News archive August 2011

According to the latest data from the EIA, US commercial crude inventories rose 5.3 MB last week, to 357.1 MB, as refineries cut operating rates to 89.2% of total capacity in preparation for Hurricane Irene, the government released barrels from the Strategic Petroleum Reserve and imports jumped 799 kb/d higher, to 9.6 mb/d. A further 4.8 MB was taken from the SPR last week, taking the total released since mid-July to 24.73 MB, while crude throughputs at refineries fell 219 kb/d, to 15.4 mb/d. Mogas stocks were down 2.8 MB, at 208.6 MB, as imports dropped 286 kb/d, to 608 kb/d, 47% lower on the year. Distillate inventories were up 0.4 MB, at 156.1 MB, as imports inched 15 kb/d higher, to 176 kb/d.

After a contraction of 1.7% one month earlier, Japan’s industrial production in July declined 2.8% on an annual basis, according to the country’s Ministry of Economy, Trade and Industry. Meanwhile, Statistics Korea announced the country’s industrial output in July was up 3.8% year-on-year, representing the slowest growth rate since September 2010.

According to data released by Japan’s Ministry of Finance, the country imported 5.2 Mt of coking coal in July, down 6% month-on-month and 24% year-on-year. Imports in January to July totalled almost 40 Mt, 13% lower than the corresponding period last year. This year’s overall decline in Japanese coking coal imports has mainly been fell by Australia (-5.0 Mt to 20.8 Mt). By contrast, imports from the US, on the first seven months of 2011 saw a 2 Mt increase on last year to 3.6 Mt.

Chinese apparent oil demand fell below 9 mb/d for the first time this year in July, having fallen 360 kb/d from June, to 8.87 mb/d, reports Petroleum Argus. Refinery runs were up 180 kb/d on the month, at 8.79 mb/d, but below average for the first half of the year. Throughputs were scheduled to fall to 8.61 mb/d this month, with up to 415 kb/d of refining capacity shut for maintenance. Net crude imports were at 4.54 mb/d in July, as shipments from Russia fell nearly 230 kb/d on the month, to below 150 kb/d, the lowest since December 2004. Russia has been directing 300 kb/d of ESPO Blend crude to northern China by pipeline this year, but there has been an ongoing dispute over transit fees all year. Middle East volumes accounted for 55% of China’s crude imports, the highest since October last year, has shipments from Oman were up 215 kb/d to 445 kb/d.

After hitting a 3-year high of $790/t, the price of Chinese wire rod was marginally lower than the previous week, down $5/t to $785/t for the week ending at August 26, according to World Steel Dynamics. Nevertheless, the average price for August of $784/t was still the highest level since July 2008 and marks a year-on-year gain of $176/t or 29%.

According to the International Grains Council, annual declines in wheat exports are forecast from Australia (-1.5 Mt to 17.0 Mt), the EU (-6.7 Mt to 15.5 Mt) and the USA (-5.1 Mt to 30.6 Mt) in 2011/12 (July-June). The IGC has revised its forecast for Argentina in 2011/12 up by 0.4 Mt to 8.0 Mt, while exports from Canada are forecast to rise marginally 0.1 Mt to 16.5 Mt. Combined wheat exports from Kazakhstan, Russia and Ukraine are projected to rise 17.6 Mt on last year to 31.5 Mt in 2011/12.

S. Korea’s crude imports rose 13.5% y-o-y in July, to 2.53 mb/d, as shipments from the Middle East increased 570 kb/d on the year, reports EnergyIntel. Volumes from Saudi Arabia were up 7% at 842 kb/d, while shipments from Iraq surged 170 kb/d to 248 kb/d. Imports from the Middle East in the first seven months of the year were up almost 300 kb/d, or nearly 16%, from 2010. Total imports for the January-July period were up 9.6% on the year, at 2.54 mb/d. Domestic demand averaged 2.13 mb/d in July, 6.3% than 2010.

European Union governments are expected to announce an embargo on Syrian imports and exports of oil next week to increase pressure on president Bashar al-Assad, reports the Financial Times. Syria produced about 387 kb/d of crude in 2010, with Europe buying nearly all the estimated 109 kb/d of net petroleum exports last year, according to the EIA. Vitol, Trafigura, BP, Royal Dutch Shell and Total are either major buyers of Syrian crude, or sellers of refined products to Damascus. Several traders and foreign oil companies have quietly stopped dealing with Syria over the last few days, refusing to take new contracts to export or import.

Preliminary July data from the American Iron and Steel Institute indicate that this year’s rally in US steel imports is now fading in the face of deteriorating domestic steel prices and an uncertain economic outlook. Although import volumes were above 2.0 Mt for a fifth consecutive month, they were down 4% month-on-month to a 3-month low of 2.3 Mt. Total imports in the first seven months of the year of 15.6 Mt were, nevertheless, still 22% higher than the corresponding period last year.

According to the latest data from the EIA, US commercial crude inventories fell by 2.2 MB last week, to 351.8 MB. The decline came after imports declined by 477 kb/d, to 8.81 mb/d, and crude throughputs at US refineries rose by 244 kb/d, to15.66 mb/d. Overall refinery utilisation last week reached 90.3% of total capacity, up from 89.1% the week before. The Strategic Petroleum Reserve (SPR) saw a further 4.8 MB of crude oil delivered to refiners last week, taking the total released since the middle of July to 19.93 MB. The U.S. has planned to release approximately 30 MB from the SPR as part of the IEA’s collective response to the Libya crisis. Meanwhile, mogas inventories rose by 1.4 MB, to 211.4 MB, last week, whilst imports rose by 217 kb/d, to 894 kb/d over the same period. US mogas demand continued to run behind year earlier levels. Distillate stocks were up by 1.7 MB, to 155.7 MB, as imports increased by 64 kb/d, to 161 kb/d.

Despite intensified global economic concerns and broad stock market declines, world export prices for hot rolled band from the World Steel Dynamics’ SteelBenchmarker have firmed to a 2-month high of $710/t, up $17/t month-on-month. This marks a year-on-year increase of $100/t, but is still $29/t lower than the 1h11 average. Perhaps most surprisingly the EU price of $753/t was marginally higher than two weeks ago, but HRB steel prices in the US did fall for the fifth consecutive month to a year-to-date low of $731/t, but up 14% year-on-year, China’s HRB price continues to firm, with the current price rising to the highest level since July 2008, at $637/t.

Shell has confirmed that force majeure has been declared on exports of Nigerian grade, Bonny Light, for the rest of August, September and October, various new agencies report. The move came after a number of recent pipeline sabotage incidents caused spills and disrupted production.

July saw a record volume of steam coal imports (including anthracite) to China, with an increase of 30% month-on-month to 13.5 Mt. Some 5.7 Mt of Indonesian steam coal was shipped to China in July, the highest level since March 2009, while imports from Australia surged 71% on June to a 25-month high of 3.3 Mt. For less positive for ship demand was the fact that imports from North Korea stood above 1.0 Mt for a fourth consecutive month. In Jan-July of this year, China imported 6.1 Mt of North Korean coal, compared with 4.6 Mt in the whole of 2010. Meanwhile, Chinese coking coal imports rose to a 6-month high of 4.1 Mt in July. However, with Mongolia remaining the largest supplier, the benefit to seaborne trade was diluted. On the upside, imports from Australia of 1.0 Mt compared with 0.4 Mt in June.

China imported 4 Mt of iron ore from India in July, down 47% on June to the lowest level since October 2010. However, July saw monthly and yearly increases in Chinese ore imports from Australia and Brazil. Shipments from Australia rose to a 6-month high of 25.8 Mt, while imports from Brazil were up 40% month-on-month to 11.2 Mt, the highest level since March. Total imports from other sources in January to July of 96.6 Mt compared with 68.1 Mt in the corresponding period last year.

Detailed customs statistics reveal that, after June’s six-month high of 84 kbpd, Chinese diesel imports slowed to 38 kbpd last month, as concerns over domestic supply subsided. July’s shipments were still 9 kbpd higher yoy. Diesel exports remained fairly depressed last month, averaging 43 kb/d, down from 49 kbpd in June, and 124 kbpd during July 2010. Meanwhile, mogas exports averaged 81 kbpd last month, down from 90 kbpd in June, and 87 kbpd a year earlier. Overall product imports averaged 682 kbpd in July, down by 96 kbpd mom and up by 81 kbpd yoy. Exports were 41 kbpd higher mom, but 59 kbpd lower yoy, at 537 kbpd.

Despite uncertainty over the global economic outlook, world steel production was up by 12% or 13.1 Mt year-on-year to 127.5 Mt in July, according to the World Steel Association. The July production totals bring world output in January to July of this year to 886.9 Mt, 67.7 Mt or 8% higher than the corresponding period last year. Monthly production in the EU-15 was at a year-to-date low of 12.2 Mt, including a 2-year low in Spain. However, this could be partly attributed to seasonal factors with EU-15 output still up 4.6% year-on-year in July. Steel output in Asia increased at an even faster annual rate, China (+16% to 59.3 Mt) and South Korea (+22% to 5.7Mt). Production in Japan was marginally lower than 1% to 9.1Mt in July, but the highest monthly level since March.

Russia’s oil product output is set to fall significantly in September, as several large refineries are scheduled to cut runs to carry out maintenance, reports Argus. A total 30 million tonnes p.a of capacity is due to close, more than twice the capacity shut in for maintenance this month, with runs expected to be down by 2-2.5 million tonnes from June, when Russia refined 22.2 million tonnes of crude, a post-Soviet era high.

Japanese crude steel production in July rose to a 4-month high, up 3% on the previous month to 9.1 Mt on recovering demand after the March earthquake, particularly from the automobile sector, according to latest data from the Japan Steel & Iron Association. Total output in the first seven months of 63.2 Mt was virtually unchanged from the corresponding period last year as a result.

Japan’s crude imports fell 11.2% year-on-year in July, to 3.25 mb/d, in its sharpest decline since April, when imports were slashed due to earthquake damage, reports Reuters. It was the first decline in three months, amid signs of recovery following the disaster in March, as a global slowdown and a strengthening currency weigh on the outlook for the country’s exports. The outlook for imports is uncertain over the coming months, as reconstruction and rising demand for direct-burn crude for power generation will provide a boost, but this could be negated by an ongoing refinery shutdown at Sendai refinery.

According to preliminary trade data from the Ministry of Japan, the country imported 11.4 Mt of iron ore in July, up 17.8% month-on-month, but down 1.1% year-on-year. Meanwhile, Japanese steel exports in the same month fell 3% on the previous month to 3.4 Mt. Trade data also showed some recovery in the country’s steel exports to Asian countries after the March earthquake, with a 2% year-on-year fall to 2.6 Mt in July compared with a 13.1% drop in June.

According to the latest data from the China Iron and Steel Association, the country's daily crude steel production in early August edged higher, up slightly by 0.35% on the last ten days in July to 1.942 Mt.

According to the latest weekly data from the EIA, deliveries from the Strategic Petroleum Reserve (SPR) accelerated last week, with 5.9 MB being delivered to refiners. Meanwhile, commercial crude inventories saw a 4.2 MB build, climbing to 354.0 MB. Crude imports rose by 185 kb/d, to 9.29 mb/d, whilst crude inputs at US refineries declined by 205 kb/d, to 15.42 mb/d. Overall refinery utilisation stood at 89.1% of total capacity, down from 90.0% a week earlier. Mogas inventories were 3.5 MB lower, at 210.1 MB, whilst imports were up slightly, rising by 44 kb/d, to 677 kb/d. Distillate stocks saw a 2.4 MB build, to 154.0 MB, with imports stable at 97 kb/d, just 2 kb/d lower than the preceding week.

According to provisional loading programmes, Angolan crude exports are scheduled to average 1.54 mbpd in October, down from the 1.67 mbpd scheduled for loading in September. October shipments are likely to be slightly higher, as the first shipment of crude from the new Pazflor field is expected to take place, Reuters reports. Developed by Total, production at the 220 kbpd field has been scheduled for a 4q11 start, with full capacity expected to be reached within six months.

Crude steel production in Germany rose 6.6% year-on-year to 3.7 Mt in July, but was down slightly on the previous month, according to the German Steel Federation. Total output in the first seven months of this year totalled 26.9 Mt, up 3% from the corresponding period last year. Meanwhile, German GDP in the 2q11 grew just 0.1% on the previous quarter, below market expectations.

Shipments of Algerian crude, Saharan Blend, reached 760 kb/d in July, an 85 kb/d increase from June’s exports, and the highest monthly average for at least a year, Argus reports. European refiners took the majority of July’s cargoes, shipping 455 kb/d of the grade, a 110 kb/d rise from June and up by 335 kb/d from the March – May average. Transatlantic shipments averaged 210 kb/d in July, down by 60 kb/d from the month before and by 200 kb/d from March – May. Chinese refiners once again did not make any purchases of Saharan Blend, having halted shipments of the grade in June. Maintenance at the 50 kb/d Arzew refinery has increased availability of the grade, whilst lower long-haul demand has allowed European buyers to take advantage of lower prices and increase their purchases of Saharan Blend to replace Libyan and North Sea volumes.