News archive April 2008

US crude stocks grew 3.8m bbl last week to 319.9m bbl, but remained 4.7% lower y-o-y, as imports rose 174k b/d to 10.2m b/d, according to the latest data from the US Department of Energy. Gasoline stocks were down 1.5m bbl at 211.1m bbl, 9.3% higher on the year, despite imports rising 379k b/d to 1.39m b/d and demand falling 26k b/d to 9.19m b/d. Distillate inventories rose 1.1m bbl to 105.8m bbl as imports inched slightly higher to 273k b/d and demand fell 224k b/d to 4.14m b/d. Refinery utilisation dipped 0.2% to 85.4%.

Coal supplies to Dalrymple Bay and Hay Point face disruption due to two derailments, according to local media reports. Queensland Rail has reportedly advised that 20-30 trains could be delayed as a result of the incidents. The coal mines of Saraji, Norwich Park, Gregory, German Creek, Foxleigh and Oaky Creek are likely to be affected, with the possibility of diverting coal to other load ports in NE Australia being explored.

Russia's seaborne crude exports are scheduled to rise 98k b/d in May month-on-month to nearly 2.96m b/d due a well supplied domestic market and a new record-high crude export duty due in June, reports Energy Intelligence. The increase is mainly due to higher volumes from Novorossiysk where shipments are set to rise 100k b/d to 863k b/d in May, following maintenance work this month. This will be offset by slight drops from Odessa and Yuzhny. Shipments from Primorsk are also set to fall 49k b/d to 1.5m b/d, despite the onset of summer when exports are usually increased through this port with the use of lubricant additives. Shipments to Gdansk are on the rise after it saw no allotments in the final 9 months of last year, with levels set to double in May to 140k b/d.

One of the Argentinian farmers' leaders has declared that roadblocks will not return if talks with government officials fail, Bloomberg reports. The head of the Argentine Agrarian Federation argued that renewed disruption could jeopardise public support. Grain cargoes were prevented from reaching the country's ports for three weeks until a 30-day truce to allow negotiations to continue was called on April 2.

Coal exports from some key US East Coast ports have jumped in the 1q08. Quoting data from the Virginia Maritime Association, Reuters reports a year-on-year increase of around 80% in export volumes from the terminals in Virginia such as Newport News and Norfolk. According to the VMA statistics some 9.4 million short tons (8.5 Mt) were shipped in the 1q08.

Mexico's crude output fell 250k b/d in the 1Q08 y-o-y to 2.91m b/d, while exports dropped 210k b/d to 1.5m b/d, reports Petroleum Argus. The decline was led by a 140k b/d drop in Maya exports to 1.32m b/d following the halt of shipments to the US west coast in Feb due to limited storage at Pemex's 330k b/d Salina Cruz refinery and limited crude pipeline capacity. Mexico's 1Q08 net gasoline imports jumped 100k b/d to 260k b/d as the inability of domestic refineries to cope with increasing demand combines with the lower crude output. Gasoline demand in the country rose about 30k b/d to 775k b/d during the period, with diesel consumption up 15k b/d at 360k b/d. However, product output from state refineries fell 90k b/d on the year to 1.5m b/d. Mexico is now the world's second largest importer of gasoline behind the US after Iran (the previous number 2) cut imports to around 100k b/d from the 190k b/d it was taking before domestic rationing was introduced in the country last summer, reports Argus.

The Forties oil pipeline, which provides a third of the UK's daily output, or 700k b/d, will close if a 2-day strike by workers at Ineos' 200k b/d Grangemouth refinery goes ahead, reports the BBC. The BP-run pipeline relies on steam and electricity from the refinery in Scotland, where workers are protesting over pensions. Closing the pipeline will cause up to 70 platforms in the North Sea to either shut down or reduce production of oil. It links the Forties oil fields to the Kinneil processing plant in Grangemouth and is expected to close late Sat and will require 12-24 hours to reopen. There have been reports across Scotland of fuel running out, rationing, queues and price hikes.

Australian competition authorities have approved the extension of the quota system at the port of Newcastle in an attempt to minimise persistent congestion, Reuters reports. Some 1.1 Mt of coal were removed from the export quota for the Q2 earlier this year as a consequence of increasing congestion at the port, according to McCloskey. Local agents advise there are currently over 40 ships at anchor off the port.

S. Korea's oil demand fell 1.28% y-o-y in March to 2.18m b/d, also lower than the 2.2m b/d in Feb, reports Platts. Demand for all products went up despite rising prices, but the increase was outweighed by a drop in kerosene demand from 147k b/d in Feb to 75k b/d in March. Gasoline demand was up at 164k b/d while diesel rose to 407k b/d. S. Korean refiners produced a total 2.55m b/d of products in March, down 1.29% on the year. The country exported 763k b/d of refined products last month, down 0.42% y-o-y. Singapore was the top buyer, taking 244k b/d, with China next at 177k b/d. Exports to Japan have halved from 99k b/d in Jan to 49k b/d in March. S. Korea imported 588k b/d of oil products in March, up 8.4% y-o-y, reports Platts.

US steel imports in the 1q08 amounted to 6.95 Mt, 11.5% less than the same period last year, preliminary data from the American Iron and Steel Institute show. Some 2.28 Mt were imported in March alone. This brings the annualised total to 27.8 Mt, significantly lower than the recent peak of 40.9 Mt in 2006.

US crude stocks grew 2.4m bbl last week to 316.1m bbl, but remained 5.5% lower y-o-y, as imports rose 1.16m b/d to 10m b/d, according to the latest data from the US Department of Energy. Gasoline inventories fell 3.2m bbl to 212.6m bbl but were still 9.5% higher on the year, while imports rose 56k b/d to 1m b/d. Demand was down 123k b/d at 9.2m b/d. Distillate stocks dropped 1.4m bbl to 104.7m bbl, the lowest since May 2005, as imports remained steady at 261k b/d and demand increased 292k b/d to 4.36m b/d. Refinery utilisation was up 4.2% at 85.6%.

Despite tight coal supply in the Asia-Pacific region during the 1q08, imports into South Korea registered a year-on-year increase of 9%, according to the latest trade data quoted by the Tex Report. Quarterly imports reached 22.9 Mt (+1.9 Mt YoY), with strong gains from Australia (+1.0 Mt to 8.0 Mt) and Indonesia (+0.8 Mt to 7.2 Mt). In contrast, short-haul shipments from China dropped (-1.4 Mt to 3.6 Mt).

Azeri crude exports from Ceyhan are set to hit record levels in May, reports Petroleum Argus. Azerbaijan's state-owned Socar will exports 606k b/d in May, up 26% from this month, while BP will ship 113k b/d, up from 66,700k b/d. Azeri crude output is expected to rise about 28% y-o-y this year to 1.09m b/d. The BTC pipeline is currently being expanded, with capacity due to be 1.2m b/d by the end of the year, up from 1m b/d, reports Argus.

Some potential signs of loosening in iron ore market balances are emerging. Chinese iron ore stockpiles are now at an all-time high of 61.6 Mt, around 15 Mt higher than the end-2007 total. Meanwhile, the spot fob price of iron ore from India (63.5% Fe content) has softened over the last month to $137/t compared with $150/t four weeks ago. The delivered cost of Indian ore is, however, still at a significant premium ($28/t) to Brazilian contract ore.

Global steel production grew 5.8% year-on-year in March to 119.5 Mt, according to the latest data from the International Iron and Steel Institute. China enjoyed output growth of 11.5% YoY to a record 44.9 Mt, while other leading Asian producers, such as Japan (+5.1% to 10.8 Mt) also saw robust expansion. In contrast production in the EU-27 declined 2.3% YoY to 18.6 Mt.

CPC Blend exports are set to rise 9.5% in May month-on-month to just over 622k b/d, reports Petroleum Argus. CPC Blend loadings at the Yuzhnaya Ozereevka CPC terminal were over 620k b/d in March, up from 600k b/d in Feb. Shipments were over 622k b/d in the 1Q08, compared with nearly 710k b/d a year earlier. Tengizchevoil (TCO) is increasing output at its Tengiz field and is commissioning a 'second-generation' plant next month that is due to reach capacity of about 174k b/d in June. The TCO consortium plans to produce 400k b/d this year, up from 300k b/d in 2007. It plans to increase crude output to over 550k b/d in the 2H08, up from the current 320k b/d. The majority of crude sold by TCO last year was exported through the CPC pipeline to Novorossiysk, with the remainder going to Odessa by rail.

Preliminary customs data indicate that China's steel production hit a monthly record of 44.87 Mt in March, according to Reuters. If confirmed this would mark a rise of around 12% year-on-year and a jump of around 15% (6 Mt) on the February total. The rapid increase in steel production has taken place against a background of rising domestic steel prices, suggesting firm underlying demand.

Angola's daily crude oil exports, including the Palanca grade, will fall 1.7% month-on-month in June to 1.92m b/d, down from 1.95m b/d scheduled for May, reports Bloomberg. 60 cargoes totalling about 57.6m bbl will load in June, compared with 63 cargoes of 60.6m bbl in May. Angola was given an OPEC production target of 1.9m b/d last year. Output increased 18% in 2007 to 1.61m b/d, according to the IEA.

US crude stocks fell another 2.3m bbl last week to 313.7m bbl, 5.6% lower y-o-y, as imports dipped 33k b/d to 9.9m b/d, according to the latest data from the US Department of Energy. Gasoline inventories dropped 5.5m bbl to 215.8m bbl but remained 9.5% higher on the year. Imports were up 43k b/d at 950k b/d while demand rose 52k b/d to 9.3m b/d. Distillate stocks grew 52k bbl to 106.1m bbl, as imports rose 99k b/d to 260k b/d and demand fell 397k b/d. Refinery utilisation dropped 1.6% to 81.4%, the lowest level since Oct 2005.

According to the latest trade data from the UK Customs Statistics, coal imports into the UK in February totalled 3.9 Mt, 0.6 Mt higher than in the previous month and 0.2 Mt more y-o-y. Shipments from Russia increased to 1.9 Mt, up 0.2 Mt y-o-y. February saw higher imports from Colombia (0.7 Mt, +69.5% y-o-y) and the US (0.3 Mt, +73.2%), while shipments declined from South Africa (0.1 Mt, -79.4%) and Australia (0.3 Mt, -18%).

China's demand for W. African crude is declining due to poor domestic refining margins, with May-loading crude to China expected to total just 550k b/d, down 33% from purchases of April-loading crude, reports Petroleum Argus. Volumes will be nearly 48% lower than February's record level of just over 1m b/d. China's W. African crude demand rose to a new quarterly high of 950k b/d for Jan-March loading cargoes. The decline is a result of lower refinery throughputs in China due to maintenance and negative margins. China's refiners are capping runs because of losses caused by rising international crude prices and state-capped domestic product prices. Chinese refiner Sinopec's trading arm Unipec has been re-offering cargoes of MEG and W. African crude, reports Argus.

Steel prices in China continue to rise in the aftermath of contract price jumps for both iron ore and coking coal for the 2008 financial year. According to data supplied by U-Metal, the price of rebar (16-25 mm, Beijing) is now 5,100 yuan/tonne as opposed to 3,280 yuan/tonne at the same time last year. This represents a year-on-year increase of 55%.

According to customs data, Chinese iron ore imports in March dropped to 35.7 Mt from a monthly record of 38.2 Mt in February. Despite the March total being the lowest monthly imports so far this year, imports in the 1q08 were a record 110.7 Mt, compared to 100.2 Mt in the same period last year.

Meanwhile, Reuters reported that steel exports increased to 4.2 Mt in March, compared with 3.1 Mt in the previous month. This takes 1q08 steel exports to 11.4 Mt, some 4.5 Mt less than in the 1q07.

China's crude imports jumped 25% in March y-o-y to reach a new record high of 4.1m b/d, having risen 13% from Feb, according to the latest data from China's Customs. The rise comes as state-controlled refiners increased fuel production to end shortages. 1Q08 imports are 13.6% higher y-o-y at an average 3.67m b/d. Product imports were up 7.2% on the year in March at 741k b/d having risen 8% from Feb.

US crude stocks fell 3.2m bbl last week to 316m bbl, 5% lower y-o-y, as imports dropped 1.37m b/d to 8.9m b/d, according to the latest data from the US Department of Energy. Gasoline inventories declined 3.4m bbl to 221.3m bbl as imports dipped 37k b/d to 907k b/d. Distillate stocks fell 3.7m bbl to 106m bbl, the lowest since May 2005 and 10% lower y-o-y, as imports halved from the previous week to 161k b/d and demand climbed 233k b/d to 4.47m b/d. Refinery utilisation was up 0.6% at 83%.