Mark Latham Commodity Equity Intelligence Service

Thursday 25th February 2016
Background Stories on www.commodityintelligence.com

News and Views:

Attached Files





    Macro

    G20 Sherpa talks messy?

    G20 sherpas are gathered here in Shanghai at the Shangri la hotel. Mood is sour. Gossip has finger pointing. Hosts China are not happy at the agenda. 
    Back to Top

    China allocates 100 bln yuan to deal with job losses from capacity cuts - ministry


    China will allocate 100 billion yuan ($15 billion) over two years to relocate workers during China's industrial restructuring, the Ministry of Industry and Information Technology said on Thursday.

    Relocating workers was the main problem that needed to be solved in restructuring Chinese industry, vice-minister Feng Fei told a news conference in Beijing.

    China was currently focused on tackling unemployment in the steel and coal industries where overcapacity was most pronounced, he added.

    http://www.reuters.com/article/china-economy-overcapacity-idUSL3N1641MH
    Back to Top

    Oil and Gas

    Schork: Why oil won't rebound into the $40s this year


    Oil prices are likely to remain under pressure this year as Saudi Arabia and Iran compete for market share in weak or slowing Asian economies, the editor of The Schork Report said Wednesday.

    Stephen Schork said he does not necessarily agree with forecasts that oil will rebound into the $40s in the next 12 months, citing Saudi oil minister Ali Al-Naimi's comments on Tuesday that OPEC and non-OPEC members will not cut production.

    "If you are long oil, get it through your head. Saudi Arabia is not going to throw you a life preserver," he told CNBC's "Squawk Box."

    Al-Naimi's remarks at IHS CERAWeek in Houston sent oil prices spiraling on Tuesday after futures had risen in previous sessions, bolstered by a plan put forward by Saudi Arabia and Russia to cap output at January levels. That plan would be contingent on participation from OPEC and non-OPEC members.

    Saudi Arabia in November 2014 led OPEC's policy of letting the market determine the oil price, rather than cutting production to boost prices.

    Schork said it is simply unlikely that Saudi Arabia, the Middle East's dominant Sunni Muslim power, would take measures that would bolster its Shiite rival, Iran.

    Iran recently ramped up crude exports after sanctions related to its nuclear program were lifted. The two countries also support opposing combatants in conflicts in Yemen and Syria.

    "We are looking at the largest chasm between the Sunnis and the Shias within OPEC ever. Why would Saudi Arabia throw Iran a lifeline at this point?" he said.

    Schork said he arrived at his conclusion by juxtaposing geopolitics with economics. Saudi Arabia and Iran are competing for available market share in Asia at a time when China is exporting deflation and Japan appears to be on the cusp of recession, he said.

    In the more immediate term, Schork said he believes oil will test the $25 threshold once again as refineries enter their maintenance season and demand for crude falls.

    Saudi Arabia can sustain the current policy for a long time because its break-even cost of producing the majority of its oil is likely below $10 a barrel, said Nansen Saleri, Quantum Reservoir Impact president and CEO.

    However, he acknowledged that the Saudi economy, which is dependent on oil revenues, is suffering and the country has fallen into budgetary deficit.

    "The pain threshold depends not only on the lifting cost but the total cost to the economy," he told "Squawk Box" on Wednesday.

    Ultimately, the current low-price environment could last anywhere from six to 18 months, Saleri said. At some point, OPEC and non-OPEC producers must find a way to achieve a reasonable oil price.

    http://www.cnbc.com/2016/02/24/schork-why-oil-wont-rebound-into-the-40s-this-year.html
    Back to Top

    Brent crude price drop takes toll on Yanchang Petroleum


    Shaanxi Yanchang Petroleum (Group) Co, China's fourth-biggest oil producer by output, may cease production in some oilfields and stop drilling both old and new wells in some areas in response to the sharp plunge in crude oil prices, a media report said on Monday.

    The Yan'an-based company faces huge pressure over soaring cost in terms of oil exploitation, personnel and operation. The cost for oil production at Yanchang stands at about $70 per barrel, against a national average of $40, according to sources quoted by Securities Daily.

    In order to remain profitable, the State-run company also plans to cut capital spending by a total of 3.1 billion yuan ($480 million) this year and merge at least three oil drilling facilities, the report said.

    Yanchang Petroleum lowered its oil output target to 12.2 million metric tons for this year, about 200,000 tons lower than a year earlier, according to a statement on the company's website.

    The more than 50 percent slump in global crude oil prices since June has badly hit producer's earnings. Brent crude oil is currently below $30 a barrel, for the first time since May 2009.

    Yanchang Petroleum is not the first firm to respond to the price dive by cutting spending or suspending production.

    Shengli Oilfield, owned by China Petroleum & Chemical Corp, the nation's second-largest oil major, plans to shut down four oilfields in the country's eastern Shandong province to stay afloat.

    The company, also known as Sinopec, said the four oilfields are the least profitable projects in the region with only a few tens of thousands tons of production, and the shutdown could save at least 200 million yuan.

    At the same time, Daqing Oilfield, the largest oilfield explored by China's major oil and gas producer China National Petroleum Corp, reduced crude oil production in 2015 for the first time in seven years.

    Though it is a painful process to make cuts or even suspend production, it is better to act early than leave it, experts.

    "It is a normal practice when oil prices plunge. It is an adaption that oil companies have to make to meet market requirements," said Han Xiaoping, chief executive officer of online energy information portal China5E.com.

    He said the cost for oil exploitation has been rising as some wells are getting old, but oil prices have been plummeting even faster, putting huge pressure on many large oil producers.

    "Oil companies need to bring costs down in line with the current lower oil prices. Many foreign companies have also made plans to sell off part of their assets or even start drilling fewer wells," he said.

    http://en.chinamining.com.cn/Companies/2016-02-24/1456276519d75366.html
    Back to Top

    CPC pipeline to boost oil exports by 20 pct in 2016 - CEO


    The Caspian Pipeline Consortium (CPC), which brings oil from Kazakhstan to the Black Sea, plans to increase exports of CPC Blend oil by 20 percent year-on-year to 51.2 million tonnes in 2016, its head Nikolai Brunich said in an interview with Reuters.

    The pipeline connects the giant Tengiz onshore field in Kazakhstan, and a number of other fields, to the sea terminal near Novorossiisk in Russia.

    Despite weak global oil prices, CPC is still on track to increase the pipeline's capacity to 67 million tonnes in 2016, finishing its five-year expansion programme, according to Brunich.

    The CEO hopes some of the new resources to help and fill the pipeline's expanded capacity will come from its largest supplier, Chevron-led Tengizchevroil, which is developing the Tengiz field.

    Tengizchevroil plans to increase supplies via CPC by 4 million tonnes to 30 million tonnes in 2016, Brunich said.

    He also believes new volumes will come this year from Kazakhstan's giant Kashagan project and from an offshore project by Russia's second-largest oil producer Lukoil.

    CPC plans to receive this year 2.5 million tonnes of oil from Kashagan and 1 million tonnes from Lukoil's Filanovsky offshore oilfield in the Caspian Sea, the chief executive added.

    Kazakh Deputy Energy Minister Magzum Mirzagaliyev said in December the restart of commercial production at Kashagan was not expected until the end of 2016 and by 2020 output will reach 13 million tonnes,

    Brunich added he expected CPC to export 45 million tonnes of Kazakh oil and about 6 million tonnes of Russian oil in total in 2016. Russia owns 31 percent of CPC, while Kazakhstan holds a 21-percent stake and Chevron has a 15-percent stake.

    http://www.reuters.com/article/oil-cpc-idUSL8N16339C
    Back to Top

    Eni secures approval for Coral FLNG project in Mozambique


    Italian energy giant Eni said on Wednesday that the Mozambique government had approved the plan of development for the company’s Coral FLNG project.

    The approval relates to the first phase of development of 5 trillion cubic feet of gas in the Coral discovery, located in the Area 4 permit.

    The giant discovery, located approximately 80 kilometers offshore of the Palma bay in the northern province of Cabo Delgado, is estimated to contain around 16 trillion cubic feet (TCF) of gas in place.

    The plan of development, the very first one to be approved in the Rovuma Basin, foresees the drilling and completion of 6 subsea wells and the construction and installation of a floating LNG facility, with the capacity of around 3.4 MTPA, Eni said in a statement.

    “Today’s approval of the Coral plan of development is a historical milestone for the development of our discovery of 85 TCF of gas in the Rovuma Basin. It is a fundamental step to progress toward the final investment decision of our project which envisages the installation of the first newly built floating LNG facility in Africa and one of the first in the world,“ Eni’s CEO, Claudio Descalzi said.

    Eni is the operator of Area 4 with a 50% indirect interest, owned through Eni East Africa (EEA), which holds a 70% stake of Area 4.

    The other partners are Galp Energia, Kogas and Empresa Nacional de Hidrocarbonetos (ENH) with a 10% stake each. CNPC owns a 20% indirect interest in Area 4 through Eni East Africa.

    http://www.lngworldnews.com/eni-secures-approval-for-coral-flng-project-in-mozambique/
    Back to Top

    Summary of Weekly Petroleum Data for the Week Ending February 19, 2016


    U.S. crude oil refinery inputs averaged 15.7 million barrels per day during the week ending February 19, 2016, 163,000 barrels per day less than the previous week’s average. Refineries operated at 87.3% of their operable capacity last week. Gasoline production increased last week, averaging 10.0 million barrels per day. Distillate fuel production decreased last week, averaging over 4.4 million barrels per day.

    U.S. crude oil imports averaged 7.8 million barrels per day last week, down by 117,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged about 7.8 million barrels per day, 7.0% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 566,000 barrels per day. Distillate fuel imports averaged 242,000 barrels per day last week.

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 3.5 million barrels from the previous week. At 507.6 million barrels, U.S. crude oil inventories are at historically high levels for this time of year. Total motor gasoline inventories decreased by 2.2 million barrels last week, but are well above the upper limit of the average range. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories decreased by 1.7 million barrels last week but are above the upper limit of the average range for this time of year. Propane/propylene inventories fell 3.7 million barrels last week but are well above the upper limit of the average range. Total commercial petroleum inventories decreased by 5.0 million barrels last week.

    Total products supplied over the last four-week period averaged over 19.6 million barrels per day, up by 0.2% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged about 9.1 million barrels per day, up by 5.2% from the same period last year. Distillate fuel product supplied averaged about 3.5 million barrels per day over the last four weeks, down by 16.0% from the same period last year. Jet fuel product supplied is up 5.3% compared to the same four-week period last year.

    Cushing +333K, Exp. -100K

    http://ir.eia.gov/wpsr/wpsrsummary.pdf
    Back to Top

    US Oil production shows a small fall in the last week


                                                            Last Week   Week Before   Last Year

    Domestic Production '000.....   9,102             9,135           9,285

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

    Attached Files
    Back to Top

    Shell to shutter key unit after U.S. boss steps down


    Marvin Odum is stepping down as head of Royal Dutch Shell's U.S. operations by mutual agreement, said the Anglo-Dutch oil company, which also announced plans to scrap a major division after abandoning two big North American projects.

    Following Odum's departure at the end of March, Shell will abolish its unconventional resources division, which he also headed, the company said in a statement on Wednesday.

    The decision to shutter the division marks a rapid change within Shell's organization. In November, it announced a major restructuring of its oil and gas production, or upstream, business starting this past January as part of the integration of BG Group, which Shell acquired earlier this month. Under the new structure, unconventional resources was set to be one of three upstream divisions.

    Shell's unconventional Athabasca Oil Sands Project and the Scotford Upgrader in Canada will now join the global downstream organization under John Abbott. The U.S. Shale Resources business will join the global upstream organization under Andy Brown.

    The company said the decision would simplify its structure.

    Bruce Culpepper, executive vice president HR for unconventional resources and regional coordination, will replace Odum as chairman of U.S. operations.

    Odum, who was born in 1958, plans to pursue other opportunities after 34 years with Shell, a company spokesman said.

    Odum's departure comes months after Shell ceased its controversial exploration in Alaska's Arctic Sea and suspended the 80,000-barrel-per-day Carmon Creek thermal oil sands project in Alberta, Canada.

    "Marvin has had a long and distinguished Shell career, and I'm grateful to him for the central role he's played in the company's success," Chief Executive Officer Ben van Beurden said.

    http://www.reuters.com/article/shell-moves-idUSL2N1631BA
    Back to Top

    Continental Resources Stops Bakken Fracking; Upbeat On New Play


    Continental Resources, a top producer in the Bakken shale formation, said Wednesday it has ceased fracking operations there amid the continued slump in oil prices.

    The bellwether shale company had already planned to defer most Bakken completions in 2016. It has four operated drilling rigs in the North Dakota Bakken with plans to maintain that level through the year.

    But Continental said it currently has “no stimulation crews deployed in the Bakken.”

    Continental posted an adjusted net loss of 23 cents per share in Q4, down from a profit of $1.14 per share a year ago. Analysts polled by Thomson Reuters were expecting a loss of 21 cents per share. Revenue sank 55.6% to $575.5 million, above views for $568.2 million.

    But Continental was bullish on acreage in its STACK play in Oklahoma, and expects an average estimated ultimate recovery of 1.7 million barrels of oil equivalent per well.

    “Our overpressured Meramec wells in STACK are delivering some of the highest returns in the Company,” said COO Jack Stark in a statement. “We clearly have another high impact, long-term platform for growth underlying our 155,000 net acres of leasehold in STACK.”

    The company plans to average four-to-five operated drilling rigs in the STACK play in 2016.

    Last month, Continental guided 2016 capital spending to $920 million, down 66% from 2015. It also sees production falling during the year on lower drilling and well completion activity.

    http://www.investors.com/news/shale-producers-post-q4-losses-see-production-rates-falling/
    Back to Top

    Chesapeake cuts annual capex by 57 pct, plans more asset sales


    U.S. natural gas producer Chesapeake Energy Corp more than halved its annual capital budget and said it would sell more assets this year.

    The company's shares fell nearly 6.5 percent in premarket trading on Wednesday.

    Chesapeake said it planned to spend $1.3 billion-$1.8 billion this year, down 57 percent from 2015 levels, and sell assets worth $500 million-$1 billion.

    It said production could fall by as much as 5 percent this year due to the asset sales.

    Chesapeake has struck deals to sell assets worth about $700 million this year so far, it said.

    "We are also renegotiating gathering, transportation and processing contracts to better align with our current development plans and market conditions ..." Chief Executive Doug Lawler said in a statement.

    Chesapeake reported a net loss of $2.23 billion, or $3.36 per share, attributable to shareholders for the fourth quarter ended Dec. 31. The company had a profit of $586 million, or 81 cents per share, a year earlier.

    Excluding impairment charges of $2.83 billion and other items, Chesapeake reported a loss 16 cents per share, below the average analyst estimate of 17 cents, according to Thomson Reuters I/B/E/S.

    http://www.reuters.com/article/chesapeake-enrgy-results-idUSL3N1634C4
    Back to Top

    Chesapeake terminates earnings call early


    Chesapeake Energy terminated 4Q call 30 mins in, many key topics left uncovered

    @zerohedge
    Back to Top

    Anadarko selling majority stake in a pipeline system


    Western Gas Partners LP has agreed to buy a majority stake in Anadarko Petroleum Corp.’s south Texas oil and gas pipeline system for $750 million.

    The deal is for Springfield Pipeline LLC, which owns a 50.1 percent share in the overall gathering system in the Eagle Ford shale basin. The system serves Anadarko and its partners’ production there, Western Gas said in a fourth-quarter earning statement after the close of New York trading Wednesday.

    “With the support of Anadarko and the strength of our portfolio, we believe we can continue to deliver meaningful distribution growth even in this commodity price environment,” Western’s chief executive officer, Don Sinclair, said in the statement.

    The Springfield system includes 548 miles of gas-gathering lines with a capacity of 795 million cubic feet a day; 241 miles of oil-gathering lines with a capacity of 130 million barrels a day; 24 compressor stations; 260,000 barrels of oil storage; and 75,000 barrels a day of “stabilization capacity.”

    Western plans to finance the deal with $449 million of 8.5 percent perpetual convertible preferred units to First Reserve Advisors LLC and Kayne Anderson Capital Advisors LP at a price of $32 per unit. It also will issue 1.25 million Western units to Anadarko and almost 836,000 units to Western Gas Equity Partners LP at $29.91 per common unit. It’s borrowing $247.5 million on its credit line, the company said.

    The transaction is expected to close by March 15, Western Gas said.

    http://fuelfix.com/blog/2016/02/24/anadarko-selling-majority-stake-in-a-pipeline-system/
    Back to Top

    Encana to cut capex, production, jobs


    Canada's Encana Corp cut its capital budget and production target for 2016 and said it would slash more jobs as the company struggles to cope with a steep fall in oil prices.

    Encana lowered the upper end of its production target for this year to 360,000 barrels of oil equivalent per day (boepd) from 370,000 boepd, maintaining the lower end at 340,000 boepd.

    The oil and natural gas producer also slashed its capital spending target to $900 million-$1 billion from $1.5 billion-$1.7 billion it forecast earlier.

    Encana, which cut 200 jobs in July last year, said on Wednesday it would lay off 20 percent of its workforce this year.

    The company reported a net loss of $612 million attributable to common shareholders for the fourth quarter ended Dec. 31. Encana had a profit of $198 million in the year-earlier quarter.

    Excluding items, the company reported an operating profit of 13 cents per share, handily beating the analyst average estimate of 1 cent, according to Thomson Reuters I/B/E/S.

    http://www.reuters.com/article/encana-results-idUSL3N16341O
    Back to Top

    Enbridge Plans to Raise About $1.5 Billion in Equity Sale


    Enbridge Inc. plans to raise C$2 billion ($1.5 billion) in a share sale to shore up its finances in the midst of an oil price rout.

    The Canadian pipeline company agreed with a group of lenders to issue 49.14 million common shares from treasury in a so-called bought deal, according to a statement. The funds will be used to pay short-term debt, the company said.

    Canadian energy companies face a wave of debt maturities over the next five years that could make it challenging for them to access financing as investors drive up borrowing costs and shun commodities-related debt. Oil has plunged about 70 percent since mid-2014, sapping revenue.

    Enbridge’s sale follows two other bought deals in the past week.Whitecap Resources Inc. and Raging River Exploration Inc. both raised C$95 million in the past week through equity raises of their own to pay down debt and fund capital expenditures.

    Enbridge’s profit rose in the fourth quarter as record oil shipments on its main system have so far shielded the pipeline operator from the oil rout. While oil and gas producers have been reeling from the collapse of energy prices, firing workers and cutting costs, pipeline fees have provided a steadier source of income. Lines such as Enbridge’s Flanagan South and Seaway Twin have expanded Canadian crude shipments to the U.S. Gulf Coast, and the company also plans to expand in Colombia and Australia.

    http://www.bloomberg.com/news/articles/2016-02-24/enbridge-plans-to-raise-c-2-billion-in-equity-sale
    Back to Top

    Silver Run raises $450 million in IPO to buy energy companies


    Silver Run Acquisition Corp, a new U.S. investment vehicle, raised a greater-than-expected $450 million in an initial public offering on Tuesday aimed at funding the acquisition of energy companies, indicating investors see bargains amid the oil price rout.

    The shares of many energy companies have been battered in the last 18 months as an oil supply glut has weighed on their prospects. Silver Run's IPO shows that some investors believe the sector's corporate valuations have reached bottom.

    In the largest IPO so far this year in the United States, Silver Run said it had priced 45 million shares at $10 each, selling 5 million more shares than it originally planned.

    Silver Run is a blank-check acquisition company sponsored by energy-focused private equity firm Riverstone Holdings LLC. Such so-called special-purpose acquisition companies (SPACs) fund the equity portion of their acquisitions through stock issuance.

    Silver Run will look for companies that are "fundamentally sound" but underperforming due to current commodity prices, according to its IPO prospectus.

    So-called secondary market investors are already placing bets that mergers and acquisitions will pick up in the oil patch by snapping up shares sold by publicly listed energy companies that could use the money to acquire assets at a discount. Silver Run's offering illustrates that SPACs can successfully make a similar pitch to IPO investors.

    "(Secondary market) investors are participating in follow-on financings that make already strong companies stronger, enabling them to withstand even lower commodity prices or potentially even allowing them to play offense," said Americas equity capital markets head at Bank of Montreal Michael Cippoletti.

    Silver Run's chief executive officer, Mark Papa, is an oil and gas veteran and Riverstone partner. He has worked for 45 years in the space, 15 of which were as CEO of EOG Resources Inc, once a division of Enron. Papa shifted EOG's focus from gas to oil, and is credited with transforming EOG into one of America's biggest oil companies.

    Shares in Silver Run are expected to start trading on Wednesday and list on NASDAQ under the symbol "SRAQU".

    http://www.reuters.com/article/us-silver-run-acqsn-ipo-idUSKCN0VW2MX
    Back to Top

    Warburg Pincus to Invest Up to $500 Million in RimRock Oil & Gas


    Private equity firm Warburg Pincus agreed to invest as much as $500 million in an oil and gas producer after commodities prices plummeted.

    Warburg Pincus will give RimRock Oil & Gas a line of equity to help the startup company acquire and develop energy assets in North America, the companies said in a statement Wednesday. The money is coming from New York-based Warburg Pincus’s $12 billion private equity fundand its $4 billion energy fund.

    While private equity firms have collected more than $20 billion for energy deals in the past two years, the money has largely remained on the sidelines, in part because oil producers have been unwilling to sell. That may quickly change, according to Deloitte LLP, which last week said more than one-third of listed producers worldwide are at high risk of bankruptcy, as their collective debt surged to about $150 billion and cash flows dwindled.

    A global oil glut has caused a collapse in prices and led producers worldwide to reduce drilling, fire workers and cut dividend payments. West Texas Intermediate crude has slumped 70 percent since its mid-2014 peak and hit a 13-year low of $26.21 a barrel earlier this month.

    “In light of the current commodity price environment, we believe there is a compelling opportunity to acquire and develop large-scale assets,” Jim Fraser, RimRock’s chief executive officer, said in the statement.

    The sentiment was shared this week at the SuperReturn International conference in Berlin, where dealmakers from firms including Carlyle Group LP and Blackstone Group LP said they expect private equity firms to increase investments in oil and gas as producers become forced sellers.

    Speaking at the conference Wednesday, Warburg Pincus Co-Chief Executive Officer Joe Landy said he expects oil producers and the banks that lent to them to take a hit as hedges continue to expire. Landy said oil and gas companies in which his firm has invested are “doing well.”

    Among Warburg Pincus’s largest oil and gas holdings are Kosmos Energy Ltd., Antero Resources Corp. and Laredo Petroleum Inc., whose stocks have each fallen by more than half in the past two years, with Laredo slumping 84 percent.

    http://www.bloomberg.com/news/articles/2016-02-24/warburg-pincus-to-invest-up-to-500-million-in-rimrock-oil-gas
    Back to Top

    Alternative Energy

    China to boost government purchases of new energy vehicles


    China will increase to more than half the ratio of purchases of new energy vehicles by some government departments, the State Council said on Wednesday, the latest move to boost green development in a country battling to rein in pollution.

    The government has been pushing electric vehicles as a way of reducing the smog that frequently blankets Chinese cities, helping sales to quadruple last year.

    "The annual purchase ratio of new energy vehicles for central government bureaus, city government departments with new energy vehicle promotions, and public institutions will be raised above 50 percent," the State Council, or cabinet, said in a statement on a meeting chaired by Premier Li Keqiang.

    But the statement on the meeting, posted on the government's website, gave no details of when the policy would take effect.

    Automakers' latest projections for rapid growth of China's green car market have added to concerns of worsening smog as the uptake of electric vehicles powered by coal-fired grids races ahead of a switch to cleaner energy.

    China plans to convert the grid to renewable fuel or clean-coal technology as part of efforts to cut carbon emissions by 60 percent by 2020.

    http://www.reuters.com/article/us-china-pollution-autos-idUSKCN0VX1GE
    Back to Top

    Abengoa unit files for U.S. bankruptcy with up to $10 billion in debt


    Abengoa SA put its U.S. bioenergy unit into Chapter 11 bankruptcy on Wednesday with up to $10 billion in liabilities, the latest twist in the multinational parent's race to avoid becoming Spain's largest corporate failure.

    The U.S. filing came as the Spanish company faced a March 28 deadline to agree on a wide-ranging restructuring plan with its banks and bondholders, without which it could be forced to declare bankruptcy.

    The filing by Abengoa Bioenergy US Holding LLC was prompted by involuntary bankruptcy petitions against two subsidiaries earlier this month by grain suppliers, including Gavilon Grain LLC, the Farmers Cooperative Association, The Andersons Inc and Central Valley Ag.

    The suppliers, which claim to be owed more than $4 million, said they were told that Abengoa Bioenergy, whose Spanish parent controls the "central treasury," had run out of cash, court documents showed.

    They cited concerns that the U.S. business was transferring cash and loan proceeds to Abengoa SA.

    Abengoa Bioenergy listed a $1.45 billion syndicated loan and $3.85 billion in bonds as unsecured debt in its filing in the U.S. Bankruptcy Court in St. Louis. It did not list secured debt, but said total liabilities could be as much as $10 billion.

    The filing appeared to include debt issued by Abengoa SA, whose global businesses include energy, telecommunications, transportation, and the environment, the documents showed.

    Abengoa declined to comment on the group debt being included in the U.S. bankruptcy filing. In a statement, Abengoa said it was negotiating a viability plan for the global organization of the company and aims to maintain business activity in all areas.

    Abengoa Bioenergy of Nebraska LLC, a subsidiary of the U.S. company in the bankruptcy filing, is listed as a guarantor of billions of dollars of debt securities and a syndicated loan in Abengoa SA's annual report.

    Abengoa SA said last week it needed 826 million euros ($908 million) of cash to make it through 2016 and another 304 million in 2017.

    Abengoa Bioenergy said the bankruptcy would allow for a reorganization or sale of the company.

    http://www.reuters.com/article/us-abengoa-bankruptcy-usa-idUSKCN0VX2OH
    Back to Top

    Xinjiang new energy generating capacity to double to 43 GW in 2020


    Total installed electricity generating capacity of new energy, including wind and solar power, in China's far western Xinjiang Uygur Autonomous Region is expected to nearly double to 43 GW by 2020, Xinjiang Grid said on February 22.

    By the end of 2015, Xinjiang had 16.9 GW of wind generating capacity and 5.3 GW of solar. Its total power generating capacity was 65.8 GW.

    Xinjiang Grid bought 19.4 TWh of electricity generated by new energy last year, 10.3% of its total purchase.

    It exported some new energy-generated power to meet growth in local demand.

    It transmitted 1.5 TWh of wind-generated electricity, up 19% year on year, to other regions, reducing coal burning by 521,600 tonnes.

    http://en.sxcoal.com/0/141460/DataShow.html
    Back to Top

    Base Metals

    Copper prices halves Sandfire profits


    ASX-listed Sandfire Resources has seen its interim profits after tax halved during the six months to December, compared with the previous corresponding period, as lower copper prices impacted earnings. Profits after tax for the interim period declined from the A$30.6-million reported in the first half of 2015 to A$15.7-million, as sales revenue declined from A$261.8-million toA$228.3-million during the same period. 

    Some 30 454 t of copper and 14 467 oz of gold was sold during the six months under review, which was down from the 32 500 t of copper and 18 330 oz of gold in the previous corresponding period. Sandfire told shareholders on Thursday that the fall in sales revenue reflected a higher year-end concentrate holding and the lower US dollar copper price, which fell by some 18% during the half-year, and which was only partially offset by the lower US/Australian dollar exchange rate. 

    Sandfire MD Karl Simich noted that the DeGrussa project, in Western Australia, had delivered a stand-out performance in the first half of the financial year, either achieving or exceeding all of its key production and cost targets. “DeGrussa continues to deliver strong cash flows despite a challenging business environment, and this is testament to both the grade and quality of the deposit and the continued focus of our team on controlling costs, delivering on targets and continually improving our performance.”

    Looking ahead, Sandfire noted that it was on track to reach its full production guidance of between 65 000 t to 68 000 t of copper, with C1 cash costs expected to be at the lower end of the $0.95/lb to $1.05/lb guidance.

    http://www.miningweekly.com/article/copper-prices-halves-sandfire-profits-2016-02-25
    Back to Top

    Alumina swings back to a profit


    The restructuring of the Alcoa World Alumina & Chemicals (AWAC) joint venture between ASX-listed Alumina and US major Alcoa has seen Alumina swing back into black during the full 2015 financial year. The company reported on Thursday a statutory net profit after tax of $88-million for the full year, compared with a net loss of $98-million in the previous financial year. 

    “Our financial results improved significantly, reflecting in part the benefits of restructuring the AWAC portfolio. While the alumina price experienced weakness later in the year, we have nonetheless delivered our best financial results and highest dividends since 2008,” said Alumina CEO Peter Wasow. 

    The JV partners have taken the decision to curtail some one-million tonnes of refining capacity from the AWAC operations, in the hopes of improving the JV’s cost position and ensuring its continued competitiveness in the prevailing market conditions. “Prices fell sharply in the second half, but whatever markets have in store, Alumina is well prepared. 

    The AWAC asset portfolio is stronger than ever and the company’s borrowings are at very low levels. Together, this means that we can withstand even the very low prices that we saw at the start of 2016,” said Wasow. Alumina reported that cash from operations increased by $333-million to $809-million, which cash costs of production decreased by $33/t.

    http://www.miningweekly.com/article/alumina-swings-back-to-a-profit-2016-02-25
    Back to Top

    Miner Kaz Minerals sees 2016 output up at least 60 pct


    Copper mining company Kaz Minerals Plc said it expected its 2016 copper output to increase by at least 60 percent as its Bozshakol and Aktogay projects come online.

    The company said it expected to produce 130,000 to 155,000 tonnes of copper cathode equivalent in 2016, up from 81,100 tonnes in 2015.

    Kaz added that its full-year earnings before interest, tax, depreciation and amortisation (EBITDA) excluding special items fell to $202 million from $355 million a year earlier.

    http://www.reuters.com/article/kaz-minerals-results-idUSL3N1642TJ
    Back to Top

    Steel, Iron Ore and Coal

    China Jan thermal coal imports at 5.84 mln T


    China’s imports of thermal coal—including bituminous and sub-bituminous coals– stood at 5.84 million tonnes in January, according to the latest data released by the General Administration of Customs.

    That was 21.4% lower from December last year and down 25% from the same month last year.

    Total value of thermal coal imports during the same period stood at $272.14 million, down 45.5% on year but up 12.8% on month.

    Lignite imports in January stood at 4.14 million tonnes, up 16.6% from December last year and rising 28.8% on year.

    In addition, China exported 30,000 tonnes of thermal coal in January, down 63.9% year on year and down from 39,467 tonnes in December last year.

    Total exports value during the same period stood at $3.51 million, down 61.6% on year but up 14.2% on month.

    China didn’t export any lignite in January, compared with 533 tonnes in December last year.

    http://en.sxcoal.com/0/141424/DataShow.html
    Back to Top

    China Jan coking coal imports down 16.1pct on year


    China’s coking coal imports fell 16.1% on year and slumped 24.27% on month to 3.37 million tonnes in January, showed the latest data from the General Administration of Customs (GAC).

    The value of the imports saw a yearly plummet of 38.1% and a monthly drop of 18.55% to $223.52 million, the GAC said.

    The average price of imported coking coal was $66.33/t in January, rising 4.66$/t or 7.56% from last month, but down $23.32/t or 26.01% from the same month in 2015.

    In January, China exported 150,000 tonnes of coking coal, a year-on-year surge of 277.4% and a monthly rise of 25%, data showed.

    The value of the exports in the same period was $14.07 million, surging 191.4% on year and up 27.01% on month.

    http://en.sxcoal.com/0/141427/DataShow.html
    Back to Top

    Hebei to control coal mines within 100 in 3 years


    North China’s Hebei province planned to cut the number of coal mines in operation and under construction to below 100 in the next three years, said the provincial Administration of Coal Mine Safety.

    It also planned to shut 70 more coal mines in 2016, the administration said.

    The move was expected to deepen industry consolidation, which would ease the current supply glut and boost the local coal industry.

    Coal producers should make efforts to achieve closure goals, under supervision of local governments.

    http://en.sxcoal.com/0/141479/DataShow.html
    Back to Top

    Iron ore price holds $50 despite steel shocker


    The surprise rally in the price of iron ore continued on Tuesday with the Northern China benchmark import price advancing to a four-month high.

    Building on a 7% jump on Monday the steelmaking raw material exchanged hands for $50.50 a tonne on Tuesday according to data supplied by The SteelIndex. Iron ore is now up a stunning 36% from near decade lows hit December 11.

    Chinese steel prices pulled back on Tuesday after hitting the highest levels since September yesterday thanks to a seasonal pick-up in demand and on hopes Beijing will do more to stimulate the slowing economy.

    Iron ore is dependent on the health of the world’s second largest economy more than any other commodity. China last year consumed nearly three-quarters of the seaborne iron ore supply and its steelmakers forged nearly half of the global total.

    China’s steelmakers are trying to export their way out of trouble, but calls rising protectionism in North America, Europe and other parts of Asia will close this opportunity too

    World Steel Association data released showed a sharper-than-expected drop in global steel output of 7.1% in January compared to last year.

    Output fell in all major producing regions for the second month in a row – including in India, a country which many iron ore producers had hoped could take up some of China’s slack.

    China’s steel production came as a real shocker, plunging 7.8% year on year. January’s contraction also comes on the heels of 5.2% decline in December. The China Iron and Steel Association recently reported that more than half its members didn’t turn a profit in 2015 so output cuts after years of overproduction was certainly inevitable.

    Colin Richardson, senior steel price specialist for Platts, says the rise in steel prices in China since the Lunar New Year can be explained by the output decline and is unlikely to continue:

    http://www.mining.com/iron-ore-price-holds-50-despite-steel-shocker/
    Back to Top
    Commodity Intelligence LLP is Authorised and Regulated by the Financial Conduct Authority

    The material is based on information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. Opinions expressed are our current opinions as of the date appearing on this material only.

    Officers and employees, including persons involved in the preparation or issuance of this material may from time to time have "long" or "short" positions in the securities of companies mentioned herein. No part of this material may be redistributed without the prior written consent of Commodity Intelligence LLP.

    Company Incorporated in England and Wales, Partnership number OC334951 Registered address: Highfield, Ockham Lane, Cobham KT11 1LW.

    Commodity Intelligence LLP is Authorised and Regulated by the Financial Conduct Authority.

    The material is based on information that we consider reliable, but we do not guarantee that it is accurate or complete, and it should not be relied on as such. Opinions expressed are our current opinions as of the date appearing on this material only.

    Officers and employees, including persons involved in the preparation or issuance of this material may from time to time have 'long' or 'short' positions in the securities of companies mentioned herein. No part of this material may be redistributed without the prior written consent of Commodity Intelligence LLP.

    © 2017 - Commodity Intelligence LLP