News archive October 2006

According to McCloskey, the vessel queue at Newcastle has fallen to 28 this week compared with 32 a week ago. This has taken the estimated average waiting time for vessels to 11.6 days. Annualised port throughput now stands just over 80 Mt once more, with year-to-date exports of 66.25 Mt.

Japan imported 4.09m b/d of crude in September, down 2% year-on-year and 2.3% lower than August, according to preliminary data from the Ministry of Economy, Trade and Industry, reports Platt's. Imports from the Middle East accounted for 90.3% of Japan's total crude imports during September, 0.2% down on the year. Saudi Arabia remained the largest exporter to Japan, accounting for 29.5% of the country's total crude imports in September, but were 0.3% down on the year at 1.2m b/d. The United Arab Emirates provided 27.7% of the total, while levels from Iran rose 17.6% on the month to take their total contribution to 11.8%. Oman also saw its share of Japan's imports rise 184.4% since August to 94k b/d.

Japanese industrial production slowed 0.7% in September month-on-month due to a drop in exports, although levels remained 5.1% higher on the year, reports the BBC. The slowdown has been attributed to weaker demand for cars, auto parts and machines to produce semiconductors. The fall follows a 1.8% rise in output in August. The Ministry of Economy, Trade and Industry now expect output to fall 0.2% in October but then rise 0.5% in November. However, despite healthy economic conditions, oil demand growth in Japan is slowing, largely due to a switch to alternative energy sources, such as LPG.

Indonesia, OPEC's second-smallest member in terms of output, will not cut its oil production despite the group's decision to reduce supplies, reports Reuters. Indonesia should cut 39k b/d of production after the OPEC decision. Indonesian crude oil output rose to 862.9k b/d in September from 860.5 b/d in August, helped by steady production at several wells. Levels had fallen in August, extending successive drops to the lowest level in over 3 decades.

China is to impose an export tax on pig iron, steel billet and semi-finished steel products of 10%. The move will take effect from November 1, Metal Bulletin reports, with coking coal and coke exports taxed at 5%. The Ministry of Finance also announced that import taxes on steel scrap imports (presently 2%) were to be abolished, while import taxes on alumina and export taxes for a range of ferro-alloys, base and minor metals are to be added.

China's steel exports have continued to rise this year, reaching 34.7 Mt in the first nine months. This marks an increase of 12.9 Mt on the same period last year, with 3q06 exports of 14.5 Mt, a quarterly record. The US steel consultancy, World Steel Dynamics, comments that the export tax indicates that the China's government wishes to reduce the country's trade surplus, thereby diminishing the chances of anti-dumping measures from China's trade partners.

The International Grains Council has revised down its world wheat trade forecast for 2006/07 (July-June) in response the drought-hit Australian wheat crop. The IGC now expects Australian wheat exports of 13.5 Mt compared with its September projection of 17.0 Mt and the June forecast of 19.0 Mt. As a result, the IGC has lifted export projections for a number of producer countries by between 0.1 and 0.4 Mt individually. These include Argentina (+0.2 Mt to 8.7 Mt), Canada (+0.3 Mt to 20.0 Mt), Kazakhstan (+0.4 Mt to 5.1 Mt), Russia (+0.1 Mt to 7.9 Mt) and the US (+0.2 Mt to 26.2 Mt). However, the new IGC world trade projection for 2006/07 is now 109.6 Mt, as opposed to last month's forecast of 112.0 Mt and the 2005/06 estimate of 107.7 Mt. The IGC revision follows a downgraded projection for the Australian wheat crop by the Australian Wheat Board from 12-15 Mt to 9-11 Mt.

Top world oil exporter Saudi Arabia has said it was taking measures to protect its oil and economic installations from a terrorist threat, reports Reuters. Western naval forces in the Gulf have been deployed to counter a possible seaborne threat to its Ras Tanura oil terminal. Ras Tanura, just north of the Saudi oil capital of Dhahran, is the world’s largest offshore oil loading facility with a capacity of 6m b/d, reports AP.

US imports of steel in September climbed to 3.36 Mt, according to American Iron and Steel Institute data, remaining above 3 Mt for the ninth successive month. This takes the year-to-date total to 30.7 Mt and means that it is increasingly likely that the annual total will exceed 40 Mt for first time ever in 2006. The latest data shows that there is no real sign as yet of slowing import demand in the US.

Nigerian villagers who took over 4 oil pumping stations in the country were set to leave on Thursday after securing assurances of more benefits from Western oil companies, reports Reuters. Royal Dutch Shell and Chevron were forced to shut the 4 facilities on Wednesday, adding about 100k b/d in lost output to the 500k b/d already shut by militant attacks in another part of the Niger Delta. The incident underlined fears that violence which hit operations on the western end of the wetlands earlier this year could be spreading east to Rivers and Akwa Ibom states, which pump around 1m b/d, reports Reuters.

Kuwait has said it will cut oil output by 100k b/d starting on 1 November in line with the OPEC decision to reduce overall production by 1.2m b/d, reports AFP. Kuwait, which holds about 10% of the world's oil reserves, has been pumping some 2.6m b/d against an OPEC quota of 2.247m b/d, reports AFP.

US gasoline stocks dropped another 2.8m bbl last week to 207.4m bbl but remained 5.9% higher year-on-year, according to the latest data from the US Department of Energy. The fall came due to a significant decline in gasoline production to 8.7m b/d, the lowest since the week ending 28 April 2006, and a 213k b/d rise in demand to over 9.5m b/d. This was despite a 281k b/d rise in imports to 957m b/d. Distillate stores fell another 1.4m bbl to 144m bbl but remained 19% higher on the year. Imports were down slightly at 241k b/d, 53% lower on the year, while demand slumped 246k b/d to 4.28m b/d. Crude stocks also dropped 3.3m bbl to 332.3m bbl due to a 936k b/d fall in imports to 9.49m b/d, the lowest since the week ending 17th March 2006. Refinery utilisation inched 0.1% lower at 86.2%, the lowest since the 7th April 2006.

China's National Development and Reform Commission predicts that the country's economy will grow by 10.6% in 2006 with growth next year moderating to under 10%. In a report published in the China Securities Journal, the Commission argued that the country's economy was "moving in the direction of a soft landing." Annual GDP growth peaked in the 2q06 at 11.3% before easing to 10.4% in the 3q06.

The current vessel queue at Newcastle stands at 32 vessels, while the average waiting time is estimated at 13 days, reports McCloskey. However, shippers have been warned that the queue at the terminal could approach a record 60 vessels in November, exceeding the peak of 56 at the port in 2004. This is due to planned maintenance, which is expected to cause six days of outages and reduce forecast system capacity to a lower than average 6.2 Mt for the month. Yesterday, the SSY Australian Coal Port Congestion Index, which takes into account delays at all coal ports in Australia, stood at 7.19 days compared to 7.13 days last week.

Meanwhile, Newcastle port operator, PWCS, reports that shipments increased close to target levels last week. Latest shipments represented an annualised rate of 85.76 Mt against an October target of 86.4 Mt.

India's oil product exports increased 54.9% in September year-on-year to 0.64m b/d with diesel exports climbing 51% during the year to reach 1.22m tonnes, reports Dow Jones. Gasoline exports surged 95.4% on the year to 72.3k b/d. Due to government rules, any refining surplus is targeted for exports to prevent a flood in the domestic market. India's crude oil imports in September grew 4.7% year-on-year to 2.15m b/d while imports during the April-September period were up 12% on the year. Product imports totalled 1.22m tonnes, around 0.3m b/d, in September, up 4.5% on the year. The country imports 76% of the crude it processes, reports Dow.

One of the two shiploaders idled at Richards Bay following the discovery of cracks in the apparatus on October 12 has returned to operation, McCloskey reports. The move means that shiploaders at berths one, three and four are now fully operational, while the berth two shiploader is due to return to service on October 27. Platts quoted an industry source who claimed that around 1 Mt of exports was expected to be lost as a result of the stoppages.

Top oil exporter Saudi Arabia has told core customers in Asia and the US it will cut supplies by 380k b/d from the beginning of next month, making good on OPEC's pledge to implement its first formal output cut since 2004, reports Reuters. Asian refiners have been informed they will be receiving up to 8% less, or around 280k b/d, oil in Nov. As yet, there has been no confirmation of cuts from other OPEC members such as Kuwait, United Arab Emirates and Iran, which are also to curb exports, although not as deeply as Saudi Arabia, which shoulders the largest share of OPEC production, reports Reuters.

On October 18, the Organisation of the Petroleum Exporting Countries agreed to cut production by 1.2m barrels a day. The move is aimed at defending $60/barrel (for WTI) and $55 for Brent crude as its new minimum international price. The reduction was about 20% more than the market largely expected and will mean an official quota for 26.8mb/d for OPEC 10 (but actual output of 26.3mb/d from September levels). The action will be fully implemented on November 1 and OPEC is due to meet again in early December when it will discuss the possibility of a further 500Kb/d cut. In its latest edition of the Monthly Shipping Review, SSY examines OPEC's current position and the effects such a cut could have on the tanker markets for the coming months. The MSR examines the tanker and dry shipping markets plus gas, chemicals and container sectors in detail. It is available from SSY Consultancy & Research Ltd for an annual subscription of

A group of 200 protesting native Americans have agreed to end its occupation of an iron ore in northern Brazil after three days, Reuters reports. The protestors' action at the Carajas mine had brought mining and rail operations to a halt at the cost of 500,000 tonnes of iron ore, according to CVRD estimates. The dispute reportedly centred on the size of payments received by native Americans from the mining company. Last year, output at the Carajas mine was 72.5 Mt.

According to the International Iron and Steel Institute's latest data, world steel production for September rose 8.8% year-on-year to 101.4 Mt. Year-on-year growth was recorded both in traditional steelmaking centres, such as the US (+3.5%), the FSU (+4.0%), Japan (+4.8%) and the EU-25 (+2.5%), as well as in China (+18.5%) and India (+5.2%). In the first nine months of the year, global output was up 9.3% to 903.4 Mt, with China alone accounting for 308.4 Mt.

China's economy grew by 10.4% in the 3Q06, down 0.9% from the record growth seen in the 2Q06, as government attempts to slow the economy took effect, reports the BBC. The government has raised interest rates twice this year and cut approvals for new business investment as it tries to prevent the economy overheating. Four consecutive years of growth at over 10% have seen China pass Britain to become the world's fourth largest economy. The latest data put inflation at 1.3% and showed industrial output slowing, reports the BBC.

China's steel production in September reached 36.16 Mt, the fourth successive month that output has exceeded 36 Mt. If confirmed, the September total, a preliminary figure, would bring the Jan-Sep total to 307.9 Mt (up 21.3% year-on-year) and moves the annualised total to 410.5 Mt compared with the 2005 total of 348 Mt.

US gasoline stocks plunged 5.2m bbl to 210.2m bbl due to imports slumping 394k b/d to 676k b/d, the lowest since 25 November 2005 and 56% lower year-on-year, according to the latest data from the US Department of Energy. Gasoline demand was up 56k b/d at 9.3m b/d. Distillate inventories also plummeted 4.5m bbl to 145.4m bbl, but remained 18.5% higher on the year. With imports relatively unchanged at 271k b/d, the drop came due to a 202k b/d rise in demand to almost 4.53m b/d, while production fell 134k b/d to 3.85m b/d. This followed a decline in refinery utilisation rates to 86.3%, the lowest since 14 April 2006. Crude stocks grew 5.1m bbl to 335.6m bbl, the highest since 30 June 2006, and 7.55% higher on the year, due to a 66k b/d rise in imports to 10.43m b/d and 483k b/d lower inputs to refineries.

A number of minor bulk imports into China had a strong month in September, indicating that industrial activity remains strong. Latest customs data from China show that after slipping in the 2q06, imports of alumina into the country rebounded strongly in the 3q06, averaging 644,000 tonnes per month, making the 3q06 the highest quarter ever. Meanwhile, Chinese scrap steel imports in September surged to 529,000 tonnes, the highest-ever monthly total. Imports of copper concentrates into China in September reached 380,000 tonnes, up from 280,000 tonnes in August.

Global oil demand grew 2.8% in September year-on-year, the largest increase of the year, to reach 85.33m b/d, reports Energy Intelligence. Demand is forecast to rise by just over 2% in the 4Q06 versus the 4Q05, but this growth requires some fuel switching, mainly in the US, to be achieved, said Energy Intelligence. The increases are due partly to lingering summer demand fuelled by falling oil prices and continued economic growth, but mostly due to low demand in 2005 resulting from the hurricane-triggered high prices. Total OECD stocks are projected to rise again in September, the fifth straight monthly increase, to 2.74m bbl. Oil stocks are high in both the US and Asia having risen 6% year-on-year to 1.34m bbl and 458k bbl respectively in September. However, stocks in Europe are down slightly on the year at 947k bbl. Total global commercial stocks reached 5.14m bbl by the end of the month. Global supply averaged 85.71m b/d in September, up 2.5% year-on-year, reports Energy Intelligence.

The US Department of Agriculture has cut its 2006/07 (Oct-Sep) wheat export forecast for Australia in response to drought conditions in the east of the country. The USDA export forecast is now 13.0 Mt compared with last month's 2006/07 projection of 17.5 Mt. In 2005/06 the USDA estimated Australian wheat exports at 15.2 Mt. As a result, the USDA has raised export forecasts for Canada (from 19.0 Mt to 20.5 Mt), the EU-25 (from 15.5 Mt to 16.0 Mt), Argentina (from 8.5 Mt to 9.0 Mt) and the US (from 25.5 Mt to 26.0 Mt). World exports are now expected to total 111.8 Mt in 2006/07 compared with the September forecast of 112.7 Mt and the 2005/06 estimate of 113.5 Mt. The USDA notes that wheat shipments from Australia to the Mediterranean are likely to be reduced in favour of shorter-haul voyages to Asian destinations.