News archive February 2011

Japan's industrial production in January rose for the third consecutive month, up 2.4% from December, according to government data from the Ministry of Economy Trade and Industry. This lifted industrial output 4.7% above its January 2010 level.

According to a preliminary loading schedule, March exports of Iraqi Kirkuk crude will rise by around 90 kb/d from approximately 420 kb/d this month, Argus reports. The rise comes on the back of higher production from the Kurdish region, in the north of the country. Northern Iraq experienced an attack on the 250 kb/d Baiji refinery complex over the weekend, leaving the country's largest refinery operating at less than 30% of total capacity. Repairs could take up to a month.

The IEA is now estimating that Libyan oil production has fallen to around half of its usual 1.6 mb/d. The chief executive of Saudi Aramco today said that increased Saudi output was making up the shortfall, but did not state how much extra oil was being produced. After earlier suggestions that loadings at certain Libyan oil terminals may have resumed, news agencies have since reported that crude oil shipments from the country are at a near standstill.

The International Grains Council has revised its estimate for world wheat and coarse grain exports during the 2010/11 marketing year (Jul-Jun) to 243.1 Mt, an increase of 0.7 Mt from its forecast in January. Meanwhile the forecast for world soyabean exports during 2010/11 (Oct-Sep) has been revised 0.5 Mt higher to 97.4 Mt. A 0.6 Mt downward revision for Argentina to 12.5 Mt has been more than offset by increased export forecasts for Brazil (+0.8 Mt to 31.8 Mt).

Refiners situated on the US west coast are increasing their imports of Russian grade, ESPO Blend, Argus reports. At least three ESPO cargoes destined for the USWC are likely to load at Kozmino during late February and early March. Demand has increased as a result of recent disruptions to pipeline supplies of Alaskan North Slope. With output of the North American grade in decline, USWC buying of ESPO Blend is likely to continue to rise in the future.

Meanwhile, with tensions still running high in Libya, crude oil output is reported to have fallen to approximately 25% of its usual 1.6 mb/d. The status of exports from the country's oil terminals is unclear, with Reuters reporting that the eastern ports of Marsa el Hariga and Zuetina had halted operations thanks to the unrest, whilst exports from the Zawiyah terminal in the west of the country had been disrupted by bad weather. The Es Sider terminal is reportedly still in operation. Saudi Arabia is said to have increased its oil output by 700 kb/d from January levels to over 9.0 mb/d in response to production falls in Libya.

Chinese coal imports in January fell 5% month-on-month to 16.56 Mt, according to customs data. While this marks a decrease from the monthly high set in December of 17.34 Mt, it represented the second highest amount imported during a single month and was 3% higher than in January 2010.

According to the latest data from the EIA, crude runs at US refineries fell to an average of 13.54 mb/d last week, a 328 kb/d decline from the week before. Overall refinery utilisation fell to 79.4% of total capacity, down from 81.2% a week earlier. Crude inventories posted a 0.8 MB rise week-on-week, reaching 346.7 MB, as imports fell by 160 kb/d to 8.11 mb/d over the same period. Mogas stocks dropped by 2.8 MB last week, to 238.3 MB, with imports falling by 127 kb/d to 808 kb/d. Distillate inventories decreased by 1.3 MB to 159.9 MB, whilst imports dropped by 40 kb/d to 171 kb/d.

With unrest in Libya continuing, estimates as to the amount of oil production capacity currently offline vary from around 500 kb/d to around 1.0 mb/d. The country produced 1.58 mb/d during January. Loadings at Libyan ports, however, are reportedly still taking place.

By late afternoon in London, ICE Brent was trading at $114.60/bbl.

Ongoing unrest in Libya has forced Total, OMV, Eni, RWE and Wintershall all to reduce their operations in the country, Bloomberg reports. It is estimated that around 300 kb/d of Libyan output is now offline. The existing regime has reportedly lost control of the east of the country, where much of Libya's oil fields are situated. Whilst force majeure has been declared on the country's oil exports, at least one tanker loaded crude at Libyan ports today. The disruptions, as well as fear of contagion within the region, prompted ICE Brent to surge past $110/bbl to its highest level since September 2008.

Rail operator QR National's coal haulage lines in Queensland are now operating at 95% capacity following the recent flooding in the region, according to Reuters, with only the West Moreton and Rolleston lines remaining down. The company hopes to have these lines returned to operation by April at the latest, Reuters adds.

Just over 1.6 mb/d of West African crude is scheduled to head to the Asia-Pacific region next month, down from a record 1.9 mb/d set to head east this month, Argus reports. The decline comes largely as a result of lower demand from Indonesian and Taiwanese refiners, deterred by poor arbitrage economics. Chinese buying for March-loading shipments remained robust at 950 kb/d, down slightly from just over 1.0 mb/d for February cargoes. Indian demand was also steady for March cargoes. The overall decline in Asia-Pacific buying was offset to some extent by healthy demand from the US and Europe.

South Korean coal imports in January rose 7% month-on-month and 25% year-on-year to 10.96 Mt, according to trade data. The increase was led by a 1.62 Mt rise in steam coal imports to 8.69 Mt, just short of the record monthly amount of 8.75 Mt in July 2010. Steam coal imports from Indonesia grew 12% to 4.01 Mt. Coking coal imports in January fell 27% from December to 1.81 Mt with imports from Australia tumbling 42% month-on-month 1.0 Mt.

As of 1715 GMT on Monday, the front month contract for Brent crude had reached $105.17/bbl, a $2.65/bbl rise from previous closing, on fears that political unrest in Libya may impact upon the country's oil production. The regime of Col. Muammar Gadaffi is coming under increasing pressure; with some reports suggesting the Libyan leader may have fled the country. According to the BBC, Gadaffi's son, Saif Al-Islam, has vowed to "fight to the last bullet" and warned of civil war. The turmoil has led to concern that Libya's oil production may be affected, with Al Jazeera earlier reporting that output at the Nafoora field had already been stopped. Dow Jones has since reported that, in fact, operations at the field are continuing, albeit with only half the usual workforce. The OPEC member produced 1.58 mb/d of crude oil in January.

Gobal steel production in January rose 3% month-on-month to 119.29 Mt, according to the World Steel Association. This represented the highest monthly amount produced since May 2010. Chinese production was 1.28 Mt higher in January at 52.80 Mt while production in Japan was 0.48 Mt higher than in December at 9.66 Mt. Production in Europe was 10% higher at 17.20 Mt while the US produced 3% more steel month-on-month at 6.82 Mt.

Imports of coal to Taiwan in January rose 2.5% month-on-month to 5.11 Mt, according to trade data. This was in spite of imports from Australia falling 7.3% from December to 1.98 Mt, the lowest since July 2010 and 28.1% lower than in November 2010. While January saw Indonesia remain the main source for Taiwan (2.08 Mt), small quantities were imported from the US and Colombia for the first time since September 2010 and imports from Canada (0.21 Mt) were the largest since April 2009.

Rosneft this week announced discoveries at their Sanarsky and Preobrazhensky blocks in east Siberia that could hold a combined 1,168 MB, Argus reports. Given their proximity to fields that currently supply crude along the ESPO pipeline, the new discoveries could provide future supplies for the line. There have been doubts as to whether east Siberia's current supplies will provide enough for the pipeline's second stage, which is due to begin operation in 2014. Sanarsky and Preobrazhensky require more exploration, however, with reserve estimates liable to change.

According to provisional loading schedules, Angolan crude exports will average 1.50 mb/d in April, a 230 kb/d fall from next month's planned shipments, Bloomberg reports. The west African country was China's second largest supplier of crude in 2010, providing an average of 789 kb/d, a volume only exceeded by Saudi Arabia.

According to the country's state oil marketing company, Iraqi crude exports averaged 2.16 mb/d in January, a 212 kb/d increase from December's volumes. Last month's shipments were at their highest level since before the 2003 invasion.

Last week saw US commercial crude inventories rise by 0.9 MB, to 345.9 MB, despite imports dropping by 643 kb/d, according to the latest data from the EIA. Over the same period, mogas inventories edged 0.2 MB higher, to 241.1 MB, with imports falling by 102 kb/d, to 935 kb/d. Distillate stocks saw a 3.1 MB draw, reaching 161.3 MB, whilst imports dropped 85 kb/d, to 211 kb/d. Crude runs at US refineries averaged 13.86 mb/d last week, a 481 kb/d decline from the week before, as utilisation on the Gulf and East Coasts dropped. Midwest plants continued to be operated at over 90% of total capacity, as refiners in the region took advantage of WTI's discount to other grades. Overall US refinery utilisation fell to 81.2% of total capacity, down from 84.7% a week earlier.

The world export price for hot rolled band has surged $68/t over the last three weeks to $773/t, the highest level since September 2008, according to the latest SteelBenchmarker issued by World Steel Dynamics. HRB prices in China rose $16 to $630/t, while US prices gained $46 to $897/t, their highest levels since August and September 2008 respectively. The European HRB price was $802/t, the highest since October 2008.

Total global oil demand averaged 87.40 mb/d in January, down 2.58 mb/d from December, but up 3.53 mb/d year-on-year, Energy Intel reports. The month-on-month fall was largely expected, after various seasonal factors had seen December OECD demand surge. Meanwhile, global supply was relatively stable from the month before, averaging 89.60 mb/d, a 30 kb/d increase from December. Supply was, however, 3.90 mb/d higher than in January 2010.

Exports of coal from the United States, excluding those to Canada, rose 5% month-on-month in December to 5.66 Mt according to official data. This took the total amount of seaborne coal exported during 2010 to 63.27 Mt, a 44% increase from 2009. Excluding Canadian cargoes, coking coal exports saw a 50% year-on-year increase to 47.66 Mt while steam coal exports grew 29% to 15.61 Mt over the same period. During 2010, total coal exports to China jumped to 5.25 Mt from 1.03 Mt in 2009 while exports to South Korea grew 3.28 Mt to reach 5.24 Mt.

According to preliminary Chinese customs data, the country imported 5.15 mb/d of crude oil last month. January's imports, the fourth highest on record, are 220 kb/d higher than the month before and represent a 1.10 mb/d increase year-on-year. Refiners increased crude runs during January ahead of the Lunar holiday, as well as to provide more diesel to drought-stricken provinces. Meanwhile, product imports last month of 3.85 million MT were down 110,000 MT from December, but up 1.31 million MT yoy. January product exports totalled 2.14 million MT, up 250,000 MT mom, but down 560,000 MT yoy. China's trade surplus fell to $6.5bn last month, down from $13.1bn last month, and the lowest level in nine-months.

Preliminary Customs data show that China imported a record-breaking 69.0 Mt of iron ore in January. This compared with the previous high of 64.6 Mt in September 2009 and was up 48% on the January 2010 level. The new import record appears to have been driven by stockbuilding - ahead of increased 2q11 contract prices - as well as rising domestic demand. China’s port stocks are currently at a new high of 88.5 Mt - up from 79.5 Mt at the end of 2010, according to data from U-Metal.

Russian refineries processed 4.98 mb/d of crude in 2010, a 5.5% increase from the year before, Argus reports. Fuel oil production reached 69.9 million MT an 8.8% increase year-on-year. Gasoil output increased by 4.0% yoy, to 70.3 million MT. Mogas production was relatively stable, rising 0.8% yoy, to 36.1 million MT. Russian crude production averaged 10.17 mb/d in December 2010.

According to India's Economic Times, the country's Supreme Court has granted permission for iron ore already stockpiled at Karnataka's ports to be shipped. Estimates from the Federation of Indian Mining Industries quoted by Reuters put these stocks at 300-400,000 tonnes. However, the Karnataka state government still has until end-March to implement new export regulations aimed at eliminating unlicensed mining.

The Karnataka iron ore export ban has been in place since July last year.