Latest news with #LSEGOilResearch
Reuters
09-04-2025
- Business
- Reuters
China petchem plants face shutdown as tariffs on US LPG loom
SINGAPORE/NEW DELHI, April 9 (Reuters) - Chinese petrochemical makers that buy $11 billion worth of U.S. liquefied petroleum gas (LPG) annually are poised to cut output or shut for maintenance in coming weeks as Beijing's retaliatory tariffs on U.S. imports drive up costs, industry insiders said. The industry of over 30 propane dehydrogenation (PDH) plants relies heavily on U.S. LPG, or propane, for processing into plastics intermediary propylene. The Reuters Tariff Watch newsletter is your daily guide to the latest global trade and tariff news. Sign up here. Advertisement · Scroll to continue Report This Ad Armaan Ashraf, global head of natural gas liquids at consultancy FGE, said tariffs could force Chinese PDH operators to cut average operating rates by nearly 15 percentage points and curb demand for propane from steam crackers and PDH plants by at least 500,000 metric tons per month. The tit-for-tat trade war that saw China on Wednesday escalate retaliatory duties on U.S. imports to 84% threatens to put a Chinese PDH sector already struggling under thin margins for two years into what an east China-based executive with a major PDH plant called a "harsh winter". The executive, declining to be named due to company policy, expects overall PDH plant utilisation rates to drop below half of total industry capacity as early as May. China's 731,000 bpd-PDH sector operated at nearly 70% of capacity in March, down from a peak of around 85% in 2020, according to industry insiders and FGE, with plants losing an average of 480 yuan ($65.31) per ton in the week of April 6, deepening from the week ago's 384 yuan, LSEG Oil Research analysts said. Last year, China bought a record 17.3 million tons of U.S. propane, or 550,000 barrels per day, 60% of China's total imports of the gas liquid. The trade war during President Donald Trump's first term brought China's LPG imports to a halt for nearly two years, but the industry was much smaller then, and operators used cargoes from the Middle East as replacement. Fuelled by cheap U.S. propane, a by-product of the shale gas boom, PDH plants mushroomed on China's east coast over the past decade, leading to overcapacity amid weakening demand for propylene, said traders and the executive. Prices of U.S. propane for Asian exports, or the Far East Index assessment, fell nearly 30% to $425 per ton this week as traders factored last Friday's retaliatory tariffs by Beijing. In physical shipments, it's unclear whether U.S. suppliers and Chinese buyers can agree to lower prices to absorb the shock. While some buyers may be able to re-negotiate with suppliers if contracts permit, others, with term supply deals, may be forced to resell to other Asian buyers. A growing price gap limits Chinese plants' ability to swap U.S. shipments for rival Middle East barrels that are mostly destined for South Korea and India, traders said. "The market is still in massive shock and confusion, with buyers and sellers struggling to reach a physical deal. The tariffs have thrown the pricing structure out of the balance," said a veteran trader. ($1 = 7.3493 Chinese yuan renminbi)
Zawya
07-04-2025
- Business
- Zawya
Crude oil's demand woes shown by softer Q1 Asia imports: Russell
(The views expressed here are those of the author, a columnist for Reuters.) LAUNCESTON, Australia - Crude oil prices are tumbling in the wake of U.S. President Donald Trump's upending of global trade. But the shock of Trump's tariffs also mask some underlying weakness in the demand that was already in place, namely soft imports in the first quarter in Asia, the world's biggest crude purchasing region. Asia imported 26.44 million barrels per day (bpd) of crude in the first quarter, down 640,000 bpd from the 27.08 million bpd for the same period in 2024, according to data compiled by LSEG Oil Research. The decline in imports contrasts with forecasts made by groups such as the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency that Asia will lead global oil demand growth in 2025. If there is a slight silver lining in Asia's weak first quarter imports, it's that they did show signs of recovery in March. The region imported 27.39 million bpd in March, up from 25.44 million bpd in February and roughly in line with the 27.33 million bpd from March last year, according to LSEG. The March recovery was led by China, the world's biggest crude importer, which saw seaborne arrivals of 10.14 million bpd, the highest in three months. Adding pipeline imports takes China's total crude arrivals in March to 11.04 million bpd, above the 10.42 million bpd for the first two months of the year, but still below the 11.6 million bpd recorded for March 2024. It's worth asking why China, and indeed the rest of Asia, imported more crude in March than in the first two months of 2025. There are several factors, such as refiners re-stocking inventories after planned maintenance and ahead of the seasonal rise in demand as the Northern Hemisphere winter ends. PRICE IS KEY But the most important factor was likely price, with most of March-arriving cargoes being arranged at a time when global crude prices were trending lower. Global benchmark Brent futures hit a six-month high of $82.63 a barrel on January 15, before starting a slide to a low of $68.33 by March 5. This trend of lower prices would have encouraged refiners to lift purchases, especially since it would appear Chinese refiners had been drawing some stockpiles in the first two months of the year. China's refiners processed about 30,000 barrels per day (bpd) more in the January-February period than the total of crude available, according to calculations based on official data. China does not disclose the volumes of crude flowing into or out of strategic and commercial stockpiles, but an estimate can be made by deducting the amount of oil processed from the total of crude available from imports and domestic output. But the dynamic of drawing on inventories likely reversed in March as cheaper crude encouraged more buying. The question for oil markets is whether the stronger imports in Asia seen in March are likely to persist, especially given that crude prices rallied from their early March low to until April 2, the day Trump launched his global tariff war. Brent hit $75.47 a barrel on April 2, but even if Asian buyers had been easing back on purchases, this will only show up in imports in May and June. Will the rout in oil price since last week result in higher imports by Asia from June onwards? Brent traded down to $63.01 a barrel in early trade in Asia on Monday, the lowest in just over four years and it has lost 16.5% since the high before Trump's announcement of blanket tariffs on virtually every country, although not Russia. The decision by the OPEC+ group of exporters to increase output by a higher-than-expected 411,000 bpd in May also contributed to the sharp drop in oil prices. But the main problem is viewed as the likely hit to global economic growth, and therefore fuel consumption, from the tariffs. This means that even sharply lower prices may not be enough to stimulate higher Asian demand for crude in coming months. The views expressed here are those of the author, a columnist for Reuters. (Editing by Christian Schmollinger)
Reuters
07-04-2025
- Business
- Reuters
Crude oil's demand woes shown by softer Q1 Asia imports: Russell
LAUNCESTON, Australia, April 7 (Reuters) - Crude oil prices are tumbling in the wake of U.S. President Donald Trump's upending of global trade. But the shock of Trump's tariffs also mask some underlying weakness in the demand that was already in place, namely soft imports in the first quarter in Asia, the world's biggest crude purchasing region. The Reuters Power Up newsletter provides everything you need to know about the global energy industry. Sign up here. Asia imported 26.44 million barrels per day (bpd) of crude in the first quarter, down 640,000 bpd from the 27.08 million bpd for the same period in 2024, according to data compiled by LSEG Oil Research. The decline in imports contrasts with forecasts made by groups such as the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency that Asia will lead global oil demand growth in 2025. If there is a slight silver lining in Asia's weak first quarter imports, it's that they did show signs of recovery in March. The region imported 27.39 million bpd in March, up from 25.44 million bpd in February and roughly in line with the 27.33 million bpd from March last year, according to LSEG. The March recovery was led by China, the world's biggest crude importer, which saw seaborne arrivals of 10.14 million bpd, the highest in three months. Adding pipeline imports takes China's total crude arrivals in March to 11.04 million bpd, above the 10.42 million bpd for the first two months of the year, but still below the 11.6 million bpd recorded for March 2024. It's worth asking why China, and indeed the rest of Asia, imported more crude in March than in the first two months of 2025. There are several factors, such as refiners re-stocking inventories after planned maintenance and ahead of the seasonal rise in demand as the Northern Hemisphere winter ends. PRICE IS KEY But the most important factor was likely price, with most of March-arriving cargoes being arranged at a time when global crude prices were trending lower. Global benchmark Brent futures hit a six-month high of $82.63 a barrel on January 15, before starting a slide to a low of $68.33 by March 5. This trend of lower prices would have encouraged refiners to lift purchases, especially since it would appear Chinese refiners had been drawing some stockpiles in the first two months of the year. China's refiners processed about 30,000 barrels per day (bpd) more in the January-February period than the total of crude available, according to calculations based on official data. China does not disclose the volumes of crude flowing into or out of strategic and commercial stockpiles, but an estimate can be made by deducting the amount of oil processed from the total of crude available from imports and domestic output. But the dynamic of drawing on inventories likely reversed in March as cheaper crude encouraged more buying. The question for oil markets is whether the stronger imports in Asia seen in March are likely to persist, especially given that crude prices rallied from their early March low to until April 2, the day Trump launched his global tariff war. Brent hit $75.47 a barrel on April 2, but even if Asian buyers had been easing back on purchases, this will only show up in imports in May and June. Will the rout in oil price since last week result in higher imports by Asia from June onwards? Brent traded down to $63.01 a barrel in early trade in Asia on Monday, the lowest in just over four years and it has lost 16.5% since the high before Trump's announcement of blanket tariffs on virtually every country, although not Russia. The decision by the OPEC+ group of exporters to increase output by a higher-than-expected 411,000 bpd in May also contributed to the sharp drop in oil prices. But the main problem is viewed as the likely hit to global economic growth, and therefore fuel consumption, from the tariffs. This means that even sharply lower prices may not be enough to stimulate higher Asian demand for crude in coming months. The views expressed here are those of the author, a columnist for Reuters.
Reuters
30-03-2025
- Business
- Reuters
Trump's Russia oil tariff threat depends on China, India reaction: Russell
LAUNCESTON, Australia, March 31 (Reuters) - U.S. President Donald Trump's threat to impose secondary tariffs of 25% to 50% on buyers of Russian crude oil is just crazy and bold enough to perhaps achieve his stated aim of a ceasefire in Ukraine. What matters now is the reaction of the other three key players to this latest move by the mercurial and inconsistent U.S. leader. Do Russian President Vladimir Putin, Indian Prime Minister Narendra Modi and Chinese President Xi Jinping believe that Trump will actually follow through, and if he does what will it mean for their energy situation? India and China are effectively the only major buyers of Russian oil, so their reaction becomes as important as Putin's response to Trump's latest shift. Trump told NBC News he is "pissed off" at Putin and will impose the tariffs of up to 50% on buyers of Russian crude if he feels Moscow is blocking efforts to bring about peace in Ukraine. "If Russia and I are unable to make a deal on stopping the bloodshed in Ukraine, and if I think it was Russia's fault ... I am going to put secondary tariffs on oil, on all oil coming out of Russia," Trump said. This is an apparent reversal of his previous friendly stance toward Putin, which had drawn widespread criticism for effectively abandoning Ukraine to its invader and surrendering to Russia's aggression. The question is whether Trump's threat is credible and likely to come to fruition, which is the assessment Russia, China and India must make. If Putin believes Trump will go ahead and massively boost what are effectively sanctions on Russia's main export, he may be inclined to back down at least far enough to allow Trump to appear to have "won" in negotiations. India is in an uncomfortable position as Modi has so far adopted a stance of trying to appease Trump, with a proposal to scrap the import duty on U.S. liquefied natural gas in order to boost purchases an example. But India has also been a significant beneficiary of much of the rest of the world shunning Russian crude, allowing the South Asian nation to snap up discounted cargoes so much so that Russia is now its largest supplier. India is expected to import 1.52 million barrels per day (bpd) of Russian oil in March, representing just under 30% of its total arrivals, according to data compiled by LSEG Oil Research. With India already not buying crude from Iran because of U.S. sanctions, replacing Russian barrels as well would likely lead to a significant boost to India's oil import costs and a scramble to find alternative suppliers. CHINA RISK China is less likely to bow to U.S. pressure as it remains the only major buyer of Iranian crude, and is still a top importer of Russian oil, buying up to 1 million bpd from the seaborne market, as well as just under that level via pipeline. The risk for Beijing is that an additional tariff of up to 50% on U.S. imports from China, on top of the 20% already imposed by Trump, would bring about real levels of pain in its economy, which is already struggling to build momentum. If Trump's threat of secondary tariffs on buyers of Russian crude is credible, it also alters the dynamics of the OPEC+ group of exporters, which consists of the Organization of the Petroleum Exporting Countries and allies including Russia. For OPEC+ members other than Russia, any reduction in Russian barrels on global markets will likely serve to boost prices, which will allow them to increase their own production and exports. In some ways it becomes a battle of self-interest versus group solidarity, and with the fiscal positions of many OPEC+ members weakening, the lure of more money from higher exports may be hard to resist. For now, the various players are likely to respond cautiously, at least in public, while they try to work out whether Trump is serious or whether his new tariff threat is a thought bubble easily discarded with the next shift in sentiment. Certainly, the initial market reaction was subdued, with global benchmark Brent futures rising a modest 0.3% to $73.84 a barrel in early Asian trade on Monday. The views expressed here are those of the author, a columnist for Reuters.
Reuters
06-03-2025
- Business
- Reuters
China's modest stimulus is no big bang for commodities: Russell
LAUNCESTON, Australia, March 6 (Reuters) - Hopes that China's annual meeting of parliament would provide significant economic stimulus to boost commodities have been dashed, with Beijing instead largely promising a continuation of the mild stimulus policies seen last year. The headline news of an economic growth target of about 5% and promises of efforts to boost consumption and tackle any fallout from the escalating trade war with the United States were encouraging. But the parliament meeting this week also fell well short of the sort of stimulus announcements that would have given confidence to commodity markets that China, the world's biggest buyer of natural resources, is going to see meaningful growth in imports in 2025. Rather, what's more likely is a continuation of the trends seen in 2024, where some commodities perform better than others but the overall story is still only of modest growth. One of the major commodities that may continue to struggle to increase demand in 2025 is crude oil, with data from the first two months of the year suggesting that China, the world's biggest importer, is continuing along its recent soft path. China's crude imports are estimated by LSEG Oil Research at 10.75 million barrels per day (bpd) in February, up slightly from January's 10.1 million bpd, but still down from the customs figure of 11.04 million bpd for 2024. Part of the softer trend for China's imports of crude oil has been the government's support for consumers to move to what it calls new energy vehicles (NEVs), which are full electric vehicles or hybrids. A subsidy scheme for switching to NEVs and more efficient household appliances was expanded earlier this year, implying that the rapid growth of NEVs, which now make up more than half of new car sales, will continue in 2025. For those hoping that the focus on boosting consumer spending would somehow create stronger demand for steel, the news is not so good. For the first time in five years China unveiled a plan to trim crude steel output in 2025 in a draft report from the state economic planner. Although the report didn't specify the target for steel output, it's likely that it will be no more than 1 billion metric tons, the level around which China's steel production has oscillated since 2019. If steel output does drop from the 1.005 billion tons recorded in 2024, it will likely weigh on China's imports of iron ore and coking coal, the two key raw materials. IRON ORE, COAL China buys about 75% of global seaborne iron ore, but imports are off to a weak start in 2025. February arrivals are estimated at 83.92 million tons by commodity analysts Kpler, which would be the lowest monthly total since April 2019 and down from 104.34 million in January. The Lunar New Year holidays may have impacted February imports, but putting them together with Kpler's January estimate gives a daily average of 3.19 million tons for the first two months of the year, down from 3.39 million for 2024. Coal is another commodity that is struggling so far in 2025, with Kpler estimating China's seaborne imports of all grades were 29.82 million tons, the lowest since February 2024 and down from January's 35.9 million. The weakness in coal imports is most likely a reflection of lower domestic prices, which have swelled inventories and cut demand for imported fuel. If there was any positive news for commodities in China's announcements this week, it was related to those most associated with the energy transition. The National Development and Reform Commission said in a statement on Wednesday that China will develop new offshore wind farms and accelerate the construction of what it called "new energy bases" across the western desert parts of the country. The ongoing focus on building renewable energy capacity is positive for China's demand for metals such as copper, aluminium and silver, which is used in solar panel manufacturing. Copper contracts on the Shanghai exchange rose in early trade on Thursday, gaining as much as 1.1% to 77,990 yuan ($10,757) a ton, and they are now up 5.2% since the end of last year, while aluminium futures gained a more modest 0.5%. While some optimism over demand for metals in China is justified by the ongoing commitment to building renewable energy capacity and increasing the share of NEVs, the residential property sector remains a concern. A bigger concern is the potential impact of the trade wars being launched by the administration of new U.S. President Donald Trump, which threaten to slow global growth and lift inflation. The views expressed here are those of the author, a columnist for Reuters.
