News archive April 2007

Congestion at Australia's coal ports remains severe, however, according to today's SSY Australian Coal Port Congestion Index, average delays at the country's east coast coal ports have fallen below 20 days for the first time in seven weeks. There are approximately 67 Panamaxes and 73 Capesizes waiting to berth at both coal and iron ore load facilities in Australia, according to local sources.

Port Waratah Coal Services Limited (PWCS), the operator of Port of Newcastle, reports that estimated average waiting time for the current week (to May 7) is 26.1 days, compared with 32 days a week ago.

Belgian refiners are preparing to shut down after unions said they would strike over pay and conditions, reports Petroleum Argus. One union intends to strike from the 9th May, with another following suit on 20th May, affecting a combined 700k b/d of refining capacity at 3 major refineries, reports Argus.

US GDP grew by just 1.3% annually in the 1q07, the slowest pace for four years, according to US Department of Commerce. The Financial Times adds that the 1q07 rate was well below the market forecasts of 1.8% and contrasts with the 4q06 growth of 2.5%. Meanwhile, US consumer spending in the 1q rose at an annual rate of 3.8%, close to the ten-year average, according to Bloomberg.

Japan's crude imports fell 7.3% in March year-on-year to 4.58m b/d, for the 11th straight month decline, but rose 20.8% from February, reports Platts. The UAE regained its position as the largest crude exporter to Japan in March, having supplied 1.24m b/d, up 22.3% on the month, but down 1.3% on the year, and accounted for 27% of Japan's total crude imports. Imports from Saudi Arabia were 1.14m b/d, 24.9% of the total and down 18.3% on the year, but 2.4% up from February. The Middle East accounted for 89% of Japan's total crude imports in March, up 1.7% on the year, reports Platts.

In its first projection for the 2007/08 trade year, the International Grains Council has forecast a new record for the world grain trade. The IGC expects the combined wheat and coarse grain trade to reach 217 Mt in 2007/08 (July-June) compared with its current prediction of 215 Mt for 2006/07. The IGC anticipates that global grain consumption in 2007/08 will rise 2.6% to 1.67 billion tonnes.

India's crude imports rose 11.5% year-on-year to reach 2.23m b/d in the 2006/07 fiscal year that ended in March, due to an increase in domestic refining capacity, reports Reuters. Product imports rose 26.9% to 342k b/d. Oil demand in the country grew 5.9%, far less than estimated growth of about 9.2%, according to the latest government data, resulting in a 45% surge in oil product exports to 625k b/d, reports Reuters.

Combined exports of steel and cement from China in March totalled a record 9.3 Mt compared with 7.2 Mt in February, China's Customs Statistics show. The high March number helps explain the recent strength of the Handymax market. Much of the 2 Mt increase is likely to have gone to destinations in Europe and the Middle East.

US steel imports in March rose slightly from the previous month to 2.7 Mt, according to the American Iron and Steel Association. However, this figure marks a decline from the same month last year, when steel exports reached 3.7 Mt. Analysis of the monthly data, though, reveals that imports of finished steel products from China -- while still comparatively small (15% of all finished steel imports) -- were up 17% year-on-year.

North Sea crude output is rising, mainly due to the start-up of the Buzzard field in early January, reports Petroleum Argus. March production averaged just over 4.4m b/d, slightly higher than February levels, taking 1Q07 output to 4.38m b/d, the highest since the 2Q06, although still almost 8% lower than the 1Q06. The rapid increase in production at the Buzzard field has lifted UK March crude output to 1.62m b/d, just 9k b/d lower year-on-year. Buzzard output has reached 124k b/d and appears to be on target to reach 200k b/d by the middle of the year. Output from the rest of the UK continental shelf continues to fall at around 9% p.a, reports Argus.

World steel production climbed 8.6% year-on-year to 110.9 Mt in March, according to the International Iron and Steel Institute. Growth was particularly rapid in Asia: China's monthly steel output exceeded 40 Mt for the first time (40.1 Mt, +20.4% YOY), while Japan's production rose 6.0% to 10.3 Mt and Indian output grew 10.2% to 4.2 Mt. In contrast, US steel mills produced 7.8 Mt in March, marking a decline of 12.0% from the same month last year.

Coal imports into China in the 1q07 exceeded exports for the first time ever, according to customs figures reported in China Daily. China imported 14.3 Mt of coal in Jan-Mar 2007, 60.4% higher year-on-year, while exports declined by 32% from last year to 11.4 Mt. China began importing more coal last year, while its exports have been declining for the last three years. This is in sharp contrast to the situation in 2003 when China was the second largest coal exporter in the world.

Coal consumption at Japanese power utilities increased in March as a result of lower nuclear and hydro generation, reports McCloskey. The ten franchised generating companies used 4.33 Mt of coal in March, compared with 3.96 Mt in the same month last year. Total coal consumption by these power utilities in Japanese fiscal year (April-March) totalled 50.89 Mt, compared with 50.57 Mt in JFY 2005.

US gasoline stocks fell another 2.7m bbl last week to 197m bbl, the tenth consecutive weekly decline, keeping levels at their lowest since October 2005 and 2.7% lower year-on-year, according to the latest data from the US Department of Energy. Imports were up 86k b/d to over 1m b/d while demand fell 225k b/d to 9.2m b/d. Distillate inventories were down 0.8m bbl at 117.3m bbl, the lowest since May 2006, while imports remained relatively unchanged at 263k b/d, more than double the levels seen in the same week last year. Demand was up 120k b/d at 4.4m b/d. Crude stocks also dropped 1m bbl to 332.4m bbl despite imports rising 115k b/d to 9.9m b/d. Refinery utilisation rose 2% to reach 90.4%.

In the first two months of 2007, US exports of steam coal (excluding exports to Canada) increased to 1.3 Mt, compared with 0.6 Mt in the first two months of 2006, according to data from the US Department of Commerce. Shipments to Europe climbed from 0.4 Mt in Jan-Feb 2006 to 0.9 Mt this year, with the majority of shipments going to Germany (0.21 Mt), UK (0.21 Mt) and the Netherlands (0.23 Mt). Meanwhile, coking coal exports were similar to the same time last year, totalling 3.5 Mt.

Average delays at Australia's iron ore ports have fallen to 8.4 days compared with 12.8 days two weeks ago, according to SSY's port congestion indices. Congestion at the country's iron ore load ports had increased in recent weeks partly as a consequence of port closures due to tropical cyclones. Meanwhile, the SSY Coal Port Congestion Index stayed above 20 days for the sixth successive week. Reports from Australia indicate that the number of Capesize vessels at anchor off both the country's coal and iron ore load facilities has declined from 84 last week to 72, with the number of Panamaxes waiting to berth still between 80-85.

Iraq's crude exports rose 100k b/d in March month-on-month to reach 1.6m b/d, reports Energy Intelligence. April exports are forecast to rise another 85k b/d to 1.69m b/d, despite levels to the US being expected to fall 334k b/d to 633k b/d or 37% of the total. In March, levels to the US surged to 968k b/d, accounting for 60% of the total. Most of Iraq's April exports, 658k b/d, are heading for Asia, up 116k b/d on the month. European shipments are slated to be 400k b/d, 24% of the total, having surged from the 97k b/d, or 6% taken in March, reports Energy Intelligence.

The Chinese government is to cut export tax rebates for a wide range of steel products. The measure will be effective from April 15 and will apply to many steel products, such as rebar, plate as well as hot- and cold-rolled sheet. In many cases, the tax rebate has been reduced from 8% or 11% to zero. This is part of a wider trend which has seen an export tax of 10% placed on steel slab, for example, and reflects the Chinese government's willingness to be seen to be controlling the volume of steel exports to such regions as Europe and North America.

According to US steel consultancy, World Steel Dynamics, in the current price environment, the additional cost is likely to be absorbed by China's exporters. However, in a weaker steel market the tax rebate cut could result in a cutback in export volumes.

Average delays at Australia's iron ore ports fell from 12.8 days last week to 9.9 days, according to the latest congestion indices produced by SSY. Congestion at iron ore load ports had increased in recent weeks partly as a consequence of port closures due to tropical cyclones.

However, delays at Australia’s coal ports were largely unchanged, with the SSY Australian Coal Port Congestion Index over 20 days for the fifth consecutive week. The vessel queue at Newcastle has risen to 72, but the port operator, Port Waratah Coal Services, advised yesterday that a reduction of the vessel queue to "acceptable" levels is expected by the end of the 2q07.

The combined queue of Capesizes waiting off both coal and iron ore terminals in Australia is now 80-85 with a similar number of Panamaxes also at anchor. This represents a net decline of 20 vessels over the last week.

US gasoline stocks plummeted another 5.5m bbl last week to 199.7m bbl, the ninth consecutive weekly decline, taking levels to their lowest since October 2005 and 3.9% lower year-on-year, according to the latest data from the US Department of Energy. Imports were down 56k b/d to 953k b/d, 13% lower on the year, while demand dipped to 9.47m b/d. Distillate inventories inched 0.1m bbl higher to 118.1m bbl, despite imports falling 116k b/d to 259k b/d. Crude stocks grew 0.7m bbl to 333.4m bbl regardless of a 441k b/d fall in imports to 9.8m b/d.

US crude production is expected to drop 0.6% in 2007 to 5.1m b/d but rise 4.3% in 2008, according to the latest Short Term Energy Outlook from the US Department of Energy. US demand is expected to rise 1.5% and 1.3% p.a. in 2007 and 2008 respectively, with gasoline consumption forecast to grow 1.2% p.a, reflecting continuing economic growth. Average gasoline demand during the summer season (April-Sept) is forecast to be 9.5m b/d, 1.2% higher on the year. Distillate demand is projected to rise 2.1% in 2007 (to 4.26m b/d) and 1.6% in 2008.

Preliminary customs data from China show iron ore exports of 35.62 Mt in March, representing massive year-on-year growth of 21%. This compares with February imports of 29.7 Mt and has contributed to congestion at Australian and Brazilian iron ore load ports. The March total is over half of the import total for the entire 2000 calendar year, highlighting the huge expansion in China's steel sector in recent years.

China's crude imports rose 9% in March year-on-year to average 3.28m b/d, 110k b/d higher on the month, according to preliminary data from the China's Customs Statistics. Total imports for the 1Q07 averaged 3.23m b/d, 6.9% higher than the 1Q06. Product imports were down 4% on the year at 691k b/d, but rose 93k b/d from February. 1Q07 volumes were 2.6% lower than 1Q06 at an average 648k b/d. Product exports were up 33% on the year at an average 352k b/d, taking the total for 1Q07 to an average 314k b/d.

World oil demand in March was up only marginally (0.17m b/d) year-on-year at 85.56m b/d, reports Energy Intelligence. Healthy growth was reported for the US and OPEC - up around 300k b/d - and for
China, which registered a 200k b/d increase. This was offset, however, by a 570k b/d drop in OECD Europe demand and a 200k b/d decline OECD
Asia consumption. For Q107 as a whole, global oil demand showed only a 0.6% year-on-year increase at 85.56m b/d.

US gasoline stocks plummeted another 5m bbl last week to 205.2m bbl, the eighth consecutive weekly decline, taking levels 3% lower year-on-year, according to the latest data from the US Department of Energy. Imports fell 125k b/d to just over 1m b/d while demand was up 241k b/d at 9.49m b/d, 4.7% higher on the year. Distillate inventories were relatively unchanged at 118m bbl, with imports rising 26k b/d to 375k b/d and demand down 60k b/d at 4.29m b/d. Crude stocks grew 4.3m bbl to 332.7m bbl but remained 3% down on the year as imports rose 613k b/d to 10.25m b/d. Refinery utilisation remained at 87%.

According to the demand survey by Japan's Ministry of Economy, Trade & Industry, crude steel output in Japan is forecast to reach 29.45 Mt in the 2q07. This is 0.48 Mt more than same time last year and 0.15 Mt more than in the 1q07. The proposed rise in steel production would imply further upward pressure on seaborne iron ore and coking coal imports. Japanese steel production totalled 116.2 Mt in 2006, 3.8 Mt more than the previous year.

Angola is set to lift its crude production from 1.5m b/d to 1.9m b/d by the end of this year, rising to 2m b/d in 2008, reports Petroleum Argus. The next increase in Angolan output will come from BP's 220k b/d Greater Plutonio field, due online in June. Although Angola was expected to lift capacity to almost 2.5m b/d in 2010 and 2.6m b/d in 2012, it now intends to keep output at 2m b/d in order to fit into a new OPEC production ceiling when the organisation meets in September, reports Argus. OPEC's next scheduled regular meeting is expected to incorporate Angola into the group's production system for the first time since the country joined at the start of the year. China is currently the biggest buyer of Angolan crude, reports Argus.