News archive November 2008

US steel imports in October were 2.69 Mt, up by 0.5% from the previous month, according to data from the American Iron and Steel Association. Total imports of finished steel fell by 4.5% month-on-month to 2.13 Mt in October. Shipments of finished steel from China rose to a record volume of 0.65 Mt in October, representing a 133% increase on the same month last year. However, year-to-date imports from China of 3.37 Mt were still down by 9% compared to the same period in 2007.

Shipments of iron ore to China from the three major exporters (Australia, Brazil and India) have shown a much sharper decline in October. The combined total of 25.7 Mt was down by 29% from the April peak of 35.96 Mt, representing the lowest monthly total since November 2007, according to data from Umetal.

October’s monthly shipments from India to China only reached 3.7 Mt, down by 71% from a peak of 12.55 Mt in April. Brazil exported 7.6 Mt to China, the lowest level in 2008. Ore exports from Australia to China fell by 26% m-o-m to 14.4 Mt in October.

US crude stocks jumped 7.3m bbl last week to 320.8m bbl, the highest since early May and 2.5% higher y-o-y, as imports rose 1.1m b/d to almost 11m b/d, according to the latest data from the US Department of Energy. Gasoline inventories were up 1.9m bbl at 200.5m bbl, 1.96% higher on the year, as imports increased 120k b/d to 980k b/d and demand fell 118k b/d to 8.8m b/d. Distillate stocks were down 0.2m bbl at 126.7m bbl despite imports rising 112k b/d to 234k b/d and output increasing 199k b/d to 4.6m b/d. Refinery utilisation was up 1.3% at 86.2%.

According to Customs statistics, South Korea’s coal imports (coking, steam and anthracite) in October increased to 8.8 Mt, up by 13% from the previous month, the third highest monthly level in 2008. That puts imports at 82.12 Mt in the first ten months of the year, up by 12.1% year-on-year. On an annualised basis, Jan-Oct data imply a further annual rise for South Korean coal imports on last year’s figures, of 10.26 Mt, up by 12% to 98.54 Mt.

Coking coal imports in October were up by 39% from September to 1.65 Mt. Shipments of coking coal to South Korea from Australia were up from 0.61 Mt to 1.09 Mt, representing a 79% increase month-on-month.

OPEC estimates world oil demand in 2009 to grow by 500 k b/d, 300 k b/d lower than its previous estimation. For 2008, it expects demand to grow by 280 k b/d, 260k b/d less than its last prediction. Non-Opec supply is predicted to grow by 740 k b/d in 2009, revised downwards by 220 k b/d, while in 2008 it is expected to grow by 200 k b/d compared to 2007. OPEC puts the call on its crude at 30.9 m b/d, compared to 31.8 m b/d in 2008.

By late afternoon in London, ICE Brent was trading at $ 51.07/bbl.

Japan’s coking coal imports in September fell by 13% month-on-month to 6.4 Mt, according to latest data from Customs, however, this has raised year-to date imports to 60.5 Mt, slightly up by 0.5 Mt compared with Jan-Sep 2007.

Steam coal imports were down by 10% from August to 8.5 Mt in September. Shipments of steam coal to Japan from China in September were down from 0.56 Mt in August to 0.18 Mt, representing a 68% decrease month-on-month, the lowest monthly level since 1995.

The SSY Australian Coal Port Congestion Index rose for the fifth consecutive week, with average delays rising to 9.2 days this week, the highest level since the beginning of August.

Meanwhile, the Hunter Valley Coal Chain Logistics Team (HVCC) has increased its forecast for the end-November queue at Newcastle to 36 vessels from 31 at the beginning of this month. The end-December queue has been revised to 32 vessels compared with 29 forecast last week.

In October, global oil demand dropped by 1.4 m b/d to 84.8 m b/d compared with the same month last year, according to Petroleum Intelligence. OECD demand contracted by 2.54 m b/d, while non-OECD demand grew by 1.15 m b/d. US demand contracted by 1.77 m b/d y-o-y and Japan's demand, similarly, fell by almost 13%, while demand was flat in the Eurozone. The only positive changes were observed in China, with demand growing by 4.4% to 7.73 m b/d.

By late afternoon in London, ICE Brent was trading at $ 45.95/bbl.

Lower steel demand in China’s domestic and international markets has led to a collapse in steel prices across the world. According to the China Iron & Steel Association, China’s steel price index fell by 25% (-35.35 points) from a month earlier to 108.59 points in October, the biggest monthly drop in seven years.

Meanwhile, China’s Baosteel has announced that it will cut its sales prices for cold-rolled steel for December to $518/t (excluding VAT) after it lowered its 4q08 base sales prices. Hot-rolled prices remain unchanged at $433/t.

In October, as global economic conditions continued deteriorating, OECD inventories grew by 800 k b/d after a draw of 500 k b/d in September partly due to US Hurricane-related outages, while global oil stocks gained 2 m b/d reaching 6.791 billion bbl versus 6.727 billion bbl at the end of September. The OECD supply surplus is estimated to have been 2.7 m b/d in October, while it is expected to amount to 1.8 m b/d for the fourth quarter, Petroleum Intelligence reports.

By late afternoon in London, ICE Brent was trading at $ 47.84/bbl.

US gasoline stocks grew by 0.54 m bbl last week to 198.6 m bbl, 1.8% higher y-o-y, while refinery utilisation slightly improved by 0.3% to 84.9%, according to the latest data from the US Department of Energy. Gasoline imports recovered by 271 k b/d to 860 k b/d, while demand slid slightly by 40 k b/d to 8.96 m b/d and production dropped by 200k b/d to 8.82 m b/d. Crude inventories were increased by 1.6 m bbl to 313.5 m bbl, their highest level since May 2008 as crude imports increased by 0.37 m b/d to 9.87 m b/d and crude oil production reached 4.94 m b/d, its highest level since August. Distillate stocks were reduced by 1.5m bbl to 126.9 m bbl, while imports grew to 122 k b/d and production rose to 4.41 m b/d.

By late afternoon in London, ICE Brent was trading at $ 49.12/bbl.

After six months of consecutive decline, US steam coal exports in September totalled 1.93 Mt (excluding exports to Canada), hitting a new record level, McCloskey reported. Year-to-date exports (excluding exports to Canada) of 11.29 Mt were up by 72% compared to the same period in 2007.

On an annualised basis, January-September data imply a further annual rise for US steam coal exports on last year’s figures, of 4.37 Mt, up by 41% to 15.05 Mt.

Asia-Pacific oil demand is falling due to the economic crisis, putting pressure on refining margins, which are expected to remain depressed as more refining capacity boosts Indian product exports over the next 5-10 years, reports Petroleum Argus. India is forecast to have a product surplus of 550k b/d in the fiscal year to March, up from 225k b/d a year earlier. This surplus is projected to double to 1.12m b/d in the fiscal year ending March 2011 if all planned refinery expansions go ahead, according to Reliance. Diesel exports are expected to rise to 560k b/d in the year ending March 2012, from 260k b/d this fiscal year, with kerosine exports rising from 45k b/d to 130k b/d and gasoline up from 45k b/d to 400k b/d. India's refining capacity is currently set to reach over 1.8m b/d if expansion projects are completed, however, the global economic situation could prevent the scheduled expansion of Essar's 210k b/d Vadinar refinery to 680k b/d by 2010. Reliance's 580k b/d expansion project was directed at rising US gasoline demand but due to changes in the market is now focussing on maximising diesel production, mostly for the European market, reports Argus.

Crude steel production in October declined by 12.4% year-on-year to 101 Mt, according to latest data from the World Steel Association, however, this has raised year-to-date output to 1,136 Mt, still up by 2.9% compared with Jan-Oct 2007.

A collapse in world steel prices has prompted steelmakers across the world to implement deep cuts in output. Most major countries’ year-on-year growth turned negative, with Ukraine’s October production down by 48.7% (1.86 Mt), Russia down by 27.1% (4.5 Mt), China down by 17% (35.9Mt), US down by 16.8%(7.1 Mt), EU 27 down by 5.7% (16.8 Mt) and Japan down by 2.7% (10.1 Mt).

OPEC has cut its 2009 oil demand forecast for a third month by 530k b/d, or 0.6%, to 86.68m b/d as the global economic crisis threatens fuel consumption, reports Bloomberg. Demand in 2008 is now forecast by the group to grow 0.3%. Falling transport fuel use and a drop in demand from the petrochemical industry are cutting oil consumption. OPEC has called an extra meeting in Cairo for 29 Nov after the 1.5m b/d production cut announced last month failed to halt a fall in prices. Oil demand in developing countries will still rise 2.5% to 25.7m b/d next year according to OPEC. It has lowered the call for its own crude by 220k b/d to 30.92m b/d in 2009 and 170k b/d to 31.84m b/d in 2008. Total OPEC crude production in Oct fell 132k b/d month-on-month to just over 32m b/d. Saudi output fell 153k b/d to 9.22m b/d while Angola's output rose.

Pirates have seized the Saudi-owned Sirius Star off east Africa, taking the biggest vessel yet in a region where Somali pirates strike almost daily, pushing global crude prices higher, reports Reuters. The vessel held as much as 2m bbl of oil, more than 25% of Saudi Arabia's daily exports, worth over $100m. The hijacking, southeast of Mombasa, Kenya, was in an area far beyond the Gulf of Aden, where most of the attacks on shipping have taken place and where some foreign navies have begun patrols. The Sirius Star had been heading for the US via the Cape of Good Hope instead of heading through the Gulf of Aden and then the Suez Canal, reports Reuters.

China has confirmed that it will cut export taxes on some steel products from 1st December 2008 as part of its economic stimulus package of measures to encourage exports. The changes range from 5% for hot-rolled coil and plate, to 10% for large sections and 15% for some hot rolling, cold rolling, galvanizing and alloy narrow strip products, according to China's Ministry of Finance.

Chinese crude steel production fell to 35.9 Mt in October, the lowest monthly total since May 2006, according to the National Bureau of Statistics. That represents a year-on-year decline of over 16% and is 3.7 Mt lower than the previous month. Monthly steel output peaked at 46.9 Mt in June and this marks the fourth consecutive monthly fall.

The latest data reveal that the decline in China’s apparent steel consumption, which started to fall in August for the first time since 2000, accelerated to over 18% year-on-year in October. This week the Beijing authorities announced a $586 billion economic stimulus package aimed at maintaining strong rates of economic growth next year.

Crude exports through Russia's Transneft pipeline in October rose by 2% month-on-month to 4.12m b/d, mainly due to a 19% rise in Black Sea shipments, reports Petroleum Argus. Shipments from Baltic Sea ports were down 9.4% on the month at 6.2mt. Exports from Novorossiysk were up 18% to 3.89mt while deliveries to Pivdenne nearly doubled to 903.4mt. Volumes from Primorsk were down 114k b/d due to repairs to a pipeline while supplies from Gdansk fell by over a half.

Azeri crude shipments from Ceyhan via the BTC pipeline are set to rise to 780k b/d in Dec, nearly double the preliminary schedule of 411k b/d for Nov, reports Energy Intelligence. Additional Azeri barrels will be shipped from the Baku-Supsa pipeline while around 50k b/d will be transshipped from Batumi.

Iron ore shipments on the Great Lakes of 5.7 million net tons in October were down by 68,000 tons on a year ago, according to the Lake Carriers' Association, which represents US-flag vessel operators. Lower steel output levels impacted sharply on shipments from Canadian Seaway ports, falling by 32% from a year ago. Shipments from US ports were up on a year ago although a decline was seen in the final week of October. January-October iron ore trade on the Great Lakes of 51.2 million net tons represented an increase of 8 % year-on-year.

US gasoline stocks grew 2m bbl last week to 198.1m bbl, 1.6% up y-o-y, despite imports falling 451k b/d to 589k b/d, the lowest volume since end-Nov 2005, according to the latest data from the US Department of Energy. Distillate inventories were up 0.6m bbl at 128.4m bbl as imports slipped 35k b/d to 114k b/d and demand fell 105k b/d to 3.9m b/d. Crude stocks were relatively unchanged again at 311.9m bbl, while imports dropped 469k b/d to 9.5m b/d. Refinery utilisation was down 0.7% at 84.6%.

In its latest monthly report, the IEA has lowered its forecasts for global oil demand growth in 2008 and 2009 by 330k b/d to 0.12m b/d, and 670k b/d to 0.35m b/d respectively, after the IMF announced another large downward revision to global GDP forecasts and continued signs of demand weakness in the OECD. Global demand is now expected to be 86.2m b/d in 2008 and 86.5m b/d in 2009. OPEC supply in October was relatively unchanged on the month at 32.1m b/d as recovery after outages in Iraq, Angola and Libya offset lower supplies elsewhere, including Saudi Arabia. Global supply rose 1.8m b/d in October to 86.9m b/d. Non-OPEC supply forecasts have been cut to 49.7m b/d in 2008 and 50.3m b/d in 2009, as Azeri and USG outages prove more sustained and extensive.

According to the latest data from the China Coal Transportation and Distribution Association, China's stockpiles of coal at Qinhuangdao, China’s largest coal loading port, rose to a record volume of 9.11 Mt at the end of last week, standing above the theoretical maximum port capacity of 9 Mt.

Lower thermal coal demand in China’s domestic market has been caused a slowdown in electricity output. China State Grid reported that power generation in China in October fell by 0.5% year-on-year, the first negative growth since 1999. Coal-fired generation was down by nearly 2%.

Indonesia's stated-owned company Pertamina plans to import 5m bbl of gasoline and 4m bbl of diesel in December to meet domestic demand, reports Platts. The combined 9m bbl is 33% lower than the estimated 13.5m bbl the company is importing this month as its 125k b/d Balongan refinery will return from a 57-day planned turnaround in mid-Dec. The company is set to import around 6.5m bbl of gasoline this month, the highest level of gasoline imports so far this year, and 7m bbl of diesel.