Eurozone manufacturing slides deeper into contraction

Market: Electricity, LPG, Metals, Natural gas, Oil products
01/10/24

The eurozone manufacturing sector slid further into contraction in September, when strength in Spain and Greece was unable to outweigh underperformance from other, larger, economies including France and Germany.

The Hamburg Commercial Bank (HCOB) eurozone manufacturing purchasing managers' index (PMI) reading, compiled by S&P Global, was 45.0 in the month, a nine-month low. It was the first fall after three months of stability at 45.8. A PMI reading of below 50 indicates a deterioration.

HCOB chief economist Cyrus de la Rubia noted a combination of falling demand and supply-chain constraints that were last seen during the Covid-19 pandemic.

"Since June, the index tracking delivery issues has been dropping alongside new orders and for the first time since February, businesses are saying they are having to wait even longer for goods than they did in the previous month," he said. "The ongoing geopolitical tensions are obviously taking their toll here." Attacks on shipping in the Red Sea have lengthened delivery times to Europe from east of Suez, with many vessels taking the longer route around the Cape of Good Hope.

Readings fell for production, new orders, employment and procurement, and producers depleted inventories. One bright spot for producers was the first fall in input costs since May, although selling prices also dropped.

In the UK the S&P Global manufacturing PMI reading was 51.5 in September, a fifth successive month of expansion, albeit at a slower rate than the 52.5 in August. Output, new orders and suppliers' delivery times were "consistent with improved manufacturing operating conditions", while levels of employment and stocks of purchases declined. Input cost inflation was at a 20-month high, and the survey noted some caution ahead of the new government setting out its fiscal priorities on 30 October.

By Ben Winkley

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30/12/24

Viewpoint: Ti scrap’s rebound pinned on Boeing, melters

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30/12/24

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30/12/24

Viewpoint: Bearish year ahead for NOx markets

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Viewpoint: Chancay port may increase Peru bunker demand

30/12/24

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30/12/24

Viewpoint: Chancay port may increase Peru bunker demand

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Viewpoint: US midcon E15 shift looms again

30/12/24

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30/12/24

Viewpoint: US midcon E15 shift looms again

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President Joe Biden's administration avoided a potential disruption to seasonal E15 sales by tapping emergency powers in April 2022 to allow for the sale of E15 during the approaching summer, citing supply disruptions in the wake of Russia's invasion of Ukraine. EPA issued similar emergency waivers ahead of summer in 2023 and 2024 to facilitate the sale of E15, using the waiver 9 RVP gasoline. The US Congress is considering legislation options to avoid requirements to reformulate gasoline. A stopgap government funding bill that would fund the government through March included language to extend the one-pound waiver to E15 year-round and make the shift by the eight midcontinent states and the attached reformulation unnecessary. But the E15 provision was pulled from the stopgap funding bill following criticisms from President-elect Donald Trump and Telsa chief executive Elon Musk . By Zach Appel Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Viewpoint: US fuel oil supply challenge to deepen

30/12/24

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30/12/24

Viewpoint: US fuel oil supply challenge to deepen

Houston, 30 December (Argus) — US residual fuel oil supplies are dwindling and face multiple challenges in 2025 because of reduced global inventories and a persistent backwardation in the domestic market. Total US inventories of residual fuel oil fell to a historic 42-year-low multiple times during 2024, including nine instances in the fourth quarter alone, according to Energy Information Administration (EIA) data. Supplies hit rock bottom at just under 23mn bl in the week ending 29 November, down by 12pc year-on-year. Despite the shrinking supplies, the US market has shown little reaction. Throughout 2024, ICE Brent futures — the basis for US residual fuel oil — remained in backwardation between the front and second month, averaging $0.60/bl. This is nearly double the full year 2023 backwardation average of $0.39/bl. The persistent backwardation of the fuel oil curve means inventory figures lack the drive to encourage wholesalers and retailers to make purchases in anticipation of future demand, traders said. The diminishing future value results in potential losses for traders who are considering purchasing spot barrels for storage as forward prices are lower than current spot prices. Residual fuel oil is primarily used as a maritime fuel for large ships, a fuel for backup power generation and for various industrial purposes. In the US it is often refined further into other road fuels. The production of US residual fuel oil has been steadily increasing in recent years, beginning even before implementation of the International Maritime Organization's 2020 global rule imposing a 0.5pc sulphur cap on marine fuels. However, output averages over the past four years remain well below pre-2019 levels. Since the US imposed sanctions on Russian fuel exports in February 2023, weekly residual fuel oil imports into the US have averaged just over 100,000 b/d, nearly half of the previous two-year average at 196,000 b/d. Mexico has now become the largest fuel oil exporter to the US, accounting for nearly 33pc of all US fuel oil imports over the past two years, claiming the top spot from Russia. Planned expansion of Mexico's refinery infrastructure may crimp US supplies, however. Mexican state-owned Pemex's 400,000 b/d Dos Bocas refinery — which is still in the start-up process — would take a greater share of Mexico's Maya crude. Maya crude yields a significant portion of fuel oil when refined. This would leave less Maya bound for the US, which has taken nearly 60pc of Mexico's Maya over the past three-years, according to Vortexa data. Pemex is also adding two new coker units to its Tula and Salinas Cuz refineries as part efforts to become more self-reliant and add an additional 168,000 b/d of road fuel output. Coker units process fuel oil to turn it into higher value road fuels, which would curtail flows to the US. Refinery maintenance involving a few US crude distillation units is set to begin in January, which could further limit domestic fuel oil production. The National Weather Service's winter forecast for the east coast is expected to be warmer than usual, likely leading to reduced demand for both high-sulphur fuel oil used in power generation and low-sulphur blending components. By Craig Ross Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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