News archive January 2006

Opinion appears divided as to the amount of disruption to Richards Bay shipments caused by a three-day rail strike due to end on Wednesday. Reuters reports trade union claims that Richards Bay Coal Terminal is operating at 30% capacity. According to Platts however, a spokesperson for RBCT was quoted claiming the trains are "getting through as normal." A spokesperson for rail operator Spoornet said that the company had rearranged the railing schedule to minimise disruption.

Russia’s coal exports climbed to 65.1 Mt in 2005, marking a rise of 5.2 Mt on the previous year, according to McCloskey. Export growth was underpinned by a jump in throughput at Murmansk, where 2005 shipments totalled 11.0 Mt, up 2.2 Mt on 2004. Meanwhile, exports through the Estonian port of Tallinn rose from 2.3 Mt in 2004 to 4.1 Mt in 2005. In contrast, coal exports from Russia’s Pacific coast ports fell 0.8 Mt to 14.4 Mt.

The International Grains Council has lowered its forecast for the world coarse grain trade in 2005/06 from its last prediction in November by 1.0 Mt to 102.1 Mt. However, the new forecast is still higher than the 2004/05 estimated total of 101.6 Mt. The IGC reduced its projections for exports from the US (-1.1 Mt to 53.2 Mt) and Argentina (-0.9 Mt to 13.6 Mt), but increased its prediction for Chinese exports by 1.0 Mt to 6.0 Mt.

Poland's coal exports in 2005 reached 18.6 Mt, marking a fall of 0.1% on the 2004 total, according to McCloskey. The total was achieved as a result of a surge in exports in the 4q05; exports in the first three quarters of 2005 were down 1.5 Mt year-on-year. The clear majority of Poland's exports comprised steam coal (15 Mt), with YOY increases in exports in evidence to France (+0.7 Mt to 1.2 Mt) and the UK (+0.25 Mt to 1.6 Mt). This offset YOY declines to Denmark and Finland.

According to a report from McCloskey, another accident at Hay Point resulted in both ship loaders at the port being put out of service over the weekend. Ship loader 1 has been out of operation since an accident on December 28, and repairs are expected to be completed by early March. Ship loader 2 was damaged late last week, and indications are that repair work will take at least 3-5 days. McCloskey reports that both incidents will reduce port throughput by approximately 2 Mt. In 2005, some 33.5 Mt of coal were exported from the terminal.

India’s oil refinery throughput rose 8.8% in Dec to 272k b/d due to a low base line figure in the year-earlier period and expectations of higher demand, reports Reuters. Indian Oil Corp. (IOC), the country’s largest refiner, reported 20% growth in refinery production after its output in Dec '04 was hit by regular maintenance at its Panipat refinery and a blast at a unit of its Koyali refinery. However, lower throughput was reported from its Mathura refinery, where one unit was shut down for 3 days, and its Barauni refinery, where output declined on lower demand. Demand is forecast to grow 3-4% in '06, prompting refiners to raise production. India’s crude output, which meets 30% of domestic demand, dropped 8.1% to about 624k b/d having been hit by a fire at an offshore platform in '05, reports Reuters.

Export sales of US soyabeans have reached as much as 1.35 Mt during the past week alone, according to a market report from the Chicago Board of Trade. This was far in excess of both market expectations and last week's sales total of 448,000 tonnes. Traders anticipate that Chinese buyers may soon increase their purchases from Brazil, where harvesting has started for a crop forecast by the US Department of Agriculture to reach a record 58.5 Mt in the 2005/06 crop year.

Imports of major dry bulk cargoes into China in 2005 climbed to 404.1 Mt compared with the 2004 total of 328 Mt, according to China's Customs Statistics. The figures highlight the astonishing increase in China's dry bulk imports over the last five years, representing a massive rise of 275 Mt from the 2000 total.

All-time highs were recorded for Chinese imports of coal (26.1 Mt), alumina (7.02 Mt) and grain (32.9 Mt) as well as for iron ore (275.2 Mt).

The year ended with high levels of dry bulk imports arriving in the country. Monthly imports of coal, grain, iron ore and steel products exceeded 34 Mt in both November and December compared with 27-28 Mt during the same month in 2004. Over the course of the year, China emerged as a marginal net exporter of steel products by some 0.4 Mt in contrast with last year's net imports of 12.9 Mt.

Imports of major dry bulk cargoes into China in 2005 climbed to 404.1 Mt compared with the 2004 total of 328 Mt, according to China's Customs Statistics. The year ended with high levels of dry bulk imports arriving in the country. Monthly imports of coal, grain, iron ore and steel products exceeded 34 Mt in both November and December compared with 27-28 Mt during the same month in 2004.

Coal exports from Murmansk in 2005 totalled around 11 Mt, according to McCloskey. This represents a rise of approximately 29% on the 2004 export total of 8.5 Mt. Together with the Baltic ports, Murmansk has been at the forefront of an expansion in Russian coal exports in 2005.

US distillate imports dropped back down by 25.4% to 465k b/d last week, although levels remained 63.7% up year-on-year, the latest data from the US Department of Energy shows. Despite the fall in imports, and a 95k b/d rise in demand to 4.1m b/d, distillate stocks have risen 0.9m bbl to 134.7m bbl, 8.8% higher than the same period last year and the highest since the week ending Aug 26. Gasoline inventories jumped 2.8m bbl to 211.6m bbl, the highest since the week ending Jul 8, but were still 2.5% down on the year. Imports inched 15k b/d higher to 1m b/d, they are now 75.5% higher than the same week in '05, while demand dropped 91k b/d to 8.9mb/d. Crude stocks rose 2.7m bbl to 321.4m bbl, 10% up on year ago levels, despite a 24k b/d fall in imports to 9.8m b/d. Crude refinery inputs dropped as some refineries are undergoing maintenance, thus refineries operated at only 86.5% of capacity last week, down 3.3% from the previous week.

Brazil’s domestic oil output grew to an average 1.68m b/d in 2005, up 13% from ’04, reports Associated Press. Dec output increased to 1.75m
b/d, peaking at 1.86m b/d, with the start up of new wells in the Marlim Sul offshore field. With oil consumption of around 1.85m b/d, Brazil expects to reach self-sufficiency this year. Brazil’s domestic
oil reserves rose to an estimated 11.36 billion bbls in ’05, mainly due to the discovery of new oil fields that government-run oil company Petrobras declared commercially viable late last year. At current production rates, Petrobras states their reserves are enough to last 19.7 years, reports AP.

Japanese consumer confidence in December reached its highest level for 15 years, according to the country's cabinet office. The Financial Times adds that economic growth during 2005 was driven by domestic spending as opposed to the export growth that had fuelled the country's economic recovery since early 2002. Recently, the Tankan survey by the Bank of Japan indicated that aggressive recruitment was being planned by many companies partly to meet an anticipated growth in demand.

An explosion on a crude oil pipeline in Nigeria has forced Royal Dutch Shell to cut 100k b/d of production, reports Reuters. The explosion on the 100k b/d pipeline carrying Forcados crude oil occurred on Wednesday, at the same time as an armed attack on Shell’s offshore E.A. oilfield in which four workers were abducted, forcing the company to shut 120k b/d from that field. It was the second major attack on Shell facilities in Nigeria within 3 weeks, after militants blew up an
oil export pipeline in Dec shutting in 180k b/d and causing another disruption in supplies from the world’s eighth largest exporter.

US distillate imports rocketed 112.6% last week to 623k b/d, the 8th largest weekly average ever, and the highest since the week ending Feb 20, ’04, the latest data from the US Department of Energy shows. Imports are now 130.7% higher year-on-year causing distillate inventories to rise by 4.9m bbl to 133.8m bbl, 8.8% higher than the same period last year, despite a 19k b/d rise in demand. Gasoline stocks jumped 4.5m bbl to 208.8m bbl, the highest since the week ending Jul 22, ’05, due to a 9.4% rise in imports to 1m b/d, 71.1% higher year-on-year, and a 4.4% slump in demand. US gasoline demand for last week was 8.95m b/d, well below the Dec average of about 9.3m b/d. Crude inventories continued to fall by another 2.9m bbl to 318.7m bbl, although remained 10.3% higher on the year, due to a 188k b/d drop in imports to almost 9.9m b/d. Refinery utilisation remained
steady at 89.8%.

The president of the European Central Bank, Claude Trichet, has argued that world economic growth in 2006 may exceed the 4% rate of growth seen in 2005, according to the Financial Times. The comments have been interpreted as signs that ECB confidence in the economic performance of the eurozone is increasing. Meanwhile, the ZEW Institute released survey results which indicated that German investor confidence stood at its highest for two years. The Financial Times adds that economists expect eurozone GDP growth in the 1q06 to maintain the growth rate of the 4q05.

Global oil demand growth continued to recover in Dec reaching 1.2%, following the 0.6% rise in Nov, reports Energy Intelligence Briefing. The expansion comes after a 0.3% contraction in Oct when the first year-on-year retreat since Mar '02 was experienced due to post-hurricane oil price hikes and some Asian nations cutting fuel subsidies. Dec demand was 86.17m b/d, 1.06m b/d higher than Dec '04, with 680k b/d coming from non-OECD countries. Dec restored the trend of the past 2 years, whereby established economies account for one third of the demand growth and non-OECD nations two thirds. The Oct slump led to a slow down in 4q05 demand growth, just 0.53% higher than 4q04, pulling total oil demand growth for '05 to 1.5%. Demand in the US jumped back up to 1.5% in Dec hitting, an all-time weekly record of 22.2m b/d mid-Dec. Global demand is forecast to rise by 1.7% in '06 to 84.89m b/d. On the supply side, an 840kb/d monthly rise in global supply, to 86m b/d, kept supply within 200k b/d of demand. Annual growth in supply continued to outrun demand growth at 1.6%, reports EIB.

Royal Dutch Shell has restored oil exports from its fields in southernNigeria following the pipeline explosion on Dec 20 which had initiallycut production by 180k b/d, reports Forbes. The company has lifted the force majeure it declared as a result of the explosion at Opobo Channel, an earlier warning to crude oil importers that it would not be able to honour its supply contracts. It follows repairs to most of the facilities, which were affected by the attack, and an adjustment to internal crude oil supply arrangements. Despite a progressive increase in production and exports from Shell’s Bonny Island Terminal, the company said it was still losing some 15k b/d, reports Forbes.
Shell is the biggest player in Nigeria’s oil field, accounting for almost half of the West African country’s daily output of 2.5m bbl.

In the weekly US oil stats report, crude stocks were reported as slightly lower but remain 10% higher y-o-y. US domestic crude production remains 11% down on the same period last year, averaging 4.8mb/d last week. Crude imports, meanwhile, are about 3% lower at about 10mb/d.
On the US product markets, gasoline and gasoil inventories built. US distillate stocks jumped by 2.1m bbl last week to 128.9m bbl, 6.4% higher year-on-year, despite imports dropping by 40k b/d, or 12%, to 293k b/d. At an average of 0.9mb/d, gasoline imports are about 10% up y-o-y as domestic production is still limited by the refinery outages following September's hurricane damage. The US Department of Energy reports that US gasoline demand is about 1% higher than this time last year, averaging 9.3mb/d. American refinery utilisation rose 1% to 89.9%.

Newcastle port operator, Port Waratah Coal Services, forecasts that coal shipments from the port will reach 88 Mt in the 2006 calendar year, Bloomberg reports. This would represent a year-on-year rise of almost 10%. Earlier this year, PWCS announced plans to lift capacity to 102 Mtpa from the 4q07. McCloskey adds that the PWCS performance target of 88.5 Mt will only be met if there were no supply chain difficulties.

Richards Bay exported 69.2 Mt of coal in 2005, according to McCloskey. The annual total was boosted by comparatively high shipments in December of 7.2 Mt and marks a considerable increase on the 2004 export total of 64.9 Mt. At the beginning of November official approval was secured for the Phase 5 expansion programme, which will see export capacity at Richards Bay Coal Terminal scheduled to reach 92 Mtpa by 2008.

Signs are emerging that purchases of US soyabeans are ahead of expectations this week, according to the Chicago Board of Trade. Weekly export sales reached 906,200 tonnes, which significantly exceeded the trade expectations of between 550,000 -- 750,000 tonnes. Soyameal sales, on the other hand, were within the limits of trade expectations at 81,800 tonnes. Cumulative sales are still below the five-year average of 51.4%, having reached 45.9% of the US Department of Agriculture forecast for the current crop year.

Government figures from Baghdad show that Iraq's oil exports last month hit their lowest level since the war started. Iraq exported 1.1mb/d in December, less than any month since exports resumed in mid-2003 and about half that prior to the war. The slowdown in exports was blamed on sabotage and a lack of investment due to the volatile political and security situation.

Newcastle exported 80.9 Mt of coal in 2005 despite a "subdued" end of the year, McCloskey reports, a 4.5% increase from the 77.5 Mt shipped in 2004. The vessel queue at Newcastle has also increased to 26, compared with the 20 vessels waiting to berth two weeks ago. The estimated average waiting time for this week stands at 7.7 days, which contrasts with the 6.1 days recorded two weeks ago.