Energy and Natural Resources Market Cheat Sheet (January 24, 2011)
Strengths
- China's December crude steel output rose to 51.52 million tons in December, up 2.7 percent from the previous month, according to data from the National Bureau of Statistics.
- China imported a record 1.03 million tons of liquefied natural gas (LNG) in Dececmber, said China’s Customs Statistics Information Centre.
- The spot iron ore price reached a two-year high of $186 per ton this week after the Indian state of Karnataka banned iron ore exports. Karnataka accounts for 25 percent of Indian’s annual exports of 100 million tons of iron ore.
- Natural gas futures gained 5 percent on the week as cold weather pushed up heating demand in the U.S.
- Weekly U.S. Department of Energy statistics show the four-week average oil demand is up a healthy 3.8 percent on a year-over-year basis.
Weaknesses
- The state of Queensland in Australia cut its annual steelmaking coal output forecast by 10.5 percent and expects to resume normal mining operations in about three months. Coking coal output in the 12 months ended June 30 is forecast to be 177.3 million metric tons, down from an initial projection of 198 million tons, Mines and Energy minister Stephen Robertson said.
Opportunities
- China may soon begin a much-delayed program of stockpiling corn for state reserves in the northeast, the National Business Daily reported. Sinograin, which manages government reserves, may buy an initial volume of 9 million tons at 1,800 yuan per ton from farmers in Jilin, the country’s largest corn growing area.
Threats
- Vietnam's state-run Coal and Mineral Industry Group plans to cut this year’s coal output by 6 percent (44 million tons) from 2010 levels, according to Vietnam News.
- The new Energy Ministry proposals approved this week means Russian oil companies may face higher oil products export duties beginning March 2011, the Kommersant business daily reported. While the crude oil export duty could be cut by 7 percent; the oil product export duty could be hiked from 60 percent to 66 percent of the duty on crude oil.
- Nigeria’s main militant group, the Movement for the Emancipation of the Niger Delta, said it is planning a “ferocious” attack on the country’s downstream oil industry soon, according to a statement by the group.
- India may tax iron ore exports at a uniform rate of 20 percent as the government seeks to boost its tax collections, the Financial Express reported. India currently levies a tax of 15 percent on shipments of iron ore lumps and 5 percent on iron ore fines, the newspaper said.
