News archive February 2012

The latest data from the EIA reveal a 4.2MB rise in U.S. commercial crude stocks last week, to 344.9 MB. In the week preceding TransCanada’s decision to proceed with the southern leg of the Keystone XL pipeline, inventories at Cushing rose by 1.6 MB to 33.8MB. U.S. crude imports were 96 kbpd higher from the week before at 9.19 mbpd, whilst crude throughputs at U.S. refineries dropped by 282 kbpd to 14.61 mbpd. Overall refinery utilisation fell from 85.5% to 83.6% of total capacity. Meanwhile, gasoline inventories dropped by 1.6 MB to 229.9 MB, as lower production and lower imports combined with falling domestic demand. U.S. gasoline demand was down by 265 kbpd from the week before, and by 799 kbpd yoy, at 8.36 mbpd. Distillate stocks fell by 2.1 MB to 141.4 MB as domestic demand recovered to 3.67 mbpd, up by 349 kbpd from a week earlier. Exports were stable at 1.13 mbpd, with the 13-week average now 252 kbpd higher yoy at 1.05 mbpd.

Japan exported 2.9 Mt of steel in January, down 6% on December, according to the Japan Iron and Steel Federation, which also marks a 16% decline year-on-year. January’s export figure stood below 3 Mt for the first time since June 2009.

TransCanada has announced their intention to proceed with the southern, 700 kbpd Cushing - Texas portion of the Keystone XL pipeline, Reuters reports. The firm has identified 2h13 as a likely date for the commencement of flows along the line. The abridged line does not cross the U.S. – Canada border, and is therefore not subject to U.S. State Dept. approval. The full 830 kbpd Hardisty, Alberta – Port Arthur, Texas line was rejected by the department earlier this year, although TransCanada intends to resubmit the project for approval in the near future. Whilst the southern portion will not increase access to fast rising Canadian tar sands output, it will, along with the soon to be reversed Seaway pipeline, allow USG refiners’ to receive greater domestic volumes from Cushing, potentially reducing demand for seaborne imports from overseas.

December saw a decline in South Korean iron ore imports, which fell 19% on November to 4.9 Mt, according to customs data. Total imports in the whole 2011 reached 64.9 Mt, up 15% on 2010. Some 44 Mt of ore were shipped from Australia, (+13.5% year-on-year). South Korea imported 16.4 Mt of Brazilian iron ore in 2011, up a sizeable 25%.

China increased imports of crude from prime supplier, Saudi Arabia, to 1.14 mbpd in January, a 143 kbpd increase yoy. Meanwhile, the country’s shipments from Russia surged to 584 kbpd, a huge 391 kbpd increase from January 2011, reflecting the strengthening energy-ties between the two nations, as China looks to diversify its crude sources and Russia looks east to the demand growth centres of the Asia-Pacific. Increased shipments from Saudi Arabia and Russia, as well as higher imports from Angola, Venezuela, Kuwait and Libya, more than offset a 138 kbpd yoy decline in crude received from Oman (304 kbpd) and a 26 kbpd drop in shipments from Iran (493 kbpd). Lower imports from Iran as a result of a dispute over term contracts are expected to materialise in February’s trade data. Overall, China imported 5.55 mbpd of crude oil in January, a 382 kbpd increase yoy.

The price of wire rod in China climbed from an 18-month low of $626/t to $634/t, according to World Steel Dynamics. However, the current price is still more than $40/t below the end-2011 level.

South Korea imported an average of 2.59 mbpd of crude oil last month, a 133 kbpd (4.9%) drop yoy, latest KNOC data reveals. Imports from Iran fell by 75 kbpd (25%) yoy, to 227 kbpd, as Korean refiners attempted to reduce their dependency on the sanction-hit Middle Eastern producer. Shipments from Iraq, Australia and Indonesia also fell, with Korea turning to its top three suppliers, Saudi Arabia, Kuwait and the UAE, to replace some of these volumes. Nevertheless, lower imports forced the country’s refiners to draw down inventories, with crude stocks dropping by 28.7% yoy, to 9.78 MB.

According to the latest EIA data, U.S. commercial crude stocks rose by 1.6MB last week, to 340.7 MB, after imports climbed to 9.09 mbpd, a 335 kbpd increase from the week before. Crude throughputs at U.S refineries were 170 kbpd higher, at 14.89 mbpd, with overall refinery utilisation rising from 84.5%, to 85.5%, of total capacity. Gasoline demand rose by 461 kbpd from a week before, to 8.63 mbpd, but 13-week average demand remains 5.7% down from the same period in 2011. Gasoline imports recovered to 845 kbpd, up from 548 kbpd from the week before, but the 13-week average is now 18.1% lower on a yoy basis. Stocks saw a 0.6MB fall, to 231.5MB. U.S. distillate demand also remained lacklustre at 3.32 mbpd, a 487 kbpd decline on a weekly basis. Inventories dropped 0.2 MB, to 143.5 MB, however, as export demand remains robust. Last week saw exports average 1.12 mbpd, taking the 13-week average to 1.04 mbpd, an all-time high.

After falling to the second consecutive month, January saw a strong rebound in US steel imports, with a 23% monthly increase to a 6-month high of 2.3 Mt, according to preliminary data from the American Iron and Steel Institute. This also marked a 20% jump from the year-ago level.

Indian refineries, excluding Reliance’s second, export-based, 580 kbpd Jamnagar plant, processed 3.44 mbpd of crude oil last month, a 4.6% decline yoy. Government data show that the drop came about after a 4.2% fall in throughputs at plants operated by state-run firms and a 10.7% decline in runs at Reliance’s domestically focussed 660 kbpd refinery. Domestic crude production was 1.9% lower yoy in January, at 750 kbpd.

January saw a sharp decline in minor bulk imports into China. Combined imports of alumina, bauxite, steel scrap, fertiliser as well as nickel, manganese, chromium and copper ores dropped by 26% month-on-month to a 10-month low of 9.5 Mt, according to China’s Customs. Most of the declines were due to heavy reductions in nickel ore (-1.6 Mt to 2.8 Mt) and bauxite (-1.5 Mt to 3.1 Mt) imports.

According to China’s Customs statistics, Chinese coal imports from Indonesia fell sharply from a record 8.2 Mt in December to 5.6 Mt in January, Short-haul shipments from Vietnam also saw a massive decline, down 35% on December to 1.3 Mt. By contrast, coal imports from Russia surged to 1.1 Mt, up 12% month-on-month and volumes from Australia rose 11% month-on-month to 4.1 Mt. Long haul imports from South Africa remained at a high level of 1.5 Mt, while imports from the US climbed to a one-year high of 0.6 Mt.

The latest data from country’s customs agency reveal that China was a net diesel exporter for the first time since July last year, in January. Imports of the product dropped from 64.5 kbpd in December, to just 11.9 kbpd last month, a year on year decline of 31.1 kbpd. Exports averaged 23.9 kbpd in January, up by 9.6 kbpd from December’s 38-month low and unchanged from a year earlier. After a number of months of tight domestic supply, higher crude runs at Chinese refineries have alleviated the need for imported volumes. Meanwhile, according to the customs report, Chinese exported no gasoline last month, compared with 51.5 kbpd in December and 151.7 kbpd in January 2011. A 72.3 kbpd mom and 70.0 kbpd yoy surge in exports of ‘other’ products (those other than gasoline, kerosene, diesel and fuel oil), to 85.8 kbpd, however, suggests that this may be the result of a reporting error. Overall, China was a net importer of 227 kbpd of petroleum product in January, a 157 kbpd decline from December, and down by 109 kbpd yoy.

China imported 15.4 Mt of Brazilian iron ore in January, up 9% from the year-ago level and a sizeable monthly increase of 16%, the highest monthly import level since September 2009, according to China’s Customs. By contrast, January’s shipments from India remained at a low level, slipping by 5% on December to 4.5 Mt. This marked a massive decline of 50% year-on-year. Imports from Australia were down 8% month-on-month and 7% year-on-year to 26.8 Mt in the same month.

Global crude steel production in January fell 7.8% year-on-year to 116.7 Mt, according to latest update from the World Steel Association. Of the major steelmaking centres, annual declines in January are led by China, with a decrease of 13% to 52.1 Mt. Declines were also seen in the Japan (-10.6% to 8.6 Mt) and the EU (-5.6% to 13.9 Mt). However, the US enjoyed output growth of 5.7% year-on-year to 7.6 Mt.

China has bought nearly 1 mbpd of West African crude for March-loading, up 200 kbpd on average imports last year, but volumes are down from the record high of over 1.1 mbpd seen in February, reports Argus. Refiners are having to seek alternatives to Iranian, Sudanese and domestic crude. China is the largest importer of heavy sweet Sudanese supply, buying just over 260 kbpd last year. South Sudan has shutdown its 310 kbpd crude output amid a dispute with Sudan over transit fees. With regards Iranian crude, China’s imports have fallen this year as buyers fail to agree prices for 2012 term contracts with Tehran, having imported 550 kbpd in January-November. Problems at a 150 kbpd domestic refinery are also prompting extra purchases from Angola.

According to latest data from the Japan Iron and Steel Federation, the country’s crude steel output edged higher by 3% on the previous month to 8.6 Mt in January. However, this figure still marked 11% decline year-on-year and the largest annual drop since October 2009.

January saw an increase in raw materials import to Japan, according to preliminary data from the country’s Ministry of Finance. In January, Japan imported 11.3 Mt of iron ore, up 10% on December to a 4-month high. Meanwhile, some 16.8 Mt of coal were shipped into Japan in the same month, with a monthly gain of 2.4 Mt or 17% and up 1.2 Mt or 8% from the year-ago level. A further decrease in the amount of electricity generated by nuclear power contributed to the strength in coal imports, which surge to the highest level since August 2008.

Surgutneftegaz has opened a tender to sell the first Urals cargo to load at the new Ust-Luga terminal, near Primorsk, reports Argus. The 100Kt cargo is scheduled to load end-February, while Rosneft has said it may load an Ust-Luga cargo in early March. Loadings were not expected to start until the second or third quarter after its first cargo was postponed in November due to construction problems.

ESPO Blend exports from Russia are set to increase after the second leg of the pipeline, ESPO-2, comes on stream at the end of the year, reports Argus. ESPO-2 could take seaborne shipments of the blend from Kozmino to 700 kbpd, up from the current 300 kbpd, helping to make the market for Russian crude more liquid and competitive. In 2010, about 60% of the crude went to S. Korea, until they were put off by rising premiums for the grade. In 2011, the main end-users were in China, Japan and the US, although USWC refineries have reduced volumes in recent months due to the high price.

China has raised the resource tax rates on iron ore, with the tariff rising from the previous 60% to 80%, various media reported, citing the country’s Ministry of Finance.

Nuclear power generation by key Japanese power companies fell 83% year-on-year to 3.74 billion KWH, according to data from the Federation of Electric Power Companies of Japan. By contrast, the decrease in the amount of electricity generated by nuclear power led to an annual increase of 28.5% in thermal power generation to 64.5 billion kWH.

Forthcoming maintenance at a number of Mediterranean refineries is set to tighten regional gasoline supply amidst on-going strong demand from North Africa and the Middle East, Platts reports. The 240 kbpd Milazzo, 300 kbpd Skikda and 110 kbpd Castellon refineries are all expected to undergo turnarounds in May and June, following on from the maintenance currently taking place at the 300 kbpd Sarroch refinery. Gasoline cracks spreads in the Mediterranean have strengthened since the start of the year, after the shutdown of three Petroplus plants in North West Europe, reaching a five month-high of over $9/bbl in early February. A heavy spring maintenance period is likely to add further support to margins.

After hitting a record of 22.1 Mt in November, January saw coal imports into China slip for two consecutive months, at 19.7 Mt, preliminary trade data show. Although this represents a month-on-month decline of 1.7 Mt or 8%, it is still 3.1 Mt higher than the year-ago level and stands well above the monthly average level in 2011 of 15.3 Mt.

January saw iron ore exports from India's major ports down 1.1 Mt on December to a 4-month low of 4.3 Mt, according to data from the country’s Ports Association. This also marked a massive decline of 5.9 Mt or 58% from the year-ago level. Total iron ore port throughput of 52.1 Mt in the current fiscal year to date (April-January) was down 25% year-on-year.