Mark Latham Commodity Equity Intelligence Service

Friday 28th April 2017
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    Bitcoin spikes to an all-time high

    Bitcoin is trading at a record high. 2017 has been a volatile year for bitcoin. It rallied more than 20% in the opening week before crashing 35% on word that China was going to begin to crack down on trading.

    The cryptocurrency rallied after China's largest bitcoin exchanges introduced a flat 0.2% fee on each transaction and blocked customer from withdrawing their coins form their trading accounts.

    It pressed to its previous all-time high of 1327.19 on March 10, just hours before the US Securities and Exchange Commission rejected the Winklevoss ETF, which sparked a 30% crash. The SEC also rejected the plans of another ETF.

    The cryptocurrency has managed to shrug off concerns that developers would create a "hard fork" that would split the currency in two.

    However, bitcoin has gained momentum as of late as Japan's financial regulator said it's a legal payment method and Russia said it was looking into approving bitcoin in 2018. Additionally, the SEC said it would reconsider the Winklevoss ETF.
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    Teck doubles dividend with new adopted policy

    Diversified miner Teck Resources has adopted a new dividend policy doubling payouts to shareholders and allowing the board to consider a supplemental dividend annually, based on free cash flow, business conditions and capital priorities.

    The Vancouver-based company said it will pay on June 30, an initial eligible dividend of C$0.10 per share on its outstanding Class A common shares and Class B subordinate voting shares, to shareholders of record at the close of business on June 15.

    Teck stated that the new dividend policy will be anchored by an annual base dividend of C$0.20 a share, which will be declared and paid quarterly, starting in the third quarter, as C$0.05 dividends on the last business day of each quarter.

    Any supplemental dividends declared would be paid on the last business day of the calendar year. If declared, supplemental dividends may be “highly variable”.

    Teck advised that the new dividend policy reflects its commitment to return cash to shareholders in balance with the needs and opportunities to invest in, and the inherent cyclicality of, its underlying businesses.

    Teck had in 2015 cut its semi-annual dividend twice as commodity markets collapsed, from C$0.45 to C$0.10 a share, and then to C$0.05 a share.

    Teck’s TSX-listed stock fell more than 6% this week after it missed on its first-quarter earnings announced on Wednesday.
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    China's central SOEs Q1 profits surged 37.3pct on year

    China's central government-administered state-owned enterprises (SOEs) saw its profits reach 587.3 billion yuan ($85.2 billion), increasing 37.3% year on year.

    SOEs realized 11.6 trillion yuan of operating revenue in the first quarter this year, a year-on-year increase of 18.5%.

    Of this, operating revenue of central enterprises – owned by central government –increased 16.6% to 7.15 trillion yuan over January-March; while that of local enterprises – owned by government at the prefecture and lower levels – gained 21.7% to 4.48 trillion yuan over January-March.

    During the same period, central SOEs' operating cost was 11.27 trillion yuan, jumping 17.7% from the year-ago level.

    Operating cost of central enterprises and local enterprises were 6.84 trillion yuan and 4.42 trillion yuan, respectively, leaping 16.3% and 19.9% from the preceding year.

    Central and local enterprises witnessed their profits soaring 27.1% and 74.3% to 426.1 billion yuan and 161.2 billion yuan, respectively.

    By end-March, central SOEs total assets amounted to 136.46 trillion yuan, up 10.6% from the previous year. Their total liabilities stood at 89.97 trillion yuan, increasing 10.8%.
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    US April propylene contracts settle down 6 cents/lb: sources

    April US propylene contract prices reached final settlements Wednesday, posting a 6-cent/lb drop to 46 cents/lb for polymer-grade product and to 44.5 cents/lb for chemical-grade product, sources said Wednesday.

    The settlement is within market expectations, which recently called for a decrease of 5-8 cents, sources said.

    Multiple propylene market participants -- including three buyers, three producers, one trader and four downstream polypropylene participants -- confirmed the settlements at that level.

    Sources cited the decrease to an increase in supply, noting a combination of recent refinery and steam cracker restarts, an increase in propane/butane cracking in steam crackers, and high run rates for metathesis units.

    The supply increase has been met with falling demand. Sources have said that propylene buyers are holding off orders and reducing their derivative run rates, expecting lower prices in the coming weeks.

    Spot PGP hit a three-month low on April 19, assessed at 36.5 cents/lb FD USG, after shedding 12.5 cents/lb from the beginning of the month, according to S&P Global Platts data.

    Since April 19, spot PGP has climbed 2 cents/lb, last assessed Tuesday at 38.5 cents/lb FD USG, according to Platts data.

    US propylene contract prices are settled on a monthly basis between major producers and buyers. The process includes price nominations by producers and subsequent negotiations with customers.
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    White House proposes tax reform without border adjustment

    The Trump administration Wednesday proposed an overhaul of the US tax code without the controversial border-adjustment provision that could have upended US energy and commodity trade flows and distorted the Brent/WTI spread.

    The plan would slash business taxes to 15%, from the current 35% corporate tax rate, extend those cuts to small and medium "pass-through" companies, and allow companies one chance to repatriate trillions of dollars in overseas earnings, Treasury Secretary Steven Mnuchin said during a White House briefing.

    Companies across the energy sector are expected to embrace the cuts.

    While US refiners were breathing easier about not facing steep new import costs from the House of Representatives' plan, Tesoro lobbyist Stephen Brown said it may be too soon to declare the border adjustment dead.

    Brown said the White House has "figured out that the Senate is poised to administer last rites over the BAT," but House leaders are still defending it.

    "I think it's still alive," Brown said. "It's not as viable as it once was. And today is more of an opening gambit than anything else. It's not politically realistic in terms of blowing a hole in the deficit, but it paints a signpost for the direction the [White House] wants to go."


    Bill Douglass, chairman of the Small Retailers Coalition and owner of Texas-based Douglass Distributing, said he would welcome any cuts to business taxes. His company, which handles more than 130 million gallons of fuel a year, pays an effective tax rate of 43.5%, including surcharges from the Affordable Care Act, Douglass said.

    "We have all waited a long time for relief, so any proposals about reduction are welcome," he said.

    Edison Electric Institute, which represents investor-owned electric utilities, said the White House proposal was positive for its members, but it would continue to fight the House plan's elimination of deductions for net interest expenses and state and local taxes.

    "Our industry is the nation's most capital-intensive industry, and EEI's members invest more than $100 billion each year to build smarter energy infrastructure and to transition to an even-cleaner generation fleet," the group said. "The loss of interest detectability will increase the cost of capital, which is reflected in electric rates paid by our customers." The White House plan omits a border-adjustment provision that is central to the House's tax blueprint, despite campaigns against it by importers from across the US economy.

    Mnuchin said earlier Wednesday during an event hosted by The Hill that Treasury officials are talking weekly with House and Senate leaders to come to agreement on one tax plan that they hope to move through Congress by the end of the year.

    "There's many aspects of it we like; there's certain things that we're concerned about," Mnuchin said of the GOP's border-adjustment proposal. "What we've discussed with them is we don't think it works in its current form and we're going to continue to have discussions with them about revisions that they will consider."


    The House plan calls for cutting corporate taxes to 20% from 35% and paying for those cuts with a border adjustment that would tax imports but not exports. Analysts estimate the border provision would raise consumer prices, upend energy and commodity trade flows, and inflate WTI crude prices by as much as 25% relative to Brent.

    The measure is estimated to generate up to $1 trillion over 10 years -- a key element that would make the package revenue neutral and allow legislators to advance the bill through the faster budget reconciliation process.

    A major sticking point of the White House plan will be funding the massive tax reductions without blowing up the federal deficit.

    Mnuchin gave few specifics about how the administration wants to pay for the cuts, except to say that it would lead to 3% or higher gross domestic product growth.

    "This will pay for itself with growth and with reduction of different deductions and closing loopholes," he said.

    Mnuchin said the White House is counting on "a lot of desire" from all sides in Congress to pass a tax package that boosts the economy, makes US businesses more competitive and creates jobs.

    "We will be working very closely with the House and the Senate to turn this into a bill that can be passed and the president can sign," he said. "And there's lots and lots of details that will go into how that will pay for itself."

    Attached Files
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    Atlas Copco profit beats forecast as growth comes surging back

    Compressor and mining gear maker Atlas Copco beat forecasts for quarterly profit and order intake on Wednesday, boosted by strong growth in its mining and industrial businesses, and said it expected demand to improve further.

    Many engineering firms have struggled to grow in recent years as weak commodity prices have squeezed mining investments and global industrial demand more broadly.

    But firming prices for metals and crude oil last year and an improving backdrop for industrial demand have lately fuelled a pick up in growth for engineering firms such as Atlas Copco.

    The Swedish company said first-quarter earnings before interest and tax rose to 5.71 billion crowns ($651 million) from 4.17 billion in the same period last year, ahead of a mean forecast for 5.31 billion crowns in a Reuters poll of analysts.

    Atlas, whose products include vacuum pumps, industrial power tools and assembly systems, reported its biggest jump in order intake since 2011, with bookings rising to 31.7 billion crowns, a like-for-like rise of 18 pct, beating a 28.1 billion forecast.

    "We see a positive trend in all sectors of our business," Chief Executive Ronnie Leten said in a statement.

    The strongest rise in like-for-like order intake was recorded in the group's newly established Vacuum Technique business area, up 33 percent year-on-year, followed by its mining business, where bookings rose 28 percent.

    The vacuum business is driven by strong demand from customers in the semiconductor industry.

    Atlas shares were up 2.3 percent at 0950 GMT, taking their year-to-date rise to 21 percent. The stock had climbed earlier this week on the back of forecast-beating results from Nordic mining gear rivals Sandvik and Metso.
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    China's first quarter industrial profits grew more than 20 percent: People's Daily

    Profits of Chinese industrial firms grew more than 20 percent in the first quarter from the same period a year ago, a senior official from the country's top economic planner was quoted as saying on Wednesday.

    While still robust, the figure could suggest a marked earnings slowdown in March from the first two months of 2017, when profits surged almost 32 percent, the fastest pace in nearly 6 years.

    The comments from Ning Jizhe, vice chairman at the National Development and Reform Commission (NDRC), came a day ahead of the official data release.

    Ning told the People's Daily in an interview that market watchers should not be too sensitive to minor fluctuations in China's economic growth rate and should pay more attention to the quality of growth instead.

    "We can't have zero growth, or too low of a growth rate, but the growth rate is not omnipotent, nor is the GDP," Ning said.

    Strong first-quarter profits, together with an increase of 14.1 percent in fiscal revenue, has set "an excellent foundation" for improved growth quality in 2017, he said.

    Echoing bullish comments from the finance minister and the central bank chief, Ning said China is set to achieve its annual growth target, even though it has so far reported data for only the first three months of the year.

    But Ning also cautioned that the problem of excess capacity in sectors such as steel and coal has not been fundamentally resolved despite more efficient utilization rates, adding it will take some time to sort out.

    The government made some progress in shutting more inefficient capacity last year, but a senior official of the China Iron and Steel Association (CISA) called on Tuesday for further cuts, saying the sector remains saturated despite increased profits in the first quarter.

    China's government has lowered its growth target to around 6.5 percent this year from a range of 6.5-7 percent last year and an actual rate of 6.7 percent.

    Barring a major shock, stronger-than-expected growth of 6.9 percent in the first quarter is expected to give the economy enough of a tailwind to meet the full-year target even if activity cools a bit later in the year, as many analysts predict.

    China's industrial firms have been enjoying their best profits in years in recent months as a construction boom and government-mandated cuts in excess capacity led to sharp increases in prices of raw materials such as iron ore and coal.

    But most economists expect price gains will soon start to slow as government stimulus fades and a red-hot property market cools.
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    China eyes upgrades to manufacturing industry, report

    China will make unwavering efforts in upgrading its manufacturing industry as the nation transitions to an economy that relies more on innovation and high value-added products, Xinhua reported.

    "China's manufacturing sector is tasked with challenges including a downshift in growth, structural adjustment and a shift in growth engines," said Miao Wei, minister of industry and information technology.

    He made the remarks when delivering a report submitted to Chinese lawmakers for deliberation at a four-day bimonthly session of the National People's Congress Standing Committee, which opened on April 17.

    China is determined to roll out more policies to optimize the investment environment and tap investment potential of businesses in a bid to support the development of advanced manufacturing, according to the report.

    The manufacturing sector will also be bolstered by lowered operation costs by standardizing fee systems, optimizing land supply and streamlining the tax structure, Miao told lawmakers.

    In the report, Miao also stressed expanding financing channels for the manufacturing sector and reducing market entry restrictions to make the manufacturing industry more open to foreign investment.

    China will aim to improve its innovation system with focus on the research and development of new materials, intelligent manufacturing and robots.
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    BHP cuts key output targets, sees some petroleum divestment

    BHP Billiton cut its full-year production guidance for coking coal and copper on Wednesday due to bad weather at mines in Australia and industrial action in Chile over the last quarter.

    BHP also said it was progressing the sale of onshore U.S. petroleum interests at two key fields at a time when management is under pressure from activist shareholder Elliott Management to decouple the division from the company.

    "Divestment of non-core onshore U.S. acreage is progressing, with the sales process well advanced for up to 50,000 acres of the southern Hawkville," BHP said in its fiscal third quarter operations report.
    Additionally, BHP said its Fayetteville field is under review and that it was "considering all options including divestment."

    The miner cut its guiance for full-year copper output by 17 percent to a range of 1.33 million to 1.36 million tonnes after a six-week strike at the Escondida mine, the world's biggest copper mine, that ended in late March.

    Coking coal guidance was reduced by 9 percent to 39 million to 41 million tonnes, while BHP narrowed its iron ore output guidance to 268 million to 272 million tonnes.

    The miner said shipments of Australian coking coal to Asian steel mills will be affected in the current quarter after a cyclone swept across eastern Australia in late March, cutting off rail lines to Pacific Ocean ports.
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    U.S. commerce secretary eyes more trade moves: WSJ

    The Trump administration may undertake trade actions to protect the U.S. semiconductor, shipbuilding and aluminum industries, citing national security concerns, Commerce Secretary Wilbur Ross told the Wall Street Journal in an interview on Tuesday.

    He said those industries could qualify for protection under Section 232 of the Trade Expansion Act of 1962, which lets the president impose restrictions on imports for reasons of national security and was used to launch a probe of steel imports, the Journal reported.

    Last week, President Donald Trump launched a trade probe against China and other exporters of cheap steel into the U.S. market, raising the possibility of new tariffs.

    Ross said the Trump administration might intercede to aid Toshiba Corp's U.S. unit Westinghouse Electric Co, which filed for bankruptcy last month.

    The company filed for bankruptcy protection after it incurred billions of dollars of cost overruns at four nuclear reactors under construction in the U.S. Southeast. The bankruptcy cast doubt on the future of the first new U.S. nuclear power plants in three decades.

    Ross said renegotiating the North American Free Trade Agreement should be completed by the end of 2017, the Journal reported. Ross told the newspaper that if the talks with Mexico and Canada go much beyond December, it would be difficult to get the pact ratified by Mexico.

    Mexico is due to hold its presidential election in July 2018.

    Ross said the Trump administration was considering restarting talks on bilateral trade deals with the European Union and China that the Obama administration had begun but never finished, the Journal reported, adding that he said the United States might reopen a bilateral deal with South Korea.

    Earlier this month, U.S. Vice President Mike Pence told business leaders in Seoul that the Trump administration would review and reform the five-year-old free trade agreement between the two countries.

    Pence said the U.S. trade deficit had more than doubled in the five years since the U.S.-South Korea free trade agreement began and there were too many barriers for U.S. businesses in the country.
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    Commodity Funds: Hogwash et al..


    The returns are in for commodity mutual funds, and, well … they’re actually not in: They’re out.

    If you bought and held shares in a commodity mutual fund during their 20 year history, it probably hasn’t returned you a dime. In fact, you probably lost money.

    [RELATED: Commodities in Your Portfolio? It’s All Hogwash, Says Wall Street Dissenter]

    Morningstar tracks more than 30 of these funds, divided up into 124 different share classes. Only nine of those shares have made money from their inception through the first quarter of this year. Looking back from the end of the quarter over one month, three months, three years or five years, the vast majority have all lost money.

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    Teck Resources profit misses estimates as costs rise

    Canada's Teck Resources Ltd , North America's largest producer of steelmaking coal, reported lower-than-expected profit due to higher costs, lower production and sales volumes.

    Unit production costs in the first quarter rose by C$13 to C$56 per tonne from a year ago. First-quarter coal production was 6.1 million tonnes, 8 percent lower than last year, the company said on Tuesday.

    Teck, which also mines gold and silver, said adjusted profit attributable to shareholders rose to C$671 million ($494.6 million), or C$1.16 per share, from C$18 million, or 3 Canadian cents a share, in the first quarter of 2016.

    Revenue rose 70 percent to C$2.89 billion.

    Analysts on average were expecting the company to earn C$1.29 per share, on revenue of C$3.04 billion, according to Thomson Reuters I/B/E/S.

    Teck said a quarterly benchmark price for steelmaking coal for the second quarter was not yet agreed upon due to cyclone Debbie's impact on Australian supply.

    It expects total steel making coal sales, including spot sales, of at least 6.8 million tonnes in the second quarter. That is in line with last month's updated forecast.

    Steelmaking coal prices almost tripled from a year ago and spot prices stabilized in the $150 to $160 per tonne range during the quarter, while copper and zinc prices rose by 25 percent and 66 percent respectively, Teck said.

    Steelmaking coal prices have soared from about $156 a tonne at the end of March to more than $200 a tonne, amid supply disruptions caused by a powerful cyclone in Australia.

    Steel plants use coking, or metallurgical, coal to fire blast furnaces.

    Net profit attributable to shareholders jumped to C$572 million, or C$0.99 per share, for the quarter ending March 31, from C$94 million, or C$0.16 share, in the same period last year.
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    CN Rail's revenue rises 8 pct on higher freight volumes

    Canadian National Railway Co on Monday reported an 8 percent increase in quarterly revenue as the railroad moved record volumes, boosted by grain, frac sand and coal.

    Canada's largest railroad also approved a quarterly dividend and said total carloads rose 9 percent in the first quarter ended March 31, although rail freight revenue per carload decreased by 1 percent.

    CN said it expects to earn more on a per-share basis this year and sees an approximate 10 percent growth in 2017 revenue ton-mile (RTM), which measures the relative weight and distance of freight transported by a railroad.

    The Montreal-based railroad now expects 2017 adjusted earnings of C$4.95-C$5.10 per share, up from last year's earnings of C$4.59 per share.

    CN, like its rivals, is seeing improved economic conditions in 2017, following a weakness in commodities last year. Positive growth drivers during the first quarter included frac sand, U.S. terminal coal, grain and potash, CN's chief marketing officer, Jean-Jacques Ruest, told analysts.

    Chief Financial Officer Ghislain Houle said he expects a strong second quarter, "while the rest of the year, in particularly the fourth quarter, will face more difficult (comparables)."

    Higher fuel prices helped drive up CN's operating expenses 11 percent, on a constant currency basis, and the railroad's operating ratio rose to 59.4 percent, up 0.5 of a percentage point compared with a year earlier.

    The lower the operating ratio, a key industry metric which measures operating costs as a percentage of revenue, the more efficient the railroad.

    CN Chief Executive Officer Luc Jobin said the company will not try to win new customers at the expense of its lean cost structure.

    "We want to be positioned for continued growth. At the same time, we don't want to go too far out into investments," he said.

    CN also increased its 2017 capital investment forecast by C$100 million to C$2.6 billion ($1.93 billion), the company said.

    The railroad said net income rose to C$884 million or C$1.16 per share in the first quarter, from C$792 million or C$1 per share, a year earlier.

    CN's board approved a second-quarter 2017 dividend of 41-1/4 cents (C$0.4125) per common share that will be paid on June 30, 2017, to shareholders of record at the close of business on June 9.

    Excluding onetime items, CN earned C$1.15 per share, in line with analysts' average estimate, according to Thomson Reuters I/B/E/S.

    Revenue rose to C$3.21 billion from C$2.96 billion.

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    Iran signs more than $50 bln in deals

    Iran signs more than $50 bln in deals

    Iranian Economy Minister Ali Tayyip Niya said that the country has signed agreements with the countries of large financial institutions to obtain foreign funding by more than fifty billion dollars, pointing out that the signing of these contracts became final in general.

    Minister Tayyip Nya stressed that Iran today has a very positive relations with international financial and specialized institutions, saying that the nuclear negotiations and to meet Tehran 's obligations fully with regard to the nuclear deal Pena to the world that Iran does not want to use atomic energy only for peaceful purposes .

    Minister of Economy said that the international institutions recognized that Iran has fulfilled all its obligations, and therefore it is natural that we expect the international community to fulfill its obligations fully about Iran . He said: Despite the slow pace in which the process of fulfilling these commitments in place , and even though we were waiting for the Western countries to meet their commitments as soon as possible, but the process is going to meet these commitments towards the positive .

    Minister of Economy announced that the volume of direct foreign investments that entered the country in the past year reached $ 12 billion, pointing out that this is a number of good Not because we expect to reach the value of direct foreign investment to $ 7 billion only, but it eventually reached 12 billion dollars .

    He concluded by saying good Nya: that Iran is a suitable ground for investment, and expressed the hope that the volume of foreign investment rises in the country during the current Iranian year (started on 21 March / March

    The past, saying that countries with a return like Iran are very few at a time when revenues reached 30 and 40 percent in some areas.
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    Caterpillar Posts First Positive Retail Sales After 51 Months Of Declines

    After 51 consecutive months, the dead CAT spell is finally over.

    On Monday, traditionally just ahead of earnings, Caterpillar reported that in March its world retail sales rose 1% Y/Y, the first increase since November 2012. The reason: Asia/Pacific, also known as China, which saw a 46% surge in total machine sales, up from 39% last month, and the best Asian performance going all the way back to April 2011. Aside from China, however, the drought remained as every other region posted a decline in annual sales, led by Latin America (down 25%), North America (down 13%) and EAME (down 3%).

    Looking at a breakdown of what kinds of machines drove the global rebound, it was all construction related machinery, which rose 7%, once again entirely due to China, where sales soared by 56% as all other geographic regions posted negative sales. Elsewhere, the contraction among resource industries continued, with world sales down 19%, and even China declining by 1%. The only region higher, perhaps predictably, was EAME where sales of resource machines rose 23% in March.

    Finally, looking at the type of Energy and Transportation machines sold, Power Gen, Industrial and Transportation all declined( -7%, -6% and -3%, respectively), while Oil and Gas rose by 15% in March.

    As a reminder, the last cycle peaked in early 2011, just as the latest Chinese credit impulse peaked and rolled over, something it has also done in recent weeks. As such, CAT retail sales may be the best concurrent, or slighly lagging, indicator of the Chinese reflation trade, which as UBS explained recently is the fundamental driver behind the global reflation impulse.
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    Sandvik profit tops forecast as mining rebound gathers pace

    Engineering group Sandvik on Monday reported a first-quarter operating profit above market forecasts, supported by a recovery in its mining gear business which helped to drive a double-digit rise in like-for-like orders.

    The Swedish company, whose main rival is Atlas Copco , is benefiting from a pickup in mining investment in response to higher commodity prices and a generally stronger global industrial demand backdrop.

    Operating profit at the Stockholm-based group rose to 3.51 billion Swedish crowns ($397.9 million) from 2.41 billion a year ago, beating a 3.17 billion mean forecast in a Reuters poll of analysts.

    "We have a very strong quarter behind us," Sandvik Chief Executive Bjorn Rosengren told conference call with journalists.

    Sandvik shares were up 5.7 percent by 1257 GMT, compared with a 1.7 percent gain before the results were released.

    The company's order intake increased to 24.9 billion crowns, with like-for-like-growth of 16 percent year-on year, soundly ahead of a 22.8 billion crown forecast.

    This outperformance was mainly due to 30 percent growth in Sandvik's mining business, where the need for mining firms to replace equipment after several years of squeezed capital spending has begun to boost demand.

    CEO Rosengren said Sandvik was currently seeing the strongest demand from customers mining gold, silver and zinc.

    Manufacturing gauges in markets like China, Europe and the United States have hit multi-year highs in recent months, adding to expectations of increased demand for Sandvik's products also outside the mining industry.

    The group's Machining Solutions division (SMS), the world's largest maker of metal-cutting tools, also beat both earnings and order forecasts for the quarter, and its North American business returned to growth after many quarters of declines.

    SMS accounts for around 60 percent of Sandvik's total operating profit, while the mining division accounts for about a third.

    Rosengren also said Sandvik had lined up two possible buyers for separate parts of its loss-making Mining Systems business and that Sandvik hoped to close those deals during the second quarter.

    Sandvik announced in January that a deal to sell the business had fallen apart.

    Sandvik's shares are up 61 percent over the past year, outperforming a 19 percent gain in the STOXX Europe 600 Industrial Goods & Services Index, and a 46 percent gain for cross-town rival Atlas Copco.
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    Peru evaluates expelling two foreigners for 'inciting' anti-mine protests

    Peruvian police are evaluating the possible expulsion of two foreigners for "inciting" rural communities to protest against the Hudbay Minerals mining company, which owns a copper mine in the nation, the country's interior ministry said on Sunday.

    The police, the ministry said, had requested documents from U.S. citizen John Dougherty, 61, and Canadian citizen Jennifer Moore, 42, who entered Peru earlier in April while claiming to be tourists.

    "The authorities have abundant information that documents that their condition (as tourists) has not been complied with, as they have dedicated themselves to inciting townspeople ... against Canadian mining activity in Peru, in particular against the Constancia mine owned by the Hudbay company," the ministry said in a statement.

    "The conduct of the foreigners is causing a change in public order ... meaning the application of expulsion measures would be appropriate," it added.

    Hudbay temporarily suspended operations at its Constancia mine in November, in the midst of protests by rural Peruvians, who blocked highways demanding development projects such as schools they said the company had committed to building.

    Neither of the two foreigners in question could be reached for comment, and nobody was available to comment at the Canadian embassy in Peruvian capital Lima.

    Peru is the world's third largest copper producer, and mining is crucial for the national economy.
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    Germany details tender rules for combined-heat-power plants

    Germany's energy ministry has set out details for the planned auctions for combined-heat-power plants (CHPs) with up to 50 MW capacity, with 100 MW on offer in the first auction set for December.

    According to a first draft of the regulation based on last year's reform of the CHP bill (KWKG 2016), the energy ministry plans two auctions each year for 100 MW each time.

    Last year's KWKG 2016 bill is set to boost electricity output from CHPs to 110 TWh by 2020 and 120 TWh by 2025 as well as improving support mechanisms for new gas-fired CHP plants.

    New-build gas-fired CHP projects that replace an older coal-fired CHP unit will receive an additional bonus while existing coal and lignite-fired CHPs will no longer receive support through this mechanism.

    The most striking part of the reform bill was a move to a new tender process for government support for new CHP units between 1 MW and 50 MW of capacity.

    Following approval by the EC, the bill was passed at the end of last year with the ministry's draft regulation now in the consultation phase until June.

    Germany's potential CHP capacity is near 50 GW ranging from large-scale new-built coal-fired units like the 900 MWe GKM 9 plant at Mannheim to mid-sized municipally-owned urban CHP units down to small-scale or even micro- units, data from Platts Powervision shows.

    Last year, power output from CHP plants was 77.5 TWh with gas-fired CHP plants accounting for almost 50 TWh, data from the German statistical office shows.

    As CHP generation does not participate in the power market the way conventional wholesale power only generation does, but is more driven by the heating requirements, the output from CHP units is more difficult to predict and track, according to industry sources.
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    Anglo American on target as diamonds and iron balance copper drop

    Copper production fell in the first quarter at Anglo American, but full year guidance was kept unchanged across the board as amounts of iron ore, coal and diamonds unearthed all rose strongly.

    Chief executive Mark Cutifani said it was "a strong operational performance" helped by the continued ramp-up of Gahcho Kué diamond mine, Minas-Rio copper mine and Grosvenor coal project, which together delivered the group a 9% increase in production on a copper equivalent basis.

    Copper production of 142,600 tonnes for the three months to 31 March slipped 3% compared to the same period last year as continued strong performance at the 44%-owned Collahuasi mine in Chile was offset by increased ore hardness further south at Los Bronces and the temporary suspension of mining operations at nearby El Soldado after a mine plan was rejected by regulators, which resulted in around 3,000 tonnes of lost production.

    Full year production guidance remained unchanged at 570,000-600,000 tonnes, of which El Soldado represents 50,000-60,000 tonnes.

    Iron ore production rose 21% to 14.8m tonnes, with full year guidance from South Africa's Kumba unchanged at 40-42mt and 16-18mt from Minas-Rio in Brazil.

    Diamond production was up 8% to 7.4m carats thanks to the contribution of Gahcho Kué in Canada and increases in response to improved demand for lower value goods in stock.

    Platinum production was broadly flat at 572,000 ounces, as, following the sale of Rustenburg, production there has been treated as purchase of concentrate (which increased by 93%) rather than own mined production (which decreased by 26%).

    Nickel production decreased by 12% to 9,900 tonnes due to unplanned maintenance of Barro Alto's electric furnaces, impacting throughput.

    Analysts at Deutsche Bank had forecast Anglo would maintain copper volume flat, platinum production to be down 5%, iron ore down 14%, diamond production to remain flat and metallic coal production to be down 7%.
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    Trump to set new executive orders on environment, energy this week

    U.S. President Donald Trump this week will sign new executive orders before he completes his first 100 days in office, including two on energy and the environment, which would make it easier for the United States to develop energy on and offshore, a White House official said on Sunday.

    "This builds on previous executive actions that have cleared the way for job-creating pipelines, innovations in energy production, and reduced unnecessary burden on energy producers," the official said on condition of anonymity.

    On Wednesday, Trump is expected to sign an executive order related to the 1906 Antiquities Act, which enables the president to designate federal areas of land and water as national monuments to protect them from drilling, mining and development, the source said.

    On Friday, Trump is expected to sign an order to review areas available for offshore oil and gas exploration, as well as rules governing offshore drilling.

    The new measures would build on a number of energy- and environment-related executive orders signed by Trump seeking to gut most of the climate change regulations put in place by predecessor President Barack Obama.

    A summary of the forthcoming orders, seen by Reuters, say past administrations "overused" the Antiquities Act, putting more federal areas under protection than necessary.

    Obama had used the Antiquities Act more than any other president, his White House said in December, when he designated over 1.6 million acres of land in Utah and Nevada as national monuments, protecting two areas rich in Native American artifacts from mining, oil and gas drilling.

    The summary also says previous administrations have been "overly restrictive" of offshore drilling.

    Late in Obama's second term, he banned new drilling in federal waters in parts of the Atlantic and Arctic Oceans using a 1950s-era law that environmental groups say would require a drawn out court challenge to reverse.

    Interior Secretary Ryan Zinke said during his January confirmation hearing that Trump could “amend” Obama’s monument designations but any move to rescind a designation would immediately be challenged.

    Last month, Trump signed an order calling for a review of Obama's Clean Power Plan, and reversed a ban on coal leasing on federal lands.

    In addition to the energy-related orders, Trump is also expected this week to sign an order to create an office of accountability in the Veterans Affairs department.

    He is also expected to create a rural America interagency task force to recommend policies to address issues facing agricultural states.
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    BMI expects gradual price recovery for industrial metals

    Since bottoming out in early 2016 and staging an impressive, albeit largely speculative, rally over the past year-and-a-half, industrial metals will experience a gradual price recovery over the coming years, as improving fundamentals support a stabilisation, rather than rebound, in prices, research firm BMI said on Friday.

    The traditional bellwether metal, copper, was expected to most closely follow this narrative, with BMI forecasting a 12.9% year-on-year price increase for this year.

    Meanwhile, BMI noted that steel and iron-ore prices would remain relatively weaker, as years of oversupply and slowing Chinese consumption growth provided limited upside pressure.

    “Although steel prices will return to a modest uptrend beyond 2018, the global long-term outlook for steel demand remains comparatively downbeat, as rising efficiency reduces overall consumption and the acceleration of Chinese economic rebalancing limits upside potential,” it pointed out.

    On the other hand, while zinc's outperformance is no surprise, given the constrained ore supply, tin and lead prices will also prove particularly resilient.

    “We forecast tin and lead prices to increase by an average of 4.7% and 4.3% yearly over 2017 to 2021, respectively.”

    The global tin market is expected to experience significant tightening over the coming years, on both the supply and demand side, posting the largest decline in stock-to-use ratio from 15.5% in 2016 to 6% by 2021.

    “Specifically, tin's versatility and use in multiple sectors, such as electronics manufacturing and chemicals, will sustain demand for the metal over a multidecade horizon, while depleting ore reserves and a sparse global project pipeline will curb tin supply,” BMI said.

    BMI further pointed out that it expected lead prices to rise and average above-consensus at $2 300/t by 2021, as the global market deficit widens further, reflected in the low stock-to-use ratio forecast of 3.1% by 2021.

    Deficits will be due to stagnating production growth from major producers and more resilient consumption growth, driven by the automotive sectors in key markets, such as India and China.
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    Inspection: 62% of Beijing, Tianjin, Hebei enterprises fail to meet environmental standards

    On April 19, China's Ministry of Environmental Protection (MEP) released the results of an inspection on air pollution control, which included enterprises in Beijing, Tianjin, Hebei and their surrounding areas. A total of 62.6 percent of the inspected enterprises, or 248 out of 396 companies, failed to meet stated environmental protection standards.

    According to the MEP, among the unqualified enterprises, 27 failed to install pollution-reducing facilities, and 21 had devices that were not functioning properly. In addition, two companies failed the inspection because of issues related to volatile organic compounds (VOC).

    During the inspection, some enterprises were found to have faked monitoring data. For instance, a cement factory in Zibo, Shandong province fudged its overall area, impairing the accuracy of emissions figures reported to its online monitoring system. Other companies manually interfered with monitoring devices to alter data.

    The MEP said its inspection teams have transferred these cases to related local departments for further investigation.
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    Historian says 'change'.

    By  Ben Sasse252 COMMENTS

    I am a historian, and that usually means I’m a killjoy. When people say we’re at a unique moment in history, the historian’s job is to put things in perspective by pointing out that there is more continuity than discontinuity, that we are not special, that we think our moment is unique because we are narcissists and we’re at this moment. But what we are going through now—the past 20 or 30 years, and the next 20 or 30 years—really is historically unique. It is arguably the largest economic disruption in recorded human history. And our politics are not yet up to the challenge.

    Attached Files
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    Cyber Attacks?

    A series of subsequent power outages in Los Angeles, San Francisco, and New York City left commuters stranded and traffic backed up on Friday morning. Although the outages occurred around the same time, there is as of yet no evidence that they were connected by anything more than coincidence.

    The first outage occurred at around 7:20 a.m. in New York, when the power went down at the 7th Avenue and 53rd Street subway station, which sent a shockwave of significant delays out from the hub and into the rest of the subway system. By 11:30 a.m. the city’s MTA confirmed that generators were running again in the station, although the New York subways were set to run delayed into the afternoon.

    Later in the morning, power outages were reported in Los Angeles International Airport, as well as in several other areas around the city.

    Via : Inverse

    The San Francisco Fire Department was responding to more than 100 calls for service in the Financial District and beyond, including 20 elevators with people stuck inside, but reported no immediate injuries. Everywhere, sirens blared as engines maneuvered along streets jammed with traffic.

    Traffic lights were out at scores of intersections, and cars were backing up on downtown streets as drivers grew frustrated and honked at each other.

    Via: SF Gate

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    Oil and Gas

    Good Fiction from the Oil Market.

    Image title
    So who cares about 1mbpd per quarter revisions?
    Image title
    Oops! We can't add up. Image title
    Who know what the shale is producing, we don't!

    Image title1mbpd here, or there, does it really matter? 

    Image titleOk, so now you are used to throwing a 1mbpd around, how about 4? Image title
    Oh, and we will just quietly triple our forecast of shale output. You don't mind do you?
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    Shale investments have surged by $100 billion, Rystad says

    Ever since OPEC began cutting oil production, drilling in the United States has surged.

    Norwegian consultancy Rystad Energy estimates $100 billion in investment funds has flowed into the U.S. shale industry over the past year, propping up domestic drilling by 60 percent. So-called completion activity – procedures like hydraulic fracturing that stimulate shale wells – has gone up 30 percent, Rystad said.

    And there’s no sign things will slow down. Shale investments could climb another 50 percent this year, Rystad analyst Espen Erlingsen said in a written statement.

    Rystad believes daily U.S. oil production could jump from 8.9 million barrels in November to 9.3 million barrels next month, getting ever closer to the nation’s recent peak of 9.6 million barrels in mid-2015.
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    Patterson-UTI losses narrow in first quarter as rigs jump

    Houston rig contractor Patterson-UTI narrowed its losses in the first quarter as its active U.S. rig fleet climbed by nearly a quarter.

    The company lost $63.5 million,  or 40 cents a share, in the January-March period, compared to a loss of $70.5 million,  or 48 cents a share, in the same three-month period last year. Revenues increased to  $305 million from $269 million.

    Patterson-UTI recently closed its $1.8 billion purchase of Seventy Seven Energy, which operates scores of rigs and pressure pumping equipment used to punch openings into oil-soaked rock underground.

    The contractor said it expects its U.S. rig  count to increase from an average 81 in the first quarter to an average of 96 in April. Still, even as oil companies order more rigs, Patterson’s rig day rates edged lower by 2 percent to $21,200
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    Two Shale Companies in Two Parts of the Country with the Same Set of Keys

    Design and consolidation driving returns

    EQT Corporation (ticker: EQT) and QEP Resources (ticker: QEP) each released first quarter earnings today, giving a snapshot of U.S. shale in 2017.

    EQT reported net earnings of $164 million, or $0.95 per diluted share, up from earnings of $5.6 million in Q1 2016. QEP reported net income of $76.9 million, $0.32 per diluted share, which vastly exceeds the $863.8 million loss the company reported this time last year.

    Completion design continues to improve

    Both companies, heavyweights in their respective basins, report recent fracture and well design improvements are boosting returns.

    Analyst Commentary

    Marcellus driller EQT recently increased its EUR estimate in the core Marcellus by 14% to 2.4 Bcfe/1,000’. The company reports that this is the result of frac design enhancements, which increased sand and water per foot of pay.

    Permian/Williston driller QEP is currently testing several different density designs that may allow more wells per section. One potential design is the “tank-style” completion. This involves separating the potential wells in a section into two “tanks,” one tank consists of all wells in the Middle Spraberry and Spraberry Shale, the other consists of wells in the Wolfcamp A and B.

    Under this completion design, every well in one tank is drilled and completed before any of these wells is put on production. Additionally, wells closest to offset producing wells are completed first. QEP believes that this process of completing wells creates less interference and shorter shut-in times for offset producing wells. Additionally, results from the newly drilled wells are improved due to a larger stimulated rock volume.

    Consolidation driving long-term improvements

    EQT is looking to other improvements for long-term advantages, however. While improvements to drilling and completing processes certainly lower the per-unit price of gas produced, they do not confer sustained advantages. Steven Schlotterbeck, EQT CEO, commented on this dynamic, saying “these improved techniques are easily transferred between producers, and the advantages gained are short-lived as other producers adopt the same best practices. So while our development operating costs have improved dramatically, the economic value added has not increased in concert, as the supply of gas increased, pushing gas prices down.”

    With this in mind EQT is looking to consolidate acreage, thus giving the company several advantages. “This consolidation will drive longer laterals,” Schlotterbeck said, “more wells per pad, improved water and operating logistics and more efficient gathering and transmission pipelines. These advantages will be more difficult to replicate and the consolidators will hold a competitive advantage that will yield higher returns for their shareholders. I think further consolidation within the Marcellus core is the best path to creating a sustained competitive advantage, increasing shareholder value.”

    QEP reports similar activities in its core Permian assets. According to Charles Stanley, QEP Chairman, President and CEO, the company is continuing to “optimize our acres position in the Permian Basin through the first quarter. We acquired additional acreage during the quarter and we continue to swap acreage with offset operators with a focus on maximizing the number of long laterals that we can drill on both blocks. Our A&D team continues to evaluate asset packages in and around our core Midland Basin and our Williston Basin assets as we look to increase our footprint in both of these prolific oil basins.”

    Attached Files
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    Whiting Economic at $40: Volker

    Focused on completions: 233 wells will be completed in 2017

    Whiting Petroleum announced first quarter results yesterday, showing a net loss of $87 million, or ($0.24) per share. After adjusting for impairments, derivative losses and other special charges, Whiting reported an adjusted loss of $54.2 million for the quarter.

    Overall, Whiting had a successful three months:

    Average production in Q1 was 117,360 BOEPD, which is at the high end of previous guidance.
    LOE, G&A and interest expenses were at the low end of guidance.
    DD&A per BOE and oil price differentials were actually below the low end of guidance, primarily due to additional infrastructure in the Williston basin driving down transport differentials.

    Williston basin enhanced completions find success

    Whiting is primarily focused on activities in the Williston Basin, where the company owns more than 443,000 net acres. Whiting’s Williston production averaged  109,125 BOEPD this quarter, 93% of total production.

    Analyst Commentary

    The company recently completed three wells at the Loomer pad, a location significantly west of previously reported enhanced completions in McKenzie County. These wells used more frac stages, diverter agents, and additional sand. Whiting reports that on average the three wells are tracking a 1.5 MMBOE type curve.

    This success suggests that the enhanced completion design can be implemented across the majority of the company’s Williston basin acreage. Current plans are to use this design on wells going forward, and test still higher sand volumes.

    Redtail: 105 drilled uncompleted wells will be completed; second frac crew mobilized

    Whiting has operations in the Redtail field of the DJ Basin, where it owns about 132,400 net acres. While the Redtail field only contributes 6% of current production, Whiting has plans to increase this share. The company intends to complete its entire DUC inventory in the field, 105 wells, this year. The company recently brought a second frac crew online to help accomplish this goal.

    In total, Whiting spent $186 million in CapEx in Q1 to complete 48 gross wells. In 2017 the company plans to spend $1.1 billion, meaning that spending will be backloaded. James Volker, Whiting President and CEO, mentioned that 70 wells will be completed in the first half of 2017, while 163 will be completed in the second half.

    Q&A from WLL Q1 2017 conference call

    Do you need $55 oil?

    Q: It seems that just speaking to some investors, they believe that much of your 2017 plan’s success relies on the $55 or higher oil. Could you address what you believe how the plan would fare in sort of a $45 to $55 range? I mean, by my judge, it looks like the economics are still quite good and the activity should be good. But I’d just like to hear your color on it.

    James J. Volker: Our activity is designed to take us forward even at a $40 oil price environment. So, I would say we certainly wouldn’t consider cutting back until the trend got below $45. And I see everything that we’re doing in 2017, and for that matter, what we planned in 2018 already as being very economic even at $40 or $45 oil.

    Q: So, you’d go forward – tackling the DUCs and everything, you would go forward with that?

    James J. Volker: Absolutely. We have flexibility should something untoward happen, should oil prices, I’m going to say consistently go below 45 and maybe you can get below 40, something like that. We have plenty of flexibility to do that. We’re running, I’ll say, only six rigs, five in the Bakken, one at Redtail. We recently renewed three rigs at day rates that are almost $10,000-a-day lower than the prior rates. And we’re able to do that with extensions of the rig contracts of only 6 to 12 months.
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    Suncor evaluates potential oil-sand deals as global majors exit

    Suncor Energy Inc , Canada's largest energy producer, is still evaluating opportunities for oil sands acquisitions in northern Alberta as foreign oil majors exit the high-cost region, Chief Executive Steve Williams said on Thursday.

    However, the company has a high bar in terms of return on investments and did not feel any pressure to agree on another oil sands deal, Williams said.

    International players are selling their stakes in oil sands projects because of factors such as weak global crude prices, the higher cost of operations compared with U.S. shale plays, and limited export pipeline capacity out of western Canada.

    Williams said there are a number of companies that have talked about an interest to move away from Canada's oil sands.

    "I have heard Total talk about their share, I have heard BP talk about their share, I have heard Chevron talk about their share, so there are potential opportunities there," he told reporters after Suncor's annual general meeting in Calgary.

    Reuters has reported that BP Plc and Chevron Corp are weighing selling their stakes in the sector.

    Total owns 29.2 percent of the Fort Hills oil sands mining project, in which Suncor is majority owner and Teck Resources owns the other 20 percent. Williams said at the right price it might be possible to buy a greater stake in Fort Hills but that was not top of his agenda.

    Suncor bought Canadian Oil Sands and Murphy Oil's stake in the Syncrude project last year, making it the majority owner of the 350,000-barrel-per-day project.

    This year, Royal Dutch Shell, ConocoPhillips and Marathon Oil Corp have dumped about $22.5 billion worth of oil sands assets.

    "The exodus from oil sands by a lot of the big international companies I don't think is quite finished yet so there may well be some incredible opportunities," Williams said, speaking on Suncor's first-quarter earnings call earlier on Thursday.

    "I don't think there are many companies out there now with the balance sheet capable of purchase," he added, referring to potential buyers.

    Some Canadian energy industry players also say they see a limited pool of oil sands buyers and prices could move lower in response.

    The sector is becoming concentrated in the hands of a few domestic companies, such as Suncor, Cenovus Energy and Canadian Natural Resources Ltd.

    Williams said the oil sands required focused operators with deep expertise to develop technology and ensure global competitiveness.
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    U.S. refiners bet on strong exports to balance market

    U.S. refiners have come out of maintenance season betting that big exports to Mexico and South America will help alleviate high product inventories and boost margins as the critical summer driving season nears.

    The first wave of earnings results from several large independent U.S. refiners showed that they are not chasing U.S. gasoline profits, due to already high inventories and steady-but-not-spectacular demand. Instead, they are taking advantage of demand from places like Mexico and South America, where sputtering local refineries cannot meet customer needs.

    Marathon Petroleum Corp (MPC.N), which just completed its largest-ever quarter of turnaround projects at its three Gulf Coast refineries, expects to process more crude than ever in the second quarter, the company said in its earnings release on Thursday.

    "The export book continues to be strong," Marathon CEO Gary Heminger said Thursday, noting that he expects company exports to grow from about 200,000 bpd earlier this year to 300,000 bpd in the second quarter. It is expected to process about 1.82 million bpd in the second quarter.

    Valero Energy Corp (VLO.N), the largest U.S. independent refiner by capacity, said it expected its 15 refineries to run up to 96 percent of their combined capacity of 3.1 million barrels per day (bpd) in the second quarter.

    There is concern, however, that high run rates might exceed the ability of refiners to export products. U.S. gasoline inventories, which had been drawing down, have rebounded to uncommonly high levels for the season, sapping refining margins.

    Jack Lipinski, CEO of CVR Energy Inc (CVI.N), said he fears a repeat of last year, when high inventories crushed margins. The company's two refineries are landlocked and have no direct access to export markets.

    "Even though we are seeing exports increasing, the increase in production is offsetting that," Lipinski said on an earnings call Thursday.

    Refinery crude runs USOICR=ECI hit a record 17.3 million bpd last week and capacity utilization rates hit their highest level since November 2015. [EIA/S]

    "Right now, we are running at summer peak levels. If we stay at this level for several months, rising inventories will overwhelm exports," said Mark Broadbent, a refinery analyst at Wood Mackenzie. "If we stay at lower levels, then exports can help balance inventories."

    The four-week average for exports of finished motor gasoline jumped to 643,000 bpd from 395,000 bpd a year ago while exports of distillate fuel oil climbed to 1.11 million bpd versus 1.01 million bpd a year earlier, EIA data showed.

    However, March's middle distillate export loadings were at an 11-month low, while gasoline export loadings to Latin America have been anchored in the 600,000-bpd range for the past couple of months, said Matt Smith, who tracks cargoes for New York-based Clipperdata.

    U.S. refiners, particularly in the Gulf Coast, have cashed in on soaring demand for refined products from Mexico, even as margins CL321-1=R have languished at the lowest levels in about seven years seasonally.

    The silver lining has been diesel markets. East Coast refiners are stepping up exports of diesel despite a regional deficit of the fuel as strong overseas demand, particularly in Europe, is proving more profitable.

    "It's a distillate world out there," said Scott Shelton, energy futures broker with ICAP in Durham, North Carolina. He said ultimately the narrowing in gasoline's premium to diesel RBc1-HOc1 should prompt more diesel refining, tightening gasoline supplies. That spread hit a four-year seasonal low on Thursday.
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    Australia backs off tax push against oil and gas industry

    The Australian government said on Friday it won't revise up petroleum taxes in next month's federal budget, allaying industry fears after it last year raised concerns about declining tax revenues.

    The decision will come as a relief to oil and gas producers, who have been battling a collapse in prices after spending $180 billion on mega projects to produce liquefied natural gas (LNG).

    The government said last November that takings from the nation's petroleum resource rent tax (PRRT) had halved to A$800 million ($600 million) since 2013, while revenue from crude oil excise taxes had more than halved due to a slump in oil and gas prices and falling output.

    A review concluded on Friday that the PRRT, a tax based on profits from oil and gas production on- and offshore Australia, should be revised for new projects, but not existing ones, and only following talks with the industry.

    "The report finds the decline in PRRT revenue does not, in itself, indicate the Australian community is being shortchanged in receiving an equitable return from the development of its resources," Treasurer Scott Morrison said in a statement.

    The review said no changes were needed to the crude oil excise or Commonwealth royalty scheme.

    Major oil and gas producers and the Australian Petroleum Production and Exploration Association were all vehemently opposed to changes to the tax regime.
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    Libyan oilfields restart...

    Oil prices fell on Thursday after news that two key oilfields in Libya had restarted, pumping crude for export into an already bloated market.

    Libya's Sharara oilfield, with a production capacity of almost 300,000 barrels per day (bpd), has restarted after the end of protests by an armed group that had blocked pipelines there, a Libyan oil source and local official said on Thursday.

    The oil source said El Feel oilfield, with a capacity of about 90,000 bpd, had also restarted.

    OPEC is discussing extending its cuts into the second half of the year, but the group has an uphill task.

    U.S. data on Wednesday showed a drop in crude stocks, but gasoline inventories surged as refiners produced more fuel than the market could consume.

    "U.S. commercial stocks increased by more than 6.5 million barrels last week," said Tamas Varga, senior analyst at London brokerage PVM Oil Associates. "Stock rebalancing has been put on hold as U.S. commercial oil inventories have jumped."

    Rystad Energy expects U.S. shale oil output to grow by 100,000 bpd each month for the rest of this year and into 2018 if oil prices hold around $50-$55 a barrel, well above estimates by the U.S. Energy Information Administration for monthly gains of about 29,000 bpd in 2017 and 57,000 bpd in 2018.
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    Total’s profit, LNG sales up in Q1

    Total’s profit, LNG sales up in Q1

    French gas and oil giant Total reported a 56 percent jump in its adjusted net income during the first three months of 2017.

    According to the company’s quarterly report, the adjusted net profit reached US$2.6 billion compared to $1.6 billion in the corresponding period in 2016.

    Commenting on the results, Total’s chairman and CEO Patrick Pouyanne said, “Brent prices remained volatile in the context of high inventories and averaged $54 per barrel this quarter.”

    However, he added that the rise in profit is due to good operational performance and a “steadily decreasing breakeven.”

    Hydrocarbon production was up 4 percent reaching 2.57 billion barrels of oil equivalent per day during the quarter under review, mostly due to project ramp-ups, “notably Kashagan, Laggan-Tormore, Surmont, Incahuasi and Angola LNG.”

    LNG sales jump

    Paris-based Total posted an increase of 11 percent in its first-quarter liquefied natural gas (LNG) sales.

    Total said it sold 2.98 million mt of chilled gas in the quarter, as compared to 2.69 million mt in the same period in 2016.

    Argentinian shale gas development

    Total said it has sanctioned the development of the first phase of the operated Aguada Pichana Este license in the giant Vaca Muerta shale play in Argentina.

    In addition, the company intends to increase its interest in the license from 27.27 percent to 41 percent.

    Gas production from the project will be treated at the existing Aguada Pichana gas plant which will thus reach its full capacity of 16 million cubic meters per day (100,000 barrels equivalent per day).

    As part of the project, the Aguada Pichana partners (Total Austral 27.27 percent, YPF 27.27 percent, Wintershall Energia 27.27 percent and Panamerican Energy 18.18 percent) have entered into a memorandum of understanding that includes an increase of Total’s participation to 41 percent in the Aguada Pichana Este project being developed.

    French energy company Total gave the go-ahead on Thursday to develop its first major project since 2014 after reporting a sharp rise in quarterly profit that underscored its drive to cut costs throughout the oil price downturn.

    Total and its peers including Royal Dutch Shell and Exxon Mobil are cautiously refocusing on growth after years of slashing spending, which involved cutting thousands of jobs and scrapping major projects.

    Total, France's largest company, kickstarted the sector's first-quarter earnings reporting with an upbeat tone, as its adjusted net profit surged 56 percent to $2.6 billion compared with the same period of 2016.

    Analysts had forecast Total's net adjusted profit at $2.4 billion in the quarter. Brent crude prices rose 58 percent during the period.

    "No question Total is through the worst of it and in a sweet spot," said Bernstein analyst Oswald Clint, who rated Total as "market-perform", saying he saw better returns at peers including Shell.

    Total said it had approved the development of its Aguada Pichana Este project in the Argentine Vaca Muerta shale gas site, and had increased its stake in the license to 41 percent from 27 percent.
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    China sets deadline for refiners to apply for oil import permits

    China's top state planner will stop accepting new applications from oil refiners to use imported crude oil from May 5, it said on Thursday, amid growing concerns about domestic refining overcapacity that has led to record exports of fuel.

    China has allowed 22 independent refiners to import crude oil since 2015 with quotas totalling 81.93 million tonnes, or 1.64 million barrels per day, making up 12 percent of the country's total crude oil imports, according to China Petroleum and Chemical Industry Federation (CPCIF).

    Harry Liu, oil analyst with consultancy IHS Markit, said the planner may have set a target of allowing in a total of 2 million bpd quotas to independents, a level expected to be met with those that have already applied before the May 5 deadline.

    "The policy, which is quite expected, also sends the signal that the government is not going to encourage independent firms to add new crude processing capacities," said Liu.

    The National Development and Reform Commission (NDRC) did not say in the statement whether it was referring to state-owned or independent refiners, unsettling an already jittery industry after a series of trade policy changes from Beijing in recent months.

    The limits, however, do not apply to large state refiners like PetroChina or Sinopec as they typically do not need quotas to import crude oil.

    "NDRC is pretty cautious in giving more import quotas because they are concerned about the fuel glut in the domestic market," said a manager at an independent refiner in the city of Zibo in Shandong province. The majority of the independent refiners operate in Shandong on China's east coast.

    He reckons he will not be affected by the deadline as he has filed for an import permit, but it could trigger a flurry of applications over the coming week.

    In a report published on Wednesday on the industry federation's website, CPCIF warned of worsening overcapacity in the refining industry which has led to net fuel exports expanding at 40-50 percent per annum over the past few years.

    The surplus capacity is expected to rise to 110 million tonnes, or 2.2 million bpd, by 2020 under a base scenario, and net fuel exports to top 50 million tonnes, or 15 percent of the total fuel produced, resulting in China overtaking South Korea and India as Asia's largest fuel exporter, said the association.

    Attached Files
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    Marathon Petroleum posts surprise profit as pipeline unit delivers

    Marathon Petroleum Corp reported a surprise quarterly profit on Thursday as the refiner earned more from its pipelines and storages business.

    Income from the company's midstream business rose 63.5 percent to $309 million in the first quarter ended March 31.

    The company also said it earned more from its stakes in new and existing pipeline and marine operations.

    Operating loss in its refining and marketing segment narrowed as margins rose 18 percent to $11.65 per barrel.

    Brokerage Barclays had estimated refining margins of $10.30 per barrel.

    Marathon, whose operations are primarily in the U.S. Midwest, Southeast and Gulf Coast, processed less crude oil due to higher turnaround activity, or scheduled events where an entire unit is taken offstream for an extended period for a revamp or renewal.

    Total throughput fell 3.7 percent to 1.71 million barrels per day in the first quarter.

    The turnaround also pushed up refinery direct operating costs by 16.5 percent to $9.45 per barrel.

    Crude oil capacity utilization was 83 percent in the latest quarter, down from 93 percent in the fourth quarter.

    The net profit attributable to the company rose to $30 million, or 6 cents per share, in the first quarter, from $1 million, or less than 1 cent per share, a year earlier.

    The year-ago quarter included 6 cents per share in charges, mainly related to a goodwill impairment recorded by MPLX LP, MPC's consolidated subsidiary.

    Excluding items, the company earned 6 cents per share.

    Analysts' on average had expected a loss of 5 cents per share, according to Thomson Reuters I/B/E/S.

    Revenue and other income rose 27.8 percent to $16.39 billion, beating analysts' estimate of $15.43 billion.

    The company said in February that it would speed up the transfer of some assets to and that a special committee was reviewing retail business Speedway's divestiture, after pressure from hedge fund Elliott Management to boost its stock price.
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    BP says to dispose interest in SECCO to Sinopec for $1.68 bln

    * BP agrees sale of interest in SECCO to SINOPEC

    * Consideration of sale of interest in SECCO to SINOPEC $1.68 billion

    * SECCO is currently owned by BP (50%), SINOPEC (30%) and Sinopec Shanghai Petrochemical Company Limited (20%), in which Sinopec holds a majority interest

    * Intends to use proceeds from disposal, most if not all of which are anticipated to be received in 2017, for general corporate purposes

    * Tansaction is subject to a number of regulatory approvals and other conditions, subject to which, it is currently anticipated to complete before end of year
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    Gazprom’s net profit climbs to nearly $17 billion, LNG sales up 4 pct

    Russian energy giant Gazprom said Thursday its net profit rose 21 percent last year as it benefited from lower costs and a stronger rouble.

    Moscow-based Gazprom posted a net profit of 951.64 billion roubles ($16.7 billion) in 2016 as compared to 787.06 billion roubles the year before.

    Gazprom said has reduced its net debt by 7 percent in 2016 to 1.93 trillion roubles.

    This decrease resulted from lower borrowings denominated in Ruble terms due to the depreciation of US Dollar and Euro, it said.

    Gazprom’s natural gas supplies to Europe and Turkey reached an all-time high of 179 billion cubic metres last year.

    The Russian company is Europe’s largest supplier of natural gas and generates more than a half of its revenue from selling gas to Europe.

    LNG sales rise

    Gazprom’s sales of liquefied natural gas (LNG) rose by 4.1 percent year-on-year to 3.71 million mt (4.94 bcm), the company said.

    In 2016, Japan remained the key destination for LNG supplies in Gazprom’s trading portfolio, accounting for about 45% of total LNG sales.

    LNG shipments to Taiwan increased considerably, while LNG cargoes to Mexico and the UAE resumed for the first time after a long interruption, the company added.
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    Saudis losing market share to Iran, Iraq on oil cuts

    Saudi Arabia, the world’s biggest crude exporter, is losing market share to Iraq and Iran as a result of OPEC’s agreement to curb supplies to bolster prices, according to the head of research at Abu Dhabi Investment Authority.

    “If you’re talking about winners, you can count Iran and Iraq,” Christof Ruehl said Wednesday at a conference in Dubai.

    The Organization of Petroleum Exporting Countries agreed to production limits for most of its members at a meeting in November and brought 11 other nations on board with the deal in December. Saudi Arabia, OPEC’s biggest producer, agreed to cut output by 486,000 barrels a day while Iraq said it would cut 210,000 barrels a day. Iran was permitted to increase output by 90,000 barrels a day, according to the OPEC accord.

    Iran has boosted production in part due to the end of sanctions restricting its oil sales in January 2016, while Saudi Arabia has made more than its share of output cuts, said Ruehl, who previously worked as BP Plc’s chief economist. ADIA is the sovereign wealth fund in Abu Dhabi, capital of the United Arab Emirates and holder of most of the country’s oil reserves.

    Saudi Arabia knew it would lose share because Iran’s production was on the rebound, said Robin Mills, founder of Dubai-based consultant Qamar Energy. “The Saudis agreed to production cuts at a time when Iranian production was at a high.”

    Brent crude slipped 20 cents, or 0.4 percent, to $51.62 a barrel at 9:29 a.m. in Dubai. The the global benchmark plunged from its 2014 high of more than $115 a barrel amid a global supply glut.

    There seems to be a consensus that the effort to curb supply should be extended, Saudi Minister of Energy and Industry Khalid Al-Falih told reporters Wednesday in Baku, Azerbaijan. Al-Falih said he’ll talk with his Russian counterpart Alexander Novak by phone this week and meet him within the next two weeks.

    Saudi Arabia cut production from about 10.5 million barrels a day in December to as low as 9.87 million daily in January and 10 million a day last month, according to data compiled by Bloomberg. Iran’s output rose to 3.8 million barrels a day in January, the highest since April 2010, the data show. Iran insisted it needed to recover its market share following years of sanctions that penalized its oil industry. Neighboring Iraq pumped 4.43 million barrels a day in March, down 200,000 barrels for the year, according to the data.

    The struggle over market share is most pronounced in Asia, according to Mills and Edward Bell, commodities analyst at Dubai-based lender Emirates NBD PJSC. Iran and Iraq increased crude sales to China last month, while Saudi Arabia slipped behind Russia and Angola as the largest suppliers to the nation, data released Tuesday by the General Administration of Customs show.

    “The Saudis are losing out because other countries are able to squeeze out more production,” Bell of Emirates NBD said. Saudi Arabia is cutting crude pricing to Asia to hold on to its share, Bell said. The kingdom will likely release its official crude pricing for June next week, with most other regional producers following.

    “The OPEC market share battle hasn’t gone away,” he said.

    Attached Files
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    Argentina sees Vaca Muerta investment reaching up to $8 billion this year

    Investments of between $6 billion and $8 billion in Argentina's Vaca Muerta shale field have been confirmed in 2017, Energy and Mining Minister Juan Jose Aranguren said on Wednesday.

    The country expects between $12 billion and $15 billion in investments in 2018 and $20 billion annually from 2019 onward, he said. Aranguren and President Mauricio Macri sought to woo oil executives in meetings in Houston ahead of Macri's trip to Washington to meet with President Donald Trump.

    Roughly the size of Belgium, Vaca Muerta is one of the world's largest shale gas reserves but has remained mostly undeveloped due to high production costs and a lack of labor flexibility.

    Macri has sought to attract investment since taking office in late 2015, and earlier this year sealed a deal with unions and oil companies including Chevron Corp and Royal Dutch Shell Plc to guarantee investments in exchange for greater labor flexibility and wellhead price subsidies.

    The uptick in investment would come as companies transition from pilot projects to the development phase, Aranguren told reporters. There are 700 unconventional wells drilled in Argentina, which Aranguren said would likely increase by a factor of 10 when projects move to development.

    Aranguren added that next Tuesday, the government will sign another deal with oil worker unions, this time in the country's Chubut province, to stimulate production in the San Jorge Gulf play.

    "The goal of the deals with the unions is to push pilot projects into the development phase, to stimulate production to substitute imports," Aranguren said.

    Once a natural gas exporter, Argentina now imports around 25 percent of its needs, including some costly liquefied natural gas imports, a major contributor to its gaping fiscal deficit. That came after years of stagnant production as consumption remained high.

    Of the 18 projects under way in Vaca Muerta just two - a joint venture involving state-owned YPF SA and Chevron, and one between YPF and Dow Chemical Co - have advanced to the development stage, Aranguren said, adding that a pilot project operated by Tecpetrol SA was close to reaching development.

    Beyond Vaca Muerta, Aranguren said Argentina would grant permission to explore to any interested company. Firms that discover viable reserves would then have to seek approval from the relevant province to produce the oil.

    That comes after Norway's Spectrum ASA said last week it was conducting a seismic study of under-explored offshore areas with YPF.

    Attached Files
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    Anadarko to shut down 3,000 oil wells after fatal home explosion

    Anadarko Petroleum Corporation announced Wednesday afternoon that it will shut down 3,000 oil wells similar to the one 170 feet from a home in Firestone that was the site of an explosion and fire that claimed two lives last week.

    In a news release, the energy company did not definitively say the well is the cause of the explosion, which remains under investigation by the Colorado Oil and Gas Commission and Frederick-Firestone Fire Protection District and Firestone Police Department.

    The explosion leveled a home in the Oak Meadows subdivision near the intersection of Colorado and Firestone Boulevards the evening of April 17.  

    The bodies of 42-year-old Mark Martinez and his brother-in-law 42-year-old Joey Irwin III were later found in the basement.

    High school science teacher Erin Martinez was injured, as was her 11-year-old son, who was released from the hospital that same day. Mark Martinez is Erin Martinez's husband, and Irwin is her brother.  

    Anadarko says it operates an older vertical well that was drilled by a previous operator approximately 200 feet from the home.

    On Friday, investigators from the Frederick-Firestone Fire Protection District told 9NEWS they are “confident” about the cause, but will hold off on releasing it until they are 100 percent certain.

    Family members told 9NEWS they suspected something that went wrong with the water heater led up to the explosion and subsequent fire.

    Anadarko says it will shut down similar vertical wells in northeast Colorado until field personnel “can conduct additional inspections and testing of the associated equipment, such as facilities and underground lines associated with each wellhead.”

    The wells account for 13,000 net barrels of production each day, Anadarko said.

    They went on to say they will face “particular focus” on places where houses and commercial developments are being built.

    The company says this process could take two to four weeks, depending on weather.
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    Maiden Bakken oil cargo to Asia ships out, with more to come

    The first ever reported export of North Dakota's crude oil to Asia left port last month, according to a shipping document seen by Reuters on Wednesday, in what is expected to be the first of numerous cargoes once the key Dakota Access pipeline starts moving oil in May.

    Swiss-based Mercuria Energy Trading S.A. loaded more than 600,000 barrels of Bakken crude, as well as some Mars Sour crude, in late March off the coast of Louisiana onto the very large crude carrier (VLCC) Maran Canopus, destined for Singapore, according to the bill of loading and ship tracking data.

    The burgeoning appetite for U.S. crude among Asian refiners could be a boon for Bakken crude, especially when the Dakota pipeline starts up. That line can carry 470,000 barrels per day of oil from North Dakota's Bakken play to the Gulf, the starting point for the lion's share of U.S. oil exports.

    At least two Asian refiners told Reuters that they are interested in Bakken light crude because of the products it can yield through refining.

    "There seems to be increasing demand for light quality crude in Asia," said Michael Cohen, head of energy commodities research at Barclays. "I think with Dakota Access coming online, it makes the pipeline route from the Bakken to the Gulf Coast more economical."

    With the start of Dakota Access (DAPL), Bakken producers such as Hess Corp and Continental Resources for the first time will have a direct route to export terminals on the Gulf Coast, better connecting them to international markets.

    A year ago, Hess Corp sold Bakken crude out of the U.S. Gulf to Europe, the first reported export of the light North Dakota oil since Congress lifted the ban on exporting crude in 2015.

    "As DAPL opens up supply of Bakken crude to the U.S. Gulf Coast, we are looking at potential exports to customers in South America, Europe and Asia," said Lorrie Hecker, a spokeswoman for Hess.

    While new exports of Bakken could be a boon for North Dakota producers, they will also dump more U.S. crude into the global oil market at a time when OPEC and non-OPEC countries are seeking to lower worldwide inventories.

    U.S. production has increased by nearly 500,000 barrels a day so far in 2017, with current production of about 9.3 million bpd, per U.S. Energy Department figures.

    The Maran Canopus supertanker took oil in a ship-to-ship transfer from smaller Aframax vessels on five different occasions, according to data on Thomson Reuters Eikon. It left the Louisiana Offshore Oil Port for Singapore on March 29 at 96 percent filled.
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    Australia plans LNG export limits to help ease local price pain

    Australia's conservative government unveiled a radical plan on Thursday to restrict exports of liquefied natural gas (LNG) at times when domestic shortages push up local prices, aiming to ease soaring energy costs for local manufacturers.

    The plan would allow Australia's resources minister to impose controls on LNG exports on advice from the market operator and regulator, as the government seeks to cap domestic gas prices, which have become a political hot potato.

    "It's not a threat. This will be export controls. They will not be able to export gas if that has the consequence of reducing the availability of gas for the Australian market," Prime Minister Malcolm Turnbull told Australian Broadcasting Corp radio.

    Australia is the world's second-largest LNG exporter after Qatar, but local gas prices have rocketed over the past two years with the start of LNG exports from three newly built plants in eastern Australia to customers in China, Japan, Korea and Malaysia.

    The government's move drew a swift rebuke from gas producers, who called instead for curbs on onshore gas exploration to be lifted to help boost supply.

    "Restricting exports is almost unprecedented for Australia," said Malcolm Roberts, chief executive of the Australian Petroleum Production and Exploration Association.

    The Australian Energy Market Operator warned in March of a shortage set to hit eastern Australia and has already taken steps to ensure there is enough gas for power plants at peak times.

    At least one of the east coast LNG plants, Gladstone LNG (GLNG) - operated by Australia's Santos Ltd - is drawing gas out of the domestic market to help meet its export contracts.

    Santos said on Thursday it was seeking more details on how the new policy would work.

    "Moving forward, Santos will supp
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    Sanchez Energy Announces First Quarter 2017 Operating Results; Comanche Integration

    Sanchez Energy Corporation, today announced operating results for the first quarter of 2017.  Highlights include:

    As previously announced, Sanchez Energy along with Blackstone Energy Partners (“Blackstone”) in a 50/50 partnership closed the acquisition of working interests in approximately 318,000 gross operated acres in the Western Eagle Ford on March 1, 2017 (the “Comanche Transaction”), resulting in adding approximately 67,000 barrels of oil equivalent per day (“Boe/d”) of production, 300 million barrels of oil equivalent (“MMBoe”) of proved reserves, and 155,000 net acres;
    First quarter production, which includes one month of Comanche production, totaled approximately 4.6 MMBoe, or approximately 51,800 Boe/d, net of previously divested production which was approximately 3,700 Boe/d;
    With the closing of the Comanche Transaction and the ongoing production increase from legacy assets, the Company is currently producing at a record level of approximately 76,000 Boe/d;
    Completion operations on the large inventory of drilled but uncompleted (“DUC”) wells acquired in the Comanche Transaction began in early March 2017, with the first 9 DUC wells brought on-line in mid-April 2017;
    The Company has completed contracting of major services to support drilling plans and mitigate the risk of inflationary pressure on its cost structure, with sand, pressure pumping, and drilling rigs now contracted for the next two years;
    Drilling activity at Comanche currently consists of 3 rigs with 2 additional rigs planned in May 2017;
    The Company brought 14 wells on-line in the South Central region of Catarina in the first quarter 2017 using a new generation of frac design that is 60% larger than the previous design used in this region.


    “During the first quarter of 2017, we took a major step towards positioning Sanchez Energy among the leading producers in the Eagle Ford Shale,” said Tony Sanchez, III, Chief Executive Officer of Sanchez Energy.  “After months of careful planning and preparation, drilling and completion operations on the newly acquired acreage began quickly and efficiently after closing the Comanche Transaction on March 1, 2017.  Completion operations began at Comanche within days of closing the transaction, resulting in initial production from the completion of the first 9 DUC wells in only 45 days.  We are currently running 3 drilling rigs, 2 frac spreads, and 3 workover rigs at Comanche, with plans to add additional rigs and completion equipment as the year progresses. Production from the initial DUC wells that were recently completed has been strong and so far has exceed expectations.

    “In addition to assuming operations at Comanche, the Company brought 14 horizontal wells on-line in the South Central region of Catarina during the first quarter 2017.  These wells were completed with proppant loading of approximately 3,000 pounds per foot, which is 60 percent more proppant and fluids compared to our standard design.  The move to a larger completion design in the South Central region of Catarina stems from tests conducted in this area over the last year.  Based on the results of this testing, we anticipate the new design will result in a flatter decline profile with payout in as little as six months and performance that is roughly 25% better than our standard completion work after 6 months of operation.

    “As we make a step-change in our operational scale, we continue to maintain a focus on well costs.  Excluding the cost of the larger completion work we are realizing an average of 10 percent to 15 percent service cost inflation, which is in line with expectations.  That being said, we have now completed contracting of major services to support drilling plans for the next two years, with fixed price arrangements in place for sand, pressure pumping, and drilling rigs, among other services.  We believe these arrangements will allow us to maintain our cost structure and de-bundled approach to procurement despite the current pressure on the services market.”
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    Nigeria: Shell Reopens 225,000BPD Bonga Field After Maintenance

    Nigeria: Shell Reopens 225,000BPD Bonga Field After Maintenance

    Shell Nigeria Exploration and Production Company Limited (SNEPCo) has reopened the 225,000 barrel-per-day capacity Bonga deepwater oilfield after a turnaround maintenance, which ensured that statutory activities that would ensure continuous optimum operations at the field were executed.
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    No sign of oil policy reversal from Saudi Arabia after royal decrees

    Saudi King Salman's surprise decrees over the weekend that reinstated allowances and bonuses for public sector employees and military personnel is not a sign that the much heralded Vision 2030 economic reforms are being put aside, according to analysts and Saudi observers.

    But nor is the policy reversal evidence of any return to the kind of government largesse that some Saudis had become used to.

    Rather, the changes amounted to a recognition of a need to correct a year of austerity measures that hit too hard, as the kingdom struggled to adapt to lower oil prices.

    The king on Saturday also appointed several government officials seen as close to Vision 2030 champion and Salman's son, Deputy Crown Prince Mohammed bin Salman, which would appear to cement the ambitious economic reform plan.

    "Vision 2030 might be detoured from time to time but it represents Plans A, B and C for the government," said Matthew Reed, vice president at Washington-based Middle East consultancy Foreign Reports.

    "Most Saudis recognize the system needs fixing, that there is fat to cut. But last year, when state finances looked grim, Riyadh cut to the bone when it suspended benefits and bonuses. It was probably too deep," he added.

    Analysts said the decrees make it likely Saudi Arabia will support an extension of the OPEC/non-OPEC production cuts past their June expiry, given that the kingdom needs to continue supporting oil prices to sponsor the employee bonuses.

    OPEC along with 13 non-OPEC countries that agreed in December to cut a combined 1.8 million b/d will meet in Vienna on May 25 to discuss the deal.

    Oil prices are up some 11.5% since it was signed.

    The latest data from the General Authority for Statistics showed Saudi oil export revenues were up 75% year-on-year in February to Riyals 53.16 billion. That was up 21% since September when the austerity measures were taken.


    "The decision to reverse the civil service salary and benefit cuts ... will likely have the most significant implications for oil," said Helima Croft, an analyst with RBC Capital Markets, adding she expects Saudi Arabia to "anchor the extension" of the OPEC/non-OPEC deal.

    "The reversal shows the limits to austerity and, more importantly, increases the need for higher oil prices," she said.

    The government shake-up included the promotion of the deputy crown prince's elder half-brother, Prince Abdulaziz bin Salman the longstanding deputy oil minister, to the position of state minister for energy affairs.

    Prince Abdulaziz had been deputy oil minister since 1995, serving under Ali al-Naimi and current minister Khalid al-Falih.

    His new remit as a state minister and relationship to energy, industry and mineral resources minister Falih remains unclear, although a source familiar with Saudi thinking said there was "no hint of a policy change coming from this move".

    "He is equal in rank to Falih now, as a cabinet minister, whereas before he was vice minister," said the source, who spoke on condition of anonymity. "The two have a good working relationship".

    Falih, for his part, said the king's new appointments aimed to strengthen the country's leadership with "young blood".

    The royal decrees would "inject new energy in the arteries of the country," Falih said, as Saudi Arabia presses ahead with the Vision 2030 economic plan.

    A year ago, the 31-year-old deputy crown prince, known as MBS, announced Vision 2030, which he said would confirm the kingdom as "the heart of the Arab and Islamic worlds, the investment power house, and the hub connecting three continents".

    The plan seeks to delink the kingdom's economy from oil prices and open large swaths of it up to private investment through a raft of significant structural reforms that will be largely financed by a sale of up to 5% of state-owned oil company Saudi Aramco through an IPO.

    But, stung by stubbornly low oil prices from a global oversupply caused by the surge of US shale production as well as OPEC's Saudi-led pump-at-will market share policy, Riyadh last September slashed subsidies on a range of goods and services, as MBS cited the need to help balance the kingdom's books and wean the country off of its oil revenue dependence.


    The move raised the ire of many citizens, with some calling for protests.

    Saturday's decrees, which the government said were prompted by increased crude oil export revenues and a decline in the kingdom's budget deficit, reinstated state employee bonuses, with the first payments at the end of May.

    These include an extra two months' pay to troops stationed on the border with Yemen, where Saudi Arabia has been fighting a costly war since 2015.

    The announcement clearly showed the kingdom's need for the cushion of the welfare state to ease the impact of domestic fuel and electricity prices, as well as taxes, said Fareed Mohamedi, chief economist of energy consultancy Rapidan Group.

    Last year, Saudi "social media was alive with fear and criticism of the austerity policy of Mohammed bin Salman," Mohamedi said.

    While bonuses may have been reinstated, it is unlikely the government will go back on the subsidy cuts. In fact, most Saudis are waiting for further domestic fuel and electricity price rises in July.

    Increases of up to 40% had been widely expected to be included in the kingdom's 2017 budget late last year, but did not materialize.

    Instead, the government announced a few details of its planned economic reforms up to 2020, known as the Fiscal Balance Program which it hopes will save around Riyals 362 billion ($97 billion).

    The government is still establishing a mechanism, known as the Household Allowance Program, which will protect lower income households from any sharp jump in costs, and to avoid potentially undermining its unwritten social contract with Saudi citizens.

    If the increased fuel and power prices are confirmed, it would be the second major hike after the kingdom's dramatic change in policy last year.

    "Getting through the next two years without financial disruptions will be the key challenge for the regime," said Mohamedi, a former corporate adviser to Saudi Aramco from 2014 to mid-2016. "Thereafter, [market] balances will tighten and they will be more successful."
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    Novatek’s profit drops as revenue climbs

    Novatek of Russia on Wednesday reported a 38.7 percent drop in profit for the first quarter of 2017 due to the foreign exchange effect and the effect of the disposals of interests in joint ventures.

    First quarter net profit reached RR 71.0 billion (US$1.25 billion) as compared to RR 115.9 billion ($2.05 billion) during the corresponding quarter in 2016.

    The company’s revenue for the period rose by 11 percent to RR 154.6 billion, largely driven by the increase in natural gas sales volumes as well as the increase in liquids sales prices.

    Novatek’s natural gas sales volumes totaled 18.8 bcm, representing a 5.5 percent increase compared with the corresponding period in 2016, resulting from a higher demand for natural gas due to adverse weather conditions.

    As at the end of the first quarter 2017, the total amount of natural gas recorded as inventory totaled 130 mmcm compared to 429 mmcm as at the end of the first quarter 2016, Novatek said in its report
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    US lower 48 oil production up 20,000 bbls

                                                       Last Week  Week Before  Last Year

    Domestic Production'000........... 9,265           9,252           8,938
    Alaska ............................................... 523              530                513
    Lower 48 ...................................... 8,742            8,722           8,425
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    Summary of Weekly Petroleum Data for the Week Ending April 21, 2017

    U.S. crude oil refinery inputs averaged 17.3 million barrels per day during the week ending April 21, 2017, 347,000 barrels per day more than the previous week’s average. Refineries operated at 94.1% of their operable capacity last week. Gasoline production decreased last week, averaging over 9.7 million barrels per day. Distillate fuel production decreased last week, averaging about 5.1 million barrels per day.

    U.S. crude oil imports averaged over 8.9 million barrels per day last week, up by 1.1 million barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 8.1 million barrels per day, 4.9% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 916,000 barrels per day. Distillate fuel imports averaged 54,000 barrels per day last week.

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 3.6 million barrels from the previous week. At 528.7 million barrels, U.S. crude oil inventories are near the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 3.4 million barrels last week, and are near the upper limit of the average range. Both finished gasoline inventories and blending components inventories increased last week. Distillate fuel inventories increased by 2.7 million barrels last week and are in the upper half of the average range for this time of year. Propane/propylene inventories were unchanged from last week and are in the lower half of the average range. Total commercial petroleum inventories increased by 6.6 million barrels last week.

    Total products supplied over the last four-week period averaged over 19.5 million barrels per day, down by 2.2% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged over 9.2 million barrels per day, down by 1.8% from the same period last year. Distillate fuel product supplied averaged over 4.1 million barrels per day over the last four weeks, up by 4.5% from the same period last year. Jet fuel product supplied is up 0.9% compared to the same four-week period last year.

    Cushing down 1.2 mln bbls

    Attached Files
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    Cenovus Energy posts smaller-than-expected quarterly loss

    Canadian oil company Cenovus Energy Inc reported a smaller-than-expected quarterly loss as operating costs fell, while oil sands production rose.

    Oil and gas companies have sharply cut costs and have been consolidating assets following a two-year slump in crude prices.

    Cenovus last month agreed to buy most of ConocoPhillips' Canadian oil and gas assets in a C$17 billion deal that effectively doubled the size of the Canadian oil company.

    Cenovus, which has laid off nearly a third of its workforce since the end of 2014, said operating costs for its oil sands fell 6 percent to C$8.97 per barrel in the first quarter.

    The company said on Wednesday that operating margin was C$450 million, a three-fold increase from last year, helped by higher commodity prices.

    Total oil production rose about 19 percent to 234,914 barrels per day.

    The company's net profit was C$211 million ($155.54 million), or 25 Canadian cents per share, in the first quarter ended March 31, compared with a loss of C$118 million, or 14 Canadian cents per share, a year earlier.

    Operating loss was 5 Canadian cents per share, while analysts on average were estimating a loss of 8 Canadian cents per share, according to Thomson Reuters I/B/E/S.

    The Calgary, Canada-based company has lost nearly a fifth of its value since the deal with ConocoPhillips was announced in late-March.
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    Hess reports smaller loss on higher crude prices, lower costs

    U.S. oil producer Hess Corp reported a smaller quarterly loss on Wednesday, helped by an uptick in crude prices and lower operating costs.

    U.S. crude prices CLc1 averaged $51.78 per barrel in the first three months of the year, up 54 percent from a year earlier.

    Hess's average realized crude oil selling price, including the effect of hedging, was $48.58 per barrel in the first quarter ended March 31, up from $28.50 a year ago.

    Higher selling prices helped Hess make up for a fall in production.

    Excluding production from Libya, net production was 307,000 barrels of oil equivalent per day (boepd) in the quarter, lower than 350,000 boepd a year ago.

    Total revenue and non-operating income rose 28.4 percent to $ 1.28 billion, while total costs and expenses fell 13.3 percent to $1.58 billion.

    Net loss attributable to Hess narrowed to $324 million, or $1.07 per share, in the first quarter ended March 31, from $509 million, or $1.72 per share, a year earlier.
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    Iran adds floating storage

    IRAN|AN FLOATING STORAGE IS BACK IN BUSINESS! We have added 3 vessels that qualified our 1 month rule

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    Drewry cuts freight rate outlook for LNG shipping

    Given the mounting pressure on freight rates and continuing fleet growth over the next two years, excess LNG tanker supply will reduce only gradually with the recovery in rates pushed back to the latter part of next year, according to the shipping consultancy, Drewry.

    The consultancy maintains a bearish stance on the LNG shipping freight rate outlook for 2017 on account of strong fleet growth which is expected to be around 13%, Drewry said in its latest edition of the LNG Forecaster report.

    The movement in rates has so far been in line with Drewry’s expectations, as rates have been falling since the beginning of the year.

    The spot rate for dual-fuel diesel-electric (DFDE) vessels (East of Suez) is currently around $26,000 per day, compared to $37,000 per day in the beginning of the year, a fall of 30%, it said in the report.

    “The tremendous weakness observed recently in the freight market highlights the ample vessel supply. We are anticipating two years of aggressive fleet growth with supply expected to expand a further 9% in 2018 which will extend the period of weak freight rate development into next year,” Shresth Sharma, Drewry’s lead LNG shipping analyst said in the report.

    “Therefore, we do not expect rates to start recovering until the end of 2018 when several new LNG trains from the US are expected to be operating at full capacity,” said Sharma.

    “As a result, we have trimmed down our forecast for average spot freight rates in 2018 to $40,000pd from the earlier expectation of $50,000pd,” he added.

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    Will Libya’s Production Rebound As Its Largest Oil Field Re-Opens?

    Libya’s biggest oil field, Sharara, which has been offline for most of the past month, is set to reopen after the Petroleum Facilities Guard (PFG) reached an agreement with protesters who have repeatedly shut down the pipelines that pump oil into the field, according to PFG chief, Brigadier General Idriss Abu Khamada.

    The deal that the PFG has reached will lead to the reopening of the Sharara field, which produces 200,000 bpd, according to Khamada.

    At the end of March, unnamed armed factions were said to have blocked production at the Sharara and Wafa fields in western Libya, cutting the country’s total output by 252,000 bpd. Sharara alone produced 220,000 bpd before the shutdown, accounting for a large part of Libya’s overall 700,000 bpd production until that point. It resumed pumping oil after a two-year pause last December.

    Less than a week later, Libya’s National Oil Corporation (NOC) said that after intervention from its chairman Mustafa Sanalla, the militia men agreed to release the pipeline so the oil flow could be resumed.

    Another week later, production at Sharara was stopped again.

    Last week, reports suggested that the El-Feel oil field in western Libya—operated by a joint venture between Italy’s Eni and Libya’s National Oil Corporation (NOC)—had reopened after two years, and expects to start pumping oil as soon as a power outage is fixed.Related: Low Oil Prices Force Abu Dhabi To Sell U.S. Assets

    Libya’s NOC said on April 20 that El-Feel continues to be closed and under force majeure due to dependence on electricity sourced from Sharara, which remained closed as of last Thursday.

    Attached Files
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    North American gas E&Ps seen likely to post modest Q1 growth as natural gas output grows

    Coming off a two-year period of belt-tightening the first-quarter earnings of some North American exploration-and-production companies are expected to reflect the first signs of new gas production growth, but that growth is conditional upon the basins where the producer operates and the individual company's economic circumstances going into the quarter.

    In addition, the quarterly results are apt to show a continuation of the trend of producers increasingly focusing on basins with better economic returns -- chiefly oilier and more liquids-rich plays -- while downplaying efforts in the drier gas basins.

    US drilling activity has been on the upswing, particularly in the Permian Basin of West Texas and southeastern New Mexico, the hottest oil and gas play in the country.

    Producers in recent months have flocked to the Permian, which boasts some of the highest initial production (IP) rates for oil and gas of any basin in the country. The Permian hovers around a 30-day average oil IP rate of 600 b/d, and for the gas the IP rate is closer to 1,400 Mcf/d, according to Platts Analytics.

    Crude-focused producers such as Anadarko Petroleum are expected to post strong Q1 results as a result of investments in the oil-rich Permian as well as the DJ Basin of Colorado, another oily province.

    Anadarko said last month it expected a 25% increase in oil sales volumes over the prior year.

    Meanwhile, some gas producers could see production growth in the quarter as well. Appalachian producers operating in the liquids-rich portions of the basin -- chiefly the southwestern Marcellus and Utica plays -- are largely expected to increase drilling and production in the quarter compared with the same period last year.

    Consol Energy recently said it expects to double its capital expenditures in full-year 2017 to an estimated $555 million, versus $205 million last year, while it expects to increase its production by about 5% to 1.14 Bcfe/d in 2017 compared with actual production of 1.08 Bcf/d in 2016.

    Appalachian producer Range Resources also provided guidance that it would increase its capital expenditures to $1.150 billion versus $513 million in 2016, while the producer estimated it would increase its production for full-year 2017 to 2.07 Bcfe/d versus 1.54 Bcfe/d in 2016.

    To drill a well in the Marcellus costs around $6 million with a gas IP rate of 10,000 Mcf/d, according to Platts Analytics. Producers drilling in the Utica Shale in eastern Ohio have mentioned gas IP rates around 20,000 Mcf/d with a well cost around $10.6 million.

    Chesapeake Energy, which operates in a number of basins across the country, is expected to drill and produce less oil and gas than last year, largely as a result of the sale of some of its non-core assets, such as the Barnett Shale of North Texas last year, according to its most recent guidance.

    The producer will operate fewer rigs and drill fewer wells in 2017 than it did last year. The company said in February it plans to operate an average of 16-18 rigs in 2017, compared with 28 in 2016, and complete 420-480 gross wells, compared with 547 last year.

    For Q1, the company expects production of 515,000-535,000 b/d of oil equivalent, of which oil production is expected at 80,000-85,000 b/d, which is consistent with prior guidance, Chesapeake said.

    Meanwhile, other producers, such as Gulfport Energy, have already posted positive results by pursuing a diversified basin strategy.

    Earlier this month the producer reported that Q1 production of 850 MMcf/d came in above expectations, "driven by the continued strong performance of our Utica Shale assets."

    In addition, the producer said in the quarter it closed on the acquisition of assets in the SCOOP play of central Oklahoma from Vitruvian II Woodford, and since the closing in mid-February has been running four operated rigs on the acreage.

    Among other trends expected to surface in the E&P companies' quarterly reports are an increase in the cost of drilling services, particularly the percentage of drilling costs that go toward the purchase of fracking sands.

    As producers drill ever-longer laterals and pump greater volumes of proppants, the cost of the sand is expected to increase, taking up a larger portion of producers' drilling budgets.
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    Far East Russian crude oil premiums recover as North Asian demand improves

    Following the sharp decline in Far East Russian crude premiums last month, suppliers of Sokol, Sakhalin Blend and ESPO Blend crude found some respite in recent weeks, as demand from North Asian end-users improved, market participants said on Tuesday.

    Regional crude traders indicated that low-sulfur Russian crude feedstock requirements from Asian end-users should increase towards the latter half of the second quarter, as many of the key refineries in the area are expected to wrap up their seasonal maintenance works around that period.

    "I think bids were generally stronger for those [Far East Russian crude] cargoes due to load late in June," said a North Asian sweet crude trader.

    India's ONGC Videsh Ltd. awarded its tender offering a 700,000-barrel cargo of Sokol crude for loading over June 11-17 to Trafigura at a premium of around $2.15/b to the June average of first-line Dubai and Oman assessments, on a CFR North Asia basis, a company source told S&P Global Platts.

    The traded level was higher than OVL's previous tender concluded last month, when the Indian supplier received a premium of around $1.83/b for a similar-sized cargo for loading over May 19-25.

    Market talk also indicated that the Japanese consortium Sodeco and ExxonMobil could have each sold a cargo of Sokol crude for loading in June to North Asian refiners at premiums close to $2.5/b to Platts front-month Dubai crude oil assessments on a CFR North Asia basis.

    Meanwhile, Sakhalin Energy was said to have sold, via spot tender, 730,000 barrels of Sakhalin Blend crude for loading over June 28-July 4 to a Japanese company at a premium of around $1.40/b to Platts front-month Dubai crude oil assessments, on a CFR North Asia basis, sharply higher than the premium of 10-50 cents/b paid for May and early-June cargoes in the previous trading cycle.

    "[Far East Russian sweet crude] premiums fell a lot [last month], so some buyers probably find them cheap now," said a North Asian crude trader.

    Last month, price differentials for Sokol and Sakhalin Blend slumped to record lows, according to Platts data. Sokol was assessed as low as at a premium of $1.40/b to the average of first-line Dubai and Oman assessments, on a CFR North Asia basis, on March 21. Sakhalin Blend was assessed at an all-time low of Platts front-month Dubai plus 5 cents/b on March 22.
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    US approves Golden Pass LNG exports to non-FTA nations

    The Department of Energy has granted an approval for Qatar Petroleum’s Golden Pass project to export liquefied natural gas (LNG) to countries that do not have a free trade agreement with the United States.

    Golden Pass has been authorized to export LNG up to the equivalent of 2.21 billion cubic feet per day (Bcf/d) of natural gas from the Golden Pass terminal near Sabine Pass, in Texas.

    The Golden Pass joint venture, owned by Qatar Petroleum (70 percent) and ExxonMobil (30 percent) proposed to build and operate three liquefaction trains with a total production capacity sufficient to produce 15.6 million tons per annum at the at the existing import terminal onshore at the Sabine-Neches waterway, on the existing Port Arthur ship channel.

    The permit has been granted for a period of 20 years, as DOE determined these exports are “not inconsistent with the public interest.”

    With the increase in domestic natural gas production, the United States is transitioning to become a net exporter of natural gas. The Department of Energy has authorized a total of 19.2 Bcf/d of natural gas exports to non-FTA countries from planned facilities in Texas, Louisiana, Florida, Georgia, and Maryland.

    Commenting on the approval, U.S. secretary of energy Rick Perry said it is the part of the Trump administration’s effort to make the US an energy force and boost to the country’s economy while providing energy security to other countries.
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    Oil Markets Whipsawed As API Reports Unexpected Crude Build

    The American Petroleum Institute (API) reported a build of 897,000 barrels in United States crude oil inventories, compared to analyst expectations that markets would see a bit of relief with a crude oil draw of 1.6 million barrels.

    The API’s report on gasoline inventories—a 4.4-million-barrel build, hit markets even harder, which follows a blow last week when the markets were shocked when gasoline inventories saw a build of 1.374 million barrels, while analysts were expecting a 2.2-million-barrel draw for the fuel instead.

    Last week, the API reported a 840,000-barrel draw for crude oil inventories for week ending April 7, while the EIA reported a 1-million-barrel draw.

    While the API and EIA crude oil inventory reports seldom match barrel-for-barrel, and sometimes even contradict each other on a significant level in any given week, the trendlines of the builds or draws since the beginning of 2017 tell roughly the same picture
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    Mexico's Pemex hedges oil output for first time in 11 years

    Mexico's Pemex hedges oil output for first time in 11 years

    Mexican state-owned oil company Pemex said on Tuesday it has hedged its output through December, the first time it has done so in 11 years, in a bid to protect its balance sheet from a potential drop in oil prices.

    Petroleos Mexicanos, as the company is officially known, said the oil hedging program will run from May to December and guarantees a price of $42 per barrel for up to 409,000 barrels per day. It will cost the company $133.5 million.

    The Pemex hedge is separate from the much larger oil price hedge undertaken by the finance ministry.

    "For the first time in 11 years, Pemex has its own hedging program, which will favor the fulfillment of its operational and investment commitments and provide greater certainty to its income considering a possible drop in oil prices," the firm said in a statement.

    Pemex said the hedge will provide protection if the average monthly price of the Mexican oil mix is between $37 and $42 per barrel, adding that if prices fall below $37, Pemex will receive the maximum amount of "contracted protection."

    In its latest budget forecast, Mexico's Finance Ministry forecast average Mexican oil prices of $42 per barrel in 2017 and $46 per barrel in 2018.

    While the Finance Ministry's hedging program "ensures the oil revenues of the Federal government, Pemex's hedging program protects the company's balance sheet," the company said.

    Long used as a cash cow for the nation's government, Pemex now contributes less than a fifth of federal revenue, down from more than a third a few years ago.

    The Mexican government is implementing an energy industry revamp finalized in 2014. It ended the decades-long production monopoly enjoyed by Pemex, which has led to the first-ever competitive oil auctions and joint venture partnerships.
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    Baker Hughes revenue falls 15 percent on lower offshore spending

    Baker Hughes revenue falls 15 percent on lower offshore spending

    Baker Hughes Inc posted a 15 percent slide in revenue, in contrast to rivals Schlumberger and Halliburton Co, as sluggish activity offshore U.S. Gulf Coast dampened gains from increased drilling on the U.S. shale patch.

    The oilfield services provider on Tuesday reported a bigger-than-expected loss and said growth in its well construction business onshore North America was more than offset by increased competition for pressure pumping services and reduced customer spending in the Gulf of Mexico.

    Spending on capital-intensive and time-consuming offshore projects has remained sluggish at a time when shale producers have ramped up investments to take advantage of oil prices stabilizing at over $50 per barrel.

    The company, which is being acquired by General Electric Co  said quarterly revenue fell to $2.26 billion in the first quarter ended March 31 from $2.67 billion.

    Analysts' on average had expected revenue of $2.27 billion, according to Thomson Reuters I/B/E/S.

    Net loss attributable to Baker Hughes narrowed to $129 million, or 30 cents per share, in the first quarter ended March 31, from $981 million, or $2.22 per share, a year earlier.

    According to Thomson Reuters I/B/E/S, the company lost 24 cents per share, on an adjusted basis. Analysts' on average had estimated a loss of 21 cents.

    GE said last week the merger of its oil and gas business with Baker Hughes remained on track to close in mid-2017.

    Baker Hughes Inc  said on Tuesday it expects revenue from North America to rise in the current quarter from the first as oil producers drill more onshore wells, helping the oilfield service provider make up for a fall in demand in the Gulf of Mexico.

    Oil producers are spending more on lucrative shale fields to take advantage of oil prices stabilizing at over $50 per barrel, while clamping down on expensive and time-consuming offshore projects.

    "Activity growth in the U.S. onshore well construction product lines is forecast to more than offset the seasonal decline in Canada and ongoing activity reductions in the Gulf of Mexico," Chief Financial Officer Kimberly Ross said in a post-earnings call.

    Baker Hughes is much more exposed than Halliburton to international markets, where activity and pricing for oilfield services has remained persistently low.

    About 31 percent of Baker Hughes' total revenue comes from North America, with operations in the Gulf of Mexico account for 15 percent of its revenue from the region.
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    Valero CEO expects Q2 biofuel costs to be 'a significant headwind'

    Valero Energy Corp Chairman and Chief Executive Joe Gorder said he expects costs for renewable fuel credits to drag on the company's returns in the second quarter of 2017.

    "While RIN (Renewable Identification Number) prices have declined relative to 2016, there is still a significant headwind for the quarter," Gorder said in a conference call to discuss first quarter earnings. "At this level, RINs expense remain an issue for us, so we continue to work with regulators."

    Valero's costs for biofuel blending were $146 million in the first quarter of 2017, $15 billion below blending costs in the same period of 2016.

    During the conference call, Gary Simmons, Valero's senior vice president of international operations and system optimization, said the company was not ready to revise its forecast for RINs for 2017.

    "We're not really ready to revise our guidance at this time," Simmons said. "We're going to keep our guidance where it is. And we'll just see how successful we are on some of these things about moving the point of obligation and what happens to RINs."

    The company has said it expects to spend an amount similar to the $749 million spent in 2016 to meet the federal renewable fuel requirements.

    Refiners trade RINs to comply with federal law requiring transportation fuels sold in the United States contain minimum amounts of renewable fuels.

    D6 RINs traded on Monday between 47 cents and 49 cents a piece.

    Valero is part of a lobbying effort to change the point of obligation where renewable fuels are blended into motor fuels from the refinery to the distributor's terminal.
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    Distillate export boom keeps U.S. refiners busy

    U.S. refiners have become a powerhouse of distillate exports, causing the supply-demand balance for fuels from the middle of the barrel to tighten in the United States despite a very warm winter.

    Exports of distillate fuel oil rose to a record 1.4 million barrels per day (bpd) in the week ending April 14, according to the U.S. Energy Information Administration.

    So far this year, exports have averaged almost 1.1 million bpd, during what is normally a seasonal lull, and will likely accelerate over the summer months.

    The result is that U.S. stocks of distillates, such as home heating fuel and diesel fuel, have emerged from the end of winter looking somewhat tight despite heavy levels of refinery processing.

    Distillate stocks stood at 148 million barrels on April 14, which was 19 million barrels above the 10-year average but 13 million barrels below the level at the corresponding point in 2016.

    Stocks have been tightening against both the prior-year level and the 10-year average since the start of February and only high levels of refinery processing have kept them from drawing down even further.

    Even so, stocks have fallen by almost 15 million barrels since the start of 2017 compared with an average decline of about 10 million barrels and a build of more than 2 million barrels in 2016.

    Stocks have fallen even though heating demand has been 2 percent lower than in 2016 and 17 percent below the long-term average because of the unusually mild weather across the country this winter.

    Most distillate is being exported to Mexico, Brazil and other countries in Latin America and the Caribbean, where ageing local refineries are struggling to keep up with growing demand.

    Smaller volumes have also been shipped to markets in Europe, according to U.S. customs data analysed by the EIA.

    Exports are set to remain strong given the chronic shortage of distillate refining capacity across Central and South America.

    But U.S. domestic distillate consumption is also forecast to rise again in 2017 after falling significantly in 2016 and 2015 which will tighten the supply-demand balance even further.

    EIA forecasts that domestic consumption will rise by 70,000 bpd in 2017 and another 120,000 bpd in 2018 (“Short-Term Energy Outlook”, EIA, April 2017).

    Hedge funds and other money managers have responded by building one of the largest bullish positions in distillate since crude oil prices crashed in the middle of 2014.

    Hedge funds have accumulated a net long position in New York No.2 heating oil futures and options contracts equivalent to 34 million barrels, according to an analysis of regulatory data (

    Fund managers hold almost 3.6 long contracts betting on a further increase in prices for every short contract betting on a decline, up from a ratio of 1.6:1 at the same point last year (

    Distillate prices remain buoyant and refining margins are the highest for the time of year since 2015, increasing the incentive to process as much crude as possible.
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    Iraq begins final expansion phase at Halfaya oil field aiming to double output

    Iraq has launched the third and final phase of work to expand its southern Halfaya oil field, aiming to double its output capacity in 2018 to 400,000 barrels per day, a state-run oil company said.

    Additional facilities to separate crude oil from associated natural gas will be set up as part of Halfaya's expansion, Adnan Noshi, head of Maysan Oil Co which oversees oilfields in Maysan province, told Reuters on Tuesday.

    Halfaya, operated by PetroChina, is Maysan Oil's largest field, producing 200,000 of the company's total output of 380,000 bpd, Noshi said.

    Expansion at Halfaya should raise Maysan's overall output to nearly 600,000 bpd in 2018, he said.

    Iraq plans to increase its oil output capacity to 5 million bpd before the end of the year.

    Output stood at more than 4.7 million bpd, Oil Minister Jabar al-Luaibi said on April 2.

    OPEC's second-largest producer after Saudi Arabia, Iraq produced at a rate of 4.464 million bpd in March, down by more than 300,000 bpd from late last year.

    Iraq has reduced its output alongside other oil exporters this year as part of an agreement aimed at boosting crude prices.

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    Russia elbows Saudi Arabia aside as China's top crude oil supplier in March

    Russia reclaimed its position as China's biggest crude oil supplier in March, customs data showed on Tuesday, displacing Saudi Arabia after two months in second place as Moscow fights to hang on to its slice of the Chinese market.

    Russian shipments grew nearly 1 percent to 1.104 million barrels per day (bpd) from the same month a year earlier, as China's private refineries maintained high processing rates and restocked inventories after receiving fresh 2017 import quotas. China's crude imports rose to a record in March, overtaking the United States and shattering expectations.

    Saudi shipments were 1.072 million barrels in March, up nearly 15 percent from a year ago, the General Administration of Customs said. For the first three months, Saudi arrivals stood at 1.165 million bpd, making it the top supplier on a quarterly basis.

    March's record arrivals came as Saudi Arabia cut April prices of light crude as Europe and the United States ramped out supply to Asia.

    The Organization of Petroleum Exporting Countries (OPEC) agreed to curb its output by about 1.2 million bpd from January to support prices. Non-OPEC producers, including Russia, agreed to cut another 600,000 barrels, but both OPEC and non-OPEC countries continued efforts to keep Asian markets vital for growth well supplied.

    March also saw the United States ramp up shipments to 45,057 bpd. A year ago, China did not import U.S. crude.

    Imports from Iran meanwhile rose 5.97 percent to 626,200 bpd.
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    Oil service costs could rise 15 percent this year, Wood Mac says

    As crude prices stabilise and drilling rigs dig into shale plays again, oil field service costs are beginning to rise back up. That could squeeze drillers’ margins later this year.

    Energy research firm Wood Mackenzie believes oil field service costs could jump 15 percent this year overall, with prices for some equipment and services possibly rising as high as 40 percent, it said in a recent report.

    Though oil field service companies aren’t likely to charge the same prices they got in 2014, before oil prices collapsed, they will probably get back market pricing power, Wood Mackenzie said.

    Oil explorers all “voice the best intentions to keep a laser eye on costs,” said Jackson Sandeen, senior research analyst at Wood Mackenzie. “But continued productivity and drilling efficiency gains over 2016 will be difficult to achieve as operators pivot to a more aggressive development mode.”

    The firm estimates U.S. oil companies will hike spending 60 percent this year on average, but drillers expect service prices to rise on average 10 percent to 20 percent, even though service companies forecast 15 percent to 40 percent price increases this year.

    Oil fields in which companies can pump crude profitably below $40 a barrel will still turn a profit even with service cost inflation. But the more active oil plays in West Texas will likely see the biggest increases in oil field service prices, Wood Mackenzie said.

    “Many difficult contract negotiations will be had in the coming months as operators look to honor growth targets shared with investors at the start of the year,” Sandeen said. “It is clear that service sector margin recapture will be a key feature in 2017 as the industry turns the corner on activity.”
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    US onshore rig day rates jump as glut fades

    Perhaps the most surprising sign of a recovery in the US onshore drilling industry has been the abrupt about-face for day rates, an analysis by RigData, a unit of S&P Global Platts, showed.

    The first quarter has seen a 3.5% spike in the average day rate to $14,600, according to RigData. While that is still down from a record $19,015 in Q4 2014, it is the biggest quarter-to-quarter jump since the previous post-bust recovery in 2010.

    A major contributing factor to the day rate recovery has been the erosion of the rig glut, which can be monitored by tracking the available rig ratio. The ratio is calculated by dividing the number of available rigs by the number of marketed rigs.

    Once this ratio has sustained above a certain threshold, then day rates soften; when it trends below that threshold, day rates begin to rise.

    On a nationwide basis, that threshold historically has proven to be about 20%. The recent down cycle saw this ratio hit a record high before tumbling to the lowest point (19.6%) since the boom months of early 2014, thus presaging the strong day rate turnaround in Q1.


    As sharp as the day rate collapse was in 2015-16, it wasn't as steep as the plunge in the previous downturn in 2009, when day rates fell to roughly $11,500. The day rate average recovered by late 2014 before falling again during the recent bust.

    Most of that earlier rebound occurred during the first two quarters of 2010, when each quarter posted a double-digit gain.

    While rig demand ramped up nicely in that prior recovery period, the main reason the average day rate soared was the transformation of the rig fleet. Rigs with drawworks capacity of more than 1,000 horsepower had begun to dominate the drilling scene, especially Tier 1 Class D (1,500-1,999 hp) AC newbuilds. These newbuilds have been dominating horizontal drilling in the Permian Basin and elsewhere.

    The proliferation of these higher-cost rigs pulled the overall average day rate -- aggregated across all regions and all rig classes -- up to the record of $19,015 just before the downturn began.

    The inflation meant that AC rigs had the steepest decline of any rig power type but also the strongest recovery.

    The current day rate recovery will likely level off somewhat in the months to come, given the continuing fragility of the oil and gas commodity price recovery.

    But the average day rate for a US land rig will be higher than it had been historically. That's because the Class D rigs, which account for 69% of all active rigs and are averaging marketed utilization of more than 90% in Q1, are overwhelmingly the newbuild AC models.


    The US active land rig count climbed 28 rigs to 824 rigs the week ended April 14, according to RigData.

    Growth in the count was driven entirely by additions in oilier plays. Drilling that targeted oil-producing formations climbed 29 rigs, bringing the active oil rig count up to 603.

    The natural gas rig count fell by one to 221.

    The number of rigs participating in horizontal drilling efforts continues to climb, and at 693 as of April 14 was up 12 rigs week on week.

    The additional horizontal rigs were all due to pickups in the Permian Basin over the past week, which now stands at 280 rigs, or 40% of all US horizontal drilling.

    The Permian has been driving the rig recovery as breakeven costs remain low relative to spot crude prices. The Midland Permian breakeven is currently $31.71/b, according to the Platts Analytics Well Economics Analyzer, well below the current Midland WTI spot price, which is averaging $50.67/b in April.

    The last time the US horizontal rig count was above 700 rigs was about two years ago on April 3, 2015. At that time there were 180 horizontal rigs actively drilling the Permian, roughly 25% of the total, when the Midland breakeven was roughly $48/b.

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    Russia indicates it can lift oil output if deal on curbs lapses

    Russian oil output could climb to its highest rate in 30 years if OPEC and non-OPEC producers do not extend a supply reduction deal beyond June 30, according to comments by Russian officials and details of investment plans released by oil firms.

    The Organization of the Petroleum Exporting Countries, along with Russia and other non-OPEC producers, pledged to cut 1.8 million barrels per day (bpd) in output in the first half of 2017.

    With global inventories still bulging, Gulf and other producers have shown increasing willingness to extend the pact to the end of 2017. Saudi Arabia and Kuwait signaled last week they were ready to prolong cuts. 

    Russia, whose contribution to the cuts was 300,000 bpd, has yet to state publicly whether it wants cuts to run beyond June, although Moscow was represented on a panel monitoring the pact that on Friday recommended an extension.

    But Russian officials have also indicated that local oil companies were ready to push up output once the pact runs out.

    "According to investment programs of (Russian) companies, it is possible Russian oil production will increase once the deal expires," Deputy Prime Minister Arkady Dvorkovich said, adding firms had been held back while the deal was in place.

    "If there are no restrictions, they will decide not to hold back," he said, speaking at the weekend on the sidelines of an economic conference in the East Siberian city of Krasnoyarsk.

    He did not give figures, but Energy Minister Alexander Novak told Reuters in March that output could reach 548 million-551 million tonnes a year in 2017, equivalent to 11.01 million-11.07 million bpd, the highest average since 1987.

    In 2016, Russia produced about 547.5 million tonnes, or an average of 10.96 million bpd.

    Under the deal with OPEC, Russia was to cut production to 10.947 million bpd from 11.247 million bpd, the level achieved in October 2016 that was the highest in the post-Soviet era.


    Although Russia has not said publicly it wanted cuts extended, Novak has said he would meet Russian oil companies this month to discuss the issue. He also said an extension would be discussed with OPEC on May 24.

    Without an extension, Raiffeisenbank analyst Andrey Polishchyuk forecast Russian output rising about 2 percent in the second half of 2017 to a peak of about 11 million bpd.

    "That's because we have new oilfields," he said.

    Projects and statements by Russian firms also indicate they are ready to increase output once restraints are lifted.

    Russia's biggest oil producer Rosneft has said it plans to boost output this year thanks to newly acquired oilfields, including Kondaneft group of fields in Western Siberia, the heartland of Russian production.

    The company had targeted 2 percent annual output growth in 2015-2017. Without any acquisitions, that would push 2017 production to more than 214 million tonnes, or 4.3 million bpd.

    Lukoil, the country's second-largest producer, has said it sees its oil output rising slightly if the global deal is not extended and could restore production to its pre-deal level in three to four months. [nL5N1GC47G]

    Mid-sized producer Tatneft said it expected to increase 2017 output by 0.5 million tonnes a year, or about 10,000 bpd, if the global production pact lapsed.
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    East Coast refiners eye Texas oil as North Dakota alternative

    U.S. East Coast refiners are looking to buy increasing volumes of domestic crude oil from the Gulf Coast, two sources said, the latest twist in a trade flow upheaval in the wake of the opening of the Dakota Access pipeline.

    Major U.S. East Coast refiners profited from railing hundreds of thousands of barrels of discounted Bakken crude to their plants daily from 2013 until 2015. But as more and more pipelines were built in North Dakota, the discount began to disappear, and so did the rail cars.

    Now, at least two East Coast refiners, Phillips 66 (PSX.N) and Delta Air Lines Inc's (DAL.N) subsidiary Monroe Energy, are looking to move more crude by ship from Texas into the Philadelphia area. The Dakota Access pipeline starts up in May, giving the Gulf access to the Bakken shale play, and will likely sap any lingering economic incentive for Bakken-by-rail, which is more expensive.

    This option is more expensive than oil imported to the East Coast, typically from Nigeria. Analysts and traders expected that once the Dakota line came into service, East Coast and West Coast refiners would rely on foreign barrels.

    In 2016, 13 million barrels of crude went from the U.S. Gulf to the East Coast, according to the U.S. Energy Information Administration. By comparison, the East Coast took in 323 million barrels of imported crude last year.

    Shipping sources say that costs could range between $2.60 to $3.50 a barrel for the two-week round trip on a U.S. flagged vessel. That is lower than the peak, brokers said, because a number of spare vessels are available. Taking a cargo of Nigerian Bonny Light to Philadelphia costs about $1.40 a barrel, brokers said.

    Brokers interviewed said bringing U.S. oil via tanker to the East Coast gives refiners access to a variety of crude grades available in Texas, where most U.S. oil ends up now.

    "It's about optimizing assets. From Texas, you could bring up Eagle Ford, Permian or even Bakken crude," said one source.

    That journey could guarantee a steady supply of domestic crude, as both Phillips 66 and Monroe Energy already have U.S.-flagged Jones Act tankers contracted, brokers said, so bringing that crude would not be difficult. Phillips 66 and other refiners use their tankers to shuffle products to higher margin regions or to bring crude to their refineries.

    Even with added Gulf shipments to the East Coast, refiners there should still receive the bulk of their supply from foreign sources due to economics, said Sandy Fielden, director of oil and products research for Morningstar.

    West Africa produces crude that is "gasoline rich," he said, important for East Coast refiners. He said he doubts sending Jones Act tankers makes a lot of sense financially because the spread between global benchmark Brent LCOc1 and U.S. West Texas crude CLc1 futures is not enough to justify the shift.

    In an earnings call last year, Phillips 66 President Tim Taylor said the combination of the Dakota pipeline and water could potentially supply the 285,000 barrel per day Bayway refinery in Linden, New Jersey.

    Moving crude by water from the Gulf up the Eastern Seaboard is not unheard of. Since October, NARL Refining LP has booked at least seven cargoes from Texas ports to its 130,000 bpd Come-By-Chance refinery in Newfoundland, in eastern Canada. In the previous 10 months, NARL booked just four Texas cargoes, according to Reuters Eikon shipping data.
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    Halliburton gains from surge in North America drilling

    Halliburton Co said on Monday that oil producers are completing nearly as many wells as they are drilling, a major reversal from when companies left wells unfinished in anticipation of higher oil prices.

    Increased demand for Halliburton's pressure pumping and well-construction services helped the world's No.2 oilfield services provider report slightly better-than-expected quarterly profit and revenue.

    "There's no doubt that the pace of completions activity is catching up with the rig count, and we expect to see that relationship continue into next quarter, most certainly," interim Chief Financial Officer Robb Voyles said on a post-earnings call.

    Halliburton's long-time chief financial officer, Mark McCollum, is taking up the role of chief executive at smaller rival Weatherford International Plc.

    U.S. shale producers have been putting more rigs to work, buoyed by oil prices that have stabilized above $50 after a more than two-year slump.

    And since the fourth quarter of 2016, oil producers have also returned to complete wells they had left unfinished during the downturn on hopes of bringing them online when prices rose.

    Halliburton said on Monday it expects revenue in its completion and production unit to increase in the upper teens in percentage terms in the second quarter, with margins expected to increase by 275-325 basis points.

    The company's revenue from North America rose 24.4 percent in the first quarter ended March 31.

    "North America activity increased rapidly during the first quarter, which was highlighted by our U.S. land revenue growth of nearly 30 percent, outperforming the sequential average U.S. land rig count growth of 27 percent," Halliburton's Chief Executive Dave Lesar said in a statement.

    However, Halliburton and larger rival Schlumberger (SLB.N) have been burdened by the costs associated with reactivating idled equipment to meet the increase in demand.

    Halliburton's reactivation costs are expected to persist into the second quarter, President Jeffrey Miller said on the call.

    The company on Monday posted an adjusted profit of 4 cents per share, edging past analysts' average estimate of 3 cents, according to Thomson Reuters I/B/E/S.

    Analysts had sharply lowered their estimates after Halliburton warned last month of higher costs and weak demand in markets outside North America.

    Revenue rose 1.9 percent to $4.28 billion, inching past analysts' average estimate of $4.26 billion, according to Thomson Reuters I/B/E/S.
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    Genscape Cushing Fri, Apr 21: Storage: 69.926MM

    Genscape Cushing Fri, Apr 21: Storage: 69.926MM Down -1.054mm from April 14; Down -346k bbls from Apr 20

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    Explorer plans first test of fracking potential in North Slope shale

    An oil explorer hoping to bring the Lower 48's fracking revolution to Alaska will take a big step this week when it launches an effort to determine the production potential of crude oil locked in North Slope shale.

    The process is expected to start Wednesday, when Accumulate Energy Alaska begins drilling an exploration well along the Dalton Highway about 40 miles south of Prudhoe Bay.

    In June, it plans to hydraulically fracture that vertical well, using water, chemicals and sand to crack and hold open rock so oil flows from the shale. A production test to determine how the well oil flows is also expected this summer.

    Paul Decker, a state petroleum geologist, said this will be the first test of its kind on the North Slope. Accumulate Energy will target residual oil and gas that never migrated out of rocks that are considered one of the sources for the crude oil at the giant Prudhoe Bay oil field.

    Similar efforts, using long-distance horizontal wells and hydraulic fracturing, have sharply boosted oil and gas production from shale in Texas and other states. Alaska officials, facing a future of falling oil production and revenues, have waited years for a similar turnaround on the North Slope.

    Sen. Bill Wielechowski, D-Anchorage, said he's been hoping for unconventional shale production to take off in Alaska since exploration company Great Bear Petroleum told lawmakers about six years ago that shale oil could boost daily oil production by hundreds of thousands of barrels.

    Great Bear, which holds large chunks of land, is now targeting more economic, conventional oil prospects at its leases. The company hopes those prospects can help foot the bill for the costlier shale-oil extraction that requires multiple wells.

    "I've heard the potential is tremendous, but is it affordable?" Wielechowski said.

    Accumulate Energy, based in Houston, Texas, hopes to find out, an official said. The company plans to drill the test well about 2 miles deep from the existing Franklin Bluffs gravel pad just off the highway.

    Accumulate drilled an original exploration well off the pad more than a year ago, collecting core samples for testing. On April 6, Accumulate received a drilling permit for the upcoming test well from the Alaska Oil and Gas Conservation Commission.

    After drilling that first well at Icewine, south of Deadhorse, the company, a subsidiary of an Australian independent, moved aggressively to broaden its stake in Alaska.

    Accumulate and partner Burgundy Xploration, also of Houston, snatched up about 400,000 acres at a state lease sale in December. That increased the companies' holdings to about 700,000 acres.

    Burgundy Xploration's chief executive is Paul Basinski, who helped discover the large Eagle Ford shale play in Texas. He told Alaska's Energy Desk in March that the prospect's name, Icewine, comes from his fondness for German ice wine, a sweet drink made from grapes that froze on the vine.

    Erik Opstad, Accumulate Energy's general manager in Alaska, said on Friday that good flow rates from a single exploration well won't prove North Slope shale is commercially viable. A good test will lead to more analysis, including whether the flow rates are enough to overcome the high cost of development.

    "You can't make huge and grandiose statements based on one well, no matter the results. But if it's positive, that's perhaps more encouraging than not for Alaska," he said.

    Pat Galvin, chief commercial officer at Great Bear and a former Alaska revenue commissioner, said he's looking forward to seeing what Accumulate learns.

    "If they are successful, it will mean good things for our area as well," Galvin said. "We wish them the best and hope for success."

    Mark Myers, former head of the U.S. Geological Survey and the Alaska Department of Natural Resources, said shale-oil production will require large amounts of water and sand for hydraulic fracturing. The costs of infrastructure, such as for new roads or new drilling pads, are some of the factors that will have to be weighed, along with the project's environmental impact.

    USGS assessments show lots of oil in North Slope shale, he said. Accumulate's test can help determine whether the oil can be technically and economically produced.

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    Aramco dissent on IPO.

    Members of the internal Aramco IPO team took their figures to the company’s chairman, Khalid al-Falih, who is also Saudi Arabia’s energy minister, say people familiar with the matter.

    One of those people said some of the Aramco team members are concerned because their calculations have consistently yielded lower numbers than the one the prince disclosed.

    Saudi government officials say Aramco’s high reserves and low costs should make the company attractive to investors. “Our profitability is higher than others and the interest we have received so far is huge,” said one official who defended the $2 trillion number.

    Some of the banks pitching for a role in the advising and underwriting of the deal have been given minimal information on the company’s financials, one person familiar with the pitching process said.

    Members of the IPO team took their figures to Aramco’s chairman, Khalid al-Falih. Members of the IPO team took their figures to Aramco’s chairman, Khalid al-Falih.PHOTO: HEINZ-PETER BADER/REUTERS

    Bankers have offered company executives advice on how they might position the offering to investors to garner the highest valuation and how Aramco would compare with other oil and gas companies, this person said.

    Yet even absent the specific financial information, this person said that it appeared highly unlikely that Aramco could achieve a valuation anywhere near $2 trillion unless it paid no taxes or royalties.

    Since deputy crown prince Mohammed bin Salman announced the stock-offering plan and his $2 trillion estimate early last year, insiders and outsiders have questioned how he arrived at that number.

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    Gazprom's western partners agree Nord Stream 2 gas pipeline financing

    Western partners of Russian gas giant Gazprom agreed on Monday on financing the 9.5-billion euro Nord Stream 2 pipeline, removing a key hurdle for the Russian plan to pump more gas to Europe.

    At a signing ceremony in Paris, Uniper, Wintershall, Shell, OMV and Engie agreed to each loan 10 percent of the cost of the venture, or 950 million euros each. Gazprom will shoulder 50 percent of the 55 billion cubic meter pipeline to start operations in 2019.

    Gazprom's CEO Alexei Miller touted the agreement as a "a symbol" of Western backing for the project, which critics fear will increase reliance on Russian gas and circumvent Ukraine as a primary transit route for supplies to Europe.

    The chairman of French gas and power group Engie said the new financial structure would allow Western partners to circumvent Polish government objections to an earlier plan for each company to get a 10 percent stakes in the venture.
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    UAE minister assures Abe of support to Japan for Abu Dhabi oil concessions

    The UAE's Minister of Foreign Affairs and International Cooperation Sheikh Abdullah bin Zayed Al Nahyan assured Japanese Prime Minister Shinzo Abe on Monday of providing Japan as much support as possible for retaining its oil concessions offshore Abu Dhabi, Japan's Ministry of Foreign Affairs said a statement.

    The UAE foreign minister's comment came in response to Abe's remarks, expressing his hope for extending oil concessions held by Japanese companies offshore Abu Dhabi, which expire in March 2018, MOFA said.

    More than half of Japan's concessions offshore Abu Dhabi are set to expire in March 2018 if they are not renewed in some form.

    The offshore concessions held by Japanese companies in Abu Dhabi -- more than 60% of which are set to expire in March 2018 -- account for 40% of the country's global equity-based oil liftings.

    In terms of import volumes, the expiring stakes account for roughly 5%, or less than 200,000 b/d, of Japan's crude imports of around 3.37 million b/d.

    During the meeting in Tokyo earlier in the day, Sheikh Abdullah told Abe that the UAE wants to broaden its bilateral relationship with Japan, from the current dominance in energy, to political, security, education, science and technology, and investment, MOFA said.

    Japan is the largest buyer of the UAE crude oil, accounting for roughly a third of their export demand.

    Sheikh Abdullah also urged Abe to visit the UAE again, according to MOFA.

    In 2015, Japan's state-backed Inpex, in which Japan's Ministry of Economy, Trade and Industry holds an 18.94% stake, was awarded a 5% stake in the giant Adco onshore oil concession.

    It followed exchanges of high-profile visits, including by Abu Dhabi's Crown Prince Sheikh Mohammed bin Zayed al-Nahyan in February 2014, following Abe's visit to the emirate in May 2013.

    Commenting on preparations by the leading UAE emirate Abu Dhabi to restructure its major offshore oil concessions, the UAE's oil minister Suhail al-Mazrouei said on April 18 the emirate was seeking a balance between its relationships with international partners and its need to include new partners from the Asian countries that import mostly Abu Dhabi crude.

    "Extending those ties with China, Korea, India, Japan is imperative," Mazrouei said.

    He said Abu Dhabi favors an open, competitive approach to future foreign investments in the country's major upstream energy projects.

    "It is a competitive process," he said. "I think what you will see is a fair process, an inclusive process. I cannot tell you who is going to be in it because it depends on who gives us the most value."

    Attached Files
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    Bulgaria may seek more time to reply to Gazprom concessions

    Bulgaria may need more time to respond to concessions proposed by Russian gas giant Gazprom in an EU antitrust case, its energy minister said on Monday, adding that while Sofia saw the concessions as positive it would like to see them expanded.

    A provisional agreement announced last month would see Gazprom avoid a fine of up to 10 percent of its global turnover over EU charges it abused its dominant market position and overcharged clients in eight eastern European nations.

    The deal is subject to feedback from EU states and market players that should be sent by May 4 and could still be amended or even abandoned.

    Bulgaria, which is almost completely reliant on Russian natural gas supplies, needs more clarity on the concessions and will send questions to Brussels later on Monday, interim energy minister Nikolai Pavlov told reporters.

    "We see the proposals as positive but we want them to be expanded," Pavlov said after a meeting with politicians from the election winning GERB party which is expected to form a coalition government in early May.

    "There are quite a few ambiguities on the proposed commitments ... If we do not get answers on time we will ask for the deadline to be extended, because the information is not sufficient," he said without elaborating.

    Gazprom's offer would see it scrap contract terms that bar clients from exporting its gas to other countries and tie deals to investments in pipelines. The company would also link its prices to benchmarks such as European gas market hub prices, rather than oil, and allow clients to renegotiate prices every two years.

    Pavlov said he expected the Bulgarian position to be agreed after a debate in parliament by the end of the week.

    He said current contracts with Gazprom allowed Bulgaria to export Russian gas and that Gazprom's proposal not to seek damages from Bulgarian partners over the cancelled South Stream gas pipeline project had been arranged back in 2012.

    A source, familiar with the matter said Bulgaria would need more details on the exact future benchmark for gas prices and would also seek guarantees it would be a natural gas transit country. Currently, Russia transports about 14-15 billion cubic metres of gas per year to Greece and Turkey through Bulgaria.

    "It is important to uphold the position of Bulgaria as a transit gas centre and defend the interests of the country through the possibility for following talks with Gazprom to renegotiate much better conditions and much better prices for gas supplies," said GERB party official and former energy minister Temenuzhka Petkova.

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    India aims to cut petroleum imports as it boosts alternative fuel use

    India is aiming to cut its oil products imports to zero as it turns to alternative fuels such as methanol in its transport sector, a government official said at an investor briefing on Monday.

    "We are trying our level best that the day will come when we don't need to import any fuel from any country and that we will be self-sufficient," said Transport Minister Nitin Gadkari at a conference organised by Nomura in Singapore.

    But he could not provide a specific timeline for the target due to challenges with the distribution and availability of alternative fuels such as liquefied natural gas (LNG) in India, he said.

    "Auto-rickshaws are using LPG (liquefied petroleum gas) now...LNG is important but the availability of LNG and distribution is a big challenge... we have to develop that," he said.

    India is also planning to start 15 factories to produce second generation ethanol from biomass, bamboo and cotton straw as it aims to develop its mandate to blend ethanol into 5 percent of its gasoline, he added.

    "Bamboo is available from tribal areas... our vision is to be cost effective, import substitute and pollution free," he said.

    India imported about 33 million tonnes of oil products over April 2016 to February 2017, up nearly 24 percent from the same period a year ago, government data showed. The majority of the imports comprise petroleum coke and LPG.

    Energy consumption in India, the world's third-biggest oil consumer, is expected to grow as it targets between 8 to 9 percent economic growth this fiscal year from around 7 percent in 2016/17.

    To cut the country's carbon footprint, New Delhi wants to raise the use of natural gas in its energy mix to 15 percent in three to four years from 6.5 percent now.

    India is developing LNG bunker ports and plans to develop its electric vehicle fleet, Gadkari said.
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    Chevron to sell Bangladesh gas fields to Chinese consortium

    Chevron Corp is selling its three Bangladesh gas fields, worth an estimated $2 billion, to a Chinese consortium as the U.S. oil and gas group looks to shed non-core assets this year.

    The deal, if completed, would mark China's first major energy investment in the South Asian country, where Beijing is pumping in billions of dollars in a race with New Delhi and Tokyo for influence.

    The gas fields, which account for more than half of the total gas output in Bangladesh, are being sold to Himalaya Energy, Chevron said. Himalaya is owned by a consortium comprising state-owned China ZhenHua Oil and investment firm CNIC Corp.

    CNIC, set up in Hong Kong in 2012, is a government investment platform that focuses on supporting Chinese companies' overseas investment.

    Reuters reported in February that ZhenHua Oil had signed a preliminary deal with Chevron to buy the Bangladesh natural gas fields.

    "The agreement is for the sale of Chevron's Bangladesh companies, which hold our interests in Bangladesh," a company spokesman told Reuters by email on Monday. "The value of the transaction is not being disclosed and we are not at liberty to share the details of the agreement."

    A ZhenHua spokesperson confirmed the agreement, adding that the closing of the deal would depend on approval from China’s Ministry of Commerce.

    Chevron sells its entire output from the Bangladesh fields -- 16 million tonnes a year of oil equivalent -- to state oil company Petrobangla under a production-sharing contract.

    The Bangladesh government has the right of first refusal in any asset sale.

    Bangladesh's junior minister for power and energy, Nasrul Hamid, said that energy consultant Wood Mackenzie is still evaluating whether it would be profitable for the country to make a bid.

    "We can't take any decision hastily until we get the consultancy report," Hamid told Reuters. "We believe that Chevron would honor our request."

    The Chevron spokesman said that the Bangladesh government is "critical to the ongoing success of the business, including the transition to the new owner", and that it would maintain continuous communication with Dhaka as the process progresses.

    The gas fields -- Bibiyana, Jalalabad and Moulavi Bazar -- had average net daily output of 720 million cubic feet of gas and 3,000 barrels of condensate, or liquid hydrocarbon produced with gas.

    Chevron said in October 2015 that it planned to sell assets worth about $10 billion by 2017, including the Bangladesh gas fields and geothermal projects in Indonesia and the Philippines, amid a prolonged slump in energy prices.
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    U.S. offshore rig count decline continues

    Following a one-rig-drop in the week before, last week’s U.S. offshore rig count was down by one more rig, according to a Friday report by the oilfield services provider Baker Hughes.
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    Core Lab Exposes Four Trends Shaping the Industry’s Future

    In its first quarter conference call, Core Laboratories (ticker: CLB) identified four major industry trends that it believes will shape tomorrow’s oil field:

    Increasing interest in EOR from tight oil reservoirs
    Finer proppants in the initial portion of hydraulic fracturing treatments
    Increasing in proppant loads and frac stages per well
    Big data and artificial intelligence to increase efficiency and reduce cost in evaluating reservoirs

    Unconventional EOR

    Enhanced oil recovery from unconventional formations has been sought since unconventional development first began. While recovery factors in conventional reservoirs commonly exceed 25%, unconventional development seldom recovers more than 9%. There is, therefore, a tremendous amount of oil and gas still in place in unconventional fields, waiting to be recovered.

    One of the few successful uses of EOR on unconventional formations was performed by EOG. Gas injection in the Eagle Ford produced 30-70% additional oil recovery, giving the project strong economics.

    Core Lab reports that early work it has performed on unconventional EOR processes has yielded recovery factors of 13% to 15%. While still below the recovery from conventional fields, this represents an increase of about 50% over primary recovery.

    Finer proppant enhancing fractures

    Finer proppant is believed to be able to enter secondary and tertiary fracture patterns. If these additional fracture systems can be propped open, the reservoir volume stimulated by a given treatment increases significantly.

    As the host company of Stim-Lab, an industry consortium with a 30-plus year history and consisting of over 40 companies, Core is boosting its evaluation of 100, 200 and 400 mesh sand. These sizes are significantly smaller than the 40 and 70 mesh sand that is typically used in fracture treatments. According to Core, the use of micro proppant during the pad stage of fracturing can boost production by tens of thousands of barrels with little added cost.

    Increasing intensity of fracture jobs

    Increasing proppant and frac stages is a trend that has been apparent since the beginning of the U.S. unconventional boom. Early Barnett wells used perhaps 1 million pounds of sand per well, with few proppant stages.

    Today companies regularly use more than 10 million pounds of sand in each well, and continue to intensify. Chesapeake Energy announced in late 2016 the completion of a truly massive fracturing job the company named “Prop-A-Geddon.” This 10,000 foot well used more than 50 million pounds of sand during completion, which Chesapeake claims is a new record. Proppant loading in wells is likely to continue to increase, as higher oil prices encourage continued development.

    Lateral lengths have also increased significantly, but the longest wells are beginning to encounter difficulties. Wells with lateral lengths beyond 10’000 ft. can encounter significant friction forces, which make fracturing and other operations difficult. Core Labs reports that it is testing friction reducing additives that would make longer lateral lengths possible.

    Big data

    Big data is a recent industry trend that seeks to use large amounts of data to more accurately describe reservoirs. For example, Core is currently analyzing data from the Deepwater Gulf of Mexico II joint industry project with machine-learned computers. Analytics will then be used to characterize and identify key properties of deepwater reservoirs. If successful, this process can be applied to deepwater projects worldwide.

    Integrating Reservoir Management

    Core also announced a change in its business structure this quarter. The Reservoir Management section of the company’s business, which accounts for less than 5% of total company revenue, will be subsumed into the company’s two primary segments, Reservoir Description and Production Enhancement.

    Q&A from Core Lab’s conference call

    Q: the North American market, particularly the Permian, is exploding with activity here. On your Production Enhancement business, I know we’re hearing about a lot of longer lead times or wait times for frac spreads and even wireline trucks, stuff like that. How do you see or what have you done with your manufacturing of your perf charges in order to catch up with the increasing demand? And are you guys now running kind of full out in terms of manufacturing?

    CLB COO Monty L. Davis: On the charge production, we have increased the number of active manufacturing base. Obviously during the downturn, those were decreased to a lower number and we have reactivated some of those with plans through the second quarter to reactivate most of what we had active capacity when the downturn started.

    Q: How does the resuming trend towards more pad – or more multi-well pads affect the Diagnostics business? I would think there could be a positive benefit if you want to make sure that the wells aren’t bashing or even maybe are bashing, depending. Does that affect the Diagnostics business for you guys?

    CLB President and CEO David M. Demshur: Yeah; sure does. For us, that is a big part of their business right now. As people try to concentrate wells on spacing and then landing zones in these sweet spots, we are seeing more wells bash each other. It’s a concern in the industry now that more bashing is leading to the loss of initial production, especially EURs. So, their business on the diagnostics side is being aimed more towards that now than it ever has in the past.

    Q: Okay, and then shifting towards the SRV [stimulated reservoir volume] concept, I know you guys have been talking about that for a little while. Help us frame that. What do you think stimulated reservoir volume was, say, in 2014 versus today versus where you think that might go?

    David M. Demshur: Yeah. I think – Rob, actually on the conference calls back then, we talked the amount of stimulated reservoir volume was probably in the low-20 percentile range. Now, with the use of finer and micro proppants, we think that is expanding rapidly. And the reason for that is the use of 400-, 200- and 100-mesh sand in the pumping the pad stage are opening up tertiary and secondary fracture systems to the exposure of surface area. That has never happened before, so it is significantly increasing the amount of stimulated reservoir volume; read that the amount of surface area in the reservoir that is open to a micro fracture.

    So, I would put that right now probably in the 50% range. So, we’ve significantly increased it since 2014. You can see that in the production figures and also in the type curves, you can plot that pretty much right alongside of that. How much further it can go, we just now entered looking at 200- and 400-mesh sand, so we’ll give you an update over the next couple of quarters on the effectiveness of using those micro proppants.

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    China exports record diesel volumes in March - data

    China exported record volumes of diesel in March and boosted sales of gasoline and kerosene as refiners continued to turn to foreign markets to offload their excess product, while liquefied natural gas imports also jumped, customs data showed on Sunday.

    Diesel exports jumped 53 percent to 1.91 million tonnes, data from the Chinese customs authority showed, outpacing the previous record of 1.78 million set in December.

    Gasoline exports rose 25 percent in March compared with the same month a year earlier to 840,000 tonnes, but were down 21 percent from February.

    Kerosene shipments abroad were 1.25 million tonnes, up 21.4 percent year-on-year and up 23 percent from February.

    The high monthly shipments led to big increases in the first quarter and will reinforce concerns that China, one of the world's top energy markets, is contributing to a fuel overhang as refiners churn out more products like gasoline and diesel than the market can absorb.

    China became a net exporter of fuel products in late 2016.

    LNG imports totalled 1.99 million tonnes in the month, up 18 percent year-on-year but down 19.5 percent from February and the lowest monthly total since October last year.

    That may reflect waning demand as temperatures rise, reducing the need for the fuel for heating.
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    U.S. drillers add oil rigs for 14th week in a row -Baker Hughes

    U.S. drillers added oil rigs for a 14th week in a row, extending an 11-month recovery that is expected to boost U.S. shale production in May in the biggest monthly increase in more than two years.

    Drillers added five oil rigs in the week to April 21, bringing the total count up to 688, the most since April 2015, energy services firm Baker Hughes Inc said on Friday.

    That is more than double the same week a year ago when there were only 343 active oil rigs.

    U.S. crude futures dropped below $50 a barrel on Friday, for the first time in two weeks and putting it on track for its biggest weekly loss in six weeks, due to doubts the OPEC-led production cut will restore balance to an oversupplied market, especially as U.S. drillers keep producing more oil. [O/R]

    U.S. shale production in May was set for its biggest monthly increase in more than two years as producers stepped up their drilling activity, according to U.S. energy data.

    Analysts projected U.S. energy firms would boost spending on drilling and pump more oil and natural gas from shale fields in coming years with energy prices expected to climb.

    Futures for the balance of 2017 were fetching around $50 a barrel and calendar 2018 was trading at about $51.

    After taking a hit last year when dozens of U.S. shale producers filed for bankruptcy, private equity funds raised $19.8 billion for energy ventures in the first quarter - nearly three times the total compared with the same period last year, according to financial data provider Preqin.

    Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, this week forecast the total oil and gas rig count would average 842 in 2017, 1,037 in 2018 and 1,170 in 2019. Most wells produce both oil and gas.

    That compares with an average of 762 so far in 2017, 509 in 2016 and 978 in 2015, according to Baker Hughes data.

    Analysts at U.S. financial services firm Cowen & Co said in a note this week that its capital expenditure tracking showed 57 exploration and production (E&P) companies planned to increase spending by an average of 50 percent in 2017 over 2016.

    That expected spending increase in 2017 followed an estimated 48 percent decline in 2016 and a 34 percent decline in 2015, Cowen said according to the 64 E&P companies it tracks.
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    ExxonMobil inks deal to supply LNG to Indonesia’s Pertamina

    ExxonMobil inks deal to supply LNG to Indonesia’s Pertamina

    U.S.-based oil and gas giant ExxonMobil has signed a 20-year deal to supply liquefied natural gas (LNG) to Indonesian state energy company Pertamina.

    Under the memorandum of understanding, Pertamina will buy 1 million tonnes of LNG per year starting in 2025.

    No further details of the LNG supply agreement have been disclosed.

    The deal is a part of 11 agreements signed by U.S. and Indonesian companies on Friday as part of the efforts of the two countries to reduce trade barriers and boost investment.

    The $10 billion-worth deals were announced by visiting US Vice President Mike Pence in Jakarta who is on a business trip in Asia.
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    Iran's crude exports set to fall in May to 14-month low

    Iran's crude oil exports are set to hit a 14-month low in May, a person with knowledge of the Middle Eastern country's tanker loading schedule said, suggesting the country is struggling to raise exports after clearing out stocks stored on tankers.

    Part of the drop may also be attributable to a decline in demand, as loadings bound for India are set to slump to a one-year low after a dispute over the award of a contract for a gas field and Japan's orders fall by more than half from April.

    Iran is also putting about 3 million barrels back into storage in May, according to the source, underlining how much oil remains available in the market despite an agreement between the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers to cut output and boost prices.

    Crude oil loadings from Iran are expected to total nearly 1.7 million barrels per day (bpd) in May, with almost 100,000 bpd being put into storage on tankers, according to the source.

    Loading figures for condensate, an ultra-light crude, were not available for May.

    In April, the country is expected to export 1.8 million bpd of crude and a little over 370,000 bpd of condensate, down sharply from a six-year high of nearly 2.9 million bpd reached in February for both forms of oil.

    In March, Iran loaded around 2.6 million bpd a day of both crude and condensate, mostly the former, according to the source. No barrels of either crude or condensate were put in storage in March and April.

    The final figures for February exports were significantly higher than preliminary numbers reported earlier by Reuters and show Iran took full advantage of its exemption from the production cuts by OPEC and non-OPEC producers, including Russia.

    Still, Indian buyers are cutting purchases after state-owned refiners agreed to cut their annual imports deal with Iran by a fifth to put pressure on Tehran to award the Farzad B gas field to an Indian consortium.

    Crude liftings for India in May are expected to about 370,000 bpd, while in April Indian customers are lifting nearly 470,000 bpd of both crude and condensate.

    Japan is scheduled to lift nearly 40,000 bpd in May, the lowest since March.

    Loadings of crude and condensate for China this month are to hit a four-month low of a little over 500,000 bpd.

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    Neptune nears Engie E&P deal after CIC ups stake

    Neptune Oil & Gas moved closer to the $2 billion purchase of a majority stake in the exploration and production arm of French utility Engie after agreeing Chinese sovereign fund CIC could increase its minority stake in the target firm, sources said.

    China Investment Corporation (CIC) will increase its stake in Engie E&P to 49 percent, after buying the initial 30 percent in 2011 for 2.3 billion euros ($2.47 billion), two sources close to the matter told Reuters.

    Neptune Oil & Gas, set up in 2015 by private equity funds Carlyle Group and CVC Capital Partner to build a North Sea E&P company led by former Centrica CEO Sam Laidlaw, is set to announce the acquisition of a majority stake in Engie's business within weeks, banking and industry sources said.

    Some details of the deal are yet to be finalised and the upcoming French elections could further delay the completion of the deal, according to the sources. The French state owns around 29 percent of the company, according to Engie's website.

    The full value of the business is estimated at around $4 billion.

    A Carlyle spokeswoman declined to comment. Engie and CIC were not immediately available to comment.

    The size of CIC's stake following the sale became a major stumbling block as the Chinese partners initially sought to increase their holding to above 50 percent, the sources said.

    The French utility, formerly known as GDF Suez, last year hired Bank of America-Merrill Lynch to exit from oil and gas exploration and stop burning coal. Its upstream assets span from the UK to Norway and Germany, Algeria, Egypt and Asia.
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    Schlumberger sees pricing improve but high costs weigh on margins

    Schlumberger NV said on Friday a ramp up in drilling activity in North America boosted pricing for its oilfield services, but the cost of reactivating equipment idled during the oil price downturn dragged down margins.

    The U.S. rig count rose more than 25 percent in the first three months of the year, according to data from Baker Hughes Inc (BHI.N).

    "In the first quarter, the North America land market continued to strengthen in terms of both activity and pricing, leading us to begin accelerating deployment of idle capacity for multiple product lines," Chief Executive Paal Kibsgaard said.

    The world's No.1 oilfield services provider said revenue rose 5.7 percent to $6.89 billion in the quarter ended March 31, but its cost of revenue increased 11.3 percent to $6.08 billion.

    Schlumberger and its rivals are reactivating idled rigs and equipment as crude oil prices stay above $50 per barrel, encouraging oil producers to resume drilling after a more than two-year lull in activity.

    The company's pre-tax operating margins fell to 11 percent in the latest quarter, from 13.8 percent a year earlier.

    Net profit attributable to Schlumberger fell to $279 million, or 20 cents per share, in the quarter, from $501 million, or 40 cents per share, a year earlier. (

    Excluding items, Schlumberger earned 25 cents per share in the latest quarter, in-line with analysts' estimates, according to Thomson Reuters I/B/E/S.

    Analysts' on average had estimated revenue of $6.96 billion.

    Up to Thursday's close, Schlumberger shares had fallen nearly 9 percent this year.
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    Gaz-System green-lights Polish LNG terminal expansion

    Polish gas transmission operator, Gaz-System has decided to expand the country’s first liquefied natural gas (LNG) import terminal in Swinoujscie.

    The facility would be upgraded to have a capacity of 7.5 billion cubic meters instead of 5 bcm, Gaz-System said on Thursday.

    The company said it is currently preparing to launch the tender procedure for the execution of front end engineering design (FEED) work.

    The expansion work includes the addition of a second berth, the addition of a third storage tank with Gaz-System planning to develop LNG bunkering facilities.

    In addition, the company is looking to advance the supply of LNG as fuel for the transport industry as well as to develop facilities enabling it to deliver LNG by rail.
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    Australian court dismisses Chevron appeal in landmark tax case

    Chevron Corp lost an appeal on Friday against the Australian tax office in a landmark case in which the U.S. energy giant contested a tax bill of A$340 million ($260 million), including penalties and interest.

    The full bench of the Federal Court dismissed the appeal against an earlier ruling that Chevron underpaid taxes by setting up a A$2.5 billion intercompany credit facility with an abnormally high interest rate which effectively lowered its taxable income within Australia.

    Chevron said it was disappointed by the judgment in the case, which covers the five tax years from 2004 through 2008.

    "We will review the decision to determine next steps, which may include an appeal to the High Court of Australia," a Chevron spokesman said in an emailed statement.

    The case is a first test of how Australia's transfer pricing rules apply to interest paid on a cross-border related-party loan. It is being closely watched by multinational companies as governments around the world clamp down on what they deem elaborate means of reducing tax obligations.

    "The economic effects of the internal financing structure put in place ... included CAHPL's (Chevron Australia Holdings Pty Ltd's) Australian taxable income being reduced by the deductions it claimed for the interest payments it made to its United States subsidiary," the court said in its latest ruling.

    The Australian Taxation Office (ATO) said it was heartened by the ruling but noted Chevron could appeal to the High Court.

    "This decision is significant and has direct implications for a number of cases the ATO is currently pursuing in relation to related party loans, as well as indirect implications for other transfer pricing cases," an ATO spokesperson said in emailed comments.
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    Exxon treats XTO as startup

    The changes made by Exxon

    What has changed on the bureaucracy side of Exxon concerning XTO is its purchasing order system, which, according to Bloomberg, "governs project spending at the rest of Exxon," citing people familiar with the matter.

    The particular system was put in place for primarily offshore projects that could take as long as a decade to develop, and which had price tags of up to $50 billion. That model is obsolete when it comes to the development of shale wells, which can cost around $6 million or so to build. Not only that, but they can be built in few weeks.

    This is also why the process of submitting a 12-month operating blueprint, which is expected to be totally adhered to by other units of the company, has also been removed from the XTO shale unit.

    It's not that these protective filters weren't viable for prior projects, or existing projects requiring a long time and a lot of money to develop, it's that they don't work with shale development and drilling.

    This isn't to suggest the unit is just winging it. After Exxon acquired XTO, it put 30-year veteran, Jack Williams, in place to head it up. He's in the inner circle of leadership at the company.

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    Alternative Energy

    Lithium supply to outweigh demand by 2018, cobalt to remain tight: CRU

    Lithium supply was expected to outweigh demand as early as next year, UK-based consultancy CRU's Rebecca Gordon said Wednesday, while the cobalt market should remain tight well into the next decade on continued supply shortness.

    While massive growth in battery demand was set to see consumption of both metals soar in coming years, new lithium supply was expected to match demand by 2018, reaching a peak of 25% of total supply by 2022, Gordon told a Minor Metals Trade Association meeting in Dublin.

    "The 2016 lithium cost curve shows why prices had to rise so sharply," Gordon said, referring to lithium carbonate and hydroxide spot prices of over $10,000/mt in 2017, having doubled in less than 12 months on rising expectations of a demand boom from battery metals and tightness in supply.

    "By 2020, the picture has changed, with brine expansions and new hard rock production keep prices in check and $6,500-7,000 the new cost level."

    By that time, China's brine resources in Tibet and Qinghai were expected to come online, reducing unit costs, while spodumene resources in Sichuan and lepidolite resources in Jianxi were "committed and probable", Gordon said.

    Even modest demand forecasts see annual lithium output growing to 500,000 mt by 2020 from around 200,000 mt currently.


    According to Benchmark Mineral Intelligence's Andy Miller, also speaking in Dublin, lithium-ion batteries developed in "gigafactories" around the world, such as Tesla's in the US, were expected to top 175 GWh by 2020, up from around 30 GWh now.

    Tesla has recently said it will reach total production by 2018, in which time it will produce more lithium-ion batteries than were produced worldwide in 2013.

    With electric vehicle production expected to be around 500,000 cars per year by the end of the decade, Tesla alone will require all of current lithium production.

    But the story is bigger than Tesla. Over 60% of battery production in 2020 was expected in China, compared with around 20% in the US, Miller said.

    "The lithium-ion industry is a China story," Miller said, with Europe far behind.

    Unlike CRU, Miller did not foresee supply outpacing demand in coming years and although he expected new spodumene supply to fill any deficit in the short term, prices should remain high on tightness.

    The story for cobalt was similar, he said. Also a component in cathodes for lithium-ion batteries, prices have surged over 60% in the past 12 months on expectations of increased demand and supply tightness.

    But whereas lithium supply has increased markedly in anticipation of greater demand, cobalt supply remained restricted.

    Although traded on the London Metal Exchange, it is hard to access supply. Production is largely a byproduct of other metals such as nickel, so it is hard to get financing for projects based on cobalt prices, despite the recent spike.

    The metal also comes nearly exclusively from the Democratic Republic of Congo, which brings with it significant supply risk, given issues around mining practice, including child labor.

    CRU expected a deficit in both mined and refined cobalt supply this year and next and although stocks should be able to meet much of the increase in demand in the short term, new supply will be needed by 2020.

    Artisanal supply was expected to play an important role, especially as a swing producer when supply is tight.

    CRU has identified a number of processors located in the DRC around Kolowezi, Likasi and Lubumbashi, that sell concentrates believed to be derived from local small scale and artisanal operations, Gordon said.

    Gordon estimated these produced around 10,500 mt of artisanal cobalt in 2015 and around 8,500 mt in 2016. She forecast around 10,000 mt this year.

    At the same time, recycling remained a concern for both lithium and cobalt, accounting for a tiny proportion of refined supply currently.

    With a 7-8 year life, electric vehicle battery recycling volumes should start to pick up after 2021 and producers such as Apple and Nissan have talked recently about the importance of battery recycling.

    Both speakers agreed that more work was needed in terms of regulation or industry best practice in battery recycling to secure supply.

    Attached Files
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    China to lead wind power growth over next five years

    China will lead growth in global wind power capacity of almost 65% over the next five years, with other Asian countries also developing more renewable energy, Reuters reported on April 25, citing the Global Wind Energy Council.

    Cumulative wind energy capacity was 487 GW at the end of 2016, a 12.6% rise from the year before and should grow by almost 65% to 800 GW by the end of 2021, the GWEC said in its annual report on the industry.

    While China will continue to lead the global market, other countries such as India, which set a record for new wind installations last year in an effort to meet ambitious government targets, will also play a part. Globally, wind power capacity installed in 2016 reached 54 GW, which should rise to 60 GW this year, GWEC said.

    Last year, the International Energy Agency said renewables surpassed coal in 2016 to become the largest power source in the world.

    "Wind power is now successfully competing with heavily subsidized incumbents across the globe, building new industries, creating hundreds of thousands of jobs and leading the way towards a clean energy future," GWEC Secretary General Steve Sawyer said in a statement.

    Last year saw significant price reductions for offshore wind in Europe, the report said.

    "Europe will continue to lead the offshore market, but the low prices have attracted the attention of policymakers worldwide, particularly in North America and Asia," it said.
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    Lynas Corp: Higher output, prices boost cash-flow

    Rare earths miner and processor Lynas is gaining the benefits of record performance, with March qtr (Q3FY17) operating and investing cash flows rising to $A11.6M on the back of record invoiced sales of $69.3M (up 6.6% from the Dec qtr) and above-design rate production of 1,373t NdPr.

    Now the world's second largest producer of neodymium-praseodymium, and the largest independent supplier, Lynas is benefiting also from the improving in-China market price to $US34/kg from $31/kg at the start of the qtr).
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    EDF EN looks to wind park "repowering", German market in Futuren takeover

    EDF Energies Nouvelles is looking to "repower" old wind parks and get into the German market through its planned 320 million euro ($350 million) acquisition of French wind developer Futuren,, EDF EN chief Jerome Cahuzac said on Tuesday.

    EDF renewable energy unit EDF EN has agreed to buy 67 percent of Futuren from a group of investment funds and wants to launch a bid for 100 percent by year-end in a deal that could value Futuren at 315 to 320 million euros, Cahuzac said.

    Futuren - called Theolia before financial difficulties forced it into a restructuring - has 50 megawatts (MW) of ageing turbines in Morocco which will have to be repowered with new machines in the next 12-18 months and 140 MW in Germany that will have to be repowered in 3-4 years.

    EDF expects synergies on spare parts purchasing, insurance, engineering and finance will add up to 20-30 million euros, or about 10 percent of the Futuren acquisition price.

    "Repowering is a key issue for us and for all wind developers in Europe," Cahuzac told reporters.

    He said that since the first wind parks were installed in the windiest sites, repowering is a good option as the sites are already grid-connected and face less public resistance.

    Futuren has net installed wind capacity of 330 MW in Germany, France, Morocco and Italy, 357 MW under management in Germany and development projects totalling just over 400 MW.

    Repowering typically takes about half the time of greenfield development, which is six to seven years in France, twice as long as in Germany.

    "Germany is an important country for us, precisely because of the repowering market there," he said.

    Germany - which has seven times more wind turbines per square kilometre than France - has lots of ageing parks whose subsidies will expire in coming years.

    Cahuzac said the German market is more challenging for smaller players since the country replaced feed-in tariffs with market prices plus a premium, and he expects a wave of consolidation in the highly fragmented wind market there.

    "We look at all possible acquisitions in Germany, especially at companies that have major development projects," he said.

    EDF EN has virtually no presence in Germany at the moment and employs only a few people there. Futuren has staff of 30 in Germany and 45 in France.

    End 2016, EDF EN had 3,108 employees and installed capacity of 9,614 MW, of which 88 percent wind and 9 percent solar. The Futuren deal would boost EDF EN's French wind market share to nearly 12 percent from 10 percent.
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    China Q1 grid-connected wind power capacity up 13pct on year

    China's grid-connected wind power generation capacity amounted to 151 GW over January-March, increasing 13% from the previous year, showed the latest data from the National Energy Administration (NEA) on April 25.

    China also saw newly added grid-connected wind power generation capacity hit 3.52 GW during the first three months, said the NEA.

    Northwest China's Qinhai province registered the largest gain in grid-connected wind power capacity of 0.59 GW in the first three month.

    From January to March, on-grid wind electricity totaled 68.7 TWh, a year-on-year increase of 26%.

    China's wind power generation facilities registered average utilization of 468 hours over January-March, gaining 46 hours from the year prior.

    Sichuan and Jilin province registered the highest and lowest average utilization of 962 and 278 hours, respectively.
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    China to boost non-fossil fuel use to 20 percent by 2030: state planner

    China aims for non-fossil fuels to account for about 20 percent of total energy consumption by 2030, increasing to more than half of demand by 2050, its state planner said on Tuesday, as Beijing continues its years-long shift away from coal power.

    In a policy document, the National Development and Reform Commission (NDRC) said carbon dioxide (CO2) emissions will peak by 2030 and total energy demand will be capped at 6 billion tons of standard coal equivalent by 2030, up from 4.4 billion tons targeted for this year.

    The NDRC said it wants to increase oil and underground natural gas storage facilities, but it did not give any further details.

    The statement largely reiterated previous pledges contained in five-year plans and other policy documents and aimed at boosting wind and solar power usage.
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    Hainan: clean energy installed capacity proportion over 50% in 2020

    As of 2020, the installed power capacity in Hainan province would stand at 11.5 GW, over half of which is expected to come from clean energy, the provincial government recently announced in a notice.

    Nuclear installed capacity would stand at 1.3 GW, generating 9.1 TWh of power in 2020; that of hydropower would amount to 1.5 GW, (including pumped storage), generating 2.3 TWh of electricity in the year.

    Non-fossil energy was planned to account for about 17% of total energy consumption in the province by 2020, the notice also pointed out.

    Power generation from non-fossil energy would be up to 14.4 TWh in 2020, or 33% of the power consumption in this province.

    By 2020, clean thermal and nuclear power would be the main power in Hainan. Power from gas and pumped storage generation would be used for peak-load regulation.
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    India Gets Record Low Bid to Build Solar Power, Minister Says

    The price of solar power in India fell to a record low of 3.15 rupees (5 U.S. cents) a kilowatt-hour in a competitive tender where French firm Engie SA’s local arm won rights to develop 250 MW.

    Power Minister Piyush Goyal confirmed the results on Twitter, saying the prices bid were a record low in the auction in the southern state of Andhra Pradesh. The result is part of Prime Minister Narendra Modi’s ambition to install 175 GW of renewables by 2022 and will spur discussion about whether India can rely on solar for more of its electricity.

    Engie bid under the name Solairedirect Energy India Pvt, according to Bridge to India, a research firm that tweeted a list of companies involved. An official at Engie had no public comment.

    Other participants in the auction include Adani Group; Ostro Energy Pvt, which is backed by private equity firm Actis LLP; Canadian Solar Inc.; Greenko Energy Holdings; Azure Power Global Ltd.; and Mahindra Renewables Pvt Ltd., the renewable energy arm of automaker Mahindra & Mahindra Ltd.

    This bids beat the previous record of 3.30 rupees a unit seen in February, when companies got rights to build 750 MW in the central India state Madhya Pradesh.

    India currently has 51 GW of installed clean energy capacity, according to government data.

    Attached Files
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    Potash Corp raises outlook, notches higher profit as sales climb

    Canada's Potash Corp of Saskatchewan reported a bigger-than-expected rise in quarterly profit on Thursday and raised its full-year outlook, citing lower costs and increased sales volumes.

    Shares of the Saskatoon, Saskatchewan-based fertilizer producer rose 1.6 percent in early New York trading, touching a three-week high.

    Revenue was lower in the first quarter due to weaker prices year over year, but it still exceeded Wall Street's expectations.

    Potash prices have rebounded modestly since last year but remain low due to bloated global capacity and weakening farm incomes. Even so, Potash Corp forecast global potash demand of 61 million to 64 million tonnes this year, exceeding last year's 60 million tonnes.

    Potash said it expected full-year earnings of 45 cents to 65 cents per share, up from its prior forecast of 35 cents to 55 cents.

    The company raised the lower end of its estimate for 2017 potash sales to 8.9 million tonnes from 8.7 million tonnes, keeping the upper end at 9.4 million tonnes.

    "We expect improved consumption trends and nutrient affordability in key markets to support potash demand and our results through the remainder of 2017," Chief Executive Officer Jochen Tilk said in a statement.

    Bernstein analyst Jonas Oxgaard said earnings benefited from a lower tax rate as well as stronger sales in China, India and North America.

    "(It) suggests the potash price recovery is in strong force," he said in a note.

    But Citi analyst P.J. Juvekar said it was too early to envision a major recovery as rivals bring on new potash mines through next year.

    Potash has nearly finished expanding its low-cost Rocanville, Saskatchewan, mine, which it says will help it weather weak crop nutrient prices.

    In September, Potash and rival Agrium Inc announced plans to merge. The deal would combine Potash's fertilizer capacity, the world's largest, and Agrium's farm retail network, North America's biggest.

    Tilk said the companies were working through the regulatory process and still expect the deal to close in mid-2017.

    Net earnings nearly doubled to $149 million, or 18 cents per share, in the quarter, beating the analysts' average estimate of 11 cents.

    Revenue fell 8 percent to $1.11 billion, despite a 13 percent rise in potash sales volumes.

    Analysts on average had expected $1.06 billion, according to Thomson Reuters I/B/E/S.

    Attached Files
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    DuPont profit beats on strong seed demand

    Chemicals and seeds producer DuPont, which is merging with Dow Chemical Co, reported a better-than-expected profit for the seventh straight quarter, helped by a rise in seed sales.

    Operating earnings at DuPont's agriculture business rose 12 percent to $1.24 billion in the first quarter ended March 31.

    Sales from the business, which accounts for half of its total revenue, rose 4 percent to $3.93 billion, helped by improved pricing as well as increased seed sale volumes.

    DuPont has moved from selling its farm products to retailers and distributors, focusing instead on selling directly to farmers in the United States.

    This pushed the timing of some seed sales to the first quarter from the fourth.

    Demand was also propelled by late-season seed demand in South America and the planting of the largest combined corn and soybean acres on record in the United States.

    U.S. seeds and agrochemicals company Monsanto Co (MON.N) — which is in the process of being bought by Germany's Bayer AG (BAYGn.DE) for $66 billion — also reported a better-than-expected quarterly profit earlier this month, helped by strong demand for its soybean and corn seeds.

    DuPont said it expects its profit per share to dip by about 5 percent to $2.42 in the first half of the year, hurt by a 32 cent charge for the Dow deal.

    "We continue to expect to close the merger in August of this year and quickly begin working on the 500-plus projects already identified to deliver the targeted $3 billion in cost synergies," Chief Executive Ed Breen said in a statement.

    The deal close has been repeatedly delayed. The merger, announced in December 2015, is now anticipated to close between Aug. 1 and Sept. 1.

    DuPont said it expects operating earnings per share, which excludes one-time items, to rise 16 percent in the first half to $2.90, driven by sales growth.

    Net income attributable to DuPont fell to $1.11 billion, or $1.27 per share, in the first quarter, from $1.23 billion, or $1.39 per share, a year earlier.

    The latest quarter included charges of $36 million, while the year-ago quarter included a $160 million gain.

    Excluding items, operating profit in the latest quarter was $1.64, above analysts' estimate of $1.39, according to Thomson Reuters I/B/E/S.

    Net sales rose 4.6 percent to $7.74 billion, beating estimates of $7.50 billion.
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    California rains muddy farm fields, higher vegetable prices soak shoppers

    Record rains are a double-edged sword for California's Salinas Valley: While the recent deluge virtually ended the state's historic drought, it also created muddy, unworkable fields - sending prices for everything from kale to cauliflower soaring.

    The famed agricultural region just south of Silicon Valley is usually a springtime sea of green vegetables. But this year, there are patches of brown unplanted dirt in "America's salad bowl," which supplies more than 60 percent of the country's leaf lettuce and almost half of its broccoli.

    "Most fields under normal conditions would be planted at this point," Jerrett Stoffel, vice president of operations at Taylor Farms, said in an interview at the privately held company's sprawling outpost in Salinas, California.

    Taylor Farms is a major provider of produce to customers such as grocer Kroger Co and burrito seller Chipotle Mexican Grill Inc.

    "No matter whether you live here or you live in Boston, you're going to see the impact" on supply and prices, Stoffel said.

    Salinas has been struck by a series supply-squeezing events, said Roland Fumasi, a Rabobank analyst who covers the fresh fruit, vegetable and flower sectors.

    Unusually hot weather in desert growing areas such as Yuma, Arizona, and California's Imperial Valley during December and January resulted in early harvests. California's 90-mile long Salinas Valley, which runs from Salinas to King City, couldn't fill the supply gap because heavy rains in January and February delayed or prevented some planting.

    And, more recent rains have lowered yields and delayed harvests for some crops that are in the ground.

    Since Oct. 1, Salinas has received 16.4 inches of rain, significantly more than normal rainfall of almost 12 inches annually, said Eric Boldt, a National Weather Service meteorologist.

    California's rainy season usually wraps up at the end of April, and the 14-day weather outlook suggests that is holding, Boldt said.

    "By the middle of next month, we might be pretty close to normal supply-side conditions," said Fumasi. "If we were to get heavy rains, then all bets are off."

    The supply crimp sent up wholesale prices, which are usually passed on to shoppers.

    Prices for boxes of California spinach and kale were up 20 percent and 87 percent, respectively, for the first two weeks of April versus the same period in 2016, according to data from the U.S. Department of Agriculture.

    The moves have been more dramatic for broccoli and cauliflower. Broccoli more than tripled to $30.21 per box from $9.08; cauliflower is at $37.52 versus $13.74, USDA data as of April 15 shows.

    Doug Classen, vice president of sales at the Nunes Co, which grows and ships Foxy brand produce, said there are few options for filling the supply gap since there is not much product coming from Mexico and other parts of the United States.

    When asked about the area's supply prospects, Classen uttered words unthinkable just a year ago: "Let's put it this way, I don't want to see any more rain."
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    Vomitoxin makes nasty appearance for U.S. farm sector

    A fungus that causes “vomitoxin” has been found in some U.S. corn harvested last year, forcing poultry and pork farmers to test their grain, and giving headaches to grain growers already wrestling with massive supplies and low prices.

    The plant toxin sickens livestock and can also make humans and pets fall ill.

    The appearance of vomitoxin and other toxins produced by fungi is affecting ethanol markets and prompting grain processors to seek alternative sources of feed supplies.

    Researchers at the U.S. Department of Agriculture first isolated the toxin in 1973 after an unusually wet winter in the Midwest. The compound was given what researchers described as the “trivial name” vomitoxin because pigs were refusing to eat the infected corn or vomiting after consuming it. The U.S. Corn Belt had earlier outbreaks of infection from the toxin in 1966 and 1928.

    A vessel carrying a shipment of corn from Paraguay is due next month at a North Carolina port used by Smithfield Foods, Inc the world's largest pork producer.

    The spread of vomitoxin is concentrated in Indiana, Wisconsin, Ohio, and parts of Iowa and Michigan, and its full impact is not yet known, according to state officials and data gathered by food testing firm Neogen Corp. (NEOG.O)

    In Indiana, 40 of 92 counties had at least one load of corn harvested last fall that has tested positive for vomitoxin, according to the Office of Indiana State Chemist's county survey. In 2015 and 2014, no more than four counties saw grain affected by the fungus.

    And in a "considerable" share of corn crops tested in Michigan, Wisconsin and Indiana since last fall's harvest, the vomitoxin levels have tested high enough to be considered too toxic for humans, pets, hogs, chickens and dairy cattle, according to public and private data compiled by Neogen. The company did not state what percent of each state's corn crop was tested.

    Smithfield would not confirm it had ordered the corn from Paraguay, but two independent grain trading sources said Smithfield was the likely buyer. A company source said corn Smithfield has brought in from Indiana and Ohio, to feed pigs in North Carolina, has been "horrible quality” due to the presence of mycotoxins.


    The U.S. Food and Drug Administration allows vomitoxin levels of up to 1 part per million (ppm) in human and pet foods and recommends levels under 5 ppm in grain for hogs, 10 ppm for chickens and dairy cattle. Beef cattle can withstand toxin levels up to 30 ppm.

    Alltech Inc, a Kentucky-based feed supplement company, said 73 percent of feed samples it has tested this year have vomitoxin. The company analyzed samples sent by farmers whose animals have fallen ill.

    "We know there is lots of bad corn out there, because corn byproducts keep getting worse," said Max Hawkins, a nutritionist with Alltech.

    Neogen, which sells grain testing supplies, reported a 29 percent jump in global sales for toxin tests - with strong demand for vomitoxin tests - in their fiscal third quarter, ending Feb. 28.

    "We're polling our customers and continually talking to them about the levels they're seeing. Those levels are not going down," said Pat Frasco, director of sales for Neogen's milling, grain and pet food business.

    The problem, stemming from heavy rain before and during the 2016 harvest, prompted farmers to store wet grain, said farmers, ethanol makers and grain inspectors.

    The issue was compounded by farmers and grain elevators storing corn on the ground and other improvised spaces, sometimes covering the grain piles with plastic tarps. Grain buyers say they will have a clearer picture of the problem later this spring, as more farm-stored grain is moved to market.

    Iowa State University grain quality expert Charles Hurburgh said the sheer size of the harvest in 2016 – the largest in U.S. history – complicates the job of managing toxins in grain, especially in the core Midwest.

    "Mycotoxins are very hard to handle in high volume," he said. "You can't test every truckload, or if you do, you are only going to unload 20 trucks in a day.” By comparison, corn processors in Iowa unload 400 or more trucks a day.


    Ethanol makers already are feeling the impact. Turning corn into ethanol creates a byproduct called distillers dried grains (DDGs), which is sold as animal feed. With fuel prices low, the DDGs can boost profitability.

    But the refining process triples the concentration of mycotoxins, making the feed byproduct less attractive. DDG prices in Indiana fell to $92.50 per ton in February, the lowest since 2009, and now are selling for $97.50 per ton, according to USDA.

    Many ethanol plants are testing nearly every load of corn they receive for the presence of vomitoxin, said Indiana grain inspector Doug Titus, whose company has labs at The Andersons Inc (ANDE.O), a grain handler, and energy company Valero Energy (VLO) sites.

    The Andersons in a February call with analysts said vomitoxin has hurt results at three of its refineries in the eastern U.S. "That will be with us for some time," Andersons' chief executive Pat Bowe said.

    Missouri grain farmer Doug Roth, who put grain into storage after last year’s wet harvest, has seen a few loads of corn rejected by clients who make pet food after the grain tested positive for low levels of fumonisin, a type of mycotoxin.

    Roth said he paid to reroute the grain to livestock producers in Arkansas, who planned to blend it with unaffected grain in order to mitigate the effect of the toxins.

    "As long as this doesn’t become a widespread problem, we're all fine," said Roth, who said toxins have shown up in less than 1 percent of the grain loads he has sold.

    U.S. farmers with clean corn are reaping a price bump. A Cardinal Ethanol plant in Union City, Indiana, is offering grain sellers a 10-cent per bushel premium for corn with less than one-part-per-million (ppm) or less of vomitoxin in it, according to the company's website.
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    Precious Metals

    AngloGold suspends Colombia project after anti-mining vote

    South Africa's AngloGold Ashanti has halted all exploration work at its La Colosa project in central Tolima, Colombia, after voters backed a proposal to ban mining in the municipality, the company said on Thursday.

    The decision comes amid legal wrangling over environmental regulations and community opposition that have worried investors and prompted the mining minister to promise a new law to reconcile central government-granted mining permits with local and judicial concerns.

    The company, which has been carrying out exploration work at the site outside of the town of Cajamarca for 14 years, said in a statement it "accepted" the result of last month's vote.

    "Diverse reasons which range from the institutional, the political and particularly the social, with the recent referendum, oblige us to take the unfortunate decision to stop all project activities and with it all employment and investment, until there's certainty about mining activity in the country and in Tolima," AngloGold said.

    The Tolima vote was made possible by a Constitutional Court decision that overturned the national government's sole authority to approve mining projects, allowing mayors and provincial governors to challenge exploration permits, to the delight of environmental groups and some politicians.

    The La Colosa project had a potential investment of $2 billion, the company has said, and could yield 28 million ounces of gold. A huge majority of Cajamarca residents - 98.8 percent - voted against allowing mining in the referendum. AngloGold has invested some $900 million in Colombia since 2006 and La Colosa was the largest of its three projects in the country.

    The company said it would continue to seek constructive dialogue about mining in the country.

    Colombia is the world's fifth-largest producer of coal and has rich deposits of gold, ferronickel, silver, copper and emeralds.

    Community votes are not the only concern for investors - Canadian company Eco Oro Minerals Corp is waging a legal battle against a court ruling that bars exploration in half its concession in an effort to preserve high-altitude wetlands.
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    Fresnillo says Q1 silver output up 12.5 pct, on track to meet FY targets

    Precious metals miner Fresnillo Plc said its silver production rose 12.5 percent in the first quarter due to higher ore grades at its Fresnillo and Cienega mines in Mexico.

    The company, which mines silver and gold at six mines in Mexico, said silver production hit 12.4 million ounces for the quarter ended March 31.

    Gold production for the quarter, however, fell 3.3 percent to 222,290 ounces due to lower grades at the company's Herradura mine and a one-off reduction of inventory levels.

    The company said it was on track to meet its 2017 production guidance of 58 million-61 million ounces of silver and 870,000-900,000 ounces of gold.

    Demand for gold, a safe-haven metal, has been robust amid mounting geopolitical uncertainty across the world, including Britain's move to leave the European Union.

    Meanwhile, the slide in the peso has been pushing costs lower for Fresnillo, while silver prices are ramping up on strong industrial demand and the metal's attraction as a haven from risk.

    Spot gold prices have risen 8.4 percent in the first quarter and silver has gained 14.4 percent, while the Mexican Peso has weakened 9.6 percent.
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    Newmont beats market, ups long-term output forecast

    Newmont Mining Corp reported higher-than-expected adjusted earnings on Monday helped by higher production and gold prices as the gold miner also raised its longer-term forecast for output and lowered costs due to expansions at a Ghanaian mine.

    The world's second-biggest gold producer by market value said adjusted earnings in the first quarter increased 4 percent to $133 million, or 25 cents per diluted share, from the same quarter in 2016.

    That was ahead of analysts' average forecasts of 22 cents a share, according to Thomson Reuters I/B/E/S.

    The Greenwood Village, Colorado-based miner, which has mines in the Americas, Africa and Australia left unchanged its gold production forecast for 2017.

    But it raised its production forecast for 2018 and beyond to between 4.7 million and 5.2 million ounces on the back of recently-approved expansions at its Ahafo mine in Ghana. Newmont had previously forecast production remaining stable at 4.5 million to 5.0 million ounces in this period.

    Newmont said all-in sustaining cost forecasts were unchanged for 2017 and 2018 but longer-term costs would fall to between $870 and $970 per ounce on increased production from Ahafo. Previously Newmont had forecast costs of between $880 and $980 per ounce in this period.

    Newmont announced plans on April 20 to extend production at its Ahafo mine by building a new underground mine and expanding plant capacity by 50 percent.
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    De Beers achieves 8% y/y increase in Q1 diamond output

    Diamond giant De Beers’ rough diamond production increased by 8% to 7.4-million carats in the first quarter of the year, reflecting the contribution of the Gahcho Kué mine, in Canada.

    The joint venture mine reached commercial production on March 2 and contributed 600 000 ct to De Beers’ production for the quarter.

    De Beers Consolidated Mines (DBCM), in South Africa, increased production by 19% to 1.1-million carats, largely as a result of higher grades at the Venetia site.

    Namdeb Holdings, in Namibia, recorded a 6% increase in diamond production, to 500 000 ct.

    However, the miner noted that, in Botswana, Debswana’s production decreased marginally to 5.2-million carats, while production at Jwaneng decreased by 8% owing to expected lower grades. This was partly offset by Orapa, where production increased by 5% owing to higher grades.

    Total rough diamond sales volumes for the quarter reached 14.1-million carats, reflecting stronger demand, particularly for lower-value goods in stock at December 31.
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    Galantas Gold plummets as it halts Irish mine expansion on terrorism fears

    Shares in Galantas Gold collapsed in London Monday after the Canadian miner announced it had halted expansion work at its Omagh gold mine as the Police Service of Northern Ireland (PSNI) said it was unable to guarantee it the necessary “anti-terrorism cover” for its blasting operations.

    The Toronto-based company, which had has begun underground development at Omagh last month, was going to create 130 new jobs due to the expansion, but it now says it was reviewing potential redundancies with recently hired mine staff, and any new recruitment or ongoing investment had been “deferred”.

    The Police Service of Northern Ireland told the miner it cannot grant it daily anti-terrorism cover for its blasting operations at the Omagh gold mine.

    The stock plummeted on the news and it was down almost 33% to 4.65p at 1:41 pm GMT.

    PSNI told the company that due to resource constraints and competing priorities, it was currently only prepared to provide anti-terrorism cover for a maximum of a two-hour period, two days a week. Such supervision, a regular duty of PSNI, is considered crucial to avoid that the transportation and use of certain rock breaking materials and explosives ends in hand of terrorists, the company said.

    Galantas noted the PSNI was also requesting a “cost recovery agreement” for the limited potential reduced protection and added the offered time was insufficient to sustain the development or operation of the mine.

    The company said that it was prepared to enter into a costs recovery agreement, provided supervision was granted for a two-hour period, five days per week., Galantas Gold’s president and chief executive, Roland Phelps, said the PSNI’s stance was a blow to the proposed mine development and to the livelihoods of its employees.

    The PSNI decision may jeopardize the future of other projects currently being developed in the area, including Canada’s Dalradian Resources (TSX:DNA) (LON:DALR), which has been working on its proposed gold project in Tyrone, North Ireland, since early 2010.

    The Toronto-based junior owns the mineral rights to more than 80,000 hectares in Northern Ireland, which includes its flagship Curraghinalt gold project outside Gortin, identified as one of the top ten undeveloped gold deposits by grade in the world.

    Northern Ireland holds the world’s seventh richest undeveloped seam of gold, but political violence kept most investors away for about three decades.
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    Argentina mulls $500 million safety plan for Barrick's Veladero mine

    Barrick Gold Corp and its new Chinese partner presented a $500 million plan on Friday to make safety and environmental improvements to the Veladero gold mine in Argentina after a third cyanide spill in 18 months, a company executive said.

    Argentina told Barrick earlier this month it had to overhaul environmental and operating processes at the mine following the latest spill on March 28.

    "We've got a plan over two years to invest half a billion dollars to develop Veladero operations," Barrick Chief Operating Officer Richard Williams told reporters after meeting government officials in Buenos Aires.

    Local authorities say the company needs to make improvements in pipelines and in its control and monitoring systems as well as expand its leach processing facility.

    Barrick will submit the technical plan next week, Williams said. "The leach pad is going to be extended and developed and improved. So it's going to be re-engineered."

    Argentina's Energy and Mining Minister Juan Jose Aranguren said that analyzing the plan would take about two weeks and approval would depend on guarantees of investment by Barrick aimed at improving safety at the mine.

    Barrick, the world's largest gold miner, has been temporarily restricted from adding cyanide to the mine's gold processing facility in Veladero, although other operations continue.

    Alberto Hensel, mining minister of San Juan province where the facility is located, told local radio he hoped the sale of 50 percent of the mine to China's Shandong Gold Mining Co announced this month would improve its operations.

    "What we know about Shandong is that it is a company that has extensive experience meeting the highest environmental standards, which we believe will contribute to the improvement of the Veladero mine," Hensel told radio station Radio Sarmiento in San Juan on Thursday evening.

    The Toronto-based company, which counts Veladero as one of its five core mines, says no material impact was expected on the mine's projected 2017 production.

    The provincial government, which rejected a first work plan from Barrick on April 5, is still evaluating a potential fine for the company for the March 28 incident.

    Hensel said penalties could surpass the $9.8 million the company was fined for a 2015 spill. A fine has not yet been applied for a September 2016 incident in which solution containing cyanide flowed over a berm.
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    Base Metals

    BHP advancing in sale of Chile's Cerro Colorado copper mine -union

    BHP Billiton is advancing with the sale of its small Cerro Colorado copper mine in Chile and there are a number of interested parties, although finalizing the deal will likely take some months, the mine's union said on Thursday.

    BHP management updated union leaders on the planned sale of the mine this week, ahead of planned visits to the deposit by potential buyers, union leader Marcelo Franco said in an interview.

    Cerro Colorado produced 74,000 tonnes of copper last year out of top exporter Chile's total 5.5 million. Located in the extreme north of the country's copper belt, it has permission to operate until 2023 but that could be extended.

    "(The sale) is already pretty well advanced, but they said it could last some months," said Franco.

    Franco said he did not know the identity of the interested parties. Traders have mentioned Chile's Empresas Copec SA , a conglomerate that has voiced interest in diversifying into copper, and Canadian companies such as Lundin Mining Corp, as possible buyers.

    He said the union had a positive attitude toward a future deal as workers' benefits were legally assured and it felt BHP was more focused on its larger Chilean assets, Spence and Escondida - the world's biggest copper mine.
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    Philippines open-pit ban will not apply to existing mines - minister

    Philippine Environment Secretary Regina Lopez said on Thursday that the ban on open-pit mining will not apply to existing mines, but only to undeveloped ones.

    Lopez earlier in the day said she is prohibiting open-pit mining, part of a months-long crackdown on the sector she blames for extensive environmental damage.
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    Kaz minerals Q1 copper output up 16 pct; says on track for FY targets

    Copper miner Kaz Minerals reported a 16 percent rise in its first-quarter copper production as it ramped up new mines.

    The company, focused on large-scale, low-cost open pit mining in Kazakhstan, reported production of 52,000 tonnes of copper in the first quarter ended March 31.

    Kaz said it was on track to meet 2017 production guidance for all metals.
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    Arconic sheds Alcoa stake through debt-for-equity swap

    Specialty metals maker Arconic Inc said on Wednesday it would exit its stake in Alcoa Corp through a debt-for-equity swap with two of its creditors.

    Arconic said it would exchange the nearly 13 million Alcoa shares it owns for debt held by Citigroup Global Markets Inc and Credit Suisse Securities (USA) LLC.
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    U.S. launches national security probe into aluminium imports

    The U.S. Commerce Department launched an investigation on Wednesday to determine whether a flood of aluminium imports from China and elsewhere was compromising U.S. national security, a step that could lead to broad import restrictions on the metal.

    Commerce Secretary Wilbur Ross said the investigation was similar to one announced last week for steel imports into the United States, invoking Section 232 of a national security law passed in 1962 at the height of the Cold War.

    Ross told reporters the probe was prompted by the extreme competitive pressures that unfairly traded imports were putting on the U.S. aluminum industry, causing several domestic smelters to close or halt production in recent years.

    China, the world's top producer and consumer of the metal, is seriously concerned by the probe and hopes to resolve the dispute through negotiations, a Commerce Ministry spokesman said at a regular briefing on Thursday.

    The U.S. move is the latest of several potential U.S. actions aimed at stemming a rising tide of aluminium imports. The Commerce Department is investigating allegations that Chinese companies are dumping aluminium foil into the U.S. market below cost and benefiting from unfair subsidies.

    Ross said part of the justification for the investigation was that U.S. combat aircraft such as the Lockheed Martin F-35 joint strike fighter and the Boeing F/A-18 Super Hornet require high-purity aluminum that is now produced by only one smelter, Century Aluminum Co.

    He said that company could probably meet U.S. peacetime needs, but not if the United States needed to ramp up defence production for a conflict. The same high-purity aluminium goes into armour plating for military vehicles and naval vessels, he said.

    "At the very same time that our military is needing more and more of the very high-quality aluminium, we're producing less and less of everything, and only have the one producer of aerospace- quality aluminium," Ross told a White House briefing.

    The investigation will determine if there is sufficient domestic aluminium capacity to meet U.S. defence needs and will also assess the effects of lost jobs, skills and investments on national security, Ross said.

    Although he said China was a major contributor to the global excess capacity in aluminium production, he said imports from other countries, including Russia, were also causing problems.

    "This is not a China-phobic program, this has to do with a global problem," Ross said.

    Last November, a dozen U.S. senators requested that a U.S. national security review panel reject the $2.3 billion acquisition of Cleveland-based aluminium products maker Aleris Corp by China's Zhongwang International Group Ltd.

    Aleris spokesman Jason Saragian said the aluminium probe announced by the Commerce Department was unrelated to the ongoing review of the merger by the Committee on Foreign Investment in the United States (CFIUS).

    "The pending acquisition is not affected by this broad inquiry, because the transaction does not involve any imports from China," Saragian said in an emailed statement.
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    Freeport readies first Grasberg copper exports after 15-week halt

    Freeport McMoRan Inc is preparing three copper concentrate export shipments from its giant Grasberg mine in Indonesia after a 15-week outage, sources with direct knowledge of the matter said.

    Freeport is ramping up output and copper shipments from Grasberg, the world's second-biggest copper mine, after obtaining an export permit on Friday that coincided with U.S. Vice President Mike Pence's state visit.

    These include shipments for customers in South Korea and Japan, the sources told Reuters. The restart of Grasberg shipments could mean freight savings for East Asian customers forced to buy from Chile while Indonesian exports were offline, one South Korean-based trade source said.

    It takes "about 35 days" to ship from Chile, he said, more than three times longer than it takes to ship from Grasberg.

    A shipping source in Japan said a vessel has loaded 22,000 tonnes of copper concentrate from Grasberg and is ready to leave for South Korea as early as later on Wednesday. Other ships may be headed to India and China, industry sources said.

    A spokesman for Freeport Indonesia declined immediate comment on the matter.

    Freeport is coordinating with customers who had made "other arrangements for supply when we were shut down for exports," chief executive Richard Adkerson told an earnings conference call late on Tuesday.

    There were "a series of ships, ones having loading completed as we speak," he said, referring to 20,000-25,000-tonne vessels.

    "We had close to 100,000 tonnes of copper concentrate at our portside ... so we'll have a series of ships to reduce that inventory."

    Indonesia halted Freeport's copper concentrate exports on Jan. 12 under rules requiring the world's largest publicly listed copper miner to adopt a new mining permit, divest a 51 percent stake of its Indonesian unit, build a second smelter, relinquish arbitration rights and pay new taxes and royalties.

    Adkerson said arbitration is still an option being considered by the Phoenix, Arizona-based company that has said it will only agree to a new permit with the same fiscal and legal protection in its current contract.

    The stoppage has cost both sides hundreds of millions of dollars, and tensions have grown around Grasberg after Freeport laid off about 10 percent of its workforce of 32,000 and cut spending on underground expansion by one-third in an effort to stem its losses.

    The company is now in talks with union leaders representing about one-third of its Indonesian workforce, Adkerson said, "in an effort to get them back to work."

    Union leaders warned last week that a one-month strike would commence on May 1, demanding an end to Freeport's furlough policy.

    According to the trade ministry, Freeport exported 1.17 million tonnes of copper concentrate to Japan, South Korea, China, India and the Philippines in 2016.
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    Freeport hit by Indonesia export ban, permit talks to start

    Freeport-McMoRan Inc, the world's biggest publicly listed copper miner, reported first-quarter results on Tuesday that reflected a months-long Indonesian export ban at its massive Grasberg mine, which clipped sales.

    Freeport, which resumed copper concentrate exports from Indonesia on Friday after securing a six-month permit, said it will immediately begin negotiations with Jakarta on a long-term license for Grasberg, the world's second-biggest copper mine.

    New rules in Indonesia require miners to divest a 51 percent stake in their operations, relinquish arbitration rights and pay new taxes and royalties.

    Freeport has said it will only agree to a new permit with the same fiscal and legal protection in its current contract.

    Freeport said it had cut costs, reduced its workforce and slowed spending on underground development and a new smelter in the Southeast Asian nation.

    If it secures an agreement, Freeport expects to spend about $1 billion annually for the next five years on Indonesia developments. Without a deal, it said that spending will be significantly cut or deferred.

    Adjusted first-quarter profit was $220 million, or 15 cents a share, compared with a loss of $196 million, or 16 cents, in the same period last year.

    Indonesia's export ban, which began Jan. 12, meant deferred sales of 190 million pounds of copper and 280,000 ounces of gold.

    Consolidated sales of 809 million pounds of copper and 182,000 ounces of gold lagged Freeport's January forecast of 1 billion pounds of copper and 460,000 ounces of gold.

    Revenue notched up to $3.34 billion in the quarter, slightly lagging analysts' average estimate of $3.46 billion.

    For 2017, Freeport expects sales of some 3.9 billion pounds of copper and 1.9 million ounces of gold, including second-quarter sales of 1 billion pounds of copper and 440,000 ounces of gold. The full-year outlook lags a January estimate of 4.1 billion pounds of copper and 2.2 million ounces of gold.

    Capital expenditure of $1.6 billion in 2017 is down from a previous $1.8 billion estimate and well below $2.8 billion in 2016. Some $700 million of the 2017 spend is earmarked for underground development at Grasberg, which hinges on securing long-term operating rights.

    Freeport, which has sold a string of assets to repair its balance sheet, had $15.4 billion in debt and $4 billion in cash at quarter-end. Two years ago, its debt reached $20.9 billion at June 30, exceeding its $15.7 billion market value.
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    Alcoa Corporation Reports First Quarter 2017 Results

    Company grew profits sequentially on stronger alumina and aluminium pricing

    “Alcoa is off to a strong start with our first full quarter as an independent company”

    1Q 2017 Results1

    Net income of $225 million, or $1.21 per share
    Excluding special items, adjusted net income of $117 million, or $0.63 per share
    Adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA), excluding special items of $533 million, up 59 percent sequentially driven by higher alumina and aluminium pricing
    Revenue of $2.7 billion, up 5 percent sequentially, reflecting increased alumina and aluminium pricing
    $804 million cash balance and $1.45 billion of debt, for net debt of $0.65 billion, as of March 31, 2017
    Company continues to expect full-year 2017 adjusted EBITDA, excluding special items, between $2.1 billion and $2.3 billion2

    Alcoa Corporation, a global leader in bauxite, alumina, and aluminium products, today reported that first quarter 2017 profits grew sequentially on stronger alumina and aluminium pricing and that it maintained a solid cash position.

    In addition, the Company reiterated its expectations of full-year 2017 adjusted EBITDA, excluding special items, between $2.1 billion and $2.3 billion, based on April 2017 market assumptions, and net performance of $50 million for the year.

    “Alcoa is off to a strong start with our first full quarter as an independent company,” said Roy Harvey, Chief Executive Officer of Alcoa. “In our Bauxite segment, our third-party business remained strong and we continued to grow profits, while our Alumina and Aluminium segments captured the benefits of improved market pricing to increase earnings substantially.”

    Harvey continued: “Over the last few months, we also remained focused on our strategic priorities. To reduce complexity, we consolidated our business units and administrative locations; we began to put our return seeking capital to work across our businesses to drive returns, and we continued to strengthen the balance sheet by maintaining a healthy level of cash on hand. As we look forward to the rest of 2017, we are well positioned to deliver value to our stockholders.”

    In first quarter 2017, Alcoa reported net income of $225 million, or $1.21 per share. Results include $108 million of special items largely due to gains from the sale of the Yadkin Hydroelectric Project. First quarter 2017 results compare to a net loss of $125 million, or $(0.68) per share, in fourth quarter 2016, which included costs to streamline the portfolio.

    Excluding the impact of special items, first quarter 2017 adjusted net income was $117 million, or $0.63 per share. In fourth quarter 2016, Alcoa’s adjusted net income was $26 million, or $0.14 per share, excluding special items.

    Alcoa reported first quarter 2017 adjusted EBITDA excluding special items of $533 million, up 59 percent from $335 million in fourth quarter 2016. In first quarter 2017, Alcoa reported revenue of $2.7 billion, up 5 percent sequentially. Both revenue and adjusted EBITDA excluding special items increased on higher alumina and aluminium pricing.

    In the first quarter, the Company’s cash from operations was $74 million and free cash flow was $3 million. Alcoa ended the first quarter of 2017 with cash on hand of $804 million after transferring the net proceeds received from the Yadkin sale to former parent Arconic Inc. according to terms of the separation agreement. The Company reported 19 days working capital.

    In an ongoing effort to reduce complexity, in the first quarter Alcoa streamlined its business segments into three, focused on bauxite, alumina and aluminium. Earlier this month, the Company also announced a consolidation of its administrative locations.    
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    U.S. makes preliminary determination that China is dumping aluminum foil

    The U.S. International Trade Commission has made affirmative determinations in its preliminary phase anti-dumping and countervailing duty investigations of aluminum foil from China, the agency said on Friday.

    The USITC voted to continue the investigations into aluminum foil imports from China, it said in a statement.

    U.S. aluminum foil producers have filed petitions with their government accusing Chinese manufacturers of dumping the product in the United States, the first such case since the inauguration of U.S. President Donald Trump.
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    Freeport warns Indonesia copper mine workers as Grasberg strike looms

    Copper miner Freeport-McMoRan Inc warned on Friday it would punish workers for absenteeism at its Indonesian unit, a day after one of its main unions announced plans to go on a one-month strike over employment conditions.

    Tensions are rising around Grasberg, the world's second-biggest copper mine, after operator Freeport laid off thousands of workers there to stem losses from an ongoing dispute with the Indonesian government over mining rights.

    While Freeport is expecting to soon seal agreements with Jakarta to allow it to temporarily resume copper concentrate exports after a more than three-month hiatus, a strike could impact its efforts to ramp up production.

    "Freeport Indonesia has experienced a high level of absenteeism over the last several days," Freeport spokesman Eric told Reuters.

    "Absenteeism is being tracked and disciplinary actions will be enforced under the terms of the Collective Labor Agreement," Kinneberg said.

    As of last week Freeport had "demobilized" just over 10 percent of its workforce of 32,000, a number expected to grow until its dispute with the government is fully resolved.

    Further adding to tensions around Grasberg, several Freeport workers and police were injured in a clash in Papua on Thursday, when officers fired rubber bullets at demonstrators in Timika.

    The Freeport workers' union said in a statement on Thursday that the company's efforts so far to reduce its workforce have had "extensive impacts on workers and their families".

    Workers are worried about the layoffs "because there are no limits or specific criteria on workers who will be furloughed," the union said. It demanded an end to the furlough policy, and notified Freeport of plans to strike for 30 days from May 1.


    "Efforts by the company to cut costs and reduce their numbers of workers, this is what has made them feel agitated," said Virgo Solossa, a Freeport workers' union member told Reuters. He added that in his view Freeport was only doing what it needed to survive, and that he and many other workers would not join the strike.

    Some workers on Thursday "carried out acts of anarchy ... so police took action and fired rubber bullets," Solossa said. He said four workers and seven police were injured in the clash but that the dispute was not related to the planned strike.

    Timika Police Chief Victor Machbon confirmed the details of the incident, adding that approximately 1,000 demonstrators attempting to free a union leader at a court hearing had not dispersed when tear gas was fired.

    Indonesia halted Freeport's copper concentrate exports in January under new rules that require the Arizona-based company to adopt a special license, pay new taxes and royalties, divest a 51 percent stake in its operations and relinquish arbitration rights. The stoppage has cost both the company and Indonesia hundreds of millions of dollars, but negotiations over sticking points is expected to continue for the next six months at least.

    In February Freeport served notice to Jakarta in the dispute, saying it has the right to commence arbitration in 120 days if no agreement is reached.
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    Pence told Widodo more steps needed on Freeport issue

    U.S. Vice President Mike Pence told Indonesian President Joko Widodo that more steps were needed to resolve the dispute between mining giant Freeport McMoRan Inc and the Indonesian government, a White House foreign policy adviser said on Friday.

    Pence briefly raised the issue during a meeting in Jakarta on Thursday at the presidential palace, thanking Widodo for an interim fix for the dispute over his government's changes to mining rules which had prompted Freeport to slash output at its Grasberg copper mine.
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    Supply disruption hits Vedanta's aluminium plant in eastern India

    Diversified miner Vedantasaid on Thursday its 500 000 t aluminium smelter in the eastern state of Odisha was hit by a power outage this week that damaged over one-third of its processing capacity.

    The company said 228 out of a total of 608 pots that process molten aluminium were damaged by the outage.

    "The impacted pots will require to be repaired over the next few months, and put back into production. Timelines will be announced in due course," the statement said.

    The per day output of each pot is about 2.5 t, a source familiar with the company's operations said.

    The incident could result in a loss of roughly 30 000 t of production in the next three months, a customer who does business with the company told Reuters. That would equate to roughly 25% of the plant's quarterly production.

    "It usually takes three months in case of damaged pots to bring them back to production," the customer said.

    Vedanta runs two smelters at its Jharsuguda plant, the second is a 1.25-million tonnes smelter.

    Aluminium production is a highly power intensive activity and requires constant supply of power 24 hours a day. Any power supply cut beyond four hours could lead to molten aluminium solidifying in the pots leading to wastage of metaland cost to the company. "This requires an expensive rebuilding process," said a note available on the company's website.

    The recovery process is underway, however, the scope of the impact is being analysed, two Vedanta executives said.
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    Las Bambas proves a winner for MMG

    The Las Bambas operation, in Peru, has set a new copper production record for base metals miner MMG, with production in the March quarter reaching 111 314 t.

    The March quarter production was up 6% on the fourth quarter of 2016, and has delivered its third consecutive quarter of production above nameplate capacity since achieving commercial production in June of last year.

    Total copper production for the March quarter was up by 5% on the previous quarter, to 111 684 t, with the Rosebery operation, in, also contributing 343 t during the quarter under review.

    Meanwhile, copper-in-cathode production for the three months to March was down 16% on the previous quarter, to 36 199 t, as production from the Sepon project, in Laos, suffered declining grades and more complex ore.

    MMG on Friday reported that zinc production for the quarter was down 3% on the fourth quarter of 2016, to 19 146 t, while lead production was up 6% to 6 253 t.

    Looking ahead at the full year, MMG expected to produce between 560 000 t and 615 000 t of copper and between 65 000 t and 72 000 t of zinc in 2017.
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    Steel, Iron Ore and Coal

    Union Pacific: Sand.

    Looking forward, we expect coal volumes will continue to benefit from favorable 2016 comps in the second quarter. For the second half of the year, we expect sustained volume assuming natural gas prices remain in the $3 range. As always, weather conditions will be a key factor of demand.

    Industrial Products revenue was up 9% on a 1% increase in volume and a 7% increase in average revenue per car during the quarter. Minerals volume increased 32% in the quarter, driven by a 59% increase in frac sand shipments through increased shale-related drilling activity and proppant intensity per drilling well.

    Specialized markets were impacted by reduced project-based waste shipments, partially offset by strength in our wind and government markets. For the remainder of the year, we anticipate continued strength in frac sand shipments as rig counts in our served territory continue to increase. The strength of the U.S. dollar negatively impacts a number of Industrial Products markets, especially metals and creates some uncertainty in our outlook.

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    Japan's JFE to raise steel output this fiscal year amid solid domestic demand

    JFE Holdings Inc, Japan's No.2 steelmaker, said it plans to hoist crude steel output in the current fiscal year, tapping into the solid domestic demand that helped lift earnings in the 12 months that ended last March.

    With companies raising capital spending and Tokyo's staging of the 2020 Olympics stoking construction projects, JFE expects to produce 29 million tonnes of crude steel in the 12 months through March 2018, executive vice president Shinichi Okada said on Thursday, up 3 percent from last year.

    Okada was speaking at a briefing where JFE said recurring profit - pre-tax earnings before one-off items - climbed almost a third to 84.75 billion yen ($762 million) last fiscal year. That number was boosted by hefty appraisal gains on inventories of coking coal and other raw materials, as well as robust demand at home and overseas.

    The profit beat both JFE's estimate of 70 billion yen and a consensus estimate of 77.3 billion yen from 10 analysts surveyed by Thomson Reuters I/B/E/S.

    But the firm didn't issue a profit forecast for this fiscal year.

    "Our earnings outlook is unclear as coking coal prices have surged after a cyclone in Australia and coal prices for April-June term contract have not been settled," Okada said. While inventory gains boosted last year's results, soaring materials costs cut into its profit margins, he said.

    The price of coking coal - a key steel-making ingredient - has been volatile, nearly quadrupling between March and late November last year, but then halving between then and the end of the last fiscal year.

    Last month brought a new twist, when Cyclone Debbie hit Australia, cutting rail lines in the world's biggest coking coal export region and sending prices higher again.

    While rail links have been restored, Japanese steelmakers have had to scramble for alternative supplies.

    Mounting global trade tensions also cloud the outlook for steelmakers including JFE.

    U.S. President Donald Trump's move to order a probe into whether imports of foreign-made steel are a national security risk has unsettled non-American steelmakers, along with uncertainty over whether he plans to withdraw the United States from the North American Free Trade Agreement (NAFTA).

    JFE and U.S. company Nucor Corp said last year they would form a venture to build a plant in central Mexico to supply automakers serving the NAFTA market.

    "If any new U.S. measures that would affect our customers' businesses emerge, we may have to think over. But there is no change in our plan at the moment," Okada said.

    Attached Files
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    Brazil's Vale misses profit estimates amid slow output

    Vale SA, the world's largest iron ore producer, missed first-quarter profit estimates on Thursday, reflecting the impact of heavy rains that slowed output in a key Brazilian mine and rising financial expenses.

    In a Thursday securities filing, Vale said net income totaled $2.490 billion, compared with profit of $525 million in the prior three months and $1.776 billion a year earlier. The result missed analysts' consensus estimate of $3.325 billion.

    Last week, Vale said first-quarter iron ore output fell 6.7 percent as seasonal rainfalls in the so-called northern system, which groups the Carajás, Serra Leste and S11D mines in northern Brazil, hampered extraction. Revenue slipped on a sequential basis, even as realized prices rose 9 percent from the fourth quarter.

    Despite the profit miss, the results suggest Vale is taking advantage of resilient mineral prices and cost cutting to rethink the pace of asset sales to cut debt. Leverage metrics improved significantly during the quarter, and Vale managed to earmark less money for capital spending this year.

    Higher ore recovery and price realization helped Vale generate $2.454 billion in free cash flow - the money left for bond and shareholders after all expenses are paid - last quarter, accelerating debt reduction plans.

    Management plans to discuss first-quarter results later in the day at a conference call with investors.

    The evolution of productivity and cost metrics signal that outgoing Chief Executive Officer Murilo Ferreira's strategy of making Vale a more cost-competitive player has bore fruit. Still, some investors say Vale may be relying too much on iron ore and metal price behavior to boost returns and cut debt.

    Adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, hit $4.308 billion, below a consensus estimate of $4.996 billion compiled by Thomson Reuters. Net revenue totaled $8.515 billion in the first quarter, below analysts' forecast of $9.026 billion.

    Gross profit slipped, even as Vale's strategy of reining in production at low-margin facilities drove costs down more than analysts expected. Financial expenses jumped to $1.115 billion, after Vale had to reassess the value of interest payments on some debt linked to iron ore prices.
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    Xinjiang to build CBM base

    A coalbed methane (CBM) industrialization base was approved to build in the southern region of Junggar Basin, China's Xinjiang Uygur autonomous region, the Xinjiang Development and Reform Commission announced on April 25.

    The first CBM pilot project landed in Xinjiang in 2016, with annual production capacity at 30 million cubic meters, making the region the third largest CBM extraction hotspot after Shanxi Qinshui Basin and Inner Mongolia Ordos basin.

    Xinjiang possesses abundant reserves of CBM. The estimated CBM resources within 2,000-meter depth stand at 9,510 billion cubic meters, or 26% of the country's total.
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    China March iron ore imports from Australia rise 7.5% on year to 58.95 mil mt

    China imported 58.95 million mt of iron ore from Australia in March, up 7.5% year on year and up 17.8% month on month, according to data released Wednesday by the General Administration of Customs.

    Imports from Brazil, China's second-largest iron ore supplier, rose 8% year on year to 19.12 million mt in March, and 5.1% from the previous month.

    Iron ore supply from Australia represented 61.7% of China's total imports in March, down 63.94% from February.

    Iron ore prices remained firm in March as stronger steel margins fueled demand for steel feedstock.

    More supplies from non-mainstream suppliers such as India sailed to Chinese ports in March.

    Indian ore supplies reached 3.46 million mt in March, up from 0.81 million mt the year before, and up 29% month on month.

    China, the world's largest steel producer, imported 95.55 million mt of iron ore in March, up 11.4% year on year.
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    China Q1 crude steel output up 4.6pct on year

    China's crude steel output grew 4.6% year-on-year to 201.1 million tonnes in the first quarter of 2017, showed data from the China Iron and Steel Association on April 26.

    Over January-March, China's steel exports declined 25% year on year to 20.73 million tonnes, the association said.

    In the first quarter, sales revenues of China's steel companies rose by more than 40% year-on-year to hit a total of 839.3 billion yuan ($122 billion).

    Steel exports to the United States plunged 51.76% year-on-year in 2016 to 1.17 million tonnes, accounting for 1.08% of China's total steel exports.

    Wang Yingsheng, deputy secretary general of the association, said the US stance on investigating steel imports would not exert much influence on China's steel industry.

    China's over-supplied steel sector has experienced years of plunging prices and factory shutdowns due to a sluggish economy. However, with an upward trend in prices since the start of 2016, many steel mills are resuming production.

    The central government has reiterated that cutting overcapacity is high on its reform agenda in 2017 as excess capacity in sectors such as steel and coal has weighed on the country's economic performance.

    Its 2016 target to cut 45 million tonnes was achieved ahead of schedule.
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    Russian miner Mechel says stronger results support debt reduction

    Russian metals and mining giant Mechel could start reducing debt this year if prices for its products hold up and other favourable market conditions continue, it said on Wednesday.

    Mechel, which borrowed heavily before Russia's economic crisis took hold in 2014, has struggled to keep up debt repayments as demand for its products weakened alongside tumbling coal and steel prices.

    Before reaching restructuring agreements on the bulk of its debt last year, the company controlled by businessman Igor Zyuzin was facing bankruptcy.

    Mechel Chief Executive Oleg Korzhov said that increases in prices for coal and steel, its two main products, had supported the company's financial results in 2016.

    "The cashflow generated by the group enables us to service our debt, operate successfully and, if the current favourable market situation holds, begin to decrease our debt burden," he said in a statement.

    Mechel's net debt stood at 459 billion roubles ($8.12 billion) at the end of last year.

    Chief Financial Officer Sergei Rezontov told Reuters in October that the company hoped to sign a final debt restructuring deal with creditors in early 2017.

    But the company said on Wednesday that a syndicate of banks had filed a suit over the repayment of a pre-export financing contract at the London Court of International Arbitration in February.

    "In February 2017, a number of creditors filed 14 arbitration requirements at the London Court of International Arbitration concerning a pre-export financing contract," Mechel said in its 2016 financial report.

    Including penalties and fines, the outstanding debt on that contract amounted to about 68 billion roubles by the end of 2016, the report said. A company spokeswoman said talks with the banks were ongoing.

    Mechel posted a net profit of 1.6 billion roubles for the fourth quarter of 2016, against a net loss of 2.8 billion roubles in the previous quarter.

    Its net profit for the year totalled 7.1 billion roubles, its first annual net profit since 2011, Korzhov said.

    Revenue increased by 20 percent quarter on quarter to 79.7 billion roubles, Mechel said, and earnings before interest, taxation, depreciation and amortisation (EBITDA) jumped 55 percent to 24.6 billion roubles.

    Capital expenditure will total 12.5 billion roubles in 2017, the company added, and it plans to produce 10 million tonnes of coking coal concentrate this year, having sold 8.7 million tonnes in 2016.
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    Ganqimaodu coal imports soar 216pct on year

    As of April 10, coal imports at Ganqimaodu border crossing in northern China's Inner Mongolia autonomous region skyrocketed 215.59% year on year to 5.01 million tonnes, data showed from Wulate Zhongqi Bureau of Commerce.

    Daily coal imports stood at 49,600 tonnes, soaring 215.92% from the preceding year. That was 101 days earlier for the border crossing to see coal imports exceeding 5 million tonnes compared to the previous year.

    From January to March, the border crossing imported 4.5 million tonnes of coal from neighboring Mongolia, hitting a quarterly new high. Total coal imports valued at $360 million.

    Over March 13-March 19, Ganqimaodu borders imported 460,000 tonnes, hitting a new high on weekly-basis. Daily coal imports reached a peak of 88,000 tonnes on February 15.

    Robust imports via the border crossing was mainly due to tight supply of coking coal in China, caused by the policy of de-capacity, environmental protection and supply-side structural reform.

    With Mongolian washed coking coal traded at the border crossing dropping three times to 900 yuan/t since February, as much as 32 enterprises were engaged in coal import business at the border crossing.
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    China to reallocate 500,000 coal and steel workers in 2017

    China needs to reallocate around half a million coal and steel workers in 2017, while advancing reduction of surplus capacity in both industries, Lu aihong, spokeswoman of the Ministry of Human Resources and Social Security, said at a press conference on April 25.

    "This is the key to resolve overcapacity issues, not only directly related to workers' vital interests, but also to the progress of supply-side structural reform," Lu said when asked what measures and policies the ministry will take to address rearrangement of laid-off workers.

    "In order to do a good job this year, we issued a notice couple of days ago over this issue with NDRC and other four relevant departments. We've already arranged key tasks for the year." added Lu.

    On February 29, Yin Weimin, the head of the ministry, said China will introduce a policy this year to encourage the development of new industries, besides assigning workers different jobs within the same or a different company, early retirement or encouraging them to become entrepreneurs.

    China reallocated jobs to 726,000 coal and steel workers in 2016 "without any major problems", overall employment outlook in 2017 is expected to remain relatively stable, despite the government facing immense pressure to create jobs, Yin said then.

    China's central government allocated more than 100 billion yuan ($14.54 billion) last year to help laid-off coal and steel workers and spent more than 30 billion yuan from the fund last year.
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    Haunted by 2016, China's utilities ready for coal buying spree

    China's utilities are readying for a months-long buying spree to shore up thermal coal reserves ahead of the hotter summer months, sources say, in a strategy aimed at averting a supply crunch but which may drive prices higher.

        Top power generating companies will need to purchase more than 40 million tonnes of thermal coal by the end of June to provide a cushion of supply during the third quarter, the second-highest demand period of the year after winter, according to internal government calculations provided by a source briefed on the matter.

    That is 14 percent of China's quarterly output, or 15 days of use. The estimate is based on stocks of 90 million tonnes at the nation's thousands of utilities and a target to reach at least 130 million tonnes by June, the source said. That target is equivalent to almost half of the utilities July to September consumption.

    The plan is to avoid a repeat of last winter's chaos when government mining cuts tightened domestic supplies, triggering a rally in prices in the world's top coal consumer and forcing Beijing to take emergency steps to boost supplies to avert an energy crisis.

    "China could have a bigger coal crisis than last year," said an Inner Mongolia-based purchasing manager with China Resources Power Group on Wednesday.

    Utilities including China Datang Corp [SASADT.UL] and China Guodian Corp [CNGUO.UL] typically replenish stocks after the winter, but this year they will need to load up more than usual because stocks are at multi-year lows, two analysts and two utility sources said.

    The stockpiling demand could spur higher thermal coal futures prices. Futures have already rallied 26 percent this year and hit a record 566.20 yuan ($82.17) per tonne earlier this month.

    Prices are surging as China's government clamped down on illegal mining and required miners to shut production as way to combat pollution and overcapacity.

    The National Development and Reform Commission (NDRC), China's economic planner, did not respond on Wednesday.

    A hotter-than-average summer would have a blistering impact on coal-fired power generation demand. Long-range weather forecasts show temperatures in China's two biggest cities Beijing and Shanghai will be slightly higher than average in July to September.

    Another challenge for the power market is recent low rainfall amounts, which last month crimped hydropower output, China's second-largest power source behind coal.

    "The first quarter was particularly dry compared with 2016, so coal generation went up quite aggressively. Power demand will remain strong and coal will see more upsides when hydropower falters," said Frank Yu, Principal Consultant, APAC Power & Renewables, for Wood Mackenzie.

    Coal inventories at major utilities stand at 50 million tonnes, their lowest in April since at least 2014 when they were 72 million tonnes, according to a survey by consultancy Fenwei.

    Utilities consumed 300 million tonnes of coal in the July to September period last year, Fenwei said.

    The Inner Mongolia buyer said he has 60,000 tonnes of coal, or about ten days of use, which is "very low".

    He will need to increase stocks to almost 100,000 tonnes, or 15 days of use, by the end of June to see him through the summer months.

    Illustrating rising concerns about coal prices in Beijing, the NDRC has issued two statements this week saying it will take steps to get prices to return to "reasonable" levels before the summer months.
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    Kloeckner beats Q1 forecasts, invests in 3D printing

    German steel distributor Kloeckner & Co beat market expectations for first-quarter core profits thanks to a jump in steel prices, which it said it expected to stabilise this quarter, lifting its share price in early trading.

    Kloeckner said it expected a "noticeable" increase in earnings before interest, tax, depreciation and amortisation (EBITDA) for the full year - which it quantified as 5-10 percent growth - after they more than quadrupled in the first quarter.

    EBITDA of 77 million euros ($84 million) beat all the estimates in a Reuters poll, which averaged 74 million euros, and Kloeckner said it expected 60-70 million euros this quarter. Sales that grew 16 percent to 1.6 billion euros also beat consensus.

    Chief Executive Gisbert Ruehl said he expected steel prices to rise by close to 2 percent over the full year in Europe and roughly 3 percent in the United States, and said Kloeckner could benefit from any new U.S. anti-dumping tariffs.

    "We are more likely to be positively affected by U.S. tariffs than negatively," he told reporters, saying Kloeckner imports only 7 percent of the steel it distributes in the United States, where it makes 40 percent of its sales.

    Shares in Kloeckner jumped as much as 4.5 percent but later pared gains to trade 1.6 percent higher in a market weighed down by disappointing results from U.S. Steel.

    "Beyond the beat on Q1 and the solid Q2 EBITDA guidance, it is the 'notable increase' in FY17E EBITDA which may imply that EU/US steel prices will remain relatively resilient in H217 from a very high H117E level," wrote Berenberg analyst Alessandro Abate, who rates Kloeckner "hold".

    Kloeckner also said it had bought a 10 percent stake in Berlin start-up BigRep, which makes the world's largest 3D printers at a cubic metre, for under 10 million euros.

    It said it planned to use these 3D printers at its European and U.S. sites in a bid to increase its share of higher-value, finished products, and expected the market for 3D printing, or additive manufacturing, to grow by 20 percent a year.

    Kloeckner said it had not participated in a previous BigRep funding round but had been impressed by large customers that BigRep had since managed to win including BMW, ABB and Airbus.

    Additive manufacturing saves money on material costs by reducing the number of parts needed and saves time from design to manufacturing. Some industrial parts can already be made in this way and the technology is developing fast.

    German steel producer and rival distributor Thyssenkrupp and U.S. industrial group General Electric both announced plans this week to invest in 3D printing in Germany.

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    Iron ore to slide below $46 a tonne by 2021 — analysts

    The rally in iron ore prices that saw the commodity climbing near $100 a tonne earlier this year will likely be the highest mark seaborne will reach for at least the next five years, a new report published Tuesday shows.

    According to BMI Research, prices will continue to slide for at least the next half decade, averaging lower each year through to 2021. The forecasters expect the commodity to drop to $70 a tonne this year, $55 in 2018, and decline to $46 by 2021, on rising supplies from Australia and Brazil and expectations for a surplus.

    BMI Research expects the commodity to drop to $70 a tonne this year, $55 in 2018, and decline to $46 by 2021.

    Major producers, backed by low costs, will continue to boost output and so drag prices down, the research arm of Fitch Group said in the report.

    After peaking in mid-February, the steelmaking raw material fell into a bear market earlier this month as steel prices drooped and warnings about oversupply reappeared on the back fresh output coming from recently opened mines, such as Roy Hill in Australia, as well as Anglo American’s Minas Rio and Vale’s S11D in Brazil.

    Last year, ore with 62% content in the port of Qingdao climber over 80%, extending the rally into 2017 to hit $94.86 in February, the highest price since 2014, according to the Metal Bulletin. It then began a painful and abrupt downward trend, falling 12% last month and continuing to drop in April. On Tuesday, the commodity lost another 46 cents to trade $66.07 a tonne.

    The knock-on effect on the market value of the world's top iron ore miners has not been minor, with world number four, Australia's Fortescue Metals Group, a pure play iron ore producer, hardest hit. FMG stock has about 15% of its value over the last month and the Perth-based firm is now worth US$16.53 billion on the ASX following a 2.6% drop in Tuesday trading.

    World number one Vale is down almost 6% over the same period, while diversified giants Rio Tinto and BHP Billiton have also seen their value shrink since mid-March.

    Several forecasters and banks had long warned the rally was not sustainable.

    Several forecasters and banks had long warned the rally was not sustainable. Last week, Macquarie added to the gloomy sentiment by predicting that iron ore would continue to decline until finding support at around $50 a tonne, implying that falls of a further 20% were in store.

    But not everyone is that pessimistic. For some, such as Stan Wholley, president for the Americas at CSA Global, the current downtrend is nothing but an expected correction. “I think people got exuberant about iron ore on the way up and we are seeing a bit of reality check right now,” he recently told

    “There is not a great deal that can be done about the new supply — it will happen. However, there are indications that stockpiles in China are decreasing (albeit from record highs) which may slow or even halt the decline,” he noted.

    While the analyst sees the commodity trading between $50 and $70 a tonne in the short term, he says fundamentals remain sound.

    “There will be a focus on higher quality ores over the next few years as new supply comes in, but that is how it should be, and this will mean producers with lower quality ores will feel the pinch as buyers seek a discount,” Wholley warns.
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    Aurizon says Goonyella coal line restarts after cyclone damage

    Aurizon Holdings on Wednesday said it had restarted its main Goonyella coal haulage line on a limited basis nearly a month after Cyclone Debbie brought the line to a halt, cutting off much of the world's sea-traded coal used in steelmaking.

    Goonyella, used extensively by BHP Billiton was the last of Aurizon's four rail systems to re-open to coal trains, although they are operating under reduced capacity.

    "The opening of this section today will allow coal services to operate from mines across the Goonyella system to export terminals at Hay Point and Dalrymple Bay," Aurizon said.

    The Goonyella coal rail system, which typically carries 52 percent of Queensland state's coal to port, was worst hit by the rains that accompanied Cyclone Debbie.
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    Rio Tinto and Yancoal moving closer to finalizing $2.5 bln deal

    Rio Tinto Plc agreed to sell its Australian unit, Coal & Allied Industries Ltd to China-owned Yancoal Australia Ltd. for nearly $2.5 billion on January 24, and the takeover process is moving towards an end, China Global Television Network (CGTN) reported on April 25.

    Australian's Foreign Investment Review Board has allowed Rio Tinto to sell off most of its thermal coal assets in the country, CGTN reported.

    For Rio, the sale allows the company to continue its plan of consolidating assets to better balance its books.

    Yancoal says the deal will create significant value for its stake holders and make the company the largest pure-play coal producer in Australia, and analysts say it will also help Yancoal to meet the rising demand back home.

    A spokesman for Yancoal said the deal still needs approval from shareholders from both companies, and the whole process is expected to be complete later this year.
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    Beijing will boost coal stockpiles ahead of summer -state planner

    Beijing will boost thermal coal supplies to ensure prices return to a "reasonable" level and raise inventories in preparation for higher summer demand, the government said on Tuesday amid concerns about deepening losses at the nation's utilities.

    The statement comes after a meeting between the country's state economic planner, the National Development and Reform Commission (NDRC), and utilities on April 14.

    It is the strongest sign yet that Beijing is seeking to prevent a potential coal supply crisis in the world's top user of the fuel during the hot summer months when power demand increases.

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    China March coal imports from Russia jump after North Korea ban: customs

    China's coal imports from Russia jumped to their highest in nearly three years in March, customs data showed on Tuesday, as the world's top buyer turned to alternative suppliers following its ban on imports from North Korea in February.

    Arrivals from Russia gained 19.5 percent to 2.3 million tons, the highest monthly total since June 2014, data from the General Administration of Customs showed on Tuesday.

    North Korea shipped zero coal last month, it said, in line with comments from customs earlier this month. A year ago, China imported 2.38 million tonnes of coal from the country.

    The data showed a big jump from February by other major importers, Australia, Mongolia and Indonesia, reflecting a shift in trade routes after China's sudden decision to ban all coal imports from its reclusive neighbor.

    That followed repeated missile tests by Pyongyang that drew international criticism.

    Overall coal imports rose, amid strong demand from steel mills, where output climbed to a record last month, and rallying domestic coking coal prices.

    The higher steel output has raised more concerns about metallurgical coal supply after China banned high-quality anthracite imports from North Korea that are typically used for steel making.

    Australian arrivals in March rose 15.75 percent from a year earlier to 6.66 million tons, while Mongolian shipments gained 56.35 percent to 3.05 million tons.

    Indonesian imports climbed 9.4 percent from a year ago to 2.6 million tonnes.

    Coal import from the United States were 340,000 tons last month, versus only 39 tons at the same time last year, the data showed.
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    Converting coal would help China's smog at climate's expense

    China's conversion of coal into natural gas could prevent tens of thousands of premature deaths each year. But there's a catch: As the country shifts its use of vast coal reserves to send less smog-inducing chemicals into the air, the move threatens to undermine efforts to rein in greenhouse gas emissions, researchers said Tuesday.

    The environmental trade-off points to the difficult choices confronting leaders of the world's second largest economy as they struggle to balance public health and financial growth with international climate change commitments.

    Between 20,000 and 41,000 premature deaths annually could be prevented by converting low-quality coal in the country's western provinces into synthetic natural gas for residential use, according to the findings of researchers from the United States and China published in the Proceedings of the National Academy of Sciences.

    If the gas were used for industrial purposes, fewer deaths would be averted and they would carry a steeper price — a dramatic increase in carbon dioxide emissions, according to the researchers and a separate report released Tuesday by Greenpeace.

    China's immediate drive to clean up local air quality could be addressed by using coal-produced synthetic gas, said study co-author Denise Mauzerall, a professor of environmental engineering and international affairs at Princeton University.

    Doing so, however, "would have an effect of increased carbon emissions, which would affect the world," Mauzerall said.

    Natural gas produces far fewer of the tiny particles of pollution that pour out of coal-fired power plants and the small coal burners that many Chinese use for heating and cooking. That smog, with particles a mere 2.5 microns in diameter, frequently blankets Beijing and major urban areas in China's densely populated eastern provinces. It endangers public health when the particles lodge in peoples' lungs and could be most effectively dealt with by reducing coal use in households, according to Mauzerall.

    Public outrage over smog and a desire to meet climate goals prompted Chinese officials to close down coal power plants around Beijing in recent years and suspend plans to construct new plants across the country.

    Technology to turn coal into other fuels dates to Germany's Nazi regime, which used it to bolster diesel supplies during World War II. South Africa used it to thwart sanctions against oil imports during the apartheid era. Since then, the method has seldom been used because of its high cost.

    China's pursuit of synthetic gas reflects in part the inability of its domestic oil and gas reserves to meet its national security and economic needs, said Ranping Song, a climate expert with the World Resources Institute. That's despite the fact that China has the third largest coal deposits in the world, an estimated 126 billion tons (114 metric tons), behind only the U.S. and Russia.

    Read more here:
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    Chongqing Steel warns of bankruptcy after creditor goes to court

    China's debt-stricken Chongqing Iron and Steel Company warned of the risk of bankruptcy on Tuesday, after one of its creditors submitted an application to a local court to reorganise its assets.

    Chongqing Steel said in a notice posted to the Hong Kong Stock Exchange that the creditor, identified as Chongqing Laiquyuan Trading, told a court on Monday that the southwest China-based steelmaker's assets were not sufficient to pay off all its debts.

    "If the court formally accepts the application for reorganisation...(Chongqing Steel) will be exposed to the risk of declaration of bankruptcy," it said.

    The firm, which has blamed its predicament on China's economic downturn, industrial overcapacity, soaring labour costs and low steel prices, has tried to expand into more profitable sectors and ditch its steelmaking assets, which operate at a loss.

    But it said last week that there was "great uncertainty" whether its restructuring plans could proceed, with the firm struggling to reach an agreement with its main creditors.

    Chongqing Steel's audited net profits and assets were negative for both 2015 and 2016, and if they remain the same this year, the Shanghai Stock Exchange will suspend trading in the company's shares, it said.

    The firm's former deputy general manager, Dong Ronghua, was put under investigation by China's graft-busting agency late last year for unspecified "serious disciplinary violations".
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    US hot-rolled coil prices edge down as business slows

    US hot-rolled coil prices edged down a bit over the past week, as steel mills moved away from offering $660/st, market sources said Monday.

    The Platts daily HRC assessment narrowed to $640-$650/st, down from $640-$660/st on Friday. The cold-rolled coil assessment remained unchanged at $830-$860/st. Both assessments are normalized to an ex-works Midwest (Indiana) basis.

    One service center source said he recently placed some orders at $640/st ex-works Midwest. The orders were "not significant," so the source said he didn't push hard for lower pricing. Only one mill is still charging $660/st, and for now, $640/st represents the lowest price he's transacted recently.

    There are mixed signals about whether the HRC market is tight. Despite low reported service center inventories, there is still very aggressive pricing, the service center source said.

    "My competitors are dropping prices like crazy. That's not the behavior of someone who doesn't have inventory or can't replace it quickly," he said.

    A mill source agreed that $660/st would be the price for specialty items, and the current ceiling for spot HRC is about $650/st. He agreed that even though there is supply-side tightness, customers aren't panicked.

    "Everyone is comfortable the way things are," he said. "There's no fear that tomorrow prices are going up $50. You can afford to wait and be a little patient."

    The mill source said he saw HRC prices in the $640-$650/st range and CRC and galvanized substrate base prices at $830-$860/st ex-works.

    Market sources said that April has been a slower month for shipments than March, which has possibly contributed to prices sliding recently. A second service center source said his company is not buying long because there is more downside potential than upside. He saw HRC at $640/st and CRC at $840/st.
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    CISA members' Mar steel sales down 0.56pct on year

    Member companies of China's Iron and Steel Association (CISA) sold 48.5 million tonnes of steel products in March, down 0.56% year on year, showed data from the association.

    In the first three months of 2017, total sales of steel products rose 4.76% from the year-ago level to 138.05 million tonnes.

    In March, CISA members' steel billet sales decreased 3.77% year on year to 2.58 million tonnes; total steel billet sales decreased 8.64% from the previous year to 6.87 million tonnes over January-March.

    The CISA members had 14.43 million tonnes of steel products in stock by the end of March, increasing 9.41% from year-ago level, showed the data.

    The stocks of steel billet posted a year-on-year increase of 16.41% to 32.63 million tonnes by end-March.
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    China tightens steel firms scrutiny

    China removed 29 steel plants from a "normal list" and urged 40 others to reform to help cut overcapacity and enhance the industry's competitiveness, said the Ministry of Industry and Information Technology on April 24.

    Most of the 29 companies were considered inefficient, engaged in illegal production or were heavily debt-laden, while some "stopped operations to echo the national call to cut supply," the ministry said. Another 40 steel companies were urged to cut pollution and upgrade equipment.

    The ministry listed 304 steel companies as normal between 2013 and 2015 based on standards in environmental protection, quality, energy consumption and safety, the ministry said. But it will "keep monitoring the industry and re-select normal companies to ensure competitiveness of the industry," it said.

    The 29 companies will have "to be seriously supervised by local authorities" although they can continue to their operations, the ministry said.

    The ministry can close the companies if they fail to meet quality and are not efficient after they have been supervised.

    The other 40 firms were given "yellow card" warnings after they failed to meet environmental protection or safety rules. They would be stripped of the normal classification if they don't improve within one year.
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    Vessel queue at Newcastle PWCS coal terminals hits five-week high

    The vessel queue at the Port Waratah Coal Services terminals at Newcastle port in Australia increased to 16 ships on April 23, hit a five-week high from 13 the week prior, citing the Hunter Valley Coal Chain Coordinator's weekly report.

    The queue is expected to fall back in line with the year-to-date average of nine ships in the coming weeks, with the Hunter Valley Coal Chain Coordinator predicting that there would be nine ships end-April and 10 end-May.

    Inbound receivals to PWCS totaled 3.51 million tonnes for the week ended April 23, up from 3.38 million tonnes the previous week, data from HVCCC shows. Port Waratah coal stocks finished the week at 1.05 million tonnes, down by 131,000 tonnes from the previous week, it said.

    There were no vessels loading coal at the Dalrymple Bay Coal Terminal and 28 at anchor on April 24, down from one loading and 30 at anchor a week earlier, DBCT Management data showed.

    The Goonyella rail system, which connects to DBCT, remains closed due to damage caused by Cyclone Debbie late March. Latest advice from operator Aurizon showed it scheduled to reopen on April 26.

    The Port Kembla Coal Terminal had six ships assembled and two queuing, up from zero queuing and assembled a week earlier as well as above the year-to-date average of one assembled and one queuing, data from the terminal's operators showed.

    Coal stocks at PKCT fell from around 231,029 tonnes week on week to 117,513 tonnes, it said. The terminal exported around 258,481 tonnes last week, which is basically similar to the 261,618 tonnes shipped the previous week, data showed.
    The RG Tanna coal terminal at the Port of Gladstone had four ships at berth and 27 at anchor, compared to four at berth and 32 at anchor a week earlier, data from the Gladstone Ports Corporation showed.
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    BHP said it could lift force majeure

    Rag Udd the chief executive of BHP Billiton Mitsubishi Alliance, said shipments would quickly increase when the Goonyella, the largest rail network in the region reopens this week. Trains have been unable to use the line because of a mudslide.

     He said it would allow the BHP and its Japanese partner to lift a force majeure provision. This is a legal term for when a company is unable to meet contracts because of circumstances out of their control.

    Udd's comments came after BMA said it would invest $200 million on a new conveyor system to link two of its mines in Queensland.

    By taking advantage of excess handling capacity at one mine, the new link will boost its coking coal output by 4 million tonnes, said BMA.
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    Tianjin to clear out coal-fired boilers in central districts

    Northern China's Tianjin planned to ban all coal-fired boilers in the central districts to speed up the progress of air quality improvement, said Xinhua News Agency on April 23.

    The city will ban all coal-fired boilers with annual capacity below 35 tonnes in Binhai New District and four districts around the city. All 10 -tonne and below coal-fired boilers, stoves and coal furnaces in other districts would also be eliminated.

    To achieve a reduction of 10-million-tonne coal consumption from 2012, Tianjin was on track to change energy structure, connect grids or use alternative clean energy, planned in an air pollution prevention program of Tianjin in 2017.

    By end-October this year, Tianjin will shut down four power generation units with capacity totaling 800 MW in Tianjin Junliangcheng Power generation Co., Ltd and another three with total capacity of 62 MW in Jinghai thermal power plant.

    Moreover, by the end of October, the city will also strive to realize zero coal use, particularly for scattered end users like households, in the center districts, Binhai New District and other district government-based streets. Clean coal will take the place of the traditional one in the demolition and renovation regions.

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    China Mar CBM output slips 0.3% on year

    China produced 650 million cubic meters (mcm) of coalbed methane (CBM) in March, a small drop of 0.3% year on year, showed the latest data from the National Bureau of Statistics (NBS).

    The CBM output totaled 1.91 billion cubic meters (bcm) over January-March, up 3.2% from the year prior, the data also showed.

    Since 2012, CBM production in China has showed a growing trend. For the whole year of 2012, China's CBM production reached 3.39 bcm. In 2016, China's total output of CBM increased to 7.48 bcm, surging 120.6% from the year-ago level.

    CBM resources within depth of 2,000m underground in Shanxi, a resource-rich northern province in China, amounted to 8,309.8 bcm, accounting for about 1/4 of the country's total. As of end-2015, accumulated proven CBM geological reserves in Shanxi reached 560 bcm, or 88% of the country's total.

    The ground-based extraction of CBM has the highest utilization rate. In this way, the purity of CBM can reach more than 90%, bringing high economic and use value.

    In the light of the current production trend, China's CBM resources extraction and utilization will maintain a rapid growth. CBM is expected to become China's "new energy noble".
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    Japan steel industry head says concerned at Trump "protectionism"

    Japanese steelmakers are concerned at "protectionism" by U.S. President Donald Trump, Japan Iron and Steel Federation chairman Kosei Shindo said on Monday, following Trump's first shot across China's bows over steel exports.

    Japan is the world's second-largest steel producer, although Shindo said it was too early to assume a U.S. probe into exporters of cheap steel would draw in Japanese steel makers.

    "We are greatly concerned over Trump's protectionism, although we hear he has softened his tone on some issues with a grasp of reality," Shindo, who is also president of Nippon Steel & Sumitomo Metal Corp, told a news conference.

    "We will need to closely watch his actual policies and negotiations," he added.

    Trump on Thursday launched a trade probe against China and other exporters of cheap steel into the U.S. market, raising the possibility of new tariffs.

    Diverging from the Obama administration's approach to the issue, which relied largely on filing complaints to the World Trade Organisation, Trump ordered a probe under Section 232 of the Trade Expansion Act of 1962, which lets the president impose restrictions on imports for reasons of national security.

    Shindo also said he expects coking coal prices to gradually fall as rail lines resume operations in cyclone-hit Australia, Japan's biggest supplier, although it could take a while for the supply chain to return to normal.

    The price of coking coal - a key steel-making ingredient - has jumped since Cyclone Debbie last month cut rail lines in the world's biggest coking coal export region.

    Japanese steelmakers have bought coking coal from the United States, Canada and China to replace lost supply from Australia, but are paying nearly double the $150 a tonne price being discussed with sellers for second-quarter supply before the supply disruption.

    Shindo also said recent weakness in China's steel market will be short-lived as domestic demand is "pretty solid", even as the market digests higher inventories of steel panels.
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    China iron ore, steel resume decline as slack demand weighs

    Steel and iron ore futures in China fell 1 percent on Monday, as the two commodities retreated on lingering worries over weak demand in the world's top steel consumer after a two-day spike.

    China's crude steel output surged to a record 72 million tonnes in March as mills ramped up output, hoping an early-year rally in prices would be sustained as the country headed for its usually brisk second-quarter period.

    But supply growth has so far outpaced consumption this month.

    "Demand is okay. It's just that production is much stronger than demand," said Helen Lau, analyst at Argonaut Securities.

    The most-active rebar on the Shanghai Futures Exchange was down 1.3 percent at 2,881 yuan ($419) a tonne by midday, after falling as far as 2,851 yuan.

    Iron ore on the Dalian Commodity Exchange was off 1 percent at 496.50 yuan per tonne, having dropped to as low as 486.50 yuan earlier in the session.

    A sustained decline in inventory of steel products among Chinese traders suggests demand remains firm, said Lau, but may be not as strong as many in the market had initially expected.

    Stocks of five major steel products - including construction-used rebar - held by traders stood at about 12.9 million tonnes as of April 21, the lowest since late January, said Lau, citing data from Mysteel consultancy.

    While Chinese mills may have not cut production so far, a "further decline in prices would be the catalyst," said Lau.

    Coal used in steelmaking also dropped. Coking coal on Dalian fell 4.6 percent to 1,085.50 yuan a tonne and coke slid 4 percent to 1,573.50 yuan.

    Further weakness in futures could push down spot iron ore prices again after a three-day rally.

    Iron ore for delivery to China's Qingdao port .IO62-CNO=MB climbed 4.4 percent to $68.22 a tonne on Friday, marking its biggest single-day increase since Feb. 13, according to Metal Bulletin.
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    Coking coal price correction turns into crash

    The price of coking coal plunged again on Friday with the industry benchmark price tracked by the Steel Index dropping 9% or $26.10 to $263.40 a tonne as supply disruption following tropical storms in Australia begin to ease.

    Last week the price of Australia free-on-board premium hard coking coal jumped to highest since the second quarter of 2011. That price spike was also the result of flooding in Queensland that saw quarterly contract prices negotiated at an all time high of $330.

    While coking coal is returning to more expected levels, iron ore's unnerving decline appears to have been arrested

    Cyclone Debbie caused serious damage to key rail lines serving mines in the state of Queensland and while three lines have now reopened according to operator Aurizon, but large sections of the Goonyella railroad in the centre of the network is only be expected to be up and running in a week's time.

    Earlier expectations were that roughly 12–13 million tonnes of Australian met coal cargoes destined for China, India and Japan could be delayed, but Aurizon said this week up to 21 million tonnes have been affected.

    A total of 221 million tonnes of coal was exported last year from Queensland, according to the Queensland Resources Council quoted by Reuters and of that at least 75% be steelmaking coal. The global met coal market is around 300 million tonnes per year with premium hard coking coal or PHCC constituting more than a third of the total market. More than half of PHCC seaborne coal come from Australian producers according to TSI data.

    A survey of economist and investment bank analysts by FocusEconomics show prices are expected to decline substantially later this year. The median forecast is for met coal to average $146 per tonne in Q4 2017 and $130 during the final quarter next year. Coking coal averaged $121 a tonne in 2016.

    While coking coal is returning to more expected levels, iron ore's unnerving decline –  a third over just the last month  – has now turned around.

    The Northern China import price of 62% Fe content ore advanced for a third day on Friday trading at $67.40 a tonne, up 4.2% on the day and just into positive territory for the week. The steelmaking raw material after dipped to a six-month low of $61.50 per dry metric tonne on Tuesday according to data supplied by The Steel Index.
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    Nearly 30 Chinese steel firms have licenses revoked for violations: ministry

    Twenty-nine Chinese steel firms have had their licenses revoked as a result of long-term production suspensions or failing to comply with state capacity and pollution requirements, China's industry ministry said on Monday.

    The Ministry of Industry and Information Technology (MIIT) released a list of 29 firms that will be removed from its official register of steel enterprises. Most have already stopped producing steel, but some had illegally expanded production or violated state closure orders.

    China is now in the middle of a concerted effort to reduce the total number of its steel enterprises by shedding 100 million-150 million tonnes of excess production capacity over the 2016-2020 period and by shutting around 100 million tonnes of low-grade steel production by the end of June this year.

    Another 40 steel firms have been asked, according to the statement posted on the website of the MIIT, to make changes in areas such as environmental protection and safety.

    The majority of the 40 steel firms were accused of failing to comply with emergency output restrictions during periods of heavy pollution, and they must fully "rectify" their violations within a prescribed period, the industry ministry said, without giving a specific timeframe.

    China set up an official steel firm register in 2009 in a bid to impose order on a chaotic and poorly regulated industry. It blamed ill-discipline and "malicious competition" for undermining the position of Chinese steel companies during price negotiations with major overseas iron ore suppliers.

    Before the register was launched, even large-scale state steel producers were not technically authorized to produce steel, and the industry was dominated by a gray economy consisting of hundreds of low-end private producers.

    One of the aims of the register was to help identify the mergers and closures required to meet a target to put 60 percent of China's total steel capacity in the hands of its 10 biggest producers by the end of 2015.

    However, industry consolidation rates actually fell to 34.2 percent over the 2011-2015 period, from 48.6 percent in the previous five-year period, and China has now pushed back the 60-percent target until 2025.

    According to figures published by the official China Metallurgical News earlier this month, 292 out of a total of 635 firms in 12 provinces and cities have already ceased production or been shut down completely.

    Metallurgical News also said 18 out of 64 firms in China's biggest steel producing city of Tangshan have ceased production or been shut down as a result of the latest campaign.
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    Liberty House to buy ArcelorMittal's U.S. Georgetown steel plant

    Metals group Liberty House Group has agreed to buy the Georgetown Steelworks plant from Arcelor Mittal in its first major U.S. acquisition, the companies said on Friday.

    London-based Liberty will buy the plant based in South Carolina, including its 540,000 tonne a year electric arc furnace and 680,000 tonne a year rod mill, the joint statement said. It did not disclose the cost of deal.

    The Georgetown plant was closed in August 2015 and directly employed more than 320 workers.

    "Acquiring the plant at Georgetown, with its ability to recycle scrap steel in an arc furnace, gives us a strong platform from which to launch our strategy in the USA," said Liberty House executive chairman Sanjeev Gupta.

    The provisional deal marks the "first significant step in Liberty's plan to make major investments in the U.S. steel industry", the statement said.

    Liberty House was in talks with the United Steelworks union on recruiting a workforce to re-open the plant.

    ArcelorMittal said in February that it expected apparent steel consumption in the United States and in Brazil to rise 4 percent this year.
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    China says enforcing North Korea coal ban seriously, no violation

    China is enforcing its policy against North Korean coal imports seriously, and there have been no violations, the foreign ministry said on Friday after a report that North Korean ships had entered a Chinese port where coal imports are offloaded.

    Following repeated North Korean missile tests that drew international criticism, China in February banned all imports of coal from its reclusive neighbor, cutting off its most important export product.

    Reuters reported on April 11 that several North Korean cargo ships, most fully laden, were heading home after China's customs department issued an official order, on April 7, telling trading companies to return their North Korean coal cargoes.

    But on Friday, the website reported several North Korean ships in and around Tangshan port, in northern China.

    Chinese Foreign Ministry spokesman Lu Kang, asked about the ships and whether China was allowing North Korean coal back in, said China was "seriously enforcing" the provisions in its announcement banning North Korean coal imports for the remainder of the year, which were in line with U.N. resolutions.

    "If the ships are still at sea or outside a port, there will always be some mariners who need to be looked after for humanitarian reasons," Lu said.

    "There is no such thing as any violating of this announcement or China violating its obligations to enforce U.N. Security Council resolutions."

    Data from Thomson Reuters Eikon confirmed that three North Korean vessels were at the Tangshan port, and others were holding offshore in the port's anchorage.

    It was not clear what the laden vessels were hauling.

    At port were the Ryon Hwa 3, a Tanzania flagged cargo vessel owned by a North Korean shipping company that was sanctioned last year by the United States, and the North Korean flagged Woory Star.

    The Su Pung, which also flies a North Korean flag, was shown to be at a berth at the port's Jintang coal terminal, data showed.

    The cargo ships Kumgangsan 2 and the Haesong 2 were offshore near the port. The Ryon Hwa 2, also holding off the port, is registered in Malta but suspected by the United Nations to be under North Korean control.

    None of the vessels showed recent changes to their draft, a measure of how deep in the water they are floating which rises or falls depending on their load.

    North Korea is a significant supplier of coal to China, especially of the type used for steel making, known as coking coal.

    In April last year China said it would ban North Korean coal imports in order to comply with sanctions imposed by the United Nations and aimed at starving the country of funds for its nuclear and ballistic missile programs.

    But it made exceptions for deliveries intended for "the people's wellbeing" and not connected to the nuclear or missile programmes.

    March customs data this year showed that China did not import coal from North Korea.
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    Japan steelmakers scramble for coking coal to make up Debbie losses

    Japanese steelmakers have bought coking coal from the United States, Canada and China to replace supply lost after a cyclone closed rail links in Australia, their biggest supplier, industry and trader sources said.

    Still, the Japanese buyers are paying nearly double the $150 a tonnes price that they were discussing with sellers for second-quarter supply before the supply disruption. The supply talks are now on hold and prices will likely stay high until full volumes start flowing again.

    In 2016, Japan bought about 71 percent of the 59.9 million tonnes of coking coal it consumed from Australia.

    "We've tapped supplies by bringing forward shipping schedules of cargos from Canada and the United States, and buying some extra coal from China," an official at a major Japanese steelmaker who deals with raw material procurement told Reuters.

    The emergency supplies were purchased at about $300 a tonne, said the official and a second source a major producer. (Graphic link on Japan's coking coal imports - here)

    Premium coking coal prices from the east coast of Australia were quoted at $289.50 a tonne on Thursday, down from $314 a week earlier, but still more than 90 percent above levels four weeks ago, according to Platts TSI.

    About 300,000 tonnes of coking coal from the U.S. is steaming for Japanese ports on bulk carriers, while dozens of empty ships sit offshore ports in Queensland awaiting loading, according to Reuters Eikon Data.

    Buyers have also tapped supplies from Russia, according to a source at a major Japanese trading house.

    Australian rail operator Aurizon Holdings Ltd temporarily closed four of its coal lines the Bowen Basin in the state of Queensland, which produces about 50 percent of global coking coal, after Cyclone Debbie made landfall on March 28.

    Three of the rail lines hit by floodwaters and landslides have reopened already and Goonyella, largest in terms of export tonnage, is expected to open on April 26 - about 10 days ahead of schedule.

    Still, Aurizon said on Tuesday that the Goonyella line will be operating at a reduced level with trains moving at lower speeds for an undetermined amount of time.

    "The Goonyella situation is going to keep the spot price up. The coal coming off that line is pretty much the basis for the spot price," said Peter O'Connor, an analyst at Australian investment firm Shaw and Partners.

    "It'll be important to keep an eye on when Aurizon finally gets the line back to full operating levels. No one knows that yet," he said, a sentiment echoed by the producer source.

    BHP Billiton, the world's biggest coking coal shipper, was among five miners in the region to declare force majeure, a clause typically invoked after natural disasters when companies cannot meet supply commitments.

    Japan's steelmakers were already running down inventories of coking coal prior to the current supply disruptions.

    "You did see Japanese steelmakers ... actually run down their stocks quite considerably," said Paul Flynn, the chief executive officer for Australia's Whitehaven Coal Ltd on an earnings call last week, adding there would be a "lingering impact on ... coal sales for some time."

    The price talks for the second-quarter coking coal term contracts may restart next month, said the source from Japanese steelmaker source.
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    US weekly coal output rises

    Analysis by the US Energy Information Administration (EIA) points to the country’s coal output rising 40% year-on-year to about 14.9-million short tons in the week ended April 15.

    The production estimate, issued on Thursday, was about 8.5% higher week-on-week.

    According to the EIA, production in coal regions east of the Mississippi river totalled six-million short tons, while west of the Mississippi river coal output totalled nine-million short tons.

    US year-to-date coal output totalled 230.4-million short tons, 17% higher than the comparable year-to-date coal production in 2016.

    Coal production decreased to 728.23-million short tons in 2016, from 896.94-million short tons in 2015. The country's coal production exceeded one-billion short tons in 2014.

    Despite coal prices having seen somewhat of a rebound over the last six months, several analysts argue that natural gasremains a strong, low-cost fossil energy competitor, adding to coal’s risk profile despite the pro-coal policies under US President Donald Trump’s administration.

    In 2016, natural gas-fired generators accounted for 42% of the operating electricity generating capacity in the US. Natural gas provided 34% of total electricity generation in 2016, surpassing coal to become the leading generation source.

    The IEA states that the increase in natural gas generation since 2005 is primarily a result of the continued cost-competitiveness of natural gas relative to coal.

    Attached Files
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    BHP announces Qld coal investment

    Mining giant BHP Billiton and its coal joint venture (JV) partner Mitsubishi have approved a $204-million investment in the Caval Ridge southern circuit (CRSC) project, in central Queensland.

    The project will create up to 400 new construction jobs and will require 200 ongoing operational roles.

    CRSC, which is an 11-km overland conveyor system that will transport coal from the Peak Downs mine to the coalhandling and preparation plant at the Caval Ridge mine, will result in the plant throughput increasing to its full 10-million tonnes a year.

    “This investment furthers our productivity agenda, reduces costs, releases latent equipment capacity, and strengthens our coal business’ global competitiveness,” said BHP president of operations, Minerals Australia, Mike Henry.

    Henry said that the project formed the missing link between the Caval Ridge and the Peak Downs mines, and would accelerate growth and productivity.

    “We are committed to Queensland’s Bowen basin and this project creates new employment opportunities during construction and locks in ongoing operational roles. The investment flowing from the project will help support the local community and state economy after what has been a difficult time in the region.”

    Construction is slated to start in mid-2017, and will take 18 months to complete.

    Henry noted that in addition to the new conveyor and associated tie-ins, the project would also mean a new stockpile pad and run-of-mine station at Peak Downs and Caval Ridge, the while the existing coal handling and preparation plant and stockyard will be upgraded.

    The JV will also invest in new mining fleet, including excavators and trucks.

    The Queensland Resources Council has welcomed the investment, with CEO Ian Macfarlane saying the investment was great news for the local community and the broader Queensland coal industry.
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