In May, China imported 94.14 MT of iron ore (91.52 MT in May 2017) which is 448 MT over five months. Steel production reached a record 2.9 MT per day with an average margin of USD 110 per tonne. Over five months, steel production was 370 million tonnes, up 5.4%..

OPEC’s decision to increase oil production will result in an increase in Saudi output as high as 11 million bd in July.

According to Roskill’s estimates, world demand for cobalt will reach 310,000 tonnes in 2027 compared to 118,000 tonnes in 2017. The demand for batteries will be 240,000 tonnes.

Over the first five months of 2018, China’s oil imports increased by 690,000 bd and India’s imports by 272,000 bd, making a total of 962,000 bd compared to the 1.4 mbd that the IEA expected in 2018 to increase global demand. By July, China is expected to import 450,000 bd of US oil!

Poor wheat harvest in Egypt with a gathering in of only 3.15 MT against forecasts of 3.5 to 4. Egypt is expected to import 12.5 MT over 2018/2019.

By mid-June, steam coal was at its highest since 2012 at USD 115 per tonne FOB Newcastle (Australia). This is linked to the heat wave that is affecting Asia and is reflected in additional demand for electricity (cooling season). In 2016, a tonne of coal was down to USD 50. Meanwhile, the LNG market in Asia is also at fever pitch at more than USD 10 a MBtu.

North American lumber prices have risen sharply as a result of forest fires, Capricorn beetle invasions and especially tax threats in the United States (20.8% since April).

Negative prospects also for Russia with a grain harvest expected by experts to be between 115 and 120 million tonnes against a record of 135 MT in 2017.

In 2017, global LNG trade reached 38.2 billion cubic feet, up 10 percent from 2016. There were 19 exporting countries and 40 importing countries. The world’s largest importer was Japan (11 billion) ahead of China (5.2)..

Libya is again sustaining the oil market with the mid-June attack on the ports of Ras Lanuf and Es Sider causing an estimated export decline of 240,000 bd. In May, some estimates put Venezuela’s output at 1.39 mbd at its lowest since the 1950s. Meanwhile, in Vienna, OPEC representatives met with American oil executives, shale oil producers, such as Harold Hamm (Continent Oil) and John Hess.

The US oil industry is concerned about US steel import measures. Major pipeline construction programmes are underway and 77% of the steel is imported, often without alternative local production for these special types of steel.

India has put in place sanctions against the United States, including almonds, of which India is the world’s largest importer from the United States (half of US exports). India is also going to tax chickpeas… On the other hand, it seems that India has decided to comply with the US sanctions against Iran and to reduce very heavily its Iranian oil imports.

Philippe Chalmin

To subscribe to the Monthly Report or Cyclope events please contact us at trading_event@ampersandworld.ch