News archive March 2010

According to data from the latest summary of weekly petroleum data from the US Department of Energy, crude inputs at the country's refineries increased by 192 kbpd from the week before to leave throughputs averaging 14.23 Mbpd. Refineries were operating at 82.6% of total capacity, the highest level since October last year. Crude oil inventories totalled 354.2 Mbbl last week, a build of 2.9 Mbbl from a week earlier, despite imports dropping by 337 kbpd to an average of 9.1 Mbpd. Stocks of mogas increased by 300 kbpd to a total of 224.9 kbpd, whilst imports rose by 87 kbpd to an average of 710 kbpd. Distillate imports rose to 321 kbpd, a jump of 153 kbpd from the week before , whilst stocks decline 1.1 Mbbl to 144.6 Mbbl.

According to government data, Japan's industrial production fell by 0.9% month-on-month in February, following strong growth in January, representing a decline for the first time over the past year. However, compared with a year ago, February industrial output was up by 31.3%.

In deals representing the first term contracts for ESPO Blend, Trafigura and Mitsubishi have both signed contracts with TNK-BP that will see them each take one cargo per month for a period of six months, reports Argus. Trafigura will take its first cargo from Kozmino on 18-19 April, with Mitusbishi due to load their cargo on 27-28 April. The deals come on the back of the news that total exports from the port of Kozmino are scheduled to average 318 kbpd (3.95 Mt) in 2q10, a 25.9% increase from the first quarter. Chevron and Talmay are the latest buyers in the ESPO Blend spot market.

BHP Billiton today announced that it had reached agreement with a significant number of customers throughout Asia to move existing iron ore contracts that were previously priced annually onto a short term landed price equivalent basis.
According to several news agencies, the top two iron ore miners have agreed quarterly prices with Japanese steel companies that would raise FOB prices by 90% to $100-110/t in the 2q10.

March has seen westbound Middle East crude liftings reach their highest levels in more than a year, Argus reports. This, coupled with an increase in west African exports to the US, has resulted in north American long-haul imports averaging 5.5 Mbpd, a 200 kbpd increase from January's volumes, with an extra 500 kbpd expected to arrive during April. Nevertheless, recent stock builds and continuing low refinery activity in the US suggests that much of these imports have ended up in inventories. Meanwhile, a heavy turnaround season for Asia-Pacific refiners has contributed to an estimated 250 kbpd decline in eastbound crude flows from the Middle East this month.

Indian iron ore FOB prices for 63.5% Fe content have risen $5/t week-on-week to $130/t. This takes the delivered price into China to a 19-month high of $155/t at the end of last week, standing above $100/t over the past five concesutive months, according to data from U-Metal.

February saw South Korea import an average of 2.34 Mbpd of crude oil, a 12.3% decline from the same month last year, reports Energy Intelligence. Saudi Arabia remains the country's primary source of crude, however February's average imports from this source of 819 kbpd represent a 4.1% fall year on year. Imports from Kuwait, the republic's second largest source of oil, were down 18.8% to 307 kbpd, whilst total Middle East imports fell 11.2% to an average of 1.95 Mbpd. Imports of Russian crude averaged 155 kbpd, a 40.9% rise from the year before.

Last month saw Chinese crude imports increase 58% year on year to an average of 4.85 Mbpd. Imports from Saudi Arabia, its primary source, averaged 948 kbpd, a 13.5% increase from a year earlier. Angolan exports to the country jumped by 103% to 672 kbpd, ensuring that the west African nation is China's second largest provider of oil. With its output increasing, Iraq has been able to provide 249 kbpd, a 255.7% increase from a year earlier. The only major exporter to see declines in the volumes of crude it ships to the Asian giant was Iran, which provided 379 kbpd, a 24.4% decrease from February 2009.

The price of Chinese wire rod has risen for the third consecutive week, up by $25/t week-on-week to $608/t at the end of this week, standing above $600/t for the first time since August 2009. This is still below $629/t the 2009 high set in early August.

The latest International Grains Council grain trade forecast for 2009/2010 (July-June) of 230.8 Mt compares with an estimate of 248.3 Mt for the previous crop year.

The total forecast export volume from the five major exporting countries has fallen to 153.3 Mt for this marketing year from 169.5 Mt a year earlier, down by 2.5 Mt from the previous forecast last month. Annual declines in exports are forecast from Argentina (-7.9 Mt to 14.5 Mt), Canada (-0.5 Mt to 21.7 Mt) and the EU (-8.6 Mt to 21.5 Mt). IGC has revised its forecast for the USA (+0.6 Mt to 77 Mt) and Australia (+0.2 Mt to 18.6 Mt).

Year-on-year declines in exports volumes for major grain exporters from the Black Sea are projected for Ukraine (-4.2 Mt to 20.6 Mt) and Russia (-1.6 Mt to 21.5 Mt).

Indian refinery inputs averaged 3.39 Mbpd in February, with output growing 0.8% year on year in, the slowest rate of growth since July, Reuters reports. The slowing of production has been attributed to a number of maintenance shutdowns at state-run refineries which, last month, processed 2.5% less crude year on year. Having significantly increased capacity over the last year, Reliance increased out put by 9%, whilst Essar saw output rise by 9.8% compared to a year earlier.

According to data from U-Metal, China’s iron ore imports from Australia grew by 3% month-on-month and a similar annual increase to 20.56 Mt in February. In contrast, imports from India marked both monthly and yearly declines to a 3-month low of 9.88 Mt in the same month. Imports from Brazil were down by 16% year-on-year to 8.97 Mt in February.

The world export price for hot rolled band has risen for the fourth straight month, up by 7% month-on-month to $635/t, according to World Steel Dynamics’ SteelBenchmarker. This represents the highest level since October 2008. The biggest monthly increase was seen in China, with prices up by 11% to $526/t. That was followed by the EU (+10% to $661/t) and the USA (+9% to $730/t).

The latest summary of weekly petroleum data from the US Energy Information Administration shows crude oil inventories at the end of last week of 351.3 Mbbl, a build of 7.3 Mbbl from the week before. Average crude imports increased from 8.43 Mbpd to 9.40 Mbpd over the same period. Mogas inventories fell by 2.7 Mbbl to 224.6 Mbbl, whilst distillate stocks totalled 145.7 Mbbl, a fall of 2.4 Mbbl. Imports of the two products were hardly changed at 623 kbpd and 168 kbpd respectively. Inputs at the country's refineries increased by 102 kbpd to an average of 14.04 Mbpd, with 81.1% of total capacity utilised.

Russian product exports totalled 7.9 Mn t in February, a decline of 3.7% on an average daily basis from the month before, Argus reports. Gasoline exports totalled just 329 kt, a 45.5% fall from January's volumes, whilst naphtha shipments were down 23.4% to 738 kt. Gasoil exports saw a less dramatic 1.7% decrease and totalled 1.9 Mn t, and fuel oil loadings totalled 3.85 Mn t, a 1.1% increase from January.

Indian iron ore FOB prices for 63.5% Fe content have risen by $7/t week-on-week to the year-to-date high of $125/t. This takes the delivered price into China to $150/t, representing the highest level
since end-August 2008, according to data from U-Metal.

February saw Chinese exports of gasoline and diesel decline rapidly from both the month before and recent peaks, meaning that the country returns to being a net fuel importer, Reuters reports. Exports of gasoline totalled 210.8 Kt (approximately 25.14 kbpd) in February, a 28% drop year on year and down from 600.5 Kt (approx. 71.61 kbpd) the month before. Diesel exports fell by 11.8% year on year and totalled 290 Kt (approx. 40.65 kbpd) last month, down from 463.8 Kt (approx. 63.41 kbpd) in January. Observers have cited a combination of record crude runs and suppressed agricultural diesel use due to the cold winter as a reason behind the recent high export levels. However, oil firms have since been less keen to ship product abroad in anticipation of increased domestic demand as the seasons change.

February world crude steel production rose by 24% year-on-year to 107.5 Mt, according to data from the World Steel Association. However, this was almost 6 Mt lower than the 109 Mt produced in January. Most of the annual increase was registered in mature economies - Japan (+54% to 8.4 Mt), the USA (+51% to 6 Mt) and the EU (+29% to 13.4Mt). Top producer China was up by 23% year-on-year to 50.4 Mt, while India's output reached 4.9 Mt, representing a modest increase of 5% year-on-year.

CPC Blend Exports Set to Rise In April
Exports of CPC Blend from the Black Sea port of Novorossiysk are scheduled to average 676 kbpd next month, a slight increase of 7 kbpd from the planned shipments this month, Argus reports. Recent production at the Tengiz fields, the oil from which is the main component of CPC blend, and the current lack of Tengiz exports through the BTC pipeline are cited as contributory factors behind the rise.

Japan’s crude steel production fell for the second consecutive month in February, down by 3.3% month-on-month to 8.44 Mt, according to the Japan Iron and Steel Federation. However, this represents a massive 54% year-on-year increase compared with a 40-year low of 5.48 Mt in the same month last year when output collapsed during the recession. February’s total marks the seventh straight month above 8 Mt.

The coming weeks will see European refiners increase maintenance shutdowns, with 1.24 Mbpd and 1.01 Mbpd of capacity set to be taken off line this month and next, Argus reports. Depressed demand has led to poor margins for the continent's refiners over the last year, with many refineries running at not much more than 80% of capacity. Refiners in Northwest Europe have endured the worst of the situation, as evidenced by the recent indefinite mothballing of a number of plants, and the region is set to see more than 770 kbpd of capacity removed for maintenance in March and April.

The latest data from the US EIA show that, last week, crude inputs at the country's refineries averaged 13.94 Mbpd, an almost identical rate to the week before, resulting in a barely changed total utilisation rate of 80.6%. Whilst crude imports fell very slightly to 8.43 Mbpd, a week on week drop of 64 kbpd, stocks increased by 1.0 Mbbl to 344 Mbbl. Mogas stocks fell by 1.7 Mbbl, to 227.3 Mbbl, as imports experienced an unseasonal drop of 198 kbpd, to average 608 kbpd. Distillate imports were up by 33 kbpd to 163 kbpd, whilst stocks fell 1.5 Mbbl to reach 148.1 Mbbl.

The World Bank now forecasts the Chinese economy to grow by 9.5% in 2010, an upward revision of 0.8% from its last report.

Iron ore imports into the UK in January fell for the second straight month, down by 0.23 Mt month-on-month to 1.05 Mt, trade data show. However, this represents a 0.89 Mt increase year-on-year. Such robust annual growth is a reflection of the slowdown in the same month last year, when the world economy was probing the depths of the financial crisis.

According to the latest China Quarterly Update from the World Bank, China’s economy will expand by 9.5% in 2010 due to a recovery in exports and solid domestic consumption. This projection is higher than the bank’s previous forcast of 8.7% set last November and the 8% target set in the 2010 government work report delivered by Premier Wen Jiabao earlier this month.