Mark Latham Commodity Equity Intelligence Service

Thursday 16th March 2017
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    Macro

    White House seeks to cut EPA budget 31 percent as Trump targets regulation


    President Donald Trump's administration is proposing a 31 percent cut to the Environmental Protection Agency's budget, eliminating its climate change programs and trimming back core initiatives aimed at protecting air and water quality, according to budget documents released on Thursday.

    The White House's proposed 2018 budget for the agency comes as Trump seeks to clear away regulations he claims are hobbling U.S. businesses - like oil drillers and coal miners. The proposed cuts are a starting point in negotiations with Congress, and could be tempered.

    The proposal would eliminate 3,200 EPA employees, or 19 percent of the current workforce, and effectively erase former President Barack Obama's initiatives to combat climate change by cutting funding for the agency's signature Clean Power Plan aimed at reducing carbon dioxide emissions.

    It would also eliminate climate change research and international climate change programs. Together, the cuts to climate change initiatives at the agency would eliminate some $100 million in spending.

    "Consistent with the President's America First Energy Plan, the budget reorients the EPA's air program to protect the air we breathe without unduly burdening the American economy," a summary of the agency's proposed budget said.

    Trump has expressed doubts about the science of climate change and has said the United States can reduce green regulation drastically without compromising air and water quality.

    But the proposed EPA budget cuts would extend well beyond climate change. It would cut some $427 million to regional pollution cleanup programs, including in the Great Lakes and Chesapeake Bay. Funding for the Superfund program to clean up the nation's most contaminated sites would drop by $330 million to $762 million.

    The budget summary said the rationale for the changes is to give local and state governments - often facing severe budget constraints themselves - responsibility for such clean-up efforts.

    Trump's proposal would also cut the budget for the EPA's enforcement division, which fines companies for pollution, by 31 percent. It would axe dozens of other programs including the popular Energy Star appliance efficiency program aimed at reducing U.S. energy consumption.

    One area that would see a small boost is for State Revolving Funds, low-interest loans for investments in water and sanitation infrastructure. The budget would add $4 million to the funds, bringing its budget up to $100 million.

    http://www.reuters.com/article/us-usa-trump-budget-epa-idUSKBN16N0E1

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    Brazil prosecutor files for 83 new cases before Supreme Court


    Brazil's top public prosecutor Rodrigo Janot asked the Supreme Court on Tuesday to open 83 new investigations into politicians named in plea bargain testimony by executives of the Odebrecht engineering conglomerate.

    Janot also requested that the Supreme Court send 211 other requests to lower courts, involving people without a right to trial before the Supreme Court. Under Brazil's constitution federal lawmakers and ministers can only be tried by the Supreme Court.

    A source told Reuters last week that Janot would seek authorization from the Supreme Court to investigate senior ministers in President Michel Temer's Cabinet and senators from his PMDB party for corruption.

    Brazil prosecutor files for 83 new cases before Supreme Court

    Brazil's top public prosecutor Rodrigo Janot asked the Supreme Court on Tuesday to open 83 new investigations into politicians named in plea bargain testimony by executives of the Odebrecht engineering conglomerate.

    Janot also requested that the Supreme Court send 211 other requests to lower courts, involving people without a right to trial before the Supreme Court. Under Brazil's constitution federal lawmakers and ministers can only be tried by the Supreme Court.

    A source told Reuters last week that Janot would seek authorization from the Supreme Court to investigate senior ministers in President Michel Temer's Cabinet and senators from his PMDB party for corruption.

    http://www.reuters.com/article/brazil-politics-corruption-idUSE6N1FG00J
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    Indian billionaire Agarwal to invest up to $2.46 billion in Anglo American


    Indian billionaire Anil Agarwal said on Wednesday he would buy a stake of up to 2 billion pounds ($2.46 billion) in Anglo American, but had no intention of trying to take control of the global miner.

    Agarwal, who has majority control of Hindustan Zinc Ltd through Vedanta Ltd, will make the investment via his family trust Volcan Holdings, Volcan said in a statement.

    Anglo, which has a market value of around 16.75 billion pounds ($20.55 billion), declined to comment.

    Two industry sources, speaking on condition of anonymity, said Agarwal was investing for his family trust and not in connection with Vedanta, and rather than using cash to finance the deal he is using a financial instrument that is a first of its kind.

    The official statement describes it as a mandatory exchangeable bond. The 2 billion pound bond is due in 2020 and is led by J.P. Morgan.

    One source said it was an efficient and innovative manner to buy a sizeable stake as acquiring around 12 percent of a company could be very difficult without attracting attention and potentially very expensive.

    The structure of the bond limits any downside, the sources said, adding the advantage of buying into Anglo American, whose portfolio includes diamonds and platinum, was to diversify Agarwal's holdings.

    "This is an attractive investment for our family trust ... I am delighted to become a shareholder in Anglo American plc," Agarwal said in the statement.

    Anglo, along with other mining companies, has recovered from a slump in commodity prices in 2015.

    The company's shares soared nearly 300 percent last year and it said in February it would resume paying dividends and slow down its asset sales as it was no longer under financial pressure.

    Wednesday's statement also said that neither Volcan nor Vedanta intended to make an offer to acquire Anglo American.

    http://www.reuters.com/article/us-anglo-american-investment-idUSKBN16M2SC
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    Reallocation of laid-off workers remain a priority in capacity cuts, Premier Li


    Helping laid-off workers find new jobs is the most important issue for China as it works to reduce industrial overcapacity, Premier Li Keqiang said on March 15.

    "Last year, the central government set up a 100 billion yuan ($14.4 billion) fund to help workers and also asked local governments to set up similar funds," he told reporters after this year's National People's Congress session. "Assistance has already been provided to 720,000 laid-off workers."

    The premier said efforts to cut overcapacity will be extended this year to coal-fired power generation.

    Together with the people who are still to be re-employed from 2016, he said China will need to help about 1 million workers this year.

    "The key is to continue generating jobs," Li said. "Thanks to the initiative of massive entrepreneurship and innovation, many jobs have been created, while traditional drivers of growth have been upgraded, which is also generating job opportunities."

    He pledged that China will continue to make effective use of central government funds and push local governments and companies to fulfill their social responsibilities.

    http://www.sxcoal.com/news/4553510/info/en

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    Oil and Gas

    IEA says oil market could tilt into deficit in the first half if OPEC sticks to cuts


    Global oil inventories rose for the first time in January as the market grappled with a swell in production last year, but if OPEC maintains its output cuts, demand should overtake supply in the first half of this year, the International Energy Agency said on Wednesday.

    The IEA's monthly report struck a more bullish note than that issued by the Organization of the Petroleum Exporting Countries on Tuesday.

    OPEC also flagged rising inventory levels, but raised its estimates for production outside the group and did not see a re-balancing between supply and demand until the second half of this year. 

    The IEA said crude stocks in the world's richest nations rose in January for the first time since July by 48 million barrels to 3.03 billion barrels, more than 300 million barrels above the five-year average.

    "The actual build in OECD stocks in January reminds us that it may be some time before global stocks start to fall," the agency said.

    The increase is the product of "relentless" supply growth in the latter stages of last year, particularly from OPEC countries that pumped at record levels, and from the U.S. shale oil basin, where drilling activity began picking up 10 months ago.

    Compliance by OPEC with its agreed output cut of 1.2 million barrels per day in the first half of this year was 91 percent in February and, if the group maintains its supply limit to June, the market could show an implied deficit of 500,000 bpd, the IEA said.

    "If current production levels were maintained to June when the output deal expires, there is an implied market deficit of 500,000 bpd for 1H17, assuming, of course, nothing changes elsewhere in supply and demand," the IEA said.

    "For those looking for a re-balancing of the oil market the message is that they should be patient, and hold their nerve."

    In its October report, before the November agreement between OPEC and some of its competitors including Russia, Mexico and Kazakhstan to limit output, the IEA warned the market risked running into a third successive year of excess supply without any action from the producer group.

    SAUDI OUTPUT UP, BUT NO QUOTA-BUSTING

    Within OPEC, Saudi Arabia has shouldered the burden of the production cuts, offsetting poorer compliance by other nations.

    In February, Saudi oil production staged a monthly rise of 180,000 bpd, but at 9.98 million bpd, its output remained below its agreed target of 10.06 million bpd and, according to tanker-tracking data, Riyadh is focusing its cutbacks on North America, the IEA said.

    "At 32.3 million bpd, the call on OPEC crude during the first quarter of 2017 is higher than average output of 31.9 million bpd so far this year, which could lead to a draw in global inventories," the IEA said, adding that it was not clear if the group will extend its supply agreement.

    "Beyond the nervousness about this legacy supply and concerns about rising production today from some non-OPEC countries; the implementation of the OPEC production agreement appears in February to have maintained the solid start seen in January."

    Saxo Bank senior manager Ole Hansen said the report did not rock the boat as the OPEC report did yesterday.

    "As long as OPEC stays on track and non-OPEC delivers on their agreed cuts the market will continue to balance," he said.

    Beyond OPEC, oil production rose 90,000 bpd in February, as increasing U.S. output offset declines elsewhere.

    Compared with last year, total non-OPEC supply was 285,000 bpd lower, of which the United States accounts for roughly half, the agency said.

    "The recovery path of U.S. tight oil is key to rebalancing the oil market over 2017, so is the compliance of the 11 non-OPEC countries that agreed to curb output," the IEA said.

    The IEA left its estimate of global demand growth unchanged from its last report at 1.4 million bpd in 2017.

    "The market is still dealing with a vast amount of past supply, which will take time to work its way through the system. Meanwhile, demand growth has not provided any further encouragement after three consecutive months when we upgraded our estimates," the IEA said.

    http://www.reuters.com/article/us-iea-oil-idUSKBN16M14N
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    Iraq Plans to Boost Crude Oil Production and Exports This Year


    Iraq pumped 4.57 million barrels a day of oil in February and plans to boost output later in the year even as the OPEC member reaffirmed its commitment to the group’s decision to cut production to counter a global glut.

    The country plans to increase output to 5 million barrels a day by the end of 2017, Oil Minister Jabbar Al-Luaibi said Wednesday at a news conference in the southern city of Basra. Iraq exported 3.87 million barrels a day from its southern and northern shipment hubs in February, the ministry’s spokesman, Asim Jihad, said in an emailed statement.

    Oil prices last week broke below $50 a barrel for the first time since December as rising U.S. shale oil supply muted the impact of reductions in output from members of the Organization of Petroleum Exporting Countries and 11 other nations that started on Jan. 1. Saudi Arabia, the biggest producer in the group, raised production last month, though the kingdom kept output below its ceiling under the cuts agreement and said it moved extra supplies into storage.

    The expected increase in shale oil poses a challenge to Iraq, Al-Luaibi said. The country is committed, however, to OPEC’s agreement to pare output to control global oversupply and support prices, the Oil Ministry’s Jihad said in the statement.

    The ministry is in talks with Exxon Mobil Corp. to develop the Ratawi and Omar oil fields, which together can produce half a million barrels a day, Hayyan Abdul-Ghani Abdul-Zahra, director general of state-run South Oil Co., told reporters in Basra. Iraq, OPEC’s second-largest producer, also plans to expand exports this year, Abdul-Zahra said.

    Missan Oil, another producer in southern Iraq, wants to almost double output to 700,000 barrels a day by 2020 from its current level of 385,000, the company’s Director General Adnan Sajet told reporters in Basra. The Oil Ministry will invite bids to develop three fields in southeastern Maysan province -- Dujail, Kumait and Rifaie -- in the second half of 2017, he said.

    https://www.bloomberg.com/news/articles/2017-03-15/iraq-plans-to-boost-crude-oil-production-and-exports-this-year
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    Total starts production from Moho Nord off Congo


    French oil company Total has started up production from the Moho Nord deep offshore project, located 75 kilometers offshore Pointe-Noire in Congo.

    Operated by the group, the project has a production capacity of 100,000 barrels of oil equivalent per day, the oil company said on Wednesday.

    “Moho Nord is the biggest oil development to date in the Republic of the Congo. A showcase for Total’s deep offshore operational excellence, it consolidates our leading position in Africa,” stated Arnaud Breuillac, President, Exploration & Production at Total.

    “Moho Nord will contribute to the reinforcement of the cash flow of the Group and to its production growth.”

    The Moho Nord field is developed through 34 wells tied back to a new tension leg platform, the first for Total in Africa, and to Likouf, a new floating production unit. The oil is processed on Likouf and then exported by pipeline to the Djeno onshore terminal, also operated by Total.

    According to the company, there will be no routine flaring and the all-electric design improves energy efficiency by optimizing the amount of power needed to run the installations. All the produced water will be reinjected into the reservoir.

    Total is the operator of the project with a 53.5% interest. Its partners are Chevron Overseas (Congo) Limited (31.5%) and Société Nationale des Pétroles du Congo (15%).

    http://www.offshoreenergytoday.com/total-starts-production-from-moho-nord-off-congo/
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    China makes first-ever US SPR crude oil purchase


    PetroChina International has bought crude oil from the US Strategic Petroleum Reserve -- the first such purchase by a Chinese company -- in a move that further underscores growing Chinese interest in US crude.

    PetroChina International, the overseas trading arm of state-owned oil giant PetroChina, bought 550,000 barrels from the SPR in the US Department of Energy's latest sale for a total of $28.8 million ($52.36/b).

    A Beijing-based senior crude trader with PetroChina International Tuesday said that the deal, announced last week by the US Department of Energy, was not yet completed and they have not decided whether to bring the barrels back to China or send them elsewhere as the volume is small. PetroChina's Houston office would not comment.

    "We notice that more and more crude barrels from North America are flowing into China, but we have not decided whether to send this cargo back," he said, declining to comment further.

    Deliveries of the crude, both by pipeline and vessel, are expected to take place in May and June, but there may be some early deliveries in April, the US DOE said Friday.

    The volume and price of the deal prompted a Shanghai-based analyst to call it a profile-building exercise by PetroChina.

    "It will be a milestone and a good headline for a Chinese company to buy [crude oil from] the US SPR," he said.

    http://www.platts.com/latest-news/oil/singapore/analysis-china-makes-first-ever-us-spr-crude-27790646
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    January Atlantic LNG production falls 9% on year


    LNG production at Trinidad-based gas liquefaction complex Atlantic LNG totalled 2.2 million cubic meters in January, down 9% year on year, according to a bulletin released Tuesday by Trinidad and Tobago's Energy Ministry.

    Production at the Point Fortin, Trinidad, facility continues to be far short of capacity as a result of curtailments by natural gas producers.

    The shortfall, caused by upgrades to gas infrastructure and decreased upstream investment by energy companies, is expected to continue through at least this year, according to industry officials.

    January LNG sales and deliveries from Atlantic LNG were 52.0 million MMBtu, down 8% year on year, the ministry said.

    The company's sales and deliveries of NGLs in January totalled 450,401 barrels, up 2% year on year.

    The seven gas producers operating in Trinidad and Tobago produced an average 3.3 Bcf/d of gas in January, down 12% year on year. Gas production typically has averaged between 3.8 Bcf/d and 4.1 Bcf/d in recent years.

    The country's LNG sector used 1.8 Bcf/d of gas in January, down 8% year on year, according to the report.

    Atlantic operates and manages four LNG trains in Point Fortin, with each train owned by a holding company with various stakeholders. The shareholders are BP, BG, Shell LNG, Summer Soca LNG Liquefaction and the National Gas Co. of Trinidad and Tobago.

    http://www.platts.com/latest-news/natural-gas/austin-texas/january-atlantic-lng-production-falls-9-on-year-21157808
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    Brazil audit court clears Petrobras to restart asset sales


    Brazil's federal audit court TCU on Wednesday allowed state-run oil company Petroleo Brasileiro SA to proceed with its divestment program, but required the company to restart the process except for two projects.

    The decision means that moves by Petrobras, as the company is known, to sell off a controlling stake in its fuels distribution unit BR Distribuidora will start from scratch.

    Petrobras had been prevented from signing any new asset sales while TCU reviewed its procedures and the court overturned an injunction that suspended sales in December.

    The two assets that Petrobras will be able to sell without restarting the process are the rights to operate the Baúna and Tartaruga Verde offshore oil fields, and a share of Petrobras' deepwater rights in the U.S. Gulf of Mexico.

    Other assets will have to be sold under new rules that were not immediately made public. Sale decisions will remain the responsibility of the board of directors, through direct negotiations with buyers instead of a bidding process.

    Petrobras said in a statement it would follow recommendations by the TCU to improve the divestment process and make it more competitive.

    "This decision is fundamental for the company to press ahead with its plan for partnerships and divestments, one of the pillars for reaching its target of reducing leverage," the statement said.

    Saulo Puttini, the TCU's infrastructure coordinator, told reporters the new rules will increase transparency and oversight in future asset sales.

    Petrobras has sold about 30 assets since 2012 when the divestment program began, Puttini said, noting that another 40 remain to be sold.

    The divestment plan has also been held up by an injunction obtained by the Alagoas oil workers union in Sergipe state, Sindipetro-AL/SE. The injunction has blocked the sale of the Baúna and Tartaruga Verde oil fields, the Baúna and Tartaruga Verde oil fields, as well as the inland fields in the states of Ceará, Rio Grande do Norte, Sergipe, Bahia and Espírito Santo.

    Petrobras's statement did not mention the oil worker's injunction.

    The union's lawyer, Raquel Sousa, said in an interview that the oil workers would not accept the sale of Petrobras assets without a bidding process as provided for by Brazilian law to protect the country's capital.

    The injunction in November forced Petrobras to suspend talks with Karoon Gas Australia Ltd on the sale of a 100 percent stake in the 45,000 barrels-per-day Bauna field, in the Santos Basin, and a 50 percent interest in Tartaruga Verde, still in development, in the Campos Basin.

    http://www.reuters.com/article/us-petrobras-divestiture-idUSKBN16M3AW
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    Iraq's talks with Exxon to develop new southern fields in progress: official


    Iraq's talks with U.S. oil major Exxon Mobil Corp to develop two small southern oilfields are progressing well, the head of state-run South Oil Co. said on Wednesday.

    Iraq has been in talks with Exxon Mobil and PetroChina about investing in a multi-billion-dollar project to boost output from the Luhais, Nassiriya, Tuba, Nahr Bin Umar and Artawi oilfields.

    "We have been in talks with Exxon Mobil for more than two years to develop Nahr Bin Umar and Artawi oilfields, and we have managed to reach advanced results," SOC's chief Hayan Abdul Ghani told reporters in the southern city of Basra. He did not elaborate.

    http://www.reuters.com/article/us-iraq-oil-exxon-mobil-idUSKBN16M10R
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    Australian PM secures Gladstone LNG projects’ support to domestic gas market


    Australia’s prime minister Malcolm Turnbull has secured commitments from two of the three Curtis Island LNG projects to contribute to the domestic gas market.

    During a meeting with the gas industry representatives on Wednesday, Turnbull said measures were agreed on that will help deliver cheaper and more reliable energy to Australian households and increase gas supplies for businesses.

    The two projects that have already committed to boosting the domestic gas supplies are the QCLNG and Australia Pacific LNG while Santos GLNG has taken the matter on notice.

    During the meeting, gas producers guaranteed that gas will be made available to meet peak demand periods, among other measures.

    Speaking of the agreements, Shell Australia chairman Andrew Smith said that the QCLNG project has already “reduced LNG export shipments to supply additional gas to the domestic market.”

    However, he called for the development of additional local supply, especially in Victoria where the government banned conventional and unconventional gas exploration and development.

    In addition to LNG projects on Curtis Island near Gladstone, other producers have also agreed to revise their domestic gas production forecasts, while the Australian Energy Market Operator (AEMO) will produce an updated supply outlook.

    http://www.lngworldnews.com/australian-pm-secures-gladstone-lng-projects-support-to-domestic-gas-market/
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    European LNG terminal owners looking for new ways to boost utilisation


    European liquefied natural gas (LNG) import terminal operators are constantly searching for new ways to improve capacity utilisation and make it commercially viable for their customers to bring more of the chilled fuel to the continent, Stefaan Adriaens, Commercial Manager at the Dutch Gate terminal told LNG World News in an interview on Wednesday.

    Despite overall natural gas demand growth in Europe in 2016, countries such as the United Kingdom, Belgium, and the Netherlands saw a decline in LNG imports as most of the fuel went to better-priced markets in Asia and the Middle East.

    According to the LNG data by Gas Infrastructure Europe, utilisation of the total installed capacity at the European LNG import terminals had been critically low during 2016, a trend that is continuing into this year.

    The average rate of LNG terminal utilisation in Europe has decreased significantly since 2010 to below 20 percent of the total send-out capacity last year, GIE data shows.

    On utilisation of European LNG terminals and Gate, Adriaens said that “for terminal operators booked capacity matters more than actual usage. Also one has to differentiate actual utilisation rates of the jetties, storage and regasification.“

    In order to keep their LNG terminals as attractive as possible, European operators have to constantly optimize utilisation at their facilities and foster investments in new LNG infrastructure.

    “A common theme (among European LNG terminal operators) has been to add new services constantly, we have done that, and also all other terminals have been doing that,” Adriaens said.

    “New services like truck loading, small and large LNG reloads and transshipment increase the optionality of outlets and thus make it a bit more attractive to bring in LNG,” he said.

    According to Adriaens, “more than two-thirds of the LNG imported into the Gate terminal left that way over 2016/17.”

    Gate terminal in the port of Rotterdam, owned by Gasunie and Vopak, is one of Europe’s largest LNG terminals, with an annual regasification capacity of 12 billion cubic meters – equal to around 180 cargoes per year.

    LNG throughput volumes at Gate dropped 26.1 percent to 1.7 million mt last year as compared to 2015.

    “We have had only 15 ships unloading instead of 21,” Adriaens said. “On the other hand, we still did 12 large LNG reloads, whilst in 2015 we had 14,” he said, adding that reducing reloads in 2016 was planned by the terminal’s management as the pricing gap all over the globe narrowed making it less economical to ship the fuel elsewhere.

    “The year turned out very different than it was anticipated, and we still see the same trend continuing so far in 2017,” Adriaens noted.

    Gate has conducted 2 large LNG reloads since the beginning of this year. These volumes landed in 3 destinations, namely Spain, Malta and Turkey.

    It has also loaded three smaller cargoes with previously imported LNG with final destinations being Norway and Sweden.

    To further boost its reloading business, Gate “may make small investments to increase reloading rates this year,” but this is still under consideration, Adriaens said.

    Second customer at third jetty

    Gate added an additional jetty in 2016 which enables the loading of small volumes of LNG, from 1,000-cbm up to 20,000-cbm.

    The third jetty will help boost the use of LNG as fuel for ships in northwest Europe.

    Since the opening of the new facility in late August, 6 vessels in total have docked at the new jetty, according to Adriaens.

    “An addition is also that we have a second customer at our third jetty, beside Shell as the launching customer.”

    “The second customer started using the jetty this year,” he said without revealing the name of the company.

    “Throughout the year, we expect the third jetty to be much more used particularly as we await the Shell bunkering vessel that should arrive in the second half of this year,” Adriaens said.

    Shell’s LNG bunkering vessel will be based at the port of Rotterdam and will load from the new berth at Gate. It will deliver the fuel to LNG-powered ships in northwest Europe and other locations.

    First U.S. LNG cargo to Gate?

    Cheniere’s Sabine Pass liquefaction terminal in Louisana, the first of its kind to ship U.S. shale gas overseas, started exporting the chilled fuel in February last year.

    Many predicted a “flood” of U.S. LNG to Europe but only a small number of these LNG cargoes landed in Europe, better said in the southern part of the continent.

    The bulk of these cargoes went to Latin America, Africa and Asia.

    However, only three liquefaction trains are currently in operation at the Sabine Pass facility and in the lower 48 states. The U.S. is expected to become the world’s third-largest LNG supplier by 2020 with an export capacity of 60 million mt coming from five terminals located along the Gulf Coast.

    Talking about the possibility of a U.S. LNG cargo landing at Gate, Adriaens said that “it has not yet happened, but I understand it was a couple of times quite close in decision making… They still rather go to southern Europe than to northern Europe.”

    “The moment will come, of course,” he added.

    Looking forward, Adriaens said he expects more LNG coming to Europe in 2017 but this will vary throughout the year depending on many factors such as prices and demand in Asia and Latin America.

    “There is a lot of LNG available… If European regas is economic, we should see a lot of it, if not – very little,” he said.

    http://www.lngworldnews.com/interview-european-lng-terminal-owners-looking-for-new-ways-to-boost-utilization/
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    Mexico needs 15 successful upstream auctions to reach output forecast: AMEXHI


    Mexico would require at least 15 upstream oil and gas auction rounds as successful as Round 1 to fulfill the International Energy Agency's production forecast, a Mexican Association of Hydrocarbon Companies, or AMEXHI, study showed Tuesday.

    The IEA Mexican Energy Outlook forecast Mexico could produce 2.8 million b/d in 2040, adding the country requires investments of $640 billion to achieve this production level. From that 2.8 million b/d, 2.5 million b/d would come from new projects in 2040.

    "This is a titanic effort," said Pablo Zarate, information director of AMEXHI's research center, said at an AMEXHI event Tuesday.

    Only 2% of Mexico's total oil production comes from reservoirs that started producing in the last 25 years, Monica Boe, leader of AMEXHI's resource access committee, said at the event.

    This is a small amount compared with US' 7%, Venezuela's 8%, and the UK's 35%.

    "The amount of new discoveries in Mexico are very low. To reverse this, we need to explore intensively," said Boe.

    To achieve the 2.8 million b/d production level, Mexico would require drilling between 20 and 30 exploratory wells and 40 and 50 evaluation wells every year until 2040, said Boe.

    Under an investment analysis, Mexico would require investments of $26.6 billion per year.

    Zarate said that close to half of the required investment could come from Pemex, which would have to invest $14.3 billion per year, or $300 billion until 2040.

    These numbers were calculated under Pemex's investment levels in recent years, said Zarate.

    Pemex invested a historical record of $16.6 billion in 2014 with oil prices at $98/b, then invested $9.6 billion in 2015 with prices at $52/b, and $6.5 billion in 2016 with prices at $43/b.

    The private sector would have to invest $12.3 billion per year, or $340 billion under this period.

    According to Zarate, Mexico would require investments from 15 bid rounds as successful as round 1 to raise the remaining $340 billion.

    Mexico Energy Secretariat, or aSENER, predicted Round 1 would bring $41 billion. However, Zarate said after applying an exploratory risk factor, AMEXHI expects a minimum investment level of $20 billion will materialize from the round.

    http://www.platts.com/latest-news/oil/mexicocity/mexico-needs-15-successful-upstream-auctions-21157831
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    US oil production continues to grow YoY


                                                       Last Week    Last Year   Year Before

    Domestic Production '000.......... 9,109          9,088           9,068
    Alaska .............................................. 528              527                517
    Lower 48 ...................................... 8,581           8,561             8,551

    http://ir.eia.gov/wpsr/overview.pdf
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    Summary of Weekly Petroleum Data for the Week Ending March 10, 2017


    U.S. crude oil refinery inputs averaged about 15.5 million barrels per day during the week ending March 10, 2017, 20,000 barrels per day less than the previous week’s average. Refineries operated at 85.1% of their operable capacity last week. Gasoline production decreased last week, averaging over 9.5 million barrels per day. Distillate fuel production decreased last week, averaging 4.7 million barrels per day.

    U.S. crude oil imports averaged 7.4 million barrels per day last week, down by 745,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged 7.6 million barrels per day, 4.4% below the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 572,000 barrels per day. Distillate fuel imports averaged 79,000 barrels per day last week.

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 0.2 million barrels from the previous week. At 528.2 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 3.1 million barrels last week, but are in the upper half of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories decreased by 4.2 million barrels last week but are near the upper limit of the average range for this time of year. Propane/propylene inventories fell 0.8 million barrels last week but are in the middle of the average range. Total commercial petroleum inventories decreased by 7.8 million barrels last week.

    Total products supplied over the last four-week period averaged 19.8 million barrels per day, up by 0.3% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged about 9.0 million barrels per day, down by 4.5% from the same period last year. Distillate fuel product supplied averaged about 4.2 million barrels per day over the last four weeks, up by 13.4% from the same period last year. Jet fuel product supplied is up 5.6% compared to the same four-week period last year.

    Cushing up 2.1 mln bbls

    http://ir.eia.gov/wpsr/wpsrsummary.pdf
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    US crude imports


    Our ClipperData show that U.S. crude imports from Saudi Arabia averaged 1.06mn bpd in 2015, and 1.1mn bpd last year. After averaging 1.28mn bpd for the first two months of the year - as a large wave of Saudi crude exported at the end of last year made its way to U.S. shores - volumes have dropped considerably so far this month (hark, below).

    The OPEC kingpin has chosen to keep its export loadings strong into East Asia in the first couple of months, to the detriment of the U.S. That said, as Saudi loadings drop off towards East Asia in March, we are seeing a corresponding uptick in crude on the water bound for Uncle Sam.    

    We saw a counter-seasonal draw to crude inventories from today's weekly inventory report. This is, however, an anomaly caused by a drop in U.S. Gulf crude imports last week due to poor weather .

    Both gasoline and distillate inventories saw solid draws; the trend of stronger implied demand for distillates persists - causing a 4.2mn bbl draw to stocks when we generally see inventories holding steady. After holding at a seasonal record for the first six weeks of the year, a drop in profitability (aka crack spreads) has mired crude inputs for the last five weeks back in the five-year range.

    http://blog.clipperdata.com/eia-oil-draw-due-to-lower-imports
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    Baker Hughes introduces ‘smart’ drill bit


    Howard Hughes Sr. revolutionised the drill bit to more than 100 years ago to accelerate the oil boom that made Houston and Texas the nation’s energy capital. Today, his legacy company is aiming to make the next evolutionary step with new drill bits that automatically adjust to the underground rock terrain.

    The pressure-sensitive technology is part of a growing effort from Baker Hughes and other power players like Schlumberger and Halliburton to build more durable and faster-drilling bits that adapt to any type of shale rock.

    Houston-based Baker Hughes on Tuesday launches its TerrAdapt self-adjusting drill bit, which, for the first time, automatically extends diamond-material buttons to provide additional protection to the bit’s diamond cutters when the going gets too rough and retracts them when the rock softens up.

    Oilfield services companies used to just modify more expensive offshore drilling technologies to work onshore, but now they’re increasingly developing products specifically for shale rock drilling as the U.S. onshore market increasingly dominates the industry, said Byron Pope, an energy analyst with Tudor, Pickering, Holt & Co. in Houston. After all, horizontally drilled extensions from onshore wells now extend more than 10,000 feet on average.

    The new TerrAdapt drill bit that adjusts on the fly is a potential game changer, Pope said. “The difference with the technology is you don’t necessarily have to customize it for the Permian or Eagle Ford,” he said. “You can just have that one bit.”

    http://fuelfix.com/blog/2017/03/14/baker-hughes-introduces-mart-drill-bit/
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    Alternative Energy

    Australia floats $1.5 billion hydro upgrade to help plug power gap


    The Australian government said on Thursday it may spend up to A$2 billion ($1.5 billion) to expand a huge hydro power scheme to help solve an energy crisis, although the main owners of the dam have yet to be consulted.

    The idea was floated by Prime Minister Malcolm Turnbull, the latest in a flurry of announcements over the past week as the country looks to plug a gap in power and gas supplies that has already led to blackouts and outages across the eastern half of the country.

    Australia is on track to become the world's largest exporter of liquefied natural gas (LNG), yet its energy market operator has warned of a domestic gas crunch from 2019 that could trigger industry supply cuts and broad power outages.

    The 2,000 megawatt expansion of the Snowy Hydro scheme could power the equivalent of 500,000 homes and meet demand in peak periods in the eastern states, Energy Minister Josh Frydenberg told the Australian Broadcasting Corp. on Thursday.

    "The cost will run into the billions of dollars but the Prime Minister has made very clear that we will make all steps necessary to ensure energy security," Frydenberg said.

    The plan so far is just for a feasibility study to be completed by the end of this year.

    The announcement was made without consulting the biggest shareholders in Snowy Hydro, the state governments of Victoria and New South Wales, and scientists said it could damage the sensitive environment around Australia's highest mountain.

    "There's no detail. We have the Prime Minister who's come out and made some pronouncement without actually thinking through how much it's going to cost, what does that mean for consumers, when it'll actually be able to be delivered," Victoria's energy minister, Lily D'Ambrosio, said on local radio, adding that she heard about the plan on the morning news.

    New South Wales energy minister Don Harwin said he looked forward to seeing the result of the feasibility study

    Industry experts said boosting hydropower storage would be an important long-term addition to power capacity, but would not meet immediate needs for more supply.

    "The thing to stress is you need to plug a gap between now and the next five years," said Gero Farruggio, managing director of Sustainable Energy Research Analytics.

    He said the government could boost energy storage within a year for the same A$2 billion by subsidizing installation of batteries in just a quarter of the Australian homes that have rooftop solar.

    Victoria and neighboring South Australia, which relies on wind and solar for 40 percent of its power, are seen at risk of blackouts next summer due to the closure of a 1,600 MW coal-fired power station this month.

    South Australia suffered a state-wide blackout last September, which paralyzed some industries for up to two weeks.

    http://www.reuters.com/article/us-australia-power-idUSKBN16N04R
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    Base Metals

    BHP has lost $700 mln so far at Escondida


    World’s largest miner BHP Billiton has lost about $712 million due to an already 35-day-long strike at its Escondida copper mine in Chile, the world’s largest, but the company is about to put an end to the stoppage.

    A previous labour strike in 2006 ended after 25 days and the current wage deal was signed four years ago when copper was trading around $3.40 a pound.

    Escondida, located in the copper-rich Antofagasta region, in northern Chile, supports just over 10,000 full-time jobs and it is forecast to produce almost 1.1 million tonnes this year, according to BHP figures. That is equivalent to about 5% of the world’s total copper production.

    While majority-owned and operated by BHP, Rio Tinto and Japanese companies such as Mitsubishi Corp also hold stakes in the mine.


    http://www.mining.com/escondida-mine-to-resume-operations-as-bhp-losses-soar-past-700-million/
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    Russia's Nornickel 2016 core earnings fall less than expected

    Russia's Nornickel 2016 core earnings fall less than expected

    Russia's Norilsk Nickel reported a 9 percent drop in 2016 core earnings on Wednesday due to lower metals prices, but was cautiously optimistic about the nickel market for this year, saying a shortfall in supply could increase.

    Nornickel, the world's second-largest nickel producer after Brazilian miner Vale SA and the world's top palladium producer, has also been affected by a one-off fall in production due to a revamp of its downstream operations.

    "The last year marked as very challenging for the commodity industry as many metal prices touched their multi-year lows, while further exhibiting extreme volatility alongside exchange rates," Chief Executive Vladimir Potanin said in a statement.

    Lower metal prices saw 2016 earnings before interest, taxation, depreciation and amortisation (EBITDA) fall to $3.9 billion, although that beat analysts' average estimate of $3.7 billion in a Reuters poll.

    Potanin said he expected Nornickel's dividend for 2016 to be around 60 percent of EBITDA. The company has already paid a 9-month dividend of $1.2 billion.

    Norilsk, part-owned by Potanin and aluminium producer Rusal , said its 2016 net profit rose 47 percent to $2.5 billion mainly due to the appreciation of the rouble currency, while revenue fell 3 percent to $8.3 billion.

    For this year, the company sees the deficit in the global nickel market widening to 100,000 tonnes from 10,000 tonnes in 2016, although uncertainties include whether Indonesia resumes exports of unprocessed ore and whether demand from China softens.

    Nornickel said it expected the deficit in the palladium market to widen to 1 million troy ounces from 310,000 ounces in 2016 due to industrial demand growth and stable supply.

    The miner forecast its capital expenditure would rise to $2 billion in 2017 from $1.7 billion in 2016.

    http://www.reuters.com/article/norilsknickel-results-idUSL5N1GS3W6
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    Japan Q2 aluminium premium talks progress as some players revise targets


    Japan's second quarter aluminium premium negotiations were progressing as a handful of sellers and buyers have indicated they were revising their target levels, market sources said Wednesday.

    Global producers Rusal, Rio Tinto and South32 have offered at $135/mt plus LME cash CIF Japan for Q2 contract premiums, up 42% from $95/mt plus LME cash CIF for Q1.

    Japanese buyers initially said they were eyeing $110-$120/mt CIF.

    However one Japanese buyer has since told producers $120-$125/mt plus LME cash CIF Japan could be considered, several Japanese buyers said. That buyer could not reached for comment.

    One producer has also suggested revising his $135/mt CIF offer, said a Japanese trader. None of the producers could be reached for comment.

    Producers told Japanese buyers last week they were suggesting a 42% hike in Q2 premiums from Q1 as strong US demand was impacting Asia, and metal supplies in Asia were moving to the US.

    Platts US Transaction premiums have remained at a multi-month high of 10 cents/lb ($220/mt) delivered Midwest since February 13.

    This equates to $120-$160/mt CIF Asia, factoring in Asia-US bulk freight at $30-$50/mt and inland US freight at $30-$50/mt, sources said earlier.

    "But premiums in Asia are capped at $110/mt CIF or slightly above, not going higher, because there are cancelled LME ingot warrants without final buyers," said one Japanese trader.

    Aluminium warrants at South Korean LME warehouses fell to 468,425 mt on March 13 from 534,950 mt on February 28, according to LME data. The warrants were cancelled for planned sales to the US, market sources said.

    But it seems not all 96,525 mt cancelled warrant supplies were shipped to the US, the sources said.

    T-bars and sows, widely used among US consumers, are moving to the US from Asia but some ingot supplies could not be sold to the US. "There is some Good Western and Indian ingot available in Asia," the Japanese trader said.

    An international trader has indicated possible Q2 sell interest at $120/mt plus LME cash CIF Japan, but has not made firm offers with shipping, volume and other terms specified, Japanese buyers said.

    The trader declined comment.

    http://www.platts.com/latest-news/metals/tokyo/japan-q2-aluminum-premium-talks-progress-as-some-26685435
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    Steel, Iron Ore and Coal

    U.S. remains net coal exporter in 2016


    The United States exported 60.3 million short tons and imported 9.8 million short tons, remained a net exporter of coal in 2016, according to EIA's data.

    U.S. coal exports fell 22.7% compared to 2015, falling for the fourth consecutive year, with 2016 exports less than half of the record volume of coal exported in 2012 (125.7 million short tons). Slow growth in world coal demand combined with supplier competition were the major factors contributing to the decline in U.S. coal exports.

    Despite mid-year increases in international coal prices, U.S. coal exports declined through most of 2016. Lower mining costs, cheaper transportation costs, and favorable exchange rates continue to provide a market advantage to other major coal-exporting countries such as Australia, Indonesia, Colombia, Russia, and South Africa.

    Nearly 80% of the coal exports of the United States in 2016 went to 10 countries. Declining exports to 9 of those 10 countries accounted for two-thirds of the total drop in U.S. exports. One of the few increases in 2016 was exports to Brazil, which increased by nearly 0.6 million short tons. China and Morocco also received increased amounts of U.S. coal, but only absorb a small fraction of total U.S. coal exports.

    U.S. coal exports are mainly shipped from eight customs districts, which accounted for 95% of U.S. coal exports in 2016. Norfolk, Virginia, the largest coal port, shipped 23.1 million short tons of coal and accounted for 38% of total U.S. coal exports.

    In 2016, U.S. coal imports in 2016 are 13% lower than the 11.3 million short tons imported in 2015 and the first decline in imports since 2013. The majority (90% in 2016) of coal imported into the United States is steam coal.

    Colombia remained the largest source of U.S. coal imports of 8.3 million short tons in 2016, despite a decrease of 12% year on year. Metallurgical coal imports, primarily imported from Canada is 1.018 million short tons, fell by 44% in 2016.
     
    U.S. coal imports are mainly offloaded at a few customs districts, with six districts receiving 90% of U.S. imports in 2016. Tampa, Florida, remained the largest recipient of coal imports in 2016, though imports into Tampa declined by 16%.

    http://www.sxcoal.com/news/4553484/info/en
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    Hallador CEO sees higher coal production, sales in 2017


    Lower US natural gas inventories in 2017 should translate into higher domestic coal sales and perhaps encourage electric utilities to move off their current "short" coal-buying strategy, Hallador Energy president and CEO Brent Bilsland said Tuesday.

    On the heels of a mild winter, what could really help domestic coal pricing, though, is a long, hot summer, Bilsland told analysts during a conference call to discuss his company's fourth quarter and full-year 2016 earnings.

    "We expect our customers to burn more coal in 2017 than in 2016," said Bilsland, whose company owns Illinois Basin thermal coal producer Sunrise Coal.

    Hallador already has committed coal sales of about 6 million st this year and is confident it will sell another 500,000 st or so in the remaining months of 2017.

    Almost all of that coal is expected to come from the Oaktown underground mining complex in Knox County, Indiana. Oaktown's No. 1 and No. 2 continuous mining operations essentially have been merged into a single large mine that produces about 5 million st annually.

    At present, Oaktown is running at only 60% capacity, according to Bilsland. Oaktown's cash costs are estimated at $28-$30/st in 2017 and could drop even lower if production picks up.

    "We ran the mine a little harder in the fourth quarter and costs dropped to [around] $26/st," he said.

    Bilsland spent considerable time talking about the interaction between gas prices and coal demand. Declining gas prices over the past few years -- they reached historic lows of around $2/MMBtu in early 2016 -- have been cited as a key reason for falling coal output, as many utilities switched away from higher-priced coal.

    Now, however, "there is a lot less gas to compete against than in years past," Bilsland said, pointing out that US-produced gas is being diverted for uses other than electric generation and is exported to Mexico. "We expect gas inventories to be half above the norm of what they were last year. This is going to create a lot more coal to be burned."

    Moreover, gas prices are forecast to be higher in 2017, in excess of $3/MMBtu, compared with an average price of $2.49/MMBtu last year. In general, nevertheless, most utilities still are playing the short game in terms of coal purchase contracts, opting for a year or less.

    "Utilities are taking a wait-and-see approach," he said. "They're going to wait to see what the summer heat brings and laying in spot purchases as they get there."

    Indeed, such a buying strategy has led to historically short contract positions for Hallador, Bilsland noted.

    With declining coal inventories late last year and an increase in exports, he believes utilities may have been poised to enter into longer coal purchase agreements if the winter had cooperated.

    But after a seasonably cool December in the Midwest, January and February produced above-average temperatures for the second year in a row.

    Utilities "started to get a little more panicky. They know we're in a market that isn't as liquid as it was," Bilsland said. "Playing the short side works until you run out of fuel."

    This summer's temperatures, particularly in June and July, are likely to dictate whether coal prices show much upside movement in 2017.

    "On pricing, it's going to be weather-dependent," Bilsland said. "When the market moves, it's going to move very quickly. If buyers need to fill 10% of their needs, pricing is going to be flat. If they need to fill 30% of their needs, pricing is going to move fairly dramatically" because of a dearth of domestic coal supply as dozens of producers have closed mines, curtailed operations or gone out of business in recent years.

    Bilsland said Hallador has sealed about 80% of its Carlisle underground mine in Sullivan County, Indiana, once its flagship operation.

    Still, the company hopes to restart Carlisle at some point, albeit as a smaller, lower-cost operation.

    "When we do bring Carlisle back on line," he said, "its cost structure will look a lot better."

    Hallador CFO Larry Martin said the company recorded a net loss of $3.8 million in the fourth quarter of 2016 but earned $12.5 million for the entire year.

    http://www.platts.com/latest-news/coal/louisville-kentukcky/hallador-ceo-sees-higher-coal-production-sales-21157806
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    India looks to Australian coking coal for steel and power industries


    As highly dependent on imports for this crucial raw material needed for steel and power generation, India has decided to tackle its coking coal deficit by acquiring a foreign coking coal asset and washing certain grades of coal to make it fuel-ready, Metal Miner reported on March 14, citing Power Minister Piyush Goyal.
     
    Goyal expressed that one of the ways the government was contemplating reducing its reliance on imports was to wash certain grades of coal to make available 20 million tonnes of coking coal in the next three to four years for the domestic steel industry.

     Chairman and Managing Director of Coal India Ltd.(CIL) S. Bhattacharya has reiterated that coking coal requirements for the domestic steel industry are still not being met. The country's near-monopoly coal producer is said to be looking at coking coal assets overseas as the country was faced with constraints of commercially viable domestic metallurgical coal reserves, the Minister told Parliament in a statement.

     CIL is looking to appoint a merchant banker to assist it in acquiring assets overseas.

     According to some media reports, CIL is considering buying coal assets in Australia for over $1 billion. The state-run company is likely to raise debt to fund the said assets in Australia. CIL is also reportedly mulling entering into strategic partnerships in FY 2017-18 to import some coking coal.

     Ironically, India sits on a huge natural stockpile of coking-grade coal, but these resources have not been fully exploited, and much of it is not suitable for power plants, forcing India to rely on imports for electricity.

    India generates about 60% of its total energy from coal and about 10% using natural gas and even diesel fuel. In view of the climate commitments made by India at the Paris Climate Conference, it needs to bring non-fossil fuels up to 40% of its energy mix and down its carbon intensity of GDP to 33% by 2020. Washing of the low-grade coal would mean it can then be used as coking coal for steel plants, and cheaper imports of coal for power plants can then be used.

    CIL is on its way to raising its annual coal output up from 560 million tonnes to 905 million tonnes in 2020. Private coal mines allotted by the ministry of coal to private producers for captive power generation are expected to mine 500 million tonnes of coal by 2020. This is expected to bring India's total coal output up to 1.5 billion tonnes by 2020.

    http://www.sxcoal.com/news/4553505/info/en
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    Jizhong Energy Group signs debt swap deal with BoCom


    Jizhong Energy Group, a large state-owned coal producer in Hebei province, signed a debt-to-equity swap agreement with the Bank of Communications (BoCom) on March 8, said the company on its website.

    The agreement with BoCom, the country's fifth-biggest lender, represented the latest effort to deal with the debt burden of Chinese state-owned enterprises.

    The move is expected to help debt-laden firm to lower leverage and bolster up real economy development, said Mao Yushan, vice director of the provincial Development and Reform Commission.

    "It will play a significant role in optimizing the group's asset structure, enhancing operation and management, as well as accelerating transformation and upgrading," said Cao Haiyan, deputy secretary of Hebei branch of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC).

    http://www.sxcoal.com/news/4553473/info/en
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    Indian DRI plants face iron ore shortage


    Indian sponge iron or direct reduced iron (DRI) manufacturing units were facing an acute shortage of iron-ore despite the government liberalising norms for the allocation of iron-oreblocks and with the country poised to achieve a five-year high in the production of the raw material.

    The shortage of iron-ore faced by DRI units have become so acute that a Minister of the southern Indian province of Karnataka, in a meeting with federal government officials earlier this week, sought urgent and immediate supplies of raw materials to units located in the southern province.

    Karnataka has sought federal government directive to the state-owned and operated largest iron-ore miner NMDC Limited to increase volume shipments to DRI units in the region.

    According to officials in Karnataka government, an estimated 75% of the 69 sponge iron manufacturing units in the region were either closed down or operating at drastically reduced capacities from shortage of iron-ore or pellets available in the open market.

    The latest cry of a crisis by a Minister in Karnatakagovernment followed persistent pleas for assured supplies of raw material from the Karnataka Sponge Iron Manufacturers’ Association ever since October last year.

    In October the Association had raised a specter of DRI units closing down as iron-ore miners were to not making any specific allocation of raw material to sponge iron producers and that the estimated 27-million tonnes a year production in the province was mostly bagged by integrated steel producersleaving very little supplies for DRI units which were largely in small and medium scale sectors.

    DRI units in the southern province require an estimated nine-million tonnes of iron-ore each year to be able to  operate at full capacity.

    However, officials in Mines Ministry have been caught by surprise by the shortage of raw material faced by DRI units particularly at a time when India was expected to close the current fiscal with a five-year high iron ore production of around 180-million tonnes.

    It was pointed out by the officials that the government also made structural changes in the legal environment and liberalised auction rules that would address iron-ore supplies to DRI units, in the long term.

    The officials said that in the auction rules first framed in 2015, sponge iron units and pellet plants were disadvantaged as the rules heavily favoured large integrated steel producersin bidding for iron-ore blocks at the auctions.

    However, the Mines Ministry late last year tweaked the rules which now enabled provincial governments to set aside specific iron ore blocks within their respective territories on basis of end-use.

    Under this provision, iron-ore bearing provinces were empowered to reserve iron ore blocks for specific sectors like DRI units or pellet plants, the officials added.

    Simultaneously, the Steel Ministry had scrapped the practice of categorising steel plants as integrated, secondary or major producers and thereby bringing all steel producers irrespective of sourcing of raw material, technology used or size of operation to a level playing field where uniform norms would be applicable to them.

    However, at least two DRI plant operators pointed out that most of such manufacturers were in the small and medium sector and did not have the financial or managerial wherewithal to participate in competitive bidding to secure iron ore blocks through the auction route.

    Also owing to their limitations in size and financial muscle, securing raw material through e-auctions conducted by various provincial government controlled mining agencies were a challenge and bulk of volumes offered through e-auctions too were mostly bagged by large steel mills, the operators added.

    http://www.miningweekly.com/article/indian-dri-plants-face-iron-ore-shortage-2017-03-15
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    Steel intensity increasing in US shale plays


    The number of active rigs in the US is not likely to reach the highs of the shale revolution, but demand for steel in the energy industry is expected to be higher than it was prior to the collapse of the energy market, Nicole Leonard, project manager for S&P Global Platts Analytics Oil & Gas Consulting, said Monday.

    "Going forward, by 2019, we predict steel demand in the Permian is going to equal steel demand in 2014," Leonard said at Platts' 13th annual Steel Market North America Conference in Chicago.

    Even though US producers are drilling less wells, the amount of steel used per well has been on the rise, Leonard said. For example, in 2010 the average gas well would require roughly 210 mt of steel, now it's closer to 400 mt, she said.

    As lateral lengths have gotten longer and wells have gotten deeper, steel intensity has increased significantly, she said. Steel demand per well has increased 45% per well since 2010, according to Leonard.

    Lateral lengths differ depending on the geology of the shale play, but overall lengths are expected to increase going forward, Leonard said. Currently, producers are reporting lateral lengths as long as 20,000 feet in shale plays throughout Ohio and Pennsylvania.

    "Steel intensity is increasing significantly," she said.

    http://www.platts.com/latest-news/metals/chicago/steel-intensity-increaseing-in-us-shale-plays-26684792
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    High Q1 ferrochrome price settled at lower Q2 level – Merafe

    High Q1 ferrochrome price settled at lower Q2 level – Merafe

    The European benchmark ferrochrome price has been settled at US$1.54/lb for the second quarter (Q2) of 2017, a decrease of 6.7% on the high-flying US$165/lb first quarter (Q1) price, Merafe Resources announced on Wednesday.

    The settled Q2 price is well up on the average 2016 European benchmark ferrochrome price of US$95.5/lb and the average US$1.07/lb of 2015.

    Ferrochrome and chrome ore prices recovered from rock bottom in the first quarter of last year and despite market volatility in the 12 months to December 31, coupled with the challenges and cost pressures faced by the South African ferrochrome industry, Merafe reported its second highest headline earnings ever.

    Ferrochrome-using stainless steel production is projected to grow by 3.5% in 2017 and by 3.8% in 2018, which should be followed by increased ferrochrome demand.

    The JSE-listed Merafe, headed by CEO Zanele Matlala, shares in 20.5% of the earnings of the Glencore-Merafe Chrome Venture, South Africa’s lowest-cost ferrochrome producer with a capacity of 2.3-million tonnes of ferrochrome a year.

    http://www.miningweekly.com/article/high-q1-ferrochrome-price-settled-at-lower-q2-level-merafe-2017-03-15
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