OIL: Shandong Refiners Slashing Runs as Access to Iranian Barrels Tightens
Shandong teapot refineries in China have slowed down runs and must still draw down their local inventories as they can't import Iranian as they used to.
- The economics of private refining in China depends heavily on deep discounted sanctioned oil. Run rates at China’s Shandong teapot refineries has fallen to the lowest since March 2020 at 43.64%, according to Mysteel Oilchem on Friday.
- Kpler figures show building Iranian crude barrels at sea. The push in Iran barrels may reflect a rush to try and front run sanctions though building at sea barrels highlights difficulties the barrels are facing.
- Reminder that Shandong ports have enforced stricter sanctions on Iranian barrels even ahead of Trumps second term.
- Vortexa data highlights that other China ports are trying to pull the barrels instead and intra flow them to Shandong refineries but appears to be a much less efficient process and likely incurring higher costs.
- On Thursday: The US Treasury Department issued a statement confirming the first Trump administration sanctions on Iranian crude oil, targeting "an international network for facilitating the shipment of millions of barrels of Iranian crude oil worth hundreds of millions of dollars to the People’s Republic of China (PRC)."
Shandong daily inventories slipping as Iran sanctions face deeper enforcement: source Kpler
Building Iranian Barrels at sea: Source: Kpler
Iran barrels struggling to place in China/India: Source: Kpler
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BONDS: OAT Block trade
OAT Block trade, suggest seller:
- OATH5 ~1.66k at 121.86.
There's also wider selling emerging again in EGBs, but small gradual moves for now.
US DATA: Surprisingly Healthy Initial Jobless Claims
The jobless claims data were on balance a little better than expected. New claims hit their lowest single week since Feb’24 and with the four-week average not too far off at its lowest since April, but continuing claims surprised a touch higher. It looks like the trend of companies managing headcount through slower rehiring rather than layoffs is still intact.
- Initial jobless claims surprised lower at 201k (sa, cons 215k) in the week to Jan 4 after an unrevised 211k.
- The four-week average fell 10k to 213k, its lowest since Apr’24 and through the 2019 average.
- Continuing claims on the other hand were a little higher than expected at 1867k (sa, cons 1860k) in the week to Dec 28 after a downward revised 1834k (initial 1844k).
- Timing of the festive period can make seasonal adjustment difficult but the non-seasonally adjusted 305k is at the low end of recent years.
- Note that by state, the 22.4k increase in NY (which drove the 21.3k increase in national claims) to 37.5k was in keeping with typical starts to the year.
PIPELINE: $4.25B IADB 5Y SOFR Debt Launched
- Date $MM Issuer (Priced *, Launch #)
- 01/08 $6B *World Bank 7Y +54
- 01/08 $4.25B #IADB 5Y SOFR+42
- 01/08 $1.5B #Kommunalbanken 5Y +48
- 01/08 $1.5B #CoE Dev Bank 5Y SOFR+42
- 01/08 $500M Novelis 5NC2
- 01/08 $Benchmark AIIB 5Y +47a
- 01/08 $Benchmark NWB 5Y SOFR+50a
- 01/08 $Benchmark Ontario 5Y SOFR+58
- 01/08 $Benchmark Northwestern Mutual 5Y +70a
- 01/08 $Benchmark Deutsche Bank 4NC3 fix/SOFR
- 01/08 $Benchmark Codelco 10Y +195a, 30Y +215a
- 01/08 $Benchmark HF Sinclair 6Y +165a, 10Y +185a
- 01/08 $Benchmark Santander UK 6.25NC5.25 +150a
- 01/08 $Benchmark Indonesia 5Y 5.65%a, 10Y 5.95%a
