News archive November 2009

The number of Capesizes waiting to berth at iron ore ports in Australia, Brazil and China as well as Australia's coal ports decreased from 128 in mid-November (close to the Capesize market peak) to 111 this week, according to local sources. Some 42 Capesizes are currently queueing off China's iron ore discharge terminals, compared with 46 in mid-November.

After an insurgent attack halted the flow of crude oil through Iraq's northern pipeline to Turkey last week, today saw full exports through the line resume, Reuters reports. The line, which runs from Kirkuk to the Turkish port of Ceyhan and typically transports a quarter of all Iraqi oil exports at an average of 500 kbpd, was running on Monday at a volume of about 640 kbpd, according to sources at Iraq's state-run North Oil Company. The line had resumed limited pumping on Friday, after having ceased operation completely on November 24, but was shut for a further 24 hours early on Sunday due to a technical fault. Sources at Ceyhan reported that one ship was loading at the pipeline's terminus, whilst three others were waiting.

, Somali pirates have hijacked the Greek-owned VLCC, Maran Centaurus. The vessel, capable of carrying 2mbbl of oil, was seized in the Somali Basin, around 600 nautical miles north-east of the Seychelles. The capture represents the second time a tanker of this size has been taken by Somali pirates, following the hijacking of the Sirius Star and its 2 mbbl of oil in November 2008. According to press reports at the time, her release in February of this year came after a ransom payment of USD3.5m.

Four new floating oil terminals and three new undersea oil pipelines will send Iraqi export capacity rocketing from today's 1.9 mbpd to 8 mbpd in the second half of 2011, Reuters reports. The plans follow the country's recent deals with a number of oil majors that it hopes will send it to third on the global oil production list, from its current position of eleventh. BP and CNPC recently finalised a deal to develop the super-giant Rumaila field, whilst consortia led by ExxonMobil and Eni have reached initial agreements to develop the West Qurna Phase One and Zubair fields respectively. December 11-12 will see a second round of tenders for contracts in 10 further largely undeveloped Iraqi oilfields. The country's current oil infrastructure has suffered the effects of years of conflict and sanctions and would be unable to cope with the increase in pumping rate scheduled for the coming years.

The International Grains Council predicts that global wheat trade will total 117.7 Mt in the 2009/10 trade year (July-June). Although this forecast has been revised up by 2.1 Mt from last month, it falls well short of the 2008/09 trade estimate of 135.7 Mt. The IGC anticipates that shipments from Argentina will be sharply reduced, forecasting exports of 2.4 Mt in the current trade year compared with 8.5 Mt in 2008/09.

The Shanghai Composite Index fell more than 3% today, closing at 3,170.98 points. This follows a volatile two days of trading this week, which saw the index lose 3.5% on Tuesday before regaining 2% on Wednesday. According to Reuters, some market commentators have attributed today's fall to investors' concerns that China's government may introduce steps to tackle rising asset prices.

October saw South Korean imports of crude oil rise to an average of 2.43 mbpd, an increase of 6.4% (145 kbpd) y-o-y, reports Energy Intel. Imports from Saudi Arabia, the country's primary source of crude, rose from 687 kbpd in October 2008 to 796 kbpd for the same period this year, a 15.9% increase. This particular rise can be put down to an increase in purchasing by S-Oil, which is part-owned by Saudia Aramco and GS Caltex. Deliveries from the UAE dropped 12.1% from 428 kbpd to 376 kbpd. Mideast imports were up 7.8% to 2.12 mbpd in total, whilst Asian imports declined by 8.7% to 216.8 kbpd.

US crude stocks rose 1 mbbl last week to 337.8 mbbl, 5.3% higher y-o-y, following a 371 kb/d rise in imports to 8.95 mb/d, according to the latest data from the US Department of Energy. Gasoline stocks were also up 1 mbbl at 210.1 mbbl, with a 344 kb/d increase in imports to 928 kb/d exceeding a 77 kb/d rise in demand. Distillate inventories were down 0.5 mbbl at 166.9 mbbl, but remained 32% higher on the year, as imports rose 82 kb/d to 234 kb/d and demand rose 59 kb/d. Refinery utilisation was up 0.9% at 80.3% resulting in a 177 kb/d increase in crude inputs.

The price of Chinese hot-rolled band has maintained its recent rise, according to figures released in World Steel Dynamics' SteelBenchmarker today. The HRB price in China now stands at $453/t compared with $407/t recorded six weeks ago. Despite the latest upward push, the HRB price is still below the year-to-date high of $508/t.

The US Commerce Department has revised down its estimate of GDP growth in the 3q09 to 2.8% compared with 3.5% from the initial forecast earlier this month, according to official figures. However, it remains the first expansion for the US economy after four straight quarters of contraction, reflecting a smaller gain in consumer spending and a bigger trade deficit.

The Kirkuk pipeline that typically transports 500 kbpd of oil from northern Iraq to Ceyhan in Turkey has been out of action since November 21 after it was damaged by a bomb attack in Salahuddin province, Reuters reports. It is anticipated that it will be a further four days before the line is rendered operational again. There has been no loading of Kirkuk at Ceyhan on Tuesday. The latest attack follows a similar incident at the end of October that prevented Iraqi oil reaching Turkey through the line until November 2. As a result of this insurgent activity the country's oil exports dropped by 4% from 1.96 mbpd in September to 1.89 mbpd in October, Iraqi officials have revealed.

The Capesize Iron Ore Port Congestion Index for China has doubled in the last month to 7.3 days, with 46 Capesizes waiting to discharge at the country’s ore ports, according to local sources. Meanwhile, the SSY Australian Coal Port Congestion Index has surged above 14 days for the first time since May 2008.

Overall crude exports from the FSU were unchanged in October compared to September, Argus reports. A fall in exports through the Transneft pipeline system, as well as from the Varandey terminal was countered by an increase in Caspian shipments and loadings at Baltic ports, leaving October's total exports averaging 6.73 mbpd. The latest figures represent a rise of 781 kbpd (13%) year-on-year, an increase for which a rise in Azeri exports through the BTC pipeline is largely responsible.

According to data from the World Steel Association, October world crude steel production hit a 14-month high of 112.2 Mt, posting a 13% increase year-on-year. This is the second month in a row when global steel output represented a year-on-year increase. The majority of this increase was due to China and the CIS, which registered growth of 42.4% and 26.9% year-on-year with monthly production at 51.7 Mt and 9.0 Mt respectively. Annual declines were pronounced in the US (-12.4% to 5.9 Mt), Japan (-12.9% to 8.8 Mt) and the EU (-12.1% to 14.1 Mt).

Angola is set to export around 1.83 mbpd of crude oil during January, a rise of 20 kbpd from the 1.81mbpd scheduled to be loaded in December, Reuters reports. January's programme will again see Angola exceed its OPEC set export targets of 1.52 mbpd, but not the 2009 record of 1.93 mbpd exported during October. The country is due to host an OPEC meeting on December 22 in its capital, Luanda.

Rosneft has tendered the first cargo of ESPO blend, Argus reports. The Kozmino export terminal, situated at the end of the East Siberia-Pacific Ocean (ESPO) pipeline, will be the location for the cargo's loading, which is scheduled to take place on 27-29 December.

Japan’s steel production rose by 6% from September to 8.79 Mt in October, according to the Japan Iron and Steel Federation, the highest level since November 2008. However, this still brings output down for the first ten months of the year by 32% from the same period last year to 69.72 Mt.

China's apparent oil demand rose 10.2% y-o-y in October to 33.89Mt, or 8 mb/d, due to higher crude processing rates, reports Platts. This was the second consecutive month Chinese oil demand has seen double-digit y-o-y growth after a 12.6% rise in September. Chinese refiners processed a record 33.29Mt, or 7.8 mb/d, of crude during the month.

October saw China’s coal imports stand above 11 Mt for the fifth straight month, posting a massive 7.65 Mt increase year-on-year, compared with a record monthly volume of 16 Mt set in June. The annualised rate from the first ten months puts imports on course to reach 117 Mt this year (+76 Mt year-on-year).

US crude oil imports fell by 77 kb/d last week to reach an average of 8.6 mb/d, the latest figures from the US Department of Energy reveal. Crude inventories also decreased from the previous week, down by 0.9 Mb/d (0.3%) to 336.8 mbbl, representing a year-on-year fall of 20.6 mbbl (6.5%). Refinery runs for the week fell once again, this time by an average of 31 kb/d to leave total inputs averaging 13.8 mb/d. Refining activity was at 79.4% of total capacity, a 0.5% drop from the previous week. Gasoline inventories were down by 1.7 mbbl (0.8%) to 209.1 mbbl, whilst distillate stocks decreased 0.3 mbbl (0.2%) to 167.4 mbbl.

Independent refiners in Europe are being forced to close
plants and cut throughputs in the face of continued weak demand, Argus
reports. In Europe, Petroplus, the region’s largest independent
refiner, processed 525 kb/d of throughputs, despite having the
capacity for 865 kb/d. Refining margins for the period were weak
despite 20% run cuts, and, as a result, Petroplus will keep runs at
585-645 kb/d for the year as it attempts to minimise cash losses. The
firm is looking at converting plants into storage terminals as a
further measure.

The US offers a similarly bleak outlook for its refiners after the
last two months saw a rapid increase in plant shutdowns and
consolidation. At the same time, integrated oil companies are
increasingly looking to increase their ’in-house’ refining capacity.
One estimate suggests that in order for the US refining industry to
restore profitability to an adequate level for investors, at least 5%,
or 900 kb/d, of capacity will have to be permanently taken off-line.

In Japan, oil firms have been left little option but to bring forward
refining cuts as domestic oil demand reached its lowest level for 40
years. All the major refiners posted refining losses for the first
half of the fiscal year ranging from

US coal exports (including anthracite coal, excluding shipments to Canada) rose by 0.6 Mt month-on-month to 4.2 Mt in September, the second highest monthly volume in 2009. However, September’s exports still represent a decline of 26% from the same month last year.

There was mixed activity in US coal exports during September. Coking coal exports dropped to 3 Mt compared with the year-to-date high of 3.1 Mt set in August. Exports to Asia accounted for one-third of US shipments, up by 35% month-on-month to 1.04 Mt. Steam coal exports in September rose to 1.2 Mt, posting an increase of 0.7 Mt month-on-month.

After witnessing a decrease in October, West African crude exports to Asia-Pacific are scheduled to rebound as a result of greater Chinese and Indian demand, Argus reports. Chinese imports from the region fell last month in response to a build-up in crude and products stocks, but the introduction of new refinery capacity and wider refining margins have reinvigorated demand for November. Similarly, growth in Indian refining capacity has bolstered the country's crude demand. Widening discounts for West African grades relative to benchmark North Sea Dated ensured that it was these that this demand centred upon. Indian imports of West African crude for the year so far have averaged nearly 435 kb/d, up from around 300 kb/d for the same period in 2008. Chinese demand has averaged just over 750 kb/d so far in 2009, a figure little changed from the same period last year, despite the continuation of the global economic downturn.

The FOB price of Indian iron ore of 63.5% Fe content now stands at $86/t, up by $13 on the month-ago level, according to data from U-Metal. This takes the delivered price into China to a 3-month high of $104/t, just short of the year-to-date high reached in August.

Meanwhile, iron ore stockpiles at China's discharge ports fell for the fourth consecutive week to 66.20 Mt, posting the lowest level since end-March, 7.93 Mt lower than the year-to-date high of 74.13 Mt in mid-September.

China’s crude steel production in October rose by 42.4% year-on-year to 51.75 Mt, according to the National Bureau of Statistics. This brings output for the first ten months of the year up by 10.5% from the same period last year to 472.47 Mt. The annualised rate from the first ten months would put China’s crude steel production in 2009 at 567 Mt (+69 Mt YoY), another new record.