Mark Latham Commodity Equity Intelligence Service

Thursday 28th April 2016
Background Stories on www.commodityintelligence.com

News and Views:

Attached Files







    Macro

    China's Dalian Commodity Exchange again doubles coking coal, coke futures transaction fees


    China's Dalian Commodity Exchange raised transaction fees on coke and coking coal futures contracts, it said on Wednesday, the fourth increase in a week.

    The exchange doubled transaction fees to 0.072 percent on the futures contracts, effective from April 28, according to a statement on its website.

    The exchange initially raised fees from 0.003 percent to 0.006 percent on April 20, effective from April 22.

    Chinese commodities exchanges have stepped up efforts to curb surging prices that some say have been driven by speculators, raising fears of another derivatives bubble after last year's stock market collapse.

    http://www.reuters.com/article/china-futures-dalian-idUSB9N17O042
    Back to Top

    Anglo American agrees $1.5 bln sale of niobium and phosphates units


    Miner Anglo American said on Thursday it had agreed to sell its niobium and phosphates businesses to China Molybdenum for $1.5 billion in cash to reduce its debt level.

    The businesses, consisting of mines, plants, processing facilities, chemical complexes and deposits, are located in Brazil.

    The deal is subject to certain approvals and is expected to close in the second half of the year.

    "The proceeds from this transaction ... will enable us to continue to reduce our net debt towards our targeted level of less than $10 billion at the end of 2016," Anglo's Chief Executive Mark Cutifani said in a statement.

    http://www.reuters.com/article/anglo-american-equity-china-molybdenum-idUSFWN17U1JE
    Back to Top

    Oil and Gas

    China's Biggest Oil Company Posts 52% Decline in 2015 Profit


    China National Petroleum Corp., the country’s biggest oil and gas producer and the parent of PetroChina Co., said profit fell 52 percent as lower oil prices punished global explorers.

    Profit last year fell to 82.5 billion yuan ($12.7 billion), the Beijing-based company said in a statement on its website Wednesday. The unlisted, state-owned company didn’t specify whether the profit is pretax, gross or net. Revenue fell 26 percent to 2 trillion yuan, while oil and gas output rose 1.8 percent to 259.5 million metric tons, it said.

    “We properly dealt with all the risks and challenges and steered the company from the model of chasing speedy expansion to a model focusing more on quality growth,” Chairman Wang Yilin said in the statement.

    CNPC owns oil and gas assets in politically unstable areas, including Sudan, and controls 86 percent of the listed company. PetroChina’s net profit tumbled 67 percent to 35.5 billion yuan in 2015, the lowest since 1999, the company said last month. Brent crude averaged $54 a barrel last year, from $99 the year before.

    CNPC’s proved oil reserves reached 730 million tons and natural gas reserves were 570 billion cubic meters at the end of last year. Total pipeline length reached 80,000 kilometers (49,720 miles). The company employs 1.52 million people.

    Wang said last month the company won’t cut frontline oil and gas workers as it seeks to reduce costs to cope with low energy prices. CNPC was also said to be among the few state-owned companies selected for reform to become a strategic holding company.

    Domestic crude production reached 111.4 million tons (about 2.24 million barrels a day), accounting for 52 percent of the country’s total, according to the company. Domestic natural gas output reached 96.5 billion cubic meters, about 73 percent of the nation’s total.

    CNPC sold 116.3 million tons of oil products last year, 40 percent of the country’s market share. Domestic natural gas sales rose 2.6 percent to 122.6 billion cubic meters.

    http://www.bloomberg.com/news/articles/2016-04-27/china-s-biggest-oil-company-posts-52-decline-in-2015-profit
    Back to Top

    Gas sales and China deal boost profit at Russia's Novatek


    Russia's second-largest natural gas producer Novatek overcame Western sanctions to deliver stronger net profit in the first quarter by selling a stake in an LNG project to a Chinese fund and improving domestic gas sales.

    Novatek, which is under a Western sanctions over Moscow's role in the Ukraine crisis, has been struggling to raise funds for its $27 billion Yamal LNG project and turned to China for investment partnerships and loans.

    The company said on Wednesday it had completed the sale of a 9.9 percent in Yamal LNG, which is due to start production of liquefied natural gas next year, to China's Silk Road Fund in March.

    Novatek said that including the deal, first-quarter net profit reached 115.9 billion roubles ($1.8 billion). Excluding the Yamal LNG stake sale, first-quarter normalised net income jumped by 87.4 percent to 58.2 billion roubles ($893 million).

    Revenue was up 22.5 percent to 139.4 billion roubles, largely due to an increase in sales of liquids, mainly crude oil and gas condensate.

    The company has increased its share of the Russian gas market as, unlike its competitor state-owned gas giant Gazprom , it is able to cut its prices.

    Novatek, in which France's Total has an 18.2 percent stake, said its earnings before interest, tax, depreciation and amortization (EBITDA), including its share in joint ventures, increased by 13 percent to 62.1 billion roubles.

    The company's other key shareholders are Gennady Timchenko and Chief Executive Officer Leonid Mikhelson.

    Novatek's shares were 0.3 percent higher at 1200 GMT, outperforming the Moscow broader stock market.

    http://www.reuters.com/article/novatek-results-idUSL5N17U2W6
    Back to Top

    Cnooc 1st Quarter Revenue Drops 31% After Crude Hits 12-Year Low


    Cnooc Ltd., China’s biggest offshore oil and gas explorer, reported a 31 percent decline in first-quarter revenue amid a crash in crude prices to the lowest in 12 years.

    Oil and gas sales dropped to 24.6 billion yuan ($3.8 billion) in the three months ended March 31, the Beijing-based company said in a statement to the Hong Kong stock exchange Thursday. Cnooc, which gets almost all of its income from oil and gas production, doesn’t report quarterly profit.

    Cnooc’s average realized oil price fell 39 percent to $32.54 a barrel in the first quarter. Brent oil, the global benchmark, averaged about $35 a barrel in the first quarter, from about $55 a year ago. Prices hit a 12-year low in January.

    Output rose 5.1 percent to 124.3 million barrels of oil equivalent from a year earlier, according to the statement.

    Cnooc’s annual production overtook China Petroleum & Chemical Corp. in 2015 to become the country’s second-biggest oil and gas producer as the offshore explorer pumped about 496 million barrels of oil equivalent, compared with its state-owned peer’s 472 million barrels. Cnooc’s output may slip to 470 million to 485 million barrels this year as the company takes measures to control operational costs.

    http://www.bloomberg.com/news/articles/2016-04-28/cnooc-1st-quarter-revenue-drops-31-after-crude-hits-12-year-low
    Back to Top

    Turkish oil group in talks to invest in Genel's Kurdistan gas project


    A Turkish state-backed energy firm is in talks to invest in Genel Energy's two big gas field developments in Iraqi Kurdistan, which would also include a pipeline to connect them to Turkey, company and industry sources said.

    London-listed Genel is one of the main oil producers in Iraqi Kurdistan and last year cut its production forecasts because of low oil prices. In March, it reported its biggest ever annual loss after downgrading its oil reserves.

    Genel is hoping that connecting the gas field developments - Bina Bawi and Miran - to Turkey will provide it with a major growth opportunity.

    Genel is currently in talks with TEC, a joint venture that includes the international arm of state-owned Turkish Petroleum, to invest in the development of the fields, a pipeline into Turkey as well as storage facilities, according to several sources involved in the talks.

    "They want to invest in the entire value chain of the project," one source said.

    Genel has made no secret of plans to bring in a partner for the project. The company hopes to complete the negotiations with the partner by the end of the year, Chief Executive Officer Murat Ozgul told reporters at the company's annual general meeting in London on Wednesday. He did not name the partner.

    http://www.reuters.com/article/genel-energy-gas-turkey-idUSL5N17U4KB
    Back to Top

    Baker Hughes reports bigger quarterly loss


    Oilfield services provider Baker Hughes Inc (BHI.N) said on Wednesday it expects U.S. rig count will begin to stabilize in the second half of this year, while the rig count globally will drop steadily through the end of the year.

    However, the company, which also reported a bigger first-quarter loss, said it does not expect drilling activity in the United States to increase meaningfully this year, even if the rig count held steady.

    Baker Hughes said it expects the current-quarter rig count in North American to fall 30 percent from the previous quarter, while the count globally would be limited by fewer new projects.

    "During the quarter, the industry faced another precipitous decline in activity, exceeding even the most pessimistic predictions, as E&P companies further cut spending in an effort to protect cash flows," Chief Executive Martin Craighead said in a statement.

    Baker Hughes, whose shares were down nearly 4 percent in premarket trading, also said revenue in North America declined 59 percent the latest quarter, steeper than the 41.9 percent drop in total revenue.

    Baker Hughes, which is to be bought by bigger rival Halliburton Co (HAL.N), also reiterated that their merger agreement would not terminate automatically if regulatory reviews extended beyond the deadline of April 30.

    Baker Hughes said it was retaining costs in its operating profit margins as required by the merger agreement. Halliburton had said it reduced the infrastructure it had been maintaining in anticipation of the merger as it saw "no scenario in the current market where we need this additional infrastructure".

    Halliburton had postponed reporting its full results to May 3 from April 25 to accommodate the deadline. The deal has run into regulatory snags, with the U.S. Department of Justice suing to block the deal earlier this month.

    Baker Hughes, which will get $3.5 billion from Halliburton if the deal is not cleared by regulators, said the two companies may continue to defend against the lawsuit and seek relevant approvals, or terminate the agreement.

    Net loss attributable to Baker Hughes widened to $981 million, or $2.22 per share, in the first quarter ended March 31, from $589 million, or $1.35 per share, a year earlier.

    Revenue fell 41.9 percent to $2.67 billion, missing analysts' average estimate of $2.85 billion, according to Thomson Reuters I/B/E/S.

    North America revenue accounted for about 30 percent of total revenue.

    http://www.reuters.com/article/baker-hughes-results-idUSL3N17U3ZB

    Attached Files
    Back to Top

    Rig-builder Sembcorp Marine's profit halves as clients defer projects


    Singapore rig-builder Sembcorp Marine's quarterly profit halved as customers deferred projects, and it faces prolonged uncertainty on contracts from its biggest client, Sete Brasil, whose shareholders have approved its bankruptcy.

    Sembcorp Marine posted a profit of S$55 million ($41 million) for the three months ended March 31, compared with a profit of S$106 million a year ago.

    Sembcorp Marine and its cross-town rival Keppel Corp have been hit by slumping orders as oil prices dropped nearly 60 percent since mid-2014.

    Exacerbating the situation are troubles at Sete Brasil, a company set up by corruption-battered Petroleo Brasileiro SA (Petrobras). The graft scandal and recession have crushed popularity for President Dilma Rousseff, who is facing ouster.

    Sete Brasil's shareholders last week voted to allow it to seek bankruptcy protection. It has paid neither Sembcorp Marine nor Keppel since late 2014.

    Both companies have said provisions taken last year for those contracts are currently sufficient, while Sembcorp Marine started arbitration proceedings against subsidiaries of Sete Brasil, from which it has won orders worth $5.6 billion.

    "For Sete Brasil, there is going to be a lot of unknowns such as the ongoing political scandal there, I doubt anything will be done this year. So the arbitration can just drag on for a while," Joel Ng, an analyst at KGI Fraser Securities, said before the results were announced.

    ORDER BOOK

    A collapse of Sete Brasil would be devastating not only for the investors that backed the project but for dozens of local suppliers. More than 800,000 local shipbuilding jobs could be lost, triggering $10 billion in losses, industry estimates show.

    "In Brazil, the political upheavals remain unabated, with the ongoing process to impeach the Brazilian President," said Sembcorp Marine's chief executive, Wong Weng Sun.

    "Such development and the deteriorating economy have contributed to the ongoing volatility and uncertainty of the situation in Brazil."

    SembCorp Marine, a subsidiary of industrial conglomerate Sembcorp Industries, posted quarterly revenue of S$918 million - a drop of about 30 percent from a year earlier. Its order book stood at S$9.7 billion at the end of the quarter.

    The company's cashflows have come under pressure as customers delay taking deliveries of their projects, hurting its gearing levels, analysts said.

    Earlier this year, Reuters, citing people familiar with the matter, reported the parent may inject funds into SembCorp Marine or buy full control to replenish finances.

    http://www.reuters.com/article/sembcorp-marine-results-idUSL3N17U3GW
    Back to Top

    Exxon ups dividend 3 percent day after ratings downgrade


    Exxon Mobil Corp raised its quarterly dividend by 3 percent on Wednesday, a day after Standard & Poor's downgraded the U.S. oil and gas company citing its generous payouts to shareholders.

    It was the smallest increase since at least the first quarter of 2006, when the dividend rose 10 percent, according to Thomson Reuters data.

    The downgrade of the oil giant was the first by S&P in more than 70 years. It was flagged by the ratings agency last week and did not come as a surprise Wednesday morning as Exxon's board met to approve the dividend increase and review quarterly results, which are set to be released on Friday.

    The board had halted a massive share repurchase program on Feb. 2, the same day S&P warned publicly a downgrade was possible. The repurchase program had dwarfed the dividend payout for years, and its cancellation was the first sign by Exxon's board of less-generous remuneration to shareholders.

    Exxon has raised its dividend each of the past 34 years. The increase this year came as the company and its peers are fighting the perception they spend too much on shareholders and not enough strengthening its balancing sheet and building oil reserves.

    Filings with U.S. regulators show that at a combined $325 billion in dividends and repurchases, Exxon's spending on shareholders in the last 11 years has exceeded by nearly 20 percent its outlays of $271.7 billion for new property, plant and equipment over the same period.

    S&P on Tuesday cut Exxon's top-tier credit rating by one notch to "AA+" from "AAA," saying it was concerned the world's largest publicly traded oil company would rather enrich shareholders than cull debt.

    Exxon raised its payout to 75 cents from 73 cents. The dividend will be payable on June 10 to shareholders of record as of May 13.

    http://www.reuters.com/article/us-exxon-mobil-dividend-idUSKCN0XO2E6

    Attached Files
    Back to Top

    US oil production slips again


                                                 Last Week     Week Before   Last Year

    Domestic Production '000........ 8,938               8,953            9,373

    http://ir.eia.gov/wpsr/overview.pdf
    Back to Top

    Summary of Weekly Petroleum Data for the Week Ending April 22, 2016


    U.S. crude oil refinery inputs averaged over 15.8 million barrels per day during the week ending April 22, 2016, 257,000 barrels per day less than the previous week’s average. Refineries operated at 88.1% of their operable capacity last week. Gasoline production decreased last week, averaging 9.5 million barrels per day. Distillate fuel production decreased last week, averaging over 4.6 million barrels per day.

    U.S. crude oil imports averaged about 7.6 million barrels per day last week, down by 637,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.7 million barrels per day, 1.2% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 898,000 barrels per day. Distillate fuel imports averaged 207,000 barrels per day last week.

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.0 million barrels from the previous week. At 540.6 million barrels, U.S. crude oil inventories are at historically high levels for this time of year. Total motor gasoline inventories increased by 1.6 million barrels last week, and are well above the upper limit of the average range. Finished gasoline inventories decreased while blending components inventories increased last week. Distillate fuel inventories decreased by 1.7 million barrels last week but are well above the upper limit of the average range for this time of year. Propane/propylene inventories rose 2.3 million barrels last week and are above the upper limit of the average range. Total commercial petroleum inventories increased by 5.2 million barrels last week.

    Total products supplied over the last four-week period averaged 20.0 million barrels per day, up by 4.0% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged 9.4 million barrels per day, up by 5.6% from the same period last year. Distillate fuel product supplied averaged about 4.0 million barrels per day over the last four weeks, down by 0.1% from the same period last year. Jet fuel product supplied is down 0.5% compared to the same four-week period last year.

    Cushing inventory up 1.7 mln bbl's

    http://ir.eia.gov/wpsr/wpsrsummary.pdf
    Back to Top

    Suncor Energy to acquire additional 5 percent stake in Syncrude


    Canadian oil and gas producer Suncor Energy Inc said on Wednesday it has agreed to pay about C$937 million to acquire an additional 5 percent stake in its Syncrude oil sands joint venture from Murphy Oil Corp's Canadian unit.

    The deal would increase the company's share in Syncrude to 53.74 percent, Suncor said in a statement.

    Together with Suncor's acquisition of Canadian Oil Sands in March, the company's production capacity would increase by 17,500 barrels per day of high-quality light sweet synthetic crude, Suncor Chief Executive Steve Williams said.

    Murphy Oil said in a statement it expected the deal to close at mid-year.

    http://www.reuters.com/article/us-syncrude-m-a-suncor-energy-idUSKCN0XP00L
    Back to Top

    Hess reports smaller-than-expected loss


    U.S. oil producer Hess Corp (HES.N) reported a smaller-than-expected quarterly loss as cost cuts helped offset the impact of lower oil prices.

    Hess, like other oil producers, has slashed its capital budget and curtailed production plans after a more-than 60 percent drop in oil prices CLc1 eroded profits.

    The company's oil and gas production inched slightly lower to 350,000 barrels of oil equivalent per day (boepd) in the first quarter, from 355,000 boepd a year earlier.

    Hess, which produces oil in North Dakota's Bakken Shale and the U.S. Gulf of Mexico, said average realized price for crude fell 36.8 percent to $28.50 per barrel in the quarter.

    Net loss attributable to Hess widened to $509 million, or $1.72 per share, in the quarter ended March 31, from $389 million, or $1.37 per share, a year earlier.

    Analysts on average had expected a loss of $1.83 per share, according to Thomson Reuters I/B/E/S.

    Revenue fell about 40 percent to $993 million.

    http://www.reuters.com/article/hess-results-idUSL3N17U3VJ
    Back to Top

    Noble Corp profit plunges as low oil prices hit rig demand


    Noble Corp Plc's quarterly profit plunged 41 percent, coming slightly below analysts' expectations, hurt by lower demand for rigs as oil prices hover around decade lows.

    The prolonged slump in oil prices has led to a steep decline in drilling activity, mainly in the offshore market, as oil and gas producers cut costs.

    Noble's average rig utilization fell to 79 percent in the first quarter ended March 31 from 86 percent, a year earlier.

    Average day rate, the amount an oil and gas company pays per day for a rig, fell 15.5 percent to $287,169.

    The net profit attributable to Noble fell to $105.5 million, or 42 cents per share, while operating revenue declined nearly 24 percent to about $612 million.

    Excluding items, the company earned 31 cents per share, missing the average analyst estimate of 33 cents, according to Thomson Reuters I/B/E/S.

    http://www.reuters.com/article/us-noble-corp-results-idUSKCN0XO2OP
    Back to Top

    Alternative Energy

    Siemens claims EU's largest wind turbine contract with Iberdrola


    Germany's Siemens has won a five-year deal worth up to 833 million pounds ($1.2 billion) to build and service wind turbines for Scottish Power's East Anglia ONE project off the eastern coast of England, Scottish Power said on Wednesday.

    The contract, for 102 turbines each capable of generating 7 megawatts of electricity, was Europe's largest single contract for the supply of offshore wind turbines, said Scottish Power, which is owned by Spain's Iberdrola.

    The turbine blades will be manufactured at Siemens' Hull factory in northern England, a 160-million pound compound to be opened in 2017 to meet Britain's huge demand for offshore wind equipment.

    Britain, the world's largest market for offshore wind projects, plans to have over 10 gigawatts of offshore wind capacity in production by 2020.

    Scottish Power plans to start building the 715-megawatt East Anglia ONE wind farm off the coast of Norfolk in 2017, with the turbines set for installation by 2019 and the wind farm operational by 2020 the utility said.

    When completed the East Anglia ONe project is expected to generate enough electricity to power around 500,000 homes.

    Scottish Power has secured a guaranteed price for the electricity produced at the wind farm of 119 pounds/megawatt hour (MWh) under the government's contracts-for-difference scheme to incentives low-carbon power production.

    Electricity prices in Britain currently trade around 37 pounds/MWh..

    http://www.reuters.com/article/siemens-windpower-contract-idUSL5N17U2EV

    Attached Files
    Back to Top

    DONG Energy has wind in its sails as profits increase in 2016


    Wind power helped Denmark’s Dong Energy to increase profits in the first quarter of 2016.

    The company reported that its EBITDA had increased by 35% to DKK8.1billion compared with DKK6billion in 2015.

    The improvement was driven by a 53% increase in wind whose stellar performance was partly offset by lower gas, oil and power prices.

    Net profit jumped to DKK5.2 billion in the first quarter, up by nearly 49% on the year. DONG said this was primarily due to the higher EBITDA and lower depreciation and net financial expenses.

    Dong said depreciation and impairment costs were down, helping achieve the growth in net profit.

    The company confirmed its initial public offering (IPO) is proceeding as planned, with the listing expected before the end of March 2017.

    Chief executive Henrik Poulsen, said: “Our strategic shift towards renewables and green customer solutions is well under way and continues to support our strong financial performance – both short and longer-term.”

    “Wind power continues to grow on the back of new offshore wind farms being constructed.

    “We are currently working on six major offshore wind farms in the UK and Germany and they are all well on track.”

    DONG is proceeding to build its pipeline of wind farm projects beyond 2020.

    It acquired 1 GW offshore project rights in the US taking total US project rights to 2.5GW. The company is establishing a presence in Taiwan in order to explore offshore wind opportunities in the Asia-Pacific region.

    https://www.energyvoice.com/otherenergy/107862/dong-energy-wind-sails-profits-increase-2016/
    Back to Top

    First Solar stock slips after first revenue miss in four quarters


    Solar panel maker First Solar Inc reported its first revenue miss in four quarters, sending its shares down as much as 9 percent in after-market trading.

    The company also said on Wednesday it named Chief Financial Officer Mark Widmar as CEO, succeeding James Hughes, who plans to step down effective June 30.

    Revenue rose about 81 percent to $848.5 million in the first quarter, largely due to higher revenue from the sale of a large California solar power plant to Southern Co.

    But that fell short of analysts' average estimate of $973.4 million, according to Thomson Reuters I/B/E/S.

    The company reported a net profit of $170.6 million, or $1.66 per share, for the three months ended March 31, compared with a loss of $60.9 million, or 61 cents per share, a year earlier.

    First Solar raised the lower end of its full-year 2016 earnings per share forecast by 10 cents to $4.10. The company retained the higher end at $4.50.

    Analysts on average were expecting $4.30, according to Thomson Reuters I/B/E/S.

    First Solar also boosted its full-year gross margin forecast to a range of 18 percent to 19 percent, from 17 percent to 18 percent.

    The company named Alexander Bradley, vice president, treasury and project finance, its interim chief financial officer.

    http://www.reuters.com/article/us-first-solar-results-idUSKCN0XO2KU
    Back to Top

    Uranium

    China’s Q1 nuclear power output at 47.1TWh


    China’s nuclear power output stood at 47.1 TWh in the first quarter of the year, up 34.22% year on year, accounting for 3.47% of China’s total 1,355.1 TWh during the same period, said the China’s Nuclear Energy Association (CNEA) in a quarterly report released on April 26.

    The nuclear output is equivalent to a reduction of 14.82 million tonnes of standard coal, 38.84 million tonnes of carbon dioxide, 0.13 million tonnes of sulfur dioxide and 0.11 million tonnes of nitric oxide.

    The on-grid power output amounted to 43.86 TWh during the same period, climbing 33.75% from the previous year, it said.

    In the first quarter, two nuclear power generating units-- #3 unit at Yangjiang nuclear power plant and #1 unit at Fangchenggang nuclear power plant—were newly put into commercial operation. At present, there are a total of 30 nuclear power generating units that have started commercial operation in China, with combined installed capacity reaching 28.6 GW, according to the report.

    http://en.sxcoal.com/0/145115/DataShow.html
    Back to Top

    German power firms may pay less than feared for nuclear storage


    German power firms may have to pay less for the storage of radioactive waste than investors had feared, driving up their shares in what is seen as a breakthrough in sorting out the financing of a nuclear phaseout.

    Utilities will be asked to pay 23.3 billion euros ($26.4 billion) into a state fund to cover the costs of nuclear waste storage, members of a commission tasked with securing funds needed for Germany's nuclear exit told Reuters on Wednesday.

    In exchange, Germany's "big four" energy firms - E.ON , RWE, EnBW and Vattenfall - will be able to shake off long-term liability for radioactive waste storage, the most complex, costly and timely aspect of nuclear decommissioning.

    The recommendation translates into a surcharge of 6.1 billion euros on top of 17.2 billion euros in storage provisions the companies have set aside so far. This is at the lower end of a 6 billion-18 billion euro range previously discussed.

    Shares in E.ON and RWE rose on the news and were up 2.1 percent and 4.8 percent, with traders saying the proposal could cap months of wrangling and remove the single biggest concern investors have regarding German utility stocks.

    Investors have been dumping utility stocks over concerns the power firms, already burdened by tens of billions of euros in debt, could remain liable for waste storage forever.

    The sources added the amount was agreed unanimously by the 19 members of the commission, which is expected to publish its proposals later on Wednesday on how to allot the costs of Germany's nuclear phase-out.

    The recommendations will serve as the basis for talks between the German government and utilities. It is generally expected that the government will adopt the commission's proposals.

    http://www.reuters.com/article/germany-nuclear-waste-idUSL5N17U3GM
    Back to Top

    Precious Metals

    Gold miner Goldcorp beats market forecasts, swings back to profit


    Canadian gold producer Goldcorp Inc on Wednesday reported better-than-expected earnings, returning to a profit in the first-quarter on the back of higher production and lower costs.

    Goldcorp, the world's third-biggest gold producer by market value, left unchanged its 2016 production and cost forecast.

    Goldcorp's two newest mines, Eleonore in Canada and Cerro Negro in Argentina, continued to ramp up in the quarter and underground mine development is "advancing well," Chief Executive David Garofalo said in a statement.

    Goldcorp said it will decide around mid-year whether to go ahead with two proposed projects, the Penasquito pyrite leach plant in Mexico and the Musselwhite materials handling venture in Ontario, Canada.

    Earlier on Wednesday, Goldcorp reported net earnings of $80 million, or 10 cents a share, for the three months to end-March. That compared with a net loss of $87 million, or 11 cents per share, a year earlier. In the fourth quarter, Goldcorp reported a net loss of $4.27 billion, or $5.14 per share.

    Excluding non-cash and one-time items such as a foreign exchange loss and restructuring costs, earnings in the first quarter were $50 million, or 6 cents a share, beating the 4 cents consensus estimate of analysts polled by Thomson Reuters I/B/E/S.

    Production at Goldcorp, which operates only in the Americas, including the United States and Mexico, increased to 783,700 ounces in the first quarter from 724,800 ounces in the year-ago period.

    All-in sustaining costs to produce an ounce of gold fell to $836 from $885 a year ago.

    Free cashflow was a negative $101 million in the first quarter, down from a negative $321 million a year ago, because of an increase in working capital, Goldcorp said. The company said it expected to be "substantially free cash flow positive" for the full year.

    Goldcorp will increasingly look for large gold deposits outside the Americas as they have become scarcer in the region, Garofalo said in January. He tagged Europe and Africa as possible locations for acquisitions.

    http://www.reuters.com/article/us-goldcorp-results-idUSKCN0XO2QY
    Back to Top

    Big boost for world's top diamond miner


    Alrosa, the world's top diamond producer by output, received a shot in the arm on Wednesday after ratings agency Moody's upgraded the miner's credit rating by two notches.

    Moody's upgrade brings the debt rating of Alrosa which is 77%-owned by Russia and the Republic of Sakha (Yakutia), to just below investment grade.

    Moody's said its decision reflects the fact that Alrosa's financial metrics "have remained strong versus global peers" and will remain robust, "owing to the company's status as a major producer and exporter of diamonds and weak rouble, the company's 29% share in the global diamond output, its low-cost reserve base, technical mining expertise, solid liquidity and conservative financial policy."

    At the same time, Alrosa's rating factors in "the volatile demand and prices for diamonds and the company's exposure to the Russian macroeconomic environment, despite the high exports, given that its operating facilities are located in Russia."

    Alrosa is being prepped for privatization and worth $8.4 billion in Moscow after rising by a third in value this year

    Moody's says the reason the outlook the rating remains negative is based on state-ownership of the company and the potential downgrade of Russia's sovereign rating. At the same time the ratings agency also takes into account the "moderate probability of government support in the event of financial distress."

    Alrosa earlier in April presented a rosy outlook for the diamond market with continued albeit modest growth in demand of 2%–4% through 2025 at the time of the release of its 2015 results.

    The company said output climbed to 38.3 million carats, a 6% increase when compared to the previous year, thanks mainly to improvements at its Mir and Udachny underground mines, as well as the commissioning of Karpinskaya-1 and Botuobinskaya pipes and other high-potential deposits.

    Alrosa, which together with Botswana-based De Beers produces more than half of the world's diamonds, also saw its reserves grow last year to 43.6 million carats. Despite poor global diamond market conditions, the company sold 3.8% more rough diamonds and increased sales 8% to $3.4 billion.

    Alrosa, which along with fellow Russian resources firms Rosneft and Bashneft are among the most likely candidates for privatization this year, is worth $8.4 billion in Moscow (RUB 546 billion) after rising by a third in value this year.

    http://www.mining.com/alrosa/
    Back to Top

    Base Metals

    Grupo Mexico: Q1 16 profit up 21%


    Mexican mining, rail and infrastructure company Grupo Mexico’s Mar 2016 qtr (Q1 2016) net profit has jumped 21% on Q1 2015 to $US406.9M due to higher metals production and a big jump in investment gains.

    The improved bottom line came despite revenue dipping 7.8% to $1.9B because of lower key commodity prices, including copper and silver.

    However, copper production was up 20% to a record 1Mt, fuelled by new projects, and a $288.6M gain in investments from Q1 2015’s $35.8M.

    http://www.miningbusiness.net/content/grupo-mexico-q1-16-profit-21

    Attached Files
    Back to Top

    Steel, Iron Ore and Coal

    CIL slashes coal prices


    Faced with mounting stocks currently estimated at 58-million tonnes, producer Coal India Limited (CIL) has slashed the prices of high-grade coal by around 40%. A senior CIL official said that the reduction in prices had been put into effect from April on an experimental basis, but could be continued through the current 2016-17 fiscal year if lower prices proved successful in reducing  existing stockpile and ensured higher off-take, particularly from the thermal power generation sector. 

    CIL has also scrapped the premium charged based on volumes delivered to incentivise large volume buyers to commit to higher offtake. For example, CIL used to charge a premium of 10% of the price for all deliveries above 90% of the contract with the buyer and the premium would increase to 20% of the price if deliveries ranged between 95% and 100% of the contract. 

    The reduction in base price and the waiver of premium deliveries, a remnant from days of supply shortage, were largely CIL’s reaction to rising production, high stocks at power plants and fall in off-take from the latter. On April 1, coal stocks at power plants was reported at 38-million tonnes During 2015/16, CIL notched a production growth of 8.5% at 536-million tonne and this enabled a reduction in imports by 34.26-million tonnes. 

    The production target for the current year had been fixed at 540-million tonnes but was implementing a phased lowering of production levels across some of mines in response to slowdown in off-take from the power sector.

    http://www.miningweekly.com/article/cil-slashes-coal-prices-2016-04-27

    Attached Files
    Back to Top

    Iron ore price plummets amid Chinese speculative mania


    On Wednesday the Northern China benchmark iron ore price fell 5.6% to $60.50 per dry metric tonne (62% Fe CFR Tianjin port). Iron ore is now down more than 12% from 16-month highs hit last week according to data supplied by The Steel Index, but the steelmaking raw material still boasts a 41% rise in 2016 and a 60%-plus recovery from nine-year lows reached mid-December.

    Given that it forges half the world’s steel and consumes more than 70% of the 1.3 billion tonne seaborne trade, the iron ore market is reliant, more than any other commodity, on the Chinese economy.

    After authorities introduced trading curbs on stocks in 2015, many Chinese investors shifted their attention from the country’s equity markets to commodity derivatives

    The surge in iron ore over the past four months has come mainly on the back rapidly rising steel prices in China and commodity investment fever that's gripping the mainland.

    Copper fell victim to Chinese speculators a year ago when a hedge fund calledShanghai Chaos conducted a bear raid on copper futures. Attention has now shifted to iron ore and other metals including aluminum.

    The first signs that the fundamentals of the physical iron ore trade was no longer much of a factor driving prices came on March 7. The price surged 19.5% in a single day – in absolute terms the day-on-day rise was roughly half of the price of contracted iron ore during the early 2000’s under the old ‘annual benchmark’ system, which ended in April 2010.

    Since then volatility has only increased – nearly 240 million tonnes worth of Shanghai rebar futures contracted changed hands on a single day last week. Reuters points to the fact that it "was equivalent to around a third of China's steel production last year, not just of construction-destined rebar but of every imaginable type of steel product."

    Circuit breakers on the Dalian Commodities Exchange to curb excessive price movement have been repeatedly triggered the past few weeks. After a very subdued launch in October 2013, volumes have sky-rocketed and last month daily trade in iron ore contracts surpassed one billion tonnes for the first time. That figure compares to the annual global seaborne trade of around 1.3 billion tonnes.

    http://www.mining.com/iron-ore-price-plummets-amid-chinese-speculative-mania/
    Back to Top

    Australia's Atlas shareholders back restructure as iron ore price rises


    Australia's Atlas Iron Ltd averted collapse on Wednesday after shareholders approved a debt-for-equity swap that will hand 70 percent of the company to creditors amid a recovery in iron ore prices.

    Chairman Cheryl Edwardes had warned ahead of an extraordinary shareholders' meeting of a "high risk" that Atlas would be placed in administration, a form of bankruptcy, unless the deal went ahead.

    Atlas mines about 14 million tonnes of iron ore a year in the Pilbara region of Western Australia, where it is dwarfed by rivals Fortescue Metals, BHP Billiton and Rio Tinto , who control the majority of Australia's 700-million-tonnes-a-year export market.

    Tumbling iron ore prices in recent years forced Atlas to lay off two-thirds of its employees, suspend mining, and seek the support of its suppliers to get back in production, underscoring the difficulties faced by smaller miners carrying high debt.

    Iron ore prices have galloped almost 50 percent this year, while Atlas has cut its cash cost of production to A$49 ($37) a tonne from A$66 18 months ago, Edwardes said.

    "This significantly lower cost base, which stands to be reduced further by the interest savings stemming from the debt restructure, enables Atlas to better withstand any future iron ore price volatility," she said.

    Iron ore .IO62-CNI=SI stood at $64.10 a tonne on Wednesday, although many in the industry believe the price recovery is only temporary owing to a supply glut.

    Citi analysts expect iron ore to average $38 a tonne in the fourth quarter, while an Australian government forecast pegs iron ore at $45 a tonne by the end of December.

    Atlas' debt-for-equity swap will put 70 percent of the company's stock in the hands of 71 lenders in exchange for a 48 percent reduction in its loan debt to $135 million.

    http://www.reuters.com/article/atlas-iron-creditors-idUSL3N17U2AI
    Back to Top

    China’s key steel makers’ Q1 losses rise over sixfold, CISA


    China’ key steel makers suffered a loss of 8.75 billion yuan ($1.35 billion) in their total net profits in the first quarter this year, increasing over sixfold or 659.51% from the same period last year, showed data from the China Iron & Steel Association (CISA).

    Meanwhile, the number of steel enterprises in the red shrank to 36.36% in the first quarter from 51.52% the same period last year, and many steel makers managed to turn losses into profitability in March amid the recent rising steel prices, registering the first profitability in recent nine months.

    CISA data showed that 96 large and medium steel producers realized sales revenue of 210.63 billion yuan in March, and their profits stood at 2.56 billion yuan; there were 28 steel producers in deficit in March, accounting for 29.2% of the total.

    It, though signaling the short-term favorable turn of steel industry impacted by de-capacity policy, also demonstrates the expanding gap inside the internal steel industry, and it will exert negative influences on the market if the steel prices fail to further rise in later period, said the analyst.

    The robust uptick in recent steel prices was only a short burst, mainly driven by Chinese government’s accelerated investment on infrastructure and the following plenty of credit activities, instead of actual improvement of domestic demand, said Goldman Sachs.

    The rising prices put supply side into the risk of ahead-of-timing production recovery, especially those steel makers tasting the sweetness of better profit, yet the capacity utilization rate of China’s crude steels still remained less than 70%, which means that the de-capacity work has not actually start, and it has a long way to go, it added.

    http://en.sxcoal.com/0/145108/DataShow.html
    Back to Top

    China’s 2016 apparent steel consumption may reach 683 mln T


    China’s apparent steel consumption is expected to reach 683 million tonnes in 2016, roughly stable or a slight rise from last year, which indicated a relatively sound demand for steel products, said the China Iron & Steel Association (CISA) in a market analysis.

    Meanwhile, China’ output of crude steel, steel products and iron ore may amount to 788 million, 770 million and 1.3 billion tonnes in 2016, falling 2%, 2% and 6% on year, respectively.

    The imports and exports of steel products are expected to drop 6.1% and 11.01% from a year ago to 12 million and 100 million tonnes respectively in the year; imports of iron ore may decline 5% or so from the year prior to 900 million tonnes, it said.

    CISA, pointing out the current tough situation of oversupplied steel market amid slowing domestic economic growth, also stressed that China will still be the largest steel consumer across the globe for a long term.

    The national regular demand for steel products remains stable and substantial, such as road construction, city maintenance and disaster rescue; the steel consumption of road construction, auto-manufacturing and ship-manufacturing sectors was on the increase in 2016, despite the slowing growth of steel demand in housing, machine, household appliances and other major steel-consuming sectors, which signaled a prospect of steel industry worth to expect.

    Besides, the state’s "Belt and Road" initiatives strategic policy and other development policies will also lend support to long-term and stable demand for steel products.

    http://en.sxcoal.com/0/145151/DataShow.html
    Back to Top
    Commodity Intelligence LLP is Authorised and Regulated by the Financial Conduct Authority

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

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

    Company Incorporated in England and Wales, Partnership number OC334951 Registered address: Highfield, Ockham Lane, Cobham KT11 1LW.

    Commodity Intelligence LLP is Authorised and Regulated by the Financial Conduct Authority.

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

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

    © 2017 - Commodity Intelligence LLP