News archive August 2010

Data from world Steel Dynamics show that after climbing to a 3-month high of $614/t on 20 August, the recent rally in Chinese steel prices was already lost momentum. Chinese wire rod prices have eased to a 4-week low of $597/t, falling $17/t over the last week.

China's crude imports from Angola, its largest supplier in 1H10, slumped 29% y-o-y in July to 536 kb/d, as its overall crude volumes fell in July for the first time in 16 months, reports Energy Intelligence. Volumes from Saudi Arabia, the new top supplier, fell 13% on the year to 965 kb/d, while those from Iraq and Oman were down 8% and 18% respectively. Imports from Venezuela surged to 227 kb/d, up from 41 kb/d last year, while shipments from Kazakhstan were up from 114 kb/d to 206 kb/d.

Mexican crude production reached 2.58 mb/d in July, a 27 kb/d increase from June, Energy Intelligence reports. The rise has been attributed to increased output at the offshore Ku-Maloob-Zaap field. Mexico's crude exports rose by 276 kb/d over the same period to reach 1.39 mb/d in July, following the disruption to shipments caused by Hurricane Alex in June.

Russia is set to begin test operations on its new pipeline to China this weekend. The line, a spur off the existing ESPO pipeline that takes crude to the port of Kozmino, is planned to begin exporting 300 kb/d to China early in the new year.

Crude oil output from North Sea fields averaged 3.42 mb/d during July, a 261 kb/d increase from the month before, Argus reports. The rise is largely as a result of increased production at the Ekofisk field, where the end of scheduled maintenance allowed output to rise by 203 kb/d to 373 kb/d. Total Norwegian production increased by 292 kb/d to 1.88 mb/d, whilst UK output fell by 32 kb/d to 1.26 mb/d.

The world hot-rolled band export price has risen by $16/t (+3%) over the last month to a current $604/t, according to World Steel Dynamics. This represents the highest level since mid-June. However, the latest SteelBenchmarker shows that recent price rallies in China and the EU are already losing impetus. Chinese HRB prices have slipped to $521/t from a 2-month high of $527/t in mid-August, while EU prices have slipped by a similar $7/t (to $683/t) in the last two weeks. By contrast, after dipping to a 7-month low of $634/t in mid-August, HRB prices in the USA have edged $6/t higher to $640/t.

According to the latest data from the EIA, crude runs at US refineries fell by 348 kb/d last week to reach an average of 14.89 mb/d, ensuring units were operated at 87.7% of total capacity, down from 90.0% the week before. Refiners have been forced to cut runs in the face of slowing demand and rising inventories. Distillate stocks reached 176.0 MB, a 1.8 MB build from the previous week, whilst mogas inventories increased by 2.3 MB to 225.6 MB. Over the same period, distillate imports fell by 97 kb/d to 163 kb/d, but mogas arrived at a rate of 1.41 mb/d, a 331 kb/d increase week-on-week, and the highest level since October 2008. Meanwhile, crude stocks saw a 4.1 MB rise to 358.3 MB, as imports increased by 320 kb/d to 9.88 mb/d.

Crude exports out of the Former Soviet Union averaged 6.99 mb/d in July, a 254 kb/d increase from the volumes exported in June, Argus reports. Shipments from Black Sea ports saw a hefty 399 kb/d mom rise, averaging 1.19 mb/d. Increases were also seen along the Druzhba pipeline (up 73 kb/d mom to 1.19 mb/d), via the CPC pipeline (up 64 kb/d mom to 753 kb/d), and, albeit marginally, through the BTC pipeline (up 3 kb/d to 816 kb/d). Exports from Baltic ports declined by 102 kb/d to 1.55 mb/d, whilst shipments from Kozmino fell by 38 kb/d to 332 kb/d. Total exports from the FSU have averaged 6.82 mb/d so far this year, a 192 kb/d increase from the same period in 2009.

Chinese coal imports from Indonesia and Australia rose by 22% and 44% respectively in July from the previous month, according to Chinese customs data published by Reuters. China imported 4.5 Mt of coal Indonesia, while Australia was the second largest source, shipping 2.6 Mt. Long-haul imports from Colombia rose for the third consecutive month to a new record of 0.75 Mt in July. Trade data also showed rebounds in July coal imports from other long-haul suppliers: South Africa (from zero shipments in June to 0.35 Mt) and the USA (+8% to 0.43 Mt).

According to the latest statistics from KNOC (Korea National Oil Corp.), South Korea imported an average of 2.22 mb/d of crude oil in July. This represents a 5.5% increase from the same month in 2009, but a 1.3% decrease from the previous month's shipments. Meanwhile, the country's refineries processed 2.26 mb/d of crude last month, a 0.8% increase yoy, but a 2.4% decline from June.

Exports of crude oil from Ceyhan via the Baku-Tbilisi-Ceyhan (BTC) Pipeline are set to average 817 kb/d in September, up more than 6% from August's scheduled shipments, Argus reports. The rise comes as Socar, the Azerbaijani state oil company, begins flows of as much as 40 kb/d of Turkmen crude along the line.

Exports of CPC Blend from Novorossiysk are scheduled to fall by 8% in September to an average of 669 kb/d. Maintenance at the Karachaganak fields is being cited as the main reason behind the decrease.

Bharat Petroleum Corp. and other state-owned refiners are adding refining capacity in India to cater to surging demand in an expanding Indian economy, reports Dow Jones. BPCL is aiming to increase its annual refining capacity to 50 million tons over the next five years, from its current 24.5 million tons. It started commissioning its units at a new 6 million ton refinery which is expected to be fully commissioned by end September. India aims to have 5.12 mb/d of refining capacity by March 2012 as it also aims to become a global refining hub. BP's Statistical Review of World Energy stated India's refining capacity in 2009 rose 19.5%, the fastest pace worldwide, to 3.57 mb/d.

According to the latest data from the EIA, US distillate stocks reached 174.2 MB by the end of last week, a 1.1 MB build from the week before, and the twelfth consecutive week of increases. Meanwhile, mogas inventories fell by 100 KB to 223.3 MB, and crude stocks decreased by 800 KB to 354.2 MB. Crude inputs at US refineries averaged 15.24 mb/d last week, a 172 kb/d rise from the week before, whilst 90.0 % of total refining capacity was operated, up from 88.1% a week earlier. Crude imports rose by 120 kb/d to 9.56 mb/d and mogas imports increased by 121 kb/d to 1.08 mb/d. Distillate imports slowed, however, by 55 kb/d to an average of 260 kb/d.

Chinese buyers have purchased 665 kb/d of West African crude oil for September loading, a 225 kb/d decline from this month and 405 kb/d less than in July, Argus reports. This represents the lowest level of demand since March 2009, before the Chinese government's implementation of stimulus measures. The fall in August was attributed to refinery maintenance in the country, but continuing declines suggest a longer term reduction in demand. Conversely, loadings of West African crude by Indian buyers are set to increase by 420 kb/d mom, to reach 790kb/d in September. The surge in demand comes as refiners turn to light sweet crude in order to meet more stringent fuel specifications.

Australian coking coal exports rose for the third consecutive month to a record monthly volume of 15.1 Mt in June. Exports of steam coal on the other hand have now reached to a year-to-date high of 12.0 Mt in the same month. As a result, total coal exports hit an all-time high of 27 Mt in June, according to the Australia Bureau of Statistics.
June trade data also showed a marked increase in iron ore exports from Australia, up by 20% year-on-year to a new record of 37.3 Mt (wet basis). Most of the monthly rise was due to increased exports to China, which rose to a year-to-date high of 25.5 Mt. Exports in the 1h10 reached 204.2 Mt, compared with 176.4 Mt in the corresponding period last year.

September will see 360 kb/d of Chinese refining capacity shut for maintenance; the highest level so far this year and 68 kb/d more than the previous peak in May, Argus reports. This follows 32 kb/d of shutdowns in July, and 284 kb/d this month. With state-guaranteed margins keeping refinery runs high, shutdowns have been less extensive in 2010 than last year. July saw runs at China's refineries average 8.57 mb/d, and units operated at 89% of total capacity.

Combined crude oil production by the eleven OPEC member states (Iraq's output does not currently count towards the organisation's production target) rose by 190 kb/d last month to reach 26.98 mb/d, 2.14 mb/d above the group's output quota, Argus reports. Nigerian production of 2.35 mb/d represents a 200 kb/d rise mom, as streams previously disrupted by rebel attacks came back online. Saudi Arabia saw a slight increase in its production from 8.27 mb/d in June to 8.30 mb/d last month. Iran, Venezuela and Angola all saw marginal drops in output, whilst production in Kuwait, Qatar, Algeria, Libya and Ecuador was unchanged. Iraqi production increased by 5 kb/d to 2.37 mb/d.

Despite ongoing economic uncertainty, the International Energy Agency (IEA) has revised up its forecast for global oil demand for both this year and next. Demand in 2010 is seen at 86.6 mb/d, an 80 kb/d increase from the agency's previous forecast, and representative of a 2.2% yoy increase. Demand in 2011 is revised higher by 50 kb/d and stands at 87.9 mb/d.

According to the US Dept. of Energy, the country's distillate stocks surged 3.5 MB last week to reach 173.1 MB, the highest level on record. At the same time, mogas stocks increased by 400 kb/d to 223.4 MB. Stockpiles of crude oil fell 3.0 MB to 355.0 MB. Crude imports fell by 188 kb/d on the week, averaging 9.44 mb/d, mogas imports declined 275 kb/d to 958 kb/d, whilst distillate imports jumped 128 kb/d to 315 kb/d. Crude oil inputs at US refineries fell by 509 kb/d to 15.07 mb/d, leaving overall refinery utilisation down 3.1% at 88.1% of total capacity.

China's crude imports fell 3.2% year-on-year in July to 4.5 mb/d, having slumped 17.4% from the record high seen in June, according to the latest data from China Customs. The decline can partly be accounted for by a pipeline explosion in the port of Dalian mid-month which temporarily affected imports. Year-to-date volumes now average 4.75 mb/d, 24.5% higher on the year. Product imports were down 18.8% on the month to 658 kb/d having dropped 26.9% from the previous year.

Chinese passenger car sales fell for the fourth consecutive month in July, down by 9.3% from June to 946,200 units, according to the China's Association of Automobile Manufacturers. Although July's total marks a 13.6% year-on-year increase, it represents the slowest pace since March 2009.

Scheduled maintenance in NW Europe is set to be at its highest in September, when 370 kb/d, or 3.8% of capacity, is scheduled to be lost, while October will see 350 kb/d taken offline, reports Argus. In addition, refiners with no need of maintenance are running their units at less than 80% of capacity due to low returns on clean products following the rise in crude values. Gasoline has seen the worst returns due to Europe's heavy reliance on exporting to the US in order clear its surplus output. Gasoline crack spreads in Europe dropped below $5/bbl earlier this month, compared to around $11/bbl this time last year.

According to the latest data from the country's Ministry of Economy, Trade and Industry, Japanese crude imports averaged 3.19 mb/d in July, down 1.5% from the same month in 2009 and 8% less than in May. Saudi Arabia remains the country's main supplier, providing 981.5 kb/d, a 3.4% drop yoy. Kuwait (305.9 kb/d) saw its exports to Japan decline by 47.1%, whilst Qatar (437 kb/d), Russia (221.4 kb/d) and Oman (125.3 kb/d) saw their volumes increase by 31.3%, 27.0% and 168.9% respectively.

Russia is proposing a temporary ban on grain exports from 15 August to 31 December as a result of a severe drought and fires which have dramatically impacted the country's wheat and barley crops, according to major media sources. In 2009/10 (July-June) Russia exported 18.3 Mt of wheat and, as recently as June, the International Grains Council had projected that exports would total 18.0 Mt in 2009/10.

In recent years, August, September and October have been key months for Russia's grain exports. The country's main export markets are located in North Africa and the Middle East: in 2008/09 the IGC recorded that, of Russia's 18.3 Mt of wheat shipments, some 6.0 Mt went to the Middle East and 5.8 Mt were moved to North Africa. Both the US and Australia have been identified as alternative suppliers, which would provide a positive effect on tonne-mile demand.