This morning in metals news: In a bid to aid domestic refiners currently limited by steep energy costs, China announced plans to auction crude oil from its strategic reserves. In other news, Shell declares force majeure as Hurricane Ida’s fallout continues. Also in the news, July steel shipments show 37% year over year rise.
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China to auction crude oil from its strategic reserves
In a bid to aid domestic refiners amid steep energy costs, an announcement made Thursday indicates China, the world’s top oil importer, intends to auction crude oil from its strategic reserves. In the statement made by the National Food and Strategic Reserves Administration, the country aims “to ease the pressure of rising raw material prices.” As reported by Bloomberg, the agency suggested future releases, stating a “normalized rotation of crude oil in the state reserves” is “an important way for the reserves to play its role in balancing the market.” According to Energy Aspects Ltd., China has accumulated around 220 million barrels in total.
While releasing oil is unprecedented, China has in previous months (including as recently as Sept. 1) released metals from its state reserves in an effort to control prices and therefore limit any curbs to economic growth.
Hurricane Ida’s fallout continues: Shell declares force majeure
A signal that no quick or easy fix is in sight, Shell declares force majeure on a number of contracts impacted by Hurricane Ida’s destructive path through the Gulf of Mexico. Argus Media reported that as of Sept. 9, nearly 80% of Shell’s offshore production remains shuttered. The company, which is the largest producer within the U.S. Gulf of Mexico, accounts for nearly 332,000 bpd from all of its Gulf facilities. Among the devastation is the company’s West Delta-143 offshore facility, a hub for numerous pipelines. According to a statement released by Shell, “crews are working to complete a comprehensive assessment of the damage and, to the degree possible, assess how long production from our Mars corridor assets will be impacted.” Overall energy losses from the storm may extend for weeks, forcing refiners around the globe to seek alternate sources.
July steel shipments rise 37% year over year
U.S. steel shipments for July rose 37.2% from 2020, with mills shipping 8,278,863 net tons. As reported by the American Iron and Steel Institute (AISI), this accounts for a 3.1% rise from the previous month. Year to date, shipments increased by 14.8% from the same period of 2020. More specifically, shipments during the first seven months of 2021 of corrosion-resistant sheet and strip, cold rolled sheet, and hot rolled sheet increased by 23%, 17% and 9%, respectively, as compared to 2020.
Also reported by AISI, the Commerce Department’s Steel Import Monitoring and Analysis (SIMA) data indicates that August’s steel import permit applications saw an 11.4% decrease from July and a 15.3% decrease from July’s final imports total. More broadly, total and finished steel imports for the first eight months of 2021 were 20,405,000 NT and 14,149,000 NT, reflecting increases of 24.5% and 26.3%, respectively, from the first eight months of 2020.
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