGC forecasts imports into the region to hit 17.5 Mt on 05/06 - up 1.5 Mt on 04/05. An increase in shipments from the EU to North Africa is considered likely. Import demand in China is seen by the IGC as the 'key variable' in the world wheat trade; the Council currently forecasts a slight decline in imports next season from 7.0 Mt this year down to 6.0 Mt.
Buchanan to Open Late June/Early July?
The US coking coal mine of Buchanan, Virginia, which has been closed since a fire in February, is expected to re-open at the end of June or early July, McCloskey reports. Mine owner Consol had declared force majeure on coal deliveries, and the first rescue team entered the mine this week. Buchanan, which had an output of 4.4 Mt in 2004, produces low-vol coal for many European steel mills.
OECD Lowers GDP Forecasts for Japan and the Eurozone
The OECD has cut its GDP forecasts for Japan and the eurozone for 2005. In its latest biannual Economic Outlook, the OECD predicts Japan's economy to grow by just 1.5% this year compared with its previous forecast of 2.1% made last year. Japan's GDP grew 2.6% in 2004. GDP growth in the eurozone is now expected to be 1.2% with "sustained momentum" being "badly lacking". The eurozone forecast is down from the previous projection of 1.9% and last year's estimated growth of 1.8%.
Surprise Fall In US Crude Oil Stocks
US crude oil inventories fell 1.8m bbl last week to 332.4m bbl, according to the latest data from the US Department of Energy. Oil market forecasters had been expecting a stock build but a drop in crude imports of 548kb/d to 10.31mb/d combined with a 0.6% increase in refinery runs to 94.6% contributed to the fall. Refineries are ramping up production ahead of the summer driving season, whose start is marked by this weekend's Memorial Day holiday. US gasoline stocks climbed 600k bbl to 215.4m bbl, with production rising 69kb/d to just over 9mb/d - the highest level this year -- while demand is nearly 1% higher than a year ago at 9.4mb/d. Gasoline imports were up 105kb/d at 1.1mb/d.
Oil Begins To Flow Through Baku-Ceyhan Pipeline
Oil started to flow through the Baku-Tbilisi-Ceyhan (BTC) oil pipeline Wednesday, with the opening of a route that will feed Caspian crude into the Mediterranean for the first time, according to news reports. It will take several months for the pipeline -which has a capacity of 10 million barrels - to be filled and so the first tanker loadings from Ceyhan are not anticipated until the fourth quarter. Eventually 1 million barrels a day is expected to flow through the system.
Market Expects Slow Brazilian Soyabean Purchases
According to a Chicago Board of Trade market report, purchases of soyabeans by China are expected to continue at a "very slow" pace owing to high inventory levels. Concern among soyabean traders is growing that outbreaks of foot-and-mouth disease and bird flu may dampen feed demand for cattle and poultry. Furthermore, the strength of the Brazilian real is also blamed for slow purchases of Brazil's soyabeans. Nonetheless, the US Department of Agriculture's May forecast for Chinese soyabean imports for 2004/05 (Oct-Sep) is 22.8 Mt -- unchanged from last month and up 5.9 Mt year-on-year.
Argentina's Soyabean Crop Predicted to Rise 20% to Record Level
Argentina's Agriculture Secretariat expects the country's soyabean production to reach a record 38.0 Mt in the 2004/05 crop year, the American Soybean Association reports. This would represent a rise of 20.6% on output in the previous crop year.
Meanwhile, the Ministry of Agriculture in China reportedly predicts soyabean demand to increase steadily during 2005, but warned that if soyabean imports were maintained at the levels seen in March, there may be some oversupply.
Chinese Fixed Asset Investment Grows 26%
Chinese fixed asset investment in the first four months of 2005 rose 25.7% year-on-year, the Financial Times reports. This compares with the official target rate of 16%. The FT comments that this data combined with 16% YOY growth in industrial production in April shows that the government's "austerity programme has not succeeded in reining in lending and investment".
Record Chinese Aluminium Output
Despite falling output from December to February, Chinese aluminium production recovered to reach a new monthly record of 619,000 tonnes in April, up 4% on the previous month and up 19% year-on-year. In contrast, aluminium production in the rest of the world totalled 1.91 Mt in April, up just 3.2% YOY, indicating that China is increasingly the main focus of the seaborne bauxite and alumina trades. In the first four months of 2005 China accounted for 24% of world aluminium production.
Russian Oil Production Growth Slowing
Russian oil production growth is seen slowing in 2005, with the country's Ministry for Economic Development and Trade projecting output will average 9.42mb/d, a 2.7% gain versus an expected 5-6% at the start of the year, reports Petroleum Intelligence Weekly. A fall in upstream investment and state and legal uncertainties are said to be behind the slowdown. Meanwhile, crude exports from the Black Sea are expected to fall in June due to maintenance on the pipeline feeding Novorossiysk, reports Petroleum Argus. The port is expected to handle 876kb/d of crude, 54Kb/d less than in May.
OPEC May Consider Oil Output Cut
OPEC could curb the current overproduction of its formal oil output limits if the cartel decides global stocks are rising too quickly, the president of the producer group said Thursday, reports Reuters. Sheikh Ahmad al-Fahd al-Sabah said the group would keep pumping around 30.3mb/d until it meets on June 15 to discuss its production policy. But he said OPEC could decide then whether to trim production in excess of official limits, which is now running at around 1mb/d. "If the stockbuild is above the agreed-upon levels, which is the five year average, then this may be the start of reducing the overproduction," al-Sabah said.
Sharp Rise In US Crude Oil Inventories
US crude oil inventories rose sharply last week, by a higher-than-expected 4.3m bbl to 334m bbl, remaining at the highest level since May 1999, according to data released by the US Department
of Energy. Crude oil imports were up 867kb/d to 10.9mb/d, with the DOE noting supplies were particularly plentiful from Mexico, a short-haul
source. The crude stock gain was despite an increase in refinery runs to 94% from 91.8% a week ago. Gasoline production rose on the back of
this increase by 102kb/d to 9mb/d and although imports were down 110kb/d at 988kb/d, stocks were up 1.1m bbl at 214.8m bbl. Gasoline
demand climbed 94kb/d to 9.27m b/d.
Record Chinese Steel Production in April
Chinese steel output totalled a monthly record of 28.1 Mt, up a massive 25.4% year-on-year, according to the International Iron and Steel Institute. China now accounts for 31% of world steel output compared with 26% a year ago. Japan and the FSU also maintained high output levels in April producing 9.5 Mt (up 3.3% YOY) and 9.4 Mt (up 3.8% YOY) respectively. In contrast, monthly production fell YOY in the US (down 1.5% to 8.0 Mt) and in the EU-25 (down 3.0% to 16.0 Mt).