Tokyo Steel keeps its steel product prices unchanged for AugustViewJapan’s Tokyo Steel Manufacturing announced that it will keep its steel product prices unchanged in August. This will be the 7th consecutive month for this steel maker to hold its product prices flat. Earlier this month, both Baosteel and Wuhan Steel in China said that they will also roll over their July prices into next month. Recently the Chinese steel market has found some positive signs due to a better economic outlook. The property stock index in China has already registered a sharp increase since the end of last month. Although China Iron and Steel Association (CISA) warned that the "mini-stimulus" measures in China are unlikely to lift the steel prices, steel makers’ confidence are indeed recovering.
Kurds begin pumping Kirkuk crudeViewAccording to Reuters, Kurds are now pumping between 20,000 and 25,000 bpd from the Avana Dome Kirkuk field and sending it to the Kurdistan Regional Government on a reversed pipeline that runs from Avana to the Khurmala Dome and has a capacity of roughly 60,000 bpd. Because of a lack of options to evacuate the oil - the main northern export pipeline is offline and the 270,000 Baiji refinery is still surrounded by the rebels - most of the production is re-injected into the Kirkuk reservoir to maintain pressure and produce associated gas, which is needed to produce electricity.
Weekly Oil Price ReviewViewOil prices kicked off the week with slight gains as both Brent and WTI rose on Monday on renewed violence in Libya and Iraq, which offset positive signs of a well-supplied crude market. Tuesday reversed the trend, following an announcement by Libya’s oil minister claiming oil output has bounced back to almost 590,000 bpd. With no disruptions and ample supply, crude prices tumbled to their lowest level since April, Brent closed at $106.02/bbl and WTI closed at $99.96/bbl. Both benchmarks bounced back on Wednesday on the back of larger than expected draws on inventories and positive economic data from China. Finally, prices rose yet again on Thursday as a Malaysian plane crashed in Ukraine, spurring fears of increased turmoil and an escalation in violence in Eastern Europe. Overall between Monday and Thursday, Brent rose from $106.66 to $107.79/bbl, and WTI rose from $100.83 to $103.90/bbl.
Libyan crude production tops 550,000 bpdViewAccording to Libya’s National Oil Corp., the country’s oil output has risen to 550,000 bpd following the reopening of the El-Sharara field. In addition, the Marsa el-Hariga and Mellitah export terminals are ready to launch exports, and Es Sider and Ras Lanuf ports are currently preparing for a restart of operations as a deal with rebel militants has been reached. The El-Sharara field in southwest Libya has a capacity of 350,000 bpd, and its output travels via pipeline to Zawiya in the west for both exports and domestic refining.
Grain exports from Argentina amid the port strikesViewYesterday, port workers in Argentina’s Rosario Terminal went on an indefinite strike which will stop all operations according to the unions involved. The port of Rosario consists of 12 berths and is mainly used for Argentine grain exports. The south American country exports mostly corn and soya and has already finished harvesting its crops for both commodities. The corn harvesting season in Argentina starts in March and finishes in May, while the soybean harvesting season starts in April of each calendar year and ends in May. Statistically, Argentine grain exports typically peak around March and then decline around July. During the first five months of 2014, Argentina exported almost 30 percent less grains than it did during the same period last year where the country exported 27 million tonnes of grains. The USDA last week reduced soybean exports from Argentina for the trade year 2014/15 by 500,000 tonnes to 8.5 million tonnes, but left its estimate about corn exports unchanged to 17 million tonnes. We wouldn’t expect major disruptions in grain export operations in Argentina, since this particular time of the year is not the busiest period for the Argentine grain ports, however this may change depending on the duration of the strikes.
Yemeni output continues decade-long slumpViewA major Yemeni pipeline suffered a renewed assault over the weekend, although did not sustain enough damage to warrant a shut down. The two main export pipelines are operational and current production surpasses 160,000 bpd, however overall output has dropped almost 100,000 bpd over just two years, leading to a significant decrease in export revenues and shortages in domestically refined petroleum products. Yemen supplied 260,000 bpd of crude in 2011 and over 400,000 bpd a decade ago. Given the smaller volumes Yemen now produces, any potential shortages going forward will have decreasingly significant impacts on global oil markets.
East Java oilfield to help Indonesia meet its production targetViewAccording to Indonesian upstream regulator SKK Migas, the former OPEC member should reach its 2015 oil and gas output goal of 845,000 bpd if the Banyu Urip fields, located in East Java, achieve their peak production by summer next year. After previous delays, the fields currently have a production capacity of 29,000 bpd, but are expected to reach 165,000 bpd at their peak with the completion of 23 new projects. Indonesia pumped over 1.5 million bpd in the 1990s, but production has been dwindling ever since. Domestic oil companies are set to supply 804,000 bpd in 2014, well below the 870,000 bpd considered to be the government’s target.
USDA sees record high soybean productionViewThe U.S. Department of Agriculture (USDA) published its latest monthly report last Friday, which showed a record high soybean production and ending stocks for the coming marketing year (Oct-14 to Sep-15). Thanks to the high prices during the first half of this year, the vast planting activity is likely to lift US soybean output in 2014/15 to 103.4 million tonnes, which is 4.5 million tonnes higher than USDA’s projection back in June. The forecast for the ending stocks in US is also increased by 28% to 11.3 million tonnes from a month earlier. The soybean futures prices have already registered sharp drops within this month. All of these are positive signs for the Q4 US grain export season in the dry freight market.
Kurdish forces seize Kirkuk oilfieldsViewAccording to news site Zawya, Kurdish military forces seized two oilfields in northern Iraq last Friday, escalating tensions between the Iraqi government and the autonomous region. The Kurdish forces took control of the city of Kirkuk a month ago following the assault by ISIL, but now have moved to secure the fields nearby which have a combined production of 450,000 bpd, although production has been significantly lower since March when the main pipeline to Turkey was sabotaged. The Iraqi Oil Ministry has called for immediate withdrawal of the Kurds, and described the assault as irresponsible and dangerous.
Colombian miners face strike issues againViewThe Colombian government believes this year Colombia will produce 89.1 million tonnes of coal in total and during the first half of this year it was believed to stay on track. However, this week the strike issues appeared again, given that the coal output last year suffered hugely from these activities. The local mechanics working at major mining company, such as Cerrejon and Drummond, downed tools yesterday due to the disagreement over payment issues. This is believed to affect the large mines, which involve vast mechanical vehicles, and the loading facilities at ports. For now the coal stocks can still support the export activity, however some people concern that the strike may last long enough to interrupt the exports eventually. This is an interesting time point, as Platts just reported that the coal inventories in the Amsterdam-Rotterdam-Antwerp region dropped to the lowest level since mid-April.