Latest News

Independent Swiss refiner, Petroplus, is running short of crude supplies, and may soon have to halt operations at its plants, after traders halted sales to the firm following the freezing of $1bn in its borrowing allowances, Reuters reports. The company operates 4.4% of European refining capacity, relying largely on Urals, Forties, CPC Blend and Bonny Light crudes. With Urals forming around 40% of the firm’s crude slate, the grade could come under pressure as a result of the developments. The potential for a cessation of Petroplus’ product output has already boosted European light and middle distillate cracks, and may prompt an increase in imports from outside the region. With its predominantly light crude slate, weak margins have already forced the closure of two Petroplus plants, one in Teeside, UK and one in Reichstett, France.

The world export price of hot rolled band (HRB) shows a small rise at the end of December, according to World Steel Dynamics. The current price of $619/t is up $7 from the 2011-low seen in November, compared with $655/t from the year-ago level. The Chinese HRB price stood at $562/t, up marginally $7/t from one month ago. By contrast, the US HRB price showed an increase of $44 month-on-month to $774/t, representing the highest level since July. This also marks a gain of $22/t year-on-year.

Iran has responded to the prospect of further EU sanctions by threatening closure of the Strait of Hormuz, Reuters reports. Whilst dismissed as ‘bluster’ by the U.S. State Dept., the move reflects heightened tensions between Iran and the West and the potential for significant disruption to seaborne oil transit should relations deteriorate.

Cosmo Oil will soon begin restarting operations at its 220 kbpd Chiba refinery, for the first time since the March 11 earthquake, Reuters reports. The initial restart will include that of a 36 kbpd hydro-desulphurisation unit, and is set to take place before the end of the year. A total of six refineries were taken offline after the earthquake and subsequent tsunami earlier this year. Four have since restarted, with Cosmo’s Chiba plant and JX Nippon’s Sendai refinery the two yet to recommence operations.

Rosneftbunker’s Ust-Luga fuel oil terminal loadings were up 42% on the month in November, at 920Kt, or 200 kbpd, due to the launch of a second rail discharge rack, reports Argus. The terminal loaded 13 cargoes in November, the highest monthly total to date, with five of them heading to the US and the other eight to Rotterdam. The second fuel oil rack will help the facility to double product loading capacity to 14-15Mt p.a.

According to the latest government data, Indian refineries processed 3.52 mbpd of crude oil in November, a 350 kbpd increase year on year. A 206 kbpd increase in throughputs at Reliance’s number one Jamnagar plant, to 718 kbpd, led the overall rise. Last month’s runs were also 40 kbpd higher than during October, as a heavy Autumn maintenance schedule drew to a close. Government data does not include inputs at Reliance’s second, 580 kb/d, export-based refinery at Jamnagar.

According to the latest data from the EIA, US commercial crude inventories dropped by 10.6 MB last week, to 323.6 MB, after imports fell by 741 kbpd, to 7.58 mbpd. The stock draw was the largest on a week-on-week basis since February 2001, whilst imports fell to their lowest weekly average since September 2008. Crude runs at US refineries were fairly stable at 14.60 mbpd, a 53 kbpd decline from the week before. Overall refinery utilisation stood at 84.9% of total capacity, down from 85.1%. Meanwhile, distillate stocks declined by 2.4 MB, to 139.1 MB, after demand rose by 447 kbpd, to 4.40 mbpd. Imports were 10 kbpd higher, at 128 kbpd. Gasoline inventories fell a modest 0.4 MB, to 218.4 MB, with demand rising by 213 kbpd, to 8.67 mbpd, and imports 175 kbpd lower, at 601 kbpd. Despite the increased consumption last week, the 13-week average for US gasoline demand was 3.9% lower year-on-year.

November saw China import a record volume of Australian iron ore, up 7.4 Mt or 33% on October to 30.1 Mt, according to official data from China’s Customs. This is 1.2 Mt higher than the previous high of 28.9 Mt seen in September. Iron ore shipments from Brazil rose 0.7 Mt or 6% month-on-month to 12.7 Mt, but remained 1.6 Mt or 11% lower than the year-ago level. Imports from India rose to a 5-month high of 4.7 Mt, up by a significant 2.7 Mt or 129% month-on-month, but still down 11% year-on-year.

After boosting crude runs to meet strong demand and alleviate mounting shortages, Chinese refiners reduced their net diesel imports to 17 kbpd in November, a 31 kbpd reduction from October, when net imports reached their second highest level on record. Last month’s net diesel imports were, however, still significantly higher than during the same month in 2010, when China was a net exporter of 22 kbpd of the product. Meanwhile, higher domestic production prompted China’s gasoline net exports to rise by 44 kbpd from October and by 8 kbpd yoy, to 98 kbpd. China’s refineries processed 5.56 mbpd of crude oil last month, the second highest level on record.

Taiwan’s Formosa has resumed spot product sales for the first time since the shutdown of its 540 kbpd Mailiao refinery following a fire in late-July, Argus reports. Last month saw a December-loading gasoline cargo sold, whilst a January loading gasoil cargo has been sold this month.

November’s global crude steel output of 115.5 Mt was down 8.0 Mt or 6% on October and represented a year-to-date low, according to latest data from World Steel Association. However, production was still up 1.3 Mt or 1.1% from the year-ago level. Steel production in EU-27 saw a 2.1% decline year-on-year to 14.2 Mt: production in Germany and Spain both suffered annual declines of more than 10%, while output in Italy and France both continued to show positive growth. In other key steel-making centres, robust annual growth were seen in the US (+11.8 YoY to 7.2 Mt) and South Korea (+12% YoY to 5.8 Mt). Meanwhile, steel output in China fell to a 14 month-low of 49.9 Mt, with a marginal decline of 0.2% year-on-year.

Faced with increased diesel demand and tougher competition for imports, Mediterranean refiners are set to add more than 100 kbpd of hydrocracking capacity in 2012, Argus reports. New units in Portugal, Greece and Israel are set to join recently added capacity in Spain and allow refiners in the region to produce more low-sulphur middle distillates. With strong competition for U.S. diesel exports coming from Latin America, and Asian output increasingly being used to meet rising demand within the region, European refiners are looking to reduce their reliance on imported volumes.

November saw coal imports to China hit a new record, with a monthly increase of 6.5 Mt or 41% to 22.1 Mt, according to preliminary customs data. This is also 3 Mt higher than the previous record of 19.1 Mt in September. Total imports in January to November 2011 totalled 161.9 Mt, 13 Mt higher than the corresponding period last year.

Japan’s crude steel production in November fell 0.8 Mt or 8% month-on-month to 8.7 Mt, according to data from the Japan Iron and Steel Federation. Total output in January to November of this year reached 99.2 Mt, compared with 109.6 Mt in the corresponding period last year.

Russian standard crude export duty will fall by 2% next month, to 397.5/t, representing lower crude prices, Reuters reports. The reduced duty placed on crudes from selected East Siberian and Caspian Sea fields will drop from $364.9/t this month, to $357.7/t in January. Gasoline and naphtha duty will fall from $365.9/t, to $357.7/t, whilst diesel and fuel oil duty will drop to $262.3/t, from $268.3/t.

Eastbound exports of West African crude averaged 1.69 mbpd last month, up from around 1.63 mbpd in October, Energy Intel reports. A sizeable decline in Chinese imports was offset by Indian receipts of 520 kbpd, nearly twice the October level. Overall West African loadings averaged 4.85 mbpd, with Angolan shipments reaching 1.84 mbpd their highest level since May 2010. Nigerian exports averaged 2.1 mbpd. Shipments of the region’s crude to the U.S. were reduced by the closure of ConocoPhillips’ 185 kbpd Trainer, PA refinery.

At their meeting today in Vienna, OPEC’s members agreed to lift its official output target to 30 mbpd. The new quota, which now includes Iraqi production, replaces the previous output target of 24.85 mbpd, which did not. Individual member targets were not agreed. According to the IEA, overall OPEC production averaged 30.68 mbpd in November, suggesting that to meet the new target, and accommodate recovering Libyan production, other members will in fact have to reduce output. MEG members, led by Saudi Arabia, boosted production in the aftermath of the disruption to Libya’s output, suggesting that any such reduction may well come from the region.

In the light of increasing economic downside risks, the IEA has reduced its global oil demand projection for 2011 to 89.0 mbpd, a downward revision of 0.16 mbpd from its previous report. Demand in 2012 is anticipated to reach 90.27 mbpd, 0.20 mbpd lower than was projected in November. Meanwhile, global supply was seen rising by 0.90 mbpd from October to November, to 90.0 mbpd. OPEC crude output reached 30.68 mbpd last month, a 0.62 mbpd increase from October, on the back of increasing Libyan and Saudi output. The group meets tomorrow to review its policies.

According to the latest customs data, Chinese refiners imported 5.56 mbpd of crude oil in November, the second highest level on record, surpassed only by September 2010’s 5.71 mbpd. Last month’s imports represented a 436 kbpd yoy increase, and were up by 627 kbpd from October. Refiners were forced to boost purchases as they ramped up crude runs to alleviate mounting diesel shortages. China’s crude throughputs averaged a record 9.28 mbpd last month.

China’s refinery throughput jumped nearly 480 kbpd on the month to a record 9.22 mbpd in November, after a slight decline in October, as state refiners increased output to ease domestic diesel shortages, reports Reuters. Runs were 3.2% higher on the year. In addition to the higher operating rates, China’s top two refiners, Sinopec and PetroChina, have imported a combined 60 kbpd of diesel for November delivery and 19 kbpd for December. The record crude runs and rising diesel imports are set to bolster November apparent oil demand in China. The high throughput had been largely expected as large refineries returned from maintenance quickly and new refineries are slowly starting up.

Japan’s crude imports were down 5.6% on the month in October, at 3.4 mbpd, relatively unchanged on the year, reports Energyintel. Imports of crude oil for direct-burning in power stations, however, jumped to 228 kbpd, up from 28 kbpd last year. Japan has shifted toward crude and fuel oil for power generation after its nuclear capacity was shut down following the Fukushima nuclear meltdown in March. Shipments from Saudi Arabia were up 13% in on the year at just over 1 mbpd, while volumes from Kuwait and Iraq were down 33% each, at 211 kbpd and 125 kb/d respectively.

Data from the port authority indicate a continuing ease in iron ore exports from Port Hedland through November, with shipments down 0.2 Mt month-on-month to a 4-month low of 19.7 Mt. However, this is still 4 Mt higher than the year-ago level, when severe floods hit in West Australia. Shipments into China and South Korea both declined from October, down to 14.7 Mt and 2.0 Mt respectively. Exports to Japan rose 0.2 Mt month-on-month to 2.4 Mt.

The latest data from the EIA shows US gasoline stocks grew 5.1 MB last week, to 215 MB, the highest since end-July. The growth came as imports increased 201 kbpd, to 820 kbpd, and demand dropped 196 kbpd from the previous week, to 8.57 mbpd. Distillate inventories rose by 2.5 MB, to 141 MB, despite a 681 kb/d recovery in consumption, to 3.92 mbpd. Crude inputs at refineries jumped 682 kbpd, to 15.25 mbpd, as overall utilisation improved, rising from 84.6%, to 87.7%. Crude stocks were up 1.3 MB, at 336.1 MB, as imports increased 375 kbpd, to 9.4 mbpd.

Russia’s seaborne crude exports are scheduled to fall to 2.67 mbpd in December, down 107 kbpd from the November loading schedule, reports EnergyIntel. Volumes from Baltic Sea ports are due to drop 239 kbpd, to 1.42 mbpd, due to maintenance work at Primorsk. There are no shipments scheduled from Gdansk, compared to 94 kbpd in November, as the quarterly schedule issued in September gave no allocations to the port. Transneft planned to stop using Gdansk after launching the Ust-Luga export terminal in November, however, exports from the port, including Kazakh volumes, totalled 297 kbpd in October-November. Meanwhile, the launch of Ust-Luga did not occur as originally planned, with the 100Kt cargo planned for November delayed. In the Black Sea, exports from Novorossiysk are set to jump by 168 kbpd, to 904 kbpd, as volumes are redirected from Gdansk. Exports from Kozmino should total 331 kbpd, up from 293 kbpd in November. The overall drop in shipments will be accompanied by a 3.5% rise of Russian exports duties in December.

The vessel queue at Newcastle continues to rise, hitting a year-to-date high of 66, with estimated vessel waiting time of 25 days, according to McCloskey. This was due to heavy rain, shceduled maintenance work and rush by shippers to complete delivery obligations by end-year. The Hunter Valley Coal Chain Coordinator forecasts the queue to ease to around 55 vessels by the end of December.