Mark Latham Commodity Equity Intelligence Service

Thursday 25th June 2015
Background Stories on www.commodityintelligence.com

News and Views:

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    Steel, Iron Ore and Coal

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    But I am knowledgeable concerning markets and believe Donald is completely correct to be concerned that we have “a big fat bubble coming up. We have artificially induced low interest rates.”

    I personally believe we are sailing in dangerous unchartered waters. I can only hope we get to shore safely. Never in the history of the Federal Reserve have interest rates been artificially held down for so long at the extremely low rates existing today. I applaud Donald for speaking out on this issue – more people should.”

    -Icahn, quietly refusing Trump's offer of treasury secretary nominee.

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    CITIC to invest $113 billion for "Silk Road" investments

    China's CITIC Ltd., the state-owned conglomerate, said on Wednesday that its banking, securities, trust and construction divisions will jointly invest more than 700 billion yuan ($112.79 billion) to support China's "One Belt, One Road" initiative.

    The investments will involve about 300 projects extending from Singapore to Turkmenistan.

    Under its so-called "One Belt, One Road" initiative, China aims to create a modern trade route known as the Silk Road Economic Belt and the 21st Century Maritime Silk Road.

    Projects under the plan include a network of railways, highways, oil and gas pipelines, power grids, Internet networks, maritime and other infrastructure links across central, west and south Asia to as far as Greece, Russia and Oman, increasing China's connections to Europe and Africa.

    China's President Xi Jinping said in March that he hoped China's annual trade with the countries involved in the "One Belt, One Road" initiative would surpass $2.5 trillion in a decade.

    China CITIC Bank Corp , with more than four trillion yuan in assets, will provide more than 400 billion yuan in financing to more than 200 projects in areas such as infrastructure, energy, agriculture and culture through its local branches, the bank said.

    The bank will also establish and manage a "One Belt, One Road" fund, with 20 billion yuan in its first phase, to participate in mergers and acquisitions, public-private partnerships and financing Chinese companies to expand overseas.

    CITIC Bank expects to increase the fund to 100 billion yuan within five years to finance projects in the region, CITIC Bank Vice Governor Sun Deshun told reporters at a press conference.

    CITIC's other subsidiaries, including CITIC Securities Co , CITIC Trust Co, CITIC Construction Co, CITIC Heavy Industries Co, and CITIC Resources Holdings Ltd, will invest nearly 300 billion yuan in about 100 projects in more than 10 countries along the "One Belt, One Road" route, which also includes Laos, Mongolia, and Kazakhstan.

    CITIC subsidiaries will provide 110 billion yuan in equity financing and debt financing to more than 30 companies with businesses related to China's global initiative.

    http://www.reuters.com/article/2015/06/24/china-citic-investments-idUSL3N0ZA3AH20150624
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    Thai PTT joins Ratchaburi for coal plants, Myanmar LNG

    Thailand's largest energy firm PTT Pcl said it signed contracts with Ratchaburi Electricity Generating Pcl to jointly invest in a liquefied natural gas (LNG) terminal in Myanmar and power plants in Southeast Asia.

    The move is part of state-controlled PTT's drive to strengthen energy security in Thailand, which uses natural gas for 70 percent of power generation. About a fifth of that is piped from Myanmar.

    Thailand is under pressure to secure long-term energy supply as its own gas is expected to run out over the next six to seven years. Import from Myanmar is likely to fall as Thailand's neighbour is expected to use more of its resources for its own development.

    Under the contract signed with Ratchaburi, PTT planned to develop a floating storage and re-gasification unit (FSRU) to store LNG in Myanmar, Pongdith Potchana, chief executive of Ratchaburi told reporters.

    The FSRU will have capacity of 3 million tonnes in the first phase with estimated investment of $400 million, he said adding Ratchaburi will own about 25-30 percent in the project, while the remaining stake will be held by PTT and a domestic partner.

    PTT's two units, PTT Energy Resources Ltd and Global Power Synergy Pcl, also signed a separate contracts with Ratchaburi to study the possibility of investing in coal-fired power plants in Myanmar, Indonesia and Vietnam, the companies said in a joint statement.

    PTT Energy and Ratchaburi will jointly invest in a 600-megawat (MW) coal-fired power plant in Kyaing Tong, Myanmar, with estimated cost of $1.3 billion, and about 500 MW of electricity will be exported to Thailand, Pongdith said.

    In Vietnam, Global Power and Ratchaburi planned to invest in a 500-MW power plant to be located near a petrochemical complex PTT has already planned, while the two companies also aim to jointly bid to buy a $150 million, 300 MW power plant in Indonesia, he said.

    http://www.reuters.com/article/2015/06/24/ptt-energy-ratchaburi-hldg-idUSL3N0ZA2P820150624
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    Oil and Gas

    Fluxys

    Capacity doubled: new facilities commissioned. In April 2008, a fourth storage tank and additional regasification facilities were put into service at the LNG terminal, doubling its throughput capacity from 4.5 to 9 billion cubic metres of natural gas per year and enabling reception of 110 cargos per year instead of 66 previously.The fourth tank increases the terminal’s cycling storage capacity from 240,000 cubic metres to380,000 cubic metres of LNG, equivalent to about three shiploads. The additional regasification facilities raise the sendout capacity from 950,000 to 1.7 million cubic metres of natural gas per hour, allowing an entire LNG cargo to be regasified and injected into the grid in about two days.With its throughput capacity doubled, the terminal is expanding its role as an LNG gateway to Western Europe, since natural gas from the facility can either be supplied to the Belgian market of brought to any neighbouring market. The capacity enhancement will also have a positive impact on the Belgian market as it increases security of supply and supports the development of more competition.

    ~2008.

    Fluxys Belgium invested €101 million in 2013. The biggest projects were the pipeline replacement between Ben Ahin and Bras with a new pipeline of a larger diameter (with the new pipeline being commissioned in September 2013) and the construction of a second jetty at the Zeebrugge LNG terminal (which is progressing according to schedule).
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    U.S. West Coast refiners snap up Russian crude cargoes

    Refiners on the U.S. West Coast and Hawaii have stepped up purchases of Russian crude, taking advantage of a narrow gap between U.S. and global prices as they look to guard against a seasonal shortage of Alaskan supply, trade and industry sources said.

    Up to four tankers were expected to carry nearly 3 million barrels of Russia's ESPO crude from Kozmino near the city of Vladivostok to refineries in the United States this month and next, the sources said.

    That will help Russia diversify beyond key buyers in China, South Korea and Japan at a time when Asian markets are grappling with oversupply. Sanctions against Russia over its actions in Ukraine bar U.S. oil companies from drilling in the country, but purchases of oil are still allowed.

    But traders said the shipments marked only a temporary trend as refineries were buying amid uncertainty over the supply of Alaska North Slope (ANS) crude during the summer months. ANS is regularly shipped to the U.S. West Coast, but production normally falls in summer due to field maintenance.

    Reuters ship tracking data confirms that the Aegean Power tanker loaded 730,000 barrels of ESPO crude last week and is due to arrive at the Long Beach refining hub in Los Angeles on July 9.

    One industry source, who was not authorised to speak to the media, said Chevron Corp likely bought the cargo for processing at its El Segundo refinery in Los Angeles. A spokesman for the U.S. oil major declined to comment.

    Two or three additional cargoes are due to load either later this month or next, with Valero Energy Corp shipping Russian crude to one of its two refineries on the U.S. West Coast, and Par Petroleum taking at least one cargo to Hawaii, according to four trade and industry sources.

    http://www.reuters.com/article/2015/06/24/oil-usa-russia-idUSL3N0Z53KZ20150624
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    Summary of Weekly Petroleum Data for the Week Ending June 19, 2015

    U.S. crude oil refinery inputs averaged over 16.5 million barrels per day during the week ending June 19, 2015, 250,000 barrels per day more than the previous week’s average. Refineries operated at 94.0% of their operable capacity last week. Gasoline production increased last week, averaging over 9.9 million barrels per day. Distillate fuel production decreased last week, averaging about 5.0 million barrels per day.

    U.S. crude oil imports averaged about 6.8 million barrels per day last week, down by 302,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged about 7.0 million barrels per day, 3.5% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 896,000 barrels per day. Distillate fuel imports averaged 128,000 barrels per day last week.

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.9 million barrels from the previous week. At 463.0 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. Total motor gasoline inventories increased by 0.7 million barrels last week, and are in the upper half of the average range. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories increased by 1.8 million barrels last week and are in the middle of the average range for this time of year. Propane/propylene inventories rose 1.3 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories decreased by 6.7 million barrels last week.

    Total products supplied over the last four-week period averaged over 19.8 million barrels per day, up by 7.2% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged about 9.4 million barrels per day, up by 4.5% from the same period last year. Distillate fuel product supplied averaged over 3.8 million barrels per day over the last four weeks, down by 0.9% from the same period last year. Jet fuel product supplied is up 7.4% compared to the same four-week period last year.

    http://ir.eia.gov/wpsr/wpsrsummary.pdf
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    Domestic US oil production week ending June 19th

                                                        Last week      Week ago       Year ago

    Domestic Production .................... 9,604             9,589             8,446 

    Full details: http://ir.eia.gov/wpsr/overview.pdf
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    Exxon Mobil halts operations at three oil platforms after California spill

    Exxon Mobil Corp has been forced to halt operations at three offshore oil platforms because it could not deliver to refineries in the wake of a broken pipeline that spilled up to 101,000 gallons of crude on the Santa Barbara coast, the company said.

    Operations temporarily ceased last week because Santa Barbara County rejected its emergency application to truck oil to refineries, spokesman Richard Keil said on Tuesday.

    A Santa Barbara County official said the company’s problem did not constitute an emergency and it could go through the normal procedure, which requires extensive environmental review, to get a permit to truck the oil.

    The shutdown is not expected to have an effect on oil prices, but it does harm Exxon Mobil’s bottom line even though production from the platforms is small compared with the company’s overall output, said Tom Kloza, global head of energy at the Oil Price Information Service.

    Crude was selling last week for $60 to $64 a barrel and could fetch more than $91 when refined for automobile gas, he said. That provided a lot of incentive for Exxon Mobil.

    “I’m sure it’s a royal pain for them,” Kloza said. “Given the profit margins for gasoline, whether you have to [deliver] it by wheelbarrow or rickshaw, you’re very motivated.”

    Exxon Mobil had cut production from the rigs by two-thirds after Plains All American Pipeline’s conduit was shut down by a spill on 19 May that soiled pristine coastline and spread tar balls as far as Los Angeles County, about 100 miles away. Nearly 200 birds and more than 100 marine mammals have been found dead in the waters.

    http://www.theguardian.com/business/2015/jun/24/exxon-mobil-halts-operations-oil-platforms-california-spill
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    U.S. motorists set new record for driving in April

    U.S. motorists drove a record number of miles in April, U.S. government data showed on Wednesday, as a resurgence in road travel that has lasted over a year showed no signs of easing.

    Americans logged 267.9 billion miles on U.S. roads in April, the highest for the month on record going back to 1990 and up 3.9 percent from a year earlier, according to data released by the Federal Highway Administration.

    That's the 14th consecutive month of year-on-year growth, with north-central and western regions accounting for just under one-half of the total, growing at the fastest pace.

    For the first four months of the year, motor travel was up by 37 billion miles, or 3.9 percent, to a record 987.8 billion miles, as a drop in U.S. gasoline prices spurred more Americans to take to the road.

    http://www.reuters.com/article/2015/06/24/gasoline-demand-united-states-idUSL1N0ZA12720150624
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    Alternative Energy

    Coons, Moran, Poe, Thompson bill will level the playing field for renewable energy

    Master Limited Partnerships Parity Act would give renewable energy projects access to a tax advantage currently available only to oil, gas, and coal projects

    U.S. Senators Chris Coons (D-DE), Jerry Moran (R-KS), and Representatives Ted Poe (R-TX-02), and Mike Thompson (D-CA-05) re-introduced bipartisan legislation to level the energy playing field by giving investors in renewable energy projects access to a decades-old corporate structure whose tax advantage is currently available only to investors in fossil fuel-based energy projects. The Master Limited Partnerships Parity Act is a straightforward, powerful modification of the federal tax code that could unleash significant private capital by helping additional energy-generation and renewable fuels companies form master limited partnerships, which combine the funding advantages of corporations and the tax advantages of partnerships.

    "Renewable energy technologies have made tremendous progress in the last several decades, and they deserve the same shot at success in the market as traditional energy projects," Senator Coons said. "By updating the tax code, the bipartisan Master Limited Partnerships Act levels the playing field for all domestic energy sources -- renewable and non-renewable - to support the all-of-the-above energy strategy we need to power our country for generations to come. This practical, market-driven solution will unleash private capital and create jobs, and that's why it has earned broad support from Republicans and Democrats in Congress as well as academics, outside experts, business leaders and investors."

    "In order to grow our economy and increase our energy security, sound economic

    - See more at: http://www.noodls.com/view/06A366131C8B1B1D9DAEE21AC1388C9FB08D8DD5?8216xxx1435150898#sthash.Ysz6VILs.dpuf
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    Norwegian power firms hope to revive 1,000 MW wind project

    Norwegian utilities, including state-owned Statkraft and transmission grid operator Statnett, are seeking to revive plans to build a large wind power development just weeks after the project was cancelled, Statnett said on Wednesday.

    "The partners will work together to investigate a new 1,000 MW project by the end of September this year," Statnett said in a statement, adding that the aim was to make a final investment decision in the first quarter of 2016.

    Power firm Statkraft is expected to have a 50.1 percent stake in the project, while TroenderEnergi aims for 5-10 percent, with a consortium led by Credit Suisse Energy Infrastructure Partners seeking to acquire the remaining shares, Statnett added.

    Denmark's Vestas had been picked to supply turbines for the original project.

    http://www.reuters.com/article/2015/06/24/norway-windpower-idUSO9N0XC02020150624
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    Rare earths miner Molycorp files for Chapter 11 bankruptcy

    Rare earths miner Molycorp Inc filed for Chapter 11 bankruptcy protection on Thursday along with its North American subsidiaries to restructure $1.7 billion of debt in its U.S. and Canadian operations.

    Molycorp has also obtained agreement for up to $225 million in new debtor-in-possession (DIP) financing, it said in a statement.

    The Greenwood, Colorado-based company listed assets and liabilities of more than $1 billion in its petition in the Delaware bankruptcy court.

    The company's operations outside of North America, with the exception of non-operatingcompanies in Luxembourg and Barbados, are excluded from the filings. Molycorp Rare Metals (Oklahoma) LLC is also excluded from the filings.

    The case is in U.S. Bankruptcy Court, District of Delaware, Case No: 15-11357.

    http://www.reuters.com/article/2015/06/25/molycorp-bankruptcy-idUSL3N0ZB2OX20150625
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    Uranium

    World’s first nuclear output rise since Fukushima

    Global nuclear output rose for first time since Japan’s Fukushima accident in 2014.

    That’s according to new report, which showed world nuclear generation in 2014 rose 1% compared to 2013.

    That’s the first annual gain since the 2011 accident.

    The disaster curbed global nuclear output sharply, according to the report.

    William Freebairn, Platts senior managing editor said: “It is interesting to see a recovery in overall output was driven by growth in units in China and improvements in capacity factors in France, Russia and Korea, which more than offset the reactor shutdowns in Japan, Germany and the US.”

    Nuclear power plants generated around 2.039 billion megawatt hours (MWh) in 2014. This was a slight increase from the 2.018 billion MWh in reported generation for 2013, the paper’s data shows.

    It adds around 350 of the world’s 429 nuclear units report gross generating data.

    http://www.energylivenews.com/2015/06/24/worlds-first-nuclear-output-rise-since-fukushima/
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    Japan's Kyushu Electric Power to restart nuclear power reactors

    Image Source: Proactive InvestorsProactive Investors reported that Japanese utility Kyushu Electric Power will restart its two nuclear power reactors at Sandei in the next couple of weeks.

    They may have been closed since 2011, but Japanese utility Kyushu Electric Power will restart its two nuclear power reactors at Sandei in the next couple of weeks.

    Reports are that fuel loading will commence next month, placing a timeline of the plants once again being onstream in August.

    http://steelguru.com/power/japan-s-kyushu-electric-power-to-restart-nuclear-power-reactors/427893#tag
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    Agriculture

    Monsanto Earnings Beat Estimates With Scotts’ Licensing Deal

    Monsanto Co., the U.S. seed producer trying to acquire Swiss pesticide maker Syngenta AG, posted fiscal third-quarter earnings that topped analysts’ estimates aided by an herbicide licensing payment from Scotts Miracle-Gro Co.

    Profit was $2.39 a share in the three months through May 30, compared with $1.62 a year earlier, St. Louis-based Monsanto said Wednesday in a statement. That beat the $2.06 average estimate of 20 estimates compiled by Bloomberg. Sales climbed to $4.58 billion, from $4.25 billion, trailing the $4.63 billion average estimate.

    Monsanto reiterated its forecast for full-year earnings at the low end of $5.75 to $6 a share, before one-time items.

    Monsanto overcame lower grain prices and a stronger dollar with help from a payment from Scotts, which expanded a licensing deal to sell Roundup herbicide to consumers.

    “The gross profit contribution from the expanded Scott’s Roundup license offsets much of the increased headwinds in the base business,” Don Carson, a New York-based analyst Susquehanna Financial Group LLLP who recommends buying the shares, said in a note Monday.

    Corn and soybean prices have fallen in the past year as global output headed for a record. Soybeans, used in cooking oil and livestock feed, lost 22 percent while corn dropped 16 percent.

    The dollar has appreciated almost 17 percent in the past year against a basket of 10 leading global currencies.

    http://www.bloomberg.com/news/articles/2015-06-24/monsanto-earnings-beat-estimates-with-scotts-licensing-dealmons
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    Monsanto to invest more than $1 bln in dicamba herbicide production

    Monsanto Co's efforts to expand its agrichemical interests beyond what has long been its bread-and-butter glyphosate herbicide business were underscored on Wednesday by news the company plans to invest potentially more than $1 billion in a production facility for an alternative herbicide.

    Monsanto officials expect to spend the money over the next three to five years expanding a plant in Luling, Louisiana, to produce the weed-killing agent called dicamba. Luling has been a key location for glyphosate production for years.

    The interest and investment in dicamba represents a step away from the company's reliance on glyphosate, which is the key ingredient in Monsanto's branded Roundup line of herbicides.

    Glyphosate is also the key to many of Monsanto's genetically engineered crop lines. The company makes corn, soybeans, cotton, canola and other crops that can tolerate being sprayed with glyphosate.

    "Over the next decade ... this holds the potential to further diversify our ag productivity segment and provide a source of growth longer term," Monsanto President Brett Begemann told analysts in a conference call.

    Roundup, and the "Roundup Ready" crops Monsanto engineers have been very popular with farmers, particularly in the United States. However, widespread planting of Roundup Ready corn and soybeans, and associated widespread use of Roundup weed killer, has contributed to the rise of weeds resistant to glyphosate.

    The weed resistance problem has become such a significant problem for crop production that farmers are seeking alternatives, and Monsanto and its rivals in the agrichemical industry are racing to introduce new options for glyphosate and Roundup Ready crops.

    "The reality is the industry is going to have to continually evolve just like plant life evolves," said Edward Jones analyst Matt Arnold.

    Monsanto's solution combines glyphosate with dicamba for what it is calling the "Roundup Ready Xtend" crop system, aimed at soybean and cotton farmers.

    Rival Dow AgroSciences, a unit of Dow Chemical Co, has developed crops that tolerate its new herbicide, which combines 2,4-D with glyphosate.

    Monsanto said it sees at least a 200 million-acre "practical fit" for its Roundup Ready Xtend system for soybeans and cotton in the Americas.

    The company said on Wednesday it is still awaiting approval from Chinese regulators to allow imports of the new soybeans. China is a key buyer of U.S. soybeans, but has shown reluctance to approve imports of new GMO crops.

    http://www.reuters.com/article/2015/06/24/monsanto-dicamba-idUSL1N0ZA1XN20150624
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    Malaysia plans to use 10 pct of rubber supply in roads

    Malaysia plans to use 10 percent of its rubber supply in roads from 2016 as it looks to eat into excess supplies and shore up rubber prices, ministers said on Wednesday.

    The roads will be made using rubber cup lumps, or naturally coagulated latex, which will be processed into bituminous cup lumps and then mixed into asphalt. The Malaysian Rubber Board estimates 4.2 tonnes of cup lumps will be needed for each kilometre of road.

    Malaysia expects to produce about 710,000 tonnes of natural rubber this year, Plantations and Commodities Minister Douglas Uggah Embas told a news conference after signing an agreement with the Works Ministry.

    "The target is to use 10 percent of Malaysia's rubber for this purpose," he said. "We hope the excess supply of rubber will be drastically reduced ... and help reduce pressure on prices."

    Embas said there was a possibility of increasing the usage of rubber in roads to 15 or 20 percent of supply if the project was successful.

    Works Minister Fadillah Yusof said the rubberised roads would save on costs, be cheaper to maintain and help roads last longer.

    The ministry was also looking to use seismic rubber in building structures to protect buildings and absorb shocks in high-risk earthquake areas, he added. In June Malaysia was hit by a 6.0 magnitude quake that killed hikers on its highest peak, Mount Kinabalu.

    http://www.reuters.com/article/2015/06/24/malaysia-rubber-idUSL3N0ZA2TC20150624
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    Precious Metals

    Uncertain future for global diamond trade as profits vanish

    The family businesses that make up the global diamond trade have seen their profits wiped out over the past five years, hit by shaky financing, increased costs and uncertain demand from customers who prefer hi-tech gadgets to bling.

    Manufacturers who cut and polish diamonds have found themselves caught between giant mining companies charging high prices for rough stones, and big retail chains that demand gems at low margins to keep sales moving.

    While the $80 billion overall spent on diamond jewellery last year was a record, the manufacturers are expected to share a profit of just $100 million in 2015. That is half last year's total and down from $900 million in 2010, according to Chaim Even-Zohar of Tacy Ltd and Pranay Narvekar of Pharos Beam in Mumbai, two of the industry's top consultants.

    Even-Zohar estimated that 300,000 Chinese and Indian workers had been laid off out of nearly 1 million employed in gemcutting in those two countries, where most manufacturing takes place.

    "The rule of supply and demand doesn't necessarily apply to the diamond sector," said Yoram Dvash, a high-end polisher in Israel who outsources his rough stones to smaller Israeli polishers.

    Over the past year he has been sending his subcontractors 20 percent less volume.

    "Manufacturing is not just work, it's out of love - taking the rough stones, with all their odd shapes, and bringing out the most precious thing in the world. But this love costs a lot of money. And rough prices have been going up and up with no connection to demand."

    In the longer term, the industry needs to sustain consumer demand at a time when the prized possession of many people with disposable income is more likely to be a smartphone than a piece of jewellery. The hottest wristwatch this year does not have diamonds on its face - it has an Apple touch screen.

    "Have you ever heard of a 20-year-old standing outside a store all night to buy jewellery?" Ernest Blom, president of the World Federation of Diamond Bourses, asked delegates at an industry conference at a Tel Aviv luxury hotel.

    "I haven't," he answered. "We have fallen behind the times."

    Last month, the leading mining companies formed a Diamond Producers Association with a focus on stimulating consumer demand. But its annual budget is just $6 million, which many delegates at the conference said was not enough.

    The manufacturers and dealers depend on just a handful of miners, which control most of the world's diamond production and say they have had no choice but to pass on high costs further down the supply chain.

    No major deposits have been discovered in about two decades. The miners say they are investing heavily to keep supplies coming.

    Production in 2013 was down 26 percent since 2005, although estimates suggest it has risen slightly since.

    http://www.reuters.com/article/2015/06/24/minerals-diamonds-idUSL8N0Z80PG20150624
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    Steel, Iron Ore and Coal

    China's May coking coal imports fall 68% on year to 1.88 mil mt, 6-year low

    China's coking coal imports in May plunged 68% year on year to 1.88 million mt -- the lowest since March 2009 -- as volumes from Australia and Mongolia plummeted, according to data released late Wednesday by the General Administration of Customs.

    May imports were nearly half of April's 3.75 million mt.

    Imports from top supplier Australia fell 67% year on year and fell 43% from April to 970,000 mt in May.

    Coking coal imports from Mongolia, China's second-largest supplier, fell 66% year on year and fell 59% from April to 534,206 mt in May.

    Russian imports were 274,354 mt in May, down 48% from a year ago but up 20% from April.

    China's appetite for higher-quality met coal imports to feed its massive coastal steel mills from 2007-2013 drove prices to record highs.

    But its appetite for imports has ebbed due to a feeble steel sector and government mandates to protect its domestic coal industry.

    Over the first five months of this year, China's coking coal imports fell 35% year on year to 16.56 million mt.

    The sharp decline in May import was unexpected as there had been reasonable spot trading liquidity for mid-to-end-April cargoes, according to market participants.

    Platts observed about 2 million mt of mid-to-end-April laycan hard coking coal volumes, meant for May arrival.

    "This year's volumes are definitely lower, but the likely explanation for such a low May number is that many shipment loadings could have been delayed," a Jingtang port stocks trader said.

    http://www.platts.com/latest-news/metals/singapore/chinas-may-coking-coal-imports-fall-68-on-year-27544634
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    Coal railings to Newcastle port terminals down 10.6pct on week - HVCC

    According to the Hunter Valley Coal Chain Coordinator’s weekly report, coal volumes railed to Newcastle’s Port Waratah Coal Services and Newcastle Coal Infrastructure Group terminals in New South Wales, Australia during the week ended Sunday fell 10.6% on the week to 3.05 million tonne.

    The weekly volume did not reach the expected inbound railings volume of 3.26 million tonne.

    For the week to Sunday, PWCS’ throughput was 2.51 million tonne, climbing 35.3% on the week and also surpassing the target of 2.25 million tonne.

    Stocks at the PWCS terminal fell 11.3% on the week to 2.04 million tonne, although the same data was not available for the NCIG terminal.

    According to the HVCCC, the PWCS terminals’ vessel queue remained steady on the week at 16 on Sunday.

    The coordinator said that, based on terminal demand, the vessel queue at PWCS was estimated to be 15 at the end of June and 13 at the end of July, compared to the previous week’s estimate of 12 at the end of June and 13 at the end of July.

    HVCC said in its report that producers forecast coal arrivals for June at 8.4 million mt, unchanged on the week, with July’s volume expected to be 10.1 million mt and August’s projection at 9.2 million tonne.

    http://steelguru.com/logistic/coal-railings-to-newcastle-port-terminals-down-10-6pct-on-week-hvcc/427909#tag
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    Shenhua to build mega coal-fired power plant in Sichuan

    State-owned coal giant Shenhua Group would build two 1GW ultra-supercritical coal-fired power units in Jiangyou City in northern Sichuan province, local media reported on June 23.

    The project, together with a 500,000-tonne coal emergency storage base, is the first phase project Shenhua planned to develop in the southwestern hydro-rich province.

    The project was approved by the National Energy Administration in October 2014. Total investment was estimated at 6.92 billion yuan ($1.13 billion). Environmental protection equipment for efficient electrostatic dust removal, desulfurization and denitration will be installed, the report said.

    The two generating units may need to burn 4.09 million tonnes of coal, and are expected to generate and sell 10 TWh of electricity each year.

    Shenhua planned to build four 1GW ultra-supercritical coal-fired power units and a one-million-tonne coal emergency storage base.

    The Shenhua project is part of the 8 GW Lukou coal-electricity base -- one of the four bases planned to be built by the provincial government during the 12th Five-Year Plan period (2011-2015).

    Sichuan’s thermal power has been greatly squeezed by its rich hydropower. By end-2014, Sichuan’s hydropower installed capacity reached 62.93 GW, accounting for 79.9% of the total power generation capacity.

    The province aimed to realize 88 GW of power generation capacity by end-2015, with 70 GW hydropower and 18 GW thermal power capacities, respectively.

    http://en.sxcoal.com/0/122565/DataShow.html
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    Westmoreland board approves San Juan mine purchase

    Argus reported that Westmoreland Coal's board has approved the company's proposal to buy the San Juan mine from BHP Billiton and enter into a new long-term coal supply agreement with the owners of the San Juan generating station.

    The plan is still subject to approval by the New Mexico Public Regulation Commission. Westmoreland plans to meet the commission's 1 July deadline for filing its binding coal supply agreement with Public Service of New Mexico and other owners of the San Juan plant.

    The acquisition is expected to close on 31 December and includes the possibility of the mine, in Farmington, New Mexico, supplying the plant through 30 June 2022. BHP has an agreement to supply the plant until the end of 2017.

    Regulators will also determine the future of the mine. The majority owner of the San Juan generating station, Public Service of New Mexico (PNM), plans to retire units 2 and 3 of the plant by the end of 2017 to comply with New Mexico's plan for regional haze. PNM owns 418MW of those two units and another 385MW elsewhere at the plant, including 195MW of unit 4. The generator wants to replace the lost power by buying an additional 132MW of San Juan unit 4.

    Meanwhile, the Public Regulation Commission will decide on the generator's request to raise rates to pay for replacement power at San Juan sometime this year. Several cities including Albuquerque and Santa Fe as well as environmental groups have raised opposition to the plan.

    http://steelguru.com/coal/westmoreland-board-approves-san-juan-mine-purchase/427908#tag
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    Vale expects to raise $1.5 bln from asset sale in Brazil

    Brazilian miner Vale SA could raise about $1.5 billion through the sale of a stake in one of its Brazil-based assets, a senior executive said on Wednesday.

    Vale, the world's largest producer of iron ore, is scrambling to raise cash to shore up its finances in the midst of a price slump in the raw material. The transaction could be completed by the third quarter, Rogério Nogueira, head of investor relations, said at an event in São Paulo.

    Nogueira also said Vale was considering selling between 25 percent and 30 percent of its base metals division in an initial public offering. The figure is a reduction from the 30 percent to 40 percent the miner said in December it was considering selling.

    Vale has said it will take a decision on whether to go ahead with the IPO at the end of the year, but that approving the move is dependent on a recovery in nickel prices. Such a recovery has remained illusive with nickel down 30 percent in the last year to $12,760 a tonne.

    Chief Financial Officer Luciano Siani told Reuters in December the IPO would only go ahead with a nickel price above $20,000 a tonne.

    After a halving of the iron ore price since last year and high capital expenditure as it builds a massive new iron ore mine in the Amazon, Vale has a funding shortfall for this year and next. The miner has said it does not plan to increase its debt level and will raise the cash through asset sales.

    Nogueira declined to elaborate on the type of asset in Brazil that could be sold. More likely assets are fertilizers, where Vale has said it is looking for a partner, and rail and port logistics, which banking sources have said are a good sale option.

    At the same event Nogueira said Vale was working to cut its level of investment, with the company's current forecast between $8 billion and $9 billion for 2015.

    That range is a possible reduction from a presentation published earlier this month, when Vale said it expected to invest $9 billion this year. It is also down from the $10.2 billion forecast given in December 2014. Much of that reduction has come from a weaker Brazilian real.

    http://www.reuters.com/article/2015/06/24/vale-investment-idUSL1N0ZA0OX20150624
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    China key steel mills daily output up 2.1pct in early-Jun

    Daily crude steel output of key Chinese steel producers increased 2.08% from ten days ago to 1.803 million tonnes over June 1-10, showed data from the China Iron and Steel Association (CISA).

    The CISA didn’t publish China’s total daily output during the same period.

    As of June 10, total stocks in key steel mills stood at 16.31 million tonnes, up 3.03% from ten days ago.

    During June 1-10, prices of the six major steel products all posted declines from the previous ten days, with rebar prices averaging 2,272 yuan/t, down 2% from ten days ago, showed data from the Ministry of Commerce.

    China’s steel market was still struggling with falling prices and weak demand in the traditional slack season; the oversupplied situation may hard to change in the short run.

    http://en.sxcoal.com/0/122566/DataShow.html
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