News archive January 2011

Angola increased its exports of crude oil to China to 791 kb/d in 2010, a 145 kb/d increase year-on-year, according to the latest Chinese customs statistics. Saudi Arabia remains China's main source of crude, providing 896 kb/d last year, a 53 kb/d rise yoy. Elsewhere, Oman, Iraq, Kazakhstan, Kuwait and Brazil all saw significant increases in their volumes shipped to China last year. The only major source to see its volumes drop was Iran, which provided 428 kb/d last year, down 37 kb/d from 2009. The Middle Eastern country does, however, retain its position as China's third largest crude supplier.

The price of Brent crude has broken the $100/bbl level for the first time since October 2008, as unrest in Egypt has led to fears of disruption to the Suez canal and the SUMED pipeline, as well as of a spread of disturbances to nearby oil-producing countries.

January saw a record amount of newbuilding deliveries with vessels totalling 8.71 Mdwt entering the dry bulk fleet, according to preliminary SSY data. This compares with the previous high of 8.2 Mdwt in July 2010 and 6.7 Mdwt in December. The increase was led by the Capesize sector with 29 new vessels of 5.0 Mdwt. There were also 16 Panamaxes, 30 Supramaxes and 23 Handysizes delivered in January (figures likely to be subject to upward revision).

Queensland is bracing itself for further heavy rainfall and gale force winds as Severe Tropical Cyclone Yasi gathers strength on its way towards the northeast Australian coast. Currently a category three cyclone, Yasi is expected to strengthen to category four by the time it makes landfall between Cooktown and Yeppoon on February 2, according to the Australian Bureau of Meteorology.

Cyclone Anthony, currently off the northeast coast of Australia, is expected to turn to the southwest and intensify before making landfall between the Queensland towns of Innisfail and St Lawrence on Sunday evening, according to the Australian Bureau of Meteorology. Having just begun to recover from recent floods, Queensland's central coalfield areas such as Emerald are now facing the possibility of further rainfall delaying their return to full operation. Meanwhile, Cyclone Bianca is expected to hit the Southwest Australian coast around Perth on Sunday evening.

South Korea imported an average of 2.39 mb/d of crude oil during 2010, a 4.5% increase from 2009, Energy Intel reports. The year ended with December imports averaging 2.51 mb/d, a 10.0% increase year-on-year. Lead supplier, Saudi Arabia, saw its December shipments to the Far Eastern country rise 9.3% yoy to 742 kb/d. Over the same period, imports from Qatar surged 79.9% yoy to 286 kb/d. Shipments from Kuwait and Iran fell by 12.2% yoy to 237 kb/d, and by 20.9% yoy to 178 kb/d respectively. December imports from Russia fell by 38.3% yoy to 71 kb/d, but surged almost 80% to 137 kb/d for the year as a whole, thanks to the commencements of shipments of ESPO Blend from Kozmino.

Polish coal exports in 2010 were 16.6% higher than the previous year at 10.0 Mt. This represented that largest annual export volume since 2007. Germany remained Poland's largest customer of steam coal and increased its annual imports by 61% to 4.2 Mt which helped total steam coal exports rise 38% to 7.8 Mt. Meanwhile coking coal exports from Poland in 2010 were 14% lower than in the previous year at 0.9 Mt.

According to the latest government data, crude throughputs at Indian refineries reached 3.48 mb/d during December, a 420 kb/d increase from the month before, and up 270 kb/d yoy. The dramatic month-on-month rise came after operations restarted at crude and coker units at Reliance's 660 kb/d Jamnagar refinery, Dow Jones reports. Inputs at the plant reached 724 kb/d in December, a 228 kb/d rise from November's processed volumes. Government data does not include inputs at Reliance's second, 580 kb/d, export-based Jamnagar refinery. Runs at IOC refineries rose by 125 kb/d to 1.17 mb/d over the same period.

According to the latest data from the EIA, US crude oil inventories increased by 4.8 MB to 340.6 MB last week. The build came as crude imports rose by 386 kb/d to 9.39 mb/d, whilst crude runs at the country's refineries fell by 212 kb/d, to 14.13 mb/d. Overall refinery utilisation fell to 81.8% of total capacity, down from 83.0% the week before. Meanwhile, mogas stocks grew by 2.4 MB to 230.1 MB, despite imports falling 78 kb/d to 644 kb/d. Both distillate imports and stocks were relatively unchanged, falling by 14 kb/d to 254 kb/d, and by 100 KB to 165.7 MB respectively.

World export prices for hot rolled band have risen $38/t to an eight month high of $705/t, according to the latest SteelBenchmarker issued by World Steel Dynamics. HRB prices in China rose to $614/t, while US prices gained 6% to $851/t. Both represented the highest levels since August 2008. The European HRB price was $753/t, up $52/t from two weeks ago and the highest level recorded since November 2008.

Port Hedland suspended loading operations for 12-24 hours on Wednesday as tropical cyclone Bianca swept southwest parallel to the northwest Australian coast, Reuters reports. At midday GMT, the cyclone had passed Port Hedland and was level with Dampier progressing along the Pilbara coast, according to the Australian Bureau of Meteorology. It is currently expected to intensify overnight and move away from the coast to the west.

Coal deliveries to the Australian port of Gladstone are expected to reach 72% of typical pre-flood levels this week, according the Port Corporation. The port is due to receive 18 trains per day this week which compares a normal daily average of 25. As a result the port authority expects to load 0.5 Mt of coal this week and for the coal stockpile to be back over the 1 Mt mark by the end of next week. 11 vessels are currently at anchor with a further seven scheduled to arrive in the next ten days, according to the port.

North Sea crude oil output averaged 3.27 mb/d during 2010, a 348 kb/d decline from the year before, Argus reports. Norwegian production fell by 197 kb/d yoy to 1.87 mb/d as output declines from mature fields were exacerbated by unplanned shutdowns. UK average output of 1.13 mb/d represents a 134 kb/d fall over the same period. A number of new fields are due to begin production during 2011 and 2012, which will go some way to offset declines at existing fields.

Imports of coal to South Korea totalled 118.6 Mt in 2010, 15.6 Mt higher than in 2009 according to data from the country's customs service. Indonesia remained South Korea's main supplier of steam coal and imports from the country increased 21.5% to 40.7 Mt. This helped total imports of steam coal rise 9.1% to 87.8 Mt in 2010. Imports of coking coal rose 46.1% to 23.4 Mt over the period led by a 43.7% increase in shipments from Australia to 13.5 Mt.

Higher European demand is limiting the volume of Atlantic basin crude that is heading transatlantic this month, Argus reports. A combined 390 kb/d of Forties, Ekofisk, Urals, BTC Blend, Kirkuk and Saharan Blend (grades that are priced in relation to Atlantic basin marker North Sea Dated) are set to head to North America this month, down from 940 kb/d in December. Compared with a usual 150 kb/d, no Forties is due to cross the Atlantic this month. Meanwhile, shipments of Algerian grade, Saharan Blend, to North America are scheduled to fall to 180 kb/d in January, down from 510 kb/d the month before. On top of higher European demand, shipments have been limited by lower demand from US refineries preparing for maintenance shutdowns.

Latest data from World Steel Association show a 1% increase in global crude steel production in December on the previous month. Production last month amounted to 116.2 Mt, which was 8.4 Mt higher than in the same month in 2009. Total global crude steel production in 2010 was 1,395.5 Mt, 15% higher than in the previous year.

Month-on-month increases were seen in the majority of steel producing regions including the US (+0.3 Mt to 6.7 Mt), China (+1.4 Mt to 51.5 Mt) and Japan (+0.2 Mt to 9.2 Mt). However in the EU, production fell from the previous month (-1.7 to 13.0 Mt).

According to the latest loading schedule, exports of CPC Blend from the terminal near Novorossiysk will average 715 kb/d in February, a 52 kb/d increase from scheduled export volumes this month. The rise is attributed to larger shipments along the pipeline from Russian suppliers Rosneft and TNK-BP.

Crude steel output in China in December reached its highest level since August at 51.52 Mt, according to National Bureau of Statistics. This marks a gain of 1.4 Mt on November. December’s improved output took the annual output total to 626.7 Mt (representing growth of 58.9 Mt on the previous year).

The latest data from the country's National Bureau of Statistics reveal that a record 9.16 mb/d of crude oil was processed at Chinese refineries during December. This represents a new monthly record, surpassing the 8.95 mb/d processed during November. December's inputs are also 980 kb/d higher than the same month a year earlier. The rise has been attributed to refiners' efforts to restock product inventories following recent diesel shortages, as well as increased throughputs at Petrochina's Liaoyang refinery, the capacity of which has been increased in order to process volumes received along the recently opened ESPO pipeline spur from Russia. Refiners received a further incentive to raise runs in December, when the government increased the domestic price of both mogas and diesel. Chinese diesel production reached 14.64 million MT last month, up 1.39 million MT yoy and a new monthly record, whilst mogas production increased by 280,000 MT yoy to 6.9 million MT.

According to the EIA's latest Weekly Petroleum Status Report, US crude inventories rose by 2.6 MB last week to 335.7 MB, as crude runs at the country's refineries fell by 389 kb/d from a week earlier to average 14.34 mb/d. Crude imports were practically unchanged at 9.00 mb/d. Overall, refineries were run at 83.0% of total capacity, down from 86.4% the week before. Meanwhile, mogas stocks increased by 4.4 MB to 227.7 MB, but imports fell 149 kb/d to 722 kb/d. Distillate stocks were up 1.0 MB to 165.8 MB, whilst imports dropped 127 kb/d to 241 kb/d.

Seaborne exports of coal from Russia's major ports fell 2.2% month-on-month in December to a total of 5.29 Mt, according to port trades data quoted by Reuters. However, shipments from Vostochny in the far east of the country rose 26.2% month-on-month to 1.2 Mt.

Imports of coal to China rose to a fresh monthly high of 17.34 Mt in December, a 25% month-on-month increase, according to China's Customs Statistics. This takes the 2010 total to 166.3 Mt, 39.62 Mt more than the previous record high in 2009. Coal exports in December were 1.45 Mt taking the 2010 total to 19.0 Mt, 15% lower than in 2009. The data includes overland movements and a breakdown is not yet available

In its latest Oil Market Report, the IEA has revised up its global oil demand forecast for 2010 and 2011 by 320 kb/d to 87.7 mb/d (up 2.7 mb/d yoy) and 89.1 mb/d (up 1.4 mb/d yoy) respectively. The revisions are attributed primarily to strong economic growth in all OECD regions, as well as in key non-OECD areas. Recent cold weather in the northern hemisphere also contributed, although less significantly.

Farmers of wheat, corn and soyabeans in Argentina have begun a seven day strike and halted sales of their grains, Reuters reports. The strike is expected to last until midnight on January 23 and is over government export quotas aimed at tackling the country's inflation. While the main Argentinean harvest season is yet to begin, sales have been proceeding at a faster rate than is normal in recent weeks, due to worries over lower yields and rising prices.

Asia-Pacific demand for West African crude jumped to 1.9 mb/d for February-loading cargoes, up from 1.7 mb/d in January, on strong distillate demand in the region. The Chinese diesel supply crisis has eased, but stockpiles remain low and the upcoming lunar new year, seasonal heating oil demand and cracker shutdowns are all pushing gasoil cracks above $15/bbl. This has encouraged lifting of WAFR grades, despite a widening premium for these grades relative to MEG crudes. With Bonny Light now trading above $100/bbl, its premium to Dubai is over $7/bbl, the highest since October 2008.