Mark Latham Commodity Equity Intelligence Service

Wednesday 10th June 2015
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    China May PPI down 4.6pct on yr

    China's Producer Price Index (PPI), which measures inflation at wholesale level, dropped 4.6% year on year and down 0.1% month on month in May, the National Bureau of Statistics (NBS) said on June 9.

    It was the 39th straight year-on-year decline, due to persisting sluggish demand from downstream sectors.

    Factory prices of production materials declined 5.9% from the previous year and down 0.1% from the month before, the NBS said.

    The price of coal mining and washing industry dropped 14.0% on year and down 3.1% on month; the price of oil and natural gas mining industry fell 36.1% on year but up 4.4% on month. Besides, prices of ferrous metal industry dropped 22.5% from the previous year and down 1.0% from April, data showed.

    The data came along with the release of the Consumer Price Index (CPI), which rose 1.2% year on year but down 0.2% from the month before in May.
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    Reviving oversight concerns, China port says iron ore stocks missing

    A subsidiary of China's Tianjin port said some iron ore stored in a private warehouse had been illegally released by an undisclosed agent and trading firm.

    The move led Tianjin Port No. 5 Stevedoring Co. Ltd to block the release of some iron ore stocks and has prompted checks by customers on the fate of their holdings of the commodity stored at the port.

    Oversight of China's ports has been under scrutiny since a scandal last year at Qingdao port involving commodity financing where a private trading firm is alleged to have duplicated warehouse certificates to pledge a metal cargo multiple times as collateral for loans.

    Using commodities as collateral to raise money is common in China and not illegal, but duplicating receipts to repeatedly mortgage the full value of an asset is fraud and could leave more than one creditor holding claims to the same collateral.

    New examples of irregularities at ports will raise fresh concerns about the risks of storing commodities in China and commodity financing, traders say.

    Tianjin Port No. 5 Stevedoring Co., a unit of the listed port operator, Tianjin Port Holdings Co. Ltd, said in a memo sent to clients and dated May 29, 2015, that an unnamed logistics agent had acted with a trading firm, also not named, to release cargoes without authority or paying port fees.

    "This matter was caused completely by the illegal operations of the agent and a related downstream trader and the port company did not itself sign...or participate in any unauthorised cargo release," Tianjin Port No. 5 said in the memo, seen by Reuters.

    "Hence, the port company was not involved in any transgression. Furthermore, to protect its legal rights, the port company has already initiated legal proceedings," it said.

    An agent is normally required to obtain a certificate issued by the port, pay management fees and present paperwork issued by a shipping firm and customs to take away stocks, said the memo, whose contents were verified by the company's lawyer.

    The memo did not name any parties or the nature of the transgression. A manager at the trading firm identified by some traders as being involved declined to comment.

    A call to the parent firm of the agent, which was also named by traders as being involved, was referred to a branch in Tianjin, where the manager was not available when a Reuters reporter visited.

    A spokesman for the main Tianjin port operator said the company was still looking into the matter and calls to the customs agency in the city were not answered.

    According to a source with knowledge of the situation, a unit of Zhejiang Materials Industry Group had imported iron ore on behalf of a small trading company after receiving a deposit, but the ore was then removed from the private warehouse without the state-owned firm's knowledge before a full payment was made.
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    Cairn India Set to Touch Six-Year Low on Vedanta Merger Report

    Cairn India Ltd., operator of the nation’s biggest oil field on land, headed for its lowest price in more than six years in Mumbai following a report Vedanta Ltd. plans to announce it will absorb the unit.

    The stock dropped 4.3 percent to 173 rupees as of 2:42 p.m. local time, poised for the lowest close since March 2009. The shares have lost 28 percent this year, compared with a 3.7 percent drop in the benchmark S&P BSE Sensex index.

    Absorbing Cairn India will give billionaire Anil Agarwal’s Vedanta access to its unit’s cash and help reduce group debt, The Economic Times reported today, citing two people it didn’t identify. Cairn India had 168.7 billion rupees ($2.6 billion) of cash and cash equivalent as on March 31, the company said on April 23. The merger process would be completed by March, one of the people said.

    “Investors are taking a narrow view on the misuse of Cairn’s cashpile,” Deven Choksey, managing director of K.R. Choksey Shares & Securities Ltd., said by phone. “The long-term view is positive as more than one product in your portfolio will mitigate risks of price volatility.”

    In 2011, Vedanta acquired majority control of Cairn India for $8.67 billion. It held 59.9 percent in the oil explorer through its various units as on March 31.

    A merger with Cairn India could be considered as a reverse takeover, Vedanta Resources told the London stock exchange in a statement Tuesday.

    Cairn India, which produces oil and gas from three of its seven blocks in India, is delaying plans to boost output to focus on becoming profitable after crude’s slump led to its first quarterly loss in more than seven years.
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    Solar trashes LNG demand.

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    In a similar statement reported by The Financial Times, The Guardian and Bloomberg, Saudi Arabia’s influential oil minister Ali Al Naimi recently said, “In Saudi Arabia, we recognize that eventually, one of these days, we’re not going to need fossil fuels. I don’t know when - 2040, 2050 or thereafter. So we have embarked on a program to develop solar energy. Hopefully, one of these days, instead of exporting fossil fuels, we will be exporting gigawatts of electric power.”

    So what happens when the biggest global exporter of petroleum liquids starts vouching for the power of the sun?

    What we are witnessing now is a major shift in thinking by some of the biggest stakeholders in oil, who have started laying out a well-planned future investment strategy for their respective energy sectors, with solar taking the lead. One of the main reasons behind this is that solar technology is becoming more affordable and popular with each passing day. Given this scenario, let us now examine the top five emerging solar energy markets from an investment point of view.

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    The Humble Hot Water Tank

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    Forget expensive high-tech silver bullets such as nuclear fusion and carbon capture and storage; the solution to climate change lies in the humble electric immersion heater that sits in the hot water tank under your stairs. That's the view of Dr Mark Barrett, senior researcher at the UCL Energy Institute, who will present his analysis at a meeting in the House of Commonson 18 June .

    A tank with an immersion heater may be just an oversized kettle, but there are thought to be around 19m in Britain's homes, which collectively have the ­capacity to store huge amounts of energy as hot water. And this could be key to achieving an almost wholly renewable electricity supply.

    Dr Barrett says the heaters could be switched on and off rapidly to compensate for the erratic output of wind turbines and solar panels, each heater controlled by a gadget that responds to signals sent through the electricity grid – a system used since the second world war. "Everybody is always looking for a shiny new silver-bullet solution" says Dr Barrett, "but this idea is cheap, safe, and based on technology that's been around for decades".

    (Guardian 2009)

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    Oil and Gas

    Murkowski releases road map for countries to seek U.S. crude exports

    A top Republican senator on Tuesday provided a blueprint for foreign countries to acquire U.S. crude, as oil companies push for an end to the nation’s longstanding ban on exporting it and the Senate nears votes on the issue.

    The document, prepared by Republican staff on the Senate Energy and Natural Works Committee and released by the panel chairwoman, Sen. Lisa Murkowski of Alaska, notes that the Obama administration can allow greater oil exports to U.S. allies already — without any changes by Congress.

    “Exempting certain countries on a case-by-case basis, as the statutes and regulations currently allow, would be a partial and helpful step toward the modernization of U.S. energy policy,” the white paper says.

    Under a change made by former President Ronald Reagan, oil shipments to Canada are exempted from the broader crude export ban. And the Obama administration is under increasing pressure to make a similar change for Mexico.

    But the paper suggests there are many other potential beneficiaries around the globe with deep ties with the United States.

    “Many U.S. allies and trading partners are interested in purchasing American oil to diversify away from Russia, Iran and other problematic sources,” the paper says. “Allowing such shipments would send a powerful signal of support and reliability at a time of heightened geopolitical tensions in much of the world. The mere option to purchase U.S. oil would enhance the energy security of (these countries) even if physical shipments did not occur.”

    The document also offers case studies for six countries — including Poland, Japan and India — that are seen as particularly well-positioned candidates to seek U.S. crude, given their dependence on foreign sources of oil.
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    Iraq is raising a new army to defend its oil from Islamic State

    Business Insider reported that Iraq is committing 27,000 security personnel to protecting its oil and energy industry from the advance of Islamic State.

    The Telegraph reports that Iraq's oil minister Adel Abdel Mahdi outlined plans for the new oil army at the Organisation of the Petroleum Exporting Countries meeting in Vienna over the weekend.

    Iraq is now the second largest oil producing nation in OPEC after Saudi Arabia and there are fears that ISIS, which operates in parts of Iraq, Syria and Iran, could disrupt supply through terrorist attacks.

    The terrorist state could also look to annex more oil resources to help fund its campaigns. It already controls several oil assets in northern Iraq and industry officials estimate ISIS could be making at least USD 1 million a day from oil exports.

    Armed forced have been trying to take back key oil fields and refineries from ISIS in Iraq in recent weeks. Iranian and US forces have been working together to try and retake the Beiji refinery in Iraq.

    Abdel Mahdi said the final structure of the new oil security forces will be finalised over the next few weeks.
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    Production from Iraq's West Qurna Two Now at Around 402,000 Barrels

    Production from Iraq's West Qurna Two oilfield is at around 402,000 barrels per day and is expected to rise to 420,000 bpd by the end of the year, senior vice president of Lukoil Overseas Gati Al-Jebouri said at a conference in London.

    "There is no more curtailment and we were at 402,000 bpd yesterday so we are very happy and we hopefully will go up to 420,000 bpd by end of the year," he said at a conference in London, adding that was due to the split in exports of Basrah crude grades to heavy and light.

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    Former Centrica boss to head $5 bln energy investment fund

    The former boss of British energy company Centrica Sam Laidlaw will head a new $5 billion fund backed by private equity firms Carlyle Group and CVC Capital Partners to buy oil and gas assets worldwide.

    The London-based platform, Neptune Oil and Gas, will focus on investing in large-scale fields and companies in the North Sea, North Africa and Southeast Asia struggling in the wake of the sharp drop in oil prices over the past year.

    Laidlaw, who stepped down as Centrica's chief executive late last year, said the fund aimed to complete one or two large deal totalling around $5 billion within the next two years to build a new exploration and production (E&P) company of 75,000-100,000 barrels per day, similar to the output of London-based Tullow Oil.

    "Very few people have actually invested in scale because there haven't been any large-scale private equity funds really devoted to international E&P," Laidlaw told Reuters on Tuesday.

    A raft of oil and gas assets have been put up for sale in recent months as energy firms ranging from majors Royal Dutch Shell and Total to small exploration companies seek to boost balance sheets.

    "The timing is good, a lot of the super majors are going through portfolio restructuring and national oil companies might be pulling back because of the lower oil price," Laidlaw said.

    Global private equity firms in recent years have formed a number of partnerships led by high-profile industry executives in a bid to turn around assets by introducing efficiencies and cost cutting.

    Siccar Point is headed by former Conoco and Centrica executive Jonathan Rogers, while Scotland-based Verus Petroleum is led by Alan Curren, a North Sea veteran with Wood Group and Lundin Petroleum.

    "We're expecting to deliver value through improving efficiencies, adding reserves, improving operating uptime and bringing in new technologies to ensure we can deliver a sensitive risk return on that basis," Laidlaw said.

    "This isn't a bet on the oil price, because it could be with us for a while," he added, referring to recent lower prices.
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    China becomes largest buyer of Brazilian oil: report

    Brazil's oil exports to China increased threefold in the first five months of this year, making Beijing the largest consumer of Brazilian oil in the world, said daily Folha de Sao Paulo on Tuesday.

    According to Folha, Brazil exported 5.4 million tons of oil to China from January to May, accounting for 35 percent of Brazil's total oil exports in the same period. The amount of oil shipped to China is twice as much as that to the United States.

    The rise in China's purchase of Brazilian oil came at a time when Brazil's state-controlled oil giant Petrobras tried to boost its relations with China. Petrobras signed some financing agreements with China during a recent visit to Brazil by Chinese Premier Li Keqiang.

    China's higher demand for oil also helped Brazil achieve record oil exports of 15 million tons from January to May, up 80 percent from the same period last year.

    However, as oil prices have fallen significantly over the past months, the record sales did not generate corresponding high revenues.

    With increased oil purchases, China has become the largest buyer of four major Brazilian products. The other three are soybeans, iron ore and cellulose.

        China replaced the United States to become Brazil's largest trade partner in 2009. The Sino-Brazilian trade value amounted to 86.67 billion U.S. dollars in 2014.
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    Wood Mackenzie: China Faces Weaker Gas Demand and Oversupply Till 2017

    Wood Mckenzie reported Wednesday that Chinese national oil companies (NOCs) are assessing how best to optimize their diverse supply portfolios as gas demand disappoints, leading to an oversupplied market with weaker prices. Wood Mackenzie says there are three major levers China can focus on to adjust with market movements and how these levers are used to manage oversupply will impact liquefied natural gas (LNG) prices and suppliers to China.

    Gas demand growth in China has been reduced significantly with demand now expected to reach around 12.71 trillion cubic feet (Tcf) or 360 billion cubic meters (Bcm) and 19.77 Tcf (560 Bcm) in 2020 and 2030 respectively compared to 14.83 Tcf (420 Bcm) and 22.59 Tcf (640 Bcm) previously. This is due to short-term and structural drivers. Gavin Thompson, Wood Mackenzie’s principal gas consultant explains, “Short-term drivers include low oil prices and high domestic gas prices, reversal of environmental policies, competition from coal and hydro and warmer winter weather. Structural factors include the switch from industrial production to the service sector as a driver of economic growth.”

    Chinese companies have signed around 2.33 Tcf (66 Bcm) per annum of term LNG contracts. Of this total, new contracts will ramp up through 2015, ultimately supplying an addition of approximately 812.1 billion cubic feet (Bcf) or 23 Bcm per annum of gas into the domestic market by 2018. Given the significant downward revision in demand, China’s NOCs are now pursuing numerous channels to reduce volumes. This includes efforts to renegotiate ramp up schedules and pricing terms and reselling volumes into the Pacific market where agreement can be reached with suppliers. Despite weakening demand growth, Central Asian volumes into China also continue to rise. Thompson says. “As a result, there is an oversupply of contracted LNG into the market, particularly during periods of low seasonal demand. We expect China will be over-contracted by about 635.6 Bcf (18 Bcm) from 2015 till 2017.”

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    Gazprom gets EU trial extension

    Gazprom has been granted six extra weeks to respond to charges launched by European Union (EU) antitrust regulators that it had abused its dominant market position, the Russian gas giant said on Tuesday.
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    Baghdad makes $430 million budget payment to Kurds-finance minister

    Iraq made a $430 million budget payment to the Kurdistan region for May, the finance minister said on Tuesday, potentially putting further strain on a deal over oil exports.

    The December deal was hailed as a breakthrough in a long-running dispute over exports between the federal government in Baghdad and Kurdish regional authorities, but both sides accuse each other of violating it.

    Finance Minister Hoshiyar Zebari said Baghdad had paid 508 billion dinars ($430 million) to the region in May as expenditure had been lowered across the board, and sought to play down any impact on the oil deal.

    "All the amounts for all ministries and state departments have been lowered," Zebari said. "There are no negative effects on the deal: it is standing and still ongoing."

    Under the deal, the Kurds committed to export 550,000 barrels per day (bpd) of oil in return for the reinstatement of budget payments to the region, which Baghdad slashed in early 2014.

    Kurdistan's minister of natural resources Ashti Hawrami said in a conference in London on Tuesday that the region had met its target and remained committed to the deal despite receiving only 35 percent of the funds it should have to date.

    Baghdad says the region has failed to hand over the volumes they agreed upon to state-run oil marketing firm SOMO.

    The Kurds say they have not received the monthly 1.2 trillion dinars to which they are entitled in the 2015 budget and have threatened to sell more oil independently to make up for the shortfall.

    Iraqi Prime Minister Haider al-Abadi said in an interview on May 30 that even if the Kurds exported their full share of oil, they could not expect to receive the 1.2 trillion Iraqi dinars to which they say the budget entitles them because it was drawn up when the price of oil was higher.

    The Kurds said they exported an average of 577,621 bpd via pipeline to Turkey in May, of which 448,889 bpd was handed over to SOMO.
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    PIRA: LNG supply challenging coal

    According to the latest analysis from PIRA Energy Group, the LNG supply side seems focused on challenging coal for a lead in the race to join forces with renewable energy to meet incremental power generation demand.

    LNG scorecard

    The supply side, led by LNG players with portfolio volumes looking for end-user markets, seems focused on challenging coal for supremacy in the race to join forces with renewable energy to meet incremental power generation demand. In summary, key figures attending the World Gas Conference in Paris, France, are offering a policy-driven solution to solve a commercial problem.

    European gas prices

    PIRA’s analysis noted: “Sometimes it's difficult to think of European gas markets as a proving ground for the next phase in the evolution of the global gas industry. After all, this market was dragged kicking and screaming into the spot market era, and even today large portions of the market remain relatively uncompetitive by oil market standards.”

    The European gas market has shown that being resistant to change in one area does not prevent change from occurring elsewhere. This has been witnessed in the gas market for power generation over the past five years, and the next phase of testing will occur in the form of integrating more LNG into the supply mix.
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    Glencore in 1 Million Ton Singapore Fuel Spree as Premiums Slump

    Glencore Plc has bought more than 1 million metric tons of fuel oil in Singapore this month as prices tumble from a record premium in the world’s biggest bunker market.

    The company has purchased at least 925,000 tons of 380-centistoke fuel oil and 140,000 tons of the 180-centistoke grade so far in June on the so-called window run by pricing service Platts, a unit of McGraw Hill Financial Inc. Glencore’s cargoes, loading this month and in July, account for about 36 percent of the total transacted volume of 2.95 million tons, data provided by Platts show.

    Francis de Rosa, a Sydney-based spokesman for Glencore, said on Tuesday the company declined to comment.

    Under the Platts process, traders report bids, offers and deals through e-mails, instant messages and phone conversations in a defined period each day, which are then used to create end-of-day price assessments for various commodities and used as benchmarks for transactions around the world.

    “It’s the high volume of cargoes traded recently that has caught the market’s attention,” Harry Tchilinguirian, the London-based head of commodity markets strategy at BNP Paribas SA, said by phone. “The fuel oil inventory data in Singapore indicates very ample supplies.”

    Singapore’s onshore stockpiles of residual fuels, including fuel oil, rose to a record in the week to June 3, according to International Enterprise, a unit of Trade and Industry Ministry. The city-state is the world’s largest port for bunker, or ship fuel, with sales of about 42 million tons in 2014, data from the Maritime and Port Authority show.
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    North American oil production flush with increasing efficiencies

    When OPEC left production unchanged in November last year many understood it to be US or Canadian tight oil producers who would suffer, but thanks to technological advances — to paraphrase Mark Twain — the reports of the death of the tight boom have been greatly exaggerated.

    In October 2014, the average new-well oil production per rig in the Bakken was 486 b/d, in the Eagle Ford it was 599 b/d, and in the Permian 207 b/d. In the ensuing seven months to June, the same basins saw new well output per rig increase to 631 b/d in the Bakken, 720 b/d in the Eagle Ford, and 296 b/d in the Permian, according to the EIA’s Drilling Productivity Report.

    How did the companies do it? The answers differ from company to company and basin to basin, but there were some common themes.

    Several companies reported a reduction in spud to well drilling days, allowing the potential for drilling more wells at the same cost, in turn yielding more production. Oxy has seen a 40% decrease in spud to rig release time in the Wolfcamp area of its Permian holdings from 43 days in 2014 to 26 days in March this year with a target of eventually reaching 16 days, according to the company’s Q1 earnings presentation.

    To that end, the company is using a process called “mechanical specific energy” which looks at the formations to be drilled and designs “exactly how much we should do,” said soon-to-be Oxy CEO Vicki Hollub in its earnings call, including “how fast we should rotate the bit and how much weight we should put on it by interval.”

    Pioneer Natural Resources is experimenting with efficiencies on several fronts in the Permian. For example, it is modifying the casing design in drilling its core Spraberry/Wolfcamp formation operation. Now in test phase, the technique offers $500,000-$1 million savings per well and shaves off 10-15 days per well, Pioneer officials have said.

    Another savings comes from expanded use of dissolvable plugs in the Eagle Ford Shale, the company said. The plugs isolate fracture intervals along horizontal wells, and using them avoids having to drill them out after a well is fractured. The savings is about $300,000 per well and completion time is reduced by three days per well.

    The efficiency gains, big and small, are why internal rates of return for basins across the shale-scape are over 10% even with WTI at $50/b, according to Platts’ Bentek Energy calculations. WTI settled at $59.13/b Friday.

    Those returns are ultimately what matters and keeps tight oil pumping. OPEC’s actions were a wake-up call, but now the tables have turned and, as ConocoPhillips CEO Ryan Lance warned last week, OPEC needs to prepare for even more competition on the “real possibility” the US crude export ban gets lifted.
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    Pioneer Natural Resources to sell 640,000 acres of Colorado oil and gas leases

    Pioneer Natural Resources Co. says it wants to sell 640,000 acres of mineral rights it holds in eastern Colorado.

    That word comes a month after Irving, Texas-based Pioneer announced plans toshut its Denver office and halve its workforce in Trinidad in southern Colorado.

    Pioneer, like many oil and natural gas companies, has been cutting staff, closing offices, and selling “non-core” assets in order to focus on what executives consider to be their best operations as crude oil and natural gas prices continue to be stubbornly low.

    The eastern Colorado oil and gas leases Pioneer has put on the market are in what has been considered an exploration area in recent years, a place where companies sought to replicate the success found in northern Colorado.

    There, mostly in Weld County, companies using horizontal drilling and hydraulic fracturing techniques have produced oil previously trapped in the Niobrara and Codell shale rock formations some 7,000 feet underground, contributing to record-setting oil production in recent years.

    The leases Pioneer wants to sell are in several eastern counties — Bent, Cheyenne, Crowley, Elbert, Kiowa, Kit Carson, Lincoln, Prowers and Washington —and include rights to drill for oil and gas in the Niobrara, Cherokee, Atoka, Mississippean and Morrow rock formations.
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    Alternative Energy

    Egypt's Renewable Energy Drive Gains Steam

    There's a lot of action in Egypt's rapidly developing solar and renewable energy market space. Nearly 5 GW worth of solar power development agreements have been signed so far this year, while Egypt 's New and Renewable Energy Authority (NREA) announced it would partner with 67 companies to see these agreements through to fruition.

    With a young, fast-growing population of some 90 million, Egypt remains one of Africa's largest economies despite recent social and political turmoil. “With social structures now returning to stability...securing an adequate power supply is a top priority as frequent blackouts impede industrial development and stir discontent. Solar and wind power are expected to play a key role in this process,” according to Berlin-based Apricum’s March 2015 Egypt country profile.

    Having launched a renewable energy feed-in tariff (FIT) program and other keystone elements of a strategic plan to develop what's considered a very rich base of renewable energy resources, Egypt's government “is sending a message that Egypt is a stable country for investment,” said Dr. Moritz Borgmann, an Apricum partner.

    The Egyptian government has set the ambitious goal of renewable energy supplying 20 percent of national electricity by 2022 — double the current share. Renewable energy deployment is viewed by the Egyptian government as an equitable and cost-effective means of addressing a range of critical social and ecological issues while at the same time boosting job creation and the national economy.  “That's why [renewable energy] is so high on the government's agenda,” Dr. Borgmann pointed out.

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    2014: Record growth for solar sector

    Last year 40GW was connected worldwide, beating the previous year’s record of 38.4GW, according to SolarPower Europe’s new report.

    China, Japan and the US led the world’s solar market in 2014, while Europe installed 7GW, with the UK leading the way – contributing 2.4GW.

    James Watson, CEO of SolarPower Europe said: “The success of the UK, set to be the largest European market again in 2015, reinforces the evidence solar power is a versatile and cost-efficient energy source in any climate.

    “Solar power could grow by 80% in Europe by 2020.”

    Michael Schmela, SolarPower Europe’s Executive Advisor said: “If today’s global solar momentum continues and being supported by the right frameworks, we could see over half a Terrawatt (TW) of solar power capacity installed by 2020.”

    Solar covers more than 7% of the electricity demand in Germany, Italy and Greece, SolarPower claims.
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    First US Offshore Wind Farm Reaches FID.

    What is likely to become the nation's first offshore wind farm has closed on more than $290 million in financing, which will allow a five-turbine demo of the renewable energy system to be completed.

    The Block Island Wind Farm is a 30-megawatt offshore wind farm that will be located about three miles southeast of Block Island. Being developed by Deepwater Wind, the renewable energy system will initially consist of 5 turbines capable of producing 30 megawatts (MW) of power.

    "We're ecstatic to reach financial close," Deepwater Wind CEO Jeffrey Grybowski said in a statement. "We're full speed ahead and moving ever closer to 'steel in the water.'"

    If all goes well, Deepwater Wind plans to follow the Block Island Wind Farm with the Deepwater ONE project, a 150-200 turbine project also in Rhode Island Sound that will be capable of generating from 900MW to 1,200MW. Deepwater ONE will produce enough electricity to power about 350,000 homes and eliminate more than 1.7 million tons of carbon dioxide emissions annually. That's the equivalent of taking 4 million cars off of the road or 40 million barrels of foreign oil imports.

    Construction of the Block Island Wind Farm has already begun. Alstom, a turbine maker based in France, has already completed fabrication of five 6MW offshore wind turbines for the project, along with 15 windmill blades.

    Deepwater Wind plans to begin offshore installation of the Block Island project this summer. The wind farm is expected to online by the end of 2016.

    Electricity from the wind farm will be transferred to the mainland electric grid via the 21-mile, bi-directional Block Island Transmission System, a submarine cable proposed to make landfall in Narragansett, R.I.

    Deepwater Wind Block Island has received the financing from Mandated Lead Arrangers Societe Generale of Paris, France, and KeyBank National Association of Cleveland, Ohio.

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    New Report Shows Explosive Growth in Residential Solar Installations

    With a majority of Americans considering solar power to be theirNo. 1 energy choice, it’s no wonder more households than ever before are going solar.

    Today, GTM Research and the Solar Energy Industries Association (SEIA) released the latest edition of the U.S. Solar Market Insight Report, which revealed the first three months of 2015 as the best quarter for residential solar system installations — ever.

    In fact, solar represented a whopping 51 percent of all new electric generating capacity brought on-line in the first quarter of 2015, outpacing even natural gas.

    The U.S. installed 1,306 megawatts (MW) of solar photovoltaics (PV) in Q1 2015, marking the sixth consecutive quarter in which the U.S. added more than 1 gigawatt (GW) of PV installations.

    Residential solar led the way, growing by 76 percent over the first quarter of 2014, with 437 megawatts (MW) of residential PV installations. That’s an 11 percent jump over last quarter, the market segment’s previous high-water mark.

    But the other solar market segments showed strength, too. In fact, the industry as a whole is on track for another record year in 2015, with 66,440 total individual solar systems coming on-line this quarter. That means nearly 700,000 systems are now generating solar power in the U.S.

    The non-residential segment installed 225 MW in the first quarter of the year, with five of the six largest non-residential state markets growing over Q1 2014.

    Continuing to carry the largest share of the market, the utility segment installed 644 MW which represents 49 percent of new PV capacity brought on-line in Q1 2015. Despite this being the smallest quarter for the segment since 2013, utility PV installations have now surpassed 500 MW for eight consecutive quarters. What’s more, the report notes that there are now 25 project developers with projects in development of 100 MW or more.

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    Prison labour helps U.S. solar company manufacture at home

    One of the largest companies to manufacture solar panels in the United States uses a surprising resource to keep costs low and compete against producers from China: prison labour.

    Suniva Inc, a Georgia-based solar cell and panel maker that is backed by Goldman Sachs Group Inc, farms out a small portion of its manufacturing to federal inmates as part of a longstanding government program intended to prepare them for life after prison.

    Suniva does not actively publicize its work with the prisons, saying it prefers to talk about its in-house factories in Georgia and Michigan, which handle most of its production and employ more than 350 people.

    But the company's arrangement with Federal Prison Industries, known as Unicor, has helped Suniva move all of its solar panel assembly to the United States from Asia over the last 18 months, said Matt Card, vice president of global sales and manufacturing. The company says prison labor accounts for less than 10 percent of its panel manufacturing.

    By making panels in the United States, Suniva has been able to capture lucrative federal contracts, avoid U.S. government tariffs on Chinese-made panels, and appeal to private sector customers who want American-made products. The company is the third-biggest producer of solar modules that are made in the United States, according to GTM Research.

    "As a U.S. company you have to be very, very smart about where you manufacture," Card said.

    Inmates working for Unicor, which has existed since the 1930s, have long made things like license plates and goods for the military. Solar panels were added to its list of products so that inmates could acquire skills in a new and growing industry and help government efforts to use more renewable energy.
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    Swansea Bay tidal energy scheme wins planning permission

    The energy and climate change secretary has given planning permission to one of the most ambitious and potentially expensive “green” energy schemes ever seen in Britain.

    Amber Rudd agreed the £1bn project to provide power for 150,000 homes from a tidal lagoon at Swansea Bay, although she has become embroiled in a separate but connected row over a super-quarry to provide stone for the Welsh project.

    Mark Shorrock, chief executive of Tidal Lagoon Swansea Bay, said his marine power project was a “game-changer” that should trigger a much wider industry in tidal energy around the UK.

    “The tidal lagoons that follow – at Cardiff, at Newport, elsewhere in the UK and overseas – must each make their own compelling social, environmental and economic case to proceed. But they have a pilot project to guide them and a blossoming technical and industrial network to support them.”

    Planning permission is essential to the Swansea Bay tidal lagoon scheme but its future ultimately depends on a separate decision by the department on subsidies.

    The Conservative party has made clear that it wants to end subsidies for onshore wind schemes but is understood to see opportunities for jobs and exports from the potentially more costly Swansea Bay scheme.

    But energy and climate change and Wales office minister Lord Bourne, who announced the green light for the scheme, said: “We need more clean and home-grown sources of energy, which will help to reduce our reliance on foreign fossil fuels. Low-carbon energy projects like the tidal lagoon in Swansea Bay could bring investment, support local jobs and help contribute to the Welsh economy and Swansea area.”
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    Precious Metals

    Chai Tai Fook Misses, cuts diamond prices.

    how Tai Fook Jewellery Group Ltd. dropped the most in five months after the world’s largest listed jewelry chain reported earnings that missed analyst estimates.

    The stock fell 6.5 percent to HK$8.58 at the close of trading in Hong Kong, the biggest decline since Jan. 9. The benchmark Hang Seng Index rose 0.2 percent.

    Net income at the Hong Kong-based jeweler fell 25 percent to HK$5.46 billion ($704 million) for the year ended March, as sales weakened in China and major markets such as Hong Kong and Macau, it said Friday. That missed the HK$5.9 billion average of 23 analyst estimates compiled by Bloomberg.

    “We are turning more concerned on the company’s outlook,” UBS Group AG analysts led by Spencer Leung wrote in a note on Friday. Hong Kong, which contributed 45 percent of the company’s total, “might have entered a new era as tourism peaked out,” they wrote.

    Chow Tai Fook is cutting prices for some diamond jewelry in Hong Kong as it looks to reduce its gem-set jewelry inventories bloated by the weaker-than-expected sales, according to Catherine Lim, an analyst at Bloomberg Intelligence.

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    Steel, Iron Ore and Coal

    China's top coal firms dismiss merger rumours

    China Shenhua Energy Co., Ltd. and China Coal Energy Co., Ltd., the nation's leading coal producers, on Tuesday dismissed reports of a merger.

    The two companies said neither they nor their parent companies have been informed on the matter of merger from government departments; meanwhile, neither company has talked with other companies or departments about any merger, according to separate statements by the two companies filed to the Shanghai Stock Exchange.

    In the mainland stock market on Tuesday, shares of both companies surged by the daily limit of 10 percent. In Hong Kong, China Shenhua rose more than 3.6 percent; China Coal Energy gained nearly 7.5 percent.

    There were rumours last month that China was considering massive mergers and acquisitions of its biggest state-owned enterprises (SOEs) to prevent in-fighting and build industrial giants able to face global competitors. A total of 112 centrally-administered SOEs were said to likely be cut by more than half to 40.

    However, the State-owned Assets Supervision and Administration Commission later said reports about such massive M&As were "unverified."
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    9 suitors show interest in purchasing US Steel Canada plants reported that more than three dozen suitors have shown interest in United States Steel Corp.'s Canadian operations, according to a document filed by the company's court-appointed monitor.

    According to the report, a financial adviser working for USSC contacted 102 potential interested parties, which included global and North American steel producers, coke producers, steel and metal industry participants, land redevelopers and private equity and financial investors. Of those contacted, 39 executed a nondisclosure agreement with the company and were provided access to its confidential information memorandum.

    U.S. Steel has said it would like to sell its Canadian subsidiary by the end of the year. Multiple letters of intent were received ranging from acquiring one or both of Lake Erie Works and Hamilton Works, according to the report. None of the interested parties were identified.

    USSC went into bankruptcy protection in September and announced its plans to sell operations in Hamilton and Lake Erie. U.S. Steel purchased the former Stelco Inc. operations in 2007.
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    POSCO named world’s most competitive steel maker’ for 6 consecutive years -

    POSCO has ranked first in the “world’s most competitive steel companies” that are selected by World Steel Dynamics, a global steel market analysis agency, for six consecutive years. As WSD made the list twice in 2010 and 2013, POSCO has ranked No. 1 in the rankings for eight consecutive events.

    WSD announced on Tuesday the rankings of 36 steel companies worldwide by evaluating 23 items, including production volume, profitability, technological innovation, pricing capacity, cost cutting, financial soundness, and acquisition of raw materials as of June in New York.

    POSCO received high marks due to its activities to boost fundamental competitiveness in steel, including sale of high value-added products and expansion of technology-based solutions, and acquired 7.91 points out of possible 10 points.

    POSCO was trailed by Nucor of the US, Nippon Steel and Sumitomo Metal of Japan, Gerdau of Brazil, and Severstal of Russia. Hyundai Steel of Korea ranked ninth this year again after last year.

    POSCO Chairman Kwon Oh-joonn is emphasizing solution marketing as way to distinguish itself from rival firms in order to overcome the economic recession. This refers to activities to deliver products that consumers want, and provide technology that customers can most efficiently utilize, and thereby increase the value of products in the end.

    A POSCO source said, “Sales in projects that adopted solution marketing targeting industrial customers, including shipbuilding, home electronics, and construction, in the first quarter (January to March) of this year increased 9 percent from the fourth quarter of last year (October – December), while sales of ‘world premium’ product group also gained 8 percent during the same period.”
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