Energy and Natural Resources Market Cheat Sheet (May 23, 2011)
Strengths
- According to the National Bureau of Statistics, China’s 2010 corn harvest reached a record 177.25 million tonnes.
- The world’s largest uranium producer, Kazakhstan, boosted output of the metal by 9 percent year-over-year in the first quarter of 2011 to 4,444 tonnes according to the state nuclear firm Kazatomprom.
- The U.S. produced around 161,521 tonnes of primary aluminum in April up 13.6 percent compared to 142,164 tonnes year-over-year, according to the Aluminum Association.
- U.S. coal exports climbed to 9.8 million short tonnes in March, up 48 percent year-over-year and 18 percent above February, according to the Census Bureau.
Weaknesses
- Preliminary Indian iron ore export data for April showed a continuation of previous trends over the past few months, with volumes down 28 percent year-over-year at 9.06 million tonnes. This is the eleventh consecutive month of year-over-year fall. Over the first four months of 2011, Indian exports have fallen 12 million tonnes compared with the same period in 2010.
- BP Plc and ConocoPhillips announced the cancellation of their $35 billion Alaska gas pipeline project this week, due to lack of shipper interest in more U.S. gas supply.
- Japan’s third-largest refiner, Idemitsu Kosan Co., said this week that it plans to refine 15 percent less crude oil in the April-June quarter compared with a year earlier, as the earthquake in March hurt demand for oil products.
Opportunities
- Vietnam has plans to build 90 thermal power plants with a total capacity of 106 gigawatts (GW) and a $83 billion investment by 2025. According to the Vietnams National Coal-Mineral Industries Group, a new coal port will be built in the Southern region where most of the thermal power plants will be built.
- According to government projections, Indian power utilities are set to independently import 35 million tonnes of thermal coal during the current 2011-2012 fiscal year as state owned producer Coal India is unable to fulfill demand.
- The weekly USDA Crop progress data this week revealed a marked pick-up in U.S. plantings but they continue to lag five year averages, most notably in the case of U.S. spring wheat where plantings were 36 percent planted compared to the five-year average of 76 percent. For corn, 63 percent was planted (a marked pick-up from 43 percent) but below the five-year average of 75 percent.
Threats
- The National Oceanic and Atmospheric Administration reported this week that the Atlantic hurricane season will be “above normal” this year with 12-18 named storms. Six to ten of these may become hurricanes and three to six are likely to become major systems. The storm season begins June 1.
- China, the world’s biggest iron ore buyer, cut purchases by 11 percent in April month-over-month due to higher prices. China’s imports were 52.88 million tonnes in April, down from 59.48 million tonnes in March, according to China’s General Administration of Customs.
- Russia plans to raise its export duty on most crude shipments by 1.9 percent on June 1, the highest level since 2008 after oil prices climbed.
- Chinese factories are facing power rationing due to coal shortages because of rising coal prices and a severe drought leading to lower output from hydro-electric plants. The overall share of hydro in power generation fell due to a fall in reservoir volumes in May for the first time in 13 months. In the six reservoirs that constitute half of China’s water stocks, the fall in level was a sharp 12 percent year-over-year and 9.5 percent month-over-month.
