Mark Latham Commodity Equity Intelligence Service

Thursday 19th January 2017
Background Stories on www.commodityintelligence.com

News and Views:

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    Macro

    China vows to deepen energy reform


    China will deepen reforms in the energy industry to improve energy consumption structure and cut carbon emissions in the years through 2020, the National Development and Reform Commission (NDRC) said on January 17.

    By 2020, China expects an annual energy consumption of below 5 billion tonnes of coal equivalent, or TCE — a unit of energy generated by burning one tonne of coal — from 4.3 billion TCE in 2015. This will ensure that the average annual growth rate is kept at below 3% in the coming years, the NDRC's Five-Year (2016-2020) energy plan envisaged.

    China's energy consumption growth is set slower than the previous five years as "the main energy-using products such as steel and nonferrous metals will post negative growth" as the authorities promote advanced industries and green development, the report said.

    But the domestic energy generation will be sufficient to ensure energy security. Of the 5 billion TCE, "at least 80%, or 4 billion, should be generated by domestic producers rather than by imports," the report said.

    Reduction of carbon emissions will be achieved by boosting the development of non-fossil fuels and enhancing energy consumption efficiency.

    By 2020, the consumption of coal should be cut to below 58% of the total energy use from 64% in 2015, while the proportion of non-fossil fuels should rise above 15% from 12% in 2015. Natural gas should account for at least 10% of the energy consumption, the report added.

    To enhance energy consumption efficiency, construction of scattered and smart distribution networks equipped with intelligent sensors will be encouraged, the report said.

    "Upon completion, energy consumption per unit of GDP would drop 15% from 2015 while carbon emissions would be slashed by 18%," the report said.

    http://www.sxcoal.com/news/4551456/info/en

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    Iran's Zarif wants cooperation with Saudi over Syria and Yemen


    Jan 18 Iran and Saudi Arabia should be able to work together to help end conflicts in Syria and Yemen, after successfully cooperating over Lebanon last year, Iran's foreign minister said.

    "I do not see any reason why Iran and Saudi Arabia should have hostile policies towards each other. We can in fact work together to put an end to miserable conditions of the people in Syria and Yemen and Bahrain and elsewhere in the region," Mohammad Javad Zarif told the World Economic Forum.

    "Iran and Saudi Arabia were able to actually stop impeding the process of the presidential election in Lebanon. We have a success story," Zarif said in Davos on Wednesday.

    Michel Aoun, a Christian leader, was elected president of Lebanon last week. Aoun is a close ally of Lebanon's Hezbollah, an Iran-backed Shi'ite Muslim group, and Iran welcomed Aoun's election as a victory for Hezbollah.

    Sunni Saudi Arabia and Shi'ite Iran also back opposing factions in Syria, Yemen, Iraq and Bahrain.

    http://www.reuters.com/article/iran-saudi-zarif-idUSU8N18R01E
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    Bitcoin China Tumbles After PBOC Finds Platform "Violations"


    Bitcoin prices in China had fallen last week after the PBOC began to investigate platforms and now, as Beijing News reports, margin trading and short selling violations were found at Bitcoin exchanges OkCoin and Huobi.com after preliminary inspections, according to PBOC officials.

    Violations were also found at the BTCC online bitcoin exchange, including unauthorized businesses and illegal margin funding, Shanghai Securities News says on cnstock.com, citing officials at the PBOC Shanghai branch.

    http://www.zerohedge.com/news/2017-01-18/bitcoin-china-tumbles-after-pboc-finds-platform-violations

    Leveraged trading in bitcoins halted in China

    PBOC orders major trading platforms to halt leveraged trading business, and strengthen internal systems to curb money laundering

    http://www.scmp.com/business/banking-finance/article/2063514/leveraged-trading-bitcoins-halted-china
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    U.S. Industrial Production Rose 0.8% in December


    U.S. industrial output rose at the fastest pace in more than two years in December as activity surged at utilities and manufacturers inched ahead, the latest sign of steady but unspectacular economic growth.

    Industrial production—a measure of output at factories, mines and utilities—jumped 0.8% from a month earlier, the Federal Reserve said Wednesday, the biggest increase since November 2014. Economists surveyed by The Wall Street Journal expected a 0.7% increase.

    Capacity use, a measure of slack in the economy, increased 0.6 percentage point to 75.5%, in line with estimates.

    Manufacturing output, the biggest component of industrial production, climbed 0.2% in December, led by gains for primary metals and autos.

    Consumer Sentiment Falls But Remains Near 13-Year High Jan. 13, 2017
    U.S. Jobless Claims Rise Modestly to Start Year Jan. 12, 2017

    Factory activity had been stagnant for much of 2016 but appears to have perked up a little in the final month of 2016. Still, a long stretch of lackluster growth left December output only 0.2% ahead of the same month a year ago.

    A separate gauge of manufacturing finished 2016 at its highest mark in two years. The Institute for Supply Management earlier this month said its purchasing managers index rose amid stronger household demand for goods and a brighter consumer outlook following November’s presidential election.

    Wednesday’s report showed output by utilities, largely a reflection of the weather, rose 6.6% last month, the strongest gain since December 1989. The move was “largely because of a return to more normal temperatures following unseasonably warm weather in November,” the Fed said.

    Mining-sector output was unchanged in December. The oil-and-gas industry posted gains that were offset elsewhere.

    Overall industrial production has gained 0.5% over the past 12 months amid small gains for manufacturing, setbacks for miners and a big rise in the utility sector.

    Capacity use remains well below the historical average of 80%.

    http://www.wsj.com/articles/u-s-industrial-production-rose-0-8-in-december-1484749489

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    Oil and Gas

    OPEC sees smaller oil glut, upbeat on non-OPEC cut compliance


    OPEC signaled a falling oil supply surplus in 2017 on Wednesday as the producer group's output declines from a record high and outside producers show positive initial signs of complying with the first joint supply-reduction deal since 2001.

    The Organization of the Petroleum Exporting Countries, excluding Indonesia, pumped 33.085 million barrels per day (bpd) last month, according to figures OPEC collects from secondary sources, down 221,000 bpd from November, OPEC said in a monthly report.

    The November OPEC production figure was the highest since at least 2008.

    As well as reporting lower output from its own members, OPEC cut its forecast of supply in 2017 from non-member countries following pledges by Russia and other non-members to join OPEC in limiting output.

    OPEC now expects non-OPEC supply to rise by 120,000 bpd this year, down from growth of 300,000 bpd last month, despite an upwardly revised forecast of U.S. supply.

    http://www.reuters.com/article/us-opec-oil-idUSKBN1521JR

    OPEC REPORT IMPLIES GLOBAL OIL MARKET WILL SEE 985,000BPD AVERAGE SURPLUS IN 2017, VERSUS 1.24 MILION BPD SURPLUS IMPLIED IN PREVIOUS REPORT

    @DeItaOne
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    Lukoil to adjust 2017 output plan in line with OPEC deal: TASS


    Russian oil producer Lukoil will adjust its oil output plan for 2017 to conform with a global deal on cutting production, TASS news agency quoted Lukoil Chief Executive Vagit Alekperov as saying on Wednesday.

    "How can we maintain (current production plans) if we are taking part in the curbing of output?" Alekperov was quoted as saying. "We will abide by all the decisions that the energy ministry passed on to the oil companies."

    Alekperov did not give any forecasts for output volumes, TASS reported.

    http://www.reuters.com/article/us-russia-oil-opec-lukoil-idUSKBN1521FZ
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    Rosneft raises 175 mln euros from Saras stake sales-sources


    Russia's Rosneft has sold its 12 percent stake in Italian refiner Saras for 1.53 euros a share, three market sources said on Wednesday, raising around 175 million euros ($187 million).

    Rosneft started reducing its stake in Saras in October 2015, selling a 9 percent holding.

    "Since October 2015 there had been an overhang risk on the (Saras) stock ... which Rosneft's exit is now removing," broker ICBPI said.

    At 0933 GMT, Saras shares were down 4 percent at 1.584 euros. Traded volumes were more than six times the past month's daily average.

    The price range for the share placing with investors was between 1.5 euros and Tuesday's closing price of 1.651 euros a share, one of the sources said.

    ICBPI said it would raise its recommendation on Saras shares to "neutral" from "sell" if the share price fell to the bottom end of the range.

    Russia's biggest oil producer agreed in 2013 to buy 21 percent of Saras, which is 50-percent owned by Italy's Moratti family, in a move that was set to strengthen Rosneft's commitment to the Mediterranean area.

    A source familiar with the matter said the stake in Saras was now not deemed strategic for Rosneft because there were no real industrial synergies.

    The source said the Russian giant was streamlining its various shareholdings in light of a reorganisation after commodities trader Glencore and the Qatar Investment Authority bought a 19.5 percent stake in the company from the Russian state.

    http://www.reuters.com/article/rosneft-saras-price-idUSL5N1F820L
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    Argentina, Bolivia's state oil companies push ahead on gas project


    Argentina and Bolivia's state oil companies are to push forward on plans to explore and produce natural gas together in eastern Bolivia, helping to boost supplies for exporting to Argentina.

    Argentina's YPF and Bolivia's YPFB plan to explore Charagua, a 99,250 hectare block with an estimated 2.7 Tcf of gas resources in the department of Santa Cruz, the companies said.

    YPF chairman Miguel Gutierrez and his YPFB counterpart, Guillermo Acha, signed a 40-year oil services contract for the project in La Paz.

    If a commercial find is made, the companies will form a consortium to invest more than $1.1 billion developing the block, with expectations of reaching production of 10.2 million cu m/d, YPFB said.

    YPF said the production would help meet demand in Argentina, which ran a 30% deficit in 2016.

    "For YPF, exploration is strategic and fundamental for creating new investment projects to sustain the supply of natural gas to Argentina," Gutierrez said.

    Argentina imported an average 30.8 million cu m/d in the first 11 months of 2016, split between deliveries from Bolivia and the global LNG market, plus five million cu m/d in regasified supplies from LNG terminals in Chile, between May and August, according to data from Argentina's energy ministry.

    Argentina could not import more because of a lack of regasification capacity, and because of slower-than-expected production growth in Bolivia.

    Argentina plans to reduce gas imports as soon as 2021, starting with LNG, as it puts into development is huge unconventional resources in plays like Vaca Muerta. Even so, Argentina's energy minister, Juan Jose Aranguren, has said imports from Bolivia would likely continue for longer, given the lower price compared with LNG and the ease of supplying its northern provinces from Bolivia instead of Vaca Muerta, in southwestern Argentina.

    Argentina produced an average 123.2 million cu m/d in the first 10 months of 2016, according to the Argentine Oil and Gas Institute, an industry group.

    http://www.platts.com/latest-news/natural-gas/buenosaires/argentina-bolivias-state-oil-companies-push-ahead-21624990
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    China Oil Stats 2016


    Avg Buy Price: $41.28/barrel 
    Imports: 7.627Mbpd 
    Spent: $114.681B 
    Production: 3.995Mbpd 
    Added To Storage: 231MB

    @TankerTrackers
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    Woodside posts record annual LNG production


    Australian LNG player Woodside said its production of the chilled fuel reached a record high in 2016 rising 6 percent from the year before.

    Woodside’s 2016 LNG production hit 63.7 MMboe (million barrels of oil equivalent), the company said in its full-year report on Thursday.

    Production of LNG is expected to rise to 63–66 MMboe in 2017, helped by the anticipated start-up of Chevron’s $US34 billion Wheatstone LNG project in Western Australia.

    Woodside said it expected an increase in LNG contract prices in the first three months of this year due to “the strengthening oil price and lag in oil-linked pricing formulas for existing LNG contracts.”

    Woodside CEO Peter Coleman said the company begins 2017 in a strong position.

    “Our business margins have improved through 2016 and our 2017 budget is free cash flow neutral at US$35 per barrel.”

    According to Coleman, the company’s production performance was “outstanding.”

    “LNG production system reliability has now exceeded ninety-nine per cent for a second consecutive quarter,” Coleman said

    “The Wheatstone project is approaching LNG Train 1 construction completion, all modules are on-site and final hook-up and commissioning has commenced. We look forward to adding production from Wheatstone in the middle of this year.”

    Wheatstone is a key component of Woodside’s near-term growth strategy and would contribute more than 13 MMboe of annual production once both trains are fully operational, Coleman said.

    Uncommitted cargoes

    Woodside noted in the report that five uncommitted 2017 LNG cargoes were contracted under a mid-term sales agreement during the fourth quarter of 2016.

    According to the company, negotiations for a further 13 cargoes in 2017-18 are currently underway.

    http://www.lngworldnews.com/woodside-posts-record-annual-lng-production/
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    Höegh LNG orders new FSRUs at South Korean shipyards


    Höegh LNG on Wednesday signed shipbuilding contracts with Samsung Heavy Industries and Hyundai Heavy Industries for two FSRUs.

    The contract with SHI follows the letter of intent signed December 7, 2016, for one FSRU and three optional units. The FSRUs will have a storage capacity of 170,000 cubic meters and a regasification capacity of 750 MMscf/day, with full trading capabilities.

    According to Höegh LNG’s statement, the firm FSRU is scheduled for delivery in May 2109, while the optional units would be delivered with six months intervals from the delivery of the firm vessel.

    In addition to firming up the deal with SHI, Höegh LNG signed a shipbuilding contract with Hyundai Heavy Industries for an FSRU for delivery in the fourth quarter of 2018.

    The unit will have a storage capacity of 170,000 cubic meters and a max regasification capacity of 1,000 MMscf/day and with full trading capabilities.

    Höegh LNG reminded that it has signed two 20-year FSRU charter deals in December, one with Quantum Power for the Tema LNG project in Ghana and the other with Global Energy Infrastructure Limited (GEIL) for the LNG import project in Port Qasim near Karachi, Pakistan. Both projects are planned to begin operations in the second quarter of 2018.

    Further to the orders, the company decided to allocate its FSRU #7 (hull number 2909) currently under construction at HHI to serve the QP charter in Ghana. The FSRU #9 (hull number 2909) also under construction at HHI is set to serve the GEIL charter in Pakistan.

    The initial period for the GEIL charter commencing in the second quarter of 2018 would be covered by an interim FSRU from Höegh LNG’s portfolio until the new FSRU is delivered, the company said.

    Commenting on the events, Höegh LNG’s president and CEO, Sveinung Støhle said, “with this order, Höegh LNG now has 10 large size newbuilt FSRUs in operation or under construction.”

    http://www.lngworldnews.com/hoegh-lng-orders-new-fsrus-at-south-korean-shipyards/
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    IEA Sees Significant Gains in U.S. Shale Oil as Prices Rise


    Oil-price gains will trigger a “significant” increase in U.S. shale output as OPEC and other producers rein in supply, according to the head of the International Energy Agency.

    “U.S. shale-oil production will definitely react strongly,” Executive Director Fatih Birol said Wednesday in a Bloomberg Television interview in Davos, Switzerland. At $56 to $57 a barrel, “a lot of shale plays in the United States would make perfect sense to produce.”

    Birol’s comments suggest that the IEA has become more optimistic about the outlook for U.S. production. Last month, the Paris-based agency said it expected U.S. tight oil -- as shale is also known -- to rise only “marginally” in 2017. The policy adviser to 29 nations will release its next short-term oil outlook on Thursday.

    Oil prices have risen about 20 percent since the Organization of Petroleum Exporting Countries reached a deal to curtail supply last year. The Nov. 30 agreement prompted a surge in activity in the U.S. -- not an OPEC member -- where oil and gas producers increased drilling the most since April 2014. Benchmark Brent crude traded at $54.65 a barrel at 10:06 a.m. in London on Wednesday.

    The oil industry is becoming more cost-efficient and a “big chunk” of global output is now profitable at $50 to $55 a barrel, Birol said in a later interview, citing Brazil, Mexico and China as countries that will also boost production. There’ll be “lots more” supply in late 2017 or early 2018, he said.

    “This will make it more difficult for OPEC to achieve its goal of restoring the balance on the oil market by means of production cuts,” said analysts at Commerzbank AG led by Eugen Weinberg in Frankfurt.

    In the first week of January, U.S. crude production rose to 8.95 million barrels a day, the highest level since April. Oil-rig use expanded to 529 in the prior week, a 67 percent increase from the 2016 low of 316.

    “At $50, $55, we’ve already seen a lot of activity,” Birol said. “U.S. oil production will continue to increase in significant terms.”

    https://www.bloomberg.com/news/articles/2017-01-18/iea-sees-significant-increase-in-u-s-shale-oil-as-prices-rise
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    API Reports Huge Gasoline Build crude fall

    API Reports Huge Gasoline Build crude fall

    The American Petroleum Institute (API) reported a larger than expected draw in commercial crude supplies in its Wednesday report.

    Analysts expected a one-million-barrel draw overall, although the API reported a 5.042 million barrel decline in inventories.

    “Following last week's surge in crude and product inventories, API reported a much bigger than expected drawdown in crude inventories ( versus -1mm expectations),” the economics blog said. “While this spiked WTI prices, they fell back amid massive builds in gasoline (9.75mm) and distillates.”

    Supplies at Cushing, Oklahoma declined twice as much as expected, with a one million barrel decrease in ready crude levels.

    Gasoline inventories saw a significant 9.75 million barrel increase – almost as much as the one year high reported two weeks ago.

    Distillates saw a 1.17 million barrel drop from last week’s levels.

    Last Tuesday, API showed a 1.5-million-barrel build in its data release. The crude inventory build sent oil prices downward, even though a modest 1.2 million barrel build had already been expected. Still, this is the first increase to crude inventories in over 8 weeks.

    http://oilprice.com/Latest-Energy-News/World-News/Oil-Stuck-After-API-Reports-Huge-Gasoline-Build.html
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    Plains increases Permian crude takeaway with expansion of Cactus Pipeline


    Plains All American is expanding its Cactus Pipeline to 390,000 b/d, increasing takeaway capacity for Permian Basin crude into the port of Corpus Christi, Texas, the midstream company said Wednesday.

    Rising production of light, sweet Permian crude is at odds with the needs of US Gulf Coast refineries, which prefer heavier crude, making it a candidate for export. Increased takeaway capacity of Cactus also expands the crude's reach to local refineries.

    The expansion is expected to be completed by the third quarter of 2017, the company said in a statement.

    The 310-mile Cactus line currently carries 250,000 b/d of crude from McCamey, Texas, southeast to Gardendale, where it connects with the Eagle Ford Joint Venture pipeline. That pipeline is jointly owned by Plains and Enterprise Product Partners.

    Crude output from the Permian Basin is forecast to rise by 53,000 b/d in February to 2.18 million b/d, Energy Information Administration data shows. Platts Analytics Bentek Energy projects volumes to rise by 244,000 b/d in 2017 to reach 2.27 million b/d, assuming a the rig activity stays constant.

    "There is risk of [the rig count] moving higher with prices," said Jenna Delaney, Bentek senior analyst.

    Current pipeline takeaway capacity from the Permian to the Gulf Coast is 750,000 b/d. The expansion of the Cactus combined with the startup of Enterprise's Midland-to-Sealy pipeline in mid-2018 will increase the region's pipeline away capacity by 440,000 b/d to 1.19 million b/d at that time.

    Besides access to the Eagle Ford pipeline, crude oil delivered on the Cactus has access to dock facilities in Corpus Christi and neighboring Ingleside, facilitating export of the crude if the economics work to ship the crude out of the country.

    Access to joint venture's dock facility in Corpus Christi and Ingleside, as well as dock capacity at other regional export facilities is available, including two 200,000 b/d Ingleside facilities owned by Occidental and Flint Hills, respectively.

    Crude exports from the US Gulf Coast averaged 245,000 b/d in October, according to most recent data from the EIA. This is down from the 470,000 b/d peak export level in September. The spread between West Texas Intermediate and Brent futures prices narrowed to average $1.45/b in October from September's average spread of $2.02/b.

    Some of the rising production of light, sweet crude oil from the Permian, Midland and San Juan basins of the Permian will push out imports of light, sweet crude by USGC refiners, replacing dwindling volumes of imports.

    Imports of light, sweet crude into the USGC averaged 2.2 million barrels in 2015, down from 100 million barrels in 2012, EIA data shows.

    At a disadvantage are land-locked Midland refiners, who have seen higher crude prices as takeaway capacity increases.

    WTI at Midland averaged $53.38/b so far this year, putting it at 76 cent/b premium over WTI at Cushing, Oklahoma, the price point of the NYMEX crude futures contract, S&P Global Platts price assessment data showed. Last year, WTI Midland traded at an average 7 cent/barrel discount to Cushing barrels.

    However, refiners in Corpus Christi and Three Rivers have benefited. The Eagle Ford JV Pipeline has a capacity of 660,000 b/d and serves the Three Rivers and Corpus Christi markets, which includes 835,000 b/d of refining capacity at four refineries.

    http://www.platts.com/latest-news/oil/newyork/plains-increases-permian-crude-takeaway-with-21640087

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    Pipeline company Kinder Morgan's revenue misses estimates


    Kinder Morgan Inc reported lower-than-expected quarterly revenue for the ninth straight quarter as its pipelines transported lower volumes of oil and gas.

    Pipeline companies, once seen as insulated from commodity price swings due to fixed-fee contracts, were hit hard by a more than 60 percent slump in oil prices since mid-2014 as cash-strapped oil and gas companies renegotiated contracts.

    Kinder Morgan said natural gas transport volumes fell 2 percent in the quarter, however it expects future natural gas infrastructure to grow due to higher demand from gas-fired power generators, exports to Mexico and growth in the U.S. petrochemical industry.

    The company reported a net profit attributable to shareholders of $170 million, or 8 cents per share, in the fourth quarter ended Dec. 31, compared with a loss of $721 million, or 32 cents per share, a year earlier.

    Kinder Morgan said it paid $988 million lesser in charges in the fourth quarter compared to a year earlier. The year-ago quarter included a $1.15 billion impairment charge.

    According to Thomson Reuters I/B/E/S, the company earned 18 cents per share on an adjusted basis, in line with analysts' average estimate.

    Revenue fell to $3.39 billion from $3.64 billion, missing analysts' average estimate of $3.54 billion.

    http://www.reuters.com/article/us-kinder-morgan-de-results-idUSKBN1522ZH

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    Dakota Access company files motion to halt environmental study


    Energy Transfer Partners has filed a motion to bar the U.S. Army Corps of Engineers from initiating an environmental study for its controversial Dakota Access pipeline crossing at Lake Oahe in North Dakota.

    Energy Transfer Partners requested on Monday that a U.S. District Court judge for the District of Columbia stop the Corps from initiating the environmental impact statement process until a ruling has been made on whether the company already has necessary approvals for the pipeline crossing.

    The Corps said it would publish a notice in the Federal Register on Wednesday stating its intent to prepare an environmental impact statement for the requested easement at Lake Oahe. The notice will invite interested parties to comment on potential issues and concerns, as well as alternatives to the proposed route, which should be considered in the study.

    The Corps in December denied Energy Transfer Partners an easement to drill under Lake Oahe, a water source upstream from the Standing Rock Sioux reservation that has been the focus of protests. Members from the Standing Rock Sioux and others say the line could damage drinking water and desecrate sacred grounds.

    In July 2015, the Corps had granted Energy Transfer Partners permission for its proposed pipeline crossing at Lake Oahe.

    A representative from Energy Transfer Partners did not immediately respond on Tuesday to a request for comment.

    The 1,172-mile (1.885 km) Dakota Access Pipeline will transport 570,000 barrels per day of crude from the Bakken shale of North Dakota to the Midwest.

    The Standing Rock Sioux said the tribe was confident the environmental impact statement would support its claim that the pipeline cannot cross under the lake, adding that the best way to analyze new routes is through an environmental impact statement.

    Comments on the scope of the environmental impact statement will be due no later than Feb. 20, the Army Corp said.

    http://www.reuters.com/article/us-north-dakota-pipeline-environment-idUSKBN15137P
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    Base Metals

    Philippines cancels permits of four more mining projects in green campaign


    The Philippines has canceled the environmental permits for four more mining projects, including one planned nickel venture, as the world's top nickel ore supplier deepens a months-long crackdown on the resources sector.

    The Southeast Asian nation has been reviewing hundreds of environmental compliance certificates (ECCs) including those granted to mines. That is separate from an environmental audit of the country's 41 operating mines whose results are set to be released on Jan. 31.

    The four revoked ECCs include one for Norwegian firm Intex Resources' proposed $2.5-billion nickel mine on Mindoro island in the central Philippines.

    Environment and Natural Resources Secretary Regina Lopez told a media briefing the project would damage the environment as it would be located on a watershed.

    "Everyone there, the politicians, the church, the academe, they vehemently did not want mining there," she said.

    A member of staff at Intex's Manila office declined to make immediate comment, saying the branch was waiting for an official response from headquarters in Norway.

    Lopez, a committed environmentalist, in December canceled the ECCs of three nickel mines as part of the clampdown.

    Firebrand Philippine President Rodrigo Duterte has backed Lopez's aggressive campaign against mines causing environmental harm, warning shortly after taking office in June last year that the country could survive without a mining industry.

    The three other ECCs canceled on Wednesday were for a gold mine, a coal producer and an iron and copper project.

    A separate mining audit has led to the suspension of 10 mines with 20 more at risk. The clampdown stoked worries about supply of nickel from the Philippines last year, helping spur a 14-percent rally in global prices.

    The Philippines' nickel ore shipments to top market China dropped 11.6 percent to 28.8 million tonnes in January-November.

    http://www.reuters.com/article/philippines-mining-idUSL4N1F828V
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    Market deficit to force sixfold increase in US, Mexico aluminium imports: Dubal


    The US must boost its imports of primary aluminium products sixfold over the next seven years to meet growing demand from the automotive and construction sectors, an executive with Middle East producer Dubal said Tuesday.

    US primary aluminium output fell to a 66-year low of 600,000 mt in 2016 because of rising labour/energy costs and global competition, causing many smelters to close, Dubal America managing director Adel Abubakar said in a presentation at the S&P Global Platts Aluminium Symposium 2017 in Scottsdale, Arizona.

    At the start of 2017, the US had five operating primary aluminium smelters compared with 32 in 1980.

    Combined US and Mexican primary aluminium production totalled 900,000 mt last year, down from 2.5 million mt in 2005, he said, citing figures from research firm Harbor Intelligence.

    In 2017, the US is expected to experience a primary aluminium deficit of 4.86 million mt, while Mexico is expected to see a deficit of 890,000 mt.

    "As a result, North America will need to increase imports of primary products by sixfold over the next seven years," Abubaker said.

    In contrast to the US and Mexico, Chinese primary aluminium production totalled 33.1 million mt in 2016, up from 7.7 million mt in 2005. Primary production from the Middle East totalled 5.7 million mt in 2016, up from 1.8 million mt in 2005.

    That trend is expected to continue for the next several years, with the Middle East and Asia accounting for most of the growth in primary aluminium production, he added.

    Global demand for primary aluminium will continue to rise because of growing working-age populations in emerging economies that consume aluminium products, continued urbanisation, industrialisation, rising incomes in the developing world and growing demand from key sectors like transportation, Abubakar added.

    Primary aluminium demand from the building and construction sector will continue to expand over the next few years, more than offsetting softening demand from the tractor trailer market, he said.

    Demand for primary aluminium from the North American building and construction sector is expected to grow 4.5% in 2017 and 2% in 2018. Demand from the durable goods sector is expected to grow 4% in 2017 and 3.9% in 2018.

    Moreover, soft demand seen in the global automotive sector probably ended last year, Abubakar said.

    Challenges in meeting the demand for imported primary aluminium include trade protectionist policies, higher alumina and energy costs, low profit margins, turmoil in transoceanic shipping industry and strong demand from the Middle East, he said.

    http://www.platts.com/latest-news/metals/scottsdale-arizona/market-deficit-to-force-sixfold-increase-in-us-21624994

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    Steel, Iron Ore and Coal

    China to cap coal consumption at 4.1 bln T by 2020


    China aims to cap coal consumption at 4.1 billion tonnes by 2020 and use cleaner fuel, said the energy sector's five-year plan for 2016-2020, released by the National Development and Reform Commission and the National Energy Administration.

    By 2020, the share of coal in the country's energy mix should fall below 58% from 64% in 2015, non-fossil fuels' share will rise to more than 15%, and that of natural gas should reach 10%.

    The push for cleaner energy is partly a response to smog in northern China, which prompted the government to step up efforts on the war against pollution.

    Smog triggered red alerts in more than 20 cities at the beginning of the year. Although the breakdown of the smog's sources -- including weather conditions, motor vehicle exhaust and industrial waste -- varies across China, winter coal consumption is a major factor.

    Substances directly related to coal burning are health hazards, including sulfates and soot, major components of PM2.5, airborne particles smaller than 2.5 microns in diameter.

    http://www.sxcoal.com/news/4551498/info/en
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    China to punish two coking enterprises for excessive pollution


    China's environmental authorities will punish two coking enterprises in Shanxi Province for excessive discharge of pollutant, according to the Ministry of Environmental Protection.

    The ministry's online monitoring system detected that two coking plants affiliated with Shanxi Coking Group and Shanxi Sanwei respectively, have discharged excessive air pollutants since the beginning of the year.

    Following heavy air pollution alerts in 14 cities, including Shijiazhuang in Hebei, Linfen in Shanxi, Heze in Shandong and Hebi in Henan, the ministry sent inspection groups to the cities, toughening scrutiny on polluters.

    Inspectors found that six production lines of Shanxi Coking Group failed to install or operate desulfurization and denitration facilities.

    The ministry has ordered the provincial environmental protection authorities to investigate those enterprises and publicize the punishment. Those who tampered or falsified monitoring data will be taken into custody, according to the ministry.

    Inspectors also found that some enterprises failed to take effective measures following alerts, or their measures were impracticable, and that small and scattered factories in Hebei had illegal emission of smoke and dust.

    Smog hit parts of northern and central China recently. People in affected regions were asked to take precautions and choose public transport services to cut emission and mitigate against pollution.

    Severe smog triggered red alerts in more than 20 cities at the beginning of 2017. When authorities issue red alerts, certain manufacturers are required to cut production and heavily polluting vehicles are banned from roads.

    China has a four-tier color-coded warning system for severe weather, with red the most serious, followed by orange, yellow and blue.

    http://www.sxcoal.com/news/4551457/info/en
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    Shanxi Jincheng suspends coal mines for Spring Festival


    Jincheng city of northern China's Shanxi province ordered all local coal mines to suspend production on January 20 for the Spring Festival, said the municipal government.

    Production resumption inspection will be started from February 3, after the end of Spring Festival holidays.

    The municipal government asked coal mines to carry out self-inspection before holidays to ensure safety during the festival; those operating quietly will face severe punishment.

    http://www.sxcoal.com/news/4551471/info/en
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    US watchdog calls Peabody bankruptcy plan fees 'exorbitant'


    The US government's bankruptcy watchdog objected on January 18 to certain parts of Peabody Energy Corp's plan to slash $5 billion of debt and exit Chapter 11, calling a proposed $240 million in transaction fees "exorbitant," Reuters reported, quoting court papers.

    Peabody Energy, the world's largest private sector coal producer, has proposed a $750 million rights offering, a $750 million private placement and the issuance of new common stock as part of a reorganization plan unveiled last month.

    In a court filing, the US Trustee said the fees to be paid in those transactions would transfer millions of dollars of funds from the bankruptcy estate before the reorganization plan is approved by creditors and the court.

    "Plan voting is at the core of the reorganization process and should not be eviscerated by a deal struck by powerful well-connected parties," the report citing the watchdog as said in a filing with the US Bankruptcy Court in St. Louis.

    The US Trustee, which oversees the administration of bankruptcy cases, said Peabody's request for court approval of those proposals would improperly lock in payment terms before the whole reorganization plan is approved.

    Peabody spokesman Vic Svec said they're evaluating the statements of the trustee and intend to respond appropriately.

    Peabody hopes to exit bankruptcy around a year after its April, 2016 Chapter 11 filing with a plan that has the approval of most but not all of its creditors.

    Shareholders have objected to the reorganization plan and have requested an official voice in the $8 billion bankruptcy case, arguing that a rise in coal prices means the company is valuable enough to repay shareholders who normally lose their money in a bankruptcy.

    A hearing on the shareholders' request is scheduled in St. Louis on January 19, while the US Trustee's objections will be heard at a hearing on January 26.

    http://www.sxcoal.com/news/4551509/info/en
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    Indian state ports' Dec coal imports drop 12.81pct on year


    India's 12 major government-owned ports imported 11.21 million tonnes of coal in December, falling 12.81% year on year but up 6.82% from November, according to latest data released by the Indian Ports Association (IPA).

    Coking coal shipments received by the 12 ports in December were 3.65 million tonnes, dropping 6.17% from a year ago but up 2.44% from the month prior, the data showed.

    Thermal coal imports at the ports dropped 15.69% from a year ago but gained 9.08% from November to 7.56 million tonnes in November.

    Paradip port on the east coast handled the highest volume of thermal coal in the month at 1.83 million tonnes, declining 49.57% from a year ago.

    Mormugao port handled the highest coking coal shipments at 0.78 million tonnes, rising 35.17% from 0.58 million tonnes in the same month last year.

    The 12 ports are Kolkata, Paradip, Visakhapatnam, Ennore, Chennai, VO Chidambaranar (Tuticorin), Cochin, New Mangalore, Mormugao, Mumbai, Jawaharlal Nehru Port Trust (JNPT) and Kandla.

    Cochin, JNPT and Chennai ports did not import any coal cargoes in November.

    By end-December, India's thermal coal imports dropped 9.48% year on year to 70.55 million tonnes during 2016-17 fiscal year (April-March), and its coking coal imports slid 6.35% on the year to 36.25 million tonnes over the same period.

    http://www.sxcoal.com/news/4551492/info/en

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    China Coal Energy 2016 coal output slides 15.2pct


    China Coal Energy Co., Ltd, the listed arm of China National Coal Group, produced 80.99 million tonnes of commercial coal in 2016, sliding 15.2% year on year, the company said in a statement late January 17.

    During the same period, the company sold 133.06 million tonnes of commercial coal, falling 3.4% from the year before, with sales of self-produced commercial coal dropping 17.2% to 80.77 million tonnes.

    In December, China Coal Energy produced 6.63 million tonnes of coal, dropping 15.9% from the year prior and 3.1% from November.

    The company's commercial coal sales decreased 25% year on year to 11.50 million tonnes in December, up 10.2% month on month due to increased seasonal demand, the company said.

    Of the December sales, 6.73 million tonnes were self-produced commercial coal, dropping 36.1% from the preceding year but increasing 4.2% from November.

    Analysts forecast the company to swing to a 9.7 yuan/t net profit last year, with coal price climbing 12% from the year-ago level.

    http://www.sxcoal.com/news/4551480/info/en
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    Vietnam 2016 coal imports soar 92pct YoY


    Vietnam imported 13.33 million tonnes of coal in 2016, soaring 92.4% from a year earlier, showed customs data released on January 17.

    Australia was the largest exporter to Vietnam with 4 million tonnes last year, up 1.78 times from a year ago. Russia followed with exports of 3.69 million tonnes to Vietnam, up 1.6 times year on year. The third biggest supplier was Indonesia, exporting 2.95 million tonnes, rising 53.84% from a year ago.

    During the same period, the country imported 1.66 million tonnes of coal from China, falling 5% from the preceding year.

    In December last year, Vietnam imported 843,600 tonnes of coal, 21.11% lower than the year-ago level and 6.72% higher than November.

    Of that, Vietnam imported 362,200 tonnes from Indonesia in December, increasing 82.65% from the previous year. Followed was Russia at 186,800 tonnes, down 33.12% from a year earlier. Australia exported 171,700 tonnes of coal to Vietnam, down 45.51% from a year ago.

    The southeastern Asian nation, traditionally a coal exporter, has actively turned to importing coal to meet rising domestic demand, particularly from the power sector.

    In December, Vietnam's coal exports increased 1.56 times year on year to 284,100 tonnes, adding up to 1.28 million tonnes in 2016, down 26.95% year on year.

    Key destinations of Vietnamese coal last year included Japan (675,000 tonnes, up 5.35% year on year), Philippines (106,500 tonnes, down 28.33% on the year) and Malaysia (102,900 tonnes, up 1.05 times from a year eralier.)

    The country produced 35.41 million tonnes of coal in the first eleven months last year, sliding 6.49% from the year-ago level, showed data from the General Statistics Office.

    http://www.sxcoal.com/site/index?lang=en
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    BHP, Vale, Samarco set June 30 deadline to resolve multibillion dollar claims


    Miner BHP Billiton Ltd  its partner Vale SA and their jointly owned Samarco unit said on Thursday they have set a June 30 deadline to settle billions of dollars in compensation claims stemming from an iron ore mine disaster in Brazil in 2015.

    The aim is to consolidate and settle separate claims, including a $47.5 billion civil claim brought by Brazil's federal prosecutors last year, the companies said.

    Under the agreement, BHP Billiton, Vale and Samarco will initially provide 2.2 billion reals ($681 million) in total to support compensation and remediation from the impact of the fatal dam failure.

    Operations at the Samarco mine were suspended in 2015 after the collapse of a dam holding mining waste, or tailings. The rupture killed 19 people, left hundreds homeless and caused Brazil's worst environmental disaster.

    "This spells out how and when we are going to settle this with the prosecutors," BHP spokesman Paul Hitchins said. "Up until this time we had all these different courts hearing the case. This consolidates all that."

    The companies said any restart of operations at Samarco was subject to a separate set of negotiations with relevant parties and would occur only if it was deemed safe, economically viable and had the support of the local community.

    http://www.reuters.com/article/us-bhp-billiton-samarco-idUSKBN1530NI
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    U.S. affirms finding of China steel plate dumping, subsidies


    Chinese workers unload a roll of tin plate at Baosteel plant on the outskirts of Shanghai November 20, 2003. REUTERS/Claro Cortes/File Photo

    The U.S. Commerce Department said on Wednesday it had made a final finding of dumping of certain imports of carbon and alloy steel cut-to-length (CTL) plate from China.

    The department said in a statement that it has set a final dumping margin of 68.27 percent for Jiangyin Xingcheng Special Steel Works Co Ltd, the only respondent in the case, "for the China-wide entity's failure to cooperate."

    Commerce officials said they would call on the U.S. Customs and Border Patrol to collect cash deposits equal to the dumping rate that would be refunded if the U.S. International Trade Commission later finds there has been no harm to U.S. producers.

    In 2015, imports of CTL plate from China were valued at an estimated $70.3 million, it said.

    The finding followed an investigation prompted by a petition from Nucor Corp and U.S. subsidiaries of ArcelorMittal SA and SSAB AB.

    The material is used in a wide range of applications, including in buildings and bridgework; agricultural, construction and mining equipment; machine parts and tooling; ships, rail cars, tankers and barges; and large-diameter pipe.

    http://www.reuters.com/article/us-usa-china-trade-idUSKBN1522RF
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    US rebar prices continue higher as mills move toward announced increases


    Prices for US-produced rebar continued to move up Tuesday in the Midwest and Southeast as mills have been working to implement a series of increases, sources said.

    S&P Global Platts on Tuesday raised its weekly US Midwest rebar assessment to $550-$570/st ex-works, up from $520-$535/st.

    US mills last week independently announced they would be raising rebar prices an additional $40/st, effective with new orders Tuesday and Wednesday, depending on the mill, marking the fourth consecutive month of announced increases.

    In a letter to customers, Commercial Metals Co. attributed its increase to higher input costs, which one Midwest distributor agreed was proving upward momentum for rebar prices. During the January buy week, US shredded scrap prices settled $30-$40/lt above December levels, depending on region.

    However, as February is typically a down market for scrap, going forward, increased demand is needed to support higher rebar pricing, sources said.

    Currently, most mills have tons available, but as demand picks up, the most recent increase will likely fully stick in the market for February domestic rebar shipments, a Midwest source said.

    "If rebar gets hard to find I think another increase will stick, but so far bar hasn't been too hard to find," said a fabricator in the Southeast. However, he added that inventories were likely to tighten approaching the spring when construction demand picks up.

    Platts on Tuesday raised its daily US Southeast rebar assessment to $530-$550/st ex-works, this is up from $520-$540/st.

    Relatively stable and higher import offer from Turkey since the start on the new year have also helped to support domestic prices in the Southeast region, sources agreed. Offers from Turkey continued to be in the range of $460-$470/mt CFR Houston ($423-$432/st CIF), US-based sources said.

    Platts Tuesday maintained its daily imported rebar assessment at $423-$432/st CIF Houston.

    http://www.platts.com/latest-news/metals/lasvegas/us-rebar-prices-continue-higher-as-mills-move-21624995
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