Mark Latham Commodity Equity Intelligence Service

Tuesday 12th April 2016
Background Stories on www.commodityintelligence.com

News and Views:

Attached Files






    Macro

    Iran says Russia delivers first part of S-300 defence system


    Russia has delivered the first part of an advanced missile defense system to Iran, Iranian media reported on Monday, starting to equip Tehran with technology that was blocked before it signed a deal with world powers on its nuclear program.

    The S-300 surface-to-air system was first deployed at the height of the Cold War in 1979.

    In its updated form it is one of the most advanced systems of its kind and, according to British security think tank RUSI, can engage multiple aircraft and ballistic missiles around 150 km (90 miles) away.

    Russia's agreement to provide Iran with S-300 has sparked concern in Israel, whose government Iran has said it aims to destroy.

    In a recorded transmission, state television showed Foreign Ministry spokesman Hossein Jaber Ansari telling a news conference on Monday: "I announce today that the first phase of this (delayed) contract has been implemented."

    Ansari was replying to reporters' questions about videos on social media showing what appeared to be parts of an S-300 missile system on trucks in northern Iran.

    Russia says it canceled a contract to deliver S-300s to Iran in 2010 under pressure from the West. President Vladimir Putin lifted that self-imposed ban in April 2015, after an interim agreement that paved the way for July's full nuclear deal.

    The U.S. military has said it has accounted for the possible delivery of the S-300 to Iran in its contingency planning.

    http://www.reuters.com/article/russia-iran-arms-idUSL5N17E131
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    ECB Scrambles To Calm A Furious Germany: "Helicopter Money Was The Straw That Broke The Camel's Back"


    Over the weekend we reported that in a scathing Spiegel article the German financial media outlet let loose at the ECB with a report according to which Germany is now "taking aim" at the ECB as a result of the imminent launch of Helicopter Money by the Frankfurt-based central bank.

    Spiegel even suggested that the German finance ministry would go so far as to sue the ECB to prevent this final monetary paradrop in a desperate attempt to stimulate (hyper)inflation:

    Were the ECB, as Draghi has indicated it might, to open the monetary policy gates even wider -- with, for example, helicopter money -- the German finance minister would view it as a breaking point. Such a policy would see the ECB bypass the banking sector and distribute money directly to companies, consumers or states, all of which would stand in violation of the central bank's own statutes. Should it come to that, sources in the German Finance Ministry say, Berlin would have to consider taking the ECB to court to clarify the limits of its mandate. In other words: the German government and Draghi's ECB would be adversaries in a public court case.

    Such a legal battle between the government and a central bank would be a first in German history. It could lead to a constitutional crisis of unprecedented severity or to currency turbulence -- which is why it is extremely improbable that the two sides would allow the conflict to escalate to such a degree.

    Just a few hours later Schauble went on the record to deny that the Geran finmin would consider taking legal action if the European Central Bank resorts to "helicopter money" but the damage was already done.

    As Reuters follows up today, "almost a month after stoking a divisive debate about how far it should go in pumping money into the flagging euro zone economy, the European Central Bank is trying to soothe relations with Germany after unusually strong criticism from Berlin."

    http://www.zerohedge.com/news/2016-04-11/ecb-scrambles-calm-furious-germany-helicopter-money-was-straw-broke-camels-back
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    Brazil congressional committee recommends impeaching Rousseff

    Brazil congressional committee recommends impeaching Rousseff

    A committee of Brazil's lower house of Congress voted 38-27 on Monday to recommend the impeachment of President Dilma Rousseff, who faces charges of breaking budget laws to support her re-election in 2014.

    A vote in the full lower house is expected to take place on Sunday. If two-thirds vote in favor, the impeachment will be sent to the Senate.

    If the upper house decides by a simple majority to put Rousseff on trial, she will immediately be suspended for up to six months while the Senate decides her fate, and Vice President Michel Temer will take office as acting president.

    It would be the first impeachment of a Brazilian president since 1992 when Fernando Collor de Mello faced massive protests for his ouster on corruption charges and resigned moments before his conviction by the Senate.

    A former leftist guerrilla, Rousseff has denied any wrongdoing and rallied the rank and file of her Workers' Party to oppose what she has called a coup against a democratically elected president.

    Speaking to thousands of supporters in Rio de Janeiro, Rousseff's predecessor and Workers' Party founder Luiz Inacio Lula da Silva said Brazilian business elites were pressuring lawmakers to remove the president. Lula, who is under investigation in a graft probe, said he had convinced Rousseff to return to policies that favored Brazil's poor.

    Caught in a political storm fueled by Brazil's worst recession in decades and the country's biggest corruption scandal, Rousseff has lost key coalition allies in Congress, including her main partner, vice president Temer's PMDB party.

    The rift between Rousseff and her vice president reached breaking point on Monday after an audio message of Temer calling for a government of national unity was released apparently by mistake, further muddying Brazil's political water.

    Temer's 14-minute audio message sent to members of his own PMDB party via the WhatsApp messaging app showed he was preparing to take over if Rousseff is forced from office.

    The audio was posted on the website of the Folha de S.Paulo newspaper and confirmed to Reuters by Temer's aides as authentic. Aides said it was accidentally released and they quickly sent another message asking legislators to disregard it.

    http://www.reuters.com/article/brazil-politics-idUSL2N17E1MQ
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    Gold: A tough asset.

    Image title
    Gold ETF shares outstanding. 
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    China auto sales up 8.8 pct in March


    Auto sales in China, the world's biggest auto market, surged 8.8 percent year on year to 2.44 million units in March, data from an industry association showed Tuesday.

    Sales of passenger cars rose by 9.8 percent year on year to 2.06 million units last month, according to the China Association of Automobile Manufacturers.

    http://news.xinhuanet.com/english/2016-04/12/c_135271195.htm
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    VEB: $20bn debt.

    Russia’s Most Important Bank Needs a Bailout

    VEB faces task of paying off about $20 billion in foreign-currency debt


    “VEB is one of my biggest bond positions,” said one trader. “The government knows that it will not let VEB default.”


    Meanwhile in Nigeria:

    Factories are closing because they can’t find dollars to import parts. Supermarkets are struggling to keep shelves stocked. Power plants have virtually stopped producing electricity because they can’t pay for maintenance. New shopping malls are empty and ordinary citizens are going to lengths to find some basic goods.

    Attached Files
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    Oil and Gas

    Kuwait Targets Oil Output at 43-Year High as Freeze Talks Loom


    Kuwait Oil Co. will soon offer contracts for offshore rigs and support services to drill its first undersea wells as the Persian Gulf nation tries to boost crude output to the highest level in more than four decades.

    Kuwait is targeting production of 3.165 million barrels a day later this year or in 2017, up from a current 3 million barrels a day, Chief Executive Officer Jamal Jaafar said Monday at a conference in Kuwait City. He made his comments a day after fellow OPEC member Iraq reported a record level of production and less than a week before some of the biggest oil-producing nations are to discuss freezing output to reduce a glut and shore up prices.

    “We are trying to make use of the low cost of production in Kuwait,” said Jaafar, whose company is the exploration and production arm of national energy group Kuwait Petroleum Corp.

    Kuwait and Iraq are among members of the Organization of Petroleum Exporting Countries that plan to meet with other major producers on April 17 in Doha for talks about a freeze. Saudi Arabia, Russia, Venezuela and Qatar agreed in February on a proposal to cap output at January levels, though Iran has refused to participate until it restores production to pre-sanctions levels. Crude prices have tumbled more than 60 percent over the last two years.

    Re-Balancing Markets

    Oil markets will be oversupplied throughout the first half of this year but will start to re-balance in the third quarter, Jaafar said.

    Kuwait Oil is looking at six offshore areas to drill its first undersea wells and plans soon to offer contracts for the work, he said, without specifying dates. Kuwait, OPEC’s fourth-largest member, hasn’t pumped an annual average of more than 3 million barrels a day since 1973, data compiled by Bloomberg show.

    Kuwait will also start a project this year with Royal Dutch Shell Plc to capture carbon dioxide at oil fields and re-inject it underground to produce more crude, he said. Kuwait Oil is tackling more difficult crude formations to increase production capacity, and it’s testing the injection of chemicals and polymers at fields in the northern part of the country to enhance recovery.

    Crude output in Iraq, OPEC’s second-biggest producer, reached a record 4.55 million barrels a day last month from 4.46 million barrels in February, the country’s state-run Oil Marketing Co. said Sunday in an e-mailed statement.

    Production in southern Iraq, where most of the country’s biggest fields lie, will remain unchanged this year amid cuts in investment, Ali Haddad al-Fares, head of the energy committee of the Basra regional council, said Monday in an interview in Kuwait City. Iraq is targeting total output to reach 6 million barrels a day by 2020, with most of the increase to come from the Basra region, he said.

    http://www.bloomberg.com/news/articles/2016-04-11/kuwait-targets-oil-output-at-43-year-high-as-freeze-talks-loom
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    Kuwait oil and gas workers to go on strike from Sunday -union


    Thousands of workers at state-owned oil, gas and petrochemical companies in Kuwait will stage a strike from Sunday in protest at a government plan to cut some of their benefits and wages, the president of the oil and gas union said on Monday.

    "The union finds itself obliged to take the difficult decision to escalate with this announcement of a general strike in all sectors (of oil and gas) starting on Sunday, April 17 at 7 a.m. (0400 GMT)," Saif al-Qahtani, head of the Oil and Petrochemical Industries Workers Confederation, told a news conference.

    The union did not say how long the strike would last.

    Production and exports would not be affected by the strike, a spokesman for Kuwait's national oil company Kuwait Petroleum Corp (KNPC), one of five state-owned companies that will be affected by the strike, said.

    "If the strike happens we do have a strategy in place to deal with this kind of action where extra staff will be used to run operations" Khaled Al-Asousi, KNPC's Deputy CEO for Support Services said, adding that some oil facilities might be shut down temporarily.

    Workers fear reduced salaries, benefits and layoffs will be part of a planned government overhaul of the payroll system in the public sector.

    Strikes are fairly common among public sector workers in Kuwait - one of the world's richest countries per capita - unlike in other Gulf states like the United Arab Emirates, where unions are banned.

    The other companies where workers plan to join the strike are Kuwait Oil Company, Kuwait Oil Tanker company, Equate Petrochemical Industries Company and Kuwait Gulf Oil Company.

    OPEC-member Kuwait pumps 3 million barrels of crude per day and has three refineries with a combined capacity of 930,000 bpd.

    http://www.reuters.com/article/energy-kuwait-employment-idUSL5N17E47I
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    Rosneft Surpasses Gazprom as Russia's Most Valuable Company


    Rosneft OJSC became Russia’s most valuable company as its market capitalization exceeded that of natural gas exporter Gazprom PJSC for the first time since its shares began trading in 2006.

    Rosneft shares rose 4.8 percent in London by 12:02 p.m., boosting the value of Russia’s largest oil producer to $52 billion. Gazprom gained 0.3 percent, raising its market capitalization to $51 billion. In Moscow, Rosneft advanced 3.4 percent, while the gas producer was little changed.

    The state-controlled oil company has narrowed Gazprom’s lead from more than $250 billion in 2008, as it expanded through the acquisitions of assets from Yukos Oil Co., which the government sold at forced auctions over tax claims, and BP Plc’s joint venture in Russia. Gazprom has faced rising competition in the domestic gas market, including from Rosneft, and the lowest prices in more than a decade in Europe.

    “Rosneft is growing its free cash flow and should do better in a stronger oil price environment,” Ildar Davletshin, an energy analyst at Renaissance Capital, said by e-mail. “Gazprom’s free cash flow is on the way down and unlikely to reverse soon.”

    Gazprom still dwarfs Rosneft by output. Its oil and natural gas output are equivalent to about 8 million barrels a day, while Rosneft pumps roughly 5 million barrels a day.

    http://www.bloomberg.com/news/articles/2016-04-11/rosneft-surpasses-gazprom-as-russia-s-most-valuable-company
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    Accenture on the global LNG market

    Accenture on the global LNG market

    There are six core implications of the demand shift for producers and marketers of LNG:

    Protect market share in Japan, South Korea, China and India

    Diversify to other markets and smaller customers

    Prepare for a very different competitive landscape with non-traditional players exporting and trading U.S. LNG

    Build flexibility in contract portfolios through trading and midstream

    Invest in science, technology, and engineering for small scale LNG and new applications

    Drive down the costs of delivered LNG

    Get to full report; https://www.accenture.com/us-en/insight-gas-grows-up?c=res_acnenrgytwt_10000267&n=smc_0216
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    Oil and gas giant PetroChina reports $162b liability


    Among all non-financial A-share companies, the country's biggest oil and gas producer PetroChina Co tops the list with 1.05 trillion yuan ($162.8 billion) liability, reported Securities Daily citing statistics.

    It recorded the liability despite bringing down its debt ratio to 43.8 percent from 45.2 percent a year ago after slashing total debts by 3.5 percent last year.

    PetroChina obtained regulatory approval in December to issue no more than 40 billion yuan worth of corporate bonds, according to Xinhua.

    The thirst for liquidity came as oil companies reported a weaker year due to nosediving oil price. Brent crude, the benchmark for more than half the world's oil, plunged 48 percent last year.

    PetroChina reported a 67 percent slump in net profit to 35.5 billion yuan, marking its worst performance since 1999, according to the company's annual report. The other mainland-listed oil magnet Sinopec reported a 32.1 percent decrease in net profit to 32.2 billion yuan.

    Cost management has gained increasing attention, with PetroChina planning a 23 percent, or 155.7 billion yuan, cut on capital expenditure, said the newspaper citing comment from the management.

    Oil giants are also eyeing enhanced ownership reform to keep lean, said analysts. PetroChina sold remaining natural gas reserves under its Xinjiang, Southwest, Huabei, Dagang, Liaohe and Changqing subsidiaries to local petroleum administrations for 3.51 billion yuan, in a drive to clarify assets relationship and recover cash flow early, it said in a regulatory filing last November.

    The company reported a 26.7 percent decrease in cash flow from operating activities to 261.31 billion yuan and a 25.8 percent slump in cash flow from investment activities.

    http://en.chinamining.com.cn/Companies/2016-04-12/1460423334d76046.html
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    LNG Backers Face Comatose Market as Oil Shows Signs of Life


    The most influential executives, investors and traders in the liquefied natural gas market will gather in Perth, Australia, this week for the industry’s biggest conference. While Brent oil has surged about 50 percent since hitting a 12-year low in January amid the worst energy crash in a generation, LNG continues its downward slide.

    For crude, two years of spending cuts have throttled output and begun to ease an unprecedented period of oversupply. In the LNG markets, where projects cost billions of dollars and take years to build, a backlog of developments sanctioned when prices were higher are bringing supply online faster than demand can soak it up.

    “It looks like we’re entering the down cycle for LNG rather than coming out the other side,” Jeff Brown, president of consulting firm FGE, said by phone from Singapore. “For the spot market in the next several years, it looks like there’s going to be a lot of LNG out there chasing buyers.”

    Oil and LNG prices have historically been linked because traditional long-term contracts priced the gas in relation to crude. That correlation held through 2014 and 2015, as prices for both fuels tanked amid a global glut.

    The two are now heading in opposite directions. Spot LNG in Singapore slipped to $4.029 per million British thermal units the week of April 4, the lowest since Singapore Exchange Ltd. began assessing it in September 2014 and extending its decline into a fifth month. Brent, meanwhile, recovered from its early-year crash to post its best first quarter in four years. The global oil benchmark fell 1 percent to $41.53 a barrel by 8:09 a.m. London time.

    http://www.bloomberg.com/news/articles/2016-04-10/lng-backers-face-comatose-market-as-oil-shows-signs-of-revival

    Attached Files
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    Pertamina has $2bn M&A war chest


    Indonesia's state-owned energy company Pertamina has a budget of up to $2 billion for mergers and acquisitions this year amid efforts to supply Indonesia's growing domestic energy demand.

    Pertamina is looking to buy into projects in countries including Iraq, Saudi Arabia and Russia and will also target expansion in border areas to strengthen Indonesia's sovereign claims, including in the South China Sea, its upstream director, Syamsu Alam, told Reuters.

    Pertamina plans to increase output through mergers and acquisitions by 14,000 barrels of oil equivalent per day this year, and by 117,000 boepd in 2017, Alam told the news agency.

    http://www.upstreamonline.com/live/1429260/pertamina-has-usd-2bn-manda-war-chest?utm_source=twitterfeed&utm_medium=twitter

    Attached Files
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    Pemex applies brakes at Lakach


    Mexican state oil company Pemex has told contractors to stop work on the offshore Lakach gas project in the Gulf of Mexico — potentially its first deep-water development — as it seeks to defer upstream spending.

    http://www.upstreamonline.com/live/1429224/pemex-applies-brakes-at-lakach?utm_source=twitterfeed&utm_medium=twitter
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    Marathon Oil to Divest $950 Million of Non-Core Assets


    Marathon Oil Corporation (NYSE:MRO) announced today it has signed agreements for the sale of certain non-core assets for $950 million, bringing the total to approximately $1.3 billion since last year.

    In the largest transaction, the Company will divest all of its Wyoming upstream and midstream assets for $870 million, excluding closing adjustments. The upstream properties, comprised primarily of waterflood developments in the Big Horn and Wind River basins, averaged 16,500 barrels of oil equivalent per day in first quarter 2016. The assets sold also include the Red Butte pipeline, a 570-mile pipeline that is the only export line in the area. The effective date of this transaction is Jan. 1, 2016, and closing is expected mid-year 2016.

    In separate transactions, Marathon Oil has signed agreements for the sale of its 10 percent working interest in the outside-operated Shenandoah discovery in the Gulf of Mexico, operated natural gas assets in the Piceance basin in Colorado, and certain undeveloped acreage in West Texas for a combined total of approximately $80 million.

    "Since August 2015, we have now announced or closed non-core asset sales of approximately $1.3 billion, surpassing our targeted range of $750 million to $1 billion," said Marathon Oil president and CEO Lee Tillman
    . "Ongoing portfolio management continues to drive the simplification and concentration of our portfolio to lower risk, higher return U.S. resource plays and support our 2016 objective of balance sheet protection."



    Read more: http://www.nasdaq.com/press-release/marathon-oil-to-divest-950-million-of-noncore-assets-20160411-00984#ixzz45aebzTYO
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    Baker Hughes 'faces police probe'


    Police have reportedly been called in to investigate a fatal incident at a Baker Hughes facility in Norway last year after the country’s Labour Inspectorate ruled there was a breach of work environment regulations.

    http://www.upstreamonline.com/live/1429173/baker-hughes-faces-police-probe?utm_source=twitterfeed&utm_medium=twitter
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    Chesapeake Energy's borrowing limit maintained at $4 billion


    Chesapeake Energy Corp said its borrowing base was reaffirmed at $4 billion, but it had to pledge additional assets as collateral.

    Every six months, energy companies negotiate their credit limits with banks, based on the value of their oil and gas reserves.

    Chesapeake, the No.2 U.S. natural gas producer, said on Monday that the next review of its borrowing base had been postponed until June 2017.

    The company's shares rose more than 6 percent in premarket trading.

    Oil prices have dropped more than 60 percent from their peaks in June 2014, hitting the profits of most companies in the industry.

    Chesapeake has managed to retain its borrowing limit at a time when most oil and gas producers are bracing for steep cuts to their credit lines.

    Just a few weeks into the current round of talks, over a dozen companies have had their loan limits cut by a total of $3.5 billion, or a fifth of available credit, according to data compiled by Reuters. (tmsnrt.rs/1S9304F)

    At that rate, $10 billion more of bank credit will disappear as the remaining credit lines of about $50 billion come under scrutiny in talks that stretch into May.

    Banks are also relaxing covenants that could have allowed lower classes of lenders to throw borrowers into default and suddenly trigger repayment requirements.

    Chesapeake said two of its covenants had been relaxed under the latest agreement.

    The company's shares were trading at $4 before the bell.

    Up to Friday's close, the stock had lost nearly three-quarters of its value since the beginning of June 2015.

    http://www.reuters.com/article/us-chesapeake-enrgy-credit-line-idUSKCN0X81E1

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    Oilfield services provider Carbo Ceramics' executives to take pay cut


    Oilfield services provider Carbo Ceramics Inc said its executives would take a 10-30 percent cut in their monthly cash compensation as the company looks to slash costs.

    The company, which makes ceramic balls used to keep the cracks in fractured shale rock open, said on Monday the cut would be through voluntary participation by executives in furloughs, unpaid time off and leaves.

    Carbo Ceramics, however, said it had not amended the employment contracts of its chief executive and other executives.

    A Reuters analysis of filings through mid-March showed that a number of companies had changed their payout plans for executives amid the collapse in oil prices.

    http://www.reuters.com/article/carbo-ceramics-compensation-idUSL3N17E3MX
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    National Oilwell slashes dividend amid oil slump


    National Oilwell Varco Inc, the largest U.S. oilfield equipment maker, said it would cut its quarterly dividend to 5 cents per share from 46 cents, as it struggles to cope with a prolonged slump in oil prices.

    The company cut its quarterly dividend by 89 percent, saying that market conditions continued to deteriorate through the first quarter.

    A prolonged oil price slump, of more than 60 percent since its peak in 2014, has forced many companies to slash or scrap dividends, lay off employees and cut executive pay.

    The dividend cut was expected to improve future net cash flow by about $615 million per year, Chief Executive Clay Williams said in a statement on Monday.

    The company forecast a 20 percent fall in first-quarter revenue from the fourth quarter. This would imply a first-quarter revenue of about $2.16 billion, based on fourth-quarter revenue of $2.70 billion.

    National Oilwell, which laid off more than 21 percent of its employees in 2015, said in February that the oil price slump would weigh on its order book for the "foreseeable future" as customers clamp down on spending.

    http://www.reuters.com/article/national-oilwell-dividends-idUSL3N17E3AY
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    Agriculture

    Pork Shortage in China Leads to Soaring Prices, Rush to Import




    Image titleToo few pigs are headed to markets in pork-loving China, leading to soaring domestic prices and a rush of pork imports from the U.S. and elsewhere to fill the gap. As WSJ’s Lucy Craymer reports:

    Prices of the key ingredient in everything from lunchtime pork dumplings to fiery Sichuan-style mapo tofu have risen 48% in China in the last year. The average price of pork in the week ended April 2 was 25.67 yuan a kilogram (roughly $1.80 a pound), up from 17.35 yuan a kilogram a year earlier, according to China’s Ministry of Agriculture.

    High pork prices were felt in the latest inflation data out of China on Monday. Consumer prices were up 2.3% in March from a year earlier, steady from the previous month. The food-price component of the index was up 7.6% in March, led by higher pork and vegetable prices. Pork continues to hold a high weighting—around 3%, according to Rabobank—in the price of the basket of goods and services that is used to calculate the consumer-price index.

    Prices of pork in China, the world’s largest pork consumer, are higher than elsewhere in the world. For example, pork in Europe sells on average for 65 U.S. cents a pound.

    http://blogs.wsj.com/chinarealtime/2016/04/12/pork-shortage-in-china-leads-to-soaring-prices-rush-to-import/

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    Precious Metals

    If Gold is good, Silver is great!

    Image title
    1 oz of Gold buys 78oz of Silver. 5 year average is 62. 
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    Base Metals

    Vedanta’s Zambian unit's copper output remains flat


    Output from London-listed Vedanta Resources’ copper unit in Zambia remained flat during the fourth quarter of the year. 

    This emerged as the unit battled a 25% increase in power tariffs in January, which impacted negatively on the cost of production, costing the miner $3-million a month. The company was now exploring a range of possible solutions and was “in continued dialogue with the relevant stakeholders”. 

    During the fourth quarter to March, mined metal production inched up 1% quarter-on-quarter to 28 600 t, also rising 6% on a year-on-year basis to 123 000 t. During the year to March 2016, the company’s integrated volume, while stable at 117 400 t, was lower than the mined metal output, owing to an increase in concentrate inventory.

     Custom volumes were at 64 300 t, 24% higher year-on-year owing to a biennial shutdown during the prior year and improved availability of third-party concentrate. A biennial shutdown scheduled for the second quarter of 2017 would result in an increase in smelter throughput exceeding 80 t/h.

    http://www.miningweekly.com/article/vedantas-zambian-unit-copper-output-remains-flat-2016-04-11
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    Alcoa profit falls; demand seen growing faster than supply

    Alcoa profit falls; demand seen growing faster than supply

    Metals company Alcoa Inc on Monday reported a lower quarterly profit, with results hurt by low commodity prices, the strong U.S. dollar and plant closures or divestments, but the company's top executive said he expected aluminum demand to grow faster than supply this year.

    Alcoa also lowered its 2016 outlook for global sales in the aerospace industry, and its shares fell 5 percent in after-hours trading.

    Alcoa will split in two in the second half of this year.

    The company's traditional smelting business will retain the Alcoa name, while a new firm named Arconic will retain the added-value aerospace and automotive business involving strong, light alloys that the company has worked hard to build in recent years.

    But that traditional business has been hurt by slumping aluminum and alumina prices. Alcoa Chief Executive Klaus Kleinfeld told Reuters in an interview that the company expects global aluminum demand to grow by 5 percent this year, while supply should increase by 2 percent.

    "That should create additional price support" for aluminum, he said.

    He added that the company's closure or sale of some smelters was a way to "achieve the profitability that we want to get to."

    Alcoa said it now expects global sales in the aerospace industry to grow in a range of 6 to 8 percent this year. That is down from its last forecast in the fourth quarter of 2015 of growth between 8 and 9 percent.

    Kleinfeld said he was confident in this outlook, citing long order backlogs for the airline industry.

    The company said it expects global automotive production to grow between 1 and 4 percent this year.

    The New York-based company posted first-quarter net profit of $16 million or 0 cents per share, down from $195 million or 14 cents per share a year earlier.

    Analysts on average had expected earnings per share for the quarter of 2 cents.

    Excluding one-time items, the company said earnings per share totaled 7 cents.

    Revenue for the quarter fell 15 percent to $4.95 billion from $5.82 billion a year earlier. Analysts had expected revenue for the quarter of $5.14 billion.

    http://www.reuters.com/article/us-alcoa-results-idUSKCN0X82H0

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    Steel, Iron Ore and Coal

    Daqin Railway Q1 net profits may slide 50pct on yr

    Daqin Railway Q1 net profits may slide 50pct on yr

    Daqin Railway Co., Ltd, the operator of China’s leading coal-dedicated Daqin rail line, expected its net profit to slide 50% in the first quarter this year, the company said in a quarterly statement on April 12.

    That means the first quarter profit may drop to 1.86 billion yuan ($287 million), based on its year-ago net profit of 3.72 billion yuan.

    Daqin Railway, which mainly transported coal from Shanxi, Inner Mongolia and other major production bases via Qinhuangdao port to be shipped to end-users in south China, attributed the profit slump to flat coal demand at domestic market and a 0.001 yuan/t cut in rail coal freight from February 4 this year.

    Daqin is losing its dominant role in rail coal transport, due to the operation of Shuohuang (Shuozhou, Shanxi – Huanghua port, Hebei), Zhangtang (Zhangjiakou, Hebei – Caofeidian port) and Zhunchi (Zhunger- Shenchi) railways that diverts Inner Mongolian coal to other northern ports.

    Shanxi province is increasing the in-situ conversion of coal to electricity and chemical products, instead of directly delivering coal to other provinces, to enhance profitability.

    In March, Daqin line realized coal transport of 28.89 million tonnes, down 19.23% year on year, while the volume over the first quarter dropped 21.43% on year to 83.28 million tonnes, the company said.

    http://en.sxcoal.com/0/144216/DataShow.html
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    Colombian Mar thermal coal exports down 28pct on year


    Colombia exported 5.65 million tonnes of thermal coal in March, falling 28% year on year and dropping 27% from February's 11-month high to the lowest monthly volume since April last year, Platts reported, citing data from Colombian shipping agent Deep Blue.

    The decreases was caused by lower shipments to European countries including Netherlands, Turkey and Spain, due to low coal burn after another mild winter, as well as ample stocks at ports and utilities.

    Yet, there were noticeable exports to India during the month, following lower dry bulk freight rates, making the Colombian material more competitive than South African material.

    Netherlands was shipped 807,577 million tonnes of Colombian thermal coal in March, down 56% on the year, which was also down 69% from the previous month and at the lowest monthly volume since July 2015.

    The second-largest destination in March was India, importing 651,708 tonnes of thermal coal from Colombia and made up 11.5% of the monthly volume.

    The US was shipped 582,511 tonnes of Colombian thermal coal during the month, up 23% on-year and 10% higher on the month to a five-month high.

    Colombia sent 497,413 tonnes of thermal coal to Israel in March, which was 2% lower compared to the same month in 2015, but increased 46% from February to a three-month high.

    Shipments to Portugal, Brazil and Chile were similar in volume at 486,211 tonnes, 406,812 tonnes and 395,906 tonnes, respectively.

    Thermal coal shipments to Turkey plunged 73% year on year in March to 330,429 tonnes, also dropping 75% from the previous month to the lowest volume since the beginning of 2014.

    Exports to Spain also fell 71% on the year and 60% on the month to 166,817 tonnes, a 14-month low, while no material was shipped to the UK for the third straight month.

    During March, thermal coal shipments from the country's largest miner Cerrejon's Puerto Bolivar terminal fell 36% year on year to 2.17 million tonnes, which was also 7% lower than February.

    Puerto Drummond exports also dropped 24% on the year in March to 2.2 million tonnes, also down 34% on the previous month.

    Puerto Nuevo, owned by Glencore unit Prodeco, shipped 1.01 million tonnes, dropping 20% from March 2015 and falling 35% on the month.

    Shipments from third-party port Carbosan-Sociedad Portuaria de Santa Marta rose 5% on-year to 255,344 tonnes, but fell 47% on the month.

    http://en.sxcoal.com/0/144234/DataShow.html
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    Thousands of German steelworkers take to streets demanding job guarantees


    German steelworkers took to the streets on Monday, demanding more measures against the dumping of cheap Chinese imports and greater job protection amid uncertainty over the future of Thyssenkrupp's steel business.

    Germany is Europe's biggest steelmaker and 45,000 workers joined rallies across the country, the IG Metall union said.

    The powerful union is demanding job guarantees if Thyssenkrupp merges its steel business with that of India's Tata Steel or another player - a prospect that has become more likely in the past weeks.

    Workers fear they could face a similar fate to their peers in Britain, where Tata has put its entire steel business up for sale, putting thousands of jobs at risk.

    "I have another 39 years left to work. I don't want to be left on the street," said Ingo, a 28-year-old Thyssenkrupp employee, who identified himself only by his first name, at a march towards Thyssenkrupp's steel headquarters in the city of Duisburg in the Ruhr valley industrial heartland. That rally drew 16,000 workers.

    Steelmaking in Europe has dwindled over the past decades as heavy industry has declined while other countries, in particular China, have ramped up production, selling excess steel on world markets at prices European producers cannot match.

    There was some positive news, though, as Tata Steel reached a deal on Monday to sell part of its British operations to investment firm Greybull Capital, saving more than 4,000 jobs. Still, thousands of other jobs remain at risk as the Indian company has yet to find a buyer for its loss-making plant in Wales.

    The European Union has set import duties on some Chinese steel products and has started anti-dumping investigations into others under pressure from Britain, France and Germany but will not impose any new measures until November.

    "Brussels must decide: dirty steel from China or good clean steel from (the German state of) NRW," Knut Giesler, head of IG Metall in the state of North Rhine-Westphalia said.

    The industry employs 86,000 people in Germany and had revenues of 40 billion euros ($46 billion) in 2014. Thyssenkrupp is the top producer, followed by ArcelorMittal and Salzgitter.

    German Economy Minister Sigmar Gabriel was due to address the protesters at Duisburg on Monday, while IG Metall also organized demonstrations in Berlin and the southwestern state of Saarland.

    http://www.reuters.com/article/us-germany-steel-protests-idUSKCN0X81HQ

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