News archive October 2005

Russian seaborne coal exports totalled 5.3 Mt in September compared with 5.9 Mt in August, according to McCloskey. Most of the decline has been attributed to a fall in shipments from Murmansk and Baltic ports (down from 3.5 Mt to 3.1 Mt). The decline is significant given that September and October usually see high levels of exports to North West Europe. A drop in imports from Russia into Europe could boost tonne-mile demand as European buyers may need to source from further afield.

China’s refinery runs hit the highest level on record in September with crude runs rising by 10% year-on-year to reach 6.01m b/d, according to the National Bureau of Statistics, reports Petroleum
Intelligence Weekly. Refiners were under pressure to boost supply after fuel shortages in Aug and are now stocking up on crude ahead of the winter and lunar New Year period in Jan ’06.

Japan’s crude oil imports fell 3% in Sept year-on-year to 125.49m bbls after a 6.8% expansion in Aug, according to the latest data from the Natural Resources and Energy Agency, reports Kyodo News. Imports from the Middle East accounted for 90.5% of the total, with the United Arab Emirates becoming Japan’s biggest oil supplier for Sept having increased its exports to Japan by 8.3% to 37.49m bbls, Saudi Arabia was next in line supplying 36.36m bbls.

The International Grains Council has raised its forecast for Iraqi wheat imports in 2005/06 (July-June), but has lowered its forecast for Chinese import demand. Iraq's wheat imports are now expected to reach 3.6 Mt (+0.7 Mt year-on-year), some 0.4 Mt higher than last month's 05/06 forecast. However, a good crop in China has lowered the IGC's projection for 05/06 imports into the country to 3.0 Mt compared with last month's forecast of 4.0 Mt and last year's import total of 6.8 Mt. The IGC now expects the world wheat trade to total 109.0 Mt in 05/06, down 0.2 Mt on last month's forecast.

According to market reports from the Chicago Board of Trade, Chinese purchases of US soyabeans have been below expectations this crop year with 2.71 Mt of US soyabeans purchased compared with 4.04 Mt last year. Uncertainty regarding short-term demand has emerged as a result of reported incidences of bird flu in Europe. Meanwhile, world ending stocks in 2005/06 are expected to hit a record high of 47.4 Mt, as opposed to 43 Mt in 2004/05 and 35.2 Mt in 2003/04, suggesting an apparent abundance of supply.

The restart of Exxonmobil Corp’s 183k b/d Chalmette refinery is imminent after being shut down since late August due to damage caused by Hurricane Katrina according to company officials, reports Dow Jones. If successfully restarted, the plant will be the only one of the three hard-hit refineries in SE Louisiana to begin production before Dec. The company’s 348.5k b/d refinery in Beaumont, Texas, closed ahead of Hurricane Rita in late Sept has restarted and is expected to be back in full operation by the end of Oct. ConocoPhillips said it expects to return its Alliance refinery in Belle Chase to partial service in Dec, while Murphy Oil Corp is aiming to have it’s Meraux refinery restarted in the 2q06.

US crude oil stocks grew by another 4.4m bbl last week to 316.4m bbl, yet again far exceeding market expectations, mostly due to an 8.1% rise in
imports bringing levels to 10m b/d, the latest data from the US Department of Energy showed. Distillate inventory levels also fell more than expected, dropping by 1.6m bbl to 121.1m bbl despite imports rising by a massive 65.3% to 514k b/d, the highest weekly average since the week ending 21 Jan '05. Gasoline imports fell by 514k b/d to 1m b/d following record high levels for the previous three weeks, while stocks inched up by 0.2m bbl to 195.9m bbl. Demand rose slightly, up 20k b/d from the previous week, although continued to run 2% below last year's levels, reports CNN. Refineries operated at 80.7% of capacity, up from 79.1% last week, and although still below pre-hurricane levels, the rate was well above the low of 69.8% seen in the week ending 30 Sep '05.

Australian coal exports climbed in the first seven months of this year to 137.7 Mt (+9.3 Mt year-on-year), according to trade data quoted in the Tex Report. Much of the export growth is the result of increased coking coal shipments, which rose 7.3 Mt YOY to 73.0 Mt in the January-July period. The growth was driven primarily by import demand in India (+3.1 Mt to 10.6 Mt) and Japan (+2.1 Mt to 26.2 Mt). Coking coal exports to Europe over the same period also rose by 0.9 Mt to 15.1 Mt.

The US Department of Agriculture has said that the threat posed to this year's US soyabean crop by the harmful Asian rust fungus has "diminished", the American Soybean Association reports. Following the discovery of the Asian rust fungus in southern states of the US in the 4q04, fears spread that US soyabean farmers would experience reduced yields in 2005. According to market reports from the Chicago Board of Trade, the soyameal trade has been affected psychologically by reports of bird flu in Europe. Despite these concerns US weekly export sales were 888,700 tonnes -- at the higher end of trade expectations, with 477,500 tonnes bound for China.

China's aluminium production increased for a seventh successive month in September, rising to 689,000 tonnes, according to the International Aluminium Institute. This represents a year-on-year increase of 22%. However, production of the metal in the rest of the world showed a more moderate year-on-year increase of 5% to 1.94 Mt, emphasising the continued importance of China to the seaborne bauxite and alumina trades.

China's GDP has grown 9.4% in the 3q05, according to the country's National Bureau of Statistics. Dow Jones Newswires reports that the 3q05 growth was slightly above market expectations. This means that economic growth in the first three quarters of 2005 also rose by 9.4%, with the Financial Times noting the role of net exports as "a substantial contributor to GDP growth". The FT adds that Chinese fixed asset investment rose by 26.1% in the first three quarters, spurred by major investment in the country's coal, oil and railway sectors.

The latest data from the International Iron and Steel Institute show that China produced 30.4 Mt of steel in September (+22% year-on-year), just short of August's record total of 30.5 Mt. Other traditional steel-making centres witnessed YOY output falls last month. US September output totalled 7.8 Mt (-7%), production in the EU-25 was 15.0 Mt (-9%), while FSU output reached 8.8 Mt (-7%). The IISI data show that world steel production rose 3.5% YOY in September to 92.1 Mt with the total for the first nine months of the year hitting 818.9 Mt compared with 770.2 Mt in the first nine months of 2004.

According to China's Customs Statistics, China imported 23.0 Mt of iron ore in September, showing only a very minor decline from August. In January-September, the Chinese steel industry imported 198.9 Mt, 48.0 Mt more than in the same period last year.

China's GDP grew 9.4% in the 3q05, according to the country's National Bureau of Statistics. Dow Jones Newswires reports that the 3q05 growth was slightly above market expectations. This means that economic growth in the first three quarters of 2005 also rose by 9.4%, with the Financial Times noting the role of net exports as "a substantial contributor to GDP growth". The FT adds that Chinese fixed asset investment rose by 26.1% in the first three quarters, spurred by major investment in the country's coal, oil and railway sectors.

The latest data from the International Iron and Steel Institute show that China produced 30.4 Mt of steel in September (+22% year-on-year), just short of August's record total of 30.5 Mt. Other traditional steel-making centres witnessed YOY output falls last month. US September output totalled 7.8 Mt (-7%), production in the EU-25 was 15.0 Mt (-9%), while FSU output reached 8.8 Mt (-7%). The IISI data show that world steel production rose 3.5% YOY in September to 92.1 Mt with the total for the first nine months of the year hitting 818.9 Mt compared with 770.2 Mt in the first nine months of 2004.

According to China's Customs Statistics, China imported 23.0 Mt of iron ore in September, showing only a very minor decline from August. In January-September, the Chinese steel industry imported 198.9 Mt, 48.0 Mt more than in the same period last year.

Gasoline imports set yet another record high, the third in as many weeks, rising another 110k b/d to 1.5m b/d, helping to increase stocks by 2.9m bbl to 195.7m bbl, the latest data from the US department of Energy showed. Gasoline demand began to rise again, back up at 9m b/d vs 8.8m b/d last week. Crude oil stocks grew by a substantial 5.6m bbl last week to 312m bbl, far exceeding market expectations, with the greatest increase being seen in the US Gulf. This growth was mostly due to an overall rise in imports of 6.8%, with levels reaching 9.2m b/d, 875k b/d of this increase was sent to the USG. Distillate inventories fell another 1.9m bbl to 122.7m bbl despite output rising by an additional 0.16m to 3.4m b/d. Refiners continued to recover from hurricane setbacks, with the processing rate rising to 79.1%, up from 74.9% last week.

The vessel queue at Newcastle has fallen to 20, McCloskey reports. This compares with the recent high of 33 recorded at the beginning of October. The reduction in the number of vessels queuing outside the port has reduced average vessel waiting times to 5.6 days from 8.4 days last week. Data from the port operator Port Waratah Coal Services indicate that weekly throughput is currently 1.75 Mt - above the port's rated capacity.

OPEC has cut its forecast for world oil demand growth by 0.2m b/d to 1.2m b/d, giving a yearly average of 83.3m b/d for 2005, according to OPEC’s monthly report. This represents a 1.4% year-on-year growth, down from the previous estimate of 1.7%. For 2006, growth is expected
to recover to 1.5m b/d, or 1.8%, for a yearly average of 84.7m b/d. OPEC said its 11 members produced an average 30.3m b/d during September, up from 30.2m b/d in August. OPEC also revised down its forecast for production by non-OPEC producers in ’05 by 0.1m b/d to an average 50.3m b/d, reports AFP.

Taiwan's coal imports in the January-September period declined by 1.0 Mt year-on-year to 46.0 Mt. The year-to-date total includes an increase from coal from the country's major supplier Australia (up 3.9 Mt to 17.1 Mt. At the same time, imports from China fell 2.3 Mt YOY to 21.5 Mt, while imports from Indonesia declined 1.1 Mt to 13.8 Mt. Last year, Taiwan imported a record 61.0 Mt of coal.

North Sea crude output fell to under 4.7m b/d in the 3q05 resulting in the lowest quarterly rate since production from the province started to decline in 2000, reports Petroleum Argus. North Sea output has fallen by the equivalent of more than two 600k bbl cargoes every three days in the first nine months of the year, compared with a year ago. A
relatively heavy summer maintenance programme and technical difficulties at some fields helped to reduce output by over 200k b/d, or 4.5%, in 3q05 compared with 3q04, said Petroleum Argus.

The US Department of Agriculture has made only minor alterations to its forecast for soya exports in the 2005/06 trade year (Oct-Sep) in its latest trade report. China is now expected to import 27.5 Mt of soyabeans compared with last month's projection of 27 Mt and the 2004/05 estimate of 25.7 Mt. The USDA has also raised its forecast for EU-25 soya imports (of both soyabean and meal) in 2005/06 to 39.0 Mt, as opposed to the last forecast of 38.7 Mt. In turn, the USDA now expects Brazil to export 38.1 Mt of soya (+0.4 Mt from last month's forecast), Argentina to supply 30.4 Mt (+0.2 Mt) and the US to export 36.3 Mt (+0.1 Mt).

According to Barlow Jonker's South African Coal Report, total South African coal exports in January-September reached 50.9 Mt - up 2% on the same period last year. This was achieved despite two major derailments on the track to Richards Bay, which led to a loss of 1.76 Mt of exportable coal. Since then, railed deliveries to Richards Bay have improved and stocks at the port currently stand at 4.4 Mt, almost 1 Mt higher than last month.

Gasoline imports were at a new record high, rising another 8k b/d to 1.43m b/d, despite stocks being at a 23-month low at 192.8m bbl, a drop of 2.7m bbl from last month, the latest data from the US
Department of Energy showed. Gasoline demand also dropped, reaching its lowest level since January at 8.8m b/d. Crude oil stocks grew by
1m bbl last week to 306.4m bbl, going against market expectations, and remained at about 11% higher year-on-year, reports Associated Press. This was mostly due to a 6.2% rise in imports, with levels back up at 8.6m b/d. Distillate inventories fell for the third week running to 124.6m bbl, a fall of 3.4m bbl, even though output rose by 0.2m to
3.2m b/d. Production from the US Gulf alone increased by 32%. Refiners began to recover from hurricane impacts, shown in the increased processing rate of 74.9% vs 69.8% last week.

Russia's Deputy Agriculture Minister, Alexander Kozlov, has announced that the country plans to export at least 13 Mtpa of wheat by 2010, according to the Russian media sources. The International Grains Council estimates that Russia exported 7.9 Mt of wheat in the 2004/05 trade year (July-June) and predicts exports of 10.0 Mt in 2005/06. Mr Kozlov reportedly argued that export growth had been constrained by such factors as high rail tariffs and delayed compensation payments to exporters for indirect taxes.

Meanwhile, total petroleum demand in the US in 2005 is expected to average 20.5m b/d, 0.9% less than in 2004, according to the latest report from the US Department of Energy. The level is 290k b/d less than that predicted in the previous report. This lower forecast is due to rapidly rising prices constraining motor gasoline demand growth,
weather factors depressing heating oil consumption and relative price factors lowering residual fuel oil demand, the US DOE said. Hurricane-related disruptions combined with increased prices is likely
to result in lower demand for petroleum products, the US DOE said. For 2006, consumption is expected to rise 2.2% from the previous year at
21m b/d.

China's crude oil imports rose to 2.7m b/d in September, a 28% increase from last month, resulting in a year-on-year rise of 4.7%, according to the latest Chinese customs data. Product imports also rose 21% above last month's levels, at an average of 675k b/d, giving a year-on-year rise of 10.8%.

China imported 1.87 Mt of soyabeans in September, according to the latest trade data. This brings the year-to-date total to 19.5 Mt - some 40% more than during the same period last year. Last month, the US Department of Agriculture forecast Chinese soyabean imports in the 2005/06 trade year (Oct-Sep) would rise by 2 Mt to 27 Mt.