News archive March 2009

Japan’s steel exports fell below 2 Mt in February for the first time since 2001, at 1.9 Mt, according to the Japan Iron and Steel Federation. This brings the annualised rate to only 23.3 Mt compared with the record high of 38.4 Mt in 2008.

Saudi Arabia is expected to increase gasoline exports in summer, as a refinery expansion of 50,000 b/d at its 400,000 b/d Rabigh unit is to be brought online in July, Argus reports. Saudi Aramco expects to cut gasoline imports from the Mediterranean market once the Rabigh reformer comes on stream. Moreover, it is well located to export gasoline to Eastern and Southern African markets. Before announcing its intention to start-up the unit, Aramco was planning to increase gasoline imports to 20,000 b/d in the third quarter.

By late afternoon in London, ICE Brent was trading at $ 47.53/bbl.

FOB iron ore prices from India fell for the sixth consecutive week, down from $73/t at the year-to-date's peak in mid-February to $50/t at the end of last week, according to data from Umetal . That represents the lowest level since May 2006 and compares with $150/t one year ago.

Run cuts by Japanese refineries will be extended into 2Q09, due to faltering demand, Argus reports. Idemitsu's crude throughputs will be decreased by 120,000 b/d to 430,000 b/d in April. Japan Energy will cut runs by 7% to 360,000 b/d in 2Q09, while Cosmo Oil will cut runs by over 9% to 430,000 b/d for the same period. Nippon Oil will cut runs by 230,000 b/d year-on-year to 765,000 b/d in April, while Shell plans to cut runs by about 25% to 435,000 b/d in April-June. Meanwhile, Chinese commercial storage is reported to hold 55 million bbl of diesel and 35 million bbl of gasoline.

By late afternoon in London, ICE Brent was trading at $ 49.75/bbl.

Chinese crude imports dropped by 15% year-on-year in February to 3.07 m b/d, led by a decline of 45%, to 331,000 b/d, in Angolan exports, Energy Intelligence reports. Imports from Sudan and Kazakhstan fell by 44,000 and 16,000 b/d, respectively. On the contrary, imports from Saudi Arabia increased by 28% to 835,000 b/d, while imports from Iran rose by 22% to 501,000 b/d. Overall imports from Middle East amounted to 1.82 m b/d, while imports from Africa averaged 750,000 b/d. Argentina was the only Latin America country to export crude to China, with shipments at 24,000 b/d. This as Sinopec and PetroChina have been cutting refinery runs due to waning oil demand.

By late afternoon in London, ICE Brent was trading at $ 51.81/bbl

According to the International Grains Council, the total forecast export volume from the five major exporting countries has fallen to 159 Mt for this marketing year from 180.9 Mt a year earlier, down by 1.2 Mt from the previous forecast last month. Year-on-year increases in export volumes for other major grain exporters are projected in Ukraine (+16.5 Mt to 20.4 Mt) and Russia (+5.1 Mt to 18.5 Mt).

The eight principal Norwegian and UK crude oil systems will produce 2.208 m b/d in April, 73,000 b/d or 3.4% higher than in March, according to loading schedules, Energy Intelligence reports. Production of other streams will contribute about 37% of total expected production in the UK and 41% for Norway in April. It is projected that total crude production from the two sectors will increase by about 44,000 in April. For the Norwegian main systems, Ekofisk production will increase by 44,000 b/d, while Statfjord, Oseberg and Gullfaks will produce 22,000 b/d more. In the contrary, Troll production will drop by 12,000 b/d. For the UK sector, Forties is expected to increase production by 41,000 b/d, while Brent production is scheduled to drop by 17,000 b/d.

By late afternoon in London, ICE Brent was trading at $ 53.08/bbl.

US crude inventories increased by 3.30 m bbl to 356.6 m bbl last week, their highest level since 1993, and were 14% higher year-on-year, while crude imports grew by 204k b/d to 9.38 m b/d and crude oil production reached 5.43 m b/d, according to the latest data from the US Department of Energy. US gasoline stocks dropped by 1.14 m bbl to 215.7m bbl, 6% lower year-on-year, while refinery utilisation fell slightly by 0.13% to 82.0%. Gasoline imports remained rather steady at 1.14 m b/d, while demand increased by 145k b/d to 9.1 m b/d and production dropped by 145k b/d to 8.72 m b/d. Distillate stocks fell by 1.58 m bbl to 143.9 m bbl, while imports rose by 346 k b/d to 449 k b/d, and production declined by 381k to 3.71 m b/d.

By late afternoon in London, ICE Brent was trading at $ 52.82/bbl.

Venezuela will import 100,000 b/d of gasoline to cover low domestic output due to refinery maintenance that will be completed at the end of May, reports Argus. Specifically, imports will replace output from 305,000 b/d Cardon and 140,000 b/d El Palito refineries, which usually produce 60,000 b/d and 40,000 b/d of gasoline, respectively. Meanwhile, China's net gasoline and diesel exports increased by about 80,000 b/d to 140,000 b/d in February, as domestic demand waned, while Chinese net fuel oil imports increased by about 200,000 b/d.

By late afternoon in London, ICE Brent was trading at $ 52.70/bbl.

Iron ore stockpiles at China’s discharge ports have risen to a 12-week high of 64.5 Mt, representing a gain of 7 Mt month-on-month. However, this is still lower than the 4q08 peak of 74.4 Mt.

FSU crude exports increased by 270,000 b/d in February compared with January, reports Argus. Exports of Caspian light sweet BTC crude was the main reason behind this increase, reaching 180,000 b/d, with exports to long-haul destinations rising in particular. Exports through the Baltic ports increased by about 100,000, while shipments through the Black Sea ports remained rather steady. Meanwhile, exports from the Sakhalin 2 field in Russian Far East climbed to a record of 100,000 b/d in February, after the completion of a pipeline.

By late afternoon in London, ICE Brent was trading at $ 53.59/bbl.

February world steel production fell for the third consecutive month with global output down by 22% year-on-year to 83.8 Mt, according to data from the World Steel Association released today. Production cuts were most severe in the US (-54.2% yr-on-yr to 3.8 Mt), the EU (-41.5% to 10 Mt) and Japan (-44.2% to 5.5 Mt). China’s steel production showed growth of 4.9% yr-on-yr with monthly production at 40.4 Mt.

According to the latest projections by Energy Intelligence, OPEC production cuts combined with a decline in non-OPEC supply growth will result in a negligible reduction in global oil inventories this year, after global oil demand and supply have converged. For 1H09, global supply running ahead of demand is expected to translate into a stockbuild of 822,000 b/d, while during 2H09, global supply running lower than demand is projected to reduce stocks by 833,000 b/d. Consequently, the net result should be only 10,000 b/d stockdraw from the high inventories at the end of 2008.

By late afternoon in London, ICE Brent was trading at $ 50.75/bbl.

The International Monetary Fund (IMF) has revised its forecast for world GDP down to negative growth of between 1 and 0.5% in 2009, the heaviest fall in 60 years. Among the key economies, the sharpest fall is predicted for Japan (-5.8%), with substantial declines forecast in the US (-2.6%) and Eurozone (-3.2%). For 2010, however, the IMF projects a rebound in annual growth between 1.5% and 2.5% for the world economy.

BTC shipments through Ceyhan are expected to decline by about 160,000 b/d to 540,000 b/d in April, compared with March, reports Argus. This is mainly due to increased volumes of Azeri-Chirag-Guneshli (ACG) block in the Azeri section of the Caspian Sea being put into storage to replenish Baku storage tanks. Meanwhile, Kazakh crude exports through Russia along the Atyrau-Samara pipeline are estimated to be at least 363,000 b/d in 2009, 5% higher than in 2008. This as crude output from fields in west Kazakhstan rises in 2009. A part of these volumes will be exported through Primorsk and Novorossiysk.

By late afternoon in London, ICE Brent was trading at $ 49.69/bbl.

Japan’s crude steel production in February fell for the fifth consecutive month to 5.48 Mt, the lowest level since 1968, according to the latest data from the Japan Iron and Steel Federation. Year to date production totalled 11.86 Mt, this brings the annualised rate to 71.16 Mt, far below crude steel output in 2008 of 118.74 Mt.

US crude inventories increased by 1.94 m bbl to 353.3 m bbl last week, their highest level since June 2007, and were 13% higher year-on-year, while crude imports grew by 59k b/d to 9.18 m b/d and crude oil production reached 5.414 m b/d, the highest level since August 2005, according to the latest data from the US Department of Energy. US gasoline stocks increased by 3.2 m bbl to 215.7m bbl, still 7% lower year-on-year, while refinery utilisation fell by 0.6% to 82.1%. Gasoline imports dropped by 108k b/d to 1.15 m b/d, while demand dropped slightly by 17k b/d to 9.0 m b/d and production increased by 329k b/d to 8.87 m b/d. Distillate stocks remained rather stable at 145.5 m bbl, their highest level since October 2006, while imports fell by 199 k b/d to 103 k b/d, and production declined by 149k to 4.09 m b/d.

By late afternoon in London, ICE Brent was trading at $ 46.74/bbl.

An easing of congestion at iron ore load ports in Western Australia and iron ore discharge ports in China has reduced the number of Capesizes waiting to berth by 38 over the past three weeks. According to local sources, there are currently a combined 53 Capesizes waiting to berth at these terminals compared with 91 three weeks ago.

Ecuador's crude output is set to decline, as investment by private-sector firms is waning, reports Argus. Crude production is expected to fall by 13,000 b/d to 482,000 b/d in 2009, with private sector's output projected to drop by 7% from 202,000 b/d it produced in 2008, as contracts are being renegotiated and firms are resisting acceptance of Quito's new deals. Meanwhile, Saudi Arabia's 500,000 b/d Arab Light Abu Hadriya-Fadhili-Khursaniya (AFK) delayed project is reported to be fully operational by the end of March, while it has been producing 250,000 b/d in early March.

By late afternoon in London, ICE Brent was trading at $ 47.56/bbl.

China's coal imports in February rose for the third consecutive month, up by 63% from the previous month to 4.88 Mt, hitting a 22-month peak. Imports of 7.87 Mt during the first two months of the year were up by 11% year-on-year.

Asia-Pacific refinery shutdowns are estimated to peak in April, when about 1 mb/d crude distillation capacity in China and Japan will be off line, Argus reports. China will shut about 600,000 b/d of its 8.9 mb/d crude capacity. More than 330,000 b/d refinery capacity will be shut-in for maintenance in Japan in April, followed by another 500,000 b/d in May. South Korea's largest refiner SK will carry out maintenance at a 240,000 b/d unit at its 870,000 b/d Ulsan refinery in April, while GC Caltex will shut a 300,000 b/d unit at its 650,000 b/d Yeochon refinery in May. Relief from product overhang as a result of these turnarounds should only be limited, given the extent of the products' oversupply.

By late afternoon in London, ICE Brent was trading at $ 44.19/bbl.

Global oil demand for 2009 was again revised downwards by 200kb/d to 84.4mb/d, 1.2mb/d or 1.5% lower year-on-year, according to the latest IEA Oil Market Report. Global oil supply for February fell month-on-month by 1.0mb/d at 83.9mb/d, having dropped by 3.4mb/d on the year. Non-OPEC supply growth for 2009 was revised downwards by 380kb/d to zero, mainly due to disruptions in Azeri crude production. OECD industry stocks rose by 9.0 m bbl to 2,712 mb, with the forward demand cover estimated at 58.7 days, 4.6 days higher year-on-year.

By late afternoon in London, ICE Brent was trading at $ 45.77/bbl.

China’s coal exports in February slumped by 61% from the previous month to 1.44 Mt, hitting an 11-year low. Exports of 5.1 Mt in the first two months of the year were down by 42% year-on-year.

China’s crude imports dropped by 15% y-o-y in February to 3.08 m b/d, having slightly increased 1% from January levels, according to the latest data from China Customs. Product imports were up 2% on the year at 886,000 b/d having risen 57% from January. Meanwhile, Japanese crude imports declined by 19% to 3.8 mb/d in January, compared with the same month last year, Energy Intelligence reports. Imports from Saudi Arabia fell by 9% year-on-year to 1.13 mb/d, but still remained the largest crude exporter to Japan. Imports from UAE reached 790,000 b/d, having fallen by 30%. Imports from Russia increased by 55% to 163,000 b/d and from Vietnam rose by 45% to 55,000 b/d. Imports from Indonesia dropped by 66% to 70,000 b/d, while shipments from Sudan, Oman, Qatar and Iran decreased significantly.

By late afternoon in London, ICE Brent was trading at $ 42.14/bbl.

China’s February crude steel production was up by 4.9% year-on-year to 40.42 Mt, according to preliminary National Bureau of Statistics data. If confirmed, that would put year-to-date total output of 81.62 Mt up by 2.4% on the same period last year.