News archive October 2004

US steel imports rose 87% year-on-year in September to 3.16 Mt, bringing the January-September total to 22.85 Mt - a YOY rise of 44%, according to trade data. The increase in US steel imports coincides with a decline in Chinese steel imports. In September, China imported 1.87 Mt of steel products, down from 4.40 Mt (a monthly record) in the same month last year. Chinese imports during the January-September period stood at 27.48 Mt compared with 32.31 Mt in the same period in 2003. The increase in US steel imports has offset the decrease in Chinese imports, so supporting international steel prices.

Despite rising violence, Iraq increased its crude oil output in October and by the end of the month will have exported an average of 2.1mb/d. The leading destination for Iraqi crude is now Asia, whereas until now it was the US. Of the cargoes loaded in October, 860,000 bbls were destined for Asia with the US taking 670,000 bbls and Europe taking 550,000 bbls.
The increased exports have been supported by larger volumes of Kirkuk crude, with an average of 300kb/d being pumped via pipeline to Ceyhan.

China has raised its benchmark interest rate for the first time in nine years. Bloomberg reports that the rise (from 5.31% to 5.58%) takes effect from tomorrow (29 October). The step to slow investment follows recent economic data showing year-on-year growth of fixed asset investment in the 3q04 running at 27.7%, which, while down on the rapid 1q04 growth of 43%, is still high. In the first nine months of this year, Chinese GDP grew 9.1% YOY.

China's Customs Statistics show that iron ore imports were sustained at very high levels in September, reaching 18.72 Mt. This marks a 2.3 Mt rise on August as well as a year-on-year increase of some 4.8 Mt and is the second highest monthly import total on record. Furthermore, data on steel product imports and exports in September indicate a shift in China's status to net exporter of steel products. During the month, China imported 1.87 Mt and exported 1.95 Mt.

According to the weekly US Energy Department report, U.S. crude stocks rose more than expected with supplies rising 3.9 million barrels to reach a total of 283.4 million in the week ending Oct. 22. Distillate stocks fell by more than expected, by 2.4mb to 116.6mb a fall of 2.1%, compared with this time last year, leaving little time to build winter supplies. Brent futures touched $51.94, earlier today, their highest price since the contract began trading in 1988.

SSY is pleased to announce that they have taken over Stratus Shipping, LLC, of Stamford, Connecticut, with effect from 1st January 2005.

The Stratus team of T. J. Rosseland, Stephen Mitchell and Nicholas Waaler will be relocated into SSY's existing brokerage operation in Stamford, Connecticut. All Stratus’ business and future business will come under the SSY umbrella.

Stratus Shipping is a specialist Chemical Chartering operation, and SSY Senior Partner John Welham said, "We are extremely happy to welcome such a quality team into our group. They will add a great deal of in-house expertise in this important and growing sector. The synergies between us are very good and we are sure that we can expand the business and make it even more successful."

T.J.Rosseland of Stratus said, "We are delighted to be aligning ourselves with SSY. We have been interested in finding the right fit for Stratus Shipping and can say with certainty that this is it!"

Economic growth in the 3q04 has slowed in the UK, growing 0.4% in the 3q04, marking the slowest pace of economic growth since the 1q03. This follows growth of 0.7% in the 1q04 and 0.9% in the 2q04. Meanwhile, the German government forecast GDP growth of some 1.8% this year, edging down to 1.7% in 2005, in contrast to the Bundesbank's expectation of 1.5% this year. The Financial Times reports that the German Ifo institute's business climate index edged up slightly in October, however, the Ifo president warned that the country's economic recovery lacked the "dynamics of previous upswings."

World steel production continued its impressive growth in September, reaching 86.6 Mt, according to the latest International Iron & Steel Institute data. China produced a monthly record of 23.8 Mt in September. The year-to-date totals reveal major year-on-year increases among several major steel producers. China produced 194.2 Mt (up 21.6%), the US 73.4 Mt (up 7.1%) FSU states 83.8 Mt (up 5.8%) and EU-25 output reached 144.5 Mt (up 5.5%).

China's GDP growth grew 9.1% YOY in the 3q04, down slightly on the rapid growth of the 1q04 (9.8%) and the 2q04 (9.6%). The Financial Times reports that fixed asset investment growth in the 3q04 was 27.7%, down on the rapid 1q04 growth of 43%, which partly prompted the government's efforts to prevent overheating in the Chinese economy this year. Industrial production expanded at a fast pace - in the January to September period, it rose 17% over the same period last year.

A possible strike by oil workers in Norway in early November, combined with sabotage attacks on oil pipelines today in Iraq have combined to push crude oil prices to new record highs today.
The strike threatens to bring Norwegian crude production of about 3 mb/d, to a halt. Fears of a cold Northern Hemisphere winter have also added to the pressure on crude and heating oil prices, at a time when lower than normal products stocks are being reported in Western Europe Japan and the US.

A raft of new expansion plans has been outlined by several major iron ore producers in Australia. BHP Billiton today announced that its Rapid Growth Project 2 would take capacity from its end-2004 planned capacity of 110 Mtpa to 118 Mtpa in the 2h06. Its annualised output total for 2004 is currently running at 90 Mtpa, according to Metal Bulletin.

Rio Tinto subsidiary Hamersley Iron produced a record 20.9 Mt of iron ore in the 3q04, Metal Bulletin reports. Hamersley is planning to expand its capacity to 116 Mtpa in 2005. Meanwhile, Portman Ltd is aiming to boost capacity at its Koolyanobbing mines from 5 Mtpa to 8 Mtpa by end-2005.

Wuhan Iron & Steel Group have teamed up with another Chinese steel manufacturer to sign a memorandum of understanding with Austeel's chairman to take 10 Mtpa of iron ore concentrate and pellets for 25 years in what reportedly would be the largest Australian iron ore contract ever.

China's GDP growth grew 9.1% YOY in the 3q04, down slightly on the rapid growth of the 1q04 (9.8%) and the 2q04 (9.6%). The Financial Times reports that fixed asset investment growth in the 3q04 was 27.7%, down on the rapid 1q04 growth of 43%, which partly prompted the government's efforts to prevent overheating in the Chinese economy this year. Industrial production expanded at a fast pace - in the January to September period, it rose 17% over the same period last year.

The Chicago Board of Trade soyabean price for November delivery rose by 0.9% to 532.5 cents/bushel yesterday, Bloomberg reports, as a result of growing expectations that China is to boost purchases of US soyabeans. One week ago, the US Department of Agriculture raised its forecast for US production in 2004/05 (Oct-Sep year) to a massive 84.6 Mt (compared with an estimated 66.8 Mt in 2003/04). Yesterday, the US under-secretary of state for economic affairs said after a meeting with the Chinese Trade Minister that China may boost imports of soyabeans and corn as China's authorities encourage farmers to produce other crops.

According to shipping sources, crude oil exports from Basrah reached 1.92mb/d yesterday, making up for some of the disruption to exports from the northern oilfields. The Kirkuk/Ceyhan pipeline suffered a sabotage attack earlier in the week, reducing flows from 450kb/d to 150kb/d, but is expected to be back in operation by tomorrow, with two loadings of 1mb each scheduled for 28th and 29th October.

Japanese utilities raised their consumption of steam coal in September, according to data from the Federation of Electric Power Companies (FEPC). September coal consumption reached 4.39 Mt - up 4.7% on the same month last year. McCloskey reports that the growth was primarily due to increased demand for steam coal at the utilities of Kansai Electric (affected by shutdowns of nuclear plants for safety checks in the aftermath of the fatal accident at its Mihama plant in August) and Tokyo-based Tepco.

According to the latest weekly figures from the US Department of Energy, distillate stock fell by 1.9 million barrels last week. The fall of 1.6% was nearly double analysts' expectations, and with peak seasonal demand for heating oil imminent, fears of winter shortages of heating oil are being exacerbated. Rising demand for product imports to replace low stocks are likely to bring upward pressure on clean MR tanker rates in the Atlantic.

World steel production continued its impressive growth in September, reaching 86.6 Mt, according to the latest International Iron & Steel Institute data. China produced a monthly record of 23.8 Mt in September. The year-to-date totals reveal major year-on-year increases among several major steel producers. China produced 194.2 Mt (up 21.6%), the US 73.4 Mt (up 7.1%) FSU states 83.8 Mt (up 5.8%) and EU-25 output reached 144.5 Mt (up 5.5%).

Asian refinery demand for light sweet crude is expected to increase on the back of rising demand for products, particularly in China and India. The percentage of West African crude throughputs in Asian refineries has risen to 7% this year, up from less than 2% five years ago. According to analysts, West African crude could account for as much as 10% of throughputs in Asian refineries by 2010.
Increasing Asian demand for light sweet crude will impact directly on demand for VLCCs and Suezmaxes to load from West Africa.

Coal exports from Richards Bay totalled 5.6 Mt in September, marking a decline of 0.3 Mt from August's throughput total, McCloskey reports. Total exports for 2004 are now expected to fall just below 66 Mt, comparing unfavourably with last year's throughput of 68.3 Mt. According to the South African Coal Report, final approval from the board of rail operator Transnet for the port's Phase V expansion project has still to be confirmed, preventing work on the rail infrastructure from starting.

According to the State Oil Market Organisation of Iraq (SOMO), improvements in internal security over the last 2 months have brought greater stability to oil production and exports. Crude oil exports are intended to increase from the 1.72mb/d achieved in September, to 1.8mb/d in October and to 1.9mb/d in November. The intention is also to increase exports from Ceyhan in the Mediterranean, to an average of 200kb/d in October, increasing to 300kb/d in November. Iraq is also aiming to increase exports of fuel oil, currently around 15000 tonnes/day to 20,000 tonnes/day in the near future.

US retail sales in September jumped year-on-year by 7.7%, the BBC reports, with car sales experiencing the highest increase for three years. The buoyant retail data overshadowed the news that September industrial production registered very slight growth of 0.1%. The news follows months of mixed data on the state of the US economy.

According to the latest figures released by the Petroleum Authority of Japan, stocks of kerosene at the end of last week were 26.4 million barrels, 18% lower than a year ago, and close to the historic low of 25.2 million barrels, set in 2002. Last week Japanese refineries were operating at 77.5% of capacity, 2% less than in the previous week. As seasonal demand for products grows, Japanese demand for product imports may increase to replace the shortfall from refinery production, causing upward pressure in the short term on freight rates for clean tonnage from the MEG and SE Asia.

The US Department of Agriculture has raised its US soyabean production forecast for 2004/05 (Oct-Sep) from 77.2 Mt last month to 84.6 Mt this month. Last season, by contrast, the US soyabean crop amounted to 66.8 Mt. The USDA has not yet lifted its US export forecast for 04/05 by a similar quantity, however. Soya exports (both bean & meal) are forecast at 32.8 Mt - just 1.1 Mt more than last month's forecast and 4.8 Mt more than 03/04.

Instead, the Department has boosted its 04/05 ending stocks forecast (from last month's 5.2 Mt to 11.0 Mt). This may be altered by an increase in Chinese demand in 04/05. Currently, the USDA expects China to import 22.5 Mt in 04/05 (unchanged from last month's forecast), compared with 16.9 Mt last year. There are clearly, however, sufficient supplies to support an even bigger increase in imports.

The US Department of Agriculture has raised its US soyabean production forecast for 2004/05 (Oct-Sep) from 77.2 Mt last month to 84.6 Mt this month. Last season, by contrast, the US soyabean crop amounted to 66.8 Mt. The USDA has not yet lifted its US export forecast for 04/05 by a similar quantity, however. Soya exports (both bean & meal) are forecast at 32.8 Mt - just 1.1 Mt more than last month’s forecast and 4.8 Mt more than 03/04.

Instead, the Department has boosted its 04/05 ending stocks forecast (from last month’s 5.2 Mt to 11.0 Mt). This may be altered by an increase in Chinese demand in 04/05. Currently, the USDA expects China to import 22.5 Mt in 04/05 (unchanged from last month’s forecast), compared with 16.9 Mt last year. There are clearly, however, sufficient supplies to support an even bigger increase in imports.

According to the latest US Department of Energy weekly statistics, distillate stocks fell last week by 2.5mb, to 120.9mb, their lowest level since July. Heating oil stocks also declined, falling 1.2mb to reach 50mb, a drop of 2.3%. With around 27% of US Gulf oil production still shut in after Hurricane Ivan, fears of winter fuel shortages are keeping upward pressure on oil prices.

Concern about weakening economic performance at the heart of the eurozone grew following the release of data on France and Germany, the Financial Times reports. A ZEW institute survey reported German investor confidence at a 16-month low reportedly due to high oil prices and new data, which indicated poor export growth. In France, industrial production in August fell unexpectedly by 1.9% on the previous month.