News archive September 2011

Union members at three southern French refineries have decided against joining the on-going strike at LyondellBasell’s Berre L’Etang plant, which has been earmarked for closure, Reuters reports. Workers at the La Mede, Fos and Lavera refineries will not be taking industrial action at this stage. The strike at Berre L’Etang, meanwhile, has now been extended until Monday lunchtime.

The fire that forced the shut-down of Shell’s 500 kbpd Singapore refinery has finally been extinguished after burning for over 24 hours, Reuters reports. Industry sources have suggested that it will be at least a month before operations can restart at the plant, with some expecting even longer disruption. In the meantime, Shell has declared force majeure on a number of cargoes due to load from the Bukom terminal.

Japanese domestic steel demand in the 4q11 is forecast to grow 4.2% from the estimated 3q level to 16.5 Mt, according to the Ministry of Economy, Trade and Industry (MITI). The automobile sector is expected to see a 13.4% demand expansion to 3.1 Mt. The government also predicts that the country’s steel product exports will show negative quarter-on-quarter (-6.5%) and year-on-year (-2.6%) growth to 8.0 Mt in the 4q11, mainly due to a slowdown in the overseas markets and the strengthening yen.

ConocoPhillips is set to close its 185 kbpd refinery in Trainer, Pennsylvania, unless a buyer can be found in the next six months, Reuters reports. The move follows a similar decision earlier in September from Sunoco to shut two of its Pennsylvania refineries if buyers for the 178 kbpd Marcus Hook and 335 kbpd Philadelphia refineries are not found by July 2012. East Coast refineries have been grappling with weak margins as a result of elevated prices for Atlantic Basin crude.

Shell is to implement a full shut-down of its 500 kbpd Pulau Bukom refinery, as the attempts continue to contain a blaze that started in the early hours of Wednesday morning, Bloomberg reports. The shut-down is scheduled to take place over the next two days. Loading at berths near the fire have been suspended, although tankers are reportedly continuing to load cargoes at berths further away. Regional crack spreads, particularly for gasoil, have widened in the aftermath of the incident.

US GDP in the 2q grew at an annual rate of 1.3%, according to data from the country’s Commerce Department. This compares with the previous estimate of 1.0% and reflects a boost from consumer spending and trade.

August saw a sizable recovery in Japanese coking coal imports, with an increase of almost 1 Mt month-on-month to a 5-month high of 6 Mt, according to data from the country’s Ministry of Finance. Most of the monthly increases came from Canada, up 0.6 Mt from July to 0.85 Mt. This represents the highest monthly level since August 2010. Japan imported 3.2 Mt of coking coal from Australia, the highest level since March. Shipments from Indonesia were unchanged from the previous month, at 1.2 Mt.

A blaze at Shell’s 500 kbpd Pulau Bukon refinery, in Singapore, has left a hydrocracking unit, amongst others, shut, whilst crude distillation units are running at reduced rates, various sources report. The fire started in the early hours of this morning amongst the plant’s storage tanks, but has since spread. Shell have evacuated all non-essential staff. The refinery is Shell’s largest, with crude distillation capacity of 500 kbpd, as well as an 800,000 mtpa steam cracker and a 155,000 mtpa butadiene extraction unit. Approximately 90% of the plant’s output is sold for export, although Shell have stated that they will be able to replace lost production with products from storage and other refineries. Most of the crude processed at Pulau Bukon derives from the Middle East, and reduced throughputs may lower eastbound shipments from the region.

World export prices for hot rolled band from the World Steel Dynamics’ SteelBenchmarker slipped $3/t month-on-month to $710/t at end-Sept, but is still $84/t higher than the year-ago level. However, China’s HRB price fell to a 6-month low of $617/t in September, down $20/t from end-August. Furthermore, the EU price of $721/t was the second lowest level so far this year, down $32/t month-on-month. Running counter to this negative trend, HRB steel prices in the US saw an increase of $36/t month-on-month to $767/t in September. The arrival of reduced in US steel imports has coincided with a firming in the US HRB prices. Preliminary August data from the American Iron and Steel Institute showed a third consecutive month fall in the country’s steel imports to 2.2 Mt, down 7% month-on-month.

The West Coast forms the focus of US refinery turnarounds this Autumn, with Argus reporting 330 kbpd of the region’s overall 3.09 mbpd capacity taken offline this month, and 367 kbpd undergoing maintenance in October. Next month will see US turnarounds peak, with 548 kbpd of capacity removed from service. Maintenance is comparatively light this year, with a number of East Coast plants up for sale, and Midcontinent refiners keen to continue taking advantage of ample, cheap supplies confined to the region.

September has seen the peak of the European autumn refinery turnaround season, although maintenance is light after many plants performed turnarounds earlier in the year in the wake of disruption to Libyan crude supplies, Argus reports. Around 433 kbpd of Europe’s 16.57 mbpd refining capacity was taken offline in September, a number that falls to 410 kbpd in October. By November, just 158 kbpd of capacity is scheduled to be undergoing maintenance.

Chinese imports of West African crude are set to reach close to 830 kbpd during October, the highest monthly level since March, Argus reports. October’s shipments to China will represent an increase of 65 kbpd from volumes loaded this month. As refineries have emerged from a heavy summer maintenance period, Chinese demand for West African crude has steadily increased over recent months. Despite the rise in Chinese buying, as well as resurgent Taiwanese demand, overall Asian purchases of West African crude will fall next month, as maintenance at Indian refineries takes its toll. October will see just over 300 kbpd of the region’s crude head to India, a fall of 170 kbpd from this month.

The price of Chinese wire rod fell for the fifth consecutive week, down $18/t week-on-week to $754/t on September 23, according to World Steel Dynamics. The current price represents the lowest level since mid-July, but is still $66/t higher than the year-to-date low of $688/t in March.

Chinese Imports of West African Crude Plunge in August China’s imports of Angolan crude oil dropped by 228 kbpd yoy, to 716 kbpd, in August. On-going disruption to Libyan supplies, as well as production difficulties in the North Sea, are contributing to a tight Atlantic Basin crude market, that has widened the Brent/Dubai spread and made Brent-linked grades less attractive to Asian buyers. China’s imports of Middle East grades, meanwhile, remained stable in August. Saudi Arabia remained the country’s primary source of crude oil, providing 934 kbpd in August, unchanged from a year earlier. The start-up of a 300 kbpd spur to the ESPO pipeline late last year ensured that Chinese imports of Russian crude increased by 183 kbpd yoy, to 405 kbpd, in August. Shipments of Venezuelan oil to China rose by 144 kbpd yoy, to 256 kbpd, last month, as the Latin American country continues to increase its shipments as part of loans-for-oil deals.

World wheat trade in 2011/12 is forecast at 128.0 Mt, virtually unchanged from last month’s forecast and 1.4 Mt higher than the estimate for 2010/11, according to the International Grains Council. Exports from the US are forecast to drop 2.1 Mt from August’s projection to 28.5 Mt in 2011/12, compared with 35.7 Mt in 2010/11. By contrast, exports from Australia (+0.3Mt to 17.3 Mt) and Canada (+0.3Mt to 15.8 Mt) are projected to rise from August’s projection, while exports from Argentina and the EU are unchanged from one-month ago. Combined wheat exports from Kazakhstan, Russia and Ukraine are projected to rise 17.6 Mt to 31.5 Mt in 2011/12.

Continued production problems at the North Sea Buzzard field have seen a first Forties cargo dropped from the October schedule, Bloomberg reports. The September and October programmes have been beset by delays and cancellations, with 19 cargoes delayed and three cancelled. The Buzzard field usually produces 200 kbpd of crude oil, but volumes have been lower since disruption emerged in May, something that has further tightened a light crude market already contending with the loss of Libyan supplies.

Latest loading schedules show that November shipments of Nigerian light-sweet grade, Bonny Light, will drop by 47 kbpd from a revised October programme, to 184 kbpd. October shipments had previously been planned at 245 kbpd, but are now scheduled at 231 kbpd. Angolan crude exports are scheduled at 1.81 mbpd in November, up by 170 kbpd from October’s planned loadings, and the highest monthly level since April 2010, Bloomberg reports.

Japanese iron ore imports rose for the third consecutive month in August, up 2.7 Mt or 28% to 12.2 Mt from the recent low seen in May, according to preliminary trade data from the Ministry of Finance. This marks the highest monthly level since October 2008. Trade data also showed strong increases in the country’s coal imports, some 16.4 Mt of coal were shipped into Japan, reaching the highest monthly import volume since July 2010. Thermal coal imports stood above 10 Mt for the first time in a year, supported by low utilization rates at nuclear power station, while coking coal imports rose to a 5-month high of 6.4 Mt.

Combined shipments of iron ore to China from the three major exporters (Australia, Brazil and India) rose by 24% year-on-year to a 5-month high of 42.7 Mt in August, supported by strong levels of cargo availability from Brazil (+2.1 Mt YoY to 12.1 Mt) and Australia (+6.9 Mt YoY to 26.3 Mt), according to customs figures. Various restrictions on production and exports in India continued to lower shipments to China, which fell 0.8 Mt YoY to 4.3 Mt in August. August imports from other sources of 16.4 Mt were close to the all-time high of 17.2 Mt in January, driven by strong imports from South Africa (+1.6 Mt YoY to a 2-year high of 3.7 Mt) and Russia (+1.4 Mt YoY to a record volume of 2.1 Mt).

According to customs statistics released today, China imported 60 kbpd of diesel last month, up by 31 kbpd year on year, and 22 kbpd higher than July. August’s imports are the second highest so far this year, following the 84 kbpd received during June. August’s diesel exports of 50 kbpd ensured that China was a net importer of the product for the fourth time since December last time, before which it had been a net exporter for 24 consecutive months. Rising demand, heightened by the threat of power shortages, has increased China’s thirst for imported volumes. Kerosene net exports fell to 10 kbpd, the lowest level since February, further highlighting the country’s increased demand for middle distillates. Total product imports averaged 755 kbpd during August, a 74 kbpd mom increase, and up 190 kbpd yoy. Total exports fell by 26 kbpd mom, to 511 kbpd, in August, but still managed a 16 kbpd increase yoy.

According to latest figures from the World Steel Association, global steel production in August was 124.4 Mt, an increase of 9.8% year-on-year. However, this marks the lowest monthly production since February. The August production totals bring world output in the first eight months of this year to 1011.6 Mt, up 8.3% on the corresponding 2010 level. Seasonal factors continued to lower production in the EU-15, which fell for a fifth consecutive month, down to a one-year low of 10.5 Mt in August. However, total output in the EU-15 was still up 3.2% year-on-year. August saw steel production in the US up 13.8% year-on-year to 7.5 Mt. This represents the highest level since September 2008, in response to a rebound in the country’s domestic steel prices. Strong annual increases have been seen in China (+13.8% to 58.8 Mt) and South Korea (+19.3% to 5.5 Mt). Production in Japan was unchanged from the year-ago level, at 8.9 Mt.

In its latest World Economic Outlook, the International Monetary Fund (IMF) has forecast worldwide economic growth at 4.0% in 2011 & 2012. Both estimates have been revised down since the IMF’s June update. The IMF has downgraded its view on growth in the advanced economies (-0.6 to 1.6%) and emerging economies (-0.2 to 6.4%) for this year. The IMF expects the Japan economy to contract by 0.5% this year, but expand by 2.3% in 2012. The IMF also revised its 2012 projection for the Chinese economy from its previous forecast of 9.5% to 9.0%. Furthermore, the IMF recognises that there are major downside risks to their forecast chiefly surrounding the euro zone and US.

the Iraqi oil minister, Abdul Karim Luaibi, has said that the country’s crude output will reach 3.0 mbpd by the end of the year, up from the current 2.72 mbpd, Argus reports. Luaibi also detailed Iraq’s intention to export in excess of 2.5 mbpd during 2012, but conceded that volumes available for overseas shipment are already higher than export infrastructure will allow. Export capacity is set to reach 2.7 mbpd by the end of the year with the opening of a 900 kbpd loading platform off the southern Iraqi coast.

Refinery complications elsewhere in the Asia-Pacific have boosted South Korean product exports, Argus reports. During the first seven months of the year, the country’s net product exports have averaged close to 350 kbpd, up 250 kb/d year on year. After March’s earthquake and tsunami damaged a number of refineries, Japan has turned to South Korea to meet its product requirements, so that sales to Japan have increased by 64 kbpd, to 110 kbpd. Elsewhere, fires at Taiwan’s Mailiao and China’s Dalian refineries have increased demand for South Korean output. July saw South Korean diesel and jet fuel exports reach record highs, after the start-up this year of an 80 kbpd condensate splitter at Onsan and of a 54 kbpd catalytic cracker at Daesan increased the volumes available for overseas delivery.

The price of Chinese wire rod has softened recently, falling for a fourth consecutive week, down $5/t week-on-week to a 7-week low of $772/t on September 16, according to World Steel Dynamics. The current price marks a decline of $18/t from the year-to-date high in mid-August.