Mark Latham Commodity Equity Intelligence Service

Monday 10th April 2017
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    Macro

    Chou En Lai on the French Revolution : Did he say it's too soon to tell?


    It is said that Chou En Lai, asked to assess the impact of the French Revolution, replied:

    "It's too soon to tell."

    Not according to Nixon’s interpreter, the American diplomat Chas Freeman, who has recently spoken about this. But before we see what Freeman had to say, let’s have a look at the story as it’s usually told.

    Legend has it that, while preparing Richard Nixon for his historic visit to China in 1972, Henry Kissinger mentioned that Chinese Prime Minister Chou En-Lai was an avid student of French history. During his trip, Nixon met with Chou in the walled garden of the Forbidden City. As they walked slowly around the lily ponds, Nixon remembered Kissinger's comment. To break the ice, he asked Chou what he thought had been the impact of the French revolution on western civilization. Chou En-Lai considered the question for a few moments. Finally, he turned to Nixon and replied, "The impact of the French revolution on western civilization - too early to tell."

    It seems this shows up in a few different versions. Sometimes it's said to Kissinger, sometimes, as related above, to Nixon, and sometimes a full twenty years earlier to someone else. So it looks, or looked, like a good guess that Chou En Lai did actually say this, though precisely when, or to whom, isn't clear.

    Chou’s answer has become a frequently deployed cliché, used as evidence of Chinese leaders' sage, patient, and far-sighted ways, in contrast to impatient westerners.

    But now up pipes Chas Freeman and kills off this cosy anecdote. Here's what he says happened.

    Chou and Nixon did indeed converse about events in France. But whilst Nixon’s question referred to the Revolution of 1789, Chou’s reply referred to les évenéments of 1968 – the Paris student riots and sit-ins just three years before.

    It seems this all came out at a seminar in Washington (in early June, I surmise) to mark the publication of Kissinger’s book, On China. Chas Freeman is reported to have said “I distinctly remember the exchange. There was a misunderstanding that was too delicious to invite correction”; also that Chou’s misconstrued comment was “one of those convenient misunderstandings that never gets corrected”. Moreover that this probably occurred over lunch or dinner, during a discussion about revolutions that had succeeded and failed; not in the walled garden.

    He said Chou had been confused when asked about the French Revolution and the Paris Commune, since “these were exactly the kinds of terms used by the students to describe what they were up to in 1968 and that is how Chou understood them.”

    Just a 300-year interlude

    I'm partly sorry this story has been debunked. That the Chinese take a long view of history may be both a cliché and actually true, even if the Nixon/Chou story can no longer be cited as an instance of it.

    As an example of short- and long-term historical perspectives, let's note that in the West, China’s emerging economic dominance is surprising and disturbing. To the Chinese on the other hand, it’s wholly unsurprising. Through most of recorded history their country has been the world’s foremost economic power; there’s been a 300-year interlude, that’s all.

    As to the effect of the French Revolution, this event brought about the rise of the nation state and was the precursor of the Russian revolution, and the Chinese revolution, and arguably of the First World War (and thereby also the Second World War). Who can say what the long term consequences of all that is? Chou’s answer, the answer we now have to believe he never gave, was quite apposite.

    China’s long predominance in world history prompts the question, why did modern science and technology develop in Europe, when China seemed so much better placed to achieve it? It’s known as the Needham Question … but here I'll stop ... more another day.

    http://peterhousehold.blogspot.co.uk/2011/07/chou-en-lai-on-french-revolution-did-he.html?m=1
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    National Grid issues warning on UK summer demand


    Wind and solar power generators in the UK may be asked to reduce their output this summer as the National Grid endeavours to ensure a balanced grid.

    FT reports that the growth of both renewable technologies means there is likely to be too much generation over the summer period, and NG has to keep the national transmission system at a stable frequency within a narrow range around 50 hertz to ensure household appliances work properly.

    In its latest “summer outlook” report, National Grid said peak demand this summer is likely to be the lowest on record, at 35.7GW. Minimum summer demand is expected to be 18.1GW, lower than 18.4GW last year.

    In a statement National Grid said, “Based on current information we anticipate that during some weeks there will be more inflexible generation on the system than is needed to meet demand. In order to balance the system, it may be necessary, during these weeks, for us to instruct inflexible generators to reduce their output. Wind generation may need to be curtailed this summer during minimum demand periods to help us balance the system.”

    http://www.powerengineeringint.com/articles/2017/04/national-grid-issues-warning-on-uk-summer-demand.html?utm_content=bufferc255f&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer
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    Venezuelan opposition, security forces clash in anti-Maduro protests


    Venezuelan opposition protesters and security officers clashed on Thursday as the country's fragmented opposition gained new impetus against a socialist government it blames for the country's social and economic collapse.

    The demonstrations were sparked by Supreme Court action last week to assume control of the country's opposition-led congress in what demonstrators said was a lurch toward dictatorship.

    While the widely condemned decision was quickly overturned, the opposition has stepped up street protests against President Nicolas Maduro, despite such demonstrations having achieved little in the past.

    Thousands of people blocked a main Caracas highway on Thursday, chanting "Out with Maduro!" and "No more dictatorship!" and vowed to march to the office of the state ombudsman, the government's principal human rights advocate.

    "The human rights advocate has to stop being the Socialist Party advocate!" opposition leader Henrique Capriles said in an online broadcast as he marched wearing a hat in the Venezuelan colors of yellow, red, and blue.

    Security forces blocked the march, sparking clashes with dozens of masked youths in a scene repeated over and over again in the past 15 years in volatile Venezuela.

    Protesters threw stones and petrol bombs while security officials fired tear gas and dispersed the crowds by mid-afternoon. The opposition called for another nationwide march on Saturday.

    Maduro critics are demanding the removal of seven Supreme Court justices who signed last week's decision. They accuse the government of stalling elections for state governors, which polls suggest would not go well for the ruling Socialists.

    State ombudsman Tarek Saab on Thursday evening shot down a censure measure against the Supreme Court justices that had been approved by the opposition-controlled assembly this week, saying the controversial ruling had been "clarified" by the reversal of the decision.

    Maduro said in a televised address that authorities had detained 30 people involved in the demonstration.

    TENSIONS FLARE

    Three opposition legislators late on Thursday said via Twitter that a young man was killed in a suburb of Caracas by security forces who were breaking up a protest there.

    Reuters was unable to independently confirm the incident, and interior ministry officials were not immediately available for comment.

    Venezuela is suffering from triple-digit inflation, shortages of basic foods and medicines, and one of the world's highest murder rates.

    Maduro's government has said that a U.S.-backed business elite is responsible for Venezuela's economic downturn and that it is trying to foment a coup to impose right-wing rule. His supporters also rallied in Caracas on Thursday.

    "Mr. Capriles, you're trying to ignite the country," Socialist Party official Freddy Bernal said during the government rally. "You're looking for deaths. Don't then come like a sissy saying that you're a political prisoner. Don't then come crying that you're being persecuted."

    Tensions have been simmering after tear gas and rocks flew between protesters and security forces during a major demonstration on Tuesday. The confrontations injured 20 people and led to 18 arrests, according to the Caracas-based Penal Forum rights group.

    Not since 2014's major unrest has the opposition held such sustained demonstrations, despite protester fatigue, fear of violence, and the necessity for so many Venezuelans to spend much of their day looking for food.

    The opposition has said it faces increasing persecution. The leader of one of its parties, Copei, sought refuge in the home of the Chilean ambassador in Caracas on Wednesday, according to Chile's foreign ministry.

    Opposition protesters have said their demonstrations are being stymied by authorities closing subway stations and adding checkpoints on major highways.

    "They can do whatever they want, but the people of Venezuela will today make their voices heard on the streets," tweeted opposition lawmaker Juan Requesens, who has led protests this week.

    http://www.reuters.com/article/us-venezuela-politics-idUSKBN17822O
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    Rio Tinto to fight $447 million Australian tax bill


    Rio Tinto, the world’s second-biggest miner by market value, will fight a A$447 million tax bill it received from the Australian government Wednesday, adding that the new assessment is not related to any tax avoidance scheme.

    The amount is linked to what is known as “transfer pricing” between Rio Tinto’s Australian operations and its Singapore office.

    The amount, consisting of A$379 million plus interest of A$68 million, is linked to what is known as “transfer pricing” between Rio Tinto’s Australian operations and its Singapore office for the calendar years 2010 to 2013.

    The practice, a tactic that allows firms to move profits to low taxing countries, is a common form of legal tax avoidance used by resources companies.

    But Rio Tinto noted it voluntarily approached the Australian Commissioner of Taxation (ATO) more than 10 years ago seeking to confirm its pricing arrangements. The transfer price in dispute is in line with an outcome agreed to by the ATO years before 2010, the company added.

    The ATO is also auditing 59 multinational corporations and hundreds of other companies to ensure they comply with the government's new Multinational Anti-Avoidance Law, the Financial Review reported.

    Such legislation, it noted, is focused on global businesses worth more than $1 billion that have company structures that allows them to evade having a taxable presence in Australia.

    Rio said that while it will challenge the amended tax assessment, it has agreed to pay 50% this month.

    http://www.mining.com/rio-tinto-to-fight-447-million-australian-tax-bill/
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    "The Change Of Change Is Now Negative"


    Ahead of what we hope will be a relatively quiet week following the juggernaut from the past 7 days, we present readers with another excerpt from the latest weekly note from Eric Peters, CIO of One River, which is not only appropriate in the context of recent observation by UBS, involving the sudden collapse of the global credit impulse, but far more importantly, may be critical for those who are in the business of timing key market inflection points.

    From Weekend Notes by Eric Peters

    “The change of change is now negative,” said the CIO.

    “Global growth is still rising, but the rate of improvement is slowing,” he explained. “Same holds true for global inflation, oil prices, copper, iron ore. Credit growth is slowing in the US, Europe, Japan, China.”  If these things were all contracting, we’d plunge into recession, but we’re not there. We’re simply at the point in the cycle where the rate of acceleration is slowing - which is both evidence of a pause, and a precondition for every major turn.

    “The last time we had a major shift in the change of change was a year ago.” In Jan/Feb 2016, China was imploding. Commodity prices were tanking with equity markets, the dollar soared alongside volatility. Then China unleashed explosive credit stimulus, while the Fed blinked, guiding forward interest rates dramatically lower.

    Within a short time, the change of change turned positive. Which is not to say things immediately accelerated, it’s just that they started contracting more slowly. And that marked the time to buy.

    “Pretty much everything that happened in 2016 can be explained by two things; China and oil prices,” he said. “Literally, that’s it.”

    China’s stimulus-induced rebound and the oil price recovery is all that mattered.

    “Brexit was a joke. Trump was a joke. In fact, the only real significance of those events was that they provided investors with opportunities to jump on board the reflation trade at back near Q1 prices.” The reflation trade quietly began in the Q1 collapse, and accelerated off the extreme post-Brexit summer lows in global interest rates.

    “That’s what made last year remarkable. Even investors who missed the first opportunity, had two chances to make a lot of money.” You see, that reward is usually reserved for those who act on the first signs of a change in the change of change.

    Summary: as Peters helpfully points out, the change of change - that "green light" to buy risk one year ago when it flipped positive - is now negative. Or, as UBS summarized it simply in just one chart several weeks ago...

    http://www.zerohedge.com/news/2017-04-09/eric-peters-calls-it-%E2%80%9C-change-change-now-negative
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    Oil and Gas

    The Next Oil Price War – Saudi Arabia Vs. Russia


    International oil markets could be heading towards a new war, as leading OPEC and non-OPEC producers are vying for increased stakes. The unexpected cooperation between OPEC and non-OPEC countries, instigated by the full support of Saudi Arabia (OPEC) and Russia (non-OPEC) has brought some stabilization to the crude markets for almost half a year. The expected crude oil price crisis has been averted, it seems, leaving enough room when looking at the fundamentals to a bull market in the coming months. As long as Saudi Arabia, Russia and some other major producers (UAE, Kuwait), are supporting a production cut extension, financials will be seeing some light at the end of the tunnel.

    The effects of the 2nd shale oil revolution, as some have stated, have been mostly mitigated by a reasonably high compliance of OPEC and non-OPEC members to the agreed upon cuts, while geopolitical and security issues have prevented Libya, Iraq, Venezuela and Nigeria, from entering with new volumes. Stabilization in the crude oil market, as always, is not only fundamentals but also geopolitics and national interests. The latter now could also be the main threat to a successful extension of the OPEC production cuts in the coming months.

    Fears are growing that OPEC’s leading producer, Saudi Arabia, is no longer happy with the overall effects it is generating by taking the brunt of the production cuts, while at the same time, other OPEC members, such as Iran and Iraq, are looking at production increases. Saudi Arabia’s other main rival Russia is also not sitting idle. Even if Moscow is still fully behind the official production cuts, Russian oil companies have been aggressively fighting for additional market share in Saudi Arabia’s main client markets, China, India and even Japan. Iraq and Iran, in contrast to what was expected, have been cutting away share in Europe.

    Threatened by its own successful agreement, Saudi Arabia is now feeling the heat on all sides. Some analysts are even proponing a doomsday scenario, implying that Riyadh has lost its grip on the largest oil markets. U.S. shale oil is increasing its market share, while addressing European options at the same time. Russia, Iran and Iraq have been pushing for market share in Asia, while taking up Saudi share in Europe. Until now, Saudi officials such as minister of petroleum, Khalid Al Falih, and Aramco’s Nasser, have been keeping quiet. No real hardline stance has been publicized until now by the OPEC leader. This could however change dramatically if recent indicators are correct.

    In an unexpected move, Saudi Arabia has reported that it will try to regain some market share in one of its former main markets, Europe. In a move to increase the attractiveness of taking Saudi crude, the Kingdom has plans to change the way it prices oil for Europe from July. The new pricing plans could be effective from July 1, mainly to increase the appeal of Saudi crude by making it easier for customers to hedge. Media sources have stated that Aramco will introduce its European exports price against the ICE settlement for the Brent benchmark after years of pricing its oil against the Brent Weighted Average (BWAVE). Both price references are part of the Brent benchmark used to price much of the world’s crude. Clients at present find it difficult to hedge the BWAVE. This development has partly been snowed under as Aramco also has lowered prices for the Mediterranean and some Asian clients. U.S. clients will however be looking at higher prices.

    Taking a bird’s eye view, the Saudi move could indicate a new market approach in the coming months or years. After a full focus on Asian markets and investment opportunities, as also shown by Saudi King Salman bin Abdulaziz’s month long visit to Asia, and Aramco’s multibillion spending spree, a sudden reorientation of part of the company’s future approach appears to be underway.

    Russia has always had a very comfortable position in the European oil markets, as it is the largest supplier (around 32 percent in 2016). Moscow’s dominance in European energy is undeniable. This is now under pressure if Aramco, in addition to Iraq and Iran, is really entering the European market in a serious manner. In a more stabilized oil market, this would not really have a direct impact on price scenarios, but looking at the current volatility, a confrontation between Russia and Saudi Arabia in Europe could destabilize not only the market but also lead to a new oil price war.

    Until 2015, Russian oil supplies had been dominating European markets, as most OPEC producers had no interest in European demand. Due to new players entering Asian markets, and the lower demand in the U.S., the Oil Kingdom is now looking for a confrontation. The Aramco move indicates that times are changing, and Europe could be the first new battleground. The Kingdom has a lot to gain (in volumes and share) as it is currently ranked 4th on feedstock supplies to European OECD countries in 2016, behind the former Soviet Union, Norway and even Iraq.

    The Russian-Saudi oil price war is already planned and partly implemented, as Russian oil company Rosneft indicated in 2015, accusing Aramco of dumping oil in Europe. The need for stabilization in the market in 2015-2016, and Aramco’s IPO, were reasons not to proceed with the conflict. Rosneft lately indicated that a European oil price war could force parties not to extend the output cut agreement for another six months.

    The conflict is brewing, but has not yet come to surface. Saudi Aramco’s first moves to re-enter Europe, however, clearly show that they are not willing to keep picking up the bill for others. Asia has been partly consolidated for Saudi Arabia. Money will talk as additional outlets (refinery projects) were acquired by Aramco the last month. Europe, a very stable and surprisingly growing crude oil market, is now the stage for a possible oil price war scenario. Riyadh’s decision to change its European price setting is, however, a clear signal that there is a red line for the Oil Kingdom. No more market share will be lost without being confronted by a more aggressive and powerful Aramco establishment.

    Both main parties, Russia and Saudi Arabia, are unwilling to risk a real oil price war. Putin’s future will be decided in the next 12 months, as elections are coming up, while the future of the young Saudi elite depends on an Aramco IPO. When taking a smarter approach, both nations could redirect their aggressive market strategies to the new incumbents in Europe. Iraq and Iran have been very smart by attempting to sneakily take market share from both sides. Combining Moscow and Riyadh’s power, an oil price war against the Iran-Iraq axis would be both more sustainable and feasible. The latter would also have the added advantage of not threatening the OPEC and non-OPEC production cut.

    http://www.commoditytrademantra.com/crude-oil-trading/the-next-oil-price-war-saudi-arabia-vs-russia/
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    China's oil demand resilient in early 2017 as industrial sector shines


    China's apparent oil demand rose 5.3% year on year in the first two months of 2017 to 11.65 million b/d on the back of robust economic growth, holiday transportation demand and efforts to build stocks ahead of the refinery maintenance season that started in March.

    Oil products across the barrel witnessed year-on-year demand growth over January-February, with LPG witnessing strongest growth of 24.8%, while gasoil demand rose 0.4%, rebounding from year-on-year declines since December 2015.

    China's industrial production grew 6.3% on year over January-February, beating expectations of 6.2% and accelerating from 6% in December. Fixed asset investment grew 8.9% in the two-month period, accelerating from 8.1% in December, according to data from the National Bureau of Statistics.

    These factors helped to lift gasoil consumption in the transportation and construction sectors. The week-long Chinese New Year holidays also pushed up demand for transportation fuels gasoline and jet fuel.

    A significant proportion of oil products also flowed into storage. Stocks, comprising gasoline, gasoil and jet fuel/kerosene, rose 15.29% month on month at the end of February, after rising 10.3% at the end of January, inventory data released by state-owned news agency Xinhua showed.

    Therefore, analysts do not expect the strong growth in apparent demand to continue in coming months because of the anticipated de-stocking activity that might take place.

    "The heavy maintenance in March will draw down China's throughput, resulting to lower apparent demand," said a Shanghai-based analyst.

    Beijing does not release official data on oil demand and stocks. Platts calculates apparent or implied oil demand by taking into account official data on monthly throughput at Chinese refineries and net product imports.

    China's GDP growth is expected to slow to 6.5% in 2017 from 6.7% last year, according to Primer Minster Li Keqiang, indicating slower growth in energy demand as the country steps up efforts to lift energy efficiency.

    GASOIL DEMAND EDGES HIGHER

    China's apparent gasoil demand rose to 3.41 million b/d in January-February, edging up 0.4% year on year.

    If additional supplies from the blending pool with light cycle oil are also taken into account, demand would work out to be 3.63 million b/d, up 2.2% year on year, calculations by S&P Global Platts showed. The barrels blended from LCO are used mainly in the construction and fishing sectors.

    Despite healthy year-on-year growth in gasoil demand in January-February, consumption was softer than in previous months because of a slowdown in activity in industry, construction and fishing sectors around the Chinese New Year holidays.

    "Sales of gasoil in January and February were significantly down from November and December due to the holidays," said a source with PetroChina's sales arm in southern Guangdong.

    As a result, gasoil stocks surged 29.7% month on month by the end of February, after rising 39.2% by the end of January, according to data from Xinhua.

    Analysts expect gasoil demand to remain steady in coming months.

    "Demand from the construction sector will fall as many key cities in China recently imposed restrictions on property buying. This will lower cash flows for new construction," the Shanghai-based analyst said.

    Hou Rui, an analyst with S&P Global Platts China Oil Analytics, said demand from spring ploughing and infrastructure construction would recover in Q2 when it is warmer. This might offset the slowdown in demand from the construction sector.

    GASOLINE GROWTH MODERATES

    Apparent demand for gasoline stood at 2.88 million b/d in January-February, representing year-on-year growth of 2.8%, compared with 8.3% growth over the same period in 2016.

    Similar to gasoil, blending pools also played a role in overall gasoline supplies. If mixed aromatics inflows are taken into account, apparent demand growth would work out to be 9.2% year on year, to as high as 3.78 million b/d. Gasoline stocks rose 2.2% month on month by the end of February after dropping 11.8% by the end of January.

    Analysts expect demand growth to slow because of weaker growth in car sales on the back of relatively higher taxes this year compared with 2016.

    Over the first two months, gasoline-fueled vehicle sales rose 6.5% year on year, compared with 14% year-on-year growth seen in 2016, data from the China Association of Automobile Manufacturers showed.

    LPG, NAPHTHA DEMAND GROWS

    Apparent demand for LPG rose 24.8% year on year to 1.67 million b/d over January-February on the back of robust appetite from the petrochemicals sector.

    In addition, demand from industrial users is also expected to grow sharply this year because of tighter environmental regulations. LPG is a cleaner alternative to coal and fuel oil.

    Apparent demand for naphtha grew 8% year on year to 1.04 million b/d over January-February, below the average growth rate of 9.9% in 2016.

    Naphtha is not only used as a feedstock to process or blend gasoline but is also used to produce ethylene and other petrochemicals. Asia's ethylene market has been gaining strength since mid-January, driven by strong spot demand, especially from China, Platts reported earlier.

    Asian naphtha prices hit a 19-month high in mid-February, reducing some buying interest from China.

    JET, FUEL OIL DEMAND SURGES

    Apparent demand for jet fuel surged 16.9% year on year to 820,000 b/d in January-February on the back of strong demand during the golden week holidays. Over the first two months in 2016, demand had fallen 3.5% year on year to 701,000 b/d, below the average of 754,000 b/d for the whole of last year.

    Aviation traffic turnover in January jumped 13.6% year on year, latest data from the Civil Aviation Administration of China showed. It was also higher than the 12.8% growth in the whole of 2016.

    Meanwhile, jet fuel stocks fell 1.36% month on month by the end of February, after climbing for three months, suggesting most of the output and net imports were consumed instead of flowing into tanks.

    Demand for jet fuel is unlikely to see similar growth in Q2 compared with Q1. "But it will still be buoyed by travel demand during the short public holidays such as Tomb-sweeping Day in April and Labor Day in May," said a Beijing-based analyst.

    The growth in apparent demand for fuel oil turned positive for the first time since February 2016, rising 4.9% year on year over January-February to 749,000 b/d. The rise was mainly attributed to the 8.7% growth in domestic output.

    Market sources said bunkering demand was weak compared with December because of slow industrial activity during the holidays, but had recovered significantly by H2 February, driven by demand for shipping coal.

    http://www.platts.com/latest-news/oil/singapore/analysis-chinas-oil-demand-resilient-in-early-27807742
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    Oil trader Gunvor sounded out rivals to sell itself - WSJ


    Gunvor Group Ltd, one of the world's largest oil traders, has discussed a possible sale of the company

    Any potential deal would further consolidate a sector already dominated by a handful of players such as Glencore , Vitol, Mercuria and Trafigura.

    However, Gunvor Chief Executive Torbjorn Tornqvist said the company had no sale plans at this time, the Journal reported.

    "I expect to remain a dominant shareholder in the group for the foreseeable future," Tornqvist told the Journal via email.

    Tornqvist is the majority owner of the closely held Swiss firm, which also trades coal, liquefied natural gas, biofuels, power and emissions.

    Tornqvist said last week 2017 would be focused on building up the commodities trader's U.S. interests, and added that he expects to announce a buyer for Gunvor's stake in a Rotterdam terminal by the end of June.

    Gunvor on Monday said net profit fell to $315 million in 2016, from a record $1.25 billion the year before that was boosted by asset sales.

    The company did not immediately respond to a request for comment when contacted by Reuters.

    http://www.reuters.com/article/gunvor-ma-idUSL3N1HF41D
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    Kuwait Is Best Off, Nigeria Worst in Fitch's 2017 Oil Break-Even


    Kuwait’s in the best position of major oil exporting nations in the Middle East, Africa and parts of Europe to have a balanced government budget this year with oil forecast to average $52.50 a barrel, according to Fitch Ratings Ltd.

    Nigeria is worst off, needing an oil price of $139 a barrel to balance its budget, Fitch said in a April 5 report on 14 major oil exporting nations in the Middle East, Africa and emerging Europe. Even after cuts in government subsidies and currency devaluations, 11 of them won’t have balanced government budgets this year, including Saudi Arabia, it said.

    “Fiscal reforms and exchange rate adjustments are generally supporting improved fiscal positions compared to 2015, but have not prevented erosion of sovereign creditworthiness,” Fitch said.

    Only Kuwait, Qatar and the Republic of Congo have estimated break-evens that are below Fitch’s oil price forecast for this year. Kuwait at $45 a barrel traditionally has a low break-even because of its high per-capita hydrocarbon production and more recently its “large estimated investment income” from its sovereign wealth fund, Fitch said.

    Brent crude, a global benchmark, has averaged about $55 a barrel this year.

    The rating agency said it “substantially” raised the fiscal break-even prices for Nigeria, Angola and Gabon from 2015 levels because of rising government spending.

    Fitch’s forecast 2017 break-even oil prices, per barrel:

    Nigeria at $139
    Bahrain at $84
    Angola at $82
    Oman at $75
    Saudi Arabia at $74
    Russia at $72
    Kazakhstan at $71
    Gabon at $66
    Azerbaijan at $66
    Iraq at $61
    Abu Dhabi, United Arab Emirates, at $60
    Republic of Congo at $52
    Qatar at $51
    Kuwait at $45

    https://www.bloomberg.com/news/articles/2017-04-06/kuwait-is-best-off-nigeria-worst-in-fitch-s-2017-oil-break-even
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    Traders clear Europe's tanks by shipping more gasoline to U.S.


    Traders are shipping more gasoline from Europe to the U.S. East Coast ahead of the summer driving season as a steady reduction in inventories there props up prices.

    At least 16 tankers carrying some 600,000 tonnes of gasoline blending components including naphtha have been booked in recent days by traders including Glencore, ExxonMobil, Mercuria, Repsol and Total, shipping data shows.

    That compared with an average of around 300,000 tonnes per week booked throughout March. The exports are helping to clear Europe's tanks of oil products and boosting profits for refining gasoline from just under $6 per barrel at the end of March to more than $13 per barrel on Thursday.

    "Europe looks better and better all the time," one oil trader said. "Demand is good and stocks are drawing."

    Benchmark U.S. East Coast gasoline refining margins have steadily risen in recent weeks as stocks in the region are gradually reduced, even though they remain seasonally high.

    However, because much of the gasoline in storage was winter grade it can no longer be used as the market shifts to summer quality.

    The New York Harbor has traditionally been a major destination for European gasoline, which is produced in excess of the region's demand. But the arbitrage from Europe was closed for weeks, leading to building stocks, including in tankers waiting for a chance to sail to other markets.

    The exports, along with some 2.2 million tonnes of clean products booked to sail to West Africa in March, have helped clear stock levels in the Amsterdam-Rotterdam-Antwerp hub.

    Gasoline, blending component and naphtha stocks in the region fell by more than 6 percent in the week to March 31, according to industry monitor Genscape, to 2.9 million tonnes.

    There are millions of tonnes yet to clear from Europe, and while one tanker with stored gasoline, the Hamburg Star, had set sail for the United States, several others filled weeks ago were still floating offshore ARA, including the Hafnia Europe, the Amorea and the Clio.

    New York Harbor demand is expected to remain strong as Latin America, particularly Venezuela, pulls in more gasoline from the U.S. Gulf Coast and space on the Colonial pipeline - the key artery from the refining hub to the East Coast -- remains limited.

    While the April arbitrage is only narrowly open, one U.S. broker said the economics looked far better in May, meaning there could be more bookings to come.

    http://www.reuters.com/article/gasoline-europe-idUSL5N1HE270
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    Exxon Mobil markets mid-term Papua New Guinea LNG supplies


    Exxon Mobil Corp is marketing 1.3 million tonnes per year (mtpa) of mid-term liquefied natural gas volumes from its $19 billion Papua New Guinea LNG (PNG LNG) plant, reflecting overproduction and an increase in gas reserves.

    The two-train plant with an original nameplate capacity of 6.9 million tonnes a year produced 7.9 million tonnes last year, making it possible to offer the excess for sale, Stephen McCusker, Vice President of PNG Marketing at ExxonMobil Asia Pacific Pte Ltd told Reuters at a gas conference in Japan.

    The move is also possible as ExxonMobil PNG, operator of the PNG LNG joint venture, said in February that a study showed that the likely technically recoverable natural gas from all PNG LNG fields is 11.5 trillion cubic feet (tcf), up a quarter from an earlier assessment of 9.2 tcf.

    "Originally we contracted for the base project 6.6 mtpa, and last year we produced close to 7.9 mtpa, so the 1.3 mtpa plus the additional recertification gives us an opportunity to approach the market with the mid-term contracts," McCusker told Reuters on Thursday at the Gastech conference in Chiba.

    PNG LNG's main four long-term customers are top global LNG buyer JERA Co at 1.8 million tonnes a year, Osaka Gas at 1.5 million, Taiwan's CPC with 1.2 million, and China's Sinopec at 2 million tonnes a year.

    The PNG project sells the remainder as spot and short-term supplies to those four and other customers, Exxon Mobil said.

    The U.S. oil and gas major and its joint venture partners are also looking at some upcoming opportunities, McCusker said.

    "Other fields that we've already discovered within the project, and of course, the other projects that are occurring around us - obviously the Total project - so PNG LNG is looking at those opportunities," he said.

    Exxon Mobil and Total SA, vying to develop new gas fields in Papua New Guinea to tap into an expected market recovery in the next decade, are likely to face tougher terms than Exxon Mobil's PNG LNG project.

    Prime Minister O'Neill has said the government had been generous when negotiating Exxon Mobil's PNG LNG project in 2009, as it was looking to secure the country's biggest foreign investment despite the global financial crisis.

    http://www.reuters.com/article/us-japan-gastech-exxon-mobil-idUSKBN1790PZ
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    For the bunker industry, 100% sulphur compliance by 2020 is a distant dream


    The world's bunker industry is making progress in inching toward meeting the International Maritime Organization (IMO) global sulfur cap target by 2020, but with less than three years to go, achieving the target in its entirety still looks like a tough climb.

    Apart from the fundamentals -- availability of 0.5% sulfur compliant fuels or other suitable alternatives -- uncertainty about oil prices and the huge costs involved will also be hurdles to achieving a radical change, sources said, adding that neither the refining industry nor the shipping sector are equipped to deal with the tectonic shifts.

    This view also resonated at an industry conference in Fujairah last week, where over 30% of the respondents who participated in a live poll said there would be some degree of non-compliance with the related emission control area (ECA) cap by 2020. Although, they were specifically responding to compliance in ECA, this might be indicative of how things might look like in non ECAs, if one were to extend the sampling group.

    "Of course, we have to take care of the environment, of course we have to take care of the next generation [but] of course, we have to be reasonable [to the industry]," Gamal Fekry, the CEO of Red Sea Marine Management DMCC, said at Fujcon 2017 last week.

    "Everybody is waiting because there is no incentive in place to do anything right now [ahead of the 2020 global sulfur cap]. Banks are not going to give money for scrubbers unless they know the repayment or payback time and find the economics attractive, while LNG is for the future as infrastructure is insufficient and capital intensive. The majority [of customers] will be hoping that refineries and trading companies can provide blended fuels although the supply chain will not be able to adapt that quickly," according to Paul Nix, general manager of terminal operations at Gulf Petrochem.

    When ECA zones were first introduced in Europe, some shipowners simply opted to pay the fines and not comply with the sulfur limit there, as this was still cheaper than burning ECA compliant fuels, Nix said, adding that the industry has been relying too heavily on a penalty-based system.

    A carrot-based approach, which has incentives, may be better than using a stick, with penalties, he said.

    However, some felt that, as long as penalties around the world are similar and are high enough, the industry will be compelled to abide. "By 2020, we will have some sort of compliance; we'll know how regulation will be enforced and how effective it is. If the industry has clarity, then solutions will be found and it will work its way through it...but unless there is a level playing field, everybody will wait and watch before adopting a solution," said Andrew Laven, manging director at Bomin Oil DMCC.

    There are 88 signatories to Annex VI of the international MARPOL environmental convention, which aims to prevent air pollution from ships. In addition, according to the International Transport Workers' Federation, there are 35 Open Registries, of which 13 are signatories to Annex VI and 22 are not. As a result, over 90% of global trade now passes through ports in the 88 signatory states.

    Open Registries/Flags of Convenience account for about 70% of bunker purchases, Robin Meech, managing director at Marine & Energy Consulting and Chairman of the International Bunker Industry Association (IBIA), said in an e-mail to S&P Global Platts Thursday, adding that this leaves significant scope for re-flagging, reducing compliance if adequate measures are not taken.

    Furthermore, of the 88 signatories, so far only 28 states (26 in the EU, along with the US and Canada) have significantly enforced Annex VI, Meech said.

    "This means 60 states require port state enforcement resources and training for officers," he said.

    Measures to improve compliance could include making it illegal to leave port with insufficient bunkers to reach the next designated port compliantly, he said. There is also a need to improve bunkering standards in many ports by introducing unified standards, accurate measurement and survey systems, and more training for seafarers and port officers, he said.

    "For its part, IBIA is also seeking to smooth the transition post 2020," he said, adding that the association has developed the IBIA Port Charter, which focuses on three essential principles to ensure that systems are in place to enable quality bunkers to be delivered, measures are taken to ensure that the correct quantity is delivered, and systems are transparent for all concerned parties.

    http://www.platts.com/latest-news/shipping/singapore/feature-for-the-bunker-industry-100-sulfur-compliance-26706656
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    The day disaster struck Gorgon


    Twenty-six million dollars is real purchasing power. But what does spending $26 million every day for 7½ years get you?

    For Chevron and its partners Shell and ExxonMobil, it bought the Gorgon project on Barrow Island. Three vast processing units, known as trains, that can process and freeze 15.6 million tonnes a year of LNG — the energy which keeps the lights on from Tokyo to Shanghai.

    For the Gorgon project team in January last year, that $26 million a day bought pressure.

    A lot of pressure.

    As if they weren’t under enough already. The project they were in charge of was one of the biggest industrial initiatives anywhere in the world.

    The challenge had been to tap the gas strapped in porous rocks 4000m below the seabed off WA’s rugged North West coast and transport it to a sprawling processing complex on tiny Barrow Island — an area so environmentally sensitive the company was allowed to disturb just one per cent of the land.

    The LNG project starts to take shape.

    On Barrow, the gas would be cooled to liquid form and pumped onto gigantic freighters bound for Asia .

    To do this, Chevron installed 230,000 tonnes, equal to three aircraft carriers, of structure on the seabed. It designed sections of subsea pipe strong enough to be unsupported for lengths of up to 270m — 95m longer than the oval at the new Perth Stadium.

    On Barrow, the giant processing plant required more steel than four Sydney Harbour Bridges. The three LNG trains comprised 51 modules, one weighing 6600 tonnes, which had floated across rolling seas to Australia from engineering yards in Asia.

    The enormity of the engineering challenge was surpassed only by the financial test.

    When construction started in September 2009, LNG was to be produced in 2014. By January last year it was more than a year late. An already eye-wateringly expensive project was becoming dearer by the day as 8000 workers — equal to the combined populations of Kalbarri, Carnarvon and Exmouth and so numerous Chevron brought in a 1200-bed floating hotel, the Europa, to house the overflow — put their shoulders to the wheel.

    In doing so they chewed through an astonishing $40 billion worth of Australian goods and services.

    The initial $US37 billion cost soon blew out by more than 45 per cent to $US54 billion ($71 billion). The extra cash that the Gorgon partners had to cough up was enough to run the WA Government for nine months.

    To add insult to injury, revenue projections were plummeting. When the project was approved in 2009, oil cost $US70 a barrel and demand for LNG was strong. Early last year, a barrel of oil could be bought for $US30 and the industry was talking about an LNG glut which would last for years.

    Investors were fretting and Chevron desperately needed some good news.

    Against that backdrop, Chevron chief executive John Watson told investors in October 2015 that “Gorgon will see first cargo in the first quarter”.

    Chief executives do not make commitments to Wall Street lightly. The thousands of workers at Gorgon had just been given a deadline to get the first load of LNG onto a ship by March 31 last year.

    For a project team that measured progress in years and months, the most complex start-up phase would be counted in weeks and days.

    By January 1 last year, the Chevron LNG carrier Asia Excellence was at Barrow Island, laden with LNG to cool the plant to ready it for producing its own LNG.

    The project team must have felt relieved when a few weeks later, on March 7, train 1 produced its first batch of LNG. There was still three weeks to produce sufficient LNG to load the Asia Excellence and ship the first cargo — meeting the chief executive’s ambitious deadline.

    To produce that first LNG, untreated feed gas travelled from the Jansz-Io gas field wellheads, 1350m below sea level off the edge of the continental shelf, to Barrow Island, 130km away.

    At the plant, a 210m long slug catcher removed condensate — a type of hydrocarbon coveted by industry. Then, successively, carbon dioxide, water and finally mercury were extracted from the feed gas to ready it for cooling and the creation of the final product: almost 600 tonnes an hour of LNG at minus 162C.

    The propane refrigeration system provided the first cooling. A compressor circulated 2300 tonnes an hour of propane — the fuel in barbecue LPG bottles — through a propane cooler.

    The feed gas ran through that cooler on a separate circuit. The propane pressure reduced in four stages — each time some of it boiled quickly, which was known as a flash. The flash cooled the feed gas like evaporating sweat cools the body. Because each flash was at a lower pressure, the propane had a lower boiling point, chilling the feed gas in stages to minus 40C.

    The propane gas from each flash flowed back to the compressor through a knockout drum to repeat the cycle. The knockout drum removed any remnant propane liquid that could damage the compressor.

    Eighteen days after first LNG production — and with the eyes of the world on the project — the fourth knockout drum failed.

    It was a major catastrophe. The compressor was damaged and production at Gorgon ground to an expensive halt for more than three months.

    What happened that day is sourced from documents at the Department of Mines and Petroleum, the safety regulator for the LNG plant, obtained through freedom of information.

    Compared with much of the Gorgon plant a knockout drum is a straightforward piece of equipment. Liquid propane settles to the bottom to drain away and the gas flows out the top to the compressor. For a knockout drum to work the liquid level cannot rise too high.

    On the second day of LNG production, March 8, there was a high level of liquid in the fourth knockout drum and vibration in the propane compressor. It was a sign of the trouble to come.

    On March 20, train 1 was shut down because of problems with a gas turbine generator.

    The next day, Chevron’s LNG carrier Asia Excellence sailed from Barrow Island escorted by tugs spraying their fire hoses. Amid the media attention there was no mention that LNG production had stopped. According to an industry source, very little of the LNG the Asia Excellence carried that day had been produced by the Gorgon plant.

    The plant was restarted on March 25. Things again went wrong, this time at the propane refrigeration circuit.

    The propane compressor vibrated so much it tripped — an automatic shutdown to protect the equipment. Again, liquid levels in the fourth knockout drum were high, and liquid propane surged into the compressor. The knockout drum was significantly damaged.

    DMP described it as a “catastrophic breakdown of the propane refrigeration circuit.” Chevron made no statement and the incident was first revealed by WestBusiness on April 1.

    The Gorgon operator’s description was more subdued than the regulator. Chevron said in a statement on April 7: “Based on initial findings, the repair work is of a routine nature and all the necessary equipment and material is available on site.”

    As part of the apparently routine work, the propane compressor was flown out of Perth for repairs aboard the world’s biggest plane, the Antonov AN-225, on May 17. The necessary material was on site because Chevron was scavenging parts from trains 2 and 3 to repair train 1.

    In early July, more than three months after the incident, Gorgon’s second cargo of LNG left on the Marib Spirit. In that time Chevron had not reported the incident to the DMP.

    The regulator and operator of the LNG plant met on August 8 to discuss the propane refrigerant circuit incident.

    As recorded by DMP in a file note, Chevron laid out “what didn’t work” leading up to the incident. It was a lengthy list.

    Perhaps the most serious was the failure of the stop-work authority that gives any worker the responsibility and authority to stop a task they believe is unsafe.

    Another problem was the hazard and operability review, or HAZOP, where engineers and operating personnel brainstorm to identify possible hazards that are then addressed with changes to design or procedures. DMP in the file note of its meeting with Chevron stated: “Start-ups and shutdowns poses significant risk to a process plant and ... HAZOP of this stage is very important”.

    The HAZOP for the propane refrigeration circuit did not cover the start-up of the equipment. Had it done so it may have identified a further issue.

    The procedures for operating the propane cooler required the operator to know the pressure at the inlet of the propane compressor, but no such indication existed.

    Other issues Chevron identified included workers starting up the plant having an “unclear line of management oversight” and “inadequate technical resources to back up operations”.

    The Gorgon project takes shape on Barrow Island in July 2012.Picture: Chevron

    When contacted by WestBusiness for comment on the incident, DMP director of dangerous goods and petroleum safety Ross Stidolph said the department was satisfied that Chevron had identified the root causes, completed remedial actions and implemented additional controls to minimise future risk.

    A Chevron spokeswoman said Chevron had notified the regulator as required, measures were taken to ensure the safety of personnel and the company had applied lessons learnt to the start-ups of trains 2 and 3.

    Gorgon started producing LNG from its third and final train two weeks ago.

    https://thewest.com.au/business/energy/the-day-disaster-struck-gorgon-ng-b88423525z
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    Permian Basin again surges in rig count


    The Permian Basin almost single-handedly led another big jump this week in the amount of rigs actively drilling for oil and gas.

    West Texas’ Permian saw 12 drilling rigs added to the oil patch this past week. That compares to the nation’s overall addition of 15 rigs, including 10 seeking oil and another five primarily drilling for natural gas, according to weekly data from the Baker Hughes services firm.

    Despite the Permian’s big gain, Texas only saw a net gain of seven rigs. That’s because the Panhandle’s Granite Wash basin lost four rigs and South Texas’ Eagle Ford shale lost a single rig. The only other state with a notable gain was Oklahoma, which added four rigs.

    The total U.S. rig count is now at 839 rigs, up from an all-time low of 404 rigs in May, according to Baker Hughes. Of the total tally, 672 of them are primarily drilling for oil.

    The Permian now accounts for 331 rigs, which is nearly 50 percent of all the nation’s oil rigs. The next most active area is Texas’ Eagle Ford shale with 72 rigs. Texas is home to 418 rigs overall, while Oklahoma is second with 122 rigs. Louisiana is next with 60 rigs.

    Despite this week’s jump, the oil rig count is down 58 percent from its peak of 1,609 in October 2014, before oil prices began plummeting.

    http://fuelfix.com/blog/2017/04/07/permian-basin-again-surges-in-rig-count/
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    Three US-based LNG terminal projects report delays to operational start dates


    Three US-based LNG export projects have delayed the planned start of their commercial operations, according to company updates on the US Department of Energy's website.

    LNG terminal developers must provide semi-annual progress reports for their facilities in April and October, as required by the department. Some projects have not yet posted April reports.

    April updates published on the department's website report later start dates for three projects: the Lake Charles Exports terminal in Louisiana, with a capacity of 16.2 million mt/year; Commonwealth LNG's Cameron Parish, Louisiana, facility, with planned exports of 169 MMcf/d and 190 MMcf/d to free trade and non-free trade nations, respectively; and Strom's Crystal River, Florida, facility, with export capacity of 80 MMcf/d.

    Lake Charles now anticipates that the first of its three trains will be operational in 2022.

    Trains 2 and 3 are scheduled for completion in six-month increments after the first train, the April report stated. Last October, the company said only that the first train was expected to be operational in 2021.

    Commonwealth LNG expects to start commercial operations by the second quarter of 2022, the company said. In October 2016, it set a start date of the fourth quarter of 2021.

    Strom said it was proposing to start operations in the second quarter of 2019, providing market conditions remain stable.

    Previously, it reported a start date in the fourth quarter of 2018. Earlier this week, six other projects reported delayed operational start dates: SCT&E LNG's export terminal in Cameron Parish, Louisiana; SeaOne Gulfport's CGL terminal at Gulfport, Mississippi; Texas LNG Brownsville's terminal in Brownsville, Texas; Gulf LNG Liquefaction's terminal at Pascagoula, Mississippi; Freeport-McMoRan's Main Pass Energy Hub Deepwater facility off the Louisiana coast; and the Venture Global Calcasieu Pass export project in Cameron Parish, Louisiana.

    LNG terminals must obtain numerous regulatory approvals before they can begin operations and progress is often held up by regulatory or commercial issues.

    http://www.platts.com/latest-news/natural-gas/austin-texas/three-us-based-lng-terminal-projects-report-delays-21395844
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    Nexen joins ConocoPhillips in cutting oil sands output: sources


    Two oil sands producers in northern Alberta have cut production at their facilities due to a shortage of synthetic crude, market sources said on Thursday, causing Canadian and U.S. crude prices to surge to multi-year highs.

    Synthetic supplies are scarce following a fire at the 350,000 barrel-per-day (bpd) Syncrude plant in March that damaged the facility and forced the operator to bring forward maintenance and cut production for April to zero.

    As a result ConocoPhillips reduced output at its 140,000 bpd Surmont project, a joint venture with Total E&P Canada, by 40 percent, two market sources said. They spoke on condition of anonymity because they are not authorized to speak to the media.

    The company mixes synthetic crude from Syncrude with tarry bitumen from its oil sands reservoir to create a heavy crude blend known as "synbit" that can flow through pipelines.

    CNOOC Ltd subsidiary Nexen Energy, which likewise uses synthetic crude to dilute its bitumen, cut output from its Long Lake oil sands project this month by 48 percent, said one of the two sources, as well as two separate sources.

    Long Lake usually produces around 40,000 bpd of undiluted bitumen, one source said.

    ConocoPhillips spokeswoman Michelle McCullagh, who earlier this week confirmed that the Syncrude outage affected Surmont output, declined to comment on the size of the production cut.

    Nexen Energy spokeswoman Brittney Price said her company does not publish production or maintenance operations for individual assets.

    Syncrude, a joint venture majority-owned by Suncor Energy Inc, is expected to return to operations the first week of May but will be running at reduced rates that month, trading sources said on Wednesday.

    The oil sands outages have boosted Canadian heavy crude prices, with the benchmark Western Canada Select blend for May delivery last trading close to a 22-month high of $9.60 a barrel below U.S. crude, according to Shorcan Energy brokers.

    On Wednesday WCS settled at $9.85 per barrel below U.S. crude.

    Meanwhile, Mars Sour traded up to $1.20 a barrel discount to U.S. crude on Thursday, the narrowest discount since September 2015, according to Reuters data. Light Louisiana Sweet traded up to $2.35 a barrel over WTI, the widest premium since March 2016.

    http://www.reuters.com/article/canada-conocophillips-surmont-idUSL2N1HE1CG
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    Alternative Energy

    Wind, solar output in EU's big five markets at record 30.5 TWh in March


    Wind and solar power production in Europe's five biggest markets in March reached a new monthly record at 30.5 TWh, up 13% year on year amid continued growth in renewables with installed capacity across Germany, France, the UK, Italy and Spain set to top 200 GW this year, data from S&P Global Platts European Renewable Power Tracker shows.

    The record March comes after four months of below-average wind conditions, especially across Northern Europe, partially masking the continued boom in capacity additions, in particular in Europe's biggest market, Germany, which added over 5 GW of new wind capacity in 2016.

    Wind output in March was up 18% year on year at 23 TWh, with solar adding 7.5 TWh across the five nations, which account for over 75% of the EU28's total installed capacity, the tracker based on national grid operator data shows.

    Across the five markets, wind output averaged 31 GW each hour in March, the data shows. Overall, wind and solar generated 82 TWh in the first quarter, up just 2% from Q1 2016 mainly on below-average wind conditions at the start of 2017. Using Platts renewable energy calculator, the 82 TWh of electricity generated by wind and solar equates to around 16 Bcm of potential gas burn or 31 million mt of coal based on average plant efficiencies (48% for gas and 38% for coal). In another purely theoretical cross-commodity comparison, some 162 LNG standard cargoes would be needed to generate the same electricity, the data shows.

    In practice, the increased supply from intermittent renewables combined with reduced power demand to ease power prices from record highs in January and February with generating fuels also turning more bearish during March.

    However, compared to early 2016, coal, gas and power price levels remain considerably above last year's record lows.

    http://www.platts.com/latest-news/electric-power/london/wind-solar-output-in-eus-big-five-markets-at-26705724
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    Wind turbine maker Vestas looks at expanding into energy storage


    Denmark's Vestas, the world's largest wind turbine maker, is keen to expand into areas such as energy storage to increase the global use of wind power and bring costs down.

    The wind industry is entering a phase of slower growth and steadier demand for turbines, prompting producers to look at alternatives to grow revenue.

    "The storage side is interesting and there are a lot of small start-ups that might be of interest. I’m looking for industry batteries," Vestas Chairman Bert Nordberg told Reuters.

    "If you can store over-production in a good way it would take down the total cost."

    Energy storage is the capture of energy produced for use at a later time, for instance in the form of batteries. The technology is becoming increasingly viable with the rise in sales of electric cars.

    In January, U.S. electric car maker Tesla launched a massive battery storage facility in the California desert. In Europe, a former Tesla executive wants to build a plant to rival the scale of his former employer's Gigafactory in Sweden.

    Nordberg said Vestas could consider buying small stakes in many companies "to see which one wins before you go for a major acquisition".

    "We have 3.2 billion euro in cash and no debt so we can afford to invest," he said, declining to say how much the firm would be willing to spend.

    He added that he preferred investing the money rather than initiating a buy-back programme.

    "A buy-back is pretty boring. It’s better if we find something that can develop the company so I’m pushing management to have better ideas than buy-backs," he said.

    Vestas came back from the brink of bankruptcy just four years ago and the share price has risen more than 1,000 percent over the past five years.

    But the company could lose its status as the world's biggest wind turbine maker as Germany's Siemens and Spain's Gamesa agreed to combine their assets in the sector.

    "We definitely are going to make their life miserable. We are going to take the deals... We have exactly the same goal that we should the biggest player," Nordberg said.

    While he expected consolidation among smaller players in the industry, Vestas was not aiming to buy anything big.

    http://www.reuters.com/article/vestas-wind-storage-idUSL8N1HF12G
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    U.S. sentences N.J. man to 5 years prison on biodiesel fraud


    The Department of Justice said on Friday it had sentenced the owner of a New Jersey feedstock processor to five years in prison for conspiracy to commit fraud in a scheme connected to credits

    The department sentenced Malek Jalal, owner of Unity Fuels, to 60 months in prison. He was also ordered to pay more than $1 million in restitution for the scheme that involved more than $7 million fraudulent tax credits and renewable fuel credits known as RINs, the DOJ said.

    http://www.commodityintelligence.com/workflow/workflow.php
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    Uranium

    EDF reprieves Fessenheim nuclear plant, in setback to government


    The board of French state-controlled utility EDF on Thursday chose not to vote on a motion that could have closed its aging Fessenheim nuclear plant for good, meaning a 2012 election pledge by President Francois Hollande will not be met.

    Hollande had promised to end power production at France's oldest atomic plant by the end of his five-year term in May.

    EDF board members instead authorized its chief executive to seek a decree from the government that would keep Fessenheim open at least until six months before the start-up of a new, third reactor at the company's Flamanville site.

    That reactor is still being built and is expected to start production around the end of 2018. That is well into the next president's term, meaning any closure decision could in theory be reversed.

    "The decision of the board ... enables EDF ... to have the nuclear fleet necessary to fulfill its obligations to supply its customers," EDF's CEO Jean-Bernard Levy said in a statement.

    EDF also said it would only close Fessenheim if keeping it open meant French nuclear output would exceed the legal ceiling of 63.2 gigawatts of power - though Emmanuel Macron, the frontrunner to be France's next president, said he would shut it down if he won.

    "Broadly speaking this is a snub to the government in that the closure of Fessenheim is not formally signed and sealed," Laurent Langlard, a CGT union official at EDF, told Reuters.

    "In concrete terms, Fessenheim continues to operate ...and we'll see when Flamanville starts producing which unit is disconnected from the grid. But it won't necessarily be Fessenheim."

    'OLD AND DANGEROUS'?

    Environment Minister Segolene Royal, who has long pushed for Fessenheim to be closed, said in a statement that the shutdown process was inevitable, adding the government would seek legal means in the coming days to endorse the decision.

    On Wednesday, she had warned EDF's board against trying to prevent the closure of the plant, on the Franco-German border.

    "The government owns more than 80 percent of EDF. A board which does not respect a shareholder which has an extremely large majority, that's unprecedented," Karine Berger, an MP for the ruling Socialist party, said on Twitter.

    Macron, tipped to secure the presidency in a runoff vote in May, said on Thursday that Fessenheim would be shut down if he won. "Fessenheim must be closed," the independent centrist candidate said in a television interview.

    Environmental groups have long suspected EDF of playing for time, seeking to prevent the closure from becoming irreversible before the end of Hollande's presidency.

    "The conditions laid down by EDF are unacceptable," Greenpeace said in a statement.

    "In addition to being old and dangerous, Fessenheim's reactor number 2 has been offline for almost a year, since a serious anomaly was detected there. The immediate halt is therefore necessary," Greenpeace said.

    Fessenheim's two 900-megawatt reactors each bring EDF about 200 million euros ($213 million) per year in earnings before interest, taxes, depreciation and amortization (EBITDA).

    http://www.reuters.com/article/france-nuclearpower-fessenheim-idUSL5N1HE55N
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    Precious Metals

    Argentina tells Barrick to overhaul Veladero gold mine


    Argentina mining officials told Barrick Gold Corp it must overhaul environmental and operating processes at its Veladero mine, following last week's cyanide solution spill, while the country's environment ministry asked for a total suspension of operations, according to statements on Friday.

    National and provincial officials told Barrick executives at a Thursday meeting that the Canadian company's ongoing business in the country hinges on a new working plan for the open pit mine, the country's energy minister said.

    A pipe carrying cyanide solution ruptured at the open pit mine on March 28, the third incident at the mine in 18 months involving cyanide-bearing solution. A Barrick spokesman said the meetings were constructive.

    "We have told the company to change their standards and invest, modify the project's engineering to ensure these incidents never happen again," Energy and Mining Minister Juan Jose Aranguren told Reuters in an interview on Friday.

    He said the company's concession to operate the mine would have been at risk if it had not agreed to an external audit on Thursday.

    The Thursday meeting, which also included Barrick President Kelvin Dushnisky and the governor of San Juan province, came as Barrick confirmed a Reuters story on a deal with China's Shandong Gold Mining Co, which bought a 50 percent stake in Veladero for $960 million.

    Barrick, the world's largest gold miner, has been temporarily restricted from adding cyanide to the mine's gold processing facility. The Toronto-based company, which counts Veladero as one of its five core mines, said no material impact was expected on the mine's projected 2017 production.

    Barrick's work plan should include "the complete re-engineering of the operational and environmental processes and standards of the Veladero enterprise," a statement from the San Juan government said.

    "We have held constructive meetings with government representatives in recent days and have agreed on a path forward that addresses their concerns," said Barrick spokesman Andy Lloyd.

    Aranguren said the province would make any decision on an eventual fine for Barrick but had the full support of the national government.

    Separately on Friday, Argentina's environmental ministry asked a federal court to halt all activities at Veladero, "until there is a guarantee that there will be no environmental damages," it said in a statement.

    Operations at the high-altitude mine were temporarily suspended last September, after falling ice damaged a pipe and spilled some ore saturated with cyanide solution over a raised bank.

    http://www.reuters.com/article/us-barrick-gold-veladero-idUSKBN1792CI
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    Base Metals

    BHP targeted by Elliot

    BHP Urged by Elliott to Unify Structure, Separate Petroleum 

    BHP Billiton is being targeted for anoverhaul by sometimes-activist Elliott Management Corp., which
    is urging the world’s biggest mining company to unify its corporate structure, spin off more assets and improve capital
    returns.

    The resources giant, which has two separate legal entities listed in Sydney and London that are run as one group, should
    unify into a single Australian-headquartered company, Elliott said in a press release Monday. The New York-based hedge fund is
    also urging BHP to seek a demerger of its U.S. petroleum business, which Elliott said is worth about $22 billion. Shares
    of BHP surged 4.6 percent to A$25.73 at the close Monday in Sydney.

    Elliott is arguing BHP, which has a market value of about $96 billion, should return capital through buybacks that would
    maximize tax credits and discourage expensive cash acquisitions. The investment firm, which referred to talks already held with BHP management, said the changes could boost shareholder value by about 50 percent. Elliott said it owns about 4.1 percent of
    BHP’s London-listed shares and has rights to acquire 0.4 percent of its Australian stock.
    “Despite the first-class quality of most of BHP’s assets, BHP as an investment has underperformed,” Elliott said in a
    letter to the company’s board. Most of that underperformance “has been driven by the incomplete status of management’s
    streamlining and value-optimization of BHP’s group structure and asset portfolio.”
    A Melbourne-based spokesman for BHP said he couldn’t immediately comment.

    BHP has been slashing costs as it seeks to position for an era of meager demand growth amid cooling economic expansion in
    China, the company’s top customer. Elliott, which manages about $33 billion, is adding BHP to a list of other companies it’s
    recently targeted including Samsung Electronics Co., Marathon Petroleum Corp. and NRG Energy Inc.
    Chairman Jacques Nasser in November 2015 defended BHP’s current structure as two listed firms, warning the costs of
    changing the setup would likely be high. Under terms of the 2001 merger of BHP Ltd. and Billiton Plc that created the group,
    holders of London or Sydney-listed shares receive equal cash dividends, according to the producer’s annual report. They
    remain separate legal entities, with BHP Billiton Ltd. trading in Australia and BHP Billiton Plc listed in London.

    Elliott said BHP “took an important first step towards streamlining” with the 2015 spinoff of South32 Ltd., which
    included smaller operations across a suite of commodities and focused BHP around key assets in iron ore, coal, copper and oil.
    The creation of Perth-based South32 reduced BHP’s portfolio from about 40 operations to 19 core assets.

    Still, that move “actually magnified the inefficiencies” of BHP’s dual corporate structure, leaving its London entity
    generating just 10.3 percent of revenue, Elliott said. The commodity producer should create a single company, which would
    continue to be managed from Australia and retain BHP’s currentstock market listings, according to Elliott.

    Competing Priorities

    BHP, the largest overseas investor in U.S. shale, should seek a separate listing of its U.S. onshore petroleum and
    offshore Gulf of Mexico assets on the New York Stock Exchange to realize their growth potential, the hedge fund said. The
    business’s expansion opportunities are limited under BHP, which has competing priorities for capital allocation, according to
    Elliott.

    The investment firm is also arguing BHP could buy back shares effectively at a 14 percent discount by making better use
    of about $9.7 billion accumulated franking credits, which offset taxes on Australian stock dividends. The proposed changes would
    also “help management to avoid making badly timed acquisitions paid for in cash,” Elliott said, and “increase the scope for
    management to pursue appropriate acquisition opportunities using unified BHP’s own shares.”

    BHP lowered its dividend for the first time in 15 years in February 2016 amid weaker commodities prices and scrapped a
    guarantee of continually rising returns. The company switched to a policy to provide payouts at a minimum of 50 percent of
    underlying attributable profit.

    Any separation of the petroleum business would mark a shift from the recent strategy under BHP Chief Executive Officer
    Andrew Mackenzie, who has been in his post for nearly four years. The company said in February that oil and copper are
    better placed in longer-term than materials including iron ore and coal. BHP will direct about three-quarters of capital
    expenditure over the next five years to the two favored commodities, according to Macquarie Group Ltd. forecasts.
    BHP in December outbid BP Plc to partner with Petroleos Mexicanos on the Trion oil field in the Gulf of Mexico. In
    February, BHP approved its $2.2 billion share of spending on the Mad Dog Phase 2 oil project. The company earned about 20 percent
    of its underlying profit from the global oil business in the six months ended December, less than half the proportion coming from
    iron ore, data compiled by Bloomberg show.  Elliott, led by billionaire Paul Elliott Singer, makes
    investments that typically involve complex legal analysis and corporate research. While most of its investments aren’t
    activist -- where it amasses shares and seeks changes to boost shareholder returns -- it’s those campaigns that often attract
    the most attention.

    Attached Files
    Back to Top

    As money men pile into aluminium, mind the Shanghai gap


    Aluminium has been the best performer among the core industrial metals traded on the London Metal Exchange (LME) so far this year.

    Currently trading around the $1,945 per tonne level, aluminium for three-month delivery is up 15 percent since the start of January.

    LME stocks are falling at a fast pace and physical premiums are rising, although as ever with aluminium appearances can be slightly deceptive.

    China's threat to force production capacity off-line over the winter heating season, starting around the middle of November, has upended a narrative of chronic oversupply.

    There's still plenty of devil in the detail of what that will actually mean in seven months' time but there's no doubt the possibility of significant cutbacks has galvanized the previous underperformer of the LME complex.

    No wonder the money men have been drawn into the action. Fund positioning on the LME aluminium contract is the longest it's been since the exchange first started publishing its Commitments of Traders Report (COTR) in July 2014.

    That new-found enthusiasm for aluminium, however, has opened up a gap between London and Shanghai prices. The question now is how much Chinese metal might flow out through that export window.

    Because while production cuts are still on the medium-term horizon, China right now is showing every sign of lifting run-rates with an accompanying surge of metal availability.

    Graphic on fund positioning on LME aluminium:

    MONEY MEN ARRIVE

    The most recent LME COTR shows money managers holding a net long position of 203,550 lots as of Thursday, March 30.

    It represents the highest level of long positioning by fund managers since the LME introduced its report in 2014.

    Expressed as a percentage of total open interest, the position was equivalent to 21.9 percent, also a record high level.

    The LME COTR is not everyone's favourite data series, given some well-flagged issues with how positions are allocated between categories.

    But it broadly corresponds with an alternative assessment of speculative positioning published by LME broker Marex Spectron.

    Marex estimates that funds were long to the tune of 215,000 lots, representing 41 percent of open interest, on the same day. That was close to a multi-year peak of 43 percent on March 2, 2017, it said.

    Slightly different numbers but the message is the same. Funds have been building length in aluminium since the start of the year.

    So far they have had no reason to trim their bets on higher prices.

    In broad-brush terms, three-month aluminium has made steady upwards progress over the last few months, helped by sizeable activity on upside call options and a conspicuous lack of contrarian selling.

    MIND THE GAP

    The problem, though, is that the funds' exuberance has helped open up a gap with the Shanghai market.

    While LME prices have risen by over 15 percent since January, the most actively traded contract on the Shanghai Futures Exchange (ShFE) has lagged behind with a more modest gain of just under 10 percent.

    As a result the arbitrage window between the two markets is flexing wider.

    That brings with it the threat of accelerated exports of semi-manufactured products.

    Product exports in January and February were relatively subdued at 580,000 tonnes, down 1.5 percent on 2016.

    That may have reflected the disruptive effect of China's Lunar New Year holidays as well as shifts in the product mix below the headlines.

    There is the potential for a strong pick-up over the coming months.

    Because while the market is fixated on the potential for Chinese cutbacks later this year, in the very short term there is no shortage of aluminium in the country.

    There is a lot of noise in Chinese production figures around this time of year but the underlying trend is firmly upwards with national output rising by an annualised 925,000 tonnes over the November 2016-February 2017 period.

    More is expected to come online in the new production hub that is the northwestern province of Xinjiang, while those producers that are in the firing line for winter cuts can reasonably be expected to maximise output just as much as they can in the intervening period.

    ShFE stocks were looking depleted in the fourth quarter of last year but have rapidly rebuilt over the last few months.

    They currently stand at 339,691 tonnes, up 238,969 tonnes since the start of January.

    None of that metal can be exported without incurring the 15-percent tax on unwrought aluminium.

    Products, on the other hand, are not only untaxed when leaving the country but qualify for a VAT rebate, which is why they have historically served as the release valve for domestic market surplus.

    How much product is available for outbound shipment is dependent on several variables, not least the state of China's own usage, but the surge in availability of primary metal is a somewhat ominous sign.

    STRUCTURAL IMBALANCES

    The rest of the world needs Chinese exports.

    There is little doubt that the market outside of China is transitioning to a state of supply shortfall.

    China itself is still structured the other way round with a natural tendency towards overproduction and surplus.

    The flow of metal between the two in the form of Chinese products is the balancing mechanism.

    But the speed of flow is determined first and foremost by the arbitrage between London and Shanghai. That arbitrage is moving to a level were exports should accelerate strongly in the coming months.

    Whether they do or not is going to be an interesting test of the state of the Chinese domestic market.

    An even more interesting test will come in November, when we get to see whether Beijing's war on pollution translates into a war on aluminium.

    Before then, though, it's probably going to be business as usual, namely higher production and higher exports.

    Funds betting on Chinese tightness later in the year may have to weather a potential storm of Chinese glut beforehand.

    http://www.reuters.com/article/aluminium-funds-ahome-idUSL8N1HF35F
    Back to Top

    Qixing incident behind: Shandong private enterprises Baotuan mutual Zouping aluminum dream frustrated

    Qixing incident behind: Shandong private enterprises Baotuan mutual Zouping aluminum dream frustrated

    Translation of a Chinese news article:

    Capital break, the debt of billions of dollars, Qi Xing Group, the establishment of nearly 30 years of Shandong Province, Binzhou City, Zouxian private enterprises tend to dump the trend.

    Qixing Group where the Zouping County is located in the central part of Shandong Province, northwest of the Yellow River, from Jinan long-distance passenger station to the northeast direction drove less than 2 hours can be achieved. This is a small town in the Lu, known for the aluminum, Shandong is rare in several national "hundred counties", but also China's cotton textile city, the Chinese sugar, but also because of "Wei Bridge model" put on mystery The

    Qixing Group debt crisis to the local private enterprises between the Baotuan "mutual protection" chain surfaced. "Mutual insurance", in virtually Zouping many companies formed a dominoes trend, and now, Qixing Group may be about to fall the first piece of dominoes.

    March 30, surging news (www.thepaper.cn) visited the vortex center of the Qixing Group Zouping Aluminum Company and Qixing Group Building. At that time the weather was dark, Qixing Group headquarters building from the outside almost no light, only the roof hanging Qixing Group four red characters, "Qi" and "Mission" are traditional characters. Look from the outside, Qixing Group Aluminum Company is also a stagnant scene, almost do not see the staff out and lights flashing.

    In fact, Qixing Group Aluminum Company on March 15 has been issued to suspend the aluminum production half a year notice. In the electrolytic aluminum industry, less than a huge loss of this last resort, the enterprise will not choose to stop working. An electrolytic aluminum industry to the surging news that the electrolytic aluminum business even if the night is still bright, because once the suspension, the molten state of aluminum will be cooling, crystallization, the entire production to stop. The cost of the restart is not only time-consuming at least 1-2 months, and the cost is so high.

    Stagnant not only its electrolytic aluminum plant. Surging news (www.thepaper.cn) found Qixing cable factory, although still parked vehicles, but the whole plant without lights, empty. Zouping said the local, years ago, the local has been in the "Qixing to bankruptcy." Qixing debt crisis is also associated with Zouping County, the phenomenon of mutual protection of ordinary people exposed. West Wang Group, Zouping County power supply companies and other enterprises to enter the list of mutual insurance. "Cross-linked chain" worries, the West King Food [ stock ] (000639), Qi Star Tower [ stock ] (002359) and other Zouping listed companies are in the capital market has been tumbled. Even if the current has not yet entered the "mutual protection chain," the Weiqiao venture, Zouping County, "origin" also brought no small trouble, its enterprises in the inter-bank bond market has been sold for two consecutive days.

    However, even if the outside world has been talking about this county, its internal but still maintain the surface of calm. A taxi driver in the surging news about the local aluminum industry, still quite proud to talk about Weiqiao venture, but also deliberately filed Wei Bridge, chairman of the board is the richest man in Shandong, or the country NPC deputies.

    The taxi driver continues to show the local "business card". He said that in Zouping this place, there are four companies, the boss is Weiqiao venture, and then the West Wang Group and Zouping County, Shandong Town, Shandong Samsung Group, the last is Qixing Group. "Many local people are working in these companies, foreigners are also quite a lot, the Northeast, Sichuan, Anhui, Henan and other places have, many college graduates after graduation." However, The taxi driver said frankly, the locals now feel that the Qixing Group has been declining. As for the reason, he can only be mentioned in general, "the bank has not given it a loan, the feeling is management, poor management."

    World "Al Valley"

    Zouping County is located in Lu, under the Binzhou City, Shandong Province, China's comprehensive strength for the top 100 counties.

    Data show that in 2015, Zouping County GDP of 81.847 billion yuan, a growth rate of 9.8%, in Binzhou City, the county ranked first in the county, accounting for 34.7% of the city's regional GDP. Zouping County's economic strength and other districts and counties in Binzhou compared to the advantages are more obvious, almost ranked 2,3,4 districts and counties of the sum of GDP.

    Among them, the aluminum industry has contributed an important force for Zouping economy.

    Data show that in 2015 Zouping County tax list of the top ten enterprises, involving aluminum enterprises, including Shandong Weiqiao, West Wang Group, Shandong innovative metal, Qixing Group. Among them, Shandong Weiqiao to create a total tax of 4.359 billion yuan, the national tax, land tax were 2.971 billion yuan and 1.389 billion yuan.

    At present, Zouping County has become China's most important aluminum production base, aluminum industry is mainly concentrated in the Zouping Economic and Technological Development Zone, which is the first in Shandong Province at the county level national economic and technological development zone. Zouping County, the backbone of enterprises to reach 21, known as the formation of the "thermoelectric - alumina - aluminum - aluminum liquid processing - aluminum deep processing" more complete industrial chain.

    Zouping county government leaders also said in 2015, Zouping County will strive to pass 2-3 years, built products with high added value, strong product innovation, high market share in the world has a strong influence of 200 billion Characteristics of high-end industrial clusters, and strive to build the world "Al Valley", and actively seize the future development of the right to speak of aluminum, aluminum in the global development of the real "Zouping voice."

    Zouping County want to pass the "Zouping voice", the most intense than Wei Bridge business. Weiqiao venture is the only one in Shandong Province to enter the world's top 500 private enterprises, its chairman Zhang Shiping is the richest man in Shandong Zhang Shiping. According to the latest release of "Forbes" 2017 Rich List, Zhang Shiping family to 67 billion US dollars ranked No. 209 in the world, China's wealth list ranked 28.

    Weiqiao venture's electrolytic aluminum production capacity has now expanded to 6.8 million tons, more than the same industry central enterprises in the aluminum and global electrolytic aluminum predators RUSAL. This volume on the total production capacity of electrolytic aluminum in China, accounting for about 16%.

    Zouping County in the local, Wei Bridge and Zouping basic business can be equated with aluminum. Surging news (www.thepaper.cn) visit Zouping County, a reference to the aluminum company, the taxi driver immediately asked whether the "two companies" or "three companies." The so-called two companies and two companies are Weiqiao venture aluminum company. So that in the surging news to go to Qixing Group of aluminum companies, the driver mistakenly thought to go to the Weiqiao venture aluminum plant, because the general mention of aluminum, are the first thought of Weiqiao venture The

    The taxi driver said, Weiqiao venture factory area and the number of Zouping should also be the most. Surging news also noted that in Zouping County, near the third road in the distribution of the Wei River Bridge, the first two industrial parks in several production areas, at the same time in the immortal two road also distributed with the completion of the time and soon of the staff of Weiqiao

    https://finance.sina.cn/2017-03-31/detail-ifycwyxr8895730.d.html?from=singlemessage&HTTPS=1
    Back to Top

    More on China's aluminium problem


    Translation:

    At the _insect country one color Jin Hu Gongye mark meeting the color cooperates the light letter character
     (2017)
     Stops up on the 48th]"About against huai and should the Qu Fang animal pen of inch headed by US card...(Admires the aluminum industry related suggestion the letter industry and informationization department office: As Chinese aluminum profession catches the development quickly,
     Especially from
     In 2001 surpassed the US becomes global electrolytic aluminium produces the first great nation, 2006
     The year surpasses the US becomes the global electrolytic aluminium disappearing match first great nation, 2008
     Since the year has surpassed Germany and US becomes the global aluminum material exports the first great nation, the US-led Western country never stops to the suppression and accusation of Chinese aluminum profession.
     In 2009, EU starts to originally made in the Chinese aluminum foil collection high quota anti-dumping tax. In 2009,
     In 2010,
     In 2011, Australia,
     Canada and US start one after another to originally made in the anti-dumping of Chinese aluminum molding collection high quota,
     Counter-subsidy tax. Since US new presidential election,
     The Sino-US trade problem once again becomes the market key concern.
     To the Chinese aluminum industry looks from nearly two years of US's development surrounding motion,
     Presents from the economic level promotion to the political height,
     From the bilateral contradictory deduction side contradictory, from the trade sanction expands to the entity industry at most,
     From attacking the entire profession the situation at the same time various ' defeating to the monomer enterprise, attacks the way also presents the characteristics of diversification: In the first half of 2016, US in Hangzhou
     During G20 summit, proposed the Chinese electrolytic aluminium capacity had seriously surplus, the United States International Trade Commission to start in view of the US aluminum profession competitive power investigation
     (" 332" investigation >,
     The regulations are to unite the Western country complain China together.
     In the second half of 2016, US many senators on the grounds of harming US national security,
     Prevents the loyal prosperous group to purchase the US to like urging the aluminum business company.
     In 2017, US government to WTO
     (WT0 > appealed to the Chinese government subsidy electrolytic aluminium industry.
     It is reported that
     The US aluminum profession to will launch the anti-dumping trade relief investigation in the near future originally made in the aluminum foil product of China,
     Further limits the Chinese aluminum product to export to US.
     In addition,
     We also find most newly,
     A US tomb analysis agency to the global most dog electrolytic aluminium enterprise Shandong Wei Qiao undertaking group that goes on the market in Hong Kong issued repeatedly makes the spatial report,
     Makes the company faced with forcing to stop the sign,
     Even has the cash flow break,
     Risk that the management stops,
     To company
     16 ten thousand staff stable,
     Industry chain upstream and downstream enterprise normal production,
     Bank debt refunding,
     As well as regional financial risk and other aspects produce major impact o
     Above
     "Combination fist"
     Will have the heavy dog influence to the Chinese aluminum industry inevitably. In summary obviously,
     We face international trade bad boundary complex ` that
     The uncertainty is even more evident,
     Yan Suoxing and pressing that the domestic aluminum profession must fully understand the current international situation. Therefore,
     We must first promote industrial all-round strength,
     Sharpens the withstand risk ability.
     Carries out supplies side constitutive property to change the grass in the expensive penetrating
     "Three fall makes up"
     Key task at the same time,
     Also must complete to strengthen the self-discipline,
     Standard export order,
     Strength stubborn energy conservation and emission reduction,
     Raises the environmental consciousness,
     Strengthens the capital market to manage,
     Guard financial crisis and other work.
     While the profession strengthens the self building,
     Suggested that the government gives the great concern,
     And supports the profession,
     The enterprise actively guards against and deals with the US-led Western country to Chinese aluminum industry entire aspect 2 surrounding.
     The concrete proposal is as follows: First, comprehensive study and deployment countermeasure.
     US's surrounding to Chinese aluminum industry started,
     Suggested that relevant state departments carry out the comprehensive study and deployment as soon as possible,
     The formulation comprehensive nature deals with the plan,
     Including formulation counterattacking plan,
     Gives the forceful blow. Second, supplies the information timely,
     Completes the early warning work.
     Promptly to profession and enterprise notification international trade situation and overseas industrial real-time trend and other information,
     The collection of especially diplomatic mission overseas field information, provides for a rainy day,
     Shifting to an earlier time plan. Third,
     Strengthens the instruction, coordinates the problem that the solution has promptly.
     Suggestion to profession and enterprise, in dealing with the US-led Western country surrounds the issue that in the work comes across to give coordinated and instruction, sharpens the response capability,
     The promotion deals with the effect,
     Conscientiously safeguards the legitimate rights and interests of Chinese Enterprise. Appendix: Shandong Wei Qiao undertaking group about dealing with US Organization makes the urgency of spatial matter partner to report that since Shandong Wei Qiao undertaking group about dealing with US machine ju will have made the spatial event reports Chinese non-ferrous industry Association = urgently in the near future '
     Makes the spatial influence from US in view of Shandong Wei Qiao undertaking group
     < Under called "Wei Qiao group"
     > In Hong Kong capital market makes spatial motion '
     The influence is specially serious
     Possibly initiates the huge risk,
     Presently on form '
     Reported urgently as follows: First, this time makes spatial event seriously affects Wei Qiao group,
     Situated in Shandong Binzhou,
     Is the world
     500 strong enterprises,
     National villous themeda enterprise first three '
     In 2016 the group sale income achieves
     3750 hundred million Yuan.
     Wei Qiao group has the textile and aluminum electricity two service plates,
     These two plates are the world are largest,
     The profit is strongest.
     Is centered on Wei Qiao group,
     In the area
     < Binzhou >
     Has formed the textile,
     The aluminum business two big industry clusters, have covered the entire industry chain,
     Two the enterprise in big colony has
     More than 2000 '
     Comprehensive annual production
     500 billion Yuan,
     The sum total solution employment is near
     30 ten thousand people
     < Wei Qiao group own employee
     160,000 people,
     Upstream and downstream company worker
     10 ten thousand people)
     , Is the local area
     < Binzhou)
     Has contributed more than half total outputs directly,
     Occupies the local finance organization more than half credit overall scales. This time makes the spatial event,
     Named does spatially,
     Actually strangles to death Wei Qiao group in two listed companies in Hong Kong [Hongqiao and Wei Qiao textile.
     We speculated that direct cause of this hostility, begins in
     In 2015,
     Wei Qiao group completes the construction after the bauxite mine in African Guinea and goes into production ' this mine to go into production '
     US aluminum,
     Lito lost quickly has directly touched its basic commercial interest in the raw material fixed price machine of global market. This time makes the spatial motion to begin in
     In 2016 11
     Month
     ' Twice issued that makes spatial report,
     And uses the rule and international accounting standards of Hong Kong stock market maliciously,
     Through anonymous reporting,
     Provides the mislead material,
     Launches malicious public opinion attack and other ways,
     Forces the auditor of Wei Qiao group ~ the Ernst & Young accounting firm is carrying on 2016
     When annual audit,
     Has extreme conservative and prudent stance.
     If continues the laissez faire to make the attack of spatial influence from the US,
     The two listed companies of Wei Qiao group will certainly unable to complete the annual report audit work promptly,
     Finally falls into by Hong Kong Securities Regulatory Commission,
     Stock Exchange puts a case on file and begins investigations '
     Stops the sign for a long time, and is unable to carry on the normal production financing event the dangerous situation. Once makes the spatial influence to realize the above goal,
     Will certainly have the following serious influence: 1st, local two big industry clusters will come under the fatal blow,
     Directly affects China
     10% textile market sum
     20% aluminum business markets '
     Chinese Enterprise will fall in the raw material fixed price power that in the international market won to recent years once again by the US aluminum business,
     Lito is in the American fund enterprise hand of representative. 2nd, two big industry clusters directly involve
     2000 hundred million domestic bank loans]
     Deals improper,
     Definitely will initiate the regional systematic financial crisis. 3rd, two big industry clusters involve
     30 ten thousand people
     < Contains Wei Qiao group
     16 ten thousand staff >
     Direct employment)
     Once the risk spreads, will cause the fierce social agitation inevitably. The goal of if making the spatial motion prevails,
     Then will certainly initiate the change of global aluminum industry market,
     The unusual fluctuation as well as domestic regional system of financial crisis Hong Kong capital market,
     But from profession angle analysis '
     His biggest beneficiary is beautiful aluminum and other US Enterprises. Second, support 1, adjuration industry association that the adjuration industry association gives,
     Invites,
     Coordinated relevant authority,
     With Hong Kong Securities Regulatory Commission,
     Stock Exchange of Hong Kong establishes smooth communication channel,
     Gives correct information promptly '
     Avoids appearing while Wei Qiao group deals with makes the spatial influence must deal with the unfavorable situation of administration and criminal probe of Hong Kong. 2nd, adjuration industry association,
     Invites,
     Coordinated relevant authority,
     With listed company the Asia-Pacific region manager partner in auditor Ernst & Young accounting firm,
     Establishes the urgent dialog consultation mechanism, early reaches the agreement, 'during practical solutions writes,
     Strives for the listed company annual report to issue normally. 3rd, adjuration industry association,
     Invites `
     Coordinated relevant authority,
     And needs to central concerned leader to reflect that in accordance with the situation this event possibly bends|Serious influence that sends,
     Early obtains related labor han to instruct for the first time that to help taking the risk preventive measure promptly,
     Completes the financial stability and social stability work. This event,
     Being important,
     The situation is urgent,
     The adjuration industry association gives related instruction rapidly.
    Back to Top

    humble imperialist lackey requests honourable client's urgent attention.


    Translation

     "" The Qu Fangbian home on the irresolute and should be headed by the US card. (MU aluminium Industry relevant recommendations of the Ministry of Industry and Informatization Office: With the rapid development of China's aluminium industry),
    Especially since
    More than 2001 years the United States becomes the world's largest producer of electrolytic aluminium, 2006
    More than the United States become the world's electrolytic aluminum extinction tournament the first big Country, 2008
    More than Germany and the United States became the world's largest importer of aluminium exports, the US-led Western countries have never ceased to suppress and accuse China's aluminium industry.
    2009, the EU began imposing high anti-dumping duties on Chinese aluminium foil. 2009,
    2010,
    2011, Australia,
    Canada, the United States began to impose high anti-dumping on Chinese aluminium profiles.
    countervailing duty. Since the new presidential election in the United States,
    Sino-US trade issues have become the focus of market attention again.
    From the past two years in the United States to carry out the Chinese aluminum industry containment action,
    Presenting the economic level to political heights
    From bilateral contradictions to multilateral contradictions, from trade sanctions to the entity industry,
    From the attack on the whole industry at the same time to the individual enterprises to break the situation, the blow way also presents a diversified characteristics: the first half of 2016, the United States in Hangzhou
    During the G20 summit, there was a serious excess of the production capacity of electrolytic aluminium in China, the United States International Trade Commission launched an investigation on the competitiveness of aluminium industry in America
    ("332" Investigation &gt;,)
    In fact, the joint Western countries are accusing China.
    In the second half of 2016, several United States senators were made to undermine U.S. national security.
    To prevent loyal to Wang Group to acquire the United States love reed aluminum companies.
    2017, the United States government to the World Trade Organization
    (WT0 &gt; Complaint Chinese government subsidies electrolytic aluminium industry.)
    It,
    The Alcoa industry will shortly initiate anti-dumping trade relief surveys on aluminium foil products originating in China,
    Further restrictions on China's exports of aluminum products to the United States.
    In addition,
    We have a new understanding of,
    A mass analysis agency in the United States has repeatedly issued short reports on the world's most canine electrolytic aluminium company, Shandong Wei Qiao, which is listed in Hong Kong.
    To make the company face compulsory suspension,
    There is even a cash flow break,
    The risk of running a standstill,
    Will be on the company
    160,000 employees Stable,
    Industrial chain upstream and downstream enterprises normal production and operation,
    Bank debt Repayment,
    and regional financial risks, and many other aspects of great impact O
    Above
    "Combination Fist"
    It is bound to have heavy dog effect on aluminium industry in China. Fully on the visible,
    The complexity of international trade in the bad environment
    The uncertainty is increasingly prominent,
    The domestic aluminium industry must fully realize the current international situation of strict and urgency. For this,
    We must first enhance the overall strength of the industry,
    Improve the ability to resist risk.
    To implement the supply side structural modifications in your own
    "Three goes down one supplement"
    While focusing on tasks,
    Also do to strengthen the industry self-discipline,
    Regulate export order,
    Strong energy saving and emission reduction
    Raising awareness of environmental protection,
    Strengthening the management of capital markets,
    Guard against financial risks and other work.
    While the industry strengthens its own construction,
    Suggesting that the government should pay high attention,
    and to support and guide the industry,
    Companies actively guard against and respond to the United States-led Western countries to China's aluminum industry in the total 2 of the containment.
    Specific recommendations are as follows: first, comprehensive research and deployment of countermeasures.
    America's containment of aluminium industry in China has started,
    Recommending that the relevant national authorities undertake a comprehensive study and deployment as soon as possible,
    Develop a comprehensive response plan,
    Including the development of anti-system plans,
    Give a forceful comeback. Second, provide timely information,
    Do well early warning work.
    Timely informing the industry and enterprises of international trade situation and foreign industry real-time dynamic information,
    In particular overseas agencies of the collection of information industry, proactive,
    Early plan. Third,
    Strengthen guidance, timely and coordinated solution to the problems.
    Advising industry and enterprises to coordinate and guide the problems encountered in the containment work of the Western countries headed by the United States, and to improve their coping abilities,
    To improve the coping effect,
    Earnestly safeguard the legitimate rights and interests of Chinese enterprises. Appendix: Shandong Wei Qiao Venture Group Emergency report on the coping with short company of American institutions Shandong Wei Qiao Venture Group on the emergency report of the US machine to deal with the short incident China nonferrous Metals Industry association = recent since
    Shorting forces from the United States targeting Shandong Wei Qiao Venture Group
    Hereinafter referred to as "Wei Qiao Group"
    Short action in Hong Kong capital markets
    Especially serious
    May cause enormous risks,
    Now on the relevant situation ′
    The emergency report is as follows: first, the serious impact of the short incident Wei Qiao Group,
    Located in Binzhou City, Shandong Province,
    is the world
    500 Strong Enterprises,
    Chinese people naoto the first three strong ′
    2016 Group sales revenue reached
    375 billion yuan.
    Wei Qiao Group has two business plates of textiles and aluminium electricity,
    These two plates are the largest in the world.
    The strongest profit.
    With Wei Qiao Group as the core,
    In the local area
    Binzhou &gt;
    Formed the textile,
    Aluminum industry clusters, covering the whole industry chain,
    The companies in the two clusters have
    More than 2000 ′
    Comprehensive annual output
    More than 500 billion RMB,
    Total settlement of employment near
    300,000 persons
    The Wei Qiao Group's own staff
    160,000 people,
    Upstream and downstream enterprise staff
    More than 100,000 persons
    , for the Local
    Binzhou City
    Directly contributing more than half of the gross domestic product,
    To occupy more than half of the local financial institutions of the total credit scale. The short event,
    The name is short,
    It is the two listed companies that strangle Wei Qiao Group in Hong Kong [China Macro Bridge and Wei Qiao Textiles.]
    We speculate that the direct inducement of this hostile action begins with
    2015,
    Wei Qiao Group completed construction and commissioning of bauxite mines in Guinea, Africa
    Alcoa,
    Rio Tinto soon lost its raw material pricing machine in global markets directly to its fundamental business interests. The short action began with
    2016 11
    Months
    Twice before and after issuing short reports,
    And maliciously exploit the rules of the Hong Kong stock Market and international accounting standards,
    Through anonymous reports,
    Providing misleading information,
    Launching a malicious public opinion attack and so on,
    Forcing the auditor of Wei Qiao Group ~ Ernst &amp; Young to conduct 2016
    The annual audit,
    Take an extremely conservative and cautious stance.
    If you continue to indulge in attacks from US shorting forces,
    Wei Qiao Group's two listed companies will not be able to complete the annual report audit work in time,
    Eventually caught in the SFC,
    Investigation of SEHK's filed
    The long-term suspension and inability to carry out the normal production and operation of the risk of financing activities. Once the shorting forces achieve the above,
    will have the following serious impact: 1, the two major local industrial clusters will suffer a fatal blow,
    Direct impact on China
    10% of the textile market and
    20% of Aluminium Market ′
    The pricing power of raw materials acquired by Chinese enterprises in the international market in recent years will fall again to the US aluminium industry
    Rio Tinto is the representative of the U.S.-funded enterprises. 2, two major industrial clusters directly involved
    More than 200 billion of domestic bank loans
    Improper coping,
    A regional systemic financial risk is inevitable. 3, two major industrial clusters involved
    300,000 persons
    Including the Wei Qiao Group
    160,000 Employees &gt;
    Direct employment
    Once the risk spreads, it is bound to trigger violent social unrest. If the aim of the short action succeeds,
    Will trigger the global aluminum industry market pattern Change,
    Abnormal fluctuations in Hong Kong's capital markets and systemic financial risks in China,
    From the industry angle analysis ′
    The biggest beneficiaries are American companies such as Alcoa. Second, urge the industry association to give support 1, solicit industry associations,
    On behalf of the business please,
    Coordinating the relevant departments,
    and the SFC,
    Hong Kong SEHK establishes a smooth communication channel,
    Timely delivery of correct information ′
    Avoid appearing in the Wei Qiao group to cope with shorting forces while responding to the adverse situation in Hong Kong's administrative and criminal investigations. 2, implore Industry Association,
    On behalf of the business please,
    Coordinating the relevant departments,
    The Asia-Pacific partner of the auditor, Ernst &amp; Young, with the listed company.
    Establishing an emergency dialogue and consultation mechanism, reaching an early consensus, ' practical solution,
    The annual report of the listed company is issued normally. 3, implore Industry association,
    On behalf of the business please '
    Coordinating the relevant departments,
    And as the case needs to reflect the central leadership of the event may bow | The serious impact of the hair,
    Early to receive relevant work Shan first indication, in order to take risk precaution measures in time,
    Good financial stability and social stability work. This event,
    Matters,
    Things are urgent,
    Urge the industry association to give the relevant instructions promptly.
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    China discovers Asia's largest manganese ore reserve: Xinhua


    China has discovered a reserve believed to contain 203 million tonnes of manganese ore which local authorities said was the largest in Asia, state news agency Xinhua reported on Saturday.

    The reserve in China's southwest Guizhou was discovered by the province's geology and mineral exploration bureau, Xinhua said citing the local government.

    The reserve has a potential value of more than 100 billion yuan ($14.50 billion), it said.

    Manganese is used in steel production and for making batteries.

    "The newly discovered ore deposits make up 60 percent of China's total proven reserves and will greatly reduce the country's reliance on imports," Chen Yuchuan, a geologist and academic at the Chinese Academy of Engineering, told Xinhua.

    http://www.reuters.com/article/us-china-manganese-idUSKBN17A0FA
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    Steel, Iron Ore and Coal

    Mountain size trouble for Australian coal lines


    Global coking coal supplies have been drastically interrupted by a small stretch of rail that wraps around a modest-sized Australian mountain range – and repair crews are unable to find a quick fix.

    Australian rail operator Aurizon Holdings Ltd said on Friday it would take another four weeks to repair the Goonyella line, which transported 118 million tonnes of mainly coking coal in 2016 and has been hit by landslides.

    The company said that its cyclone-damaged Blackwater coal haulage line - the second major rail corridor after Goonyella - would reopen on Monday at reduced capacity.

    "Recovery and repairs are being undertaken at multiple sites along the Goonyella corridor, including at Black Mountain which experienced significant landslides," Aurizon said.

    Multiple landslides and flooding knocked out the rail network when Cyclone Debbie ripped through the state of Queensland, a major coking coal region, last week.

    The cutoff in exports of the key steelmaking ingredient, has left steelmakers in China, the world's biggest producer, scrambling for supplies, even looking as far as the United States, and pushed up prices.

    Queensland accounts for more than 50 percent of the global seaborne coking coal market, which hit 314 million tonnes in 2016, according to Australia's Department of Industry.

    Aurizon's note was the first update it has provided to the market since Monday. It had previously forecast Blackwater to come back on line this week, while there is no change to the Goonyella time table.

    The much smaller Newlands and Moura rail networks are expected to be operational next week.

    NOT A QUICK FIX

    While the return of the Blackwater line will start replenishing coking coal supplies, the majority of coal in the region travels on the Goonyella line.

    Goonyella wraps around a mountain range en route to port facilities, where repairs are hampered by risks of further landslides, while drenched terrain limits how quickly heavy equipment can be moved into place.

    Buddhima Indraratna, an engineering professor specializing in railway geotechnology, said the trackbeds, known as ballasts, would have been infected.

    "The ballasts are now probably contaminated with landslide mud and debri; fouled ballast needs to be replaced, or cleaned and placed again," Indraratna said.

    "Any side slopes adjoining the track need to be stabilized properly so that subsequent sliding is prevented."

    The repair work is occurring at the most difficult part of the almost 500 kms (310 miles) of Goonyella track, where one of the few nearby access points - the Marlborough–Sarina Road - has itself been cut due to landslide damage. The state government has estimated road repairs will take "at least six months".

    Aurizon said on Friday it was working on "alternative routing options" such as moving coal onto the northern Newlands line or south via Blackwater.

    That sets up a potential race to secure any spare capacity on the alternate routes, with trucking an unlikely viable option, said independent mining analyst Peter Strachan.

    "There may well be some temporary trickle of truck-hosted haulage, but when you're looking at the tonnes involved that would be a trickle, they couldn't do with trucks what they can do with train lines," Strachan said.

    http://www.reuters.com/article/us-australia-cyclone-coal-idUSKBN179100
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    Coal India misses annual production target by 44.48 mln T


    Coal India missed its annual production target by 44.48 million tonnes as it produced 554.13 million tonnes of coal by the end of 2016-17 against a target of 598.61 million tonnes, the company reported on April 3.

    The miner also missed its offtake target for the financial year by 55.45 million tonnes, showed the provisional data.
     
    Against a target of 598.61 million tonnes, its offtake for the FY2016-17 was at 543.16 million tonnes, up 1.6% over the offtake for 2015-16.
     
    The miner achieved 93% of its annual production target for the last financial year, achieving a 2.9% growth over its production in 2015-16.
     
    "The production was impacted due to rehabilitation and resettlement issues along lower dispatch which have been noticed in the entire year," a Coal India official said.
     
    At the beginning of the 2016-17, Coal India's Chairman Sutirtha Bhattacharya had said that in order to meet the production target, the miner needed to step up to a double-digit growth rate.
     
    Coal India, which produces 84% of the country's coal, exceeded the target for March by excavating 66.07 million tonnes of coal.
     
    The miner's two subsidiaries, South Eastern Coalfields Limited (SECL) and Mahanadi Coalfields (MCL) contributed most of its annual output by respectively generating 140 million tonnes and 139.21 million tonnes of coal.
     
    For March only, its offtake was at 52.30 million tonnes, achieving 90% of the monthly target of 58.30 million tonnes.
     
    During 2015-16, the miner produced 538.75 million tonnes of coal and its offtake was at 534.50 million tonnes.
     
    In 2017-18, the miner's projected production volume was 660.7 million tonnes and it envisaged production of 908.10 million tonnes in 2019-20 with a CAGR (Compound Annual Growth Rate) of 12.98% regarding 2014-15.

    http://www.sxcoal.com/news/4554474/info/en
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    Shenhua Xinjiang Q1 commercial coal sales up 25pct on year


    Shenhua Xinjiang Energy Co., Ltd, a subsidiary of giant Shenhua Group, sold 7.57 million tonnes of commercial coal in the first quarter of 2017, up 25% from the previous year, said Shenhua Group on its website.

    During the same period, total rail shipment amounted to 2.66 million tonnes, gaining 1.52 million tonnes from the preceding year, a new record on quarterly basis.

    The company transported 300,000 tonnes of coal to Sichuan, Chongqing, Zhejiang, Jiangsu, Gansu and etc., exceeding total outbound rail shipment in 2016.

    The company's all-in cost was 108.33 yuan/t, decreasing 2.84 yuan/t from year on year, owing to the reduction of labor costs among other factors.

    http://www.sxcoal.com/news/4554471/info/en
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    Shanxi Coal International Energy 2016 coal sales up 132pct on year


    Shanxi Coal International Energy Group Co.,Ltd in coal-rich Shanxi province, saw its coal sales reached 92.63 million tonnes in 2016, skyrocketing 132% from the year-ago level, according to data released by the company.

    The company's raw coal output reached 21.46 million tonnes in 2016, up 9.9% year on year, said the company

    During the same period, operating revenue amounted to 49.16 billion yuan, gaining 24.2% from the preceding year. Net profit attributable to shareholders was 308 million yuan.

    All-in cost of raw coal was 127 yuan/t last year, decreasing 6 yuan/t or 4.5% form the year prior.

    The company aims to produce 20 million tonnes of coal and gain 50 billion yuan of operating revenue in 2017.

    Shanxi Coal will accelerate release of capacity at its high-yield and high-efficiency mines, and actively resume production or construction of suspended mines or projects.

    Shanxi's economy, which expanded 4.5% last year, continues to move on the upward track, bringing the positive influence on coal companies in the province.

    http://www.sxcoal.com/news/4554488/info/en
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    Fortescue moves on growing markets outside steel giant China


    Fortescue Metals Group is making iron-ore marketing forays to steel-producing nations outside China to tap forecast increases in demand from burgeoning infrastructure projects across the region.

    The world’s fourth-biggest exporter’s mines in northwestern Australia are well-positioned to take advantage of expected growth in countries such as India, Vietnam and the Philippines, CFO Elizabeth Gaines said in an interview. Australian iron-ore exporters including Perth-based Fortescue account for more than half of the global exportmarket.

    “Our marketing team visit potential and prospective customers in all those regions regularly - it’s not just a complacent watching brief,” said Gaines, who took the post in February having served on the miner’s board since 2013. “We are actually in those markets talking to people and wanting to be partners with them as those opportunities arise.”

    India is poised to become a beacon for growth in global steeloutput as demand from infrastructure, construction and auto-making accelerates, BMI Research said in a report received Wednesday. Steel output in the nation will average annual growth of about 9% between 2017 to 2021, according to the report.

    Economic growth is forecast to pick up in about two-thirds of Asia’s 45 economies, even as the pace of expansion cools in China, the Asian Development Bank said this month in its latest outlook report. India’s gross domestic product is forecast to grow 7.4% in 2017 and 7.6% next year, while in Southeast Asia – which includes Vietnam and the Philippines– GDP growth will expand to 5% in 2018 from 4.8% this year, the report said.

    “As those economies realize their growth potential there’ll be demand for infrastructure, which will drive demand for steel,” Gaines said in the interview Wednesday in Sydney. “Being based in the Pilbara, we’ll be very well placed to supply to those markets as and when that demand occurs.”

    Fortescue declined 1.4% to A$6.21 at 10:36 a.m. in Sydneytrading, trimming its advance in the past 12 months to 140%.

    A rally in iron-ore since late 2015 that’s swelled profits and allowed producers to trim debt and boost returns to investors is losing momentum. Prices have slumped about 15% since the steel-making ingredient touched a more than two-and-a-half-year high of $94.86 a metric tonne in February. Benchmark ore in Qingdao declined 0.8% to $80.92/t Thursday, according to Metal Bulletin

    Fortescue’s efforts to more than halve cash costs in the past two years to about $12.54/t in the last quarter mean that it’ll remain “bullet-proof” even as prices retreat, chairperson and founder Andrew Forrest said in an interview last month.

    “We’re not finished there, we’re looking at continuing to focus on innovation, on efficiency and productivity benefits to continue to be the lowest cost producer,” Gaines said. Fortescue was ranked the lowest-cost seaborne supplier to China in a Metalytics Resource Sector Economics study, the producer said in a December filing.

    Operating costs are the sector’s third-lowest behind larger rivals BHP Billiton and Rio Tinto Group, according to Bloomberg Intelligence.

    Fortescue may target early repayment of $478-million of April 2022 notes that are callable from this month as it looks to extend a drive to cut debt and will also consider further options for broader changes to its borrowings, according to Gaines. The producer has cut net borrowings to about $4-billion at the end of December from a peak of $10.7-billion four years earlier.

    “Part of the opportunity is looking at the remaining debt and how we might structure that,” she said. The producer is also likely to consider what it wants to do with $2.16-billion of 9.75% secured 2022 notes as they become callable from March next year. “Clearly that’s expensive debt,” Gaines said.

    http://www.miningweekly.com/article/fortescue-moves-on-growing-markets-outside-steel-giant-china-2017-04-07
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