Shanghai rebar futures slipped on Thursday, tracking losses in other commodities, with investors still concerned the United States could be pushed into recession without a breakthrough in budget talks.
Chinese steel mills have kept inventories of iron ore very low for most of this year, and some are restocking ahead of winter, encouraging miners and traders to raise offer prices more quickly than expected.
"Steel mills are buying a bit, but are not very active, and if prices rise further, they might suspend restocking," said an iron ore trader in Shandong province.
"It's more about traders, and miners are raising offers themselves at the moment," he added.
Steel demand in China slows in the winter season as cold temperatures halt construction work, hitting rebar consumption and potentially putting pressure on iron ore prices.
"Given steel is weak, I think some traders are deliberately taking tenders and doing swaps at high prices in hope of driving up prices," an iron ore trader based in Shanghai said.
London copper fell as US lawmakers struggled to find a fix to the looming "fiscal cliff". It was also hurt by a rebound in the dollar after it tumbled in the wake of the US Federal Reserve's extension of loose monetary policy.
The most active rebar contract for May delivery on the Shanghai Futures Exchange edged down 0.2 percent to 3,685 yuan ($590) a tonne by the midday break, after rising on Wednesday for a seventh time in eight sessions.
"The spot market has been weak and steel traders don't want to restock amid concerns about demand and tight cash flows," said Wu Linda, a futures analyst with HNA Futures in Shanghai.
Benchmark 62 percent iron content ore rose 1.2 percent to $125 a tonne on Wednesday, a level last seen on July 20, data from information provider Steel Index shows.
Source: Reuters
Iron ore future brighter, to tune of $2.7b
Australia's top commodities forecaster has revealed a more optimistic outlook for the iron ore sector than the one it offered just three months ago, in the latest sign that confidence in Australia's most valuable export business is recovering.
In a departure from its gloomy prediction in September that iron ore prices would average just $US101 a tonne in 2013, the Bureau of Resources and Energy Economics increased that prediction to an average of $US106 a tonne.
While still lower than most exporters would hope for, the revised prediction would represent an extra $US2.7 billion ($2.57 billion) worth of revenue should it prove correct.
The change to BREE's forecasts came on the same day the benchmark iron ore price hit its highest mark since July 20 when the commodity was beginning to lurch into a severe slump.
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The benchmark price touched $US124.90 a tonne on Wednesday, and the price has been hovering around these levels - which are widely considered to be its ''floor'' - for more than seven weeks.
The share prices of major iron ore producers are enjoying the benefits, with BHP Billiton and Rio Tinto shares both testing their highest prices since May, while Fortescue Metals has recovered from its recent debt crisis to be fetching its best share price since mid-August.
However, all those stocks remain significantly lower than the prices they were fetching in early 2011.
Despite the investment boom having passed from bulk commodities to export gas projects in recent times, the BREE statistics suggest iron ore will continue to be Australia's most valuable export earner in the next couple of years at least.
BREE expects iron ore exports will be worth $54.6 billion to Australia in the year to June 30, 2013, with gas exports expected to yield $16.4 billion. But the gap between the two commodities is closing, with the value of gas exports predicted to rise by 37 per cent compared to the 13 per cent fall predicted for iron ore export values.
The statistics also reinforce the notion that Australia's resources industry will increasingly rely on higher volumes of exports rather than high prices to maintain revenues. Despite higher export volumes of gas, iron ore, coal, gold and indeed most commodities, BREE expects the value of Australia's resources and energy exports will fall 4 per cent - or about $9 billion - to $184 billion in the year to June 30, 2013.
Source: Sydney Morning Herald
In a departure from its gloomy prediction in September that iron ore prices would average just $US101 a tonne in 2013, the Bureau of Resources and Energy Economics increased that prediction to an average of $US106 a tonne.
While still lower than most exporters would hope for, the revised prediction would represent an extra $US2.7 billion ($2.57 billion) worth of revenue should it prove correct.
The change to BREE's forecasts came on the same day the benchmark iron ore price hit its highest mark since July 20 when the commodity was beginning to lurch into a severe slump.
Advertisement
The benchmark price touched $US124.90 a tonne on Wednesday, and the price has been hovering around these levels - which are widely considered to be its ''floor'' - for more than seven weeks.
The share prices of major iron ore producers are enjoying the benefits, with BHP Billiton and Rio Tinto shares both testing their highest prices since May, while Fortescue Metals has recovered from its recent debt crisis to be fetching its best share price since mid-August.
However, all those stocks remain significantly lower than the prices they were fetching in early 2011.
Despite the investment boom having passed from bulk commodities to export gas projects in recent times, the BREE statistics suggest iron ore will continue to be Australia's most valuable export earner in the next couple of years at least.
BREE expects iron ore exports will be worth $54.6 billion to Australia in the year to June 30, 2013, with gas exports expected to yield $16.4 billion. But the gap between the two commodities is closing, with the value of gas exports predicted to rise by 37 per cent compared to the 13 per cent fall predicted for iron ore export values.
The statistics also reinforce the notion that Australia's resources industry will increasingly rely on higher volumes of exports rather than high prices to maintain revenues. Despite higher export volumes of gas, iron ore, coal, gold and indeed most commodities, BREE expects the value of Australia's resources and energy exports will fall 4 per cent - or about $9 billion - to $184 billion in the year to June 30, 2013.
Source: Sydney Morning Herald
November Hampton Roads coal exports fall 3%; year-to date exports up 15%
Monthly coal exports from the three coal terminals in Virginia's Hampton Roads port complex declined 3% in November to 3,251,476 st from 3,352,315 st in November 2011, according to data released by the Virginia Maritime Association.
In the first 11 months of 2012, coal exports from the terminals are rose 14.8% to 44,463,740 st from 38,742,682 st in the same period in 2011.
The association does not comment on its export data.
In October, the US Energy Information Administration reported US coal exports were on track to surpass the record 113 million st exported in 1981, though the pace has slackened in recent months due to weaker overseas demand for both US thermal and metallurgical coal.
November exports by Dominion Terminal Associates, which operates from a terminal in Newport News, Virginia, rose 51.8% to 1,194,489 st from 787,100 st in November 2011.
So far in 2012, the terminal has exported 13,852,042 st, compared with 9,907,867 st through the same period last year, a 40% increase.
Dominion Terminal President Rick Cole, asked about the increases, said in an e-mail to Platts that "nothing finite" was behind the big jump.
"We've been fairly busy every month this year," wrote Cole. "We finished last year at roughly 14 million (st) shipped and anticipate loading roughly 16 million (st) in 2012."
Cole added that the terminal operates on a month-to-month basis, loading cargoes as scheduled by the terminal's three owners: Peabody Energy, Alpha Natural Resources and Arch Coal.
Norfolk Southern, which owns and operates the Lambert's Point Coal terminal in Norfolk, Virginia, which is also known as Pier 6, exported 1,163,129 st from its facility in November, compared with 1,629,859 st in November 2011, a 28.6% decline.
Through November, coal exports from Lambert's Point totaled 16,497,046 st compared with 18,314,917 st in the same period in 2011, a 9.9% decline.
A spokesman for the company was not able to immediately comment on the declines. However, when the company reported its third-quarter results in October, it reported an unexpected 28% drop in coal export volumes in September, which it attributed to the economic slowdown in Europe.
The company recently completed a four-month, $18 million upgrade to the terminal, consisting of structural renovations to the terminal's dumper system and its two transloaders, but the spokesman was unable to say if the project may have affected shipments from the terminal.
Pier IX, also in Newport News, which is owned and operated by Kinder Morgan Terminals, exported 893,857 st in November, compared with 935,356 st in November 2011, a 4.4% decline.
In the first 11 months of the year, the terminal saw exports of 14,114,652 st, a 34.2% increase compared with 10,519,898 st in the same period last year.
In an e-mail to Platts, Joe Hollier, a spokesman for Kinder Morgan Terminals, attributed the year-over-year jump to "strong customer demand" but declined to elaborate further.
Source: Platts
In the first 11 months of 2012, coal exports from the terminals are rose 14.8% to 44,463,740 st from 38,742,682 st in the same period in 2011.
The association does not comment on its export data.
In October, the US Energy Information Administration reported US coal exports were on track to surpass the record 113 million st exported in 1981, though the pace has slackened in recent months due to weaker overseas demand for both US thermal and metallurgical coal.
November exports by Dominion Terminal Associates, which operates from a terminal in Newport News, Virginia, rose 51.8% to 1,194,489 st from 787,100 st in November 2011.
So far in 2012, the terminal has exported 13,852,042 st, compared with 9,907,867 st through the same period last year, a 40% increase.
Dominion Terminal President Rick Cole, asked about the increases, said in an e-mail to Platts that "nothing finite" was behind the big jump.
"We've been fairly busy every month this year," wrote Cole. "We finished last year at roughly 14 million (st) shipped and anticipate loading roughly 16 million (st) in 2012."
Cole added that the terminal operates on a month-to-month basis, loading cargoes as scheduled by the terminal's three owners: Peabody Energy, Alpha Natural Resources and Arch Coal.
Norfolk Southern, which owns and operates the Lambert's Point Coal terminal in Norfolk, Virginia, which is also known as Pier 6, exported 1,163,129 st from its facility in November, compared with 1,629,859 st in November 2011, a 28.6% decline.
Through November, coal exports from Lambert's Point totaled 16,497,046 st compared with 18,314,917 st in the same period in 2011, a 9.9% decline.
A spokesman for the company was not able to immediately comment on the declines. However, when the company reported its third-quarter results in October, it reported an unexpected 28% drop in coal export volumes in September, which it attributed to the economic slowdown in Europe.
The company recently completed a four-month, $18 million upgrade to the terminal, consisting of structural renovations to the terminal's dumper system and its two transloaders, but the spokesman was unable to say if the project may have affected shipments from the terminal.
Pier IX, also in Newport News, which is owned and operated by Kinder Morgan Terminals, exported 893,857 st in November, compared with 935,356 st in November 2011, a 4.4% decline.
In the first 11 months of the year, the terminal saw exports of 14,114,652 st, a 34.2% increase compared with 10,519,898 st in the same period last year.
In an e-mail to Platts, Joe Hollier, a spokesman for Kinder Morgan Terminals, attributed the year-over-year jump to "strong customer demand" but declined to elaborate further.
Source: Platts
Australia Cuts Energy Export Revenue Forecast
Australia scaled back its revenue expectations from exports of energy and key minerals like iron ore this fiscal year following a marked fall in commodity prices, underscoring the challenge for Prime Minister Julia Gillard and her government as they seek to return the budget to surplus.
The weaker outlook is the latest sign that Australia's resources boom has lost momentum, with mining companies down under already moving to protect profits by closing mines and laying off workers. Prices of industrial commodities have fallen sharply this year as China's cooling economy depressed demand.
Exports are now expected to be worth 184 billion Australian dollars (US$194 billion) in the year through June, down 4% compared with the 2012 fiscal year, according to the government's Bureau of Resources and Energy Economics, or Bree. Six months ago, the agency was predicting another record year, with exports totaling A$209 billion on strong Asian demand.
Revenues from iron ore-Australia's biggest export-alone are forecast by Bree to fall by 13% and steelmaking coal even more sharply, reflecting weak prices as Asia grapples with an oversupply of steel as infrastructure and construction activity slows.
However, Bree has a rosier view of production of iron ore in the current fiscal year than before, raising its forecast by 3 million metric tons to 529.4 million tons as miners gear up for stronger demand for steel driven by Beijing moves to stimulate its economy by fast-tracking big infrastructure projects.
"Further growth in Australia's export earnings from resources and energy will depend on increased volumes," said Quentin Grafton, Bree's executive director. "This is because resource commodity prices, with a few exceptions, are not expected to return, in real terms, to their historic highs of 2011-12."
Australia's minority Labor government is depending on mining taxes and royalties to return the national budget to a slim surplus by mid-2013 ahead of elections. The government in October announced new spending cuts of 16.4 billion Australian dollars (US$17 billion) to reach the budget target. The savings, over four years, will take money out of the economy at a time when the country's mining boom is cooling.
The cutbacks have prompted the Reserve Bank of Australia to lower interest rates more aggressively than it might have intended. Last week, the bank cut its benchmark lending rate by a quarter of a percentage point to 3.0%, matching a low reached in the aftermath of the financial crisis.
Australia's terms of trade-the difference between what the country is paid for its exports and what it pays for imports-are down around 14% this calendar year.
"Terms of trade and commodity prices more broadly are definitely a drag on national growth right now," said Huw McKay, senior economist at Westpac.
Despite the price falls and recent closures of some mines like BHP Billiton Ltd.'s (BHP) Norwich Park coal operation in Queesnland state, Australia is shipping commodities in greater volumes than ever before. According to Bree, iron ore exports are forecast to rise 9% to 512 million tons this fiscal year, while thermal coal and steelmaking coal shipments are expected to rise 14% to 180 million tons and 9% to 154 million tons, respectively.
Source: Dow Jones
The weaker outlook is the latest sign that Australia's resources boom has lost momentum, with mining companies down under already moving to protect profits by closing mines and laying off workers. Prices of industrial commodities have fallen sharply this year as China's cooling economy depressed demand.
Exports are now expected to be worth 184 billion Australian dollars (US$194 billion) in the year through June, down 4% compared with the 2012 fiscal year, according to the government's Bureau of Resources and Energy Economics, or Bree. Six months ago, the agency was predicting another record year, with exports totaling A$209 billion on strong Asian demand.
Revenues from iron ore-Australia's biggest export-alone are forecast by Bree to fall by 13% and steelmaking coal even more sharply, reflecting weak prices as Asia grapples with an oversupply of steel as infrastructure and construction activity slows.
However, Bree has a rosier view of production of iron ore in the current fiscal year than before, raising its forecast by 3 million metric tons to 529.4 million tons as miners gear up for stronger demand for steel driven by Beijing moves to stimulate its economy by fast-tracking big infrastructure projects.
"Further growth in Australia's export earnings from resources and energy will depend on increased volumes," said Quentin Grafton, Bree's executive director. "This is because resource commodity prices, with a few exceptions, are not expected to return, in real terms, to their historic highs of 2011-12."
Australia's minority Labor government is depending on mining taxes and royalties to return the national budget to a slim surplus by mid-2013 ahead of elections. The government in October announced new spending cuts of 16.4 billion Australian dollars (US$17 billion) to reach the budget target. The savings, over four years, will take money out of the economy at a time when the country's mining boom is cooling.
The cutbacks have prompted the Reserve Bank of Australia to lower interest rates more aggressively than it might have intended. Last week, the bank cut its benchmark lending rate by a quarter of a percentage point to 3.0%, matching a low reached in the aftermath of the financial crisis.
Australia's terms of trade-the difference between what the country is paid for its exports and what it pays for imports-are down around 14% this calendar year.
"Terms of trade and commodity prices more broadly are definitely a drag on national growth right now," said Huw McKay, senior economist at Westpac.
Despite the price falls and recent closures of some mines like BHP Billiton Ltd.'s (BHP) Norwich Park coal operation in Queesnland state, Australia is shipping commodities in greater volumes than ever before. According to Bree, iron ore exports are forecast to rise 9% to 512 million tons this fiscal year, while thermal coal and steelmaking coal shipments are expected to rise 14% to 180 million tons and 9% to 154 million tons, respectively.
Source: Dow Jones
Strong Expansion in Mining Forecast for 2013
The Mozambican government envisages an 18.6 per cent increase in production from the country's mining and hydrocarbon industries in 2013.
According to the social and economic plan presented to the Mozambican parliament, the Assembly of the Republic, by Prime Minister Alberto Vaquina, coal production in the western province of Tete should reach 7.5 million tonnes.
This breaks down into six million tonnes of coking coal (a 20 per cent increase on this year's figure), and 1.5 million tonnes of thermal coal (a 61.2 per cent increase).
At the dredge mine operated by the Irish company Kenmare Resources, in the northern district of Moma, the plan expects production of 905,000 tonnes of the main mineral mined, ilmenite (iron titanium oxide), which is a 44.1 per cent increase. However there will be a decline in production of the two other minerals exploited at Moma - xircon (minus 10.9 per cent) and rutile (minus 29.9 per cent).
After many years of paralysis, tantalite mining at Ile, in Zambezia province, resumed in 2011. The plan envisages that production will remain steady at 982 tonnes a year.
At the natural gas treatment plant in Temane, in the southern province of Inhambane, operated by the South African petro-chemical giant Sasol, the plan forecasts production of 141 million gigajoules of gas, and 420,000 barrels of condensate (increases of 6.3 and 11.1 per cent respectively).
Gold production is expected to fall by 70.6 per cent, from 408 to 120 kilos. But a spectacular increase in the mining of certain precious stones is forecast. The discovery of new deposits, mostly in the central province of Manica, will lead to a boom in the production of tourmalines and garnets.
This year's tourmaline production is expected to be just over five tonnes, while for garnets the figure is 1.8 tonnes. But for 2013, the plan envisages the mining of 150 tonnes of tourmalines and 50 tonnes of garnets, increases of well over 2,500 per cent in both cases.
The target for manufacturing industry is growth of 5.8 per cent. The major contributions to this will come from the food and drink industry (an increase of 11.1 per cent), cement (22.4 per cent) and tobacco (8.9 per cent). The sharp rise in cement production is due to the scheduled opening of four new cement factories in 2013.
Electricity production should rise by 5.7 per cent, largely due to work on replacing and restoring critical equipment at the Cahora Bassa dam and its converter station. The amount of power sold by the Cahora Bassa operating company, HCB, to the dam's main client, the South African electricity company Eskom will rise from 10,318 to 10,774 gigawatt-hours (GWh). The Mozambican electricity distribution company, EDM, is scheduled to buy 3,459 GWh, a five per cent increase n the 3,294 GWh of HCB power bought this year. The largest growth is in the sale of power to the Zimbabwean utility, ZESA. ZESA has now paid off its debt to HCB and is expected to purchase 1,328 GWh in 2013, a 51.2 per cent increase of the 878 GWh bought from HCB this year.
The government plans to electrify a further 17 district capitals in 2013, which will bring the number of districts on the national grid to 126 (out of a total of 128). There will be a further 125,000 homes connected to the grid, bringing to 41 per cent the proportion of the Mozambican population that has access to electricity, either from the grid or from solar panels.
Source: All Africa
According to the social and economic plan presented to the Mozambican parliament, the Assembly of the Republic, by Prime Minister Alberto Vaquina, coal production in the western province of Tete should reach 7.5 million tonnes.
This breaks down into six million tonnes of coking coal (a 20 per cent increase on this year's figure), and 1.5 million tonnes of thermal coal (a 61.2 per cent increase).
At the dredge mine operated by the Irish company Kenmare Resources, in the northern district of Moma, the plan expects production of 905,000 tonnes of the main mineral mined, ilmenite (iron titanium oxide), which is a 44.1 per cent increase. However there will be a decline in production of the two other minerals exploited at Moma - xircon (minus 10.9 per cent) and rutile (minus 29.9 per cent).
After many years of paralysis, tantalite mining at Ile, in Zambezia province, resumed in 2011. The plan envisages that production will remain steady at 982 tonnes a year.
At the natural gas treatment plant in Temane, in the southern province of Inhambane, operated by the South African petro-chemical giant Sasol, the plan forecasts production of 141 million gigajoules of gas, and 420,000 barrels of condensate (increases of 6.3 and 11.1 per cent respectively).
Gold production is expected to fall by 70.6 per cent, from 408 to 120 kilos. But a spectacular increase in the mining of certain precious stones is forecast. The discovery of new deposits, mostly in the central province of Manica, will lead to a boom in the production of tourmalines and garnets.
This year's tourmaline production is expected to be just over five tonnes, while for garnets the figure is 1.8 tonnes. But for 2013, the plan envisages the mining of 150 tonnes of tourmalines and 50 tonnes of garnets, increases of well over 2,500 per cent in both cases.
The target for manufacturing industry is growth of 5.8 per cent. The major contributions to this will come from the food and drink industry (an increase of 11.1 per cent), cement (22.4 per cent) and tobacco (8.9 per cent). The sharp rise in cement production is due to the scheduled opening of four new cement factories in 2013.
Electricity production should rise by 5.7 per cent, largely due to work on replacing and restoring critical equipment at the Cahora Bassa dam and its converter station. The amount of power sold by the Cahora Bassa operating company, HCB, to the dam's main client, the South African electricity company Eskom will rise from 10,318 to 10,774 gigawatt-hours (GWh). The Mozambican electricity distribution company, EDM, is scheduled to buy 3,459 GWh, a five per cent increase n the 3,294 GWh of HCB power bought this year. The largest growth is in the sale of power to the Zimbabwean utility, ZESA. ZESA has now paid off its debt to HCB and is expected to purchase 1,328 GWh in 2013, a 51.2 per cent increase of the 878 GWh bought from HCB this year.
The government plans to electrify a further 17 district capitals in 2013, which will bring the number of districts on the national grid to 126 (out of a total of 128). There will be a further 125,000 homes connected to the grid, bringing to 41 per cent the proportion of the Mozambican population that has access to electricity, either from the grid or from solar panels.
Source: All Africa
China commodity imports more important than sluggish exports
If anybody is worried by the seeming weakness of China's November trade data, then the commodity numbers should help reinforce the view that the recovery in the world's number two economy is on track.
Exports rose a disappointing 2.9 percent in November, well down on October's 11.6 percent gain, while imports were flat versus October's 2.4 percent rise.
For exports, there was probably a tailing off because Christmas orders were likely shipped in the prior two months, and the ongoing drag from recession in Europe and sluggish recovery in the United States also would have been a factor.
But exports are becoming relatively less important for the Chinese economy, with the policy emphasis on switching to domestic demand as the main driver of growth.
This can be seen by the higher-than-forecast 10.1 percent gain in industrial output in November and the 14.6 percent rise in retail sales, which also beat expectations.
On imports, especially on the commodity front, it appears lower prices may well have impacted the value figure, as the volume numbers show healthy demand across major items, such as crude oil, copper and iron ore.
Oil imports were the joint third-highest on record in barrels per day (bpd) terms, coming in at about 5.69 million bpd, about 110,000 bpd more than in October.
Oil demand has been rising as new refinery units come on stream, with two starting in October alone.
Another started in late November, meaning there's a strong likelihood that crude imports will remain robust in December.
The new units are also slowly starting to make their impact felt on the net imports of refined products, which slipped to 1.35 million in November from October's 1.37 million.
While there are restrictions on the export of some fuels, the ramping up of refinery capacity should at least mean fewer imports of products, thereby cutting the net import figure even if exports remain relatively stable.
The granting of licences to directly import crude to smaller refineries, known as teapots, should also eat into product imports as much of these are in the form of fuel oil, which the teapots use as a feedstock.
Similar to oil, iron ore imports showed strong performance, jumping 17 percent from October to 65.78 million tonnes, the highest since January 2011.
While some of the rise was put down to mills restocking as prices of the steel-making ingredient rebound from third quarter lows, the ongoing resilience in iron ore would seem to point to solid industrial demand.
In year-to-date terms, iron ore imports are up 8 percent over the same period in 2011, despite the midyear slowing of growth in the economy, and also still ahead of a consensus forecast 6 percent gain in a Reuters survey last December.
Turning to copper, the picture is mixed, as the 13.5 percent jump in imports in November looks impressive at first glance, but in reality it only partially reversed the 18.5 percent drop in October from the prior month.
Taking the last two months together, given that October was disrupted by a week-long national holiday, and a picture emerges of virtually flat growth in copper imports.
The problem is that inventories remain high, equivalent to three months' imports at current rates at more than 1 million tonnes.
And that's just stockpiles in bonded warehouses, which don't include other inventories, meaning the total may be closer to 1.4 million tonnes, representing a substantial overhang.
But in some ways it's little surprise that the weakest of the major commodities would be copper, given its predominance in manufactured goods for exports.
It seems reasonable that copper will lag both iron ore, used more for steel for domestic construction and car assembly, and crude oil, used to fuel China's expanding vehicle fleet.
The days of uniform strong gains across the commodity complex in Chinese import data are probably past. What's become clearer from data since the middle of the year loss of economic momentum is that the pick-up in demand will be lumpy and uneven.
Source: Reuters
Exports rose a disappointing 2.9 percent in November, well down on October's 11.6 percent gain, while imports were flat versus October's 2.4 percent rise.
For exports, there was probably a tailing off because Christmas orders were likely shipped in the prior two months, and the ongoing drag from recession in Europe and sluggish recovery in the United States also would have been a factor.
But exports are becoming relatively less important for the Chinese economy, with the policy emphasis on switching to domestic demand as the main driver of growth.
This can be seen by the higher-than-forecast 10.1 percent gain in industrial output in November and the 14.6 percent rise in retail sales, which also beat expectations.
On imports, especially on the commodity front, it appears lower prices may well have impacted the value figure, as the volume numbers show healthy demand across major items, such as crude oil, copper and iron ore.
Oil imports were the joint third-highest on record in barrels per day (bpd) terms, coming in at about 5.69 million bpd, about 110,000 bpd more than in October.
Oil demand has been rising as new refinery units come on stream, with two starting in October alone.
Another started in late November, meaning there's a strong likelihood that crude imports will remain robust in December.
The new units are also slowly starting to make their impact felt on the net imports of refined products, which slipped to 1.35 million in November from October's 1.37 million.
While there are restrictions on the export of some fuels, the ramping up of refinery capacity should at least mean fewer imports of products, thereby cutting the net import figure even if exports remain relatively stable.
The granting of licences to directly import crude to smaller refineries, known as teapots, should also eat into product imports as much of these are in the form of fuel oil, which the teapots use as a feedstock.
Similar to oil, iron ore imports showed strong performance, jumping 17 percent from October to 65.78 million tonnes, the highest since January 2011.
While some of the rise was put down to mills restocking as prices of the steel-making ingredient rebound from third quarter lows, the ongoing resilience in iron ore would seem to point to solid industrial demand.
In year-to-date terms, iron ore imports are up 8 percent over the same period in 2011, despite the midyear slowing of growth in the economy, and also still ahead of a consensus forecast 6 percent gain in a Reuters survey last December.
Turning to copper, the picture is mixed, as the 13.5 percent jump in imports in November looks impressive at first glance, but in reality it only partially reversed the 18.5 percent drop in October from the prior month.
Taking the last two months together, given that October was disrupted by a week-long national holiday, and a picture emerges of virtually flat growth in copper imports.
The problem is that inventories remain high, equivalent to three months' imports at current rates at more than 1 million tonnes.
And that's just stockpiles in bonded warehouses, which don't include other inventories, meaning the total may be closer to 1.4 million tonnes, representing a substantial overhang.
But in some ways it's little surprise that the weakest of the major commodities would be copper, given its predominance in manufactured goods for exports.
It seems reasonable that copper will lag both iron ore, used more for steel for domestic construction and car assembly, and crude oil, used to fuel China's expanding vehicle fleet.
The days of uniform strong gains across the commodity complex in Chinese import data are probably past. What's become clearer from data since the middle of the year loss of economic momentum is that the pick-up in demand will be lumpy and uneven.
Source: Reuters
Australia Lifts 2013 Iron-Ore Price Forecast on China Demand
Australia, the world’s biggest iron- ore exporter, raised its price estimate for next year on expectation that infrastructure projects and stimulus spending by China, the world’s biggest buyer, will boost demand.
Prices will average $106 a metric ton in 2013, compared with a September estimate of $101 a ton, the Bureau of Resources and Energy Economics said in a report today. Prices are set to average $128 a ton in 2012 from $126 a ton forecast in September, the Canberra-based bureau said. Australia may ship 481 million tons in 2012 and 543 million tons in 2013, from 483 million tons and 528 million tons predicted in September, it said.
Iron ore climbed yesterday to the highest price in more than four months on signs China will rebound after a seven- quarter slowdown. Industrial output and retail sales rose faster than economists estimated, data showed Dec. 9, bolstering prospects for a sustained pickup. China imported 65.78 million tons of the ore last month, the customs bureau said Dec. 10, the second-highest level after a record 68.97 million tons in January 2011, data compiled by Bloomberg show.
“The mood is improving,” said Tom Price, a commodities analyst at UBS AG in Sydney. “After Chinese New Year through to the middle of the year, there’s a lift in raw materials trade, steel production rates lifts and the whole industrial sector comes back to life.”
Chinese Imports
China’s iron-ore imports will climb 5.3 percent to 769 million tons next year, today’s report said. The country’s crude-steel production will gain to 732 million tons next year from 704 million tons in 2012, it said.
Iron-ore exports from Australia advanced 7.6 percent to a record 44.2 million tons in October, according to government data compiled by Bloomberg. China’s industrial production climbed 10.1 percent in November from a year earlier and retail sales growth accelerated to 14.9 percent, according to the country’s statistics bureau.
Prices in the first half of 2013 are expected to remain around current levels, before increasing in the fourth quarter of 2013 in line with an expected increase in steel consumption demand, the report said. China approved plans including building of roads, subways and extra spending on railways in September.
The country’s crude-steel production, the biggest in the world, gained 14 percent in November from a year earlier, the National Bureau of Statistics said Dec. 11. Output climbed to 57.47 million tons last month, it said.
Gross domestic product will increase 7.7 percent in the October-December period following a third-quarter gain of 7.4 percent, according to the median estimate in a Bloomberg survey.
The bureau’s forecast referred to iron ore with 62 percent content free-on-board Australia. The same grade of ore delivered to the Chinese port of Tianjin rose 1.2 percent to $124.90 a dry ton yesterday, the highest since July 20, according to a gauge compiled by The Steel Index Ltd.
Iron ore is measured in dry tons, or metric tons less moisture. At Tianjin port moisture can account for 8 percent to 10 percent of the ore’s weight.
Source: Bloomberg
Prices will average $106 a metric ton in 2013, compared with a September estimate of $101 a ton, the Bureau of Resources and Energy Economics said in a report today. Prices are set to average $128 a ton in 2012 from $126 a ton forecast in September, the Canberra-based bureau said. Australia may ship 481 million tons in 2012 and 543 million tons in 2013, from 483 million tons and 528 million tons predicted in September, it said.
Iron ore climbed yesterday to the highest price in more than four months on signs China will rebound after a seven- quarter slowdown. Industrial output and retail sales rose faster than economists estimated, data showed Dec. 9, bolstering prospects for a sustained pickup. China imported 65.78 million tons of the ore last month, the customs bureau said Dec. 10, the second-highest level after a record 68.97 million tons in January 2011, data compiled by Bloomberg show.
“The mood is improving,” said Tom Price, a commodities analyst at UBS AG in Sydney. “After Chinese New Year through to the middle of the year, there’s a lift in raw materials trade, steel production rates lifts and the whole industrial sector comes back to life.”
Chinese Imports
China’s iron-ore imports will climb 5.3 percent to 769 million tons next year, today’s report said. The country’s crude-steel production will gain to 732 million tons next year from 704 million tons in 2012, it said.
Iron-ore exports from Australia advanced 7.6 percent to a record 44.2 million tons in October, according to government data compiled by Bloomberg. China’s industrial production climbed 10.1 percent in November from a year earlier and retail sales growth accelerated to 14.9 percent, according to the country’s statistics bureau.
Prices in the first half of 2013 are expected to remain around current levels, before increasing in the fourth quarter of 2013 in line with an expected increase in steel consumption demand, the report said. China approved plans including building of roads, subways and extra spending on railways in September.
The country’s crude-steel production, the biggest in the world, gained 14 percent in November from a year earlier, the National Bureau of Statistics said Dec. 11. Output climbed to 57.47 million tons last month, it said.
Gross domestic product will increase 7.7 percent in the October-December period following a third-quarter gain of 7.4 percent, according to the median estimate in a Bloomberg survey.
The bureau’s forecast referred to iron ore with 62 percent content free-on-board Australia. The same grade of ore delivered to the Chinese port of Tianjin rose 1.2 percent to $124.90 a dry ton yesterday, the highest since July 20, according to a gauge compiled by The Steel Index Ltd.
Iron ore is measured in dry tons, or metric tons less moisture. At Tianjin port moisture can account for 8 percent to 10 percent of the ore’s weight.
Source: Bloomberg
China to remain key factor in energy, metal price direction: Woodmac
China is likely to remain the major factor driving the direction of commodity markets in 2013, analysts at UK-based Wood Mackenzie said in a new report published Wednesday.
Energy and metal markets will also be affected by slower growth in other emerging markets and economic problems in the developed world, it said in the Horizons 2013 report.
"China remains the key swing driver for global commodity prices," Woodmac said, pointing to the fact that while Europe continues its "recession recovery," demand for energy there has fallen.
"Navigating the next 12 months without incident will be challenging, and there is little chance of events in Europe sparking a resurgence in global energy demand," it said.
Woodmac said that China's economy is slowing, and 2013 will determine if this is a successfully managed transition to a new phase of development.
The investment-driven boom of China's last decade is moving from the prosperous south and east of the country, towards the relatively undeveloped western interior.
"As cities and infrastructure are built in Hubei, Hunan and beyond, the economies of Beijing and Shanghai will rebalance towards the consumption-driven model of the developed world, implying a structural change in China's commodity demand," it said.
Chinese demand for energy will be key at a time when Europe's total energy demand has fallen 5% since 2008. This structural shift downward is permanent, Woodmac said.
"Final demand for energy [in Europe] will not return to pre-recession levels before 2030," it said.
It said that Europe is struggling to adapt to a new era of austerity and low demand, and falling trade is contributing to problems in emerging markets.
"China must prevent its economy from slowing too quickly, and the growth engines of India and Brazil are stalling. The acute threat posed by a Eurozone banking crisis has receded, but 2013 remains risky for Europe, and its impact on the rest of the world."
It said that with global growth so fragile, "a deep European recession would further damage emerging markets, derailing a nascent return to global energy demand growth."
UNCERTAINTY
Woodmac said geopolitics are also still a source of increasing tension, so that positive and negative price risks are finely balanced.
"Geopolitical risks are ever-present, and difficult to predict, but the febrile situation in the Middle East clearly presents upside, but likely shorter-term, risks to commodity prices."
"This period of price uncertainty is forcing divergent responses across energy and metals," it said.
Woodmac said oil and gas producers, however, seem resilient to the price uncertainty and are busy reloading their exploration and production budgets.
"The rapid transfer of improving technologies is reducing breakeven costs and unlocking reserves globally. But with growing supply, accessing and capturing demand is paramount."
Without an upside surprise to global demand, continued growth in unconventional oil and gas supply will push down commodity prices across the energy spectrum, it said.
The growth of unconventional oil and gas also promises to push North America towards energy independence.
Woodmac suggested that pipeline politics are key for 2013, dictating whether North American supply growth can be maintained, and how quickly the region will adopt a new, potentially disruptive role at the heart of global energy trade flows.
During 2013, decisions are expected on two oil pipeline projects, it said.
Keystone XL would transport Canadian oil sands to refineries on the US Gulf Coast, while the Northern Gateway would transport Canadian crude to the Pacific coast, to be shipped to markets in Asia.
"With falling domestic demand [in North America], increasing unconventional and oil sands production will back out crude imports. This will increase OPEC spare capacity, allowing for greater resilience against upward price shocks."
Source: Platts
Energy and metal markets will also be affected by slower growth in other emerging markets and economic problems in the developed world, it said in the Horizons 2013 report.
"China remains the key swing driver for global commodity prices," Woodmac said, pointing to the fact that while Europe continues its "recession recovery," demand for energy there has fallen.
"Navigating the next 12 months without incident will be challenging, and there is little chance of events in Europe sparking a resurgence in global energy demand," it said.
Woodmac said that China's economy is slowing, and 2013 will determine if this is a successfully managed transition to a new phase of development.
The investment-driven boom of China's last decade is moving from the prosperous south and east of the country, towards the relatively undeveloped western interior.
"As cities and infrastructure are built in Hubei, Hunan and beyond, the economies of Beijing and Shanghai will rebalance towards the consumption-driven model of the developed world, implying a structural change in China's commodity demand," it said.
Chinese demand for energy will be key at a time when Europe's total energy demand has fallen 5% since 2008. This structural shift downward is permanent, Woodmac said.
"Final demand for energy [in Europe] will not return to pre-recession levels before 2030," it said.
It said that Europe is struggling to adapt to a new era of austerity and low demand, and falling trade is contributing to problems in emerging markets.
"China must prevent its economy from slowing too quickly, and the growth engines of India and Brazil are stalling. The acute threat posed by a Eurozone banking crisis has receded, but 2013 remains risky for Europe, and its impact on the rest of the world."
It said that with global growth so fragile, "a deep European recession would further damage emerging markets, derailing a nascent return to global energy demand growth."
UNCERTAINTY
Woodmac said geopolitics are also still a source of increasing tension, so that positive and negative price risks are finely balanced.
"Geopolitical risks are ever-present, and difficult to predict, but the febrile situation in the Middle East clearly presents upside, but likely shorter-term, risks to commodity prices."
"This period of price uncertainty is forcing divergent responses across energy and metals," it said.
Woodmac said oil and gas producers, however, seem resilient to the price uncertainty and are busy reloading their exploration and production budgets.
"The rapid transfer of improving technologies is reducing breakeven costs and unlocking reserves globally. But with growing supply, accessing and capturing demand is paramount."
Without an upside surprise to global demand, continued growth in unconventional oil and gas supply will push down commodity prices across the energy spectrum, it said.
The growth of unconventional oil and gas also promises to push North America towards energy independence.
Woodmac suggested that pipeline politics are key for 2013, dictating whether North American supply growth can be maintained, and how quickly the region will adopt a new, potentially disruptive role at the heart of global energy trade flows.
During 2013, decisions are expected on two oil pipeline projects, it said.
Keystone XL would transport Canadian oil sands to refineries on the US Gulf Coast, while the Northern Gateway would transport Canadian crude to the Pacific coast, to be shipped to markets in Asia.
"With falling domestic demand [in North America], increasing unconventional and oil sands production will back out crude imports. This will increase OPEC spare capacity, allowing for greater resilience against upward price shocks."
Source: Platts