Mark Latham Commodity Equity Intelligence Service

Thursday 27th August 2015
Background Stories on www.commodityintelligence.com

News and Views:

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    Macro

    Global shipping slumps as Asia to Europe container movement’s freight rates falls

    Exim News Service reported that global shipping has slumped over the late summer as freight rates for container shipping from Asia to Europe fell by over 20% in the second week of this month, even though trade volumes should be picking up at this time of the year.

    According to them, this slump has dashed hopes of a quick recovery from the global trade recession, heightening fears that the six-year economic expansion may be on its last leg.

    The Shanghai Containerised Freight Index for routes to north European ports crashed by 23% in five trading days.

    Recent data from Container Trades Statistics shows that global volumes fell by 3.1% in June from the already depressed levels the month before. The period from June to August is normally the strongest time of the year, boosted by pre-shipments for the Christmas season.

    http://steelguru.com/logistic/global-shipping-slumps-as-asia-to-europe-container-movement-s-freight-rates-falls/432970#tag

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    Bunker prices plunge to ten year low in Singapore

    Maritime 360Prices of CST380 heavy fuel oil fell to USD205 per tonne in Singapore, the world's biggest bunkering port by sales volumes.

    Bunker prices in Singapore have not been this low since 2005.

    Fuel oil traders who spoke to IHS Maritime say it remains to be seen if prices would fall below USD 200 per tonne, as oil prices show no sign of recovering.

    One trader said that "There is just too much oil in the market and OPEC shows no sign of cutting output. It is inevitable that HFO prices will continue falling. If sanctions on Iran are lifted, more oil will be available."

    Another trader said that the downward trend in Singapore's bunker prices casts doubt on whether LNG bunkering can take off there. There are no ECAs in Asia and with the shipping market still depressed, shipowners have no incentive to invest in retrofitting vessels, more so now when fuel oil is so cheap. Prices of HFO and marine diesel oil have come down by more than 50% from last year.

    http://steelguru.com/logistic/bunker-prices-plunge-to-ten-year-low-in-singapore/432980#tag

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    China sells dollars.

    China has cut its holdings of U.S. Treasuries this month to raise dollars needed to support the yuan in the wake of a shock devaluation two weeks ago, according to people familiar with the matter.

    Channels for such transactions include China selling directly, as well as through agents in Belgium and Switzerland, said one of the people, who declined to be identified as the information isn’t public. China has communicated with U.S. authorities about the sales, said another person. They didn’t reveal the size of the disposals. Ten-year Treasuries pared gains and two-year notes erased an earlier advance.

    The People’s Bank of China has been offloading dollars and buying yuan to stabilize the exchange rate following the Aug. 11 devaluation. The nation’s foreign-exchange reserves, the world’s largest, dropped $315 billion in the last 12 months to $3.65 trillion. The stockpile will fall by some $40 billion a month in the remainder of 2015 because of the intervention, according to the median estimate in a Bloomberg survey.

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    Venezuelan Bolivar as a Napkin

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    Oil and Gas

    Top Asian refiner Sinopec's net profits slip 22 pct in H1

    China's Sinopec Corp , Asia's largest refiner, posted a 22 percent fall in first-half profit on a sharp decline in international crude prices that hit upstream earnings.

    The state-controlled company's net profit was 25.4 billion yuan ($3.96 billion), compared to 32.5 billion yuan a year earlier, it said in a filing with the Hong Kong bourse.

    Sinopec said last month that it expected an 11-fold jump in quarterly net profit in the second quarter compared to the first.

    The company plans to cut back operations at its refineries by around 5 percent in the fourth quarter compared with the first half of the year as fuel inventories rise and demand for diesel slows, industry sources told Reuters.

    In the first half, crude oil production fell 2.1 pct on year to 174.1 million barrels, Sinopec said in the filing.

    Sinopec reported a worse than expected fourth-quarter net loss of 5.3 billion yuan in 2014 -- its first quarterly loss since becoming a public company in 2000.

    http://www.reuters.com/article/2015/08/26/sinopec-corp-results-idUSL4N1112W820150826

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    Schlumberger to buy oilfield gear maker Cameron in $14.8 bln deal

    Oilfield services company Schlumberger Ltd agreed to buy Cameron International Corp, which makes equipment used by oilfield services providers, in a deal valued at $14.8 billion to cut costs amid weak drilling activity.

    Cameron makes products, such as blowout preventers and valves, that control pressure at oil and gas drill sites. Schlumberger provides oil and gas producers with a full array of services from surveying a site to drilling and completing wells.

    The two companies had combined their subsea businesses in November 2012 to create a joint venture to drill in deeper waters.

    Besides cutting operating costs, the acquisition will also help Schlumberger streamline its supply chains and improve its manufacturing processes, Chief Executive Paal Kibsgaard said in a statement.

    The cash-and-stock offer values Cameron at $66.36 per share, a premium of 56.3 percent to Cameron's Tuesday close.

    Cameron's shares shot up to $62.50 in premarket trading on Wednesday. Schlumberger's shares fell 1.4 percent to $71.50.

    Oil prices have tumbled 60 percent since June last year, forcing oil and gas producers to cut back on exploration activity, which in turn has hurt demand for oilfield services.

    Schlumberger has slashed 20,000 jobs this year alone and lowered its capital budget in an effort to maintain margins.

    Schlumberger's rivals Halliburton Co and Baker Hughes Inc agreed in November to merge in an effort to contain costs. The deal, which will create a company with 2013 pro-forma revenue of $51.8 billion, is yet to get all required regulatory approvals.

    Schlumberger and Cameron's combined pro-forma revenue would have been $59 billion in 2014, Schlumberger said.

    Schlumberger's offer values Cameron at $12.74 billion, based on the company's diluted shares as of June 30.

    Cameron shareholders will get $14.44 in cash and 0.716 of a Schlumberger share for each share held.

    Schlumberger said it expects the deal to add to earnings by the end of the first year after closing, which is expected in the first quarter of 2016.

    http://www.reuters.com/article/2015/08/26/cameron-intl-ma-schlumberger-idUSL4N1113KU20150826
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    Trafigura replicates its oil market tactics to dominate LNG

    Trafigura is blazing a trail for trade houses, adopting highly successful tactics used in oil markets, to get an edge in the burgeoning liquefied natural gas (LNG) sector.

    Oil traders usually act as a go-between for producers and end users, investing in logistics and storage to facilitate trade, while also providing credit and shouldering risk for their customers.

    Commodity traders are now stepping up their activity in LNG, adding liquidity and carving a niche in a market previously dominated by producers and oil majors such as Qatar and BP , as new supplies create fresh trade opportunities.

    Trade houses including Vitol, Noble Group and Guvnor are also attracted to LNG through rising global supply, growing competition and increasingly scattered pockets of demand fuelling spot market trade.

    Swiss-based Trafigura, best known for its oil and metals business, is leading the pack, having become the top LNG trader in around two years after leaping into LNG markets in 2013 with a major deal to supply Mexico.

    Trafigura declined to comment on its strategy or growth outlook.

    "They're taking the classic trading model from other energy markets and applying it to LNG, using infrastructure and shipping to take advantage of opportunities, it's the typical bag of tricks used by traders," Jason Feer, head of business intelligence at Poten & Partners said.

    Earlier this year Trafigura took advantage of a glut of cheap tankers available for spot charter, agreeing a rare deal with shipping company Golar LNG to lease six vessels on a single-voyage basis.

    It has also leased storage at India's Kochi terminal and Singapore's Jurong Island import terminal, providing flexibility and security to execute trades at short notice that other players cannot easily match.

    "If somebody fails to perform for them then they've got backup and vice versa, if they're distressed, they're long a cargo, then they can always stick it into storage," a source at a rival trading house said.

    Flat forward prices may keep pushing Trafigura to maintain trading momentum in order to repay the costs of leasing tank space. In a rising market, by contrast, simply storing fuel adds to its value, helping pay down fees.

    Trade houses ability to manage risks around a buyers terms and conditions, along with managing payment, have helped them increase their market share of LNG.

    "They use their balance sheet, they're willing to go places other people aren't, they're willing to take risks that major oil companies aren't," Feer said.

    Oil major Shell is fronting a significant chunk of supply for Trafigura's various positions into Latin America and Egypt, say trade sources, showing how traders are partnering suppliers wary of exposure to potentially risky new buyers.

    http://www.reuters.com/article/2015/08/26/trafigura-lng-growth-idUSL8N0ZQ46820150826
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    Anadarko Finds Mozambique-Gas Buyers as State Mulls Go-Ahead

     Anadarko Petroleum Corp. has clinched almost all the supply accords it needs to bring a natural-gas project in Mozambique to fruition and is awaiting state consent to export the fuel as U.S. competition gathers pace.

    The company has obtained about 90 percent of the heads of agreement, or non-binding accords, it needs to finance an onshore liquefaction plant, country manager John Peffer said by phone from Maputo.

    Reaching an investment decision on the liquefied natural gas project “is predicated on how quickly we can get the agreements from government,” Peffer said. “They’re motivated and we’re motivated.”

    Africa’s projects to chill gas to a liquid for shipment by sea face competition from the U.S., which is moving ahead with its own export plans after shale production boomed. Mozambique passed laws in the past year to aid LNG development while PresidentFilipe Nyusi, elected in October, made senior appointments to state energy companies ahead of a possible gas bonanza.

    “Ultimately the timing for taking a final investment decision will be determined by the government’s pace agreeing the legal and contractual framework and approving necessary permits,” Peffer said. Anadarko expects to submit its development plan in the coming months.

    The oil and gas producer, based in The Woodlands, Texas, is pursuing the $15 billion Mozambique project at a time when other energy companies have deferred large developments following the collapse in crude, which is trading at less than half its price a year ago. The LNG plant would allow shipments from the largest gas discovery in a decade.

    http://www.bloomberg.com/news/articles/2015-08-26/anadarko-finds-buyers-for-mozambique-gas-as-state-mulls-go-ahead
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    Three Chilean generators seeking LNG contracts after reserving capacity


    Three Chilean power companies will be looking to sign supply contracts for LNG in the coming months after reserving capacity in a proposed expansion of the country's largest regasification terminal, GNL Chile said Wednesday.

    AES Gener, Colbun and IC Power reserved the whole of the 3.2 million cubic meters/day on offer under an open season launched late last year, GNL Chile said in a statement. The power companies now have until December to confirm their interest in signing a definitive contract.

    GNL Chile is owned by local gas consumers ENAP, Endesa Chile and Metrogas, which each own 20% of the Quintero terminal. The balance of shares is owned by Spain's Enagas and Oman Oil Company.

    GNL Chile said that the three companies' proposals obtained the highest points under the open season qualification process contemplated. The open season aims to attract new clients to the terminal, until now controlled by the shareholders of GNL Chile, and expand the size of the natural gas market in Chile in line with the current government's pro-gas energy market.

    In the past, energy companies have blamed the lack of access to regasification capacity on competitive terms for hindering the growth of the market.

    AES Gener, controlled by AES Corp, has become Chile's largest power generator thanks to heavy investment in coal-fired capacity over the last decade. It also owns the 379-MW Nueva Renca combined cycle plant in Santiago. Colbun, linked to Chile's Matte business group, owns 1,144 MW of gas-fired installed capacity in central Chile.

    IC Power, a subsidiary of New York-listed Kenon Holdings, currently owns two diesel-fired power plants in Chile.

    "This result underlines the commitment of GNL Chile's shareholders to competition on this market and to facilitate investment in the energy sector," GNL Chile chairman Andres Alonso said.

    http://www.platts.com/latest-news/natural-gas/santiago/three-chilean-generators-seeking-lng-contracts-21030320
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    Summary of Weekly Petroleum Data for the Week Ending August 21, 2015

    U.S. crude oil refinery inputs averaged about 16.7 million barrels per day during the week ending August 21, 2015, 117,000 barrels per day less than the previous week’s average. Refineries operated at 94.5% of their operable capacity last week. Gasoline production decreased slightly last week, averaging 9.8 million barrels per day. Distillate fuel production decreased last week, averaging 4.9 million barrels per day. 

    U.S. crude oil imports averaged 7.2 million barrels per day last week, down by 839,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged 7.5 million barrels per day, 1.7% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 630,000 barrels per day. Distillate fuel imports averaged 123,000 barrels per day last week. 

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 5.5 million barrels from the previous week. At 450.8 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 1.7 million barrels last week, but are in the middle of the average range. Both finished gasoline inventories and blending components inventories increased last week. Distillate fuel inventories increased by 1.4 million barrels last week but are in the middle of the average range for this time of year. Propane/propylene inventories rose 1.9 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories increased by 2.9 million barrels last week. 

    Total products supplied over the last four-week period averaged 20.3 million barrels per day, up by 2.4% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged about 9.6 million barrels per day, up by 5.8% from the same period last year. Distillate fuel product supplied averaged 3.7 million barrels per day over the last four weeks, down by 5.7% from the same period last year. Jet fuel product supplied is up 4.6% compared to the same four-week period last year.

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



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    US Oil production declines slightly




                                        Last Week  Week Before  Year Ago
    Domestic Production ......9,337            9,348           8,631

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


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    US natural gas glut prompts price warning


    The hot summer weather has done little to burn off an impending US natural gas glut, prompting warnings of record-breaking inventories and lower prices for the fuel in the year to come.

    By the onset of winter, gas banked for the heating season is likely to approach or exceed 4tn cubic feet, surpassing a previous high set in 2012, analysts believe.

    The forecasts are surprising, because this summer has been warmer than the last two and the 10-year norm, according to Commodity Weather Group. Power plants have consumed 4bn cu ft per day more gas than in 2014 as they meet air conditioning needs and turn away from coal as an energy source, according to Bentek Energy.

    But robust output from shale formations has more than compensated for this demand, with states such as Ohio emerging as important suppliers.

    Bentek, an analysis and forecasting unit of commodities information service Platts, warned in a report that benchmark US gas prices could fall below USD 2.50 per million British thermal units by autumn, with regional prices around northeastern wells dropping to record lows. Nymex September gas settled at USD 2.685 per mBtu on Tuesday.

    “Not much stands in the way of US gas storage inventories reaching record high levels this fall of about 4tn cu ft,” Bentek said in the report, to be issued at an industry conference this week. “And that strong likelihood points to a winter of relatively weak gas prices, perhaps carrying deep into 2016.”

    In the US gas market, producers inject gas into underground storage reservoirs from spring to autumn, banking fuel for the winter heating season. Design capacity of these facilities, consisting of salt domes, depleted gasfields and aquifers, is 4.665tn cu ft, according to the Energy Information Administration.

    The record for stocks held at the end of injection season was 3.929tn cu ft in November 2012. Because storage capacity is ample, some analysts do not expect a fire sale in which producers unload gas they cannot store.

    Breanne Dougherty, analyst at Société Générale, wrote: “While achieving a record storage level seems likely it is less about the level and more about how that level relates to capacity”.

    However, Bentek said that some storage reservoirs, especially salt domes along the US Gulf of Mexico coast, would approach physical limits by late autumn.

    “The price implications for this are decidedly bearish,” its report said, as “significant volumes of natural gas will be dumped on to the market this October and November, especially if heating load is slow to ramp up.”

    http://steelguru.com/gas-oil/us-natural-gas-glut-prompts-price-warning-report/432975#tag

    Natural gas production across all major shale regions in Energy Information Administration Drilling Productivity Report (DPR) is projected to decrease for the first time in September.

    Production from these seven shale regions reached a high in May at 45.6 billion cubic feet per day (Bcf/d) and is expected to decline to 44.9 Bcf/d in September.

    In each region, production from new wells is not large enough to offset production declines from existing, legacy wells said the EIA.

    The Utica region in eastern Ohio is the only DPR region expected to show production increases in June, July, and August.

    https://www.energyvoice.com/oilandgas/86043/natural-gas-output-in-us-set-to-fall-in-september/
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    Appalachian Producers Considering More Pennsylvania Utica wells


    Following last year’s rush to test the boundaries of the Utica Shale outside Ohio, some producers are reevaluating their prospects in the Appalachian Basin to determine how best to spend capital after consistent success from the formation in West Virginia and Southwest Pennsylvania.

    To be sure, for those with established acreage across the basin, the Marcellus Shale remains the low-risk, high-quality asset, while the Utica Shale in Southeast Ohio remains the proven economical sweetspot. But better-than-expected results from the Utica Shale in West Virginia and a series of record-breaking Utica wells in Southwest Pennsylvania now have management at some companies wondering how those blocks could fit into stretched drilling programs amid the current commodity price environment. Infrastructure would need to be built, or repurposed for voluminous dry gas Utica wells, astronomical costs, particularly in the deep, dry gas Utica of Southwest Pennsylvania, would need to come down and more data needs collecting.

    For the time being, as oil prices seesaw and natural gas prices show no signs of a rebound, some of the basin's leading producers are at the very least considering their options.

    "I think at this point, it's just too early to know how we're going to allocate those rigs to potential Utica wells in 2016 or not," Range Resources Corp. CEO Jeffrey Ventura told financial analysts during the company's second quarter earnings call in July. "I think we'll look at the economics; we'll look at the cost; we'll look at the markets and our new transportation deals and the customers that are coming online. We'll have to look at all of those things to see how that rolls out when we present our budget to the board in December."

    Range was the first company to test the Utica in Southwest Pennsylvania's Washington County. In December, the company reported an initial production (IP) rate from its Claysville Sportsman's Club #1 well of 59 MMcf/d (See Shale Daily, Dec. 15, 2014). That well has a 5,800-foot lateral. Since then, two other wells have bested the Claysville.

    EQT Corp. reported that its Utica Scotts Run well in Greene County, PA -- to the south of the Claysville -- had an IP rate of 72.9 MMcf/d (see Shale Daily, July 23). That well was drilled with a 3,221-foot lateral.

    To the east, Consol Energy Inc.'s Gaut 4IH, a step-out well in Westmoreland County, PA, IP'd at more than 60 MMcf/d on a 5,840-foot lateral. Both Consol’s and EQT's wells cost about $30 million to drill, complete and turn to sales -- more than double the cost of some Utica wells in Ohio.

    The recent success has been underscored by several other prolific dry gas wells in Southeast Ohio and Northern West Virginia over the last year, where operators have tested Utica wells between 25 MMcf/d and nearly 47 MMcf/d (see Shale Daily, Dec. 9, 2014; Sept. 25, 2014; Sept. 8, 2014; June 2, 2014; Feb. 14, 2014). Terry Engelder, a professor of geosciences at Pennsylvania State University, said those results from a tight, seven-county swath encompassing all three states have essentially proven the Utica's potential in Southwest Pennsylvania. He cautioned, though, that there is not yet enough data to determine decline rates there.

    "We have 614,000 acres in the Utica, 530,000 are 100% working interest acres that we really felt needed to be tested," said Consol Vice President of Gas Operations Craig Neal in an interview withNGI's Shale Daily. "Quite frankly, I'm glad we did; the results here have really driven us to look hard at comparing this to our Marcellus opportunities. We believe that we will get the cost down to under $15 million in the deep area and probably work our way down below that. Over in Monroe County, OH, we're already at that level on our 10,000-foot total vertical depths, and we'll be working our way down to much lower than $15 million, possibly even $12 million."

    EQT has said the same, aiming to lower Utica costs in Southwest Pennsylvania to between $12.5-14.5 million. EQT plans to drill a second Utica well in Greene County by the end of September, which would be about 13,400 feet deep and have up to a 4,500-foot lateral. Range is finishing up completions at its second Utica well in the region and plans to spud its third by the end of the year ahead of completion in 2016.

    Neal said Consol is drilling its second Utica well in the state, the CNX GH9, four miles away from the Smiths Run well. Both EQT and Consol have said it would take a "few" of these wells to ultimately lower costs in the area.

    "We think that [laterals] will get longer. We're monitoring our ability to frack at those depths. This thing is in the range of 20,000 feet," Neal said. "So, at those lengths, we are concerned about being able to stimulate it, see what the pressures would be." Neal added that the company would use ceramic proppant on the CNX GH9 as it did on the Gaut well. EQT also used ceramic proppant on its Smiths Run well.

    http://www.naturalgasintel.com/articles/103442-appalachian-producers-considering-more-pennsylvania-utica-as-budget-season-nears?utm_source=dlvr.it&utm_medium=twitter

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    Oil industry needs to find half a trillion dollars to survive


    At a time when the oil price is languishing at its lowest level in six years, producers need to find half a trillion dollars to repay debt. Some might not make it.

    The number of oil and gas company bonds with yields of 10 percent or more, a sign of distress, tripled in the past year, leaving 168 firms in North America, Europe and Asia holding this debt, data compiled by Bloomberg show. The ratio of net debt to earnings is the highest in two decades.

    If oil stays at about $40 a barrel, the shakeout could be profound, according to Kimberley Wood, a partner for oil mergers and acquisitions at Norton Rose Fulbright LLP in London.

    Debt repayments will increase for the rest of the decade, with $72 billion maturing this year, about $85 billion in 2016 and $129 billion in 2017, according to BMI Research. A total of about $550 billion in bonds and loans are due for repayment over the next five years.

    U.S. drillers account for 20 percent of the debt due in 2015, Chinese companies rank second with 12 percent and U.K. producers represent 9 percent.

    In the U.S., the number of bonds yielding greater than 10 percent has increased more than fourfold to 80 over the past year, according to data compiled by Bloomberg. Twenty-six European oil companies have bonds in that category, including Gulf Keystone Petroleum Ltd. and Enquest Plc.

    Gulf Keystone can “satisfy all its obligations to both its contractors and creditors” after authorities in Kurdistan, where the company operates, committed to making monthly payments from September, Chief Financial Officer Sami Zouari said in an e- mail.

    Some earnings metrics are already breaching the lows of the 2008 financial crisis. The profit margin for the 108-member MSCI World Energy Sector Index, which includes Exxon Mobil Corp. and Chevron Corp., is the lowest since at least 1995, the earliest for when data is available.

    Some U.S. producers gained breathing space by leveraging their low-cost assets to raise funds earlier this year and repay debt, Goldman Sachs Group Inc. wrote in a Aug. This helped companies shore up their capital and reduce debt- servicing costs.

    That may no longer be an option because energy companies have been the worst performers in the past year among 10 industry groups in the MSCI World Index.

    The biggest companies, with global portfolios that span oil fields to refineries, will probably emerge largely intact from the slump, Norton Rose’s Wood said. Smaller players, dependent on fewer assets, could have problems, she said.

    https://www.energyvoice.com/oilandgas/86082/oil-industry-needs-to-find-half-a-trillion-dollars-to-survive/
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    Alternative Energy

    Origin says big solar to dominate large-scale renewable energy market

    Origin Energy, the biggest energy retailer in the country, says that large-scale solar plants will quickly overtake wind energy, as the most cost competitive renewable energy technology, and will likely dominate the new build required to meet the reduced large-scale renewable energy target.

    Origin CEO Grant King says wind energy is not likely to fall in costs, because of the declining Australian dollar, the distance from new projects to transmissions sources, and because it is a mature technology. (And, if you believe New Zealand’s Meridian Energy, because the political opposition to wind energy will likely raise costs too).

    But large-scale solar – little of which has been built in Australia to date without additional government grants – is looking more attractive, both in terms of costs and because solar projects can be built more quickly, from planning to construction, than wind farms.

    Origin Energy produced this graph to show the transition between solar and wind costs. But it says that even these estimates of the falling cost of solar may prove conservative.



    wind vs solar costs“Wind, which has traditionally supplied renewable energy, is unlikely to come down in cost,” King told a media briefing following the company’s annual results on Thursday.

    “If anything, wind energy will go up in cost in our view because sites are becoming further removed from transmission and are costing more to connect.” The appreciation of the dollar and the fact wind was a “mature” technology, meant it was unlikely wind costs would fall, he said.

    “The big story is that solar costs continue to come down and come down quite dramatically,” King said. “We suspect that this chart in a few years will have underestimated the falling costs of utility-scale solar.”

    http://reneweconomy.com.au/2015/origin-says-big-solar-to-dominate-large-scale-renewable-energy-market-35657

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    Molycorp to suspend production at Mountain Pass facility in California

    Rare earths supplier Molycorp Inc , which recently filed for bankruptcy protection, said it would suspend production at its flagship Mountain Pass facility in California by Oct. 20 due to a fall in prices.

    The company, which is the only U.S. supplier of rare earths, said it will continue to supply rare earths from its other facilities in Estonia and China.

    The Greenwood, Colorado-based company filed for bankruptcy protection in June.

    Rare earths gained global attention in 2010, when China clamped down on exports. Sensing an opportunity, Molycorp started expanding its Mountain Pass rare earths mine in California. But China subsequently eased export rules, causing prices to fall.

    Rare earths are used in a range of products from smartphones to military jet engines to hybrid vehicles. China controls roughly 90 percent of the world's supply of rare earths.

    http://www.reuters.com/article/2015/08/26/molycorp-mountainpassfacility-idUSL4N11146D20150826
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    UK AD sector breaks 500MW capacity

    The UK anaerobic digestion (AD) industry now has a capacity of more than 500MW.

    That’s according to data published by the Anaerobic Digestion and Bioresources Association (ADBA).

    AD is the process of converting waste to produce green energy.

    The new total is 514MW for 411 plants in the farming, waste and water sectors.

    ADBA’s Chief Executive, Charlotte Morton, said: “This capacity is extremely valuable because AD generates low carbon baseload or dispatchable power, helping to keep the lights on and balance the output from intermittent renewables such as wind and solar.”

    She added Energy Secretary Amber Rudd has “rightly said providing baseload is one of her department’s priorities and biogas should be seen as an important component to our energy security”.

    However she said further growth in capacity is being hindered by the government’s decisions to remove Levy Exemption Certificates in the Summer Budget – which ADBA estimates will cost the industry £11 million – and to fast-track a four-week consultation aimed at removing pre-accreditation from the Feed-in Tariff.

    Ms Morton added: “To continue to expand the industry needs viable support in the forthcoming FiT review and an RHI budget which will support new green gas.

    “AD has the potential to meet 30% of UK domestic gas demand and overall it could cut UK greenhouse gas emissions by 4% and support food security and production.”

    http://www.energylivenews.com/2015/08/26/uk-ad-sector-breaks-500mw-capacity/
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    Samsung: E-Bike Battery Pack That Runs 100km with Single Charge

    Samsung SDI unveiled an e-bike battery pack that can run for 100 km with a single battery charge. The company will participate at the Eurobike 2015 on August 26 (Wednesday) in Friedrichshafen, Germany to showcase its various lithium-ion battery technologies for electric bicycles.

    “As the No.1 company of small scale-batteries, we will continue to build up the market for new battery application.”

    Eurobike is the world’s largest bicycle trade fair that has around 1,300 industry companies from 54 different countries attending each year. Starting from 2012, this year will mark Samsung SDI’s fourth participation.

    Samsung SDI will exhibit six types of standardized battery packs that can either be built inside or installed on the outside for immediate use. It will also display 12 types of battery packs that are currently being supplied to global manufacturing companies and the cells of various specifications. Another technology worth noticing is the addition of a Bluetooth function which will enable users to check on their smartphones for residual battery, remaining distance, and other data, while riding their bicycles.

    The 500Wh battery pack, unveiled for the first time by Samsung SDI, has achieved its slim size by incorporating high capacity cells and superior battery pack technology. It can also run for a 100km with a single charge by having maximized energy storage.

    Recent vitalization of eco-friendly e-bicycle market and higher demand for long distance products - due to the diversification of usage in leisure, commuting, and others - have prompted Samsung SDI to develop its high capacity battery packs.

    http://www.businesswire.com/news/home/20150826005361/en/Samsung-SDI-Unveils-E-Bike-Battery-Pack-Runs#.Vd2-7iVVhBc
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    EDF buys US wind energy developer


    EDF’s renewable arm has bought a wind power developer in the US.

    It now owns 100% of OwnEnergy’s assets, which includes its pipeline of future wind projects.

    The US company currently has eight wind energy projects either in the construction or operating phase. They have a total capacity of 329MW.

    Tristan Grimbert, CEO and President of EDF Renewable Energy said: “OwnEnergy’s business model taps into the entrepreneurial spirit of farmers, ranchers and other community leaders across the country with a focus on the mid-size market of off-takers. Their community partner approach will continue under the EDF Renewable Energy brand.”

    EDF has so far developed 6GW of wind, solar, biomass and storage projects in North America.

    http://www.energylivenews.com/2015/08/26/edf-buys-us-wind-energy-developer/
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    Agriculture

    Monsanto Drops $46 Billion Bid for Syngenta

    Biotech seed giant Monsanto Co. has dropped its roughly $46 billion bid for pesticides-focused rival Syngenta AG, bringing an end to a strongly resisted takeover bid that would have reshaped the global agriculture industry.

    Monsanto said it continues to believe that such a deal would have created “tremendous value,” but it will now focus on building its core business.

    Monsanto, the world’s largest seller of seeds, proposed in late April a deal that would have created a world leader in both seed and pesticide sales. The St. Louis-based company says the new entity would be better equipped to formulate new products and bring them quickly to farm fields.

    On Aug. 18, Monsanto increased its takeover offer to a value of 470 Swiss francs a share in cash and stock, up from its original offer of 449 francs and making the deal worth about $46 billion. The proposal also increased the reverse breakup fee to $3 billion.

    http://www.wsj.com/articles/monsanto-drops-bid-for-syngenta-1440600680
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    Precious Metals

    Evolution doubles profits


    Australian gold producer Evolution Mining has more than doubled its underlying net profit for the financial year ended June, as the company’s focus on cost reduction and improved efficiencies paid off. 

    Underlying net profit for the year reached a record A$106.1-million, compared with the A$50-million reported the year before, while earnings before interest, taxes, depreciation and amoritsation increased by 28% to A$266.4-million. 

    Evolution executive chairperson Jake Klein said on a conference call on Thursday that these results were reflective of the journey Evolution had been on in the last four years. “We started this journey with assets that were perceived as high cost, with limited mine lives. 

    By acting like owners and focusing on costs and efficiency gains, we have materially improved these assets. Put simply, this year, these results show that we were able to produce more gold from these same assets at significantly lower cost, while also selling each ounce at a higher amount.” Evolution reported record gold production of 437 570 oz for the year, as well as record low group average cash costs of A$711/oz and all-in sustaining costs of A$1 036/oz, which compared with the A$1 083/oz reported last year. 

    Operating costs decreased by 9%, to A$360.5-million, with Evolution noting that this lower cost level was sustainable going forward, owing to strong cost control at all operations. The transition to an owner-miner model at the Mt Rawdon mine in July 2014 and the more recent transition of the Mt Carlton mine had been a driving force behind the reduction in operating costs. 

    Sales revenue for the full year increased by 5% to A$666-million, driven by an 11% increase in gold volumes sold to 426 562 oz. Looking ahead, Evolution was forecasting group gold production of between 730 000 oz and 810 000 oz for the 2016 financial year, as the newly acquired La Mancha assets were expected to add to production in the new year. 

    The La Mancha assets included the high-grade Frog’s Leg underground mine and the adjacent White Foil openpit mine, in Western Australia, as well as the recently completed 1.5-million-tonne-a-year Mungari carbon-in-leach processing plant. Evolution had also acquired the Cowal gold project in July, where an ore reserve estimate of 72.58-million tonnes, grading 0.93 g/t gold for 2.18-million ounces of contained gold, has been defined. 

    Further, the miner flagged a takeover offer for fellow-listed Phoenix Gold, which has assets adjacent to the La Mancha assets. “We look forward to the next exciting phase in Evolution’s growth as we now turn our focus towards the successful integration of Cowal and Mungari, while maintaining our high standards across all of our sites,” Klein said.

    http://www.miningweekly.com/article/evolution-doubles-profits-2015-08-27
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    Base Metals

    Thundelarra strikes high grade copper at Red Bore

    Thundelarra strikes high grade copper at Red Bore

    Thundelarra’s has found very high grade copper during drilling at its Red Bore Project in Western Australia’s Doolgunna region. This has extended the known mineralisation at the Gossan prospects.

    The best result includes a peak intersection of 52 metres at 2.5% copper, and also included 1.9 grams per tonne gold and 4.2g/t silver from 25 metres in TRBC096.

    Down-hole surveying has also identified the presence of deeper off-hole conductors.

    In addition, two new holes at Impaler have intersected copper-gold-silver mineralisation, providing further support for the interpreted presence of deeper primary mineralisation.

    Detailed targets are currently being prepared as the final results of the downhole surveying are received and incorporated in to the conceptual model.

    These will be tested by a program of deeper diamond drilling in the next quarter.

    http://steelguru.com/mining/thundelarra-strikes-high-grade-copper-at-red-bore/433026#tag

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    Rusal warns aluminium prices to stay weak, pays no dividend

    Russia's Rusal Plc reported a 158 percent jump in second-quarter core profit on Thursday, beating forecasts thanks to sharp cost cuts and a weaker rouble, but opted not to pay a dividend due to limits imposed by its lenders.

    The world's top aluminium producer warned that it sees aluminium prices, already down to six-year lows, remaining under pressure due to a glut of exports from China and new supply from the Middle East and India.

    "Looking to the future, we expect that (the) aluminium market is likely to remain challenging for the remainder of the year," Chairman Matthias Warnig said in a statement.

    Rusal predicted global supply would outstrip demand by 277,000 tonnes in 2015, but that was less bearish than U.S. rival Alcoa's forecast for a surplus of 760,000 tonnes this year.

    It said it doubted Chinese producers would increase exports of semi-manufactured aluminium products, like plates for window frames and beer cans, as those exports were already loss-making.

    "This may result in a potential slowdown in Chinese exports in the second half of the year," it said.

    Rusal's core profit, or adjusted earnings before interest, tax, depreciation and amortisation (EBITDA), soared to $568 million for the three months to June from $220 million a year earlier, topping eight analysts' forecasts around $467 million.

    Recurring net profit, which is adjusted net profit plus Rusal's share of Norilsk Nickel's earnings, nearly tripled to $363 million from a year ago.

    It cut net debt to $8 billion by the end of June from $8.6 billion at the end of March.

    The market had thought Rusal would announce its first dividend since listing in 2010, after it said earlier this month that was under consideration.

    "We would like to see the dividend instated, but I don't think it's a key driver of the share price, and this should be overshadowed by the EBITDA and cash beat," CLSA analyst Andrew Driscoll said.

    Rusal's shares initially rose nearly 3 percent on Thursday but later fell 4.1 percent.

    Rio Tinto said recently that sliding London Metal Exchange prices and shrinking premiums - surcharges paid on top of LME prices for metal delivery - had driven 40 percent of the industry's smelters back into the red.

    That has led producers to consider cutting smelter capacity again, adding to cuts over the past two years. Glencore's Century Aluminum Co this week said it would idle a plant in Kentucky.

    Rusal expects to decide later this year on plans to cut 200,000 tonnes per year of capacity, which would come through maintenance of pot lines and would mostly affect output in 2016, Chief Financial Officer Alexandra Bouriko told reporters.

    http://www.reuters.com/article/2015/08/27/united-co-rusal-results-idUSL4N11208920150827
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    Steel, Iron Ore and Coal

    China July thermal coal imports down 30.6pct on year

    China’s July imports of thermal coal – including bituminous and sub-bituminous coals, climbed 12.8% from the previous month but slumped 30.6% on year to 7.12 million tonnes, according to the latest data from the General Administration of Customs (GAC).

    The was the fifth consecutive yearly drop, reflecting chronic weak domestic demand amid the government’s stricter quality standards of imported materials.

    China’s thermal coal imports over January-July were 49.47 million tonnes, a 42.2% fall from the year-earlier period.

    China imported 3.99 million tonnes of Australian thermal coal in July, down 28.1% on the year but increasing 5.8% from June, while imports from Indonesia fell 21.4% on year but up 16.2% on month to 2.1 million tonnes.

    Thermal coal imports from Russia decreased 23.4% on year but climbed 22.1% on month to 0.85 million tonnes in the month.

    Meanwhile, China’s lignite imports in July fell 4.4% on the year but surged 41.4% from June to 4.95 million tonnes.

    Lignite imports over January-July were 28.7 million tonnes, down 31.2% year on year, with imports from top supplier Indonesia at 93.4% or 26.8 million tonnes, down 32.1% from a year ago.

    http://en.sxcoal.com/0/130404/DataShow.html
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    China July coking coal imports further rise

    China’s coking coal imports posted a second straight monthly increase to 6.66 million tonnes in July – up 31.1% from June and up 31.9% on year, showed the latest data from the General Administration of Customs (GAC).

    Industry insiders attributed the increase largely to a slump of Australian coking coal prices and improved demand from domestic steel mills amid a rebound of steel prices.

    Imports from top supplier Australia surged 92.5% from the previous year and up 39.9% from the month-ago level to 3.98 million tonnes in July.

    Coking coal imports from Mongolia – China’s second largest supplier – rose 18.6% on year and up 3.4% from June to 1.32 million tonnes during the same month.

    Canada’s July exports to China stood at 1.0 million tonnes, up 32.7% on year and roaring 134.9% from June.

    Over January-July, China imported a total 28.29 million tonnes of coking coal, down 21.4% year on year.

    Top supplier Australia contributed 14.84 million tonnes or 52.5% during the same period, down 13.1% year on year.

    Mongolia and Canada exported 7.59 million and 3.22 million tonnes of coking coal during the same period, down 12.2% and 15.7% on year, separately.

    http://en.sxcoal.com/0/130405/DataShow.html
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    Vale sells another coal mine in Australia

    Brazilian mining giant Vale has continued its disposal of non-core holdings, agreeing to sell a mothballed coal mine in Australia jointly to Glencore Plc and Bloomfield Group for an undisclosed sum.

    The mine, called Integra, has been in care and maintenance since July 2014, when Vale said low coal prices meant keeping it open was no longer sustainable. It is the second coal mine Vale has sold this month, as it pursues a strategy to divest non-core assets.

    Vale in July sold another coal mine in Australia to a local operator for A$1 amid a sector downturn that has claimed thousands of jobs and billions of dollars in losses.

    The Integra colliery neighbours separate coal assets owned by Bloomfield and Glencore. It produced about 4.5 million tonnes of coal per year from both its underground and open cut mine before it was shut.

    Prices for coking coal used in steel making have fallen from $300 a tonne in 2011 to around $85, reflecting a global supply glut and a slowdown in steel production growth in China, a key destination for Australian coal.

    Vale has been looking to get out of the Integra mine since 2012. At the time it was seen worth around $500 million, although such heady valuations may no longer apply, say analysts.

    Under the sale, Glencore will acquire Integra's underground operations while Bloomfield will acquire the open cut mine.

    "This is a logical and unique opportunity that would strengthen our ability to operate over the long term," said John Richards, managing director of Bloomfield. "The deal would breathe new life into the Integra open-cut site and will sustain local employment."

    More than 4,000 jobs have been lost at Australian coal mines alone in the past two years.

    Bloomfield intends to incorporate its part of the mine into its existing operations, while Glencore said it had no immediate plans to resume mining in the near term.

    "This acquisition provides Glencore with future optionality to realise synergies from adjoining tenements," said Ian Cribb, head of Glencore's Australian coal operations

    Vale owns 61.5 percent of Integra with the rest held by Asian manufacturers, steelmakers and power companies, including Japan's Toyota Industries Corp and JFE Holdings Inc and South Korea's Posco, who have also agreed to sell.

    The transaction is expected to close in the next few weeks, the statement said.

    Vale said the sale was in line with its strategy of owning assets able to produce large volumes at competitive costs.

    http://www.reuters.com/article/2015/08/27/glencore-vale-integra-idUSL1N11201020150827

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    Shenhua taps S. Korea market for coal export

    China’s coal giant Shenhua Group has been reportedly seeking export of the commodity to South Korea, encouraged by the recent devaluation of the yuan and a lack of positive signs in the domestic market.

    It was said Shenhua had dispatched a delegation to South Korea days ago to meet traders and power utilities.

    One South Korean trader said Shenhua was offering 5,800 Kcal/kg NAR coal with 0.3% sulfur from Yujialiang mine located in Shendong County, Shaanxi Province at $80/t FOB, inclusive of the export tax.

    The main target customers for Shenhua may be the South Korean power utilities, who normally bought typical high calorific coal with about 1% sulfur.

    On 6,080 Kcal/kg NAR basis, Shenhua’s price of $80/t FOB translated to about $85/t CFR South Korea basis, far above South Korean utilities’ current price expectations.

    Some South Korean utilities were bidding this variety at below $55/t CFR, while others could accept prices at $54/t FOB, traders said.

    Actually, Shenhua Group and Datong Group -- one leading Chinese power producer, reported during an industry gathering in Beijing in April their plans to raise coal exports, hoping to find new growth momentum amid slack domestic demand.

    In a sign that China has been making efforts to revitalize the coal export market, the country lowered its coal export tax from 10% to 3% in January this year.

    Domestic and import demand for coal both shrank at a faster pace since 2014, which may be the main cause for the government to make the export tax cut.

    In 2014, China’s domestic coal consumption declined for the first time on a yearly basis to 3.51 billion tonnes, down 2.9% from 2013, data showed.

    http://en.sxcoal.com/0/130410/DataShow.html

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    BC Iron pledges to cut costs further as loss widens

    AAP reported that BC Iron has axed its dividend and pledged to cut its production costs further after the slide in iron ore prices saw it slump to a $158 million loss which followed a $71.8 million profit a year ago. The result was weighed down by more than $120 million in writedowns, though it still made a $43.1 million loss on an underlying basis.

    The junior miner cut its C1 cash costs from $69 to $47 per wet metric tonne during the second half of the year but not quickly enough to offset the fall in prices. On Wednesday the company said it would look to bring that down to between $42 and $45 per tonne in 2015/16.

    BC Iron has also scrapped its final dividend payment in response to the full year loss. In 2013/14 the company paid out 32 cents per share in dividends.

    Managing director Morgan Bell said the year had been challenging for the company, but it was focused on lowering costs at its Nullagine mine and other assets. He said "We are committed to continuing to drive costs down at Nullagine and building a long term future around our newly acquired assets. We also recognise the need to be pragmatic and make decisions that reflect the iron ore environment we operate in.

    http://steelguru.com/mining/bc-iron-pledges-to-cut-costs-further-as-loss-widens/433019#tag

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    Voestalpine may delay China special steel plant - CEO

    Austrian high-end steel maker Voestalpine might not stick to its plan to start building a specialised steel plant in China this year but still wants to expand there in the long term, its chief executive told Reuters in an interview.

    Voestalpine said in October it planned to start building this year a premium steel and specialised steel product plant in Yinchuan with local partner Kocel Machinery, pumping 140 million euros ($161 million) into the project.

    The plant was still an option but "we will take our time to assess how we will proceed from here", Wolfgang Eder said, adding Voestalpine might choose another location. He gave no details.

    European car makers such as Volkswagen and BMW have seen their business slow in China as demand drops.

    Voestalpine has been relatively shielded from the slump in Chinese markets and cheaper Chinese steel exports as it produces premium steel and steel products, mainly for the transport and energy sectors, which are otherwise hard to get in China.

    "Nothing has changed for us in terms of China's attractiveness in the long term," Eder said, adding it was not "unrealistic" that Voestalpine might build another 10 plants in China by 2020.

    Voestalpine is keen to expand in Asia, where it generated around 783 million euros of revenue -- or 7 percent of the group total -- in 2014/15, of which 300 million was in China alone, where it already has around two dozen sites.

    It has said it aims to nearly triple annual revenue there to around 2 billion euros by the end of 2020 and invest between 400 million and 500 million euros in the region.

    Low prices for commodities including iron ore, aluminium, coal and titanium have derailed Voestalpine's revenue target of 20 billion euros by 2020/21, Eder said. In 2014/15 Voestalpine's revenues reached 11.2 billion euros.

    Still, he confirmed a 9 percent margin target for earnings before interest and tax (EBIT) and 14 percent for earnings before interest, tax, depreciation and amortisation (EBITDA) by 2020/21, adding the latter may be hit before then.

    He also confirmed Voestalpine's EBITDA and EBIT this financial year are on track to beat last year's 1.53 billion euros and 886.3 million, respectively.

    http://www.reuters.com/article/2015/08/26/voestalpine-outlook-china-idUSL5N11114N20150826
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    Tata Steel to mothball Wales plant as tough markets persist

    Tata Steel, Britain's largest steelmaker, said on Wednesday it will mothball a plant in south Wales as tough markets persist, forcing the company to focus on higher-value products.

    Europe's second-largest steelmaker after Arcelor Mittal said it will redeploy employees at the plant in Llanwern, Newport, which makes strip products used in autos, construction, domestic goods and packaging, although British press reports said the company will cut 250 jobs.

    The move comes only a month after Tata said it may cut up to 720 British jobs, mainly at Rotherham in northern England, in a revamp of its speciality and bar business, which has been hit by cheap imports and high energy costs.

    "In the past year, we have also been making positive improvements to our manufacturing capability," Stuart Wilkie, director of Tata Steel's Strip Products UK business, said in a statement on Wednesday.

    "But surging, and often unfairly traded, imports have combined with a strong pound to create a very challenging business environment," Wilkie added.

    Tata Steel has been forced to slash costs and jobs since 2007 when it bought Anglo Dutch producer Corus for $13 billion. It employs around 17,000 people versus some 25,000 in 2008.

    The UK steel sector has shrunk dramatically in recent years amid challenges like poor post-financial crisis demand growth, over-capacity, high labour and energy costs and more recently, rising imports and a strengthening currency.

    http://www.reuters.com/article/2015/08/26/britain-tatasteel-closure-idUSL5N1113P920150826
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