News archive August 2009

US steel imports in July rose by 14% month-on-month to 0.9 Mt after falling for five consecutive months, according to the American Iron and Steel Institute (AISI). Year-to-date imports dropped by 49% from a year earlier to 8.7 Mt. This represents the lowest level over the past nineteen years.

US gasoline stocks fell 1.7m bbl last week to 208.1m bbl, but remained 6% higher y-o-y, as imports rose 160k b/d to 1.1m b/d, according to the latest data from the US Department of Energy. Demand was down 100k b/d at 9.1m b/d. Distillate inventories rose 0.8m bbl to 162.4m bbl while imports fell 47k b/d to 132k b/d and demand dell 54k b/d to 3.4m b/d. Crude stocks grew 0.2m bbl to 343.8m bbl, 12% higher on the year, as imports increased 1.1m b/d to 9.2m b/d. Refinery utilisation was relatively unchanged at 84.1%.

The latest SteelBenchmarker produced by World Steel Dynamics has shown continued positive development for hot rolled band (HRB) steel prices outside China. The world export price for HRB has risen to a year-to-date high of $546/t compared with $507/t in late July. The US and the EU HRB prices are both up by 8% month-on-month to $566/t and $570/t respectively. In contrast, Chinese HRB prices have fallen from their early August peak of $508/t to the current price of $462/t on high domestic stocks.

A record volume of Australian iron ore was imported into China in July, up by 16% month-on-month to 27.45 Mt and representing a 52% increase year-on-year. This accounted for almost half of China’s July imports (58.08 Mt). Shipments from Brazil rose by 42% year-on-year to 12.26 Mt while imports from India fell by 15% from the previous month to 7.08 Mt, however, posting a 14% increase year-on-year.

Indian diesel demand is rising quicker than expected, as electricity shortages cause a rise in the use of generators for private power supply, reports Argus. Hydroelectric power output has been reduced due to a weak monsoon season. India’s diesel demand rose 7% y-o-y in the 2Q09 to 1.19m b/d and hit a record high in June of 1.22m b/d. Imports were just 1,000 b/d in June, 97% lower y-o-y, as Reliance ended the export-orientated status of its 660k b/d Jamnagar refinery in April. India had expected to not import any diesel between June this year and March 2010.

China's steel prices have corrected downwards after stronger production levels and stock building. Chinese wire rod prices slipped by $26/t from a week ago to $540/t at the end of last week, down by $89/t (-14%) from their year-to-date high of $629/t set in early August.

Americas: On the Caribs and S. America routes there was prompt space available to most destinations out of the USG. There were plenty of cargoes being quoted, with 3,200-5,500t 4gr base oils 1-2 Houston/Ecuador + Peru being noted for 1H September. 200,000 bbl diesel oil is looking to move Curacao/Balbao for 1H September while yellow grease has been heard loading ex-Miss River and 5,000t vegoil is being quoted ex-Argentina into Caribs. There was continued activity in the Caribs region, including a molasses cargo which was booked into EC Mexico. Several small cargoes were also seen, including 500t toluene Borburata Bay/Rio Haina end-August, 1-1,500t xylene Cartagena/Altamira, 3-5,000t VAM and 2-300t ethyl acetate USG/Pto Cabello. Transatlantic markets have seen some activity, with 3-5,000t BTX fixed ex-Rdm into USG and there were some caustic cargoes fixed Runcorn/USAC with more yet to find space. 14,000t EDC fixed Stade/USG for end-Aug in low $30 while UAN was quoted ex-Miss River into France. Conditions on the USG/Far East lane remain steady as COA nominations continue to increase. There is still some spot space to be found for August, with owners looking for completion cargoes. There are also some outsiders looking to go on berth, despite the limited opportunities. 35-40,000t vegoil is looking to move USG/China 20-25 September. Space remains tight through August on the USG/India lane due to rising COA volumes. A couple of owners are also advising spot space available for 2H September. On the return leg there was 5,000t base oils Sing/Houston for August and 16,000t PME Straits/US end-Aug, along with 6,000t benzene Dalian/USG ely September in the high $40s.

Europe: The European coastal business has entered a quiet phase, with fewer market quotations seen. CPP is also pretty slow in the Baltic and N.Sea. Southbound into the Med is steady with a few FAME cargoes to Spain and France, glycols into the Adriatic, benzene and PX to Spain, ACN to Spain and Turkey and base oils into Turkey. Northbound is a bit ragged. Of particular note are a couple of methanol requirements from Marsa to various options, ranging from Spain through to ARA. 5,000t BTX Tarragona/Moerdijk is also of interest. Inter-Med business has been slow, and there is plenty of August tonnage available. Vegoils from the Black Sea are coming to life again, but only for September loading. Transatlantic westbound is thin. Some PX requirements were noticed into the USAC, and a small cargo of BTX was looking to ship Rdam/USG. 8,000t caustic fixed Runcorn/USAC, and more caustic enquiries have been seen, again from Runcorn as well as from ARA. A large cargo of EDC was fixed from NWE to the USG too. Very little is happening on the CPP market westbound, and rates remain weak. Europe/Asia is slowing. A couple of attempts to ship PX from Portugal, Haifa and ARA have been tried, with one cargo believed fixed from Kotka. Several traders have been eyeing EDC cargoes to Asia, but none have fixed so far. Base oils too have appeared again from ARA and the Med to Spore. Base oils have been quoted to India and Dubai too, and traders were looking at styrene to WC.India. 10,000t pygas was seen Kertch/Jebel Ali, and a number of large cargoes of vegoil are on the market to India and the MEG from the Ukraine. Several cargoes of ACN were booked Ventspils and Sillamae to WC.India, along with 1,500t ACN Tees/Adabiya. Phos acid prices into India have still to be settled by some Med sellers.

MEG/Asia/Far East: Westbound from India and the MEG area is not busy on the spot market. A few cargoes of aromatics, castor oil, wax, ethanol and molasses have been interspersed with the occasional requirement for glycols and styrene into Turkey, but volumes are still far below that which is needed to cover the number of ships looking to head back home. Instead, many ships are finding employment within the region. There are substantial volumes of benzene, toluene, PX, glycols and methanol moving from the MEG into India, along with cargoes of base oil and 2EH. Rates however are very competitive due to the amount of open tonnage. Eastbound is also fairly busy, again mostly with aromatics, glycols, methanol and ethanol, with a few unusual cargoes such as 3,000t base oils Dubai/Spore. Palm oil volumes to India, Pakistan and China are very strong, and rates continue to nudge upwards. Rates for bigger lots back to Europe and the US however have made no significant changes over last week. Biodiesel volumes are increasing, with more fixtures done from Straits, China and Kakinada. Sulphuric acid cargoes continue to be seen, including an interesting 8-12,000t Tasmania/India. Plenty of small grades of solvents, aromatics and paraffins have been quoted Asia/India, along with some caustic. Benzene is also moving NE.Asia/Jubail and Kuwait. Trade in benzene to NWE and the US has melted away, but there is talk of styrene moving Korea/Rdam, and there have been more examples of small parcels of chems/solvents moving back to UK, NWE and Med. 5,000t base oils were heard quoted Spore/Houston. Inter-Asian traffic sees more styrene and BTX volumes into China, as well as larger cargoes of BTX both north and southbound.

Nigeria's crude exports are forecast to average 2.28m b/d in September as they anticipate fewer attacks against facilities and a recovery from technical problems, reports Energy Intelligence. August exports are set to reach 1.87m b/d, while July levels are still uncertain due to the disruptions, estimates are that they were about 1.87m b/d.

July was the first month since September 2008 to see global steel production reach 100 Mt, according to data from the World Steel Association. At 103.9 Mt world steel production was down 11% year-on-year in July, with strong growth registered in China (+13% to 50.7 Mt) and India (+4% to 4.7 Mt).

Nonetheless, steel output in the US fell 42% from the same month last year to 5.0 Mt, while there was an annual drop of 36% in EU-27 production to 11.2 Mt.

China imported 13.88 Mt of coal in July, according to China's Customs Statistics, just short of June's record monthly total of 16.07 Mt.

Chinese imports of all grades of coal have boomed in 2009, accelerating to current levels from just 2.99 Mt in January. As a result the year-to-date imports of 62.15 Mt are already well above the total for the whole of 2008 of 40.4 Mt.

US crude stocks slumped 8.4m bbl last week to 343.6m bbl but remained 12% higher y-o-y, as imports fell 1.4m b/d to 8.1m b/d, the lowest since Sept '08, according to the latest data from the US Department of Energy. Gasoline inventories fell 2.1m bbl to 209.8m bbl as imports dipped 32k b/d to 942k b/d and demand rose 254k b/d to 9.2m b/d. Distillate stocks were down 0.7m bbl at 161.6m b/d, 22% higher on the year, while imports rose 17k b/d to 179k b/d and demand increased 268k b/d to 3.4m b/d. Refinery utilisation was up 0.5% at 84%.

According to the China Iron & Steel Association, China’s steel inventories have risen for the first time in the past five months. Stocks for construction steels (rebar and wire rod) increased by 6% to 4.26 Mt by end-July. Hot rolled coil stocks were up by 7% month-on-month at 2.9 Mt. That’s 81% and 95% higher than the beginning of this year.

Global oil demand in July fell 1.94m b/d, or 2.24%, y-o-y to average 84.5m b/d, 710k b/d higher than the previous month, reports Energy Intelligence. OECD demand was down 4.1% on the year while non-OECD demand remained flat. Supply was up 310k b/d on the month at 84.3m b/d, 3.7m b/d lower than the same month last year, as Norway's output rose over 300k b/d after the return from maintenance.

European crude throughputs were just 10.9m b/d in June and July, the first time they have been below 11m b/d since early 1995, as refinery utilisation fell to 83% in July, down from 91% in the same month last year, reports Argus. Weak demand and poor refining margins are leading to extensive run cuts and refinery shutdowns, tightening the supply of gasoline during the peak summer driving season. Refinery throughputs are unlikely to recover this month given weak demand, with some closed until market conditions improve and others closed for both planned and unplanned maintenance.

China wire rod prices dropped by 10% from a week ago to $566/t at the end of last week after rising to a ten-month high of $629/t in the first week in August. This represents a 28% decline year-on-year.

US steam coal exports hit a year-to-date high of 1.3 Mt in June (excluding exports to Canada) compared with 0.6 Mt from the previous month, representing an 18% year-on-year increase. Year-to-date exports dropped by 17% from a year earlier to 6.3 Mt.

Meanwhile, US coking coal exports (excluding exports to Canada) in June jumped by 107% month-on-month, similar to the level from the same month last year. This brings exports in the 1h09 to 13 Mt, posting a 28% year-on-year decline.

Russia's pipeline crude exports fell 5.1% both y-o-y and month-on-month in July to 3.9m b/d due to maintenance one the Baltic Pipeline System route to Primorsk and a cut in Pivdenne loadings, reports Argus. Volumes to Novorossiysk fell 7.4% y-o-y to 3.73mt, or 880k b/d, while those to Odessa and Pivdenne dropped 59% and 43% y-o-y respectively. Shipments to Odessa, however, were up 32% from June. Total Black Sea volumes were down 16% on the year, while those to the Baltic were down 4%.

The US Department of Agriculture (USDA) has sharply reduced its forecast for Argentina’s wheat exports by 1 Mt from July’s estimate to only 1.5 Mt in 2009/10 (July-June), compared with 8.4 Mt in the previous marketing year. This represents a massive 82% decline year-on-year. If it is realised, this would be the lowest level over
the past 36 years.

Japan's crude imports in the 1H09 fell 14.9% y-o-y to 3.68m b/d, reflecting an 11% decline in domestic oil sales to 3.36m b/d, reports Energy Intelligence. Imports averaged 3.24m b/d in June, down 8.3% on the year, according to data from the Ministry of Economy, Trade and Industry. Saudi Arabia's shipments in June fell 3.6% to just over 1m b/d, while imports from the UAE and Qatar slumped over 20% to 626k b/d and 333k b/d respectively. Total Mideast imports in June fell 6% while Asian shipments fell 40%. In 1H09 Asian volumes dropped 49%, African fell 70% and Mideast 11%.

According to the National Bureau of Statistics (NBS), China’s crude steel output rose to the first 50+Mt monthly total in its history, up by 2.6% from the previous record set in June to 50.6 Mt, posting a 13% increase year-on-year. Year-to-date production totalled 317 Mt. This brings the annualized rate to 544 Mt. If it is realised, that would be 9% higher than crude steel production in 2008 of 498 Mt.

US crude stocks grew 2.5m bbl last week to 352m bbl, 19% higher on the year, as imports increased 243k b/d to 9.53m b/d, according to the latest data from the US Department of Energy. Gasoline inventories were down 1m b/d at 211.9m bbl after imports fell 47k b/d to 974k b/d, despite demand dropping 248k b/d to 8.95m b/d. Distillate stocks rose 0.8m bbl to 162.3m bbl, with imports just 21k b/d higher at 162k b/d and demand down 228k b/d at 3.2m b/d.

The IEA has revised its 2009 forecast for global oil demand by 190k b/d to 83.94m b/d, indicating an annual rate of --2.7% versus 2008. Growth in 2010 is now assessed at +1.6% y-o-y at 85.3m b/d. Oil supply in July rose by 570k b/d to 85.1m b/d, two-thirds of which stemmed from non-OPEC. Total non-OPEC supply for 2009 has been revised up 160k b/d to 51m b/d, largely due to stronger-than-expected Russian output, while 2010 supply has been forecast up 440k b/d to 51.4m b/d.

China's crude imports jumped 42% y-o-y in July to a new record high of 4.6m b/d after rising 14% from June, as refiners boosted exports and cashed in on retail price hikes in June, according to the latest data from China Customs. Jan-Jul volumes now average 3.8m b/d, up 6% on the year. Product imports were 13% lower in July than the previous year at 900k b/d, although they were slightly up on the month. Year to date volumes averaged 812k b/d, down from 873k b/d in the same period last year.

China’s iron ore imports rose for the second consecutive month in July, up by 5% from the previous peak set in June to 58.08 Mt, representing a 47% increase year-on-year and hitting a new monthly record, according to preliminary Chinese Customs data. That represents the fifth consecutive monthly import total over 50 Mt.

Latest information from China’s iron ore ports indicate that a total of 47 Capesize vessels are waiting to berth compared with a peak of 88 in mid-June.

The impact of de-congestion at China’s ports has been partially offset over this period by increases in Capesize queues at iron ore load ports in Australia and Brazil, however. As a result the number of Capesizes waiting to berth at iron ore ports in Australia, Brazil and China (as well as coal ports in Australia) has fallen from 154 in
mid-June to 123 this week.