Mark Latham Commodity Equity Intelligence Service

Thursday 23rd July 2015
Background Stories on www.commodityintelligence.com

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    Macro

    Former senior Chinese energy executive stands trial

    A former senior Chinese energy executive has gone on trial this week, the official Xinhua news agency reported on Wednesday, part of the government's sweeping crackdown against deep-rooted corruption.

    Wang Yongchun was a deputy general manager at China's biggest oil company, China National Petroleum Corporation (CNPC) , until he became caught up in a graft probe last year.

    Wang's trial on charges of "holding a huge amount of property with unidentified sources" and "abuse of power by a staff member of a state-owned company" opened on Monday in Xiangyang, central Hubei province, Xinhua said.

    Several senior CNPC executives have already been put under investigation in the far-reaching crackdown, among them former Chairman Jiang Jiemin, who was formally charged in March.

    CNPC, the parent of PetroChina , was a power base for disgraced former domestic security chief Zhou Yongkang, who was jailed for life for corruption last month, and several of his former colleagues or political allies have been caught up in a sweeping graft probe.

    http://www.reuters.com/article/2015/07/22/china-corruption-trial-idUSL3N10238L20150722
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    Teck profit beats estimates as loonie’s slide aids bottom line

    Teck Resources Ltd. reported better-than– estimated second-quarter profit as the Canadian diversified mining company benefited from lower relative costs due to a slumping local currency.

    Net income fell to C$63-million ($48.6-million), or 11 cents a share, from C$80-million, or 14 cents, a year earlier, Vancouver-based Teck said in a statement on Thursday. Profit excluding one-time items was 14 cents a share, topping the 12– cent average of 25 analyst estimates compiled by Bloomberg.

    Sales were little changed at C$2-billion, beating the C$1.95-billion average estimate.

    “Downward movement in the Canadian dollar is acting as a counterweight to weakness in copper and coal prices,” Shane Nagle, a Toronto-based analyst at National Bank Financial, said before the results were released.

    The Canadian dollar has slumped against the greenback in the past year as growth in the Canadian economy slowed. While much of Teck’s operating costs are paid with the local currency, the company sells coal and metals in U.S. dollars.

    Each one-cent change in the U.S.-Canada exchange rate has a C$52-million effect on Teck’s earnings before interest, taxes, depreciation and amortization, the company said in February. Teck also said it was benefiting from the drop in oil prices.

    Teck generated 69 per cent of its revenue last year from operations in Canada, according to data compiled by Bloomberg.

    The company is the world’s second-largest exporter of seaborne coal used in steel making. The quarterly benchmark price for metallurgical coal fell in the period to $110 a metric ton, the lowest in more than seven years, amid slowing Chinese demand and a global oversupply.

    Teck said its copper unit costs fell by 15 U.S. cents a pound from a year earlier, while coal costs declined by $17 a ton, helped by the falling Canadian dollar, lower oil prices and cost-reduction efforts.

    http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/teck-resources-profit-falls-21-on-lower-prices/article25640797/
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    Oil and Gas

    Iraq replaces Saudi as top crude oil supplier to India in June

    Iraq replaces Saudi as top crude oil supplier to India in June; totalled 3.56 mil mt (896,826 b/d), up 85% on year, shipping data shows

    @Plattsoil
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    Russia: The conclusion of the second gas contract with China is postponed

    The signing of a contract with China for the supply of gas through the 'Altai' pipeline (or 'the Power of Siberia - 2') has been delayed indefinitely, two federal officials told 'the Vedomosti'. The growth of the Chinese economy is slowing down, China is revising its energy needs, they explain.

    The growth in demand for gas in China is slowing, and due to the fall in oil prices, LNG, for example from Australia, is becoming more accessible for China, the analyst of 'Sberbank CIB' Valeriy Nesterov informs. According to BP, in 2012-2013 gas consumption in China has grew by 12-13%, while in 2014 the increase was 8.5% and reached 185.5 billion cubic meters. In H1 2015 the growth was only 2%, Nesterov states, in this situation 'Gazprom' will not be able to get a high price for the 'Altai' gas.

    'Gazprom' offered to CNPC a high price, explaining it with high cost of the construction of the 'Altai pipeline'. China is ready to build a cheaper gas pipeline and considers an open tender so that its companies can participate and the construction costs become transparent', - the President of the Russian-Chinese analytical center Sergei Sanakoyev explains: 'Gazprom' refuses, so China is in no hurry.

    http://www.oilvoice.com/n/Russia-The-conclusion-of-the-second-gas-contract-with-China-is-postponed/173f8f1ea1ea.aspx
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    Cairn Energy said to vote against Vedanta offer

    FT - UK-based explorer Cairn Energy is set to vote against an offer by Vedanta Ltd to buy out minority shareholders in its former subsidiary Cairn India, according to people familiar with the situation.

    The move will cast doubt on the overall transaction, which was proposed last month by Mumbai-based resources conglomerate Vedanta Ltd, in part to bolster the finances of its heavily indebted London-listed parent Vedanta Resources.

    Cairn Energy is Cairn India’s largest minority shareholder, with a 10 per cent stake. Vedanta controls about 60 per cent of Cairn India, but Indian law requires that a majority of minority shareholders also approve the deal.

    This means that the two largest minorities — Cairn Energy and state-backed insurer Life Insurance Company of India (LIC), which holds about 9 per cent — are likely to be able to block the transaction, analysts say.

    A vote against the merger would mark the latest twist in the often tumultuous relationship between Vedanta and Cairn, which began when Vedanta’s billionaire founder Anil Agarwal bought out the British group’s majority holding in a long-delayed $9.6bn deal in 2011.

    Cairn Energy’s objections rest on “fundamental” disagreements over valuations, alongside a preference for holding an investment in an energy company rather than a distributed resources group, according to one person with direct knowledge of the matter.

    http://www.ft.com/cms/s/0/d0bd19fa-3069-11e5-8873-775ba7c2ea3d.html?ftcamp=published_links/rss/companies_oil-gas/feed//product&utm_source=twitterfeed&utm_medium=twitter#axzz3gdXFxb7z
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    PetroNeft Resources provides Licence 61 operations update

    PetroNeft an oil & gas exploration and production company operating in the Tomsk Oblast, Russian Federation, and 50% owner and operator of Licenses 61 and 67 is pleased to provide an update on operations at Licence 61.

    Highlights

    Tungolskoye

    T-503 horizontal well brought online at sustained rate of over 550 bopd.
    Latest test rate was 675 bopd.

    Sibkrayevskoye

    Processing and interpretation of 1,000 km of high quality 2D seismic underway.
    Early indications suggest that the Sibkrayevskoye structure is larger than previously understood.

    Lineynoye

    L-10 well horizontal segment in progress.

    Production

    Current gross production from Licence 61 about 2,400 bopd.

    Tungolskoye Development

    The T-503 well at Tungolskoye has been successfully completed with a horizontal segment of 1,000 metres in the Upper Jurassic J1-1 horizon at a depth of approximately 2,502 metres TVD. Of the 1,000 metres horizontal segment it is estimated that approximately 663 metres is in effective net pay. The well was brought online on 14 July and the average flow rate over the last five days has been over 550 bopd (750 bfpd). The well is still cleaning up the long horizontal section and the water cut is now below 20% and continuing to reduce. The well will be allowed to continue in this mode for a period to monitor its performance. Higher oil rates should be possible once the well has fully cleaned up completion and drilling fluids. The latest test rate, on 21 July 2015, was 675 bopd (755 bfpd at 10% water cut).

    The Tungolskoye T-51B well has also been completed. While it provided the necessary stratigraphic control for the T-503 horizontal well, the reservoir in this vertical well was tight in the J1-2 and it was not possible to produce from it. The well will ultimately be used as the water source well for pressure maintenance programme at Tungolskoye.

    The T-508 vertical well is now drilling ahead; the primary purpose of this well is to provide the necessary stratigraphic information for the drilling of a horizontal well in the south-east of the oil field, and will be completed as either a producer or injector.

    http://www.oilvoice.com/n/PetroNeft-Resources-provides-Licence-61-operations-update/e14cffd7ddf9.aspx
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    Halliburton seen facing antitrust issues on Baker Hughes deal

    Oilfield services provider Halliburton Co's acquisition of smaller rival Baker Hughes Inc is facing resistance from U.S. regulators who are concerned that the deal could hurt competition, Bloomberg reported.

    Justice Department lawyers reviewing the proposed $35 billion deal are worried that the oilfield services industry would become too concentrated post the merger, Bloomberg reported, citing a person familiar with the matter.

    "We are fully committed to our target of closing the pending Baker Hughes acquisition in late 2015," Halliburton spokeswoman Susie McMichael said in an email to Reuters.

    The Justice Department concern focused on two areas, according to the first source. One is that the drilling technology businesses would go to small companies that could not effectively compete with the two leaders. The other is that the leaders would have less incentive to innovate.

    Halliburton and Baker Hughes have overlapping businesses in the United States, Asia and Europe, and the deal is being scrutinized by regulators in several countries.

    The second source, who believes regulators will ultimately approve the deal, said the companies knew going into the antitrust probe that divestitures would be needed, and that these were under discussion.

    The Justice Department has not said if it was satisfied, said the source, who noted that the agency was far from ready to make a final decision.

    http://www.reuters.com/article/2015/07/22/baker-hughes-ma-halliburton-idUSL3N1024U920150722

    Attached Files
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    Summary of Weekly Petroleum Data for the Week Ending July 17

    U.S. crude oil refinery inputs averaged about 16.9 million barrels per day during the week ending July 17, 2015, 45,000 barrels per day more than the previous week’s average. Refineries operated at 95.5% of their operable capacity last week. Gasoline production increased last week, averaging over 10.1 million barrels per day. Distillate fuel production decreased last week, averaging about 5.1 million barrels per day.

    U.S. crude oil imports averaged over 7.9 million barrels per day last week, up by 587,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.5 million barrels per day, 2.5% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 815,000 barrels per day. Distillate fuel imports averaged 193,000 barrels per day last week.

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.5 million barrels from the previous week. At 463.9 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. Total motor gasoline inventories decreased by 1.7 million barrels last week, but are in the upper half of the average range. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories increased by 0.2 million barrels last week and are in the middle of the average range for this time of year. Propane/propylene inventories rose 0.3 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories increased by 2.9 million barrels last week.

    Total products supplied over the last four-week period averaged about 20.0 million barrels per day, up by 3.4% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged over 9.6 million barrels per day, up by 6.9% from the same period last year. Distillate fuel product supplied averaged 3.8 million barrels per day over the last four weeks, down by 1.5% from the same period last year. Jet fuel product supplied is down 2.6% compared to the same four-week period last year.

    http://ir.eia.gov/wpsr/wpsrsummary.pdf

    Attached Files
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    US Domestic oil production week ending July 17th


                                        Last week    Last Month   Year ago

    Domestic Production .....9,558           9,562          8,565

    http://ir.eia.gov/wpsr/overview.pdf
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    North Dakota oil well completions slow sharply

    No new well completion reports have been filed in North Dakota since July 10, the longest gap this year, according to daily activity records published by the state's Department of Mineral Resources (DMR).

    Completions, rather than wells drilled, provide the best guide to short-term changes in output, since operators can always delay completing a well and putting it into production, either because they are waiting for completion crews to be available or to wait for better prices.

    Completion is usually defined as a single operation including the stimulation and testing of a well as well as the installation of surface production equipment 

    North Dakota's regulators consider a well completed when the first oil is produced through wellhead equipment into tanks from the ultimate producing interval and after the well has been cased.

    Well operators must file a completion report with state regulators within 30 days of the completion date, and in some circumstances immediately.

    "In no case shall oil or gas be transported from the lease prior to the filing of a completion report unless approved by the (DMR) director," according to state rules.

    Completions reported to the DMR are published in its daily activity reports. The number of completions reported each day is volatile because operators have some discretion about when to file their forms; there are indications that operators often file a clutch of reports for related wells at the same site at the same time.

    Nonetheless the forms have to be filed within 30 days so the number of completions reported over a period of seven to 14 days gives a rough idea of how many wells are being put into production.

    The recent slump in reported completions is unusual and coincides with the fall in oil prices which has seen wellhead prices for Bakken crude drop below $50 per barrel.

    If the slump continues over the next few days, it could be a sign that shale producers are deferring putting more wells into production to save cash and wait for better prices.

    The DMR estimates that 110 to 120 new wells need to be completed each month to maintain state oil output at its current level of 1.2 million barrels per day.

    According to the latest state report, 102 wells were completed in April and 114 in May, though the May figure is preliminary.

    The number of wells reported completed so far in July is running far below the previous level and well below the number the DMR estimates is needed to hold production steady.

    It is possible that operators will file a sudden rush of completion forms in the next few days, but unless they do, it looks like the pace of completions may be slowing substantially.

    http://www.reuters.com/article/2015/07/22/usa-northdakota-drilling-kemp-idUSL5N1022F420150722

    Attached Files
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    Pioneer Natural Resources Company Provides Production Updates

    Second Quarter 2015 Production

    Pioneer’s production averaged 197 thousand barrels oil equivalent per day (MBOEPD) in the second quarter of 2015, of which 51% was oil production. Oil sales averaged 101 thousand barrels per day (MBPD), natural gas liquids (NGLs) sales averaged 37 MBPD and gas sales averaged 356 million cubic feet per day. The Company’s production guidance for the quarter was 198 MBOEPD to 203 MBOEPD.

    Strong Spraberry/Wolfcamp production performance in the second quarter (119 MBOEPD) was partially offset by lower-than-expected production in the Eagle Ford Shale (46 MBOEPD). The shortfall in the Eagle Ford Shale was primarily due to (i) fewer wells being placed on production during the quarter as a result of weather delays and (ii) well performance issues in LaSalle County, an area outside of Pioneer’s core acreage in Karnes and Dewitt counties. Second quarter production in the West Panhandle field (7 MBOEPD) was also negatively impacted by a longer-than-expected turnaround at the Fain gas processing plant and weather impacts.

    Spraberry/Wolfcamp production grew 7 MBOEPD in the second quarter, or 6%, compared to the first quarter of 2015, driven by the Company’s successful horizontal drilling program in this play. Fifty-five horizontal wells were placed on production during the second quarter as expected, of which 28 wells were in Pioneer’s extensive Northern Spraberry/Wolfcamp acreage position and 27 wells were in the Southern Wolfcamp joint venture area. The majority of the horizontal wells drilled across Pioneer’s northern acreage position were Wolfcamp B interval wells. The average production from these wells is tracking estimated ultimate recoveries (EURs) of more than 1 million barrels oil equivalent (MMBOE). Five Lower Spraberry Shale horizontal wells were also placed on production across the northern acreage during the second quarter with average production results tracking EURs of 1 MMBOE.

    In the Eagle Ford Shale, Pioneer’s second quarter production was approximately 3 MBOEPD below the Company’s forecast for the quarter. The Company expected to place 42 wells on production in the Eagle Ford Shale during the second quarter. However, due to record rainfall and flooding in this area during the quarter, only 33 wells were placed on production in Karnes and DeWitt counties where Pioneer has continued to drill some of the most productive wells in the Eagle Ford Shale and has successfully implemented a downspacing and staggering program. The reduced number of wells placed on production impacted second quarter production by approximately 2 MBOEPD.

    Pioneer placed 15 Eagle Ford Shale wells on production on the Washburn Ranch lease (approximately nine thousand net acres) in LaSalle County during 2014. Due to a fire in May of 2014 at the central gathering plant for this area, production from these wells was significantly curtailed until year-end 2014. As a result of the fire, the production forecast that was developed for 2015 was based on limited production data and actual production for these 15 wells came in approximately 1 MBOEPD below this forecasted level in the second quarter. The Company has postponed any further drilling in this area until it has a better understanding of well performance to date.

    Full-Year 2015 Production Update

    Pioneer is maintaining its full-year 2015 production growth forecast at 10%+. Although production growth in the Eagle Ford Shale is now forecasted to be nominal in 2015, production from the Spraberry/Wolfcamp is forecasted to grow by 22% to 24% in 2015 compared to the 20%+ previously forecasted. The reduction in the Eagle Ford Shale growth rate is primarily due to the delays in placing wells on production and performance issues during the first half of 2015, while the increase in the Spraberry/Wolfcamp growth rate reflects the continuing strong performance of the horizontal drilling program, especially in Pioneer’s northern acreage.

    http://www.businesswire.com/news/home/20150722005696/en/Pioneer-Natural-Resources-Company-Production-Derivatives-Updates#.Va-Uf6RVhBc
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    Senate Republicans end bid to pare back oil train safety rule

    Senate Republicans have backed away from a controversial proposal that would have repealed a new federal safety rule requiring oil trains to be equipped with advanced new braking systems.

    Republicans eliminated the proposal from a multi-year surface transportation bill, after coming under pressure from the Obama administration and Democratic lawmakers, whose support they need for passage of the legislation, Senate aides said on Wednesday.

    In late June, the Republican-controlled Senate Commerce Committee voted to repeal the requirement that trains carrying crude oil install electronically controlled pneumatic (ECP) brakes, less than two months after the administration unveiled sweeping new rules aimed at preventing catastrophic oil train derailments.

    The railroad and oil industries, including interests controlled by billionaire investor Warren Buffett, mounted a powerful lobbying campaign to overturn the ECP requirement, saying it would slap an unnecessary $3 billion cost on railroads, oil refiners and others.

    BNSF Railway Co, which Buffett owns through his Berkshire Hathaway Inc holding company, is the leading U.S. railroad for crude oil shipments and would have benefited most from cost relief if the Republican bid had been successful.

    Senator John Thune, Republican chairman of the Senate Commerce Committee, had proposed repealing the ECP requirement last month with a measure that orders new research to justify the technology's benefits until a permanent decision is made.

    But the legislation unveiled this week by Senate Republican leader Mitch McConnell preserves the ECP requirement. It still requires the study of braking technologies, and calls on the transportation secretary to repeal the ECP requirement eventually if the research does not justify its use.

    http://www.reuters.com/article/2015/07/22/usa-train-regulations-oil-idUSL1N10224E20150722
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    Freeport sets sights on export of foreign-sourced LNG

    Texas-based terminal operator Freeport LNG Development LP has filed an application with the US Department of Energy (DoE) for renewal of its blanket authorization to export LNG previously imported into the US from foreign sources.

    The application relates to the amount up to the equivalent of 24 billion cubic feet (Bcf) of natural gas on a short-term or spot market basis for a two-year period starting on July 19th, 2015.

    If approved, Freeport LNG would export the LNG from the Freeport LNG Terminal located on Quintana Island, Texas, to any country with the capacity to import LNG via ocean-going carrier and with which trade is not prohibited by U.S. law or policy.

    The company currently holds a blanket authorization to import LNG from various international sources by vessel in an amount up to the equivalent of 30 Bcf of natural gas.

    DoE said that in reviewing the application it would consider domestic need for the gas as well as other issues, such as consistency with DoE’s policy of competition and free negotiations on trade arrangements and environmental effects.

    http://www.lngworldnews.com/freeport-sets-sights-on-export-of-foreign-sourced-lng/
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    $1 Natural Gas?????

    Image title
    Texas Eastern Transmission's Illinois Hub price spot.
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    Alternative Energy

    Britain moves to slash renewable subsidy costs

    Britain's government on Wednesday moved to rein in the spiraling costs of renewable power subsidies which it said threatened to push up household bills.

    The plans include closing support for small-scale solar projects, changing the way renewable projects qualify for payments and modifying subsidies for biomass plants.

    The proposals come just a month after the government said it would scrap new subsidies for onshore wind farms from April next year.

    "We can't have a situation where industry has a blank cheque and that cheque is paid for by people's bills," Energy and Climate Change Secretary Amber Rudd said on BBC radio.

    Figures published by the Department of Energy and Climate Change (DECC) show the cost of renewables subsidies could reach 9.1 billion pounds ($14 billion) a year by the 2020/21 tax year compared with a proposed budget of 7.6 billion.

    Investors said the government's u-turn had undermined the industry's case for investing in renewable electricity production.

    "The government has stripped away without warning incentives for projects on which many companies have made major investment decisions in renewable technologies," said Richard Kirkman, technical director at Veolia UK, a subsidiary of French environmental services group Veolia.

    Other European governments have also curbed generous renewable subsidies.

    Last year Germany changed its renewable energy law, seeking to cap support for renewables, while Spain changed its subsidy scheme for solar plants after higher than expected demand.

    Britain's DECC also said on Wednesday it would no longer guarantee subsidies offered for biomass conversion projects.

    The decision sent shares in power company Drax, which is in the process of converting its coal plants to using biomass, down around 2 percent in early trading but they have since recovered.

    As part of extensive reforms of Britain's electricity market, the government has been changing the way it supports renewable energy by replacing direct subsidies with a contracts-for-difference (CfD) system.

    Under the scheme, qualifying projects are guaranteed a minimum price at which they can sell electricity and renewable power generators bid for CfD contracts in a round of auctions.

    But Rudd on Tuesday cast doubt on whether there would be another auction of CfD renewable support by telling a parliamentary committee she could not confirm it would take place.

    http://www.reuters.com/article/2015/07/22/britain-renewables-idUSL5N1020TV20150722
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    Shenhua gains approval for first offshore wind power project

    China’s largest coal producer Shenhua Group has obtained approval from the Provincial Development and Reform Commission of East China’s Jiangsu province to build an offshore wind power plant in Dongtai, said the State-owned Assets Supervision and Administration Commission on July 20.

    The approval marked a substantial progress in Shenhua’s move into the offshore wind power field.

    The Dongtai Phase 4 offshore wind power plant, about 42km off the coast, has a designed installed power generation capacity of 300 MW, including 75 wind turbines each with capacity of 4 MW.

    This may imply that Shenhua has started to explore new energy businesses to seek a new driver of profit growth, as its engagements in coal and thermal power sectors face a gloomy future.

    Its listed subsidiary, China Shenhua Energy Co., Ltd., may see H1 earnings slide 40% on year, according to a research report from CITIC Securities.

    http://en.sxcoal.com/0/127222/DataShow.html
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    China's largest solar power tower plant starts construction

    China's largest solar power tower plant has begun construction in the northwestern province of Qinghai, local media reported on July 22.

    Occupying 2,550 hectares of the Gobi Desert in Golmud city, the plant will have an installed capacity of 200 MW, and be capable of supplying electricity to 1 million households, according to Qinghai Solar-Thermal Power Group.

    "Its designed heat storage is 15 hours, thus, it can guarantee stable, continual power generation," said board chair Wu Longyi.

    Once operational, the plant will generate 1.12 TWh of electricity per annum, slashing standard coal use by 4.26 million tonnes every year, reducing emissions of carbon dioxide and sulfur dioxide by 896,000 tonnes and 8,080 tonnes, respectively.

    The project, which was invested 5.38 billion yuan ($879.1 million), is planned to be put into operation before end-July 2018.

    China has been focusing on increasing its proportion of clean energy. By 2014, the country's solar power capacity was 28.05 GW, 400 times more than 2005, and there are plans to increase this to around 100 GW by 2020.

    http://en.sxcoal.com/0/127259/DataShow.html

    Attached Files
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    Precious Metals

    Newmont earnings in line, raises output forecast

    Newmont Mining Corp reported higher second-quarter adjusted earnings on Wednesday, in line with analyst expectations, as lower oil prices and favorable exchange rates offset the impact of weaker metal prices.

    Based on this performance, Newmont, the world's No. 2 gold producer, raised its gold production forecast and lowered its cost outlook.

    The miner now expects attributable gold production of between 4.7 million and 5.1 million ounces in 2015, up from a prior forecast of 4.55 million to 4.9 million ounces. It sees production rising to between 5.2 million and 5.5 million ounces in 2017.

    Consolidated all-in sustaining costs per ounce are now expected to be between $920 and $980 in 2015, down from an earlier forecast of $960 to $1,020, and seen holding relatively steady at between $900 and $1,000 in 2017.

    The changes also take into account the recent acquisition of the Cripple Creek & Victor mine, the pending sale of the Waihi mine and the start up of the Long Canyon mine.

    Newmont said adjusted net earnings rose to $131 million, or 26 cents a share, in the quarter to end-June from $101 million, or 20 cents a share, in the same period a year ago.

    Analysts on an average expected the miner to report earnings of 26 cents per share, according to Thomson Reuters I/B/E/S.

    All-in sustaining costs to produce one ounce of gold improved to $909 an ounce from $1,063 in the same quarter a year ago.

    Attributable gold production from Newmont's mines in the Americas, Australia, Asia and Africa rose to 1.24 million ounces of gold and 41,000 tonnes of copper in the quarter. That compares with 1.22 million ounces of gold and 20,000 tonnes of copper in the second quarter of 2014.

    http://www.reuters.com/article/2015/07/22/newmont-mining-results-idUSL1N1022PC20150722
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    Steel, Iron Ore and Coal

    Indian Q2 thermal coal imports down 4 pct on year

    Indian imported 21.5 million tonnes of thermal coal over April-June, the first quarter of the 2015-16 fiscal year, down 4% on the year, according to the latest data of India’s Central Electricity Authority.

    Of the total, 10.6 million tonnes was imported by 29 utilities for blending while 10.9 million tonnes was imported by eight utilities for power plants burning only imported coal.

    Twelve utilities did not import any coal during the same period.

    Privately-owned power producer Adani Power imported the most thermal coal in April-June at 4.2 million tonnes, followed by state-run power generator NTPC Ltd. with import of 3.8 million tonnes.

    For 2015-16, utilities are set to import 115 million tonnes of thermal coal. Of this, 73 million tonnes would be for those plants blending imported and domestic coal, with the remaining 42 million tonnes to be imported by those plants which use only imported coal.

    During 2014-15, Indian utilities imported 91.24 million tonnes of coal compared with a target of 94 million tonnes.
     
    http://en.sxcoal.com/0/127223/DataShow.html
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    Six of the seven listed Chinese coal cos report H1 deficit amid sliding prices

    Six of the seven listed Chinese coal companies that have released half-year performance forecasts pointing to a combined loss of 1.9-2.5 billion yuan ($310-408 million), in stark contrast to profit of 133 million yuan a year ago.

    China coal energy Co., Ltd., China’s second largest coal producer, may post the most significant loss, as it forecast a loss of 0.8-1.2 billion yuan in the first half, the first deficit since 2012 on June 26.

    Next was Taiyuan Coal Gasification Co., Ltd., who said on July 15 its H1 net loss was expected to hit 650-700 million yuan, more than doubling 312 million yuan’s deficit over January-June 2014. The company attributed the huge loss to tough sales amid sliding prices of washed coal and middlings – a byproduct in the process of coal preparation.

    Henan-based Shenhuo Coal and Electricity Co., Ltd. said it may have to bear a loss of 270-300 million yuan in the first half. The company said the average sales price of its coal products fell 93.66 yuan/t on year to 447.28 yuan/t over the six-month period, leading to 341 million yuan of drop in net profit.

    On July 18, Hebei-based Kailuan Energy Chemical Co., Ltd., a major coking coal producer, predicted a deficit of 150-200 million yuan in the first half, a sharp drop from 103 million yuan of profit in the same period last year.

    Inner Mongolia-based Pingzhuang Energy Co., Ltd. and Shanxi-based Meijin Energy Co., Ltd. forecast a loss of 49.5-50.5 million and 23-28 million yuan from January to June, respectively.

    Jizhong Energy Co., Ltd., also based in Hebei, appeared to be the only company with luck to see a net profit of 6-10 million yuan during the first half, which, however, was down over 80% year on year.

    http://en.sxcoal.com/127221/NewsShow.html
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    China’s June thermal coal imports slow to 4-mth low

    China’s June imports of thermal coal – including bituminous and sub-bituminous coals, slumped to a four-month low of 6.21 million tonnes, a 43% drop on year and down 4% from the previous month, according to the latest data from the General Administration of Customs (GAC).

    China’s thermal coal imports over January-June were 42.35 million tonnes, a 44% fall from the year-earlier period.

    The slump was mainly due to low prices in the domestic market, stricter trace elements check, reduced power demand amid weak industrial activity and increased competition from the hydropower sector.

    Thermal coal prices have been hovering low at China’s domestic market since May, after falling materially from the start of the year, with 5,500 Kcal/kg NAR coal now around 495 yuan/t ($80.9/t) with VAT, FOB Qinhuangdao.

    China imported 3.76 million tonnes of Australian thermal coal in June, down 28% on the year and 1% lower than May, while imports from Indonesia slumped 52% on year and down 4.3% on month to 1.76 million tonnes.

    Thermal coal imports from Russia decreased 56% on year to 661,790 tonnes in the month, the lowest since October 2012.

    Meanwhile, China’s lignite imports in June fell 18% on the year and down 18.1% from May to 2.9 million tonnes.

    Lignite imports over January-June were 23.75 million tonnes, down 35% year on year.

    Lignite imports from top supplier Indonesia stood at 22.15 million tonnes in the same period, down 34.7% from a year ago.

    http://en.sxcoal.com/0/127258/DataShow.html
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    BC Iron sets sights on cost reductions

    ASX-listed BC Iron on Thursday told shareholders that the company would strongly focus on cost reductions in the near-term. 

    During the three months to June, the Nullagine joint venture (JV), in the Pilbara, delivered 1.46-million tonnes of ore, which was in line with the previous quarter’s production. C1 cash costs at the operation reached A$49/t free-on-board, which was also in line with the previous quarter, while all-in cash costs reached A$58/t. 

    However, in an effort to cut costs, BC Iron transitioned its major mining, crushing and screening contractor at the Nullagine project. The company exercised an early termination right in its contract with Watpac, appointing a new contractor. “The June quarter results were solid given the transition in our major contractor at the Nullagine JV during the period and the ongoing iron-ore market challenges,” said BC Iron MD Morgan Ball. “Our cost base is now materially lower as a result of changes implemented over the last six months, which is reflected in our full year guidance for 2016.” 

    The miner was targeting a C1 cash costs of between A$42/t and A$45/t at the Nullagine project for the 2016 financial year, with all-in cash costs expected to reach between A$48/t and A$54/t. “We are continuing to strive for further cost reductions in light of expected ongoing volatility in iron-ore prices and also remain focused on ensuring we make decisions that are in the best interest of shareholders,” Ball said. 

    For 2016, BC Iron was expected to produce between 4.9-million tonnes and 5.3-million tonnes of ore, compared with the 5.26-million tonnes produced during the full year ended June. The miner said that the slightly lower production rates in 2016 would facilitate the deferral of capital expenditure associated with the higher-cost Bonie East and Coogan mesas.

    http://www.miningweekly.com/article/bc-iron-sets-sights-on-cost-reductions-2015-07-23
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    Fortescue Deepens Cuts as Iron-Ore Downturn Bites

    Fortescue Deepens Cuts as Iron-Ore Downturn Bites

    Fortescue Metals Group Ltd. said it intends to cut costs in the year ahead by nearly as much as the two prior fiscal years combined, as the miner steps up its defense against a slumping iron-ore price.

    Once a tiny explorer, Fortescue took on major producers Vale SA, Rio TintoPLC and BHP Billiton Ltd. in a decadelong expansion that turned it into the world’s fourth-largest iron-ore exporter. But the cost of digging up its ore is higher than those rivals, and the miner also sells its raw material, which is lower quality, for less. That leaves it vulnerable as iron-ore prices fall.

    In 2012, executives set about cutting costs from the business, spooked by a sharp dip in prices that sparked emergency talks with lenders. Cutbacks were wide-ranging, from job layoffs to company funded barbecues.

    Now, Fortescue thinks it can go deeper. On Thursday, the miner said it expects to cut costs a further US$1.4 billion in the year through June, 2016, almost matching the US$1.6 billion of savings recorded over the 24 months prior.

    “That means we will produce the same amount of tons as we did last year, and we will spend US$1.4 billion less in doing so,” Chief Financial Officer Stephen Pearce said on a conference call.

    The miner is renegotiating rates with suppliers and changing how it blends and processes ore. Mr. Pearce wouldn’t say whether there would be more job cuts, although he said: “We will always continue to refine our organization.”

    http://www.wsj.com/articles/fortescue-deepens-cuts-as-iron-ore-downturn-bites-1437633683

    Attached Files
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    Outokumpu’s underlying EBIT was EUR -25 million in Q2

    While European restructuring progressed and performance in Coil EMEA improved, a decline in financial performance was driven by low delivery volumes and weak performance in Coil Americas. Coil Americas’ underlying EBIT loss increased to EUR 50 million. Operating cash flow was EUR -41 million.

    Stainless steel deliveries were 616,000 tonnes1 (I 2015: 620,000 tonnes).
    Underlying EBITDA2 was EUR 57 million (I 2015: EUR 77 million) and underlying EBIT2 was EUR -25 million (I 2015: EUR 2 million). The decline was driven by weak performance in Coil Americas.
    EBIT was EUR -26 million (I 2015: EUR -10 million). The net effect of raw material-related inventory and metal derivative gains/losses was EUR -1 million (I 2015: EUR 7 million). There were no non-recurring items in the second quarter (I 2015 EUR -19 million).
    Operating cash flow was EUR -41 million (I 2015: EUR -62 million).
    Net debt increased to EUR 2,116 million (March 31, 2015: EUR 2,034 million) and gearing was 96.4% (March 31, 2015: 91.5%).

    Outokumpu estimates stainless steel end-user demand to remain relatively healthy in the third quarter. However, the European markets will be seasonally slow during the summer months, and in Americas, the pressure from Asian imports continues and low nickel price puts constraints on distributor sector buying, pricing and rebound of the market. In APAC region stainless steel market remains difficult.

    Outokumpu estimates somewhat lower delivery volumes quarter-on-quarter with seasonal decline in Europe and gradual increase in Americas. The Group’s underlying EBIT for the third quarter is estimated to improve from the second quarter, but to remain negative mostly due to seasonal impacts. In addition to the ongoing savings programs, special measures are taken to improve profitability in Coil Americas. With current prices, the net impact of raw material-related inventory and metal derivative gains/losses on profitability is expected to be EUR 10-15 million negative.

    Outokumpu’s operating result may be impacted by non-recurring items associated with the ongoing restructuring programs. This outlook reflects the current scope of operations.

    - See more at: http://globenewswire.com/news-release/2015/07/23/754393/0/en/Outokumpu-reports-EUR-25-million-underlying-EBIT-for-the-second-quarter-of-2015-Improvement-in-Coil-EMEA-not-enough-to-cover-losses-in-Coil-Americas.html#sthash.WrFZ2dGi.dpuf
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    Stronger rouble boosts Russian Severstal's Q2 net profit

    Severstal, one of Russia's largest steel producers, saw its second-quarter net profit increase by 39 percent quarter-on-quarter because of a stronger rouble, it said on Thursday.

    Severstal's net profit of $469 million was boosted by a FX translation profit of $130 million, the company, controlled by billionaire Alexei Mordashov, said in a statement.

    Adjusting for this non-cash item, the company would have posted an underlying net profit of $339 million, missing an estimate by analysts of $358 million.

    Its revenue increased 18 percent quarter-on-quarter to $1.8 billion, while earnings before interest, taxation, depreciation and amortisation (EBITDA) rose 0.9 percent to $588 million.

    The rouble strengthened by around 5 percent against the U.S. dollar in the second quarter and led to higher dollar-denominated selling prices. Revenue was also supported by a seasonal rebound in sales on domestic and export markets.

    However, it said it expected global steel prices to remain under pressure because of a weaker Chinese economy, with steel demand falling 5.1 percent since the start of 2015 and growing Chinese steel products exports.

    http://uk.reuters.com/article/2015/07/23/russia-severstal-results-idUKL5N10317Y20150723
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    Indian stainless steel imports in 2014-15 up by 49% YoY

    Image Source: EpcworldPress Trust of India reported that Minister of State for Steel Mr Vishnu Deo Sai in the Rajya Sabha informed that India's stainless steel imports surged 49 per cent to 5.5 lakh tonnes in the last financial year

    India had imported 3.7 lakh tonnes of stainless steel in 2013-14

    In value terms, imports of the metal rose by 23 per cent to INR 5,918.9 crore in 2014-15, as against INR 4,801.9 crore in 2013-14, the data showed.

    Mr Sai told "Domestic steel manufacturers and other stakeholders have been representing against the surge in imports of steel.”

    http://steelguru.com/steel/indian-stainless-steel-imports-in-2014-15-up-by-49-yoy/430200#tag
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