News archive October 2009

Due to large purchases from Near East Asia, the International Grain Council (IGC) has lifted its forecast for world grain trade in the 2009/10 marketing year by 2 Mt from last month's forecast to 226 Mt, compared with 247 Mt in 2008/09. The IGC expects wheat exports from the five major exporters to reach 75.9 Mt in the 2009/10 trade year, 1.5 Mt higher than the previous month's forecast, however, far below a record volume of 91.9 Mt in 2008/09. Meanwhile, the total forecast export volume for world soyabeans has increased to 77.1 Mt for this marketing year from 75.8 Mt a year earlier.

After August's decline, September saw Mexico's crude output rise by 57 kb/d to average 2.60 mb/d for the month, reports Energy Intelligence. Similarly, exports for September rose 27k b/d to reach 1.13 mb/d. Elsewhere in the region, BHP, Repsol and Hess have made two oil discoveries in the Shenzi field, 120 miles off the coast of Louisiana, reports Bloomberg. The news has increased optimism in the production prospects of the area and in the Gulf of Mexico as a whole.

22 October saw the port of Kozmino, on Russia's Pacific coast, receive - by rail - its first crude cargo, Argus reports. The first tanker cargo is due to leave the port towards the end of December from its double-sided berth, which can accommodate tankers up to 150 kdwt. Until the ESPO pipeline, of which Kozmino constitutes the end point, comes fully on stream in 2014, the port will be supplied by rail at a rate of 15 mt/yr. After this, pipeline deliveries are scheduled at 30 mt/yr, with 5 mt/yr continuing to arrive by rail.

According to World Steel Dynamics’ SteelBenchmarker, the world export price for hot rolled band has slipped by $42/t month-on-month to $503/t, representing the lowest level since June. US and EU HRB prices are both down from their year-to-date highs in September to stand at $592/t and $588/t respectively. In contrast, Chinese HRB prices have increased from $415/t last month to the current price of $430/t after falling for the previous two months.

Despite varied schedules for individual systems within the Norwegian and UK North Sea sectors, the total scheduled volumes for November suggest a drop of only 17k b/d m-o-m, or 0.78%, to 2.081m b/d. Energy Intelligence reports. In line with traditional levels of respective optimism, the Norwegian sector anticipates an overall gain of 33k b/d, whilst the UK schedules a fall of 49k b/d. Temporary production difficulties in the Buzzard field have led to the deferral of two cargoes originally due to load towards the end of November, which in turn saw a 38k b/d drop in the Forties schedule.

China imported a total of 25.98 Mt of iron ore from Australia in September, up by 18% month-on-month and 34% year-on-year, with Australia’s share of China’s imports more than 40%. Imports from Brazil rose by 70% year-on-year to an all-time high of 16.71 Mt, accounting for 26% of total imports as the second largest supplier in
September. Shipments from India were 8.42 Mt, posting a massive 72% year-on-year increase, according to U-metal.

US crude stocks grew 0.8m bbl last week to 339.9m bbl as imports increased 191k b/d to 8.9m b/d, according to the latest data from the US Department of Energy. Gasoline inventories were up 1.7m bbl at 208.6m bbl as imports rose 107k b/d to 756k b/d and demand fell 92k b/d to 8.86m b/d. Distillate stocks fell 2.1m bbl to 167.8m bbl as demand rose 150k b/d to 3.6m b/d and imports rose 64k b/d to 184k b/d. Refinery utilisation was up 0.7% at 81.8%.

South Korea’s GDP rose by 2.9% quarter-on-quarter in the 3q09, the fastest pace since 1q02 and up from 0.6% compared with the same period last year after three consecutive quarters of negative year-on-year growth.

India's crude output fell 0.5% y-o-y in September to 2.77Mt, or 677k b/d, for the ninth monthly decline in 10, reports Bloomberg. The fall was led by lower output from Oil & Natural Gas Corp, the country's largest explorer. Production from non-state explorers rose 7.9% to 425kt, or 104k b/d. India's refiners increased crude processing by 3.4% y-o-y in September to 13.5Mt, the second monthly rise, to meet fuel demand.

FSU product exports rose 450k b/d in the 3Q09 y-o-y to over 2.9m b/d, mainly due to higher shipments of middle distillates, particularly to the EU, and strong Asia-Pacific fuel oil demand, reports Argus. Gasoil exports have been increasing from Primorsk and Ventspils due to new infrastructure and refinery upgrades. Volumes of 10ppm diesel from Primorsk were 115k b/d in September, up from under 25k b/d a year earlier. The US has been importing Russian heating oil, with 1.1m bbl due to start arriving on the east coast in late October, however, the arb is not expected to stay open long.

There are tentative signs of improved end-user demand for steel in China, with some prices showing upward movement after two months of decline. According to World Steel Dynamics, Chinese wire rod FOB prices have increased by $20/t (+4%) from their recent 6-month low of $479/t set in early October to the current level of $499/t, the highest level over the past five weeks.

World steel production in September reached 107.0 Mt, a gain of just 0.5 Mt on August, according to Worldsteel. The data show virtually flat growth year-on-year, although September 2008 was one of the first months to experience output cuts due to the sudden worsening economic conditions. Furthermore, there remains a sharp contrast between trends in China, where output was up 27% YoY to 50.7 Mt, and other major producing areas. For example, Japan (8.3 Mt, down 18%), the US (5.4 Mt, down 31%) and the EU-27 (13.2 Mt, down 24%) are still well short of year-ago levels.

FSU crude exports to non-CIS destinations rose 7.7% y-o-y to 6.61m b/d in Jan-Sept 2009, reports Argus. The rise came as Caspian crude loadings increased, as did exports of Russian crude from the Barents Sea port of Varandey. Overall, exports were up 2.7% month-on-month in September at 6.69m b/d. CPC shipments were up 3.9% on the month at 738k b/d, 11.9% higher on the year. BTC exports were down 2% on the month at 789k b/d but were 15.2% higher than the previous year.

China processed a record volume of crude oil at 32.83Mt, or around 8m b/d, in September (2.2% higher than the previous high) to power accelerating economic growth and feed a rapidly expanding car fleet, reports Dow Jones. The record runs came after a 240k b/d plant was brought online in August and the government raised gasoline and diesel prices by 4-5% in September. Runs are expected to stay high as the demand outlook for products, mostly diesel and gasoline, looks strong. Diesel output rose 12% y-o-y to 12.7Mt in September while gasoline rose 9.1% to 5.78Mt. China's GDP rose 8.9% in the 3Q09 y-o-y, the fastest pace this year and up from 7.9% in the 2Q09, as stimulus spending and record lending growth helped the nation lead the world out of recession.

US crude stocks rose 1.3m bbl last week to 339.1m bbl, but remained 8.9% higher y-o-y, with imports dipping 32k b/d to 8.7m b/d, according to the latest data from the US Department of Energy. Gasoline inventories dropped 2.3m bbl to 206.9m bbl as imports fell 41k b/d to 649k b/d and demand declined 306k b/d to 8.95m b/d. Distillate stocks were down 0.8m bbl to 169.9m bbl as imports fell 44k b/d to 120k b/d, while demand fell 70k b/d to 3.49m b/d. Refinery utilisation was up 0.2% at 81.1%.

High volumes of coal imports into China were maintained in September, when 12.55 Mt were imported compared with 3.7 Mt in the same month last year, according to China’s Customs Statistics. September’s total was just 3.52 Mt below June’s record monthly total of 16.07 Mt. China’s coal imports have boomed in 2009, year-to-date imports of 86.46 Mt have already far exceeded the previous annual record of 51 Mt in 2007.

Angola's crude exports are scheduled to fall in December to 1.76m b/d, down 1.7% from the original schedule for November, reports Bloomberg. This will be the second month shipments have dropped, bringing volumes closer to the country's OPEC quota. OPEC has urged members to comply more closely with production cuts as compliance with output targets has fallen to 62%. Exports this month are set to rise to the highest this year. Angola output in September was just under 1.82m b/d compared to Nigeria's volumes of under 1.81m b/d.

North Sea crude and condensate output fell 185k b/d y-o-y in the 3Q09 to just above 3.5m b/d, a record low from the 1999 peak, mainly due to a large drop in output from the Norwegian sector, reports Argus. Maintenance at the 215k b/d Buzzard field also cut volumes. Total volumes from Norway in the 3Q09 were just over 2m b/d, down 5.8% on the year, with September output at 1.9m b/d. Output from the UK was down 2.7% at 1.2m b/d in the 3Q09, with September volumes at just under 1.22m b/d.

Following two months of falls, some small gains in domestic PRC steel prices have been reported. According to the World Steel Dynamics, the price of Chinese wire rod rose by $14/t week-on-week to a 3-week high of $493/t at the end of last week, after declining 24% over two months.

China's apparent oil demand rose 1.2% during the first eight months of the year to 7.7m b/d, and is likely to see growth for the full year of 2-4%, reports Energy Intelligence. Apparent gasoline demand has risen this year as consumers have responded to government rebates and tax incentives by buying more cars. China expects total auto sales in 2009 to exceed 12m, up 28% y-o-y. Total air traffic has increased over 8% y-o-y in Jan-Aug 2009, causing jet kerosene demand has surged, with domestic output up 22% at 308k b/d.

US gasoline stocks slumped 5.2m bbl last week to 209.2m bbl, but remained 7.9% higher y-o-y, as imports fell 321k b/d to 690k b/d and production was cut by 964k b/d to 8.45m b/d, according to the latest data from the US Department of Energy. Refinery utilisation was down 4.1% at 80.9%. Distillate inventories were down 1.1m bbl at 170.7m bbl as imports dipped 50k b/d to 164k b/d and output fell 166k b/d to under 3.9m b/d. Crude stocks rose 0.33m bbl to 337.8m bbl, while imports fell 367k b/d to 8.7m b/d.

The world export price for HRB steel has slipped to $537/t, according to the latest SteelBenchmarker issued by World Steel Dynamics. This is partly due to an acceleration in exports from China. PRC steel exports have risen each month since May to reach a year-to-date high of almost 2.5 Mt in September. Meanwhile, HRB prices in China have fallen to a six-month low of $407/t, while US and EU prices have declined to their current respective levels of $609/t and $582/t.

China’s imports of iron ore surged to an all-time high of 64.55 Mt in September, according to preliminary customs data released today. This marks a massive jump from the August import total of 49.68 Mt and is significantly higher than imported volumes in the previous record month of July (of 58.08 Mt). As a result year-to-date imports of 469.6
Mt are 36% higher than during the same period last year.

China's crude imports rose 14% y-o-y in September to 4.2m b/d, despite falling 3.8% from August, according to the latest data from China Customs. Volumes in Jan-Sept were up 8% at an average 3.9m b/d. Product imports were up 9.8% on the year at 685k b/d, having risen from 642k b/d in August. Year-to-date imports were down 6.8% on the year at an average 779k b/d.

In its latest monthly report, OPEC has revised up its forecast for 2009 world oil demand growth by 0.2m b/d to now show a contraction of 1.4m b/d. Growth in 2010 has also been revised up to 0.7m b/d to take into account the gradual improvement in the world economy. The demand for OPEC crude in 2009 is estimated to average 28.6m b/d, 2.3m b/d lower on the year, while in 2010 it is expected to average 28.4m b/d.