Mark Latham Commodity Equity Intelligence Service

Friday 25th September 2015
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    Brazil 5-yr CDS jump to 7-yr high, dollar bonds tumble 2-3 cents

    Brazilian debt insurance costs jumped to their highest in almost seven years on Thursday and sovereign dollar bonds fell 2-3 cents across the curve on fears of a deepening political and financial crisis.

    Other emerging assets also sold off as world stocks slid towards two-year lows but the biggest losses came in Brazil where the real currency fell another 1.5 percent to fresh record lows, shrugging off central bank interventions.

    Five-year credit default swaps (CDS) rose 33 basis points from the previous close to 513 bps, according to data from Markit. The CDS have risen almost 200 bps since the end of August and last traded above 500 bps in October 2008.

    "Brazil is in a deep economic, currency and confidence crisis. The decline in the currency is unprecedented, similar to the collapse of the (Russian) rouble last year ... accordingly CDS are jumping and bond yields are rising," said Bernd Berg, a strategist at Societe Generale in London.

    Investors have been spooked by news that Brazilian retailer General Shopping has deferred coupon payments on $150 million of subordinated debt and offered creditors a 50 percent write-down on another debt tranche.

    The fear is that another rating agency will follow Standard & Poor's example and cut Brazil's credit rating to junk, forcing many global funds to dump its bonds from their portfolios. Brazilian dollar bond yield spreads over U.S. Treasuries widened 15 bps to 506 bps on the EMBI Global index while dollar bonds maturing 2040 and 2045 fell 3.875 cents and 2.8 cents respectively, according to Tradeweb .

    The broader EMBIG index saw spreads widen 10 bps to 455 bps, the widest in a month.

    A 2020 dollar bond issued by state-run oil firm Petrobras fell 3.3 cents while a 2040 issue lost 2 cents.

    According to calculations by the Bank for International Settlements (BIS), Brazilian non-financial borrowers owe over $300 billion in dollar-denominated debt, double the 2008 levels and amounting to almost a fifth of gross domestic product.

    "With private sector spending slowing sharply, commodity prices in retreat and manufacturing activity contracting, producers across large swathes of the economy are likely to find it increasingly hard to pay their bills in the coming months," said Michael Henderson, head of economics at Verisk Maplecroft.
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    CATERPILLAR WARNS: Bad news is 'converging' and now we have to make some major changes

    Caterpillar has some bad news.

    On Thursday, the industrial giantannounced that it as part of a restructuring plan it will cut up to 10,000 jobs in the face of what it called, "a convergence of challenging marketplace conditions in key regions and industry sectors — namely in mining and energy."

    Caterpillar is seen as a bellwether for the global economy because its equipment is big and expensive and often the kind of investment a company only makes when they feel confident about their prospects and the global economy.

    Additionally, Caterpillar has been seen as one of the leading indicators on China's economic slowdown given the decline in the company's sales in that region over the last several years.

    In its announcement on Thursday, the company notes that 2015 will be its third straight year of sales declines. And with sales also expected to decline in 2016, the company could be looking at its first four-year stretch of sales drops in its 90-year history.

    In a statement, Caterpillar CEO Doug Oberhelman said, "We recognize today's news and actions taken in recent years are difficult for our employees, their families and the communities where we're located. We have a talented and dedicated workforce, and we know this will be hard for them."

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    China plans to launch national cap-and-trade system

    China is preparing to announce plans to launch a national system to limit greenhouse gases and force industries to purchase pollution credits, Obama administration officials said Thursday.

    Beijing plans to put the system known as cap-and-trade into place in 2017 as part of measures aimed to address climate change in cooperation with the U.S. and others.

    A joint statement to be released following Friday’s summit between President Barack Obama and his Chinese counterpart Xi Jinping aims to flesh out how their two countries plan to achieve targets for cutting emissions set at a bilateral summit in Beijing last year.

    The officials, who spoke on condition of anonymity so they wouldn’t pre-empt China’s official announcement, said it’s hoped the announcement will give impetus to a broader global treaty on climate change at a Paris conference in December.

    The announcement will also cover components of the cap-and-trade strategy, including the individual sectors covered under the plan, which range from power production to papermaking, the officials said. Those sectors produce “a substantial percentage of China’s climate pollution,” one official said.

    Cap-and-trade sets an annual limit on the amount of pollution that can be produced, then requires firms to obtain permission to pollute by purchasing credits from less polluting industries.

    Other parts of China’s announcement will include prioritizing low-carbon and efficient electricity production.
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    Glencore CDS surge into the 'killing zone'

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    VW Scandal 'breakout'

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    Oil and Gas

    Iran postpones London oil conference to Feb 2016

    Iran has postponed a crucial conference to present new oil contracts to investors in London to February 2016 from December 2015 as industry sources said Tehran was still waiting for Western sanctions to be lifted.

    The global oil industry has been eagerly watching Tehran's plans for the conference as Iran, OPEC's third largest oil producer, holds the world's fourth largest oil reserves and the largest for natural gas.

    Under a deal reached with six major powers in July, Iran agreed to curb its nuclear programme in exchange for an end to economic sanctions imposed on the country over its disputed nuclear work.

    The sanctions imposed on Iran in 2012 have choked Tehran's oil production. Output is down a million barrels per day (bpd) since the start of 2012 at 2.7 million bpd, depriving it of billions of dollars in oil revenue.

    The conference has been already postponed four times, including the current delay, because of uncertainty over sanctions and as Iranian officials are still working on the model for new contracts.

    Oil majors have said they would go back to Iran if it made a major improvement to the so-called buy-back contracts of the 1990s, which companies like France's Total or Italy's Eni said made them no money or even incurred losses.

    Iran has said the new contracts would be a major improvement not only on the old buy-backs but also on the contracts rival and neighbour Iraq offered to oil majors during 2000s.

    The details of the new contracts have yet to emerge. Iran says it needs foreign know-how and technology to help develop new oil fields and improve pipeline and refinery infrastructure.

    More could emerge when Iran holds a conference in Tehran, where new oil contracts could be unveiled, according to Deputy Oil Minister Roknoddin Javadi quoted last week by Iranian media.

    The new dates for the London conference have been tentatively set for February 22-24, the organisers said on the web site.
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    Oil services boss predicts new opportunities for oil and gas sector

    Major oil and gas players will emerge from the global downturn leaner and greener sparking a new boom for firms in the supporting industries, a respected industry CEO believes.

    Rune Fantoft said the number one priority coming across from operators was a desire to find and secure new efficiencies.

    Far from generating further crises, he believes restructuring will create new opportunity for the industry to strengthen for the future.

    Extending the life of fields, working equipment and technology longer and smarter and delivering on environmental improvements, have all risen closer to top of the industry’s business agendas.

    He said that was already delivering interest for firms like his, Fjords Processing, from companies seeking to tap into their well of expertise in helping maximise returns.

    “I see great opportunities for companies like Fjords Processing who are well positioned during the downturn”, he said.

    Fjords specialises in wellstream processing technology, separation and treatment of oil and gas.

    “It is an attractive proposition to field operators at a time when they are particularly dealing with the pressures of curtailed capital spending and profits,” said Fantoft.

    Fjords has just signed a raft of three new brownfield contracts in recent weeks including in central North Sea, Qatar, Australia worth over $35 million.

    That comes on top of previous announcements in July of a triple contract win for the Johan Sverdrup development, also in the North Sea.

    It will be the ability of the service industry to respond rapidly and tailor solutions that will deliver returns so quickly that he says is seeing a huge lift in what is becoming an increasingly important brownfield sector.

    Fantoft said: “Operators want to produce more oil even though they don’t want to invest that much into production. Our competitors do not have our range of solution capabilities and consequently we will become a more dominant force in that part of the industry.

    The on-going contract in the North Sea, in which Fjords has designed and supplied produced water treatment and sulphate removal unit (SRU) packages in a single module for a major operator, demonstrates its ability to package multiple technologies to save on footprint, weight and cost, said Fantoft.

    “In other words, we don’t just tell the client what they need to do, we do it and that’s something the customers appreciate in today’s economic climate.”

    His comments come after the latest annual economic impact report from trade body Oil and Gas UK confirmed the trend of companies looking at ways of improving performance and efficiency.

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    Repsol said to consider options for its gas natural stake

    Repsol SA, Spain’s biggest oil company, is exploring options including a sale of part or all of its stake in Gas Natural SDG SA to shore up its balance sheet amid low oil prices, according to people familiar with the matter.

    Repsol, whose 30 percent stake in the Spanish natural gas distributor is valued at about 5.2 billion euros ($5.9 billion), is discussing potential deal structures with advisers, the people said, asking not to be identified because the discussions are private.

    As well as a full or partial sale, which could come as soon as this year, options include selling shares in the market and finding partners to join Gas Natural’s shareholder structure, the people said.

    “We deny that we have any plans to sell the Gas Natural stake,” said Kristian Rix, a spokesman for Repsol. A representative for Barcelona-based Gas Natural declined to comment.

    A sale of the stake would help Repsol raise funds to reduce debt and avoid a downgrade of its debt rating, the people said. Oil prices reached a six-year low last month as concern over China’s growth fueled market volatility. Repsol shares have fallen more than 35 percent this year, valuing the company at about 14 billion euros.

    No final decision has been made, and the timing of any deal remains unclear as market uncertainty related to the Catalan and national elections before year-end could affect any transaction, the people said. The company plans to present its 2016 to 2020 strategic plan on Oct. 15.

    Spanish oil major Repsol is not studying any potential sale of part or all of its stake in Gas Natural, a spokesman said on Thursday, denying press reports about such a possibility.

    "Repsol is not studying any stake sale in Gas Natural," the spokesman said.
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    Russia considers breaking Gazprom's gas exporting monopoly

    Russia is looking at allowing companies other than Gazprom to export natural gas, Energy Minister Alexander Novak said on Thursday.

    Russian energy giants, including the world's top listed oil producer Rosneft and gas producer Novatek, have long been vying for lucrative exporting rights.

    Gazprom, Russia's top gas producer, has had the pipeline gas exporting monopoly since 2006, generating more than half of its revenues from selling gas to Europe.

    "The exporting channel should stay, but in order to increase effectiveness on the whole, we believe that the access (of other than Gazprom companies) should be mentioned in the state strategy," Novak told a conference.

    He added that details of such measures should be discussed.

    Rosneft and Novatek have already successfully challenged Gazprom's monopoly to export seaborne liquefied natural gas. Rosneft has claimed that in order to make its far-flung gas projects in East Siberia viable, it should be allowed to export gas.
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    YPF Said to Plan 2016 Spending Cut as $77 Crude Disappears

    Argentina’s YPF SA will cut spending by as much as 20 percent next year if a new administration lowers the domestic oil price nearer to international levels, according to three people familiar with the plans.

    The state-controlled company would lower its 2016 budget from this year’s $6 billion, mainly in operations at the Vaca Muerta shale formation, a YPF official said, asking not to be named as the company’s business plan has yet to be approved. The next administration plans to lower the nation’s crude price to $66, triggering the YPF budget cut, said an official from provinces which own shares in YPF.

    YPF will turn more to natural gas as it pulls back from shale, two provincial officials said, asking not to be named as the adjustments will be announced in December when a new president replaces Cristina Fernandez de Kirchner.

    The three people spoke assuming Daniel Scioli, the ruling party candidate, will be elected president. Scioli, the current governor of Buenos Aires province, who has received the support from governors of oil producing provinces, would defeat the opposition candidate Mauricio Macri in the first round of voting on Oct. 25, according to a poll by Hugo Haime & Asociados sent by e-mail Wednesday.

    YPF has only begun to draft its capital expenditure plan for next year and still can’t comment on the matter, the company said in an e-mailed statement. Chubut’s governor Martin Buzzi, who leads the body that represents the 10 oil-producing provinces, didn’t reply to calls seeking comment.

    The Argentine energy producer’s American depositary receipts fell 2.7 percent to $16.57 at 9:38 a.m. in New York, the lowest since August 2013. The ADRs have fallen 37 percent this year.

    While oil majors including BP Plc and Royal Dutch Shell Plc cut spending for more than $40 billion in 2015, YPF kept its capital budget intact from last year, helped by the federal government which fixed a local price for the barrel of oil at $77 a barrel, 61 percent above international benchmark Brent, making motorists subsidize oil drillers.

    The price for new natural gas will be maintained at $7.50 per million BTU as Argentina seeks to cut gas imports.

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    Schlumberger calls off Eurasia Drilling Company stake buy

    Schlumberger, the world’s largest provider of oilfield services, is backing down from an agreement to buy interest in a Russian drilling contractor Eurasia Drilling Company Limited (EDC).

    Schlumberger announced on Thursday that it does not intend to extend the pending agreement to acquire a minority equity interest in EDC, once the current extension expires on September 30, 2015.

    Schlumberger said it would instead focus on other M&A opportunities.

    After it was announced in January 2015 that the world’s largest provider of oilfield services would buy interest in EDC for $1.7 billion, the merger came across obstacles in the form of Russian Federal Anti/Monopoly Service and the Government Commission on Monitoring Foreign Investment as the companies had to wait for Commission’s final written confirmation.

    In light of this, the two companies extended the long-stop date for completion of the transaction four times, the final extension being the one set for September 30, 2015.

    Before Schlumberger’s announcement came to light on Thursday, EDC announced on Wednesday that it would hold a conference call in relation to the transaction with Schlumberger on September 30, 2015.
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    Former Petrobras executive mentions Transocean in graft probe

    Transocean Ltd., a top offshore drilling company, has been mentioned in testimony in a corruption investigation focused on Brazil's state-run oil firm Petroleo Brasileiro SA, Brazilian court documents showed.

    Former Petrobras executive Eduardo Costa Vaz Musa, who is collaborating with prosecutors in the southern city of Curitiba, said in plea bargain testimony that he was offered payments in 2007, if the Switzerland-based company won a drillship contract.

    According to court documents made public this week, Musa told prosecutors he began receiving payments in 2012 after Transocean won a contract to operate the Petrobras 10,000 drilling rig.

    Among the people Musa said he discussed receiving payments with was a man who identified himself as a representative of Transocean.

    Transocean said in a statement that it has a long-standing commitment to uphold the highest standards for corporate ethics and compliance and requires employees and everyone making visits on its behalf to adhere to high standards for integrity.

    Shares in Transocean fell 4.8 percent on the New York Stock Exchange.

    Prosecutors say more than a dozen foreign firms are being investigated in the Petrobras probe and many are collaborating.

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    Oil rebounds on Cushing crude draw data

    Oil prices rose as much as 1 percent on Thursday, rebounding from sharp losses in the previous session, after a market data provider suggested more inventory draws from the U.S. crude futures' delivery hub.

    Oil data and market intelligence firm Genscape noted a drawdown of 625,000 barrels out of the Cushing, Oklahoma delivery point for U.S. crude in the week to Sept. 22, according to traders who saw the data.

    Crude futures pared earlier losses prompted by weak U.S. durable goods and employment data.

    Oil had tumbled on Wednesday, with U.S. crude losing 4 percent, after a large build in gasoline stockpiles offset bullish impact from a big crude drawdown announced by the U.S. Energy Information for the week to Sept. 18.

    The Cushing inventory reduction cited by Genscape followed through with the 462,000 barrels-drop the EIA reported for the hub.
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    August Marcellus wellhead average $1.41

     Response to our newly launched crowd sourced
    at-the-wellhead (ATW) pricing area has been

    We've tallied the recent gas pricing entries,
    and the average ATW pricing reported by our
    members for August is $1.41/Mcf.
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    North Dakota set to extend deadline for gas flaring rules

    North Dakota is poised to give the energy industry up to two extra years to curb the amount of natural gas burned off at oil wells, a move that would ease worries pipeline construction delays make it impossible to meet aggressive flaring standards.

    Governor Jack Dalrymple and the two other members of the North Dakota Industrial Commission (NDIC), who spent months last year finalizing the rules, will mull oil companies' request for the extension at their Thursday meeting.

    "These were lofty goals, but things have changed a bit and we've got to take that into consideration," Doug Goehring, an NDIC member and the state's agriculture commissioner, said in an interview. "We're probably going to have to extend the deadline."

    Goehring, who said low commodity prices will influence his vote, has an outsized influence over oil regulation due to his seat on the NDIC.

    Environmentalists oppose any extension and note the volume of gas flared in the state continues to rise as more oil wells are drilled, despite the best intentions of existing regulations.

    "We're just hoping the Industrial Commission will stand firm," said Wayde Schafer, a spokesman for the Sierra Club's North Dakota chapter.

    The NDIC in June 2014 imposed four increasingly tighter tranches for how much gas can be burned off.

    The state's oil companies flared 20 percent of the natural gas they produced in July, the latest month for which data are available. That went beyond current standards to flare no more than 23 percent.

    The standards tighten to 15 percent in January, a goal the industry says is untenable.

    "Just like any road construction project, we've had unanticipated delays that are frankly no fault of the producers," said Ron Ness, president of the North Dakota Petroleum Council, an industry trade group.

    Ness said a Byzantine web of federal oversight impedes construction of pipelines necessary to connect wells with processing facilities. Oil can be stored in tanks indefinitely, but natural gas must be piped away after extraction.

    Oneok's decision to cancel its Lost Creek pipeline and delays in federal approval for Hess Corp's Hawkeye pipeline dashed hopes the January standards could be met, Ness said.

    Oil producers want two extra years to comply with the rules. Lynn Helms, who advises the NDIC as head of the state's Department of Mineral Resources, recommends a 10-month extension. Goehring, the NDIC commissioner, said he does not have a preferred timeline.
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    Natural Gas Price Slips Following Massive Inventory Addition

    The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stocks increased by 106 billion cubic feet for the week ending September 18. Analysts were expecting a storage injection (increase) of around 97 billion cubic feet. The five-year average for the week is an increase of around 83 billion cubic feet, and last year’s addition for the week totaled 96 billion cubic feet.

    Read more: Natural Gas Price Slips Following Massive Inventory Addition - ExxonMobil Corp (NYSE:XOM) - 24/7 Wall St.
    Follow us: @247wallst on Twitter | 247wallst on Facebook
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    Engie says nobody is making money off US natural gas exports

    Just as gas export-terminals are preparing to start up along America’s Gulf Coast, the oil-price crash has made it unprofitable to send the U.S. fuel abroad, according to the North America head of power and natural gas supplier Engie.

    It costs about $2 to liquefy gas and another $3 to take it from the U.S. to Asia, said Zin Smati, president and chief executive officer of Engie’s GDF Suez Energy North America. Engie changed its name from GDF Suez SA in April.

    Those costs used to leave plenty of profit margin when the gap between LNG prices in Asia and natural gas in the U.S. was more than $14 per million British thermal units. Now, the spread is less than $5, according to data compiled by Bloomberg.

    “You cannot ship gas from the United States anymore,” Smati said at the Council of the Americas energy conference at Rice University in Houston on Thursday. “Nobody really is making money from LNG now. Certainly we are not.”

    Engie, the world’s largest independent power generator, is a partner in the Cameron liquefied natural gas export terminal being built in Louisiana. The company also operates LNG import terminals in the U.S. Northeast.

    Spot LNG cargoes for delivery to Asia fell to $6.80 last week from $19.70 per million British thermal units in February 2014, according to New York-based Energy Intelligence’s World Gas Intelligence publication. LNG prices are generally tied to global oil, Smati said, and crude has fallen more than 50 percent from its 2014 peak amid a global supply glut.

    Cheniere Energy Inc. plans to begin production in December at its Sabine Pass LNG terminal in Louisiana, paving the way for the the first cargo of gas from the lower 48 states. The U.S. will be a net gas exporter by 2017, according to the Energy Department.

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    Alternative Energy

    China's Solar Power Analysts Can't Agree Why Shares Are Plunging

    Since peaking in May, the NYSE Bloomberg Global Solar Energy Index of 127 companies has plunged 47 percent, more than quadruple the pace of the MSCI World Index. Yet panel makers anticipate record installations this year and have mostly recovered from a plunge in prices that slashed margins at the beginning of the decade.

    So why are shares not following industry fundamentals? Analysts offer a number of explanations ranging from the slump in oil prices hurting confidence in all energy companies to the fact that developers in China, the world’s biggest market for the technology, aren’t getting paid on time.

    “The environment for China’s photovoltaic power market is bad,” said Louis Sun, an analyst at BOCOM International Holdings Co. in Shanghai. “This will spread to the entire industry chain, especially those producers with a larger market share in China.”

    Yingli Green Energy Holding Co. is the worst performer among big panel makers in the last quarter, losing two-thirds of its value after saying in August that its outlook for profit and sales would be lower than previously expected for the rest of the year. It hasn’t recovered from the drop in solar panel costs that started in 2009.

    Shunfeng International Clean Energy Ltd. is down 57 percent in the past three months and Trina Solar Ltd., the leading panel maker, by 31 percent. Canadian Solar Inc. has fallen 47 percent in the past three months, while JA Solar Holdings Co. is down by 15 percent.

    Supply Glut Worries

    The industry “is still worried about a continuing supply glut, and competition is intense,” leaving investors less certain the companies will benefit from rising installations worldwide, BOCOM International’s Sun said.

    The world may install as much as 61 gigawatts of solar panels in 2015, up 36 percent from the previous year, according to Bloomberg New Energy Finance. The London-based researcher expects installations to rise to almost 70 gigawatts next year.

    Net income in JA Solar more than triple in the second quarter from a year ago. Trina in August posted its biggest profit in four years as surging demand prompted the company to boost its shipment forecast by as much as 16 percent.

    Even so, China’s solar companies are tumbling because of systematic risks, said Nick Duan, an analyst at New Energy Finance in Beijing.
    “Orders are concentrated on top manufacturers as demand grows, while one or two of them have cash flow issues,” Duan said.

    Oil Prices

    The relatively unknown profile of Chinese solar companies may also be behind the declines, some analysts say.

    "Overseas investors aren’t familiar with Chinese solar stocks listed in the U.S. and may ignore them" even as some report profit gains, said Steven Han, a Shanghai-based analyst from SWS Research Co.
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    Renewable energy outstrips coal for first time in UK electricity mix

    Renewable energy has for the first time surpassed coal in supplying the UK’s electricity for a whole quarter, according to government statistics released on Thursday.

    The revelation of the surge in wind, solar and bioenergy to a record 25% comes in a week when the government has been heavily criticised by business leadersand Al Gore for cutting support for clean energy.

    The high performance of renewable electricity between April and June, the latest period data is available for, was due to both more wind and sun and more turbines and solar panels having been installed, compared to the same period the year before, when renewables contributed 16.4% of electricity.

    Gas-fired power stations provided the most electricity - 30% - with renewables second. Nuclear power was third with 21.5% and coal - the most polluting fuel - fell back to fourth, with 20.5%. Ageing coal and nuclear plants have been closing in recent years, while renewable energy has been rapidly rolling out.

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    CHORUS Clean Energy revives flotation plans

    German wind and solar park operator CHORUS Clean Energy revived its plans for an initial public offering (IPO) on Thursday, more than two months after putting its flotation on ice due to the Greek crisis and jittery markets.

    "The environment stabilised enough that we could launch another attempt," Chief Executive Holger Goetze told Reuters.

    CHORUS is the latest in a series of German firms to announce plans for an IPO, including automotive supplier Schaeffler and Bayer's plastics division Covestro, as companies try to take advantage of robust equity markets.

    CHORUS said it would offer investors up to 12 million new shares from a capital increase, in addition to 914,058 existing shares held by stockholders and an over-allotment of up to 1.9 million existing shares.

    At the mid point of the price range of 9.75 euros to 12.50 euros, gross proceeds of the IPO will be up to about 125 million euros. CHORUS said its stock would start trading on the Frankfurt stock exchange on Oct. 7.

    Wind park operators such as CHORUS and larger peer Capital Stage, have benefited from rising demand for energy assets, most of which offer stable returns in times of record-lowinterest rates.

    CHORUS, founded in 1998, has said it would use the proceeds from the initial public offering to expand its portfolio -- more than 250 megawatt (MW) of capacity in five European countries including Germany and Italy.

    "We want to grow significantly and expect that we can more than double the portfolio in a relatively short time," CEO Goetze said.

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    Indebted Abengoa gets creditor backing for cash call

    Spanish energy company Abengoa said on Thursday its major creditors had agreed to back most of a 650 million euro ($728 million) share sale in a deal providing vital funds to cut debt and cover cash flow needs.

    The Seville-based engineering and renewable energy firm, which has biofuel and solar-heated power plants in the United States, had lost over half its market value since the share issue was announced in early August on concerns banks would not underwrite it.

    Banks Santander, HSBC and Credit Agricole would back the cash call for up to 465 million euros ($522 million), the company said on Thursday. Its shares rose over 10 percent when the market opened before retreating to Wednesday's closing levels. Bonds rallied strongly.

    "This is a positive development for Abengoa after (previous) news that the banks were not willing to underwrite the capital increase. However we think it will take time and delivery of the goals to regain investor confidence," said Nuno Estacio, analyst at Haitong Research.

    Shareholder Inversion Corporativa, run by the founding Benjumea family, will invest at least 120 million euros in the capital hike, while U.S. fund manager Waddell & Reed will invest 65 million euros through its funds, the company said.

    Inversion Corporativa has agreed to cap its voting rights at 40 percent after the share issue and will lose its majority status.

    Executive Chairman Felipe Benjumea, whose father founded the company, will step down after 25 years in the position to be replaced by Jose Dominguez Abascal, the company's former chief technology officer, in a non-executive role.

    Abengoa, which issued a profit warning in July, said it would cancel its dividend, step up asset sales and cap investments as part of the refinancing plan while making debt reduction a priority.
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    Customers ‘could self-supply by 2020’

    It will be “common” for customers to self-supply energy and go off the grid by 2020.

    That’s according to a survey by Vlerick Business School’s Energy Centre in partnership with KPMG.

    It asked energy executives from 24 countries, which represent 70% of the European consumers, about the changes they foresee in the industry in the next five years.

    More than a third of them believe self-supply would be a typical choice for customers and it would affect supply-demand balance.

    Almost all respondents, 98% think the trend towards more decentralised electricity generation will continue.

    It also found 86% expect big changes in innovation while 75% see progress in asset management.

    Asked about policies, nearly 94% expect important changes on a regulatory level but 50% think that regulatory commissions have a good understanding of the complexity and challenges the industry faces.

    Daniel Dobbeni, Chairman of Vlerick’s Energy Centre said: “Decentralised and renewable electricity as well as customers becoming self-suppliers will change the power sector like never before. Industry actors must therefore quickly acquire new knowledge and experiences. We believe that dedicated education, networking and research will support DSOs in achieving their ambitious objectives.”

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    Precious Metals

    Gold: Parabolic chart is good indicator.


    Gold prices soared to a one-month high Thursday as fears of a global slowdown have investors seeking so-called safe haven assets like bonds and bullion. And according to Dennis Gartman, often referred to as the "commodities king," the rally in gold could just be starting.

    "There's a real strength in the gold market when you look at it in non-U.S. dollar terms," the publisher of The Gartman Letter said Thursday in an interview with CNBC's "Futures Now." "The difference is enormous.Image title

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    Gold miners cut back global hedge book in second quarter

    Gold mining companies trimmed their outstanding global hedge book by 17 t in the second quarter, an industry report showed on Thursday, as two of last year's biggest hedgers, Fresnillo and Polyus Gold, closed out positions. 

    In their quarterly Global Hedge Book Analysis, Societe Generale and GFMS analysts at Thomson Reuters said the global producer hedge book stood at 177 t at the end of June, down 9% from the quarter before. "Polyus Gold and Fresnillo, holders of the two largest hedge books, were the largest contributors to the de-hedging activity, on a combination of scheduled deliveries into forward sales contracts, and options reaching maturity," the report said. 

    "Significant de-hedging was also seen from Detour Gold, Northern Star Resources and St. Barbara. In total, 30 companies reduced their delta-adjusted hedge books during the period. This activity was only partially countered by new hedges from other gold miners."

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    Argentine judge lifts order against Barrick Gold's Veladero mine

    An Argentine judge on Thursday lifted his order forbidding Barrick Gold Corp's from pumping cyanide solution for the leaching process in its Veladero mine, saying a leak had not contaminated water in the surrounding area.

    Barrick had said that the Sept. 13 leak, due to a faulty valve, was detected almost immediately and that there had been no contamination of nearby rivers.

    Throughout the suspension, the miner had been able to use cyanide solution already pumped into the leaching system, meaning production was not impacted.

    "The water did not contain cyanide or other contaminating metals, so I decided to lift the cautionary measure," Judge Pablo Oritja, in the western San Juan province where the open-pit mine is located, told television channel TN.

    He added, however, that a special committee would spend 30 days investigating if there was any contamination in the region in order to reassure the local population.

    The Veladero mine produced 722,000 ounces of gold last year and is forecast contribute about 10 percent of Barrick's 2015 gold output, according to RBS Capital.
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    Base Metals

    MMG Las Bambas to start copper output in 2016

    MMG Ltd's USD 7.4 billion Las Bambas project in Peru is on track to start commercial production in May or June of 2016 that will ramp up to 400,000 tonnes of copper in 2017

    Construction of the mega mine in Peru's Apurimac region is almost complete and funding for remaining investments secured

    Mr Luis Rivera, vice president of operations at Las Bambas said that copper production will likely total about 200,000 tonnes in all of 2016

    He said that “A copper slump has led the company to trim operating costs but has not hurt the company or cut its spending on social projects in nearby towns. Mining investments like Las Bambas are very long-term and so our mission is to get through the different cycles that the price of copper is going to have.”

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    Steel, Iron Ore and Coal

    China coal production drops 4.8%

    China's coal output delivered a year on year drop of 4.8% to 2.41 billion tons in the first eight months of this year, according to figures released by the National Development and Reform Commission (NDRC).

    In the first eight months of this year, China's coal imports plunged 31.3% year on year to 140 million tons, while its coal exports declined 16.3% to 3.29 million tons.

    China's national coal storage at major power plants stands at 65.6 million tons and will be available for 20 days by the end of Aug.

    In the Jan-Aug period, China's total electricity consumption rose a meager of 1.3% to 3,678 terawatt hours, China Knowledge reported earlier.

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    China’s Aug coking coal imports up 8pct on year

    China’s coking coal imports in August rose 8.1% year on year to 4.15 million tonnes, according to the latest data released by the General Administration of Customs.

    But August imports were down 37.7% from 6.66 million tonnes in July, which was the highest monthly volume so far this year.

    The share of imports from Australia was 63%, the highest since February 2014, with volume jumping 62% on year but falling 35% from July to 2.6 million tonnes.

    Coking coal imports from Mongolia, China’s second-largest supplier, fell 37% on the year to 840,000 tonnes. This was below the monthly average of 1.08 million tonnes for the first seven months of the year.

    But Mongolian coal managed to maintain a 26% share of Chinese imports year-to-date similar to that for the same period last year.

    Canada’s exports to China in August rose 11% year on year to 450,000 tonnes, but was less than half of the 1 million tonnes in July.

    Imports from Russia were 260,000 tonnes in August, 11% lower than the previous year.

    China’s coking coal imports posted a 19% drop to 32.44 million tonnes for the first eight months, compared to the same period last year.
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    Heilongjiang Longmay Group to slash 100,000 jobs in 3 mths

    Heilongjiang Longmay Mining Holding Group Co. Ltd., or Longmay Group, the biggest met coal miner in northeast China, will cut 100,000 jobs in three months amid great losses, it said on its website September 22.

    The group has established an enterprising training center for all employees, vowing to complete employee placement by end-June 2016.

    Impacted by the slump in coal prices, the group saw its loss over January-August surged more than 1.1 billion yuan ($17.2 million) from the year before.

    The provincial government has taken various measures to aid the state-owned miner, which has 248,000 workers and shoulders many social responsibilities, making it more difficult to weather through the industry downturn.

    The provincial finance department would help Longmay to auction non-core assets to supplement cash flow, the statement said.

    The company would also boost sales by taking advantage of winter heating demand and expand market share across the country.

    Under coordination of relevant government authorities, power plants in Heilongjiang signed thermal coal supply contracts in excess of 12 million tonne this year, the largest volume since 2009, said provincial governor Lu Hao.

    The miner said it would strengthen internal management and eliminate corruptions to reduce losses, while actively seeking for policy and financial supports from the government.

    Based on its own resources, Longmay would work to make breakthrough in the transition to primary and tertiary industries, improving efficiency of staffs and solve human resource allocation problems fundamentally.

    The group closed eight coking coal mines in the first half of the year, most of which had approached the end of their mining lives, due to poor production margins amid bleak sales.

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