News archive January 2009

The latest International Grains Council grain trade forecast for 2008/09 (July-June) has been revised down by 10 Mt to 228 Mt and compares with an estimate of 238 Mt for the 2007/08 crop year.

The total forecast export volume from the five major exporting countries has fallen to 162.3 Mt for this marketing year from 180.7 Mt a year earlier, down by 3 Mt from the previous forecast last month. Declines in exports are forecast from the USA (-26.3 Mt to 78.2 Mt), Argentina (-6.5 Mt to 20.2 Mt) and Canada (-0.5 Mt to 22 Mt). IGC has revised its forecast for the EU and Australia grains exports in the 2008/09 up by 8.9 Mt and 6 Mt from 2007/08 respectively.

Year-on-year increases in export volumes for other major grain exporters are projected in Ukraine (+14.4 Mt to 18.3 Mt), Russia (+4.1 Mt to 17.5 Mt) and South Africa (+1.6 Mt to 2.5 Mt).

South Korean crude imports dropped 1.1% to 2.36 m b/d in 2008, as domestic product demand fell 4.3% to 2.08 million b/d, reports Energy Intelligence. Imports from the Middle East grew 6.1% to 2.04 m b/d in 2008 and accounted for 86.3% of the total, up from 80.7% in 2007. Imports from Asia declined by 17.4% to 296,000 b/d, from West Africa by 72.1% to 27,100 b/d, and from Russia by 38.5% to 64,100 b/d. Saudi Arabia was the top supplier, with imports rising 5% to 719,000 b/d. An SK Energy's 60,000 b/d residual fluid catalytic cracker, which started up in June, increased country's appetite for Saudi crude.

By late afternoon in London, ICE Brent was trading at $ 46.02/bbl.

The International Monetary Fund (IMF) has revised sharply down its projection for world economic growth for 2009 from 2.2% in its last forecast in November, to 0.5%, the slowest pace since World War II. The UK would suffer the worst slump of all developed economics in the deepest recession all over the world, it would shrink by 2.8% in 2009, more than twice as severe as previous forecast. Following the UK, with Japan GDP projected to contract by 2.6% this year, the US 1.6% and the EU 0.2%. By contrast, the IMF predicted the Chinese economy would grow by 6.7% in 2009 and 8% in 2010.

Chilean diesel demand and imports from US is expected to contract in 2009, due to weaker Chilean economy and rains providing more hydroelectric power, reports Argus. Chilean diesel demand is projected to be 160,000 b/d in 2009, down by 20,000 b/d compared with 2008.But tighter sulphur specifications from 2010 should boost imports from US Gulf coast. Specifically, from 2010, all Chilean diesel will switch from a maximum sulphur content of 350 ppm to 50 ppm, while, until then, the 50 ppm limit only applies to the Santiago region.

By late afternoon in London, ICE Brent was trading at $ 45.05/bbl.

US gasoline stocks dropped slightly by 121k bbl last week to 219.9 m bbl, 2% lower year-on-year while refinery utilisation dropped by 0.8% to 82.5%, according to the latest data from the US Department of Energy. Gasoline imports remained steady at 1.15 m b/d, while demand also remained almost unchanged at 8.65 m b/d and production dropped by 69k b/d to 8.66 m b/d. Crude inventories increased by 6.2 m bbl to 338.8 m bbl, 16% higher year-on-year, while crude imports dropped by 158k b/d to 9.71 m b/d and crude oil production reached 5.05 m b/d. Distillate stocks decreased by 1 m bbl to 144.0 m bbl, while imports dropped by 98 k b/d to 264 k b/d and production rose slightly by 17 k b/d to 4.17 m b/d.

By late afternoon in London, ICE Brent was trading at $ 44.14/bbl.

US steam coal exports in November totalled 2.07 Mt (excluding exports to Canada), the highest monthly total since February 1997, according to the latest data from US Customs. Year-to-date exports (excluding exports to Canada) of 15.08 Mt were up by 70% compared to the same period in 2007.

On an annualised basis, January-November data imply a further annual rise for US steam coal exports from the 2007 total, of 5.77 Mt, up by 54% to 16.45 Mt.

East Asia refinery shutdowns will reduce product supply in the following months, reports Argus. Taiwan's CPC will have no spot gasoline in March, and possibly in April-May, as it will close a 50,000 b/d capacity at its 550,000 b/d refinery in February for up to three months for maintenance and expansion. Formosa Petrochemical's 520,000 b/d Mailiao refinery in Taiwan will probably not export low-sulphur gasoil in March due to a 1-month shutdown of a 80,000 b/d unit. GS Caltex's 650,000 b/d Yeochon Complex in South Korea will shut a 90,000 b/d unit in February-March.

By late afternoon in London, ICE Brent was trading at $ 44.44/bbl.

Mexican firm's Pemex output fell by 9.2% to 2.8 m b/d in 2008, to the lowest level in over a decade, reports Argus. The main reason behind the drop was the decline of the Cantarell oil field. Crude exports fell by 240,000 b/d to 1.4 m b/d, while refinery throughput remained unchanged at just under 1.5 m b/d. Meanwhile, Indian refiner Reliance will ship its first oil products from its 580,000 b/d new refinery Jamnagar in January. The firm commenced production in 25 December 2008 and will export its first two 35,000t naphtha cargoes in late January.

By late afternoon in London, ICE Brent was trading at $ 49.15/bbl.

According to the latest data from the industry and energy ministry quoted by McCloskey, Russian total coal output in 2008 was 329.51 Mt, a 4.9% year-on-year increase. Russian annual coal exports in 2008 reached 94.92 Mt, representing an increase of 1.49 Mt on the previous year. Shipments of coal to outside the CIS increased by 1.99 Mt to 85.65 Mt in 2008, with coking coal exports declining by 1.73 Mt from 2007 to 3.53 Mt.

Russia produced 7.71 m b/d of crude and condensate last year, down by just under 1% on 2007, according to preliminary data from the energy ministry, reports Argus. This was the first drop in 10 years. Increased production from Surgutneftegaz's Talakan field in East Siberia was not enough to offset falling output at its mature fields in East Siberia. Rosneft increased production by 1.5%, while output from Yuganskneftegaz increased by 8.4%. Gazpromneft boosted output by 11%. Russian firms produced 9.57 m b/d in December, compared with 9.72 m b/d in November.

By late afternoon in London, ICE Brent was trading at $ 43.13/bbl.

According to the National Bureau of Statistics (NBS), China’s gross domestic product slowed to 6.8% in the 4q08 compared with 9% in the 3q08. Annual GDP growth in 2008 was up 9% year-on-year, the slowest growth in 7 years and the first time it fell to the single-digit level since 2003 due to the global financial crisis continuing to affect China’s economy.

The NBS also announced that industrial output grew 5.7% in December from a year ago, the weakest pace in almost ten years. China’s Consumer Price Index (CPI) in December fell for the eighth consecutive month, to 1.2%, the slowest rise since July 2006. China’s retail sales growth decelerated continuously during the 2h08, down from 20.8% in November to 19% in December.

US gasoline stocks grew further by 6.5 m bbl last week to 220.0 m bbl, still steady y-o-y, while refinery utilisation dropped by 2% to 83.2%, according to the latest data from the US Department of Energy. Gasoline imports increased by 357 k b/d to 1.15 m b/d, while demand slid by 117 k b/d to 8.64 m b/d and production dropped by 84k b/d to 8.73 m b/d. Crude inventories increased by 6.1 m bbl to 332.6 m bbl, while crude imports rose by 137k b/d to 9.87 m b/d and crude oil production reached 5.05 m b/d. Distillate stocks rose by 790k bbl to 145.0 m bbl, while imports increased by 147k b/d to 362 k b/d and production dropped by 513k b/d to 4.15 m b/d.

By late afternoon in London, ICE Brent was trading at $ 42.63/bbl.

Japanese crude steel output in December was down by 15% month-on-month to 7.48 Mt, the lowest level since April 1999, according to the latest data from Japan's Ministry of Economy, Trade and Industry. The December total represents a massive 28% year-on-year fall, compared with 10.38 Mt in the same month in 2007, in response to the collapse in steel demand. As a result annual Japanese crude steel production in 2008 was 118.7 Mt compared with 120.2 Mt from the previous year.

US crude oil imports are expected to have fallen below 10 m b/d in 2008, with November's figure reaching 9.8 m b/d, 294,000 b/d less than October 2008 and 140,000 b/d less than November 2007, reports Energy Intelligence. The top 10 crude import sources supplied 86% of the total imported crude. Canada, the largest import source, provided about 2 m b/d, while Saudi Arabia, the second largest source, supplied about 1.46 m b/d. Imports from Nigeria fell below 1 m b/d for the first time since 2003. Imports from Venezuela and Mexico also decreased, but Brazil and Colombia made up for part of the loss.

By late afternoon in London, ICE Brent was trading at $ 42.51/bbl.

According to the latest customs statistics, South Korea imported 9.2 Mt of coal in December, representing an increase of 0.8 Mt on the previous month and up 1.5 Mt on the same month in 2007. As a result the annual coal import total is 99.6 Mt (including 19.7 Mt of coking coal and 74 Mt of steam coal) compared with 88.3 Mt the previous year, up by 12.8% year-on-year.

Annual imports from China declined by 10.3% to 17.9 Mt in 2008, annual imports from the FSU (+18.8% to 7.2 Mt), Canada (+7.8% to 6.5 Mt) and Indonesia (+4.8% to 26.5 Mt) increased. Australia (+31% to 38.2 Mt) remained South Korea's largest coal supplier.

North Sea output declined by 240,000 b/d or about 6% in 2008 year-on-year, reports Argus. UK output fell by 115,000 b/d, as declining Brent output outweighed the increase from Buzzard, which was added to the Forties stream. The Norwegian production also decreased in 2008, to a lesser extent, though, with the exception of Oseberg, and it is expected to fall by about 10% in 2009. Exports to the US East coast fell by more than 40% to less than 45,000 b/d partly due to lower demand and poor refining margins on the Atlantic Coast market.

By late afternoon in London, ICE Brent was trading at $ 44.01/bbl.

China’s imports of main dry bulk commodities (including iron ore, coal, steel and grains) totalled 539.8 Mt in 2008 compared with 484.1 Mt in 2007, up by 11.5%. Imports peaked at a record 50.4 Mt in April.

However, imports fell to 118.4 Mt in the 4q08, the lowest level for the past five quarters. The 4q08 total represented a decline of 6% on the same quarter in 2007.

US oil demand is expected to rebound in 2010, after 2 consecutive years of falling trend, according to the latest Short-Term Energy Outlook by the US Energy Information Administration (EIA). Demand will grow by 150,000 b/d or 0.8% in 2010, after having fallen by almost 400,000 or 2% in 2009, due to continued economic malaise. Gasoline and distillate consumption are each expected to increase by 50,000 b/d in 2010. On the supply side, US output will increase by 320,000 b/d to 5.25 m b/d in 2009 and by 50,000 b/d in 2010, the first increases since 1991.

By late afternoon in London, ICE Brent was trading at $ 43.13/bbl.

Global oil demand is forecast to decrease by 0.5 m b/d or 0.6% to 85.3 m b/d in 2009, revised downwards by 1 m b/d, according to the latest IEA monthly Oil Market Report. 2008 oil demand is estimated to have contracted by 0.3% or 0.3 m b/d to 85.8 m b/d. On the supply side, non-OPEC output is expected to grow by 0.5 m b/d to 50 m b/d in 2009. 1Q09 global refinery throughput is forecast at 72.3 m b/d, revised downward by 1.2 m b/d since the last report. OECD industry stocks decreased by 2.0 m bbl to 2,658 m bbl in November, with the forward demand cover remaining high at 56.4 days.

By late afternoon in London, ICE Brent was trading at $ 44.70/bbl.

The US Democrats have proposed a $825bn stimulus package to help the US economy, Financial Times reported. The package comprises $275bn in tax cuts and $550bn in public spending. The Democrats are reportedly aiming for the bill to become law by mid-February.

In a strong end to the year, US coal exports in November hit 5.1 Mt (excluding cargoes to Canada), up 0.8 Mt year-on-year, according to the country's National Mining Association. Volumes were boosted by the largest monthly steam coal export total since 1997 (at 2.1 Mt). The month's coking coal total of 3.0 Mt was up 0.4 Mt on November 2007.

US gasoline stocks grew by 2.1 m bbl last week to 213.5 m bbl, their highest level since July 2008, but still 0.8% lower y-o-y, while refinery utilisation improved by 0.7% to 85.2%, according to the latest data from the US Department of Energy. Gasoline imports decreased by 55 k b/d to 797 k b/d, while demand slid by 232 k b/d to 8.76 m b/d and production dropped by 300k b/d to 8.81 m b/d. Crude inventories were increased by 1.1 m bbl to 326.5 m bbl, their highest level since August 2007 while crude imports fell by 0.76 m b/d to 9.73 m b/d and crude oil production reached 4.92 m b/d. Distillate stocks rose by 6.3 m bbl to 144.2 m bbl, their highest level since October 2006, while imports fell to 215 k b/d and production rose to 4.67 m b/d.

By late afternoon in London, ICE Brent was trading at $ 44.15/bbl.

The US Department of Agriculture (USDA) has revised its forecast for world coarse grain trade during the 2008/09 marketing year down by 2.5 Mt from last month to 105 Mt. This would represent a fall of 22 Mt from 2007/08. The US, Argentina and Russia are predicted to supply less coarse grain into the international market, with export forecasts down from December’s estimates by 1.0 Mt, 0.8 Mt and 0.5 Mt.

Global corn trade estimates in January for 2008/09 marketing year are down by 18 Mt from 2007/08 to 78 Mt.

Imports of iron ore into China reached a surprisingly high 34.53 Mt in December, according to official customs data. This marks an increase of 2.0 Mt on the previous month and was up 0.3 Mt on the same month in 2007. As a result the annual 2008 iron ore import total is 443.7 Mt compared with 383.7 Mt the previous year.

Coal exports surged to 4.47 Mt in December, the highest monthly total since July. Exports for the year were 45.43 Mt, down from the 53.2 Mt in 2007, however.

Soyabean imports for 2008 showed an increase of 6.6 Mt on the previous year. December imports of 3.30 Mt took the annual total to 37.44 Mt.

China’s crude imports rose 11.6% y-o-y in December to 13.89Mt, or 3.40m b/d, having increased 4.1% from November levels according to the latest data from China Customs. 2008 as a whole averaged 3.6m b/d, up 9% from a year earlier. Product imports were up 37% on the year at 859 b/d having increased 82% from November. 2008 volumes were 14% higher on the year, averaging 778k b/d. In the meantime, Chinese bank lending and money supply rose in December, with annual loan growth reaching 18.8% in December, higher than previous forecasts of 6.5%, reports Reuters. This might be an early sign that the Chinese government stimulus package is starting to feed through the financial system.

By late afternoon in London, ICE Brent was trading at $ 44.42/bbl.