News archive November 2007

India's economy expanded by 8.9% in the 3q07, compared with 9.3% in the previous quarter, according to official statistics. This was the slowest rate of growth since the 4q06 in Asia's third largest economy and Bloomberg reports that the central bank could soon end three years of interest rate increases. Interest rates have been raised nine times since 2004. Despite the latest easing, the Indian economic growth rate is almost three times that of the US and the countries that share the euro and is only behind China (11.5% in the 3q07) among the world's top 15 economies.

According to revised data from the Commerce Department, the US economy grew at an annual rate of 4.9% in the 3q07, the most in four years. Bloomberg reports that the latest surge occurred before the full impact of the worsening housing market and turmoil in the credit markets took hold. In October, despite house prices falling by the most in nearly four decades, fewer new homes than forecast were sold in the US. The Commerce Department reported that 728,000 new houses were bought at an annual rate, up from 716,000 units in September, which was the lowest in almost 12 years.

US gasoline stocks grew 1.4m bbl to 196.6m bbl last week, despite imports falling 289k b/d to 835k b/d and demand rising 134k b/d to 9.4m b/d due to the Thanksgiving holiday, according to the latest data from the US Department of Energy. However, gasoline production increased 56k b/d to just over 9m b/d as refinery utilisation rose 2.4% to 89.4%. Distillate inventories dipped 0.1m bbl to 130.9m bbl as imports fell 64k b/d to 203k b/d. Demand dropped 273k b/d to 4.33m b/d while production increased 122k b/d to 4.3m b/d. Crude stocks declined 0.4m bbl to 313.2m bbl, 8.1% lower y-o-y, despite imports rising 534k b/d to 10.35m b/d.

US steel imports in October increased to 2.4 Mt, compared with 2.0 Mt in the previous month, according to preliminary data from the American Iron and Steel Institute. This brings the year-to-date imports to 25.8 Mt, 9.2 Mt less than during the same period last year. In the first ten months, the three largest suppliers of finished steel from offshore were China (4.1 Mt, down 6% y-o-y), South Korea (1.8 Mt, down 27%) and Japan (1.3 Mt, down 13%). Despite this year's overall imports declining against the all-time high of 2006, imports are still historically high on average (some 6% more than 2005 levels).

Japan imported a record amount of iron ore in October, according to preliminary trade data quoted in the Tex Report. October imports were 13.3 Mt, up 2.2 Mt on the previous month and around 1.3 Mt more than in the same month last year. In the first ten months of this year, imports totalled 115.8 Mt, up 3.9 Mt on the same period last year. Much of the additional iron ore has come from Australia, South Africa, Canada and Chile.

India's crude imports in October fell 1.4% y-o-y to 9.79mt (2.31m b/d) as Reliance shut a 330k b/d unit in Jamnagar for maintenance, reports Reuters. Overall refinery runs in October grew 2.8%, the lowest rise since November 2005, while oil product demand rose 9.9% y-o-y during the month, the fastest pace in the last 11 months, to 2.53m b/d. Total consumption is forecast to rise 4.5% in 2007 to almost 2.8m b/d, and slow down to 2.3% in 2008 as natural gas continues to displace naphtha use. India expects domestic demand for oil products to grow at a compounded annual growth rate of 2.9% to 132mt by 2011/12. India's oil exports dropped 0.1% to 0.79m b/d in October as state-run refiners' shipped out 25% less products during the month, reports Reuters.

Capacity at Dalrymple Bay is set to decrease in the 1q08 by 4.1 Mt as the port is expanded, reports Bloomberg. As result of the expansion works, there has been a significant reduction in throughput capacity since May. In May-Sep 2007, 18.7 Mt of coal were exported, 2.3 Mt less than during the same period last year. By the end of 2008, the annual capacity at Australia's second biggest coal exporting port is expected to rise by 44% to 85 Mtpa.

Meanwhile, Rio Tinto's capacity has been cut by 1.2 Mt in the 1q08 and according to the company's spokeswoman, it may not be able to meet its export obligations. Rio Tinto, the biggest user of the port, has notified its customers and said that force majeure is in effect for first quarter sales in 2008.

According to a CVRD spokesman quoted by Bloomberg, the company will postpone around 20 iron ore shipments in December. CVRD said that as a result of seasonal rains and the blocking of a railroad by protestors output has been reduced and shipments from the Carajas mine have been disrupted. This has led to increased delays at the company's Ponta da Madeira port, where the vessel queue has reportedly doubled from one month ago to 14 ships. Any shortage of Brazilian supplies in December is likely to put pressure on exports from alternative sources and tighten overall supply in the near term.

South Korea's crude imports fell 3.8% y-o-y in October to 2.3m b/d, as volumes from Saudi Arabia, the country’s largest supplier dropped 16.1% to 578k b/d, reports Energy Intelligence. Imports from Australia and the Neutral Zone also declined 32.2% and 49.1% respectively. However, supplies from the UAE rose 20.3% to 457k b/d, and those from Iraq more than doubled to 167k b/d. Only 67k b/d of African crude was taken, which all came from Algeria.

According to the latest trade projections from the International Grains Council, world corn trade is forecast to reach a new record in the 2007/08 crop year (July-June) of 95 Mt. The latest forecast is up 2 Mt from last month's projections due to higher purchases by Near East Asia, especially Saudi Arabia, and strong EU imports from Brazil and is up 8 Mt from last year's trade estimate. Corn exports from Brazil have been revised upwards by 1 Mt to a record 9.5 Mt, while US exports remained unchanged at 60 Mt. Outstanding sales of US corn (contracted but not yet shipped) have been very strong since the new season began in October (+61% on the same time last year).

US housing starts in October unexpectedly increased 3% from the previous month to 1.229 million units but were 16.4% lower than the same month last year, according to the US Department of Commerce. Bloomberg reports that the latest increase in privately-owned housing starts was against market expectations of a fall to 1.17 million homes and was spurred by more activity in work on condominium projects, which exceeded the weakest construction of single-family homes in 16 years. Meanwhile, building permits, a sign of future construction plans, declined 6.6% from September to an annual pace of 1.178 million, the lowest since 1993.

Coal exports from China in October increased to 5.3 Mt, 0.8 Mt more than in September and 0.8 Mt more than the same month last year, according to the latest customs data. October was the fourth consecutive month when China was a net exporter of coal, compared to the situation in the 1h07 when it was a coal net importer. In January-October, coal exports reached 43.3 Mt, 9.2 Mt less than the same time last year. Meanwhile, China continues to import large amounts of coal. Chinese coal imports in the first ten months of this year were 42.3 Mt, up 12.9 Mt year-on-year.

World steel production in October expanded 6.6% year-on-year, slightly higher than the 6.2% growth seen in September, to reach a new monthly record of 114 Mt, according to the latest data from the International Iron and Steel Institute. Chinese output in October reached 42.9 Mt, representing growth of 13.5% YOY, but slightly slower than the 14.8% growth in September. Sound annual growth rates were recorded in the US (+5.1% to 8.5 Mt) and the FSU (+5.9% to 10.5 Mt), while production in India increased by 4.3% to 4.4 Mt and Japanese output grew 2.7% to 10.4 Mt. Meanwhile, YOY production declined in the EU-27 (-1.4% to 17.8 Mt).

The ongoing tanker backlog at the Nigerian port of Lagos has started to grow again due to problems with the single buoy mooring there, reports Platts. Recent reports put the queue at 22 vessels as the SBM is down and causing disruptions. Tanker congestion at Lagos, through which around 95% of Nigeria's clean petroleum product imports enter, has been an ongoing issue due to the port's inadequate infrastructure. Meanwhile, Nigerian demand for gasoline is strengthening, due to low stocks and expectations of increased driving during the upcoming holidays, according to market players, reports Platts.

The World Bank has lifted its forecast for economic growth in East Asian economies for 2007 to 8.4% from its previous projection of 7.3%. If realised, this would be the fastest expansion in nearly ten years and compares with expansion of 8.3% in 2006. The growth is expected to slow to 8.2% in 2008. Strong macroeconomic fundamentals, particularly strong expansion in China, are helping East Asian economies to advance. The World Bank forecasts Chinese economy to grow by a strong 11.3% this year and 10.8% in 2008.

Coal imports into the UK in the first nine months of the year totalled 31.6 Mt, down 14.6% year-on-year, according to the latest trade data from the UK Customs Statistics. Despite lower Russian shipments in January-September (14.9 Mt, -13.3% y-o-y), Russia continued to be the largest importer, accounting for about 47% of total coal imports. Shipments from South Africa declined by 42.8% to 5.0 Mt, while shipments from Colombia fell by 6.6% to 2.6 Mt. Meanwhile, imports increased from Australia (3.7 Mt, +20.4%), Canada (1.4 Mt, +52.4%) and the US (2.1 Mt, +44.4%).

US crude stocks grew 2.8m bbl last week to 314.7m bbl but remained 6.3% lower y-o-y, according to the latest data from the US Department of Energy. The rise came as crude imports jumped 831k b/d week-on-week to 10.49m b/d, 11% higher on the year. Gasoline inventories increased 0.7m bbl to 195m bbl, despite imports falling 117k b/d to just over 1m b/d, as demand dropped 180k b/d to 9.19m b/d. Distillate stocks declined 2m bbl to 133.4m bbl as imports dipped 60m b/d to 210m b/d and demand rose 282k b/d to 4.52m b/d. Refinery utilisation increased 1.5% to 87.7%.

High-quality iron ore exports from India in the first six months of the 2007/08 fiscal year were 14.9 Mt, 23% less than the same time last year, reports Reuters. In April-September 2007, total iron ore exports declined by 3% to 37 Mt, mainly due to the introduction of export tax on iron ore exports and a weak dollar. Meanwhile, spot prices for Indian iron ore fines (fob) continue to rise. According to data supplied from U-Metal, the latest price is $158/t, representing a rise of $63/t in the last three months. As a result, the delivered price at Chinese ports is now $212/t.

The SSY Australian Coal Port Congestion Index rose to 14.9 days, following a brief reduction to 14.2 days last week. Congestion increased at Dalrymple Bay (where Berth 1 is closed for maintenance until approximately Nov 15) and Newcastle. According to the Hunter Valley Coal Chain Logistics Team, the operator body that co-ordinates rail and port cargo movements through Newcastle, the current vessel queue at Newcastle has risen to 44 vessels from 37 last week. Their forecast for the end-November queue stands at 42 vessels, while the end-December forecast has been revised from 34 vessels last week to 35.

In its latest monthly report the IEA has revised down global oil demand for the 4Q07 by 0.5m b/d due to high oil prices, weaker-than-expected demand from the US and FSU, and delays to European heating oil restocking. Average demand for 2007 is now forecast at 85.7m b/d, 1.2% up on 2006. The 2008 forecast has also been lowered 0.3m b/d to 87.7m b/d. OECD stocks dropped 29.5m bbl in September, with Japanese crude stocks falling to their lowest level in at least 20 years. Preliminary data for October suggest a further 21m bbl draw in oil stocks in the US, Japan and EU-16. Global oil supply saw a monthly gain of 1.4m b/d in October as non-OPEC outages receded and OPEC volumes increased by 410k b/d to 31.2m b/d.

According to data from the US Department of Commerce, combined coking and steam coal exports from the US (excluding those to Canada) totalled 25.6 Mt in January-September 2007, some 5.9 Mt more than in the same period last year. Annualised exports now stand at 34.2 Mt, which, if realised, would be the highest total since 2000. Year-to-date shipments to Europe have risen significantly from 13.7 Mt in the first nine months of last year to 16.8 Mt this year, while shipments to Morocco rose by 1.2 Mt to 1.4 Mt.

China's crude imports rose 16.5% y-o-y in October to 2.99m b/d, despite falling 10.7% on the month to the lowest daily volumes this year, according to preliminary data from China customs. From Jan-Oct, imports totalled 136.68mt (3.3m b/d), up 13.8% on the year. Imports of oil products were down 18.8% y-o-y having dropped 17% from September to 519k b/d, the lowest level this year. In the Jan-Sept period China imported 9% less oil products versus a year ago.

The US Department of Agriculture has raised its forecast for the 2007/08 world coarse grain trade by 1.8 Mt to 119.4 Mt from the October's forecast. The latest forecast is 6.0 Mt higher than last trade year. US coarse grain exports are expected to rise by 9.1 Mt year-on-year to 68.0 Mt, while Argentinean exports are set to total 18.5 Mt (+1.7 Mt). Shipments from China are predicted at 1.5 Mt, 3.9 Mt lower than in 2006/07.

China is likely to replace the US as Japan's biggest export destination this year for the first time in modern history, reports Reuters. In Jan-Sep, exports to China reached 12.8 trillion yen ($113.1 billion), slightly higher than 12.7 trillion yen of exports to the US. Shipments to China are expected to reach 16.0 trillion yen in 2007, double the level of five years ago, offering much needed support to many Japanese companies, which have been affected by steady but slow domestic economic growth.

World oil demand grew at 1.3% year-on-year in October to 85.06m b/d (but fell 0.2m b/d from September) despite oil prices being in the $90/bbl region, reports Energy Intelligence. Non-OECD countries' demand rose 3.7% on the year, while OECD's was down by 0.43%. For the first 10 months of 2007, total world oil demand was up 1.1% (or almost 1m b/d) over 2006. Global supply outpaced demand again in October as several areas recovered from maintenance and unplanned weather outages in August and September, and Saudi Arabia began implementing OPEC production increases a month early. Total supply rose 1.27m b/d on the month to 86.85m b/d (about 1.8% up on the year), with about 75% of the rise coming from increments to non-OPEC sources and OPEC's other liquids, and the other 25% from OPEC crude production, reports Energy Intelligence.