Mark Latham Commodity Equity Intelligence Service

Monday 28th November 2016
Background Stories on www.commodityintelligence.com

News and Views:

Attached Files






    Macro

    Brazil's New President Temer Threatened With Impeachment After New Corruption Scandal Emerges


    Six months after Brazil's former president Dilma Rouseff was removed from power as a result of a carefully orchestrated process by her former Vice President, Michel Temer, who as many suggested at the time, was merely trying to shift attention away from himself and to his former boss due to his "checkered past", swirling with allegations of corruption on par with those of the deposed president, Temer himself may be in danger of impeachment when overnight, Brazil's public prosecutor announced it was studying a possible investigation into whether President Michel Temer put pressure on a former minister to favor a Cabinet colleague's property investment.

    Marcelo Calero, who resigned last week as culture minister, told federal police that the president pressured him to resolve a dispute with another Cabinet member, Geddel Lima, president Temer's top government congressional liaison, who was seeking a permit for an apartment building in a historic preservation area of his hometown, a federal police source said.

    Calero's accusations have set off new crisis for Temer for allegedly using his public office to obtain a permit for the luxury oceanfront building in the city of Salvador.

    Following the news, the Brazilian real slumped as much as 2.2% to 3.4679 reais to the dollar, the biggest intraday drop since Trump's unexpected victory. Traders cited concern that the controversy could derail an overhaul of government finances favored by investors. Simiarly, Brazil's main stock market index, the Bovespa, fell 1.3 percent on concerns of continued political uncertainty delaying recovery from the country's worst recession since the 1930s

    http://www.zerohedge.com/news/2016-11-25/brazil-president-temer-threatened-impeachment-after-new-corruption-scandal-emerges
    Back to Top

    Kuwaiti opposition win big in anti-austerity vote


    Opposition candidates are estimated to have won around 20 seats out of 50 in Kuwaiti elections that saw most parliament members replaced, in a vote analysts said reflects anger at austerity measures to curb a budget deficit.

    The results of Saturday's vote are likely to make it harder for the government to work with the new assembly to pass further reforms.

    State news agency KUNA said that 30 new MPs gained seats in the 50-member parliament, including several younger men and one woman, after a turnout estimated at around 65 percent for the Gulf's most outspoken legislature.

    Analyst Ibrahim al-Hadban said the election campaign had shown that some of the decisions taken by the government were not popular among citizens, including raising gasoline prices.

    "MPs who were in the assembly did not object to these decisions. So, in my view, they were blamed and punished," Hadban, who teaches political science at Kuwait University, told Reuters.

    With no political parties, it was difficult to pin down precisely how many opposition MPs had been elected. But some estimates put the number at between 17 and 24.

    The opposition, including the Muslim Brotherhood, liberals and pan-Arabists, had boycotted the election in 2012 to protest against changes to election laws they saw as favouring pro-government candidates.

    At least two cabinet members failed to win parliament seats this time, apparently an indication of popular discontent with the government's austerity plans.

    The parliament of Western-allied Kuwait had been due to run until July 2017, but the emir, Sheikh Sabah al-Ahmad al-Sabah, dissolved it in October, saying "security challenges" in the region - an apparent reference to wars in Iraq and Syria - should be met by consulting the popular will.

    More than 290 candidates, including 14 women, were standing in an assembly that enjoys legislative powers but has often been at odds with the government of Kuwait, one of the world's wealthiest countries, thwarting attempts to strengthen fiscal discipline.

    Former speaker Marzouq al-Ghanem, who retained his seat, said political stability was crucial for Kuwait to focus on economic development in what he described as a "sensitive, critical and important stage".

    "As I pointed out to all political blocs, progress or development must have a base and the base is political stability," Ghanem told Reuters after polls closed on Saturday night.

    Campaigning had focused mainly on austerity measures adopted in the past year after officials forecast a deficit of 9.5 billion dinars ($31 billion) for the 2016/17 fiscal year. The OPEC state relies on oil for about 90 percent of its revenues.

    Although the deficit is likely to be smaller than forecast as it was based on an oil price of $25 a barrel, many Kuwaitis fear the government will try to raise prices further and cut many of the perks they have enjoyed for decades. These include free health care, education, subsidized basic products, free housing or land plots and interest-free loans for many citizens.

    http://www.reuters.com/article/us-kuwait-election-idUSKBN13M0D4
    Back to Top

    3D Printing a house, or a car, or a human organ.

    Watch this giant 3D printer build a house | WIRED UK

    www.wired.co.uk/article/giant-3d-printer-builds-houses 21 Sep 2015 - This 3D printer is big enough to build houses. Created by Italian engineering company WASP, the project has aspirations to solve the global ...

    World's first 3D printed house is completed after just 45 DAYS in ...

    www.mirror.co.uk › News › World news › House prices27 Jun 2016 - The first 3D-printed house in the world has been completed and unveiled in China where experts are leading an architectural revolution.

    Chinese Construction Company 3D Prints an Entire Two-Story House ...

    https://3dprint.com/138664/huashang-tengda-3d-print-house/ 16 Jun 2016 - Obviously it depends on the size of the house and other factors, but ... construction by 3D printing a 400-square-meter, two-story house in a ...

    3D-printed house in China can withstand an 8.0 earthquake | Inhabitat ...

    inhabitat.com/3d-printed-house-in-china-can-withstand-an-8-0-earthquake/ 28 Jun 2016 - 3D printers started small, but now companies are printing entire homes – and a Chinese company just created an entire mansion in 45 days!

    How Dutch team is 3D-printing a full-sized house - BBC News

    www.bbc.co.uk/news/technology-27221199 3 May 2014 - Architects in Amsterdam have started building what they say is one of the world's first full-sized 3D-printed houses.

    Attached Files
    Back to Top

    The Great Climate Fraud.

    Image titleImage titleImage titleImage titleImage titleImage titleImage title

    Attached Files
    Back to Top

    Hundreds Arrested in Hebei Pollution Crackdown

    https://news.sina.cn/2016-11-09/detail-ifxxmyuk6334015.d.html?wm=3049_0016&HTTPS=1&from=singlemessage&isappinstalled=1

    According to the Ministry of Environmental Protection Web site news, Hebei recently informed of 6 cases of environmental protection accountability typical of the 487 responsible persons serious accountability, of which four department-level cadres, cadres at the level of 33 people.

    Hebei Provincial Party Committee and Provincial Government on the Central Environmental Protection Inspectorate Group transfer of clues to set up a special investigation and accountability work leading group, responsible for the 487 serious accountability, including four department-level cadres, cadres at the level of 33, And the following cadres 431 people, the main person in charge of business 7, 12 other enterprise management personnel, to the party discipline and discipline disciplinary action 294 people, admonish 117 people, dismissed or transferred from 10 people, transferred to the judiciary 5 people.

    Of these, 6 are typical cases:

    1, the Provincial Office of the Office of Industry and Commerce Office of Monitoring and Coordination, the Provincial Environmental Protection Bureau of the total amount of pollutant emissions control and supervision is not in place, not strict, resulting in the sintering machine should be out of the violation found and be retained. Provincial Environmental Monitoring Center Station Party Secretary (Provincial Environmental Protection Bureau of the total amount of pollutant emissions control of the former Deputy Director) Ma Yongxian, the Provincial Department of Industry Office of the Deputy Director of Monitoring and Coordination Gao Linhai, Wu'an City Environmental Protection Bureau Deputy Director Zhang Jixing 7 were Giving administrative records, administrative warnings, admonishing remarks, informed criticism. Li Bao, deputy director of the Provincial Environmental Protection Department transferred to the judiciary for criminal responsibility.

    In 2, the deep state party secretary Sun Yunxia any city mayor during the mayor, presided over the mayor of office, beyond the approval of approval by the National Development and Reform Commission approved Yangzhou Chemical Group Co., Ltd. Yangzhou annual output of 220,000 tons of ethylene glycol project . Sun Yunxia and other six people were given a serious warning within the party, the party warnings, administrative punishment in mind.

    3, Tangshan City, four ferroalloy projects did not complete the required capacity replacement, Tengda company with a false capacity replacement letter to cheat EIA approval, Caofeidian District Government Office Deputy Director Meng Xiangzuo, government office secretary of a branch staff Zheng Wei suspected forged nickel-iron alloy Project capacity replacement letter, Guye District Development and Reform Bureau of the Dingxiang company reported the capacity transfer agreement is not organized to verify the gate, Laoting County Government Inspection Office of the dry billion companies to submit the nickel-iron alloy production capacity alternative program reported unconfirmed Tangshan City Development and Reform Commission Industry Coordination Office of the relevant projects without verification report, resulting in the replacement of the relevant project capacity is not real problem. On the Tangshan City Development and Reform Commission Industrial Coordination Branch Director Bian Mingjiang, Guye District Development and Reform Bureau Director Hao Demin, Laoting County, deputy director of the government inspection office, deputy director of the Office of the Government and the branch director Zhang and other 6 were given administrative in mind Administrative records, administrative warnings. Meng Xiangzuo, Zheng Wei, Tengda company suspected of fraudulent transfer of public security departments to deal with.

    4, State Power Baoding Northwest suburb of thermal power plant project coal consumption equivalent alternative and Mancheng County paper products processing zone cogeneration project coal equivalent alternative reporting process, the provincial Development and Reform Commission Energy Conservation Monitoring and Monitoring Center and Baoding City, Mancheng District Development and Reform The department did not seriously verify, resulting in two projects in the same amount of alternative programs in some of the boiler to replace the repeated problems. The provincial energy conservation supervision and monitoring center of the legal supervision room director Tian Lijun, Baoding City Mancheng District Development and Reform Bureau party secretary, the Secretary Feng Liang and other seven were given administrative records, administrative warnings, admonishing conversation. Baoding City Development and Reform Commission former director Zhang Lijuan case transferred to the judiciary for criminal responsibility.

    5, Tangshan Iron and Steel Co., Ltd. Hebei Branch of the implementation of blast furnace ex situ modification project, without approval, started construction of a 1580m3 blast furnace project. On the Hebei Iron and Steel Co., Ltd. Tanggang Branch Chairman, Party Secretary Wang Lanyu and other 5 were given administrative warnings, admonishing remarks, informed criticism.

    6, Hebei Iron and Steel Co., Ltd. Handan Iron and Steel Branch did not press the Ministry of Environmental Protection approved the elimination of 900m3 blast furnace and 90m2 sintering machine. On the Hebei Iron and Steel Co., Ltd. Handan Iron and Steel Company chairman, party secretary Guo Jingrui and other five people were given administrative warnings, admonishing remarks, criticized.
    Back to Top

    Oil and Gas

    OPEC Seeks Oil Deal as Saudis Open Door for No Output Cut


    OPEC is embarking on a last-ditch diplomatic push to reach a production cut, with ministers flying to Russia for talks, as Saudi Arabia for the first time suggested the oil-club doesn’t necessarily need to curb output.

    The Organization of Petroleum Exporting Countries will meet on Wednesday in Vienna to try finalize the terms of its first production decrease in eight years. Yet the group remains divided about how to share the curbs internally and Khalid Al-Falih, the Saudi oil minister, has opened the door to leave the group’s production unchanged.

    We expect demand to recover in 2017, then prices will stabilize, and this will happen without an intervention from OPEC,” Al-Falih said in Dhahran, eastern Saudi Arabia, on Sunday, according to the Saudi newspaper Asharq al-Awsat. “We don’t have a single path which is to cut production at the OPEC meeting, we can also depend on recovery in consumption, especially from the U.S.”

    Brent crude fell 0.1 percent to $47.19 a barrel by 5:08 a.m. in London amid skepticism OPEC will reach an agreement to cut production.

    Al-Falih’s comments came two days after Saudi Arabia decided not to attend a meeting with non-OPEC producers, including Russia, scheduled for Monday because of internal divisions within the group. The meeting was later canceled and instead OPEC officials will meet in Vienna to bridge their differences ahead of the ministerial gathering on Wednesday.

    “It’s not beneficial to attend the meeting with producers from outside OPEC before holding meetings within OPEC and deciding whether to cut or continue with current levels of production,” Al-Falih said, according to Asharq Al-Awsat.

    Russia Help

    As OPEC tries to resolve it’s own differences, with Saudi Arabia, Iran and Iraq at odds, the group is also asking other big producers such as Russia to reduce output too. Russia has so far resisted OPEC’s request that it joins the cut, offering instead to freeze production at its current level.

    In an unexpected move, Algerian Energy Minister Noureddine Boutarfa, one of the architects of OPEC’s September accord to reduce output, and Venezuela’s Eulogio Del Pino, a regular intermediary in the group’s discussions, will meet in Algiers and then travel to Moscow on Monday, according to two delegates familiar with the matter. They asked not to be identified as the talks are private.

    OPEC is also proposing a 600,000 barrel a day output cut by non-OPEC producers. Russian Energy Minister Alexander Novak has repeatedly said his country prefers to freeze rather than reduce output.

    Internal Differences

    While efforts to secure the cooperation of non-members continue, OPEC nations are still trying to agree among themselves about how much each should cut. The organization, which had planned to hold technical discussions with non-members on Monday, will instead hold an internal meeting to resolve the differences.

    Algeria’s Boutarfa presented Iranian Oil Minister Bijan Namdar Zanganeh with a proposal for a collective cut of 1.1 million barrels a day in Tehran on Saturday. Iran had previously said it should be allowed to continue increasing production as its exports recovered from nuclear-related sanctions that were eased in January.

    Boutarfa will also meet with his Iraqi, Saudi and Qatari counterparts in Vienna ahead of the OPEC ministers’ meeting on Wednesday, according to the state news agency Algerie Presse Service. Failure to reach a deal could lead oil prices to drop below $40 a barrel, APS reported, citing Boutarfa. Iraq has said it will participate in output curbs, having initially resisted joining in the effort.

    However, Iraq hasn’t clarified how big a production it’s willing to make.

    http://www.bloomberg.com/news/articles/2016-11-27/opec-push-for-deal-sends-algeria-venezuela-ministers-to-moscow

    Attached Files
    Back to Top

    Saudi Aramco to supply more oil to Asia in January: sources


    State oil giant Saudi Aramco has agreed to supply some customers in Asia with incremental crude that will load in January, as it holds to a strategy of maintaining market share, three sources with knowledge of the matter said on Friday.

    The decision by the world's top exporter to give extra oil came weeks before Saudi Aramco was due to notify customers of their monthly supply allocation. For January supplies, allocations would have been made only around Jan. 10.

    By exercising flexibility to meet customers' demand, Saudi Arabia is signaling that it won't budge on market share even as it works with members of the Organization of Petroleum Exporting Countries to finalize plans for a production cut at their Nov. 30 meeting, the sources said.

    "We're going into winter so we need lighter grades," said an official with a North Asian refiner who spoke on the condition of anonymity.

    "It's just as usual. There is no indication of a change in their behavior (in giving additional supplies)," he said.

    Saudi Aramco could not be immediately reached for comment as its office is closed for weekend.

    The excess Saudi supplies, combined with a rise in arbitrage inflow from Europe and the United States, have depressed Asia's demand for similar quality light sour crude such as those from Abu Dhabi.

    Aramco is selling more January Arab Extra Light crude, a second source with a North Asian refiner said.

    "CPC Blend, Forties, there are a lot of replacement barrels," he added.

    Demand for Saudi Arab Extra Light crude has been robust in Asia because of its competitive pricing and its higher yield of naphtha, which is used to produce petrochemicals.

    Refiners' profits for producing naphtha are at their highest since April, Reuters data showed.

    Some Asian refiners have also requested to lift more Arab Medium crude in January although Saudi Aramco has yet to commit to an increase, trade sources said.

    http://www.reuters.com/article/us-saudi-oil-asia-idUSKBN13K0GK?rpc=401&

    Attached Files
    Back to Top

    Saudi exports increase


    SAUDIS EXPORTED 8.1M B/D CRUDE NOV. 1-20: PETRO-LOGISTICS - BBG SAUDI NOV. CRUDE EXPORTS SEEN 1.5% HIGHER M/M: PETRO-LOGISTICS

    @C_Barraud  
    Back to Top

    Russia cements leading China oil supply position


    Russia is cementing its position as the main oil supplier to China, the world's biggest net importer and growth market for the fuel, taking over the lead from Saudi Arabia in the first 10 months of the year, customs data showed on Friday.

    Russia also took the monthly lead back from Angola, which briefly had top supply spot to China in September, the data showed.

    Chinese crude oil imports from Russia in October climbed 39 percent on a year earlier to 1.12 million barrels per day (bpd), making it the biggest supplier. That also left it the largest supplier over the first 10 months of the year, totaling around 1.03 million bpd in that period, customs data showed.

    China's total crude oil imports in October have, however, dropped from a record high the previous month to their lowest on a daily basis since January. Independent refineries have cut back purchases because of higher prices and tighter government controls into their import activities, which are highly regulated.

    Crude oil imports from Iran in October also rose, jumping 129 percent year-on-year to 773,860 bpd, while imports from Iraq rose 60 percent to 875,400 bpd.

    Imports from Saudi Arabia, traditionally the biggest supplier to China, eased 0.28 percent to 935,800 bpd.

    The data comes just days ahead of a Nov. 30 meeting of the Organization of the Petroleum Exporting Countries (OPEC) to finalize a planned production cut aimed at propping up prices, which continue to languish below $50 per barrel due to oversupply.

    Exemptions to the planned cuts were given to Libya and Nigeria, where output has suffered from conflict, and sanctions-hit Iran.

    http://www.reuters.com/article/us-china-economy-trade-crude-oil-idUSKBN13K0N5?rpc=401&
    Back to Top

    Another pipeline attack in Nigeria

    Another pipeline attack in Nigeria

    NIGERIA OFFICIAL SAYS MILITANTS BLOW UP PIPELINE IN NIGER DELTA SUNDAY MORNING

    @staunovo 
    Back to Top

    Novatek courting Japanese investors with Arctic LNG projects


    Yamal LNG operator, Novatek is looking to Japan as it looks to secure additional funds for its Arctic LNG project.

    In an interview with The Nikkei, Novatek CEO, Leonid Mikhelson said that the company’s business could be a core point in economic cooperation between Japan and Russia.

    One of the projects Novatek is proposing is the Arctic LNG 2, with a targeted production of 12 million to 16 million tons per year. Operations are predicted to start in 2025.

    Mikhelson said the company would prefer to see Japan as a partner in the project, from gas production to the construction of the LNG facility, as well as management and sales, with a portion of the plant’s output landing in Japan.

    A €1 billion (Approx: US$1.05 billion) joint loan between the Japan Bank for International Cooperation and European financial institutions could soon be agreed for the Yamal LNG project.

    Mikhelson added that the arrangement could be reached in time for the visit of Russian president Vladimir Putin, to Japan, scheduled for mid-December.

    The report shows that 30 cooperation points have been set for implementation during Putin’s visit to Japan, with Mikhelson adding that Novatek’s LNG projects could find their place among those 30 priorities.

    In September, JBIC and Novatek signed a memorandum of understanding to cooperate on liquefied natural gas projects.

    http://www.lngworldnews.com/novatek-courting-japanese-investors-with-arctic-lng-projects/
    Back to Top

    Cold Snap Makes EU Tap Its Gas Reserves at Faster Pace: Chart


     Image title

    A colder-than-normal start to the winter boosted Europe’s demand for natural gas while a 16 percent increase in prices since the start of the heating season on Oct. 1 encouraged traders to tap fuel stored at lower cost during the summer. 

    Storage sites are being depleted at a faster pace than normal before the coldest months arrive, according to data from Gas Infrastructure Europe.

    https://www.bloomberg.com/news/articles/2016-11-25/cold-snap-makes-eu-tap-its-gas-reserves-at-faster-pace-chart

    Attached Files
    Back to Top

    Iran eyes Maersk help to cut gap with Qatar


    Maersk is also interested in developing Iran's deepwater hydrocarbon reserves in the Caspian Sea.

    The National Iranian Oil Company (NIOC) says it is in talks with Denmark’s Maersk Group to extract oil from the world’s largest gas field known as South Pars in Iran.

    Negotiations have been held for the second phase development of the South Pars oil layer, NIOC Deputy Managing Director Gholam-Reza Manuchehri told reporters in Tehran Wednesday.

    “Using modern technologies and horizontal drilling in view of the heaviness of the oil at the South Pars layer are the most important development scenarios for this oil field which is shared with Qatar,” he said.

    NIOC plans to drill 300 wells at the South Pars oil layer, which requires improved recovery (IOR) and enhanced recovery (EOR) technologies to reach crude oil.

    Only a few international companies are in possession of such technologies, with the Danish company considered to be a “powerful” candidate for the development of the South Pars oil layer, Manuchehri said.

    “Negotiations with the Danish company are underway but nothing is final yet,” he said.

    As in gas extraction, Qatar is ahead of Iran in developing the oil layer, having already completed the drilling of 300 wells which started production in 1991, according to Manuchehri.

    “Iran would need at least two-thirds of this amount of drilling to increase production from the oil layer to 200,000 barrels per day over a period of 20 years,” he said.

    An aerial view of a development phase in Assaluyeh where gas from the South Pars field is brought for processing (Photo by Shana)

    Maersk Group is cooperating with Qatar in the shared field which the tiny Persian Gulf country calls North Dome.  

    Manuchehri said the development of the South Pars oil layer is among the Iranian Ministry of Petroleum’s priorities, to be offered under the new oil contract model.

    Iranian companies are working on the first phase of the project and expect to pump 35,000 barrels of oil a day before the end of the current Persian year in March 2017.

    South Pars is the world's biggest gas field with 30 trillion cubic meters of reserves, divided to 24 phases on the Iranian side for development. Iranian companies are currently carrying out the gas phases but they look for a foreign partner to bring the oil layer to operation.

    Maersk is also interested in developing Iran's deepwater hydrocarbon reserves in the Caspian Sea, Minister of Petroleum Bijan Zangeneh said in January during a visit to Tehran by Denmark’s Foreign Minister Kristian Jensen.

    The Danish company has already been involved in deepwater oil drilling the Caspian Sea for Azerbaijan. Maersk has also experience in building world-class FPSO vessels for floating oil and gas production, storage and offloading oil and gas, which Iran needs at the South Pars oil layer.

    Iran has offered four projects in the Caspian Sea, blocks 24, 26 and 29, as well as the Sardar-e Jangal oil field to foreigners for exploration and development.

    http://www.presstv.com/Detail/2016/10/19/489737/Iran-oil-layer-south-pars-Maersk-gas
    Back to Top

    Low Oil Prices Create $1 Billion Business Killing Old Fields


    Low crude prices that have been hammering oilfield service companies for the past two years might be ready to give a little back.

    Sinopec Oilfield Service Corp., Keppel Corp. Ltd. and others will have a chance to fight for $1 billion a year in new business in Asia as the crude crash forces energy producers to decommission aging and unprofitable fields, industry analyst Wood Mackenzie Ltd. said in a new report. More than 600 fields, mostly in China, Australia, Indonesia and Malaysia, could be shut down over the next decade.

    The decommissioning represents an opportunity for oilfield service firms to rebuild their business after two years of layoffs and cost-cutting as the crude plunge caused a drop in drilling and exploration, the main activity for these firms. The Bloomberg World Oil & Gas Services Index has dropped 40 percent since the summer of 2014, compared with a 12 percent gain in the S&P 500.

    “There’s been a lack of the traditional activity for service companies, like drilling and exploration,” Andrew Harwood, Wood Mackenzie’s director for Asia upstream research, said in Singapore. “Maybe this is an opportunity to fill the gaps.”

    Decommissioning oil fields can be as simple as plugging an old well on land or as complicated as disassembling complicated subsea infrastructure, said Jean-Baptiste Berchoteau, an upstream analyst with Wood Mackenzie in Singapore. Poorly done work can leave oil leaking, causing environmental damage for years. Most of the fields are producing little or no oil, so the decommissioning won’t have much impact on global supply and demand balances.

    Regulations regarding decommissioning vary from country to country. Wood Mackenzie sees Australia and Thailand having clear rules in place, while China, Indonesia and Malaysia have murkier controls on issues like liability. Lack of clear regulations could make it more difficult for companies to obtain financing to decommission fields in those countries.

    Oil prices will go a long way in determining how quickly decommissioning work ramps up, Berchoteau said. Wood Mackenzie sees oil trading in the $50 to $55 a barrel range in 2017, which would speed up the process. A rebound in prices could make companies delay shutting some fields to try to eke out a few more barrels. Brent futures traded 21 cents lower at $47.03 a barrel at 7:27 a.m. London time.

    “There will be work for everyone,” Berchoteau said. “The cake is big enough for a lot of people to eat from it.”

    https://www.bloomberg.com/news/articles/2016-11-27/low-oil-prices-create-a-1-billion-business-killing-aging-fields
    Back to Top

    NNPC: 224 firms bid to buy crude


    A total of 224 companies yesterday bided to buy Nigerian crude through the 2016/2017 Nigerian National Petroleum Corporation (NNPC) Crude Term Contract.

    Speaking with reporters at the bid opening in Abuja, the Group Managing Director, Dr. Maikanti Baru, said the number of companies that will emerge from the bidding will be a factor of actual production focus in February next year.

    He said: “The companies to emerge from the bid would be decided on actual production focus around February when the tenders are supposed to come in,” adding that the state-run oil firm selected about 37 companies from its bidding exercise last year.

    Baru however pointed out that the volume that the Federal Government would be offering for sale from the transaction will be about 600,000 barrel per day (bpd) from the Joint Venture operations.

    He added that 100,000 bpd would also be available from the transaction through royalties and taxes accruing from Production Sharing Contract (PSC).

    Baru said: “It is the volume that we get our JV operations that is about 600,000 barrels per day when you have full operations. We also have somewhere in the region of 100,000 barrel per day in terms of royalties and  tax that is accruing from the PSC operations. So these are the kinds of volumes we are expecting for next  year.”

    He said NNPC was looking forward to refiners,  gigantic traders and companies that have invested tremendously in the downstream oil sector.

    “We are targeting refiners and also big traders as well as companies that have made substantial investments in the oil and gas industry, particularly, downstream in Nigeria,” Baru said.

    He said it was untrue, rumours that the government was finding it difficult to get buyers for the nation’s crude, noting that Nigeria’s crude is hot cake, adding that it is very valuable because of its light nature and also yields several by products.

    Baru said contrary to the common opinion that the crude goes only to China, it goes to India and most European countries.

    The GMD said: “There is that speculation that we are suffering for markets. It is not quite true. Nigerians crude  has continued to earn premiums and they are hot cakes all over for refiners because of the light nature of the crude; it gives very high yields on the valuable products that are produced  from crude oil.

    “Nigerian crude continues to maintain the market. In fact, contrary to a lot of speculations that a lot of Nigerian crudes go to China, no, they don’t. Most of them are consumed in India and Europe, particularly this year and last year, most of Nigerian crudes end in European countries.”

    According to him, the ceremony marked the opening of the 2016/2017 bid tender for Nigerian crude under the NNPC on behalf of government for the people of Nigeria.

    He said the corporation is not signatory to the account of the proceeds but only plays the role of confirming the payment for the crude.

    He added that the proceeds from sale of crude goes directly to the Federation Account in the Central Bank of Nigeria (CBN).

    http://thenationonlineng.net/nnpc-224-firms-bid-buy-crude/
    Back to Top

    Argentina plans railway to help lower shale drilling costs


    Argentina's national government is in the preparatory stages for equipping an aging railway and laying new train tracks to service the Vaca Muerta shale play.

    Jorge Ocampos, a legislator in the province of Rio Negro, made a presentation of the $1.2 billion project late Wednesday, according to a statement Thursday.

    The railway is to run from the port city of Bahia Blanca in Buenos Aires province through Rio Negro to Anelo and Rincon de los Sauces, a town and city at the heart of Vaca Muerta activities in the southwestern province of Neuquen.

    The project also includes building more roads and highways, Ocampos said in the statement.

    While there is no start date for the project, Ocampos said the cargo train is scheduled to be in operation in five years, citing a plan drafted by the national Ministry of Transport.

    The ministry did not respond to a request for further information.

    The Diario Rio Negro newspaper reported that the project involves revamping 1,300 km of lines from Bahia Blanca to Neuquen City, and laying 250 km of new tracks from Chichinales, Rio Negro to Anelo and Rincon de los Sauces.

    The train would help lower the cost of moving proppant for fracking from national or foreign suppliers, the paper reported, citing unnamed sources in the Ministry of Transport.

    With the project, the government wants to increase the transport speed to 90 km/hour, and run eight to 10 trains per day, the paper said.

    Argentina's conservative government under President Mauricio Macri is betting on Vaca Muerta and other unconventional plays to turn around more than a decade of decline in oil and gas production.

    Vaca Muerta has drawn comparisons to the prolific Bakken and Eagle Ford shale plays in the US for its potential, luring majors like Chevron, ExxonMobil and Shell to start drilling.

    Argentina's state-run YPF is leading the development in a partnership with Chevron, producing about 58,200 b/d of oil equivalent.

    YPF has slashed drilling and completion costs to $9.5 million per well in the third quarter from $11 million in the third quarter and $16 million when it started developing Vaca Muerta in 2012.

    The proposed cargo train and more infrastructure capacity to move proppant in and oil and gas supplies out are considered keys for cutting costs to a government target of $7 million per well, making the play more economically viable for development.

    Ocampos said that the national government is buoyant about Vaca Muerta's potential.

    "A rise in the price of oil is expected," the legislator said in reference to global prices. "This will improve the expectations for Vaca Muerta."

    http://www.platts.com/latest-news/oil/buenosaires/argentina-plans-railway-to-help-lower-shale-drilling-27716714
    Back to Top

    Neuquen governor vows to defend high oil, gas prices in Argentina


    The governor of Argentina's Neuquen province, Omar Gutierrez, said Thursday he has asked President Mauricio Macri to keep domestic oil prices above international ones and provide gas pricing incentives to help to boost production after more than a decade of decline.

    Gutierrez made the comments after meeting late Wednesday in Buenos Aires with Macri and national Energy Minister Juan Jose Aranguren.

    Neuquen has emerged as a hot spot for shale oil and gas, holding some of the world's largest resources in huge plays such as Vaca Muerta.

    The southwestern province, which produces 20% of the country's 514,000 b/d of oil and 48% of its 124 million cu m/d.

    Gutierrez said he would defend "a price of oil without a roof and a floor" to encourage development of the resources.

    Macri's government plans to bring domestic crude prices in line with international benchmark references, and has been working to reach that by the middle of 2017.

    However, this month it emerged that the target would be reached this month.

    That would mean cutting domestic prices by 30% to less than $45/b , ending a government-orchestrated agreement between refiners and producers to sustain the price by allowing diesel, gasoline and other products to be priced accordingly.

    Macri's government has not announced the plan publicly and said in a statement that the meeting with Gutierrez was for pushing ahead with the creation of a federal energy development plan.

    The Energy Ministry, which sets energy pricing policies, declined to comment on the meeting. VACA MUERTA

    The governor also told Macri and Aranguren of his plan for developing the Neuquen Basin so the country can regain the energy self-sufficiency it has lost on declining production since the late 1990s and early 2000s.

    Oil production has declined by nearly 40% since a peak of 847,000 b/d in 1998 while gas has dropped 13% from a record 143 million cu m/d in 2004, mostly because of low investment and maturing conventional reserves.

    As well as sustaining domestic oil prices at around $63/b, Gutierrez urged the government to extend pricing incentives for gas production to 2020.

    The incentives allow producers to sell output from new developments like Vaca Muerta and tight plays such as Lajas and Mulichinco at $7.50/MMBtu, more than the average price of $4.75-$5.00/MMBtu.

    With the oil and gas pricing guarantees from the national government, companies will be able to plan investments for the next few years, including in the infrastructure needed to sustain a recovery in production led by Vaca Muerta, Gutierrez said.

    YPF, the country's state-run energy company, is producing about 58,200 b/d of oil equivalent from Vaca Muerta and about 10 million cu m/d of tight gas from other plays.

    YPF has said $50/b is a break-even price for Vaca Muerta, and it has been focusing on ramping up productivity and cutting drilling and completion costs to make its projects more economically viable. CHUBUT

    With Vaca Muerta gaining the attention of oil companies, other provinces such as Chubut are concerned about a pullback in drilling activity in their fields. On Thursday, Chubut Governor Mario Das Neves called a meeting with oil officials and union leaders from his province and from Mendoza, Salta, Santa Cruz and Tierra del Fuego to discuss Macri's plans to cut oil prices.

    They will meet November 30 in Rawson, Chubut to draft a plan to defend keeping local oil prices at around $63/b, according to a statement.

    http://www.platts.com/latest-news/natural-gas/buenosaires/neuquen-governor-vows-to-defend-high-oil-gas-27716715

    Attached Files
    Back to Top

    Alternative Energy

    Closing arbitrage brings China ethanol imports to 17-month low of 1,191 cu m


    Chinese imports of ethanol in October fell to a 17-month low of 1,191 cu m, according to China customs data released Saturday, as declining domestic prices due to a glut of corn reduced trading opportunities into the country.

    In October, China imported 1,188 cu m of denatured ethanol from South Africa, and negligible volumes from a handful of other origins including the US, Japan and the UK.

    Denatured ethanol is typically blended into gasoline as part of biofuels mandates.

    These volumes are expected to pick up again in coming months, with a handful of cargoes heard trading from the US, loading in October and November.

    Meanwhile, the country also imported a very small volume -- 3,914 liters -- of undenatured ethanol, mostly from the US.

    Chinese ethanol exports remained marginal, totalling 3,121 cu m, including 1,636 cu m of denatured ethanol shipped to North Korea and 1,320 cu m of undenatured ethanol to South Korea.

    Traders are keeping a close eye on potential Chinese ethanol export flows, as domestic prices are lower than the rest of Asia.

    For dried distiller grains, or DDGs, Chinese imports fell over 50% month on month in October to 134,934 mt, from 272,240 mt in September. All of China's DDGS imports in October came from the US.

    http://www.platts.com/latest-news/agriculture/singapore/closing-arbitrage-brings-china-ethanol-imports-27717905
    Back to Top

    Precious Metals

    Indian cash crunch hits gold demand during peak wedding season


    Mumbai resident Shashikant Zhalte's wedding this weekend will be less sparkling than his family had hoped, thanks to a cash shortage following Indian Prime Minister Narendra Modi's shock withdrawal of high-value notes to fight "black money".

    Zhalte bought gold jewellery for his wife-to-be months ago, but had delayed purchases for his mother and sisters.

    Then came the Modi bombshell on Nov. 8, in the middle of the wedding season when gold demand spikes, forcing Zhalte to drop his plans to buy an additional 50 gms, worth around $2,200.

    The scenario is being played out across India, the world's second biggest consumer of gold, where it is customary to gift jewellery in marriages.

    The wedding season stretches from September to April, and Thomson Reuters-owned metals consultancy GFMS says it accounts for more than half of the country's annual demand for gold.

    More than two-thirds of that demand of around 800 tonnes a year comes from the countryside, where farmers are struggling to get enough cash to buy seeds and fertilisers in the sowing season. Penetration of credit or debit cards and money apps is very low in rural India.

    The resulting drop in incomes and tepid buying in the wedding season means gold imports, which spiked in the immediate aftermath of the banknote announcement amid panic buying, are likely to drop sharply in the coming months, said traders in India and in the supply hubs of Dubai and Hong Kong.

    "Instead of shopping, we were busy visiting banks and government offices to prove that there is a wedding in the family," said Rahul Ahire, a cousin of Zhalte.

    The Indian government has put strict limits on the amount of money people can withdraw from banks, although a larger sum, 250,000 rupees ($3,600), is allowed for weddings, as long as participants can prove that the marriage is genuine.

    Gold demand from India is not a major factor in global prices, but has historically provided support when the international market is falling.

    Gold is trading at its lowest levels in nearly 10 months in anticipation of a U.S. interest rate hike in December. Higher U.S. rates would boost the dollar and increase the opportunity cost of holding the metal.

    A senior official with a Hong Kong bank, which caters mainly to Indian and Chinese gold buyers, said that it was worrying that the slowdown in Indian buying was overlapping with an expected rate hike by the U.S. Federal reserve next month.

    "In the past, physical Indian demand gave support whenever there was a sharp fall in global prices," said the official. "Without Indian buying, prices could fall steeply."

    SLOWDOWN IN INDIAN GROWTH

    Surendra Mehta, secretary of the India Bullion and Jewellers Association, said imports would be "negligible" in December and January, but did not give any numbers.

    Traders said that a year ago India bought 182.2 tonnes in those two months, a figure that could fall to 60 to 70 tonnes this time around.

    "Retail demand is very weak and since prices are falling, jewellers are not willing to build inventory," Mehta said. "They are postponing purchases."

    Another factor that could hit imports is a plan reportedly being considered by the government to impose curbs on domestic holdings of gold. A third of India's gold demand is paid for by unaccounted money.

    The scrapping of 500 and 1,000 rupee banknotes, or 86 percent of the value of cash in circulation, is part of a crackdown on corruption, tax evasion and militant financing.

    But brokerage Ambit Capital says the decision could pull down economic growth, which was 7.6 percent last year, by as much as 4.1 percentage points in the year to March 2017.

    "It wasn't possible to change the wedding date at the last moment, so I curtailed spending," says Dashrath Jagtap, whose daughter got married this week in a small village in the western state of Maharashtra.

    Most Indian weddings are held on days considered auspicious in the Hindu calendar. Between Nov. 8 and end-December, there are 15 such days, or nearly a quarter of the total in 2016, making the note ban particularly painful for service industries that rely on weddings.

    "There is a huge drop in the wedding demand as many people don't have the new currency," said Chirag Thakkar, a director at gold wholesaler Amrapali Group in the western city of Ahmedabad.

    "It could be more than 50 percent (on a) year-on-year basis. Most people used to purchase in cash and now they are confused whether to buy gold or spend on something else."

    A wholesale trader in Dubai said demand will continue to be weak until people feel comfortable with their cash levels. The government expects the cancelled notes to be replaced in a few months, but some experts say it could take up to a year.

    http://www.reuters.com/article/india-modi-corruption-gold-idUSL4N1DQ3UP
    Back to Top

    Aussie gold miner with Chinese parent company looking to buy half of Kalgoorlie


    Barrick Gold's quest to find a buyer of the Kalgoorlie "Super Pit" has taken another intriguing turn.

    Over the past couple of days rumours have been swirling that a Chinese company with deep pockets has put in an offer for Barrick's 50% stake in the Australian gold mining operation. The bid is reportedly $540 million above any other competing offer.

    Newmont Mining owns the other half and Barrick handed over operational control of the iconic mine to Newmont in May of last year. The Super Pit is expected to be depleted of ore by 2019 but underground mining could continue after that.

    [I]f it goes through, the transaction would put an end to earlier dalliances between Barrick and Newmont, the natural buyer of the stake since it already owns half the mine.

    Two sources told Reuters that "Barrick Gold Corp. is reviewing the financial backing behind an approximately $1.3-billion (U.S.) bid for its stake in Australia’s Kalgoorlie mine by Minjar Gold, a unit of Shanghai-listed Shandong Tyan Home," according to a story carried today in The Globe and Mail.

    Unsurprisingly, considering that major miners rarely offer press comments on mergers and acquisitions in whole or in part, Barrick was mum on the potential deal. But if it goes through, the transaction would put an end to earlier dalliances between Barrick and Newmont, the natural buyer of the stake since it already owns half the mine.

    The Reuters source said Canadian, Australian and Chinese companies have also shown interest in the Kalgoorlie stake, which is Toronto-based Barrick's last gold holding in Australia. The mine is valued between US$600 million and $1 billion. Reserves top 7.5 million ounces and the mine is one of the biggest in Australia, producing about 800,000 ounces annually.

    Barrick, the world's No. 1 gold company, has set a target of paying down $2 billion in debt this year, mostly by selling mines or stakes of mines, including its majority stake in its African subsidiary Acacia Mining(LON:ACA). Barrick sold four U.S. gold mines this time last year. Newmont has shown interest in purchasing Barrick's Kalgoorlie stake, but price has been an issue and a deal has so far eluded the Denver-based company.

    Minjar Gold has been on the hunt for Australian mines all year. The company in August purchased Evolution Mining's (ASX:CAH) Pajingo minefor US$40 million – a deal that looks like small change in comparison to the offer on the table for Kalgoorlie.

    Perth-based Minjar Gold is incorporated in Australia but is owned by Shandong Tyan Home. That company is listed on the Shanghai Stock Exchange and its primary business is Chinese property development. It has a current market value of $12.1 billion.

    News of the whopping bid for Australia's Super Pit emerged around the same time that China’s Chinalco inked a preliminary deal with Peru's government to expand the Toromocho copper mine, the Asian nation’s largest overseas copper project.

    The move is part of a series of agreements signed this week that will see China pouring close to $5.3 billion into Peru’s mining and energy sector. Chinalco is expected to inject $1.3 billion into Toromocho in the coming months.

    http://www.mining.com/aussie-gold-miner-chinese-parent-company-looking-buy-half-kalgoorlie/

    Attached Files
    Back to Top

    Base Metals

    Zambia copper concentrate duty to disrupt global copper supplies – sources


    A plan by Zambia to put a duty on copper concentrates imports could put a kink in the global supply chain for the metal, industry sources said, by forcing neighbouring Democratic Republic of Congo (DRC) to send surplus mine output elsewhere.

    The 7.5% duty announced earlier this month and due to come into force at the start of 2017, is likely to disrupt supply of refined metal in the early part of the year, just as the global market moves away from surplus, helping to support prices.

    Zambia, Africa's second-largest copper producer, will produce about 425 000 t of copper metal this year, according to consultancy GFMS, accounting for about 2% of global output.

    The country's smelters, including those run by privately held Eurasian Resources Group (ERG) and India's Vedanta Resources, currently source some 500 000 t of concentrate from the DRC, according to consultants Wood Mackenzie.

    This is made up of 400 000 t from ERG's Frontier mine and around 100 000 t from La Sino-Congolaise Des Mines(Sicomines), a joint venture between DRC's Gecamines, China Railway Construction Corp. and Sinohydro Corp.

    "It will not be viable for smelters to buy concentrates from the DRC," said an industry source working in Zambia. "This change will upset the supply chain for the first six months of 2017."

    Miners in the DRC would be forced to look for other ways to process their concentrate, such as sending it some 3 000 km (1 860 miles) overland to Durban in South Africa for shipping to China, a two-month trip, three industry sources said.

    This would take the supplies out of circulation for several months and delay production of up to 150 000 t of coppermetal.

    SMELTERS UNDER STRESS

    Smelters in Zambia, where capacity far outstrips current mine supply, are already struggling with low feed stocks after miners including Glencore closed copper shafts as prices fell to six-year lows.

    The duty could mean they have even less concentrate to process, at least in the short term, raising costs per unit.

    "People are well aware that Zambian smelters are under considerable stress to which this will add significantly," said a source familiar with the matter.

    The sources said the most affected smelters would be ERG's Chambishi Smelter and Vedanta's Konkola Copper Mine which source a significant part of their concentrate needs from DRC.

    Officials at ERG did not reply to an emailed request for comment. Konkola declined to comment.

    The new duty was likely aimed at boosting Zambian refined metal production from local concentrate supplies, but the move could backfire and instead benefit smelters in other countries such as China and India, Wood Mackenzie said.

    Companies with local mines including First Quantum Minerals and Barrick Gold could increase output, traders said. Officials from both companies did not respond to requests for comment.

    The Zambian government was also coming under sustained lobbying from smelters to reverse its proposal, industry sources said.

    "Some are already threatening to close down," said a Swiss trader active in the region. "I believe that the duty is not a definitive decision".

    http://www.miningweekly.com/article/zambia-copper-concentrate-duty-to-disrupt-global-copper-supplies-sources-2016-11-25

    Attached Files
    Back to Top

    Protest halts Anglo American's Los Bronces copper mine for second time


    Anglo American has halted production at its Los Bronces copper mine in central Chile after masked protesters seized parts of the installations, the second time in a month this has happened.

    "The Los Bronces mine will remain completely halted until the minimum necessary guarantees exist that it can operate safety and without risk to personnel," the company said in a statement Sunday.

    The mine is one of the world's largest copper operations, producing 401,700 mt of the metal in concentrate and cathode last year.

    According to Anglo American, the protesters "violently and illegally" entered the mine site early Saturday morning, just hours after unions representing staff of contractor firms employed at the high altitude operation accepted a proposal from their employers.

    The shutdown of the mine comes just 10 days after a similar protest which closed the mine for approximately around a day.

    The company called on the protesters to "suspend this illegal occupation and maintain a dialog through the established channels to achieve a peaceful resolution to this dispute."

    Anglo American said Sunday that police have now entered the mine in order to allow workers not involved in the protest but unable to leave because of it can return home and to provide supplies key to maintaining mine processes and mitigating its environment impact.

    Anglo American owns 50.1% of the mine, after selling the balance of shares to Chile's state copper company Codelco and Mitsui and Mitsubishi of Japan in 2012.

    Last September, unionized employees at Los Bronces went on strike for five days after pay talks ended without agreement.

    http://www.platts.com/latest-news/metals/santiago/protest-halts-anglo-americans-los-bronces-copper-27717904
    Back to Top

    Aluminum producers seek first-quarter premium of $95-$110/T from Japanese buyers: sources


    Some big aluminum producers seek a premium of $95-$110 per ton from Japanese buyers for primary metal shipments in the January to March period, up 27-47 percent from the previous quarter, five sources involved in pricing talks said on Friday.

    Japan is Asia's biggest importer of the metal and the premiums for primary metal shipments it agrees to pay each quarter over the London Metal Exchange (LME) cash price set the benchmark for the region.

    Any increase in the quarterly premiums would mark the first rise in three quarters, and reflect tightening supply, although buyers said the initial offers were too high, the sources said.

    For the October-December quarter, Japanese aluminum buyers agreed to pay a premium of $75 a ton for the metal, down 17 percent to 19 percent from the prior quarter, on softer spot premiums amid a supply glut.

    Rio Tinto Ltd has offered Japanese buyers a premium of $95 per ton following a drop in local inventories and higher demand for imported aluminum in China, while Rusal has sought a premium of $110 per ton to reflect higher U.S. premiums, the sources said.

    Aluminum stocks at three major Japanese ports fell 2.9 percent in October from the previous month to 278,200 tonnes, trading house Marubeni Corp said on Monday.

    Buyers are not ready to accept the offers, the sources said.

    "The $110 proposal is way too high and the $95 offer is still above the levels that we think are appropriate," said a source at a trading house who declined to be named.

    "We will need to accept a hike from the current quarter amid tighter supply in Asia, but only if premiums come in the low $80 a ton," a source at a fabricator said.

    The quarterly pricing negotiations are held between Japanese buyers and global miners including Rio, Alcoa Inc and South32 Ltd.

    Rusal has not been involved in the quarterly pricing talks over the past couple of years, but the Russian company sent an email to its customers in Japan this week in an apparent bid to have an influence in the negotiations, the sources said.

    Some talks started this week and are expected to continue until next month.

    Rio and Rusal declined to comment.

    http://www.reuters.com/article/japan-aluminium-premiums-idUSL4N1DQ35T

    Attached Files
    Back to Top

    Steel, Iron Ore and Coal

    China Oct coking coal imports surge 67.8% on yr, down 7.2% on mth


    China imported 5.16 million tonnes of coking coal in October, surging 67.8% on year, showed the latest data from the General Administration of Customs (GAC).

    However, the volume dropped for the second consecutive month by 7.2% from September's 5.56 million tonnes, influenced by a 2.8% drop of crude steel output in the month, fluctuated exchange rate, as well as domestic buyers' reluctance to accept expensive imported material.

    According to the GAC, value of the imports stood at $485.87 million, gaining 110.7% on year and 26.4% on month, which translated into an average price of $94.16/t, up 36.15% from the previous month.

    Analysts attributed the year-on-year rise of imports value to insufficient supply in Australia and Mongolia, caused by rainstorms and mining constraints.

    Over January to October, the country's imports of coking coal rose 23.7% on year to 48.63 million tonnes; the value of the imports was $3.40 billion, rising 4.3% year on year.

    Separately, China's exports of coking coal doubled on the year to 10,000 tonnes in October, down 80% from September, with the value at $695,000, surging 155.6% from the year-ago level.

    In the first ten months of the year, China exported 0.93 million tonnes of coking coal, increasing 23.3% compared to corresponding period last year, with total value of the exports flat year on year at $83.46 million.

    http://www.sxcoal.com/news/4549616/info/en
    Back to Top

    China stands firm on cutting excess steel, coal capacity


    The Chinese government has reiterated its firm stance on cutting excess steel and coal capacity in response to an emerging backlash from producers prompted by recent price hikes.

    China retired 45 million tons of steel and 250 million tons of coal production capacity by the end of October, meeting its full-year goals ahead of schedule.

    But problems have also emerged, especially in some companies seeking to add capacity as an unexpected demand-supply gap pushes up prices of steel and coal products.

    "The rising prices have triggered worries in the market and to some extent shaken the resolve of some local authorities and enterprises. But we must stay clear-headed that the price volatility has been driven by temporary demand growth, magnified by speculation, and does not indicate a long-term trend," Xu Kunlin, deputy secretary general of the National Development and Reform Commission, said at a press conference Wednesday.

    The steel and coal industries are plagued by overcapacity and the government's resolution is unwavering, Xu said.

    Since the capacity cuts were blamed for causing a supply shortage, it will not be easy to resolve the combination of a short-term crunch and long-term excess.

    Gu Shengzu, a member of the Financial and Economic Affairs Committee of the National People's Congress, said the rapid price increase created a dilemma for policymakers about whether to stabilize supply or stick to reducing capacity.

    "There is an urgent need to streamline relations between the government and market, and market-driven, law-based measures should be adopted in capacity cuts," Gu said.

    The State Council hopes to strike a balance. The authorities will press ahead with capacity cuts while paying more attention to price changes, according to a statement released after an executive meeting chaired by Premier Li Keqiang on Wednesday.

    An array of measures to curb prices have been put in place, and the priority is still on downsizing those bloated sectors. As the targets have been met ahead of schedule, the next step is to ensure the stated cuts are effective.

    Investigation teams will be dispatched to Hebei and Jiangsu, where capacity cut rules were breached, as part of efforts to intensify supervision, the State Council said, citing cases of fraud and illegal production in the provinces.

    "We should give zero tolerance to steel and coal producers that fail to meet national and environmental standards," Premier Li said.

    Local governments have been asked to give financial support to and create jobs for workers made redundant by the cuts. In May, the Ministry of Finance announced 100 billion yuan ($14.5 billion) in aid for steel and coal companies to resettle laid-off workers.

    Mergers and acquisitions will be encouraged for further consolidation in the two industries, the statement said.

    China is the world's largest producer and consumer of steel and coal. Cutting overcapacity is a high priority as the two industries have become a major drag on growth.

    Steel capacity will be cut between 100 million tons?and 150 million tons by 2020, while about a half billion tonnes of coal capacity is scheduled to be slashed in the next three to five years.

    In the coming year, it is important to phase out excess capacity through reforms, Premier Li said, highlighting further steps in mergers and acquisitions in steel enterprises, and the integration of coal mining and power generation.

    "The task will still be difficult. Problems will be accentuated by hysteresis effects from the re-employment of redundant workers and the unsettled debts of closed coal mines," said Jiang Zhimin, vice president of China National Coal Association.

    http://www.chinamining.org/News/2016-11-28/1480294790d78099.html
    Back to Top

    Shanxi Oct coke output rises 17pct on year


    Northern China's Shanxi province produced 7.44 million tonnes of coke in October, rising 17.3% year on year, showed data from the provincial Statistics Bureau.

    Over January to October, coke output of the province edged up 0.7% from the year-ago level to 67.54 million tonnes.

    Shanxi is China's top one coke province, producing half of the country's total coke output, and exporting above 80% of coke exported to other countries.

    By end-2015, Shanxi had coke production capacity of 145 million tonnes per annum (Mtpa), mainly from 72 independent coking enterprises each with capacity above 2 Mtpa.

    Affected by domestic oversupply and sluggish demand, Shanxi saw its coke output, prices and profits plunge in recent years. The provincial government has rolled out policies to stabilize coke output and promote transformation of coking industry, said Ji Mingde, vice director of Shanxi Economy and Information Commission.

    http://www.sxcoal.com/news/4549613/info/en
    Back to Top

    Shanxi withdraws licenses of 15 coal mines


    North China's Shanxi province has withdrawn the licenses of 15 coal mines, Xinhua reported, citing local authority.

    The decision will cut annual coal production capacity by 10.6 million tonnes, according to the Shanxi land and resources department.

    The 15 mines belong to six State-owned enterprises including Shanxi Coking Coal Group. Production capacity of the mines is between 300,000 and three million tonnes a year.

    Shanxi province supplies about a quarter of China's coal.

    China intends to slash about 500 million tonnes of coal capacity in five years starting from 2016 to address overcapacity in this sector.

    In early October, Shanxi raised its target for cutting surplus coal capacity this year from 20 million tonnes to 23.25 million tonnes.

    http://www.sxcoal.com/news/4549641/info/en
    Back to Top

    Iron ore price set to top $80


    On the Dalian Commodities Exchange iron ore futures added to 5.3% gains racked up on Friday with May contracts closing at 622 yuan ($90.50 a tonne) on Monday.

    Regulators recently upped trading fees and margin requirements to cool down the credit-fuelled speculation in iron ore, met coal and rebar, but volatility in the market show no signs of ending.

    The latest leg up came after a new 5-year planning document released by Beijing called for the closure of 100 – 150 million tonnes of steel capacity through the end of the decade to increase profitability of remaining producers and tackle pollution.

    Authorities are also pushing for consolidation of steel producers with a target of 60% market share for the top 10 steelmakers which should translate into higher prices for steel, iron ore and met coal.

    The import price of 62% Fe content ore at the port of Tianjin jumped 3% to $79.20 per dry metric tonne on Friday. The index is likely to breach $80 a tonne on Monday – the highest since mid-September 2014 according to data supplied by The Steel Index.

    Year to date the price of the steelmaking raw material is up 84% following near-decade lows in December last year.
    Back to Top

    Chinese govt sends steel capacity cut investigators to Hebei and Jiangsu


    Work teams from the State Council, China's cabinet, have been dispatched to two provinces to see if steel capacity cut rules were breached, Xinhua News Agency reported on November 28.

    The move follows a State Council executive meeting last week which revealed that some companies might still be seeking to add capacities, despite a reduction target of 45 million tonnes per annum set for this year.

    The investigators have arrived in Qinhuangdao city of Hebei province and Xuzhou in Jiangsu province to conduct on-site investigations into local steel companies' practices.

    The investigation teams are composed of officials from ten government departments and industry associations including the National Development and Reform Commission and Ministry of Industry and Information Technology.

    China, the largest producer and consumer of steel and coal in the world, has put capacity reduction a high priority, as the two oversupplied industries have become a drag on economic growth.

    http://www.sxcoal.com/news/4549667/info/en
    Back to Top

    Germany's Merkel says G20 must tackle global steel glut


    The G20 group of leading economies must find a solution to excess capacity in the global steel industry, German Chancellor Angela Merkel said on Saturday, adding that overproduction in some countries was causing job losses elsewhere.

    Merkel said Germany, which takes over the G20 presidency next month, would push for a collective solution for the worldwide glut that has dampened steel prices for years and raised tensions between China and other major producers.

    European and U.S. leaders have pressed China to accelerate capacity cuts, blaming its big exports for slumping prices and accusing it of dumping cheap steel in foreign markets.

    "For example, at the G20 summit in China, we discussed in a very open manner overproduction in the steel sector, which is resulting in people in the steel industry losing their jobs," Merkel said in her weekly podcast.

    "We must solve this problem together, so that we don't have a situation where one country wreaks damage on other countries," Merkel added.

    China has vowed to cut capacity by 45 million tonnes this year, though it said in August it was behind on that target.

    Last month, the European Union set provisional import duties on two types of steel entering the bloc from China to counter what it said were unfairly low prices. The measure was criticized by Beijing, which accused the bloc of engaging in protectionism.

    Some 5,000 jobs have been axed in the British steel industry in the past year as it struggles to compete with cheap Chinese imports and high energy costs.

    G20 leaders pledged at a summit in China in September to work together to address excess steel capacity that has punished the global industry with low prices for years.

    http://www.reuters.com/article/us-g20-germany-steel-idUSKBN13L0D4

    Attached Files
    Back to Top
    Commodity Intelligence LLP is Authorised and Regulated by the Financial Conduct Authority

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

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