News archive June 2009

India's crude imports rose 19% in May y-o-y to 12.02 million tons, or 2.84m b/d, after declining 12% y-o-y in April after refineries re-opened after maintenance shutdowns, reports Bloomberg. Fuel sales in India, which imports over 75% of its crude requirements, fell 1.4% to 11.5 million tons, or 2.72m b/d. Fuel exports were down 33% to 1.9 million tons in May.

The FOB price of Indian iron ore of 63.5% Fe content has risen to $62/t this week, with the delivered price into China climbing to $80/t, according to data from U-Metal. The delivered price is now $20/t above the level seen at the end of March.

Asia-Pacific demand for West African crude is increasing in July on the back of new refining capacity and improving margins, reports Argus. Around 1.38 m b/d of July-loading crude is expected to head east from West Africa, 280,000 b/d lower than in June but similar to May exports. West African volumes to China are expected to reach 735,000 b/d, down on June but similar to May's volumes.
By late afternoon in London, ICE Brent was trading at $ 70.72/bbl.

The SSY Australian Coal Port Congestion Index has climbed above 12 days once again, as vessel queues lengthen at coal load terminals on the east coast of the country. This is the first time since May 2008 that the index has reached this level. According to local sources, around 125 dry bulk carriers are now waiting to berth at Australia's coal ports.

Chinese crude imports rose by 5.5% year-on-year to 4.04 m b/d in May, with Iran becoming the largest supplier, Energy Intelligence reports. Imports from Iran almost doubled to 730,000 b/d, while imports from Saudi Arabia reached 653,000 b/d, down by 15.5% year-on-year. Imports from Angola dropped 35.5% to 483,000 b/d, while volumes from Oman rose 70% to 319,000 b/d and imports from Kuwait almost tripled to 244,000 b/d.

By late afternoon in London, ICE Brent was trading at $ 68.91/bbl.

The International Grains Council has made further cuts to its grain export projections for Argentina in 2009/10 (July-June). Dry weather conditions have impacted exportable supplies, prompting a 2009/10 wheat export forecast of 4.0 Mt (-3.3 Mt on 2008/09 and -0.5 Mt on last month's projection for 09/10). The IGC also expects Argentina's corn exports in the new trade year to stand at 9.0 Mt (-3.0 Mt on last year and -1.0 Mt on the May 09/10 forecast).

Nigeria is forecast to export around 1.4m b/d of crude in August due to cuts in production caused by militant attacks, reports Bloomberg. This rate is for shipments of Nigeria's 10 biggest crude grades and compares with 2.07m b/d from 13 crude varieties due to be shipped in July. In the latest of attacks in Nigeria the Billie-Krakama pipeline, which supplies one of the country's main export terminals, has been sabotaged, reports Reuters. Attacks have forced oil companies to shut at least 133k b/d of oil output in the last month.

At 7.4 Mt, South Korean coal imports during May were down 13% on last year, trade data reveal. Coking coal shipments to South Korea were down 0.3 Mt to 1.0 Mt, while combined steam coal and anthracite imports dropped 0.7 Mt to 6.4 Mt.

A shift in trading patterns over the past year emerges from the data: coal imports from China have fallen (from 2.1 Mt in May 2008 to 0.6 Mt in May this year), whereas shipments from Australia have climbed over the same period (from 2.7 Mt to 3.5 Mt).

US crude inventories fell by 3.9 m bbl to 353.9 m bbl last week, but still were 17% higher year-on-year, while crude imports grew by 247k b/d to 9.28 m b/d and crude oil production reached 5.26 m b/d, according to the latest data from the US Department of Energy. US gasoline stocks rose by 3.87 m bbl to 208.9 m bbl, steady year-on-year, while refinery utilisation grew by 1.15% to 87.1%, the highest level since December 2008. Gasoline imports dropped by 119k b/d to 0.97 m b/d, while demand fell by 225k b/d to 9.13 m b/d, and production rose by 93k b/d to 9.22 m b/d. Distillate stocks rose by 2.08 m bbl to 152.1 m bbl, 27% higher year-on-year, while imports rose by 98 k b/d to 289 k b/d, and production increased by 154k b/d to 4.07 m b/d.

By late afternoon in London, ICE Brent was trading at $ 68.36/bbl.

According to the latest SteelBenchmarker from US consultancy World Steel Dynamics, global hot rolled band export prices have risen to $446/tonne, up by $44/t from two weeks ago and the highest level since January. However, while the latest rise implies that global steel demand is beginning to recover, the current price remains 60% lower than the record high of $1,113/t seen at the end of July last year.

The number of Capesizes waiting at China's iron ore ports stands at 88, a record high for this year. SSY's new Capesize Iron Ore Port Congestion Index for China, which provides a weighted average of berthing delays at China's leading iron ore discharge terminals, now stands at 16.2 days. This compares with just 1.6 days at the beginning of 2009.

Indonesia bought 95,000 b/d of crude for August, down from 170,000 b/d in July. This as demand was hit by a week's unplanned shutdown at a 200,000 b/d crude unit at Indonesia's 350,000 b/d Cilacap refinery, reports Argus. Meanwhile, Forties output will fall to 345,000 b/d in August, down from 675,000 b/d in July, before rising to 555,000 b/d in September.

By late afternoon in London, ICE Brent was trading at $66.07/bbl.

FSU gasoline exports increased in May as FSU refiners boosted exports on the back of higher US and European demand, after maintenance reduced production levels in April, reports Argus. Exports rose by around 50% month-on-month to 315k b/d, having grown by 70% compared with the same month last year. Most of the volumes were destined to US ahead of the start of the summer driving season.

By late afternoon in London, ICE Brent was trading at $67.34/bbl.

The spot FOB price of Indian iron ore is maintaining its gradual rise, according to data from U-Metal. The FOB price for ore with Fe-content of 63.5% is currently $60/t, having slowly risen from a low of $50/t in March. Although this level is still far below last year's record high of $150/t, it does indicate some stabilisation following rapid falls during the 2h08 and 1q09.

World steel output in May totalled 95.6 Mt, up by 7% on the previous month, according to data from the World Steel Association. The world total for May marks a decline of 21% year-on-year.

Production in China reached 46.5 Mt, up just 0.6% on May 2008. In contrast, production in the rest of the world dropped by 34% year-on-year to 49.1 Mt during the same month. Of the major steelmaking centres, annual declines were most pronounced in the US (-50.6% to 4.6 Mt), Japan (-38.5% to 6.5Mt) and the EU-27 (-44.8% to 10.5 Mt).

Exports of BTC Blend crude from the Turkish Mediterranean port of Ceyhan are expected to increase by 10% in July, compared with June, to around 877,000 b/d, according to the loading programme, reports Argus. This is partly due to increased Tengiz crude being injected into BTC Blend. Meanwhile, Kazakh crude exports fell by 3.8% to 1.41 m b/d in May month-on-month, reflecting reduced exports along the Caspian Pipeline Consortium (CPC) route.

By late afternoon in London, ICE Brent was trading at $71.49/bbl.

Russian crude exports through the Transneft system to non-CIS countries increased by 0.8% to 4.28 m b/d in May, compared with April, reports Argus. A rise in shipments from Black Sea ports and along the Druzbha pipeline offset lower Primorsk exports due to pipeline maintenance. Meanwhile, Norwegian crude output dropped by 205 k b/d to 1.87 m b/d in May, compared with April.

By late afternoon in London, ICE Brent was trading at $70.78/bbl

According to the latest data from the Japan Iron and Steel Federation, Japan’s crude steel production rose to a year-to-date high in May, up by 13% from the previous month to 6.5 Mt. This represents a 38% fall year-on-year. Year-to-date output was 29.8 Mt, bringing the annualised rate to 71.5 Mt, which would represent a fall of 40% from 2008 total production of 118.7 Mt.

US crude inventories fell by 3.9 m bbl to 357.7 m bbl last week, but still were 19% higher year-on-year, while crude imports grew by 67k b/d to 9.04 m b/d and crude oil production reached 5.27 m b/d, according to the latest data from the US Department of Energy. US gasoline stocks rose by 3.39 m bbl to 205.0 m bbl, 1.8% lower year-on-year, while refinery utilisation remained steady at 85.9%. Gasoline imports rose by 218k b/d to 1.09 m b/d, while demand increased by 213k b/d to 9.35 m b/d, and production rose by 180k b/d to 9.13 m b/d. Distillate stocks rose by 0.31 m bbl to 150.0 m bbl, 29% higher year-on-year, while imports rose by 29 k b/d to 191 k b/d, and production fell by 18k b/d to 3.92 m b/d.

By late afternoon in London, ICE Brent was trading at $ 69.40/bbl.

China imported 9.43 Mt of coal in May, representing a massive 127% increase year-on-year, according to China’s Customs Statistics. The record levels of coal volumes have been spurred by lower overseas prices. The first five months of 2009 have seen imports rise by almost 14 Mt (+71%) over the same period last year.

There is currently a total of 154 Capesize vessels waiting to berth at load and discharge ports in Australia, Brazil and China, according to the latest data from local sources. This equates to around 18% of the world's Capesize fleet.

The chart below demonstrates the swings in the number of Capes waiting to berth at terminals in these three countries, which have corresponded to gains and losses in the freight market.

At the freight market peak in early June 2008, a total of 115 Capes were waiting to berth. By the time of the market collapse at the end of November, unwinding in congestion had effectively "released" 75 Capes on to the market. Since then rises and falls in congestion have led to large fluctuations in Cape fleet supply.

The current total of 154 represents a rise of 75 on the late March total and helps account for the subsequent gains in Capesize freight rates over this period.

Chronic congestion at China accounts for a record total queue of 87 Capesizes with waiting times at some ports rising to three weeks. This has led to substantial increases to round voyage times, which, coupled with the ballasting required, has further slashed available fleet supply.

There is currently a total of 154 Capesize vessels waiting to berth at load and discharge ports in Australia, Brazil and China, according to the latest data from local sources. This equates to around 18% of the world's Capesize fleet.

Global oil supply is estimated to have outstripped demand by 2 m b/d in May, as demand rose by 700,000 b/d compared with April and supply increased by 100,000 b/d, held back by heavy maintenance and unplanned outages in Norway, according to Energy Intelligence. This surplus was estimated at 1.7 m b/d and 2.6 m b/d in March and April, respectively. In the 2H09, the surplus is expected to narrow.

By late afternoon in London, ICE Brent was trading at $ 71.89/bbl.

US coking coal exports in April fell to 1.33 Mt, down by 56% from the previous month, representing a massive 63% fall year-on-year. That represents the lowest monthly total since August 2006.

OPEC has revised global oil demand projection for 2009 down by 50,000 b/d, reports Argus, citing the latest OPEC Monthly Oil Market report. Demand is now projected to fall by 1.62 m b/d in 2009. Demand forecast for OPEC's crude has been revised downwards by 200,000 b/d to 28.6 m b/d, compared with its previous estimation.

By late afternoon in London, ICE Brent was trading at $ 69.23/bbl.