Mark Latham Commodity Equity Intelligence Service

Monday 17th October 2016
Background Stories on www.commodityintelligence.com

News and Views:

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    Macro

    Exhibit A: Debt to GNP

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    Exhibit B: A weak global economy.

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    Exhibit C: Political change: Trump?

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    GOOGLE SEARCH TRENDS: HOW TO VOTE FOR TRUMP IS CRUSHING HOW TO VOTE FOR HILLARY

    7 COMMENTS

    Don’t we just love our Google data, folks? I swear, we have the best Google data! Granted, Google has already censored crucial election data, but thank god that the Google Trends tool is still a thing.

    Even though we know that Trump is going to win by a landslide, it remains unclear that Google search data can predict election results.

    Although, being that “how to vote for Trump” is crushing Hillary, the Clinton camp should be very concerned. Seriously, “how to vote for Trump” has nearly twice as many searches as “how to vote for Hillary”. Feel free to spin that as “uneducated” Trump supporters. But, the fact that more potential voters are searching how to vote for Trump should be extremely telling.


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    Russian state fund to co-invest $1 billion in India


    A man rides past a billboard near one of the venues of BRICS (Brazil, Russia, India, China and South Africa) Summit in Benaulim, in the western state of Goa, India October 14, 2016. REUTERS/Danish Siddiqui

    The state-backed Russian Direct Investment Fund (RDIF) will work with an Indian fund to invest $1 billion in Asia's third-largest economy, the head of the fund said before a bilateral summit expected to yield several big business deals.

    The RDIF and India's National Investment and Infrastructure Fund (NIIF) will each invest up to $500 million in the joint fund, replicating partnerships the Russian entity has with countries like China.

    "We helped in the process of the NIIF being created," RDIF CEO Kirill Dmitriev said in an interview with Reuters. "Now we will provide equity capital to joint Russian-Indian projects, mainly in India."

    The RDIF was set up by Dmitriev in 2011 with billions in Kremlin cash and has since made partial exits from bets in Russia, including the Moscow Stock Exchange, diamond miner Alrosa (ALRS.MM) and Rostelekom (RTKM.MM).

    It also worked with Indian infrastructure investor IDFC to invest $1 billion in power projects when President Vladimir Putin last visited India in late 2014.

    India is courting international investors to help finance new roads, railways and power projects that the country needs.

    Putin will meet Indian Prime Minister Narendra Modi in the tourist destination of Goa on Saturday for a summit at which major defense, oil and nuclear power agreements are expected to be signed.

    The RDIF-NIIF partnership will also be sealed at the summit. It will address around 20 investment proposals and seek to strike its first deals in 2017, said Dmitriev.

    Leaders of the BRICS caucus - Brazil, Russia, India, China and South Africa - will also gather in Goa this weekend. The bloc has founded its own New Development Bank that has co-invested in two RDIF-backed hydropower plants in Russia that have just broken ground.

    Dmitriev said he hoped that the Russian fund would be able to draw on the platform of the BRICS bank to build similar small-scale hydro projects in India that are based on Russian technology.

    http://www.reuters.com/article/us-india-russia-rdif-idUSKBN12E1ZF
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    China's risk clamp down hits commodity trades, niche broker business


    New rules in China aimed at curbing risk and speculation have triggered an exodus of institutional cash from the country's commodities futures markets and hobbled a thriving niche business for brokers.

    Before the ban, futures brokers were launching hundreds of structured products a month offering guaranteed returns, which attracted institutional cash and fed billions of dollars into the commodity futures markets.

    Now, fresh launches are just a trickle as the brokers comply with new rules that include a ban on guaranteed returns. With no promise of big returns, the 100 brokers or so that run asset management businesses offering these products are struggling to keep clients.

    "The new rules made the launch of structured products nearly impossible," said Ni Chengqun, a senior manager with the asset management arm of Hicend Futures in Shanghai.

    The slump in trade is a blow for the likes of the Shanghai Futures Exchange and the Dalian Commodity Exchange, which run China's biggest commodity futures contracts.

    Average daily volume in steel rebar futures, for example, dropped to 5.3 million in September from 13.5 million in April, while iron ore turnover dropped to 1.5 million from 4.7 million.

    The rule changes by the Asset Management Association of China (AMAC) prohibit asset managers at futures brokers from guaranteeing returns, restrict leverage and include stricter standards for funds acting as advisors. AMAC was taking aim at highly-leveraged products that were offering the promise in many cases of returns of 8-9 percent.

    In one popular type of product, brokers pooled funds from investors and deployed the capital in equities, fixed income and commodity futures markets for a specified period. An outside fund acted as an advisor to devise the trading strategy.

    Futures were central to many of the products because they offer the ability to leverage, one asset manager said, citing the need to deposit as little as 10 percent of the contract value on margin. So an investor pool of $10 million can wield a notional position of up to $100 million in the market.

    As a result, a relatively modest price gain in that market can produce outsized profits on the initial deposit.

    Such juicy returns attracted institutional fund managers. Banks such as China Merchants Bank and some of the big-five lenders flocked to the products, asset managers said.

    BIG PROMISES, BUMPER LEVERAGE

    In the first half of 2015, the hottest structured products were tied to equity indexes like the Shanghai/Shenzhen CSI 300 Index, which surged roughly 50 percent from January to June amid a retail investor buying frenzy.

    Futures on the CSI 300 rallied by the same degree, and volumes more than doubled from the year before to average over 1.2 million contracts a day for the first half of 2015.

    Alarmed by the prospect of a bubble, regulators then stepped in to restrict trade, triggering an exodus from stocks and effectively barring retail investors from trading stock futures. CSI 300 futures volumes collapsed. Average trade in the first half of 2016 was 80 times less than a year earlier.

    That's when futures brokers steered investors into fixed income, equities and commodities, sparking a surge in commodities trading in early 2016. Iron ore and steel futures prices jumped more than 60 percent by mid-April.

    LOWER FEES, MORE COMPETITION

    For brokers, the latest rules come just as a proliferation of new rivals has intensified competition in their core business of hedging risk.

    An estimated 80 percent of brokers' asset management business focused on leveraged structured products, people working in the sector said.

    Now, brokers like Huatai Futures, which manages more than 10 billion yuan ($1.5 billion) in assets, and Hicend Futures, are finding only tepid interest from investors in products that comply with the new rules.

    "Since banks can't be guaranteed high returns, most of them have lost interest, while a few are only willing to work with big asset management firms," Hicend's Ni added.

    Kang Lan, a senior asset manager at Huatai in the southern province of Guangzhou, said her firm has only managed to launch one fund under the new rules. In the month before the change, the firm had set up as many as 10.

    EARLY STUMBLE

    Of China's 150 futures brokers, more than 100, including the nation's top names Founder CIFCO Futures, Guosen Futures and Hongyuan Futures, have asset management units, AMAC says.

    Their assets under management more than doubled to 227.3 billion yuan ($34 billion) in the first six months of 2016 from the end of 2015.

    "With strengthening supervision from regulators, (brokers' asset management) business will definitely slow down," Liang Lijin, a finance lawyer with Hiways Law Firm in Shanghai said.

    "They will launch new products based on the new rules, but they will be slow and business will not grow." ($1=6.67 yuan)

    http://www.reuters.com/article/china-brokers-idUSL2N1BX046
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    Oil and Gas

    Iran says OPEC secondary source estimates for oil output ``not acceptable''


    Iran says OPEC secondary source estimates for oil output ``not acceptable'', adding voice to Iraq and complicating effort to cut.

    @A_DiPaola17
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    OPEC news headlines


    More OPEC headlines likely next Tuesday/Wednesnay from the "Oil & Money Conference" - speakers Al-Falih, Barkindo, Birol, Sechin.

    @staunovo
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    Iran Kicks Off Oil-Development Tender to Woo Foreign Investors


    Iran is ramping up efforts to woo foreign investment in an energy industry stunted by years of sanctions, with a request for companies to submit documents to pre-qualify as bidders to develop the country’s oil and natural gas fields.

    State-run National Iranian Oil Co. will solicit documents from international companies starting Monday, according to an announcement posted on the website of Shana, the oil ministry’s news service. Interested companies will have until Nov. 19 to submit their qualifications, and the government will publish a list of eligible bidders on Dec. 7, according to Shana.

    The announcement marks an acceleration in Iran’s effort to rejuvenate its energy industry since economic sanctions were eased in January. OPEC’s third-largest producer is seeking to attract investors with a revised oil investment contract to boost output at fields it shut when exports were restricted. The country wants to attract more than $100 billion in investment to increase its oil production by 1 million barrels a day by the start of the next decade.

    Iran pumped 3.63 million barrels of oil a day in September, data compiled by Bloomberg show. The Organization of Petroleum Exporting Countries will meet next month to seek agreement on how to put into effect a planned cut in the group’s output. OPEC agreed last month in Algiers to reduce its collective production to between 32.5 million and 33 million barrels a day, though it may exempt Iran from any cuts.

    NIOC wants to sign new development contracts with foreign and domestic companies during the current Iranian year, which runs through March, Mehr News Agency reported on Sept. 17, citing Ali Kardor, a deputy oil minister and NIOC managing director.

    http://www.bloomberg.com/news/articles/2016-10-16/iran-kicks-off-oil-development-tender-to-woo-foreign-investors
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    Attackers set NNPC crude pipeline on fire in Niger Delta: Nigerian army


    Attackers have set fire to a crude oil pipeline in Nigeria's restive Niger Delta, a military spokesman said on Saturday, the second strike in the country's oil hub within a day.

    A militant group had earlier said it attacked the pipeline, which is run by the state oil firm NNPC and a local private firm, Shoreline, near Ughelli on Friday night.

    "The Niger Delta Greenland Justice Mandate is not kidding with anybody," the militants said in a statement.

    "This shall be the state of affairs until all of you adjust to taking our land and the lives of our people seriously," it said, referring to this and a similar attack in the same area on Thursday night.

    There was no immediate information on the impact of the latest incidents on Nigeria's oil production. Attacks have reduced output by 700,000 barrels per day since the start of the year.

    Militants say they want a greater share of Nigeria's oil wealth to go to the impoverished Delta region. Crude sales make up about 70 percent of national income and the vast majority of that oil comes from the southern swampland.

    Nigeria, an OPEC member, was Africa's top oil producer until the recent spate of attacks pushed it behind Angola.

    President Muhammadu Buhari has said the government is trying to negotiate a lasting solution with the militants, but there has been no visible progress.

    The militants are splintered into small groups, made up mostly of unemployed men, who even their leaders struggle to control.

    http://www.reuters.com/article/us-nigeria-oil-idUSKBN12F0JL
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    Oil Speculators Most Bullish Since ’14 After Wild Two Months


    Oil investors must be getting dizzy.

    In the two months since OPEC began talking about capping production, speculators’ sentiment has swung wildly, with government and exchange data showing the four biggest weekly position changes ever for the two global benchmark crudes. The latest shift is to optimism, with money managers the most bullish on West Texas Intermediate oil in two years.

    "Since the summer we’ve had big moves in net length," said Mike Wittner, head of oil-market research at Societe Generale SA in New York. "It usually has trended up or down over a couple of months. Now this is happening in a matter of weeks. We’re seeing huge shifts."

    Money managers reduced bets on lower WTI prices by more than half in the past three weeks as OPEC agreed to its first deal to cut output in eight years. That drove net length to the highest since July 2014 in the week ended Oct. 11, Commodity Futures Trading Commission data show.

    The Organization of Petroleum Exporting Countries agreed on Sept. 28 in Algiers to trim output to a range of 32.5 million to 33 million barrels a day, which is due to be finalized at the Vienna summit next month. OPEC took a step toward coordinated supply curbs with Russia last week and will meet for a “technical exchange” to set a road map for output levels later this month.

    The swings in sentiment have tracked the rocky road to $50 a barrel oil. Speculators’ combined WTI and Brent crude net position rose or fell more than 100,000 contracts four times in the past two months, the only moves of that size in CFTC and ICE Futures Europe data going back to 2011.

    Prices began to rise after OPEC’s president said Aug. 8 that the group would hold informal talks in Algiers and Saudi Arabia signaled Aug. 11 it was prepared to discuss taking action to stabilize markets. Futures gave up most of those gains amid doubts that Saudi Arabia and Iran to reach an deal, before the agreement in Algiers sparked the latest rally.

    "The change in tone from the Saudis is important," said Kurt Billick, the founder and chief investment officer of Bocage Capital LLC in San Francisco, which manages about $432 million in commodities equities and futures. "Getting to a yes in Vienna is challenging. That they are willing to talk about a deal is a big change."

    Money managers’ short position in West Texas Intermediate crude, or bets on falling prices, shrank by 28 percent to 71,407 futures and options. Longs rose 1.8 percent to the highest since June 2014. The resulting net-long position increased 13 percent.

    WTI increased 4.3 percent to $50.79 a barrel in the report week. Prices on Monday were down 0.3 percent at $50.19 a barrel as of 12:17 p.m. in Singapore.

    Other Markets

    In other markets, net-bullish bets on gasoline rose 19 percent to 36,650 contracts, the highest since March 2015, as futures slipped 1.1 percent in the report week. Wagers on higher ultra low sulfur diesel prices climbed 46 percent to 9,074. Futures rose 2.1 percent.

    The scale of the internal differences OPEC must resolve before securing a deal to cut supply was revealed Oct. 12 as the group’s latest output estimates showed a half-million-barrel difference of opinion over how much two key members are pumping.

    "The bottom line is that they’ve made an agreement," Wittner said. "If you are going short you are betting against the Saudis, which isn’t a good thing historically."

    http://www.bloomberg.com/news/articles/2016-10-16/oil-speculators-most-bullish-since-2014-after-a-wild-two-months
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    Rival faction challenges Libya's U.N.-back government in Tripoli


    A Libyan faction opposed to the U.N.-backed government seized a building used by parliament in Tripoli, proclaiming its own authority and demanding a new government in a challenge to Western plans to end the instability in the country.

    Libya's internationally backed government, which has struggled to impose its authority on rival factions, condemned the takeover of the Rixos Hotel as a bid to scuttle its attempts to form a stable government in the North African OPEC member.

    Later on Saturday, the U.N.-backed government posted images on social media of its presidential council and ministers holding a meeting in the main offices of parliament in a different part of Tripoli.

    The United Nations and European Union warned against attempts to create parallel institutions and reiterated their backing for the U.N.-negotiated deal that formed a Government of National Unity (GNA) in Tripoli.

    Since the fall of Muammar Gaddafi in 2011, Libya has been caught up in factional fighting between various groups of former rebels who battled Gaddafi and then steadily turned against each other in a struggle for control.

    The presidential council of the GNA arrived in Tripoli in March in the latest attempt to bring together factions who operated competing governments in the capital and in the east of the country since 2014.

    Tripoli was calm on Saturday hours after leaders of a former Tripoli government said they had taken over the Rixos in the capital, where part of the U.N.-backed government is supposed to operate. The hotel was already controlled by an armed group loyal to them.

    "The presidential council was given chances one after another to form the government, but it fails... and has become an illegal executive authority," former premier Khalifa Ghwail said in a statement late on Friday.

    Ghwail called for a new administration to be formed by his former Tripoli government and its rival in the east, where hardliners also oppose the U.N.-backed administration. He said all institutions including banks, the judiciary and local authorities were under their jurisdiction.

    There appeared to have been no fighting in the takeover of the Rixos, which was supposed to be the base for the State Council, a legislative body made up of Tripoli's former parliament as part of the U.N.-backed unity government deal.

    Traffic was flowing as normal around the Rixos on Saturday, where around 10 military vehicles secured the perimeter.

    "The seizure of the state council is an attempt to hinder the implementation of political agreement by a group which rejects this deal after it has proved its failure in managing the state," the presidential council said in a statement.

    Tripoli is controlled by various armed brigades, some loyal to the GNA and others who backed the former National Salvation government when its forces took over the capital in 2014 in fighting that destroyed the international airport.

    Brigades of former rebels have often stormed government offices, ministries and the parliament in the last five years to make political demands or call for higher salaries.

    Challenging the GNA's authority in the capital poses a risk to Western plans for Libya's unity government to stabilise the country and help fight Islamist militants and migrant smugglers.

    Eastern factions led by former General Khalifa Haftar are also opposed to the U.N.-backed Tripoli government. But they fought a conflict with rivals for control of Tripoli in 2014. Haftar's forces have taken over four key oil ports and now are cooperating for the moment with the GNA in allowing oil exports.

    http://www.reuters.com/article/us-libya-security-idUSKBN12F051
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    Traders chase dwindling oil refining profits


    Trade firms that profited from the renaissance in global refining over the past two years are bracing for tougher times as ample stocks, dwindling volatility and newly powerful refineries in China squeeze opportunities, the chiefs of major trade houses told the Reuters Commodities Summit.

    The oil price crash was a windfall for traders, who cashed in by helping the world manage the imbalance in supply and demand it created – for example, by ferrying gasoline churned out at a breakneck pace in Europe to millions of new car and motorcycle owners in India and China emboldened by cheaper fuel.

    Traders also padded their profits through easier conditions created by contango – a market structure in which prices in the future are higher than those today. This allows them to make money just by holding onto oil and oil products, or even slowly shipping it from one region to another.

    But trade house chiefs told the Reuters commodities summit that in 2016, and the year to come, these golden opportunities will become increasingly hard to find.

    "I think it will be slightly tougher for everybody," Vitol Chief Executive Ian Taylor said.

    While Europe's refineries are still remarkably profitable – well after most industry experts thought the margins would have melted away – the money-making opportunities they created are fading.

    Gasoline, said Glencore's head of oil Alex Beard, "really didn't perform the way many people expected, I think mainly because of an overhang of gasoline from last winter."

    A strong refinery margin, along with a good contango, makes for an ideal trading environment, he said.

    Beard warned that "the refining margin outlook is trending back to long-term historical averages, which is challenging to many," including Glencore.

    Distillates, such as heating oil, diesel and jet fuel, have also flooded into the world's storage tanks. The ample availability means that traders can miss out on additional profits.

    Traders are also warily eyeing China's independent refineries, dubbed "teapots", which were allowed late last year to start importing crude oil directly for the first time. Suddenly, Taylor said, these units "found everybody's number on their speed dial", and began churning products into the global market.

    ALSO IN ASIA

    ChemChina, Sinochem in talks on possible $100 billion merger: sources
    Rosneft-led group to buy India refiner Essar for $12-$13 billion: sources

    "China has started exporting some products at times. So the surplus tends to be pushed into international markets faster, when traditionally (when Chinese consumption outstripped production) they refrained from exporting products," said Mercuria chief Marco Dunand. "You have to be a lot more informed about internal product storage levels."

    Even so, no one predicted a return to the crisis of the beginning of the decade for either refineries or traders.

    "The market has been able to absorb a number of big (refinery) projects in the Middle East, China, India ... in a very short period of time," said Torbjorn Tornqvist, chief executive of Gunvor, noting these did not collapse margins

    . "I don't think it's going to be as bad as it was three or four years ago, when it really was tough."

    http://www.reuters.com/article/reuters-summit-refining-idUSL8N1CJ4TL
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    EU, Gazprom Close to Agreeing on Settlement Terms


    Russia’s state-owned natural gas company OAO Gazprom and the European Union’s antitrust authorities are aiming to agree as soon as the end of October the terms of a settlement that would force changes to the way the company operates, according to people familiar with the matter.

    Gazprom executives, Russian government officials and the European Commission, which is the bloc’s antitrust regulator, are expected to hash out the final details of the agreement in a high-level meeting at the end of the month, one of the people said.

    The Russian government, which controls more than 50% of the company’s shares, has been actively involved in the settlement discussions, which are aimed at addressing the EU regulator’s long-running concerns that the energy giant harms competition and charges unfair prices in several Eastern European countries.

    A settlement could help the company avoid billion-dollar fines in exchange for changes to the way the business operates. The discussions, however, could still go awry and no final plan has yet been signed off, the people stressed.

    If the terms of the settlement are agreed, the plan would then have to be presented to the other countries affected by the case--a process that could take weeks.

    The closing of the talks in the EU’s antitrust case comes as tensions mount between Russia and the West after a diplomatic breakdown over Moscow’s bombing of the Syrian city of Aleppo.

    The EU’s handling of the Gazprom case has been swayed by diplomatic considerations in the past.

    The EU’s initial probe into Gazprom stems from September 2011 and formal proceedings were opened a year later—well before the conflict in Ukraine ignited. In early 2014, EU regulators and Gazprom officials had been heading toward a settlement. But when Russia annexed the Crimean peninsula in March 2014, and talks subsequently stalled, the EU held off on filing charges, worrying that they would rile the Kremlin at a sensitive time.

    Then last April, with its new Competition Commissioner Margrethe Vestager in charge, the EU filed formal charges against Gazprom.

    The regulator alleged the state-controlled company breached the EU’s antitrust rules in eight countries where it is the dominant gas supplier—Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia. The commission said restrictive terms in Gazprom contracts forced territorial constraints on customers, for instance by prohibiting them from re-exporting gas to another country. It also objected to Gazprom’s practice of tying the price of gas to that of oil.

    While Gazprom has denied any wrongdoing, its management moved quickly to start settlement talks after the formal charges were issued last year.

    As part of the agreement with the EU, Gazprom would have to untie the price of gas to oil. While the price of oil has plummeted in recent years, thereby also depressing gas revenue for Gazprom, it could always regain momentum in the future, raising costs for gas customers.

    Some points in the settlement talks are still open. The commission has expressed willingness to allow Gazprom to charge customers different prices when customers want their gas exported to a different national market than originally agreed in the contract, the person said. But the EU and the company are still negotiating over how to calculate those prices.

    When the commission presents the settlement plan to the other relevant countries, some nations could push back against the terms of the settlement if they deem them too favourable to the Russian state-owned gas giant.

    http://www.wsj.com/articles/eu-antitrust-authorities-and-gazprom-close-to-agreeing-settlement-terms-1476429423
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    Nigeria LNG CEO claims amendment to 1989 law could affect investment


     According to Reuters, Nigerian lawmakers are looking to modify the law that established the Nigeria LNG (NLNG) partnership in 1989.

    NLNG is a public private partnership between Eni, Total, Royal Dutch Shell and state-owned Nigerian National Petroleum Corp. (NNPC), producing LNG for export. The CEO of the company, Tony Attah, has stated that this move has the potential to negatively impact investment.

    The company is currently in the final stage of deciding whether or not it should invest in Train 7. This would cost approximately US$12 billion and increase the facility’s LNG exports from 22 million t to 30 million t.

    However, Attah claims that lawmakers in Nigeria’s lower house are looking to cancel guarantees made by the government that helped pave the way for private investment in the company, as well as introduce levies paid by exploration firms equivalent to approximately 3% of the overall budget. Attah claims that LNG produced by the company for Asian and European markets was exempt from the levy under the 1989 act, and that the parliamentary amendement had gone for a public hearing.

    Attah reportedly said: “Train 7 will not happen if we don't have the NLNG act as it is today. The amendments as proposed will not deliver value, they will erode value, they will not make NLNG grow.”

    https://www.lngindustry.com/liquefaction/14102016/nigeria-lng-ceo-claims-amendment-to-1989-law-could-affect-investment/

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    PDVSA's default prospects hinge on swap deal, oil price: analysts


    The prospects for a default in 2017 by Venezuela's PDVSA will depend on how much flexibility the troubled state-owned oil company negotiates with bond holders in a multi-billion dollar debt swap closing next week, two analysts said Friday.

    Investors have until Monday to respond to sweetened terms for swapping $5.3 billion of 2017 notes for new bonds due in 2020.

    "If the swap doesn't happen, they're in big trouble for next year," said Francisco Monaldi, Latin American energy policy fellow at the Baker Institute for Public Policy. "I think they're really worried about that."

    Speaking at an Inter-American Dialogue forum in Washington, Monaldi said PDVSA had been counting on the swap deal and a recovery in oil prices to save the day -- but both factors are looking uncertain.

    Raul Gallegos, senior analyst for Control Risks, said the deal's initial terms were not attractive enough and even the adjusted terms are not "doing much for investors."

    "But, conceivably, if oil prices start inching up a little bit, that might make it enough for them to just make it by next year, although that will be tough, definitely," Gallegos said.

    "In our view, certainly this year we don't see [a default], and next year, we believe they could still scrape through," he added.

    Venezuela's third-quarter 2016 crude production dropped 12% year on year to 2.11 million b/d, according to Energy Information Administration data released Thursday. That compares with the 2.33 million b/d that Venezuela reported to OPEC for August.

    "I would take those numbers with a grain of salt -- there's a lot of opaqueness," Gallegos said, adding that he does not expect output to drop much below 2 million b/d next year.

    Venezuela's oil exports are falling slower than its production because of a sharp drop in domestic demand and the country's dependence on imported diluents and oil products for the domestic market, Monaldi said.

    He said January-September exports dropped 7% year on year, compared with a 12% drop in production for the same period.

    http://www.platts.com/latest-news/oil/washington/pdvsas-default-prospects-hinge-on-swap-deal-oil-21794759
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    Tullow Seeks Truckers for Early Shipments of First Kenyan Oil


    Tullow Oil Plc’s Kenyan unit said it’s seeking trucking companies to transport crude from northwestern fields to the port city of Mombasa as the East African nation rushes to export its first oil by mid-2017.

    The work will involve the trucking of crude in insulated containers from a production facility near Lokichar, Turkana county, to storage facilities run by Kenya Petroleum Refineries Ltd., Tullow Kenya BV said Friday in an advertisement in the Nairobi-based Daily Nation newspaper. It said it plans to lease 100 ISO T11 standard insulated containers with a minimum fluid capacity of 25,000 liters.

    Kenya, which has about 750 million barrels of recoverable reserves, plans to construct a 865-kilometer (538-mile) pipeline linking the northern fields to a port being built on its Indian Ocean coastline by 2021. In the meantime, the government says initial production of about 2,000 barrels per day, expected by June next year, will be hauled by road and rail. Tullow’s statement didn’t mention rail transport and company spokesman George Cazenove didn’t immediately reply to an e-mail seeking comment.

    Vancouver-based Africa Oil Corp. estimates the South Lokichar basin, about 510 kilometers northwest of the capital, Nairobi, may contain as much as 1.63 billion barrels of oil.

    Making Losses

    Kenya’s government has previously said the northern oil would be transported by road from Lokichar to Eldoret, a thoroughfare it’s upgrading for about 3.2 billion shillings ($31.6 million), then taken to Mombasa by rail.

    While Kenya has about 60,000 barrels ready for export, it needs oil prices at $40-$50 per barrel to avoid making losses as the cost of road-shipping is estimated at $30-$34 a barrel, according to Andrew Kamau, the principal secretary for petroleum. Renaissance Capital’s chief economist, Charles Robertson, has said Kenya’s oil may not be economically viable even at $50.

    Kenya is planning its own, shorter pipeline after Uganda abandoned an initial proposal for a joint line linking its oil-rich western Hoima region to Lamu port in Kenya. That conduit’s cost is estimated at $5 billion by Nagoya, Japan-based Toyota Tsusho Corp. Uganda prefers a $4 billion pipeline across Tanzania to that country’s Tanga port.

    http://www.bloomberg.com/news/articles/2016-10-14/tullow-seeks-truckers-for-early-shipments-of-first-kenyan-oil

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    Shell Said to Consider Sale of $1 Billion Malaysia LNG Stake


    Royal Dutch Shell Plc is considering a sale of its stake in a Malaysian liquefied natural gas export plant, which could fetch more than $1 billion, people familiar with the matter said.

    Shell is gauging interest in its 15 percent stake in MLNG Tiga Sdn., which owns an LNG terminal in Sarawak on the island of Borneo, according to the people. The sale may draw interest from private-equity firms, the people said, asking not to be identified as the process is private. Malaysia’s state-owned Petroliam Nasional Bhd., which holds 60 percent of MLNG Tiga, has pre-emptive rights on the stake, one of the people said.

    The disposal is part of the Anglo-Dutch energy giant’s plan to raise $30 billion from asset sales in the three years through 2018 to help cut borrowings after its acquisition of BG Group Plc prompted Fitch Ratings Ltd. to lower its credit rating. The company’s total debt ballooned to $90.3 billion at the end of June, from $52.9 billion a year earlier, data compiled by Bloomberg show.

    “The pressure is on Shell to slim down its global footprint following the BG acquisition,” Saul Kavonic, a Perth-based analyst at energy consultancy Wood Mackenzie Ltd., said in an e-mailed response to questions. “Majors are also looking to remove mature, high ongoing-cost assets and rebalance towards growth and long-life ‘cash cow’ assets.”

    Steady Cash Flow

    MLNG Tiga, set up in 1995, is the third plant to be built in the Petronas LNG complex in Bintulu, Sarawak, according to itswebsite. The plant has a production capacity of 6.8 million metric tons a year.

    Europe’s largest oil company by market value sold more than $20 billion of assets in 2014 and 2015 combined, Shell Chief Executive Officer Ben Van Beurden told analysts in February. It will likely see less than $10 billion of disposals this year, he said.

    “The MLNG Tiga plant should be relatively insulated from the supply glut in the market, as most of its supply is contracted on a long-term basis to buyers in Northeast Asia,” said Chong Zhi Xin, principal LNG analyst for Wood Mackenzie in Singapore. “This asset will probably be attractive to companies that are looking for a steady cash flow stream. There is also the benefit of developing a closer relationship with Petronas.”

    Shell regularly receives expressions of interest for its assets and continues to evaluate all opportunities and proposals, a spokeswoman for Shell said by e-mail, adding that all such discussions are confidential. Should any offer be received by Petronas, the company will evaluate it on its own merits, the Malaysian company said in an e-mailed statement.

    http://www.bloomberg.com/news/articles/2016-10-14/shell-said-to-weigh-sale-of-over-1-billion-malaysia-lng-stake
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    Key Asia Aframax freight up 24% on day to three-month high


    A spike in the activity levels for late October cargoes along with an increase in bunker costs boosted Asia Aframax freight rates 24% on the day to a three-month high Friday.

    "Owners are tired of getting kicked around earning $3,000 per day on their ships. It's now a good market. Bunker prices are getting higher and there are lots of cargoes which encourages owners," said an Aframax shipowner.

    Platts assessed the key Aframax Indonesia-Japan voyage up 17.5 Worldscale points on the day to w90 basis 80,000 mt. The rate was last at this level on July 12, Platts data showed.

    Two vessels were heard on subjects at w90 out of the Southeast Asia region. Sources said Shell placed a Teekay vessel on subjects for a Kimanis to Whangarei voyage, loading October 23-25, at w90 basis 80,000 mt.

    Also, SPC placed the BM Bonanza on subjects to replace the Sea Hazel for a Pluto to North Asia voyage, loading October 23, at w90 basis 80,000 mt, an informed source said.

    "The charterers had been in the driver's seat since February this year except momentarily in March, and now time charter equivalent earnings have gone up to $11,000 per day," said a broker.

    http://www.platts.com/latest-news/shipping/singapore/tankers-key-asia-aframax-freight-up-24-on-day-27688524?hootpostid=9d8c3264226dfaa3d65de2f92721c5eb
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    Brazil’s Petrobras Announces New Retail Fuel Pricing Plan


    Brazilian state-run oil company Petróleo Brasileiro SA, or Petrobras said Friday said it would adopt a new fuel pricing policy that will link domestic fuel prices more closely with the price of petroleum on international markets.

    The change is a major departure for Petrobras, which has long been subject to government pressure to manipulate fuel prices in line with policy objectives.

    The company said that it will cut diesel prices by 2.7% and gasoline prices by 3.2% in its refineries. The price reductions will start this weekend.

    The impact on final prices for consumers depends on how much of the reductions are passed along by distributors and gasoline stations. But if the cuts are fully reflected in retail prices, Petrobras estimates that pump prices of diesel will fall by 1.8% and gasoline by 1.4%. Brazilian consumers have seen no reductions in retail prices over the past few years, despite plummeting oil prices.

    “Who decides the price is the market,” said Jorge Celestino, director of refining and natural gas, at a Friday press conference in Rio de Janeiro. He said the company wants to attract strategic partnerships in refineries and other areas. “For this, we need to have a consistent price policy, which adheres to the market,” he said.

    In the short-run, the price cuts will likely reduce Petrobras’ revenue.

    But in the long-term the move is a major positive for the company, said João Pedro Brugger, an analyst at Leme Investimentos in Florianopolis.

    “It’s very good for business as it ensures flexibility for executives to adjust prices according to market conditions,” Mr. Brugger said.

    In morning trading in Sao Paulo, Petrobras preferred shares were up 2.15% at 16.10 reais while the company’s common shares were up 1.60% at 17.78 reais. The Ibovespa, the main local stock exchange index, was up 0.96%.

    Petrobras said it would monitor international prices and will review its pricing policy monthly.

    “We don’t think that a parametric and deterministic form is the best way for the company to operate. It is an extremely dynamic market where things happen quickly,” said the company’s president, Pedro Parente. “We need to act in the way that is best for the company. It is a clear, transparent policy.”

    Petrobras’ retail fuel prices have long been a source of friction between company management and the government. Under former leftist President Dilma Rousseff, for example, Petrobras kept a lid on fuel prices in a bid to fight inflation, even as international petroleum prices rose. Brazil is a net importer of refined fuel, thus the move cost Petrobras’ refining unit billions as it imported pricey gasoline and sold it at a loss to consumers.

    Petrobras, the most indebted oil major in the world, is in the midst of a major restructuring aimed at returning the troubled firm to health. The company is selling assets and seeking investment partners as it recovers from a major corruption scandal that has upended Brazilian politics.

    http://www.wsj.com/articles/brazils-petrobras-announces-new-retail-fuel-pricing-plan-1476447998
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    U.S. drillers add 15 more rigs


    U.S drillers put another 15 rigs back into operation this week, the fourth increase in a row and the ninth in the past 11 weeks, the Houston oilfield services company reported Friday.

    The rig count climbed to 539,  up from the low of 406 reached in May. The count, however, is still down significantly from last year, when 787 drilling rigs were operating in U.S. oil and gas fields.

    Drilling activity has followed the modest rebound in prices, from February’s low of about $26 a barrel to about $50 a barrel recently. Crude was set to settle about $50 in New York trading friday.

    Over the past week, the number of active oil rigs increased by 4 to 432. Gas rigs rose to 11 to 105. The number of  offshore rigs was unchanged, at 23.

    Drillers operated 244 rig in Texas, down three from last week.

    http://fuelfix.com/blog/2016/10/14/u-s-drillers-add-15-more-rigs/
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    The Truth About Permian Shale Break-Even Prices


    Despite OPEC’s best efforts, shale boomers are still alive and kicking—at least some of them. More precisely, those that came first, chose the best acreage, and had the farsightedness needed to make it profitable in the long run, as well as some luck. At least that’s the conclusion of IHS Markit in a new study.

    The market researcher’s study focused on the Delaware Basin, which is a particularly prolific part of the Permian. The study found that the best performers were the companies that entered the play first and knew more than most about the local geology, and named EOG Resources as the most successful in that area, thanks to its long presence in the Delaware Basin and the extensive knowledge of the equally extensive plays it is operating, according to author Sven Del Pozzo.

    Because of its early entrance and higher-risk appetite, EOG and others like it now remain profitable even with $50 crude, unlike droves of other sector players that have either gone under or are about to, because they simply cannot bring their production costs down enough to survive in the current price environment.

    But these best performers have more than just themselves to thank, according to another IHS expert, associate director for Plays and Basins Reed Olmstead. Olmstead explained at a recent industry event that there were four factors that determine oil and gas company success in this area. The first indeed included tactics such as picking and choosing where to drill, which accounted for 35 percent of the overall cut of their breakeven price, but 40 percent of the reduction came from price cuts made by the oilfield service sector – a segment of the oil industry that is having its own problems after being forced to offer service prices at a solid discount plus much shorter contracts to stay afloat.

    The other two factors contributing to the success of the oldest Permian players were operational improvements, which accounted for 20 percent; and infield learnings, which accounted for 6 percent.

    Meanwhile, the Permian remains the most productive of all shale plays across the U.S.

    It’s apparent that luck had a bit to do with the success of those early entrants, but risk-taking was also a defining characteristic, according to Del Pozzo, who is IHS’ director of energy company and transaction research. In those early days of the shale revolution, these companies were the first to try horizontal drilling instead of the traditional, vertical kind.

    Horizontal drilling is costlier than its vertical sibling, but it makes for better yields. Higher risk, but higher possible reward. The shale boom pioneers seem to be still reaping the benefits of these yields despite the price downturn.

    In June of this year, energy expert Art Berman said that the breakeven in the Permian had gone down to $61 a barrel, making the play the lowest-cost deposits in the world. Still, crude oil prices at the time were notably lower than $61 (and still are).

    Despite this discrepancy, the old dogs in the Permian survived. Today, the breakeven point in the Delaware Basin may be as little as $37, assuming the calculations of a Wood Mackenzie analyst, Ben Shattuck, are accurate.

    In this light, local E&Ps are not just surviving, they are thriving. No wonder Del Pozzo titled his report “IHS Herold Company Play Analysis: Delaware Basin: The Strong Get Smarter; Remarkable Profitability at Current Prices.”

    http://oilprice.com/Energy/Crude-Oil/The-Truth-About-Permian-Shale-Break-Even-Prices.html
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    Cushing Pipeline Suspension Gets Extended

    Cushing Pipeline Suspension Gets Extended

    Plains All American Pipeline, the operator of the biggest pipeline carrying crude from the Permian to Cushing, Oklahoma, said it has extended the suspension of the pipeline due to problems with pressure. The announcement was made on Thursday, the day when the pipeline was to be restarted after a 10-day stoppage for a hydrotest.

    The news immediately affected the spread before the front-month futures contract for West Texas Intermediate, and the second-month contract, Reuters noted, with traders largely expecting the planned outage to cause a shortage of 2 million barrels at Cushing for last week. As a result, the front-month WTI contract’s discount to the second-month futures narrowed by 10 cents to just US$0.33. Spot prices for WTI were also affected, with the discount to the futures contract diving to US$1 a barrel from US$0.15 in the same session, before the pipeline operator made its announcement.

    The November contract for WTI closed at US$50.77 a barrel on Thursday, up 0.56 percent. The spot price for the benchmark at Cushing was US$50.72 on Tuesday, the latest available figure from the EIA.

    The Permian pipeline is the only outgoing one in the most productive shale play in the U.S. It has a daily capacity of 450,000 barrels of crude, and if Plans All American Pipeline does not complete the work on it until next Thursday, storage facilities along and around it could fill up. This would push spot prices further down, according to traders.

    http://oilprice.com/Latest-Energy-News/World-News/Cushing-Pipeline-Suspension-Gets-Extended.html?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+oilpricecom+%28Oil+Price.com+Daily+News+Update%29

    Genscape Cushing inventory week ending 10/7: -383k bbl w/w @Lee_Saks

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    Freeport-McMoRan Announces Agreement to Sell Onshore California Oil & Gas Properties for $742 Million


    Freeport-McMoRan Inc. announced today a purchase and sale agreement to sell its onshore California oil and gas properties to Sentinel Peak Resources California LLC for total consideration of $742 million, including contingent consideration.

    Under the terms of the agreement, FCX will receive cash consideration of $592 million at closing and additional consideration of $50 million per annum in each of 2018, 2019 and 2020 if the price of Brent crude oil averages $70 per barrel or higher in that calendar year. The purchasers will also assume future abandonment obligations associated with the properties, which had a book value of approximately $0.1 billion at June 30, 2016.

    The transaction has an effective date of July 1, 2016, and is expected to close in fourth-quarter 2016, subject to customary closing conditions.

    For the twelve month period ended June 30, 2016, net daily sales volumes from these properties averaged 28.6 thousand barrels of oil per day. Over this period, revenues totaled $0.4 billion, cash production costs (before G&A) totaled $0.3 billion and capital expenditures totaled $0.04 billion.

    Net cash proceeds will be used for debt repayment. FCX does not expect to record a material gain or loss on the transaction.

    Following completion of this transaction and the previously announced Deepwater Gulf of Mexico (GOM) sale, FCX’s portfolio of oil and gas assets would include oil and natural gas production onshore in South Louisiana and on the Shelf of the GOM, oil production offshore California and natural gas production from the Madden area in Central Wyoming. In the second quarter of 2016, these properties produced an average of 8.6 thousand barrels of oil and natural gas liquids per day and 78 million cubic feet of natural gas per day.

    FCX is a premier U.S.-based natural resources company with an industry-leading global portfolio of mineral assets. FCX is the world's largest publicly traded copper producer.

    FCX's portfolio of assets includes the Grasberg minerals district in Indonesia, one of the world's largest copper and gold deposits; significant mining operations in the Americas, including the large-scale Morenci minerals district in North America and the Cerro Verde operation in South America. Additional information about FCX is available on FCX's website at "fcx.com."

    Sentinel Peak Resources is a private energy company focused on acquisitions and development primarily in California. Sentinel Peak Resources is backed by Quantum Energy Partners, a leading provider of equity capital to the energy industry.

    http://www.businesswire.com/news/home/20161014005298/en/Freeport-McMoRan-Announces-Agreement-Sell-Onshore-California-Oil
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    Uranium

    Tepco shares slump after anti-nuclear novice wins Japan election


    Shares in Tokyo Electric Power (9501.T) fell 8 percent on Monday after an anti-nuclear candidate won an upset victory in a Japanese regional election, in a blow to its attempts to restart the world's biggest atomic power station and a challenge to the government's energy policy.

    The election of Ryuichi Yoneyama, 49, a doctor-lawyer who has never held office, is a setback for Prime Minister Shinzo Abe's energy policy, which relies on rebooting reactors that once met about 30 percent of the nation's needs. All but two are shut down in the wake of the 2011 Fukushima nuclear disaster.

    Reviving the seven-reactor giant, with capacity of 8 gigawatts, is key to saving Tepco, which was brought low by the Fukushima explosions and meltdowns, and then the repeated admissions of cover-ups and safety lapses after the world's worst nuclear disaster since Chernobyl in 1986.

    Yoneyama won the vote on Sunday after a campaign dominated by concerns over the future of the Kashiwazaki-Kariwa power station and nuclear safety, beating Tamio Mori, 67, who was backed by the ruling Liberal Democratic Party (LDP) and initially favored for an easy victory.

    "As I have promised all of you, under current circumstances where we can't protect your lives and your way of life, I declare clearly that I can't approve a restart," Yoneyama told supporters at his campaign headquarters.

    Tepco shares were down by 7.4 percent at 385 yen at 0100 GMT (09:00 p.m. EDT) after falling further earlier. The Nikkei 225 was up by 0.5 percent and other utilities were mixed.

    Yoneyama had more than 500,000 votes to about 430,000 for Mori with 93 percent of the vote counted in the region on the Japan Sea coast, public broadcaster NHK said.

    Mori, a former construction ministry bureaucrat, apologized to his supporters for failing to win the election.

    Yoneyama, who had run unsuccessfully for office four times, promised to continue the policy of the outgoing governor who had long thwarted the ambitions of Tepco, as the company supplying about a third of Japan's electricity is known, to restart the plant.

    As the race tightened, the election became a litmus test for nuclear safety and put Abe's energy policy and Tepco's handling of Fukushima back under the spotlight.

    "The talk was of Kashiwazaki-Kariwa, but I think the result will affect nuclear restarts across the country," said Shigeaki Koga, a former trade and industry ministry official turned critic of nuclear restarts and the Abe administration.

    Koga told Reuters it was important that Yoneyama join forces with another newly elected governor skeptical of nuclear restarts, Satoshi Mitazono of Kagoshima Prefecture in southern Japan. "Without strong support from others, it won't be easy to take on Tepco," he said.

    TROUBLES

    Tepco spokesman Tatsuhiro Yamagishi said the company couldn't comment on the choice of Niigata governor but respected the vote and would strive to apply the lessons of the Fukushima disaster to its management of Kashiwazaki-Kariwa.

    The government wants to restart units that pass safety checks, also promoting renewables and burning more coal and natural gas.

    Only two of Japan's 42 reactors are running more than five years after Fukushima, but the Niigata plant's troubles go back further.

    Several reactors at Kashiwazaki-Kariwa have been out of action since an earthquake in 2007 caused radiation leaks and fires in a disaster that prefigured the Fukushima calamity and Tepco's bungled response.

    Niigata voters opposed restarting the plant by 73 percent to 27 percent, according to an NHK exit poll.

    Yoneyama, who has worked as a radiological researcher, said on the campaign trail that Tepco didn't have the means to prevent Niigata children from getting thyroid cancer in a nuclear accident, as he said had happened in Fukushima. He said the company didn't have a solid evacuation plan.

    The LDP's Mori, meanwhile, was forced to tone down his support for restarting the plant as the race tightened, media said, insisting safety was the top priority for Kashiwazaki-Kariwa, while promoting the use of natural gas and solar power in Niigata.

    http://www.reuters.com/article/us-japan-nuclear-election-idUSKBN12G0HM

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    Precious Metals

    Asanko to exceed H2 production guidance, following ‘exceptional’ third quarter


    TSX- and NYSE-listed Asanko Gold expects to produce gold on the upper end of its updated guidance for the final six months of the year after achieving ahead-of-plan output of 53 986 oz at its Asanko mine, in Ghana, during the third quarter of the year.

    Fourth-quarter production from Phase 1 of the Asanko mine, of between 52 000 oz and 57 000 oz, is expected to push output for the second half of the year to between 106 000 oz and 111 000 oz.

    This is above the revised second-half guidance of 100 000 oz to 105 000 oz.

    “The operations had an exceptional quarter with the process plant now running at 300 000 t/m, or about 20% abovedesign. The ore grade from the Nkran pit continued to increase during the quarter with most of the ore now coming from the main mineralised domains within the heart of the deposit,” said Asanko president and CEO Peter Breese.

    This strong performance is expected to position the company to finance its Phase 2 expansion project with cash flowgenerated from the operations.

    With gold sales of 54 393 oz at an average price of $1 311/oz during the three months to September 30, Asanko generated revenue of $71.3-million.

    “The company’s balance sheet strengthened during the quarter with approximately $69.4-million in cash and immediately convertible working capital balances, as at September 30,” Breese pointed out, adding that there are currently no significant current long-term debt obligations, with its first principal repayment on its $150-million debt facility only due in 2018.

    Asanko will release its third-quarter financial results on November 7.

    http://www.miningweekly.com/article/asanko-to-exceed-h2-production-guidance-following-exceptional-third-quarter-2016-10-14
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    Base Metals

    Nova commissioning starts ahead of schedule


    Commissioning of the nickel processing plant at the Nova project, in Western Australia, has started some four weeks ahead of schedule, owner Independence Group has reported.

    The processing plant construction, which included wet commissioning, was completed on October 10, and crushingand milling operations started four days later, following several days of operating on waste to test all systems in slurry.

    “The ore commissioning commencement is a great milestone for the Nova project and, combined with the progress that has been achieved with the underground development, marks a significant reduction in the development risk profile of theproject,” said Independence MD and CEO Peter Bradford.

    “We now expect that we will produce first concentrate, ahead of time, in November and potentially by late October.”

    Bradford noted that the project continued on budget.

    Over the coming weeks, Independence will focus on calibrating the processing plant control systems and achieving design concentrate grades and recoveries. The last phase of the commissioning process will be the commissioning of the concentrate filters and production of first concentrate.

    At full production, the A$443-million Nova project was expected to deliver about 26 000 t/y of nickel, 11 500 t/y ofcopper and 850 t/y of cobalt over a ten-year mine life.

    In July this year, Independence announced plans to accelerate the development of the Bollinger orebody at Nova, with early access to the deposit expected to deliver enhanced early cash flow and additional project value.

    http://www.miningweekly.com/article/nova-commissioning-starts-ahead-of-schedule-2016-10-17
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    Steel, Iron Ore and Coal

    China completes 80% of coal de-capacity target by end-Sep, NDRC


    China has completed over 80% of coal capacity cut target set for 2016 in the first three quarters, and detailed information is to be released as soon as possible, said Zhao Chenxin, spokesman of the National Development and Reform Commission (NDRC), in a press conference on October 13.

    China began to pick up pace in cutting coal capacity in second half of this year, after worries were aroused over only 29% of the finished de-capacity task in the first six months.

    As such, domestic coal prices were going up wildly amid shrinking supply. By October 13, Fenwei CCI Thermal Coal Index assessed the 5,500 Kcal/kg NAR coal traded at Qinhuangdao at 610 yuan/t FOB, surging 245 yuan/t or 67.1% from the start of the year, showed data from China Coal Resource (sxcoal.com).

    NDRC correspondingly decided to allow more coal miners to boost output and expand supply in late September, in order to curb fast rises of coal prices. The move, however, brought about doubt whether the country is going against its original policy.

    Cautious move and continuous efforts should be made by the government in capacity cuts of domestic coal sector in the rest months, to assure the completion of the 2016 task.  

    http://www.sxcoal.com/news/info?lang=en&id=4548061
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    Shanxi publicizes 2nd batch of coal mines to be shut this year


    Coal-rich Shanxi province in northern China publicized the second batch of coal mines to be shut in 2016, further eliminating coal production capacity of 12.65 million tonnes per annum (Mtpa) through closure of 10 coal mines, according to a de-capacity timetable released on October 13 by the Shanxi Coal Industry Administration.

    The administration on August 25 announced that the provincial government planned to cut coal capacity of 10.60 Mtpa by shutting down 15 coal mines in the first stage, which has been fulfilled.

    The second batch of coal de-capacity target is expected to reach by October 31, showed the schedule.

    For the first batch of coal mines to be closed in Shanxi, please visit http://www.sxcoal.com/news/info?id=4546830&lang=en.

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    Global thermal coal trades to plummet to 527 mln T by 2035


    Thermal coal trades worldwide are expected to plummet to 527 million tonnes by 2035, down from 900 million tonnes this year, forecasted Wood Mackenzie, an energy consulting company, in its latest report.

    It came with an expected sharp drop from 41% in 2013 to 16% in coal's share of the global power generation by 2035, in order to realize target of holding global temperature rises within 2°C, according to the report.

    The shrinking demand from thermal coal may cause its prices to slump to less than $50/t in the long run, said Wood Mackenzie.

    Japan, main importer of Australian thermal coal, would see its annual thermal coal imports drop to 100 million tonnes while trying to fulfill a targeted decline of coal's share of power generation to 25% by 2030, said Jonny Sultoon, a head of the company.

    The goal of 2°C is actually difficult to obtain though all the involved countries put great efforts in reducing emissions, which, if to be realized, Japan alone will need to decrease 50-60 million tonnes of coal imports annually, Sultoon warned.

    http://www.sxcoal.com/news/info?id=4548127&lang=en
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    China to put mega coal-to-olefins project into operation


    Zhongtian Hechuang Energy Co., Ltd will start commercial operations at its new coal-to-olefins complex in Ordos, Inner Mongolia, on October 20.

    The new complex includes a 0.12 million tonnes per annum (Mtpa) low density polyethylene (LDPE) plant, a 0.25 Mtpa pipe grade LDPE unit, a 0.3 Mtpa linear low density polyethylene unit and a 0.35 Mtpa polypropylene plant.

    Zhongtian Hechuang Energy is a joint venture established in September, 2007, by Sinopec with 38.75% stake, China National Coal Group with 38.75%, Shanghai-based Shenergy Co., Ltd with 12.5% and Inner Mongolia Manshi Coal Co., Ltd with 10%.

    The company in late September started methanol production from its coal-to-olefins unit in Ordos.

    http://www.sxcoal.com/news/info?lang=en&id=4548109
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    Whitehaven production surges in September quarter


    Coal miner Whitehaven Coal has reported a 41% increase in run-of-mine (ROM) production for the quarter ended September, compared with the previous corresponding period, on the back of a 136% increase in production at its Narrabri mine, in New South Wales.

    Whitehaven noted that the Narrabri mine produced 2.35-million tonnes ROM coal during the September quarter, with the higher output driven by a longwall change-out.

    Production from the Maules Creek mine also increased by 23% during the period under review, as the operation began its second year of commercial production. The mine produced 1.9-million tonnes ROM coal for the three months to September.

    Coal sales for the September quarter reached just over five-million tonnes, which was 12% higher than the previous corresponding period.

    Metallurgical coal sales from Maules Creek mine accounted for just over 20% of the mine sales, as semi-soft coking coaloutput from the mine continued to attract strong market interest.

    The miner told shareholders on Monday that it continued to make good progress with trial shipments of Maules Creeksemi soft coking coal to a number of steelmakers in the Asian region.

    http://www.miningweekly.com/article/whitehaven-production-surges-in-september-quarter-2016-10-17
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    China's Hebei imposes 'special emission' limits on steel mills


    China's Hebei province, the country's biggest steelmaking region, has imposed what it calls "special emission restrictions" on local mills as part of its war on smog, according to a policy document.

    Local steel enterprises will have until Sept. 1, 2017, to ensure their facilities comply with tough new standards for sulphur dioxide and other major sources of air pollution, the local environmental protection bureau said in a notice.

    Hebei is responsible for nearly a quarter of China's total national steel output. It was the location of seven of China's 10 smoggiest cities last year and is a major source of air pollution in China's capital, Beijing.

    The province has pledged to shut 60 million tonnes of crude steelmaking capacity and 40 million tonnes of coal production capacity from 2014 to 2017.

    Last year, steel production in Hebei rose 1.3 percent on the year to 188.3 million tonnes, though total capacity remains much higher. Coal output in the province fell 5.4 percent to 82.2 million tonnes.

    According to a notice issued by the local environmental protection bureau on Friday, 41 million tonnes of steel capacity and 27 million tonnes of coal capacity have already been closed.

    The province, one of the main fronts in a "war on pollution" declared by Premier Li Keqiang in 2014, has been under pressure to crack down on "backward" production capacity and firms that break environmental rules.

    It was heavily criticised by the Ministry of Environmental Protection (MEP) earlier this year after an inspection tour revealed that local firms had illegally expanded production capacity and engaged in "fraudulent practices" aimed at circumventing rules.

    Hebei has since launched a campaign against local steel and coal producers, and the provincial government said last week it had uncovered 1,173 illegal projects in the steel sector, involving 93 companies.

    According to MEP data, average concentration levels of PM2.5, a major smog indicator, fell 17.1 percent to 58 micrograms per cubic metre in the Beijing-Tianjin-Hebei region over the first three quarters of 2016.

    However, six of the 10 most polluted cities for that period were still in Hebei province, the ministry said on Thursday.

    China's National Meteorological Center (NMC) issued a yellow smog alert for Beijing and parts of Hebei on Saturday, and urged residents to take protective measures.

    http://www.reuters.com/article/china-pollution-steel-idUSL4N1CL03W
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    Tokyo Steel keeps product prices unchanged for November delivery


    Tokyo Steel Manufacturing Co Ltd , Japan's top electric-arc furnace steelmaker, said on Monday it would keep product prices unchanged for November delivery, reflecting lacklustre demand at home.

    Tokyo Steel's pricing strategy is closely watched by Asian rivals such as South Korea's Posco and Hyundai Steel Co and China's Baoshan Iron & Steel Co (Baosteel) that export to Japan.

    The company will keep prices for its main product, H-shaped beams used in construction, at 65,000 yen ($631.70) per tonne and prices for steel bars, including rebar, at 47,000 yen a tonne.

    The company cut product prices by up to 13 percent for October.

    "The last month's price cut has helped diminish market speculations that prices would go further down, but overall demand is not resilient enough to bolster prices," Tokyo Steel's managing director, Kiyoshi Imamura, told reporters on Monday.

    Local demand is expected to improve late this year or early next year as construction for the 2020 Summer Olympic Games and redevelopment projects in the Tokyo metropolitan area are set to start next summer, Imamura added.

    http://www.reuters.com/article/tokyo-steel-prices-idUSL4N1CN1RP
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