News archive April 2011

According to the latest provisional loading schedules, Nigerian crude oil exports are set to average 2.15 mb/d during June, up from around 2.03 mb/d in May and 2.06 mb/d this month, Reuters reports. The increased exports come as a result of a rise in the number of available Bonny, Forcados and Agbami cargoes, and will offer some help in easing the currently tight light/sweet crude market.

The world export price for hot rolled band fell to a 3-month low of $731/t, down by $38/t or 5% month-on-month, according to World Steel Dynamics' SteelBenchmarker. The decline in global steel prices was led by monthly falls in the USA (-$19/t to $951/t) and the EU (-$22/t to $830/t). By contrast, steel prices in China continued to increase over the past six weeks, with Chinese domestic HRB rising $27/t (+4%) from a month ago to $633/t. This represents the highest level since July 2008.

According to the latest data from the EIA, US crude inventories saw a 6.2 MB build last week, growing to 363.1 MB. The rise came as imports increased by 1.21 mb/d from the week before, to 9.27 mb/d. East Coast imports more than doubled week on week, rising 592 kb/d, to 1.15 mb/d. Over the same period, shipments discharging on the Gulf Coast rose 573 kb/d, to 5.51 mb/d. Crude runs at the country's refineries were fairly stable, down just 27 kb/d from the week before, at 14.08 mb/d. Overall refinery utilisation rose very slightly from 82.5%, to 82.7% of total capacity. Meanwhile, mogas stocks continued to fall, down 2.5 MB from the week before, to 205.6 MB. Mogas imports rose 197 kb/d over the same period, to 1.05 mb/d. Distillate stocks dropped 1.8 MB, to 146.5 MB, as imports declined 172 kb/d, to 121 kb/d.

Chinese imports of Angolan crude oil dropped 393 kb/d (-36.4%) yoy during March, to 688 kb/d, as refiners favoured Middle Eastern volumes in light of a widening Brent-Dubai spread. Saudi Arabia strengthened its position as China's primary supplier, shipping 1.03 mb/d last month, up 264 kb/d (34.7%) yoy. Whilst Angola remains the country's second largest source of crude, third placed Iran closed the gap after exporting 554 kb/d, up 29 kb/d (5.5%) yoy. Amongst other major suppliers, Kazakhstan, Venezuela, Iraq and Sudan all saw yoy increases to their exports to China during March. Exports from Russia, Oman and Libya were all down from the year before. China's total crude imports averaged 5.12 mb/d last month, up 144 kb/d (2.9%) yoy.

Chinese coal imports from Australia showed a dramatic decline in March as a result of weather disruption, down 0.8 Mt or 53% month-on-month to 0.7 Mt, representing the lowest monthly shipments since January 2009, according to China customs data published by McCloskey. By contrast, overland imports from Mongolia leapt from 0.4 Mt on February to 1.5 Mt, so accounting for over half of China's total monthly coking coal imports.

The latest wheat and coarse grain trade forecast for 2010/11 (Jul-Jun) from the International Grains Council of 243.4 Mt (122.4 Mt of wheat and 121 Mt of coarse grain) compares with an estimate of 240.3 Mt for the previous crop year.
The total forecast export volume from the five major exporting countries has increased to 185.1 Mt for 2010/11 from 162.3 Mt a year earlier but is 0.2 Mt lower than last month's forecast. Annual increases in exports are predicted from Argentina (+4.4 to 24.4 Mt), Australia (+4.8 to 22.8 Mt), the USA (+9.5 Mt to 88.6 Mt) and the EU (+4.2 to 27.9 Mt)
Meanwhile, the forecast for global soyabean exports during 2010/11 (Oct-Sep) of 97.9 Mt is 4.8 Mt higher than in the previous marketing year.

According to preliminary data from the country's Finance Ministry, Russian standard crude export duty will rise to $61.90/bbl in May, up from $57.80/bbl this month, and the highest level since August-September 2008, Bloomberg reports. The discounted rate for ESPO Blend will rise to $28.90/bbl, up from $26.10/bbl. Exports from the east-Siberian Vankor field, operated by Rosneft, will lose their discounted status, and will be liable to full duty.

World crude steel production rose 7.0% year-on-year to a new monthly record of 129.3 Mt in March, according to data from the World Steel Association. Total global output in the 1q11 was 371.5 Mt, up 8.8% from the year-ago level. Asia contributed 64% of total production in the first three months of the year, at 237.3 Mt, with an increase of 9.1% year-on-year. January-March production in Europe was 6.9% higher at 45.6 Mt while the US produced 7.1% more year-on-year.

After falling to a 23-month low of 6.8 Mt in February, China's coal imports in March climbed by 2.3 Mt month-on-month to 9.1 Mt, according to latest data from China Customs Statistics. This is, however, still 6.1 Mt or 40% lower year-on-year, mainly due to unfavourable price differentials between domestic and international supplies. Total imports in the 1q11 of 32.4 Mt were 11.1 Mt lower than the previous quarter, compared with 44.4 Mt in the corresponding period last year.

According to the latest data from the EIA, US crude inventories fell by 2.3 MB last week, to 357.0 MB. The drop came as imports declined to 8.05 mb/d, down 518 kb/d from the week before. Crude runs at US refineries saw an 87 kb/d increase, rising to 14.10 mb/d. Overall refinery utilisation reached 82.5% of total capacity, up from 81.4% a week earlier. Mogas stocks continued to fall, dropping 1.6 MB, to 208.1 MB, over the same period, whilst imports were 36 kb/d lower, at 853 kb/d. Despite imports rising 192 kb/d, to 293 kb/d, distillate inventories saw a 2.5 MB draw last week, falling to 148.3 MB, reflecting higher demand for the product.

According to the latest Short Range Outlook from the World Steel Association, apparent steel use (ASU) for 2011 is set to rise 5.9% year-on-year to 1359.2 Mt after the strong increase of 13.2% in 2010. The WSA forecasts that world ASU will increase by a further 6.0% to another new record of 1440.6 Mt in 2012. Steel consumption in China is expected to rise by 5.0% in 2011 and 2012, while demand in the rest of world is predicted to grow by 6.6% tis year and 6.8% in 2012.

Chinese state oil firm, Sinopec has suspended oil product exports to prevent domestic shortages, Bloomberg reports. At the same time, the company intends to run refineries at full capacity, and to reduce petrochemical production in favour of higher transport fuel output. Despite a recent rise in government mandated retail fuel prices, refining margins continue to come under pressure from elevated crude prices, prompting independent refiners to reduce output.

Total North Sea crude oil output fell by an average of 21 kb/d during March, to 3.24 mb/d, Argus reports. The decline came as Norwegian production dropped 101 kb/d, to 1.81 mb/d. UK output rose by 80 kb/d over the same period, reaching 1.16 mb/d.

March saw Japanese utilities use 120 kb/d of crude oil for direct burning, in order to replace lost nuclear power generation capacity, Argus reports. This is three times more than during the same month last year. At the same time, fuel oil burning for power generation rose 15 kb/d yoy, to 100 kb/d. Oil-fired units have been restarted at Kashima, whilst two mothballed units are set to recommence operation by the end of July. Meanwhile, the Petroleum Association of Japan (PAJ) has asked the Ministry of Economy, Trade and Industry to consider relaxing the fuel oil sulphur limit from its current 0.5% level whilst the country relies on oil burning.

The price of Chinese wire rod rose for the third consecutive week, up $17/t to $726/t on April 15, according to World Steel Dynamics. This represents the highest level since February 18 and is only $23/t lower than the 30-month high set February 11.

Latest data from the National Bureau of Statistics of China show a rebound in March crude steel production, up 9% on February to 59.4 Mt. Increases in output also reflected higher exports in March, which rose to a 9-month high of 4.9 Mt. Combined with steel trade statistics, the latest production figures imply an improvement in China's apparent steel consumption, up by 5% year-on-year to of 56 Mt.

According to the National Bureau of Statistics, Chinese refineries processed 8.9 mb/d of crude oil during March, an 8% increase year on year, but down 3.4% from February's record high. China's diesel production averaged 3.33 mb/d during March, up 9.3% yoy, mogas output rose 4.4% yoy, to 1.80 mb/d, whilst fuel oil production reached 380 kb/d, a 16.6% annual increase.

According to data from the China Iron & Steel Association (CISA) quoted by major media sources, national daily crude steel production in March remained at a high level, up by 4.6% on February to 1.9 Mt.

Latest data from the North Queensland Bulk Port Authority show a recovery in March shipments from Hay Point (+0.3 Mt to 2.2 Mt) and Dalrymple Bay (+0.7 Mt to 3.4 Mt). However, combined coal exports from these two terminals of 15.7 Mt in the 1q11 fell by 35% or 8.5 Mt on 4q10 and 23% (4.8 Mt) from the corresponding period last year, mainly due to severe floods early this year.

According to the EIA's latest weekly report, released yesterday, mogas inventories dropped 7.0 MB last week, to 209.7 MB, the largest weekly decline since October 1998. The decline came on the back of increased demand, a drop in imports and lower crude runs and left inventories 5.2% lower year on year. Imports averaged 889 kb/d, down 188 kb/d from the week before. Meanwhile, distillate stocks declined 2.7 MB, to 150.8 MB, as imports fell 30 kb/d, to 101 kb/d. Crude inventories saw a 1.6 MB build, reaching 359.3 MB, as crude runs fell by 354 kb/d, to 14.02 mb/d, and imports declined 379 kb/d, to 8.57 mb/d. Overall refinery utilisation slowed to 81.4% of total capacity, down from 84.4% a week earlier.

Latest trade data shows a substantial increase in US seaborne coal exports. February exports (excluding those to Canda) rose for the seventh consecutive month to 7.4 Mt (4.8 Mt of coking coal and 2.6 Mt of steam coal), up 52% year-on-year to the highest level since March 1992, according to data from the US Department of Commerce.
Exports to Asia-Pacific rose 54% on January to 3.2 Mt in February, compared with 1.0 Mt in the same month last year. Japan became the largest single destination for US coal exports in February, rising to 1.3 Mt. This compared with last year's annual total of 2.9 Mt.

The world export price for hot rolled band steel slipped by $10/t from two weeks ago to $759/t, according to the latest SteelBenchmarker published by World Steel Dynamics. Chinese HRB prices rose $22/t from end-March to an 8-week high of $628/t. By contrast, HRB prices in the US and the EU both slipped, to $969/t and $840/t respectively.

Lower supply from the Mediterranean and Asia-Pacific has prompted European and South African buyers to take at least 100 kb/d of US diesel this month, Argus reports. Mediterranean diesel supply has dropped as refiners reduce crude runs in response to lower Libyan crude output, whilst imports from the Asia-Pacific have slowed as cargoes are kept within the region to offset lost Japanese output. Diesel exports from Asia to Europe have dropped from 60 kb/d during January and February, to 20 kb/d in April. Unusually, some of the extra US cargoes heading transatlantic are originating from the USAC. The region is short of diesel, and relies on pipeline shipments from the USG, but a hefty premium for Mediterranean diesel has opened the arbitrage.

In its latest World Economic Outlook, the International Monetary Fund (IMF) has forecast worldwide economic growth at 4.4% in 2011 and 4.5% in 2012, both estimates are unchanged from the IMF's January update.
The IMF has downgraded its view on growth in the advanced economies to 2.4% this year. This is mainly due to downward revisions to estimates for the US (-0.2 to 2.4%), Japan (-0.2 to 1.4%) and the UK (-0.3 to 1.7%), which are not fully offset by more positive expectations for the Euro area and Canada.
The IMF continues to expect the Chinese economy to expand by 9.6% this year, but has lowered its growth estimates for India (-0.2 to 8.2%) and the Middle East and North Africa (-0.5 to 4.1%).

Coal shipments from Colombia in the 1q11 rose 5.5% year-on-year to 16.5 Mt, according to data published by McCloskeys. Most of the increase came from Europe, with an increase of 22% year-on-year to 11.7 Mt in the 1q11. By contrast, exports to Asia fell dramatically, down to 0.31 Mt in the1q11 compared with 1.9 Mt in the corresponding period last year.