More US Crude Is Going on Ships to Different Destinations
According to the EIA (U.S. Energy Information Administration), US crude oil exports rose 12% in 2016. Exports rose despite a fall in crude oil production.
As we saw in an earlier article, OPEC has cut down its oil production. In this article, we’ll take a deeper look at this move’s impact on the crude tanker industry.
Crude oil production has gradually fallen since the beginning of 2016, especially on the non-OPEC (Organization of the Petroleum Exporting Countries) side.
In this part of the series, we’ll see how Wall Street analysts have upgraded or downgraded crude tanker companies since the start of the year.
Oil production is falling. How will this affect crude oil trade and, by extension, crude oil tanker companies? How do Wall Street analysts view the futures of these companies?
In February 2016, oil prices hit a 13-year low of $26.2 per barrel. Crude oil prices bounced to $54 per barrel in February 2017, their highest level since June 2015.
US products supplied for the week ended March 17, 2017, totaled 19,225 Mbpd (thousand barrels per day), 1% less than in the previous week.
China’s crude oil imports hit a record with the second-highest amount of monthly imports in February 2017. Its total crude oil imports came in at 31.8 million tons.
Markit’s manufacturing PMI (purchasing managers’ index) is an indicator of a country’s economic health. The index was 51.6 for China in February 2017, compared to 51.3 in January.
Crude tanker rates were relatively strong from December 2016 to January 2017. However, in February 2017, rates fell.
In 2016, the number of VLCCs (very large crude carrier) rose ~7%, and the Suezmax fleet grew 5%. In comparison, the fleet grew 3% in 2015 and 1.3% in 2014.
Newbuild vessel prices fell once again in February 2017. For the past several months, newbuild vessel prices have been on a downward trend.
Given the steep rise in Chinese steel production and modest demand indicators, one would have expected a tsunami of Chinese steel exports. However, that hasn’t been the case.
China is the world’s largest steel producer, consumer, and exporter. Last year, we saw a steep rally in Chinese steel prices.
According to the World Steel Association, China produced 128 million metric tons of steel in the first two months of 2017, 5.8% more than in the corresponding period last year.
Currently, the benchmark iron ore contract for delivery to China is hovering at $85 per metric ton. Iron ore prices have seen upward price action in 2017.
Steelmaking is raw material–intensive in nature, and raw material pricing tends to impact steel prices. In this article, we’ll discuss how steel scrap prices are playing out in the United States.
Reviving America’s infrastructure was one of President Donald Trump’s pre-election promises. Notably, infrastructure and steel found mention in several of his pre- and post-election speeches.
The earnings of steel companies such as ArcelorMittal (MT), U.S. Steel Corporation (X), and Nucor (NUE) are sensitive to changes in steel prices.
The market’s reaction to the election results wasn’t really surprising given Trump’s stance on curbing imports and boosting US manufacturing.