News archive May 2005

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 Korea’s 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, Korea’s crude imports averaged 2.31mb/d, up 4.7% on a year ago.

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.

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.

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%.

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 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.

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 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 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".

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 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 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.

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.

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).

Japan's GDP grew at the unexpectedly high rate of 5.3% in the 1q05, the highest for a year, the Financial Times reports. A surge in household spending and capital spending by businesses is thought to have contributed to the fast growth. Nevertheless, some analysts are concerned that the positive news has not been accompanied by a rise in household earnings.

Chinese customs website reports Chinese iron ore imports in the Jan-April 2005 period at 87.49 Mt. This implies that China imported a record 24.27 Mt of iron ore in April - up 0.05 Mt on the previous month and up 6.65 Mt year-on-year. The April import total appears to indicate stockbuilding ahead of the introduction of a new import licensing system from May 1.

Soyabean imports during Jan-April are reported to total 7.31 Mt, indicating April imports of 1.90 Mt (up 54% YOY), while Jan-April coal imports reached 7.37 Mt, suggesting April imports of 1.96 Mt (up 28% YOY).

Meanwhile, China's April crude oil imports rose 22.5% YOY to 12.25 Mt, equivalent to 3 mb/d, a new record high level of imports. Between January and April, China imported 41.9 Mt of crude, a 4.4% rise on a year ago. Fuel oil imports in April were reported to have dropped 42.6% to 2.5 Mt on a year ago.

Chinese customs website reports Chinese iron ore imports in the Jan-April 2005 period at 87.49 Mt. This implies that China imported a record 24.27 Mt of iron ore in April - up 0.05 Mt on the previous month and up 6.65 Mt year-on-year. The April import total appears to indicate stockbuilding ahead of the introduction of a new import licensing system from May 1.

Soyabean imports during Jan-April are reported to total 7.31 Mt, indicating April imports of 1.90 Mt (up 54% YOY), while Jan-April coal imports reached 7.37 Mt, suggesting April imports of 1.96 Mt (up 28% YOY).

China’s April crude oil imports rose 22.5% year-on-year to 12.25m metric tonnes, equivalent to 3mb/d, a new record high level of imports, according to data released by China’s General Administration of Customs. Between January and April, China imported 41.9m mt of crude, a 4.4% rise on a year ago. Fuel oil imports in April were
reported to have dropped 42.6% to 2.5m mt on a year ago.

US retail sales in April were up 1.4% on the previous month, exceeding many analysts' expectations, the Financial Times reports. US employment data for April also bode well for the country's economy. Some 274,000 new jobs were created compared with 146,000 in March. The positive news follows concerns earlier this month that inflationary pressures were rising in the US.

Eurozone economic growth in the 1q05 was 0.5%, growing at a faster rate than in the 4q04, the BBC reports. However, the European Central Bank has cut its GDP growth forecasts for the eurozone in 2005 and 2006. The ECB now expects the economies of the 12 eurozone countries to record growth of 1.6% this year instead of 1.8%. In 2006, the ECB predicts growth of 0.2%-0.6% as opposed to its earlier forecast of 0.3%-0.7%. This downgrading of eurozone growth prospects reflects the particular weakness of the German and Italian economies.

Crude oil prices fell below $50/bbl Thursday in the wake of rising US oil stocks and indications of slower global demand growth, particularly in China and the US. Data released on Wednesday by the International Energy Agency also showed that oil supplies had risen to around 53 days of demand in March compared with 52 in February. Oil prices were also weighed down by a surge in the US dollar to a 6-month high against the Euro after the US trade deficit narrowed and US retail sales rose their most in 7 months.

The latest figures released by Dalrymple Bay port operator Prime Infrastructure indicate that the vessel queue outside the port has fallen to 28. According to Platts, the vessel queue at the port had reached 54 in March. The average waiting time for a berth is now 18-24 days. Meanwhile, congestion at Newcastle has virtually cleared. McCloskey reports that the vessel queue is currently just three with estimated waiting time for a berth now under a day.

The International Energy Agency Wednesday, indicated global oil demand growth was weaker than anticipated in Q105, revising it down 290kb/d
to 1.83mb/d due to slower growth in China and the US. Chinese oil demand grew 4.5% in Q105 but was down on the 19% growth seen in Q104. The IEA is maintaining its world demand growth forecast of 1.78 mb/d (2.2%) to 84.3 mb/d for 2005, as although it is lowering European oil
demand it has raised OECD Pacific demand. World oil output rose by 435 kb/d to 84.5 mb/d in April, primarily due to higher OPEC supply, according to IEA data.

US crude oil stocks hit their highest level since July 1999 last week, rising 2.7m bbl to 329.7m bbl, data from the US Department of Energy showed. Crude imports were down 267kb/d at 10mb/d. Gasoline
stocks climbed 0.2m bbl at 213.7m bbl with gasoline imports up 51kb/d at 1.1mb/d, the fifth consecutive week that imports have averaged that
level and the longest stretch ever, according to the DOE. Refinery runs were up slightly at 91.8% compared with 91.7% a week ago.