Mark Latham Commodity Equity Intelligence Service

Wednesday 29th April 2015
Background Stories on www.commodityintelligence.com

News and Views:







Macro

New Saudi Crown Prince Mohammed bin Nayef marks generational shift

Saudi Arabia's new heir to the throne Crown Prince Mohammed bin Nayef, a close friend of the United States and a scourge of Islamist militants, will be the country's first king from the third generation of its ruling dynasty.

King Salman bin Abdulaziz, in a decree on Wednesday, appointed his nephew and Interior Minister Prince Mohammed as heir apparent, replacing the monarch's half-brother Crown Prince Muqrin in a shake-up at the top of the world's biggest oil exporter.

The move, three months after he took the throne following the death of King Abdullah and coming as Saudi Arabia leads a military campaign against Iranian-allied Houthi militias in Yemen, appeared to settle for many years to come tough decisions over the kingdom's succession.

By sending an assassin to try to kill Prince Mohammed when he was Saudi security chief in 2009, al Qaeda paid him the compliment of treating him as one of its most dangerous enemies.

The prince narrowly survived that attack, in which a militant approached him claiming he wanted to defect before detonating a bomb concealed under his clothes, and was named Interior Minister in November 2012.

The 55-year-old is now firmly established as the most powerful member of his generation in the ruling al-Saud family, and even before he becomes king will be one of the most important figures in the kingdom.

He is the first grandson of Saudi Arabia's founding monarch, King Abdulaziz, or Ibn Saud, to join the line of succession. Abdulaziz established the kingdom in 1932 and ruled until his death in 1953, a period in which Saudi Arabia assumed growing geopolitical importance because of its huge oil resources, developed with U.S. partners.

Mohammed, who was named as first deputy prime minister, remained in his position as Interior Minister, Wednesday's decree said.

http://www.reuters.com/article/2015/04/29/saudi-politics-crownprince-idUSL5N0XQ08820150429
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A breakout in commodities would be the last thing anyone expects

Andrew Thrasher, who studies price rather than macroeconomics, had the below remarks and chart in his weekly roundup Monday:

One way we can chart inflation is through the relationship between commodities and Treasury’s.

If commodity prices are rising at a faster pace than bonds, then it’s believed that inflation is also on the rise. As you can see from the ratio chart below, commodities have been under-performing the 10-year Treasury bond since early 2014, However, it seems we may be seeing a possible double bottom in this relationship, which would favor commodities over Treasury’s. At the same time momentum via the Relative Strength Index (RSI) is creating a positive divergence by putting in a higher low.

I’ll be watching to see if the ratio between $CRB and $UST is able to break above its prior high at 1.80. If this happens then we may begin seeing signs of inflation re-introducing itself. What would cause this? That’s not my concern nor on my radar. All I know is this setup may turn to be bullish for commodities after the terrible performance they have had over the last year.

CRB

Read more: http://thereformedbroker.com/2015/04/27/chart-o-the-day-are-commodities-bottoming/#ixzz3YcSSu
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Atlas Copco, deepening mining slump hits demand

Sweden's Atlas Copco said that weak demand for its mining equipment and large compressors had slumped further in the first quarter.

Atlas, which has long been an investor darling because of its nimble cost structure, strong aftermarket sales and robust cashflow, said orders had fallen furthest for underground mining equipment, in which it is the global market leader.

"We saw strong demand for industrial tools and assembly solutions, while the mining area continued to be challenging," Chief Executive Ronnie Leten said in a statement.

Atlas and its peers in a Nordic cluster of mining gear suppliers, including Sweden's Sandvik, Denmark's FLSmidth and Finland's Metso, have been squeezed by spending cuts among miners in recent years.

Order intake at Atlas rose to 25.5 billion Swedish crowns ($2.97 billion) from a year-ago 22.7 billon, boosted by favourable exchange rates, but fell well short of the 26.4 billion seen in a Reuters poll of analysts.

"The order intake for equipment ... was mixed and, overall, it was weaker than expected," the company said.

Atlas Copco shares were down 7.7 percent by 1222 GMT, heading toward what would be their biggest daily decline in nearly four years, and were the worst performer in the STOXX Europe 600 Industrial Goods & Services Index.

Before the report, the shares were up 37 percent on the year, sharply outpacing the sector.

"This is Atlas Copco. When orders come in like this, this is what happens," Handelsbanken Capital Markets analyst Peder Frolen said, referring to the firm's history of continuously delivering strong results.

The order intake for the mining unit alone lagged analyst forecasts by 8 percent in the quarter while orders at Compressor Technique, its biggest unit, fell short by 5 percent.

Signs mining demand has slowed still further came last week as Metso posted weaker-than-expected earnings and complained of a further slide, though a more upbeat take from Sandvik had lifted Atlas shares on Monday.

Operating earnings at Atlas, whose mining gear includes drill rigs and loaders, rose to 4.5 billion crowns from a year-ago 3.8 billion, lagging a mean forecast of 4.8 billion in a Reuters poll of analysts.

The company said it expected overall demand to rise somewhat in the current quarter.

http://www.reuters.com/article/2015/04/28/atlascopco-results-idUSL8N0XP2AN20150428
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Oil and Gas

Saudi King Names Al-Falih Aramco Chairman, Replacing Al-Naimi

Saudi Arabia’s King Salman named Khalid A. Al-Falih as chairman of Saudi Arabian Oil Co., the world’s biggest crude exporter, replacing Oil Minister Ali Al-Naimi, according to state television.

Al-Falih, born in 1959, was also named health minister in a royal court statement published by the official Saudi Press Agency on Wednesday. He had been president and chief executive officer of Aramco. No replacement for that job was announced.

“Having Al-Falih as a full cabinet remember now does not preclude him from other ministerial positions including petroleum in the future,” Mohammed al-Ramady, professor of economics at King Fahd University of Petroleum and Minerals in Dhahran, Saudi Arabia, said by phone on Wednesday.

Al-Falih said on Jan. 28 that Saudi Arabia won’t “singlehandedly” balance global crude markets even if prices fall. Saudi Arabia has resisted calls from fellow members of the Organization of Petroleum Exporting Countries to trim output. OPEC kept its production target unchanged at a Nov. 27 meeting, seeking to defend market share rather than support prices which fell about 50 percent last year.

Al-Falih took office as president and chief executive officer of the company on January 1, 2009, according to the company’s website. He spent his entire career at Aramco over a period of three decades.

Al-Falih earned a B.S. degree in mechanical engineering from Texas A&M University in 1982. In 1991, he graduated with an MBA from the King Fahd University of Petroleum and Minerals in Dhahran, Saudi Arabia.

http://www.bloomberg.com/news/articles/2015-04-29/saudi-king-names-al-falih-aramco-chairman-replacing-al-naimi
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Top Oil ETF Sees Largest Outflow in Four Years on Rebound

The biggest U.S. fund that tracks oil is heading for the largest outflow in four years as investors cash out following a 30 percent rebound in crude prices.

Holders of the U.S. Oil Fund have pulled out more than $500 million this month, after pouring in almost $3 billion in the previous six months, according to data compiled by Bloomberg. Other oil exchange-traded products including ProShares Ultra Bloomberg Crude Oil also saw investor selling.

West Texas Intermediate crude has rebounded more than $10 from a six-year low in mid-March on speculation that the falling number of oil rigs will reduce U.S. production and ease a supply glut. Monthly output will decrease from June through September before rising back again in the fourth quarter, the Energy Information Administration forecast.

“Oil’s had a heckuva bounce off the bottom, and I think people are just cashing in some of their short-term chips,” said Matt Hougan, president of San Francisco-based research firm ETF.com. “It was easier to bet oil would go from $40 to $55 than it is to say it’ll go back to $70.”

A total of $518 million has been withdrawn from the U.S. Oil Fund, which follows WTI prices, heading for the biggest monthly outflow since April 2011. The fund’s shares outstanding dropped to 138.9 million Monday, down from a record 188.4 million on March 19.

http://www.bloomberg.com/news/articles/2015-04-28/top-oil-etf-sees-largest-outflow-in-four-years-on-rebound
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Russia's Novatek Says 1Q Net Profit Up 23%, Beats Forecast

Russia's No.2 gas producer Novatek said on Tuesday its first-quarter net profit increased by 23 percent to forecast-beating 31.1 billion roubles ($595.6 million) thanks to rising sales and production.

Analysts, polled by Reuters, expected net income at 27.2 billion roubles.

Novatek also said total January-March revenues rose to 113.7 billion roubles from 88.7 billion roubles in the year-earlier period.

- See more at: http://www.rigzone.com/news/oil_gas/a/138315/Russias_Novatek_Says_1Q_Net_Profit_Up_23_Beats_Forecast?rss=true#sthash.R9U7NZy8.dpuf
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Gazprom Profit Plunges $19 Billion

Russia’s gas giant OAO Gazprom said Wednesday its 2014 net profit plunged 980.26 billion ruble ($19 billion) on year to 159 billion ruble due to weakness in the Russian currency and instability in Ukraine.

Gazprom, facing tougher conditions in its biggest market Europe, saw its sales to the continent fall to 159.4 billion cubic meters from 174.0 bcm a year ago.

Russia’s ruble plummeted last year, losing around half of its value against the dollar, due to lower oil prices and a crisis of confidence in the currency following Western sanctions on Russia over the crisis in Ukraine. The weaker ruble also pushed Gazprom’s net debt higher by 48% to 1.65 trillion rubles.

The company said it suffered a 34 billion ruble loss on its balance sheet due to a dispute with Ukraine’s state energy company Naftogaz.

http://www.wsj.com/articles/gazprom-profit-plunges-19-billion-1430297805
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Eni sees higher output this year as first-quarter tops forecast

Italy's Eni said it expects to produce more oil and gas this year after posting a 46 percent drop in first-quarter net profit due to weaker crude prices.

Eni's adjusted net profit fell to 648 million euros (464 million pounds) but easily topped an analyst consensus provided by the company of 460 million.

Benchmark Brent prices averaged $55 a barrel in the first quarter of 2015, down by almost half from a year earlier.

Eni said the impact of fallen oil prices had been partly offset by a better refining margins and higher investment income.

Oil and gas production this year will be higher than last year due to new field start-ups and a ramp-up of projects in places such as Angola, Congo and Egypt, it said.

Eni, the biggest foreign oil producer in Africa, also said it expected to produce higher volumes in conflict-torn Libya.

The group said it would spend less this year than in 2014. Eni has committed to cutting costs and will reduce investments by 17 percent to 2018.

http://uk.reuters.com/article/2015/04/29/uk-eni-results-idUKKBN0NK0DB20150429
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Texas total well completions for 2015 year to date

Texas total well completions for 2015 year to date are 5,946, down from 10,130 recorded during the same period in 2014: Texas RRC

Texas data: http://www.rrc.state.tx.us/media/27835/ogdc0315.pdf
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Range hits record with Marcellus well

Range Resources has drilled a southern Marcellus shale well that logged a record-setting initial production (IP) rate of 43.4 million cubic feet equivalent per day (Mmcfe/d).

http://www.upstreamonline.com/live/1398340/range-hits-record-with-marcellus-well?utm_source=dlvr.it&utm_medium=twitter
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Consol Energy profit falls 35 pct on weak prices

Coal and natural gas producer Consol Energy Inc reported a 35 percent fall in quarterly profit, hurt by weak prices for both commodities.

The company, which has shifted its focus to natural gas production, said its coal mining operations would continue to benefit by partnering with the power plants that will be around for many years to come.

U.S. power companies shut or converted over 4,100 megawatts of coal-fired plants last year and are expected to stop burning coal at another 22,100 MW of plants in 2015, according to Thomson Reuters data.

Utilities are shutting down older coal plants instead of upgrading them to meet increasingly strict federal environmental rules due to high costs and abundant supply of cleaner and cheaper natural gas, an alternative to coal.

Consol said on Tuesday it also signed an "innovative" sales agreement with a utility that allows it to sell either coal or natural gas depending on whichever commodity is morecost-effective for a given month.

The company said it expects second-quarter net gas production of about 71-75 billion cubic feat equivalent (bcfe), compared with 71.6 bcfe it produced in the first quarter.

Consol also forecast current-quarter coal sales of 7.1-7.7 million tons, higher than the 6.5 million tons it sold in the quarter ended March 31.

Net income from continuing operations fell 35 percent to $79 million, or 34 cents per share, in the first quarter.

Excluding a charge of $67.7 million on debt extinguishment and a $60 million gain on commodity derivatives, earnings were 37 cents per share.

Revenue fell 8.2 percent to $889.6 million.

http://www.reuters.com/article/2015/04/28/consol-energy-results-idUSL4N0XP59D20150428
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National Oilwell forecasts declining revenue

National Oilwell Varco Inc, the largest U.S. oilfield equipment maker, reported lower-than-expected quarterly revenue and forecast declining revenue for the next few quarters as weak oil prices reduce drilling activity.

The company, which in February warned of a "severe downturn" in its business, said total backlog fell to $11.86 billion in the first quarter ended March 31 from $14.32 billion on Dec. 31.

Global oil prices have fallen 44 percent since peaking in June last year, prompting oil producers to quickly scale back spending, which in turn has weighed on demand for oilfield equipment.

The average U.S. rig count has also fallen about 40 percent since June and was at 1,110 in March, according to a Baker Hughes Inc survey.

Net income attributable to the company fell 47.4 percent to $310 million, or 76 cents per share, from a year earlier, mainly hurt by $200 million in charges.

Excluding one-time items, National Oilwell earned $1.14 per share, above the average analyst estimate of $1.09, according to Thomson Reuters I/B/E/S.

Revenue fell marginally to $4.82 billion, below analysts' average estimate of $4.84 billion.

http://www.reuters.com/article/2015/04/28/national-oilwell-results-idUSL4N0XP5BZ20150428
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Alternative Energy

China to adjust resource tax and fees

China will reform the resource tax of several natural resources and cut unnecessary fees starting from May, according to a statement released after a State Council executive meeting presided over by Premier Li Keqiang on Tuesday.

Resource taxes of rare earth, tungsten and molybdenum will be levied according to price instead of quantity. Reasonable tax rates will be worked out with no more tax burdens on enterprises.

Meanwhile, the central government will exempt mineral resources compensation fees, and ban illegal charges on the three resources by local governments below the provincial level.

The three resources will also be exempt from export tariffs from May, the Ministry of Finance announced last Thursday.

http://en.chinamining.com.cn/Policies/2015-04-29/1430275823d72031.html
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China’s Checks on Solar Quality Could Spur More Consolidation

China’s National Energy Administration is pressing local governments to inspect and report how much power the nation’s solar panels are producing in an effort to crack down on defects.

The inspections come as flaws found in some Chinese solar panels continue to compromise efficiency, reducing the amount of electricity the panels produce.

Here’s what the crackdown may mean.

1. Inspections to Target Quality of Solar Equipment

According to Bloomberg New Energy Finance, China’s solar capacity has surged almost fivefold since the end of 2012, making it one of the fastest-growing clean energy markets for the past two years. A plunge in panel prices is helping make solar power more commonplace -- both in China and elsewhere. Critics argue the price drop forced panel makers to reduce costs, compromising quality.

2. New Standards or Regulations Expected

China has called for stronger planning and management of photovoltaic power stations. The nation is expected to issue new technology standards or regulations for solar products or power projects after evaluating results of the investigations.

3. Consolidation of Solar Equipment Manufacturers Expected

Consolidation of solar equipment manufacturers is expected as part of a broader industry shakeout.

“Inspections will benefit companies with high-quality products and good technology,” said Nick Duan, a Beijing-based analyst with Bloomberg New Energy Finance. Manufacturers found to be underperforming face being eliminated, he said.

4. A Precursor to a Cut in Preferential Power Prices

The inspections are seen as a precursor to a cut in preferential power prices for solar projects.

China has held its subsidy for ground-mounted projects at the current level since September 2013.

http://www.bloomberg.com/news/articles/2015-04-27/china-s-checks-on-solar-quality-could-spur-more-consolidation
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Portable machine turns salt water into drinking water using solar power

By using solar power to charge a cache of batteries, scientists at MIT have figured out a way to remove salt from water through electrodialysis at an extremely efficient rate.

David L. Chandler explains, "Electrodialysis works by passing a stream of water between two electrodes with opposite charges. Because the salt dissolved in water consists of positive and negative ions, the electrodes pull the ions out of the water, leaving fresher water at the centre of the flow. A series of membranes separate the freshwater stream from increasingly salty ones."

MIT's advancement in the actual membrane is another reason for the increased rate of efficiency.  Compared to the 40% to 60% of traditional reverse osmosis systems, they are able to turn 90% of the saltwater fed into the machine into drinking water.  In one day this machine can filter 2,100 gallons of water.

According to mechanical engineer, Amos Winter, working on the project "both electrodialysis and reverse osmosis require the use of membranes, but those in an electrodialysis system are exposed to lower pressures and can be cleared of salt buildup simply by reversing the electrical polarity. That means the expensive membranes should last much longer and require less maintenance, Winter says."

As David Cohen-Tanugi points out, graphene is the new super filtration material

https://www.minds.com/blog/view/439821037283053568/portable-machine-turns-salt-water-into-drinking-water-using-solar-power
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Precious Metals

Barrick Gold shareholders reject executive compensation plan

Barrick Gold Corp shareholders have voted to reject the gold miner's controversial executive compensation plan, Barrick Executive Chairman John Thornton said on Tuesday.

Although the final tally of votes on the nonbinding say-on-pay vote were not yet in, Thornton said early returns indicated that about 75 percent of shareholders who voted rejected the pay plan.

"Now that is obviously not where we want to be. And that's obviously not where you want us to be. So I want you to know that we have heard you loud and clear," Thornton said at Barrick's annual meeting in Toronto.

He said Barrick, the world's biggest gold producer, will take the feedback from shareholders on its compensation plan and refine the scheme, especially as it relates to his own package.

Barrick's goal is that next year's vote on executive compensation will be "at a minimum the opposite of the vote this year, and preferably a whole lot better than that," Thornton said.

Although so-called say-on-pay votes are not mandatory in Canada, and companies are not required to take any action on the outcome, they are an important barometer of investor attitudes.

In the lead-up to Tuesday's meeting, some large institutional investors, including the Ontario Teachers' Pension Plan, said they would vote against Barrick's pay plan and withhold votes for directors to express their unhappiness.

At the heart of shareholder discontent was the $12.9 million in compensation Barrick paid to Thornton in 2014. That was a 36 percent increase on his 2013 package and came after a year in which Barrick's stock price fell 39 percent and underperformed its peers.

http://www.reuters.com/article/2015/04/28/barrickgold-compensation-idUSL1N0XP1HG20150428
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Base Metals

China's top aluminium producer Chalco swings to profit in Q1

Aluminum Corp of China Ltd (Chalco) swung to a profit in the first quarter of 2015 after domestic prices of the metal in the world's top consumer rose.

Chalco reported a net profit of 63.1 million yuan ($10.2 million) for the January-March period after a net loss of 2.16 billion yuan in the same period a year earlier, it said in a filing on the Hong Kong stock exchange on Tuesday.

The top Chinese producer of primary aluminium and raw material alumina had booked a record loss of 16.2 billion yuan in 2014 due to huge writedowns and weak metal prices as the Chinese economy slowed.

Chalco mainly sells its products in China, the world's top producer and consumer of aluminium. Chinese aluminium prices rose 1.4 percent in the first quarter, supported by reduced spot sales by some producers.

http://www.reuters.com/article/2015/04/28/chalco-china-results-idUSL4N0XO48J20150428
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Steel, Iron Ore and Coal

Indonesian coal miners move on as cash runs out

Indonesian coal miners are diversifying into other businesses to offset a collapse in demand from China, which has slashed their cash flows to the lowest levels in months.

The free cash flow of the 15 biggest coal miners and contractors on Jakarta's stock exchange averaged $10.7 million in the three months ended December, Thomson Reuters data shows. Six of the firms, including PT Indo Tambangraya Megah Tbk and PT Golden Energy Mines Tbk, experienced negative free cash flow. That means the cash they generated could not cover operating costs. Company executives and industry groups are not expecting a pickup anytime soon in demand especially from China, the world's top consumer of the commodity.

PT Adaro Energy Tbk, Indonesia's biggest coal miner by market value, is turning its focus to its logistics business and power generation. Sinarmas Group, parent of Golden Energy Mines, is investing as much as $700 million to build two coal-fired power plants in Indonesia. PT Bukit Asam Tbk is conducting feasibility studies on setting up power stations in Vietnam and Myanmar.

Indonesia's coal production may slide as much as 24 percent this year as miners slow output and concentrate on stabilising their businesses, said Pandu Sjahrir, chairman of the Indonesian Coal Mining Association. "The Chinese slowdown is worse than we thought," Sjahrir said. "India and Japan have improved. The problem is that China overpowers everyone else."

Adding to the industry's woes, the government is planning to double coal royalties from next month.

http://www.reuters.com/article/2015/04/29/indonesia-coal-cashflow-idUSL4N0XO3BW20150429
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Mechel posts record loss on weaker rouble, assets sale

Indebted Russian miner Mechel posted a record 2014 net loss on Tuesday of $4.3 billion because of $3.9 billion in non-cash write-offs caused by a weaker rouble and assets sales.

The profits of many Russian exporters have been hit by the rouble, which plunged against the dollar last year on weaker oil prices and Western sanctions over Russia's role in the Ukraine crisis.

"The downside of our asset disposal process and national currency devaluation was the decrease of the group's (full year) revenue by 25 percent and a major paper loss of $4.3 billion," Mechel said in a statement.

The net loss in the fourth quarter reached $3.1 billion compared with a net loss of $575 million in the previous quarter. Its net loss stood at $2.9 billion in 2013.

But the rouble depreciation has also made Mechel's coal products more competitive on dollar-denominated markets, boosting its export sales and reducing its net debt by 23 percent to $6.8 billion.

Mechel, controlled by businessman Igor Zyuzin, had accumulated much of its debt before the economic downturn. It invested heavily in expansion before the 2008 financial crisis hit demand and then had to sell some of its assets when they became loss-making.

"The company's management is making every effort to resolve our debt issue as soon as possible," Mechel said in its statement. It gave no details.

http://www.reuters.com/article/2015/04/28/russia-mechel-results-idUSL8N0XP2V520150428
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Cliffs quarterly revenue falls, cuts capex

Coal and iron ore producer Cliffs Natural Resources Inc reported a 28 percent fall in quarterly revenue, and the company cut its capital budget as prices tumble.

Iron ore prices have been weighed down by weak demand for the steel-making ingredient in both domestic and international markets such as China.

Revenue from the company's U.S. iron ore operations decreased about 14 percent to $311.8 million in the first quarter.

Spot iron ore prices .IO62-CNI=SI fell about 28 percent in the January-March quarter.

Cleveland, Ohio-based Cliffs said it expects to produce and ship 20.5 million tons of iron ore in 2015 from its U.S. business, compared with 22.4 million it produced in 2014.

The company said it was considering a sale of its North American business, which produced 1.4 million tons of coal in the quarter ended March 31.

"They're looking to exit both North American coal and Asia Pacific iron ore but the problem is, I don't think they have a buyer right now for either business," Wolfe Research analyst Gordon Johnson told Reuters.

The company recently sought creditor protection for its Canadian arm and sold its chromite assets in the northern Ontario Ring of Fire district.

Cliffs cut its capital expenditure budget to $100 million to $125 million for 2015. The miner had earlier set a capital budget of $125 million-$150 million.

The company's net loss attributable to shareholders widened to $772.6 million, or $4.26 per share, in the first quarter ended March 31, from $83.1 million, or 54 cents per share, a year earlier.

Revenue fell to $446 million from 615.5 million.

The company said the first-quarter results take into account the impact of the North American Coal and the Canadian businesses being treated as discontinued operations.

http://www.reuters.com/article/2015/04/28/cliffs-results-idUSL4N0XP74M20150428
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Nippon Steel to cut output by 9 pct in April-June to reduce stock

Nippon Steel & Sumitomo Metal Corp, Japan's top steelmaker, plans to cut crude steel output in the April-June quarter by 1 million tonnes, or about 9 percent, from the previous quarter because of rising inventories at home.

The reduction is bigger than the 4.9 percent fall forecast by Japan's industry ministry this month in the country's crude steel output for the period, which would take it to the lowest level for the quarter in six years.

Steel product inventories at major Japanese wholesalers totalled 5.91 million tonnes as of February, up 4 percent from about a year earlier, due to lower automobile output and weaker housing starts, both hit by a sales tax rise in April last year.

"We are worried about a surge in inventories," Nippon Steel's executive vice-president, Katsuhiko Ota, told reporters.

"We will cut output to help reduce stocks," he said.

Nippon Steel reported that its 2014/15 recurring profit, which is pre-tax before one-off items, rose 25 percent as lower material costs boosted margins. It did not provide a profit forecast for this year.

http://www.reuters.com/article/2015/04/28/nippon-steel-output-cut-idUSL4N0XP42520150428
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China drives global stainless steel output to 2014 record

A jump in stainless steel output in top producer China drove global production to another record high last year, outstripping demand growth and weighing on prices, an industry report showed on Tuesday.

Global stainless steel output rose 8.3 percent last year to a record 41.7 million tonnes, with output gains in all regions except central and eastern Europe, according to theInternational Stainless Steel Forum (ISSF).

China, which produces about half the world's stainless steel, saw output jump 14 percent year-on-year to 21.7 million tonnes, while the Americas saw output jump 15 percent to 2.8 million tonnes.

China's 14 percent output growth rate was lower than last year's 18 percent rate, but it was still enough to keep stainless steel prices depressed ST-CRUSTL-IDX.

Global prices are are at their lowest since last March, and not far off a 4 year low hit in August 2013.

Output in Asia excluding China rose by just 0.6 percent to 9.3 million tonnes, while output in Western Europe rose 1 percent to 7.6 million tonnes. Output in central and eastern Europe fell 0.6 percent to 277,000 tonnes.

http://www.reuters.com/article/2015/04/28/stainless-steel-output-global-idUSL8N0XP26V20150428
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