Energy and Natural Resources Market Radar (May 21, 2013)
Strengths
- South Korea’s liquid natural gas (LNG) imports grew 29 percent year-over-year to 3.51 million metric tons in April as domestic demand increased according to the Korea Customs Service.
- China’s refined copper output rose 14 percent from the prior year in April to 558,000 metric tons, according to NBS. As a result, output of refined copper for the first 4 months totaled 2.1 million metric tons, up 11 percent year-over-year.
- U.S. steel output remains at a 9-month high of 1.9 million tons for the week ending May 11, with higher output in Great Lakes offset by lower Southern region volume. As a result, quarter-to-date output is 11.2 million short tons, plus 4 percent from the prior period.
Weaknesses
- China’s crude processing decreased to 9.36 million barrels a day in April, the lowest level in eight months. That is the lowest since August and 8 percent below December’s record, according to data published today on the website of the Beijing-based National Bureau of Statistics.
- Industrial metals were under renewed pressure yesterday amid fears that Beijing may introduce more stringent policy on the property market. According to local media, real estate developers will need to obtain government approval for pre-sale of homes. This could limit new project growth and associated metals demand as pre-sale has been a key source of funding for properly developers.
- Further data points to a slowdown in China’s economy as year-to-date electricity growth remained low at 3.8 percent from the prior year and urban income growth slowed to 6.7 percent year-over-year, indicating a lack of momentum for industrial activity and consumption despite a further acceleration of credit growth and money supply.
Opportunities
- Africa’s oil demand will climb at a faster pace than most of the world in the next five years because of rising transport and power-generation needs, the International Energy Agency said. Gasoline and gasoil consumption are each forecast to rise 4.5 percent a year, while the use of jet fuel or kerosene will advance 3.9 percent. The gains will boost Africa’s oil use by 4 percent a year from 2012 to 2018 compared with an average of 1.2 percent growth globally.
- The Times of India reports that “China, the world's largest rice consumer, is expected to become the largest rice importer this year, according to a new report. China's rice imports this year will surge to three million metric tonnes from 2.34 million tonnes a year ago, according to a U.S. Department of Agriculture report. If the forecast holds true, it would represent a sharp increase as the country's rice imports hovered around 450,000 tonnes per year over the five-year period that ended in 2011, official data showed. It would also make China outstrip Nigeria to become the world's largest rice importer.
- China will probably commission additional storage sites for its strategic petroleum reserve this year, boosting crude demand even as construction work on the program takes longer than expected, according to the International Energy Agency (IEA). The nation, the world's second-biggest crude consumer, will add 245 million barrels of capacity in the second phase of its emergency stockpile plan, the Paris-based IEA said in its Medium-Term Oil Market Report released this week. This is up 45 percent from the IEA's original estimate of 169 million barrels.
Threats
- Credit Suisse issued a report that said gold will trade at $1,100 an ounce in a year and below $1,000 in five years, implying lower than expected inflation expectations and further weak sentiment for the commodity sector overall.
