Mark Latham Commodity Equity Intelligence Service

Friday 30th October 2015
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    Is Money another 'digital' buggy whip?

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    'I've been a loyal customer for 50 years, but HSBC wouldn't take my £7,300': Why banks won't let you pay cash into your own account


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    Banks are urging some of their largest customers in the U.S. to take their cash elsewhere or be slapped with fees, citing new regulations that make it onerous for them to hold certain deposits
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    Median familt income: falling for ten years now?

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    Glencore shrinking its $18 bln commodity inventory mountain

    Commodities mining and trading giant Glencore is reducing its $18 billion inventory pile, industry sources say, a move ratings agencies say could help assuage concerns about its balance sheet.

    The biggest player in the secretive commodities trading industry to hold a public share listing that requires it to disclose its accounts, Glencore has been battered by the global downturn in commodities prices.

    Worries about its $30 billion debt burden saw its share price lose nearly two thirds if its value so far this year. The firm has pledged to reduce its debt by $10 billion by suspending dividends, reducing investments and selling some assets in order to protect its investment grade debt rating.

    Sources close to the company say it is also reducing its vast trading inventory, driven in part by the winding up of "contango" market conditions, under which long-dated futures contracts were priced higher than spot prices, encouraging traders to store material to resell it at a profit later.

    "If you look at where commodities prices are today and how the market conditions changed in the past six months - it is fair to say that the only way for inventories is to go down," a source close to Glencore said.

    That could help appease ratings agencies such as Moody's and S&P, which both rate Glencore just two notches above junk, with a negative outlook that means its investment grade rating is in jeopardy.

    "Sometimes the balance sheet is just more important than the contango play," said the source close to the company.

    A rating cut would raise the cost of borrowing. Some brokerage analysts see this as a potential threat to Glencore's business model. Glencore denies it would have a major impact but says it wants to avoid it anyway.

    Despite the steep fall in commodities prices since last year, the total value of Glencore's inventory has barely budged, another way of saying that the volume of hydrocarbons, metals and other commodities the firm is holding has ballooned in size.

    Under the "contango" conditions in place at the start of 2015, when traders expected the price of oil to recover from last year's steep falls, the cost of buying and storing it was lower than the price for contracts to deliver it in future months. Traders responded by storing millions of barrels in ships and inland tanks to earn a profit selling it later.

    But in recent months, with a global oil glut growing, the cost of storage rising and the market now expecting low prices to persist longer, future prices for many commodities have fallen closer to, or lower than, spot prices. That means there is less to be earned from holding inventory.

    Hence traders ranging from BP to Vitol have been reducing inventories. When Glencore presents investors with an update on Nov 4 it will most likely show a cut in inventory of billions of dollars.

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    Bitcoin Soars Near Highest Since 2014 As China Outflows Accelerate

    For the past few weeks we have been detailing the tightening of China capital controls and what that may mean for Bitcoin. It appears the outflows (that offshore Yuan weakness relative to onshore Yuan suggests) are accelerating as Bitcoin just traded above $314( near the highest since December 2014.

    Perhaps today's acceleration is on the heels of The Fed statement and expectations of a response from China...Image title

    As we recently concluded, the last week or two suggest, perhaps more importantly, that China easing (and outflows implict from further devaluation) now appears to go straight to Bitcoin.

    As Overstock's Chairman noted previously: gold is great, but tough to transport; thus, forcing Chinese into Bitcoin as we previously explained:

    As we concluded previously, while China is doing everything in its power to not give the impression that it is panicking, the truth is that it is one viral capital outflow report away from an outright scramble to enforce the most draconian capital controls in its history, which - as every Cypriot and Greek knows by now - is a self-defeating exercise and assures an ever accelerating decline in the currency, which authorities are trying to both keep stable while also devaluing at a pace of their choosing. Said pace never quite works out.

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    Real Estate Bubble Trouble

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    Oil and Gas

    Iran Seen Jolting Oil Market With 90-Day Supply After Sanctions

    Iran may roil global oil markets with plans to sell about 45 million barrels of fuel stored in tankers in the Persian Gulf within three months of the removal of sanctions on its economy, according to analysts.

    Most of the stored oil is condensate that contains a sulfur compound, which complicates sales because many refineries can’t process it, said Victor Shum of IHS Inc. and Robin Mills at Dubai-based Manaar Energy Consulting. To market this large amount of oil within three months -- the equivalent of about half a million barrels a day -- Iran will have to resort to offering deep discounts, they said.

    “Iran’s getting ready to open the taps,” Shum, IHS’s head of oil market research, said by phone on Oct. 26. “If they want to unwind this supply in the current weak market, they’ll have to offer discounts. It’s a buyer’s market.”

    The country is seeking to claw back the market share it lost under sanctions by boosting oil exports after a July deal with world powers to return to energy and financial markets. The condensate in tankers moored off its southern coast will add to a worldwide oil glut, putting more pressure on crude prices that have dropped more than 40 percent in the last year. Sanctions curbed Iran’s sales of crude and condensate to 1.4 million barrels a day in 2014 from 2.6 million in 2011, the U.S. Energy Information Administration said in June.

    Iran pumped 2.8 million barrels of crude a day in September, making it the fifth-largest producer in the Organization of Petroleum Exporting Countries, according to data compiled by Bloomberg. It plans to boost crude production and exports by 500,000 barrels a day within a week after sanctions are lifted,Roknoddin Javadi, managing director of state-run National Iranian Oil Co., said Oct. 21 in an interview in Tehran. Iran will add another 500,000 barrels in daily sales within six months after curbs are removed, he said.

    Shipments of the 45 million barrels of condensate over three months would come on top of these planned crude exports, Javadi said, and surpass current expectations about the wave of Iranian oil poised to hit the market. The condensate, a light hydrocarbon liquid, is pumped from the offshore South Pars natural gas deposit.

    “What is probably in the price consensus is around a half-million-barrel-a-day hike” in shipments, Eugen Weinberg, an analyst at Commerzbank in Frankfurt, said by phone on Oct. 28. “If the increase is stronger than expected, it’s likely to have a negative impact on the price.”
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    China oil refiner Sinopec's net profit down 47.8 pct

    China's Sinopec Corp, Asia's largest refiner, posted a 47.8 percent fall in net profits in the first nine months of the year, as oil prices fell.

    The state-controlled company's net profit was 27.0 billion yuan ($4.25 billion), compared to 51.8 billion yuan a year earlier, it said in a filing with the Shanghai bourse.

    The company plans to cut back operations at its refineries by around 5 percent in the fourth quarter compared with the first half of the year as fuel inventories rise and demand for diesel slows, industry sources told Reuters.

    Operating profit at the exploration and production business reported an operating loss of 3.4 billion yuan, as crude oil production fell 2.4 percent, Sinopec said in the filing, without providing a production figure.

    The refining business made an operating profit of 14.9 billion yuan, up 34.3 percent on year, while the marketing division had an operating profit of 21.5 billion yuan, down 18.7
    percent on year.

    The chemicals division had a net operating profit of 15.0 billion yuan, compared to a loss of 18.5 billion yuan during the same period last year.

    In 2014, Sinopec reported a worse than expected fourth-quarter net loss of 5.3 billion yuan - its first quarterly loss since becoming a public company in 2000.

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    ConocoPhillips Reports Biggest Loss Since 2008 on Oil Crash

    ConocoPhillips reported its widest quarterly loss in more than six years as a crash in oil and natural gas prices tempered growth from Texas to Canada.

    The largest major U.S. oil company without refining operations said it further reduced 2015 spending by $800 million for an anticipated total of $10.2 billion. ConocoPhillips lost $1.07 billion, or 87 cents a share in the third quarter, compared with a gain of $2.17 a share a year earlier, the Houston-based company said in a statement Thursday. It was the biggest loss since the fourth quarter of 2008.

    The loss mirrored those of other major oil companies, including Royal Dutch Shell Plc, which reported a third-quarter net loss of $7.42 billion Thursday, the most in more than a decade. Exxon Mobil Corp. and Chevron Corp. report earnings Friday.

    Chairman and Chief Executive Officer Ryan Lance has said ConocoPhillips will continue to support its dividend, which has a yield of about 5.6 percent and is among the highest for companies that explore for and produce oil and gas. Some analysts have questioned whether the company can continue to make those investor payments while funding new drilling and limiting spending to what it receives in cash from operations.

    “That will be a challenge for them,” Brian Youngberg, an analyst at Edward Jones & Co. in St. Louis, said in an interview before the earnings release. “Operationally, they’re doing well with what they can control, but they can’t control prices.”

    ConocoPhillips is among producers that have turned to asset sales to help shore up their finances, pay dividends and continue drilling after oil fell by more than half and natural gas declined to the lowest level in more than three years.

    Oil and gas production rose 5.5 percent to the equivalent of 1.55 million barrels a day. Excluding one-time items, the company lost 38 cents a share in the third quarter, in line with the 38-cent average of 21 analysts’ estimates compiled by Bloomberg.
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    BG lifts production guidance as third-quarter earnings drop

    BG Group posted a 37% drop in third-quarter core earnings but raised its full-year production guidance as output increased sharply in the period.

    Earnings before interest, tax, depreciation and amortisation came to $1.24bn in the quarter, down from $1.98bn in the same period last year but better than the $1.15bn expected by analysts.

    The company lifted its output guidance to between 680,000 and 700,000 barrels of oil equivalent per day from 650,000 to 690,000, as it reported a 26% rise in third-quarter production to 716,000 boed.

    Revenue for the period fell to $4.15bn from $4.58bn, with pre-tax profit down to $466m from $1.99bn.

    BG said its Upstream business maintained positive momentum in growth projects in Australia and Brazil and continued to improve reliability and efficiency in its base assets.

    It added that liquefied natural gas operations saw a robust operating performance despite challenging market conditions.

    Chief executive Helge Lund said: "We are on track to deliver our promised operating and capital cost savings for 2015 and are adding new low cash cost volumes through Australia and Brazil. These actions will help mitigate the impact of lower commodity prices on our financial results.

    "We continue to work with Shell on integration planning and to secure the necessary regulatory approvals ahead of the shareholder vote. The transaction remains on track to complete in early 2016."

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    Genel Energy sells 20% interest in Kurdistan PSC

    Genel Energy has announced the sale of a 20% participating interest in the Chia Surkh Production Sharing Contract, in the Kurdistan region of Iraq, to Petoil Inc.

    As consideration for the sale of the 20% interest, Petoil will carry Genel's share of the costs associated with the Chia Surkh-12 (CS-12) appraisal well. The total cost of the CS-12 well is estimated at about $50 million, with drilling expected to commence in first-quarter 2016.

    The drilling will help refine the contingent resource estimate for the Chia Surkh license, which is currently estimated at 250 MMboe.

    On completion of the transaction, which is subject to Kurdistan Regional Government (KRG) approval, Petoil will transfer $10 million to Genel in the form of security, which will be released at different stages of well operations in accordance with cash calls, wellcompletion and testing. The operatorship of the Chia Surkh PSC will also transfer from Genel to Petoil for the duration of the CS-12 well.

    On completion, Genel will have a 40% participating interest in the Chia Surkh license, with Petoil at 40% and the KRG at 20%.
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    China unveils four more shale gas fields, soon to commercialize

    China unveiled four more shale gas fields in the country. These fields have potential for commercial use. That's why the country is confident in becoming the third largest shale gas producer this year after the US and Canada. But the efficiency of shale gas in the country remains uncertain.

    China has so far discovered 500 billion cubic meters of shale gas, arguably the world's largest, with 6 billion cubic meters available for commercial exploitation.

    "The abundance of shale gas reserves in China is encouraging. There's one field, which is only 3,800 square meters in scale, but has 3,800 cubic meters of shale gas. That's a treasure," said Zhai Gangyi, oil & gas director of China Geological Survey.

    Zhai says his team is studying the commercial value of other fields.

    Data by China Geological Survey shows China has issued 54 licences for shale gas exploration, covering 170 thousand square meters of fields. 25 billion yuan has been invested into the sector, setting up 840 drill wells.

    "The production of shale gas in China in 2014 was six times the amount in 2012, hitting 130 million cubic meters. This year, the production is set to be over 5 billion cubic meters. That means China will become the world's third largest shale gas producer," said Ren Shoumai, researcher of China Geological Survey.

    But that target is facing challenges. That's the word from the country's powerful economic planner, the NDRC. Although China is preparing for a US-style shale gas boom, the demand for energy lost steam on the cooling economy this year. Both foreign and domestic companies halted exploration work.
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    Oil Producers Curb Megaproject Ambitions to Focus on U.S. Shale

    A stubborn 16-month crude rout with no end in sight is driving the largest U.S. oil producers away from costly, high-risk megaprojects long touted as the industry’s future and toward safer shale operations that generate the cash needed to satisfy anxious investors.

    Exxon Mobil Corp., Royal Dutch Shell, Chevron Corp., ConocoPhillips and Hess Corp. have all either delayed or abandoned projects that range from the deep seas of the Gulf of Mexico to Canada’s oil sands and the U.S. Arctic. At the same time, Exxon and Chevron both announced plans to substantially increase U.S. crude production, largely as a result of their shale operations.

    “What makes more sense in this environment: drill a $100 million well in the deepwater Gulf that might come up empty, or poke lots of holes in west Texas where you already know there’s oil for a few million apiece?” said Michael Webber, deputy director of the University of Texas Energy Institute.

    Explorers are expected to slash spending on deep-water wells by 20 percent to 25 percent next year, compared with a 3 percent to 8 percent overall reduction on all types of fields, according to Barclays Plc analysts including J. David Anderson. The type of giant reservoirs that require megaproject treatment are now found in only the roughest, deepest and coldest parts of the world.

    One example: An equipment failure forced Chevron to put its $5.1 billion Big Foot development, a deepwater Gulf of Mexico project that was supposed to begin pumping crude this year, on hold until at least 2018. The San Ramon, California-based company hasn’t said whether the delay will bloat the price-tag, which already had risen 28 percent from a 2010 estimate of $4 billion.

    International producers are failing to deliver 80 percent of megaprojects on time and on budget, compared with about 50 percent in 2005, said Neeraj Nandurdikar, oil and gas director at Independent Project Analysis Inc.

    Exxon and Chevron may update investors on their biggest ventures when they report third-quarter results on Friday. “Chevron is taking actions responsive to the current price environment,” said Kurt Glaubitz, a company spokesman. “We are getting our cost structure down and actively managing to a smaller capital program.” An Exxon spokesman declined to comment.

    ConocoPhillips, the third-biggest U.S. oil producer, canceled in July plans to search the deep Gulf of Mexico this year. Terminating a long-term rig lease may cost the Houston-based company as much as $400 million.

    The shale drilling boom led to a supply glut that deflated prices by more than half since 2014 and shale remains one of the most economic options for producers. For Exxon and Chevron, that’s meant rededicating their spending to a region they’d mostly ignored for the half century before the shale boom while they pursued giant overseas discoveries.

    “Projects are getting bigger and bigger and they are failing more often,” said Howard Duhon, systems engineering manager at Gibson Applied Technology and Engineering Inc., which advises major oil companies on how to design deep-water projects. Equipment is more complex and project teams are three or four times bigger, and “it’s not clear we’re getting any better results,” he said.

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    Marathon Oil Cuts Quarterly Dividend by 76% to Preserve Cash

     Marathon Oil Corp. reduced its quarterly dividend by 76 percent in an effort to increase cash flow with oil prices holding below $50 a barrel.

    Marathon’s Dec. 10 payout to investors will drop to 5 cents a share from 21 cents, the company said in a statement Thursday. The dividend cut is expected to increase annual cash flow by more than $425 million.

    “We believe the revised dividend appropriately addresses the uncertainty of a lower for longer commodity price environment,” Lee M. Tillman, the company’s president and chief executive officer, said in the statement.
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    Range Resources Corporation announces third quarter 2015 results


    = Unit costs declined by $0.36 per mcfe, or 12% compared to the prior-year quarter.
    = Production volumes averaged 1,445 Mmcfe per day, a 20% increase over the prior-year quarter.
    = Marcellus production averaged 1,277 Mmcfe per day, a 27% increase over the prior-year quarter.
    = First Utica well in Washington County, Pennsylvania estimated to have 15 Bcf EUR, or 2.8 Bcf per 1,000 feet of lateral.
    = Second Utica well brought online with choke management at 13 Mmcf per day rate and projected to = have higher EUR than the first well.
    = Full-year 2015 capital budget of $870 million is on track to deliver 20% annual year-over-year growth.
    = Mariner East I with full operations for propane and ethane expected by the end of the year.

    Commenting, Jeff Ventura, Range's Chairman, President and CEO, said:

    'Our operational results in the third quarter continued to improve during this challenging commodity period. Range is expecting to deliver our 20% production growth target in 2015 from a significantly lower capital budget of only $870 million, compared to $1.5 billion in 2014. We believe Range has one of the most capital efficient operations in the industry and we expect to continue improvements in 2016 and beyond. The keys to increasing capital efficiency are our large, concentrated, stacked pay acreage position that can deliver high quality returns at low-cost and right-sized takeaway capacity to move products to better or improving markets. This gives Range a sustainable competitive advantage in the current market and becomes more important as the natural gas markets improve.

    'We are continuing to work on potential non-core asset sales for areas in our portfolio that cannot compete against the Marcellus for capital. Range expects to close one or more non-core asset sales prior to year-end. Any sales proceeds will be used to reduce debt and strengthen our balance sheet. Importantly, we are continuing to drive down costs and implement innovative marketing solutions that are expected to deliver improved margins. We also see signs of improved pricing ahead, especially in Appalachia, as the Mariner East I project becomes fully operational by year-end and completion of other infrastructure projects to move natural gas and NGLs out of the basin. Each of these projects is expected to improve the basis differentials in the southwest area of the Marcellus in the near-term. These projects, combined with the industry slowdown and reduction in capital spending, should help to bring supply and demand in balance both nationally and regionally, thus improving our prices and margins going forward.'

    Capital Expenditures

    Third quarter drilling expenditures of $188 million funded the drilling of 25 (20 net) wells with a 100% drilling success rate. During the third quarter, 31 wells were turned to sales. In addition, during the third quarter, $9 million was expended on acreage, $6 million on gas gathering systems and $4 million for exploration expense. Range is on target with its $870 million capital budget for 2015. Similar to recent years, the 2015 capital budget is front-end loaded and has been redirected to more dry gas drilling to maximize expected rates of return. The Company started the year running 15 rigs, is currently running five rigs and plans to finish the year with five rigs. Range expects to have 50 to 60 wells waiting on completion at the end of the year, consistent with prior-year averages.

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    Whiting Petroleum Corporation announces third quarter 2015 financial and operating results

    - Q3 2015 Production Averaged 160,590 BOE/d after 8,700 BOE/d of Q2 2015 Property Sales

    - Q3 2015 Discretionary Cash Flow Totals $280 Million

    - Enhanced Completions Contribute to 44% Quarter-over-Quarter Productivity Increases in Williston Basin

    - Enhanced Completion Pad at Cassandra Prospect Tests at Average Rate of 5,224 BOE/d per Well

    - Announces $400 Million of Total Asset Sales Year-to-Date

    - Credit Commitments Unchanged at $3.5 Billion, Zero Drawn at September 30, 2015

    = Whiting's production in the third quarter 2015 totaled 14.8 million barrels of oil equivalent (MMBOE), 89% crude oil/natural gas liquids (NGLs). Third quarter 2015 production averaged 160,590 barrels of oil equivalent per day (BOE/d) after 8,700 BOE/d of Q2 2015 property sales. This represents a 38% increase over the third quarter 2014.

    James J. Volker, Whiting's Chairman, President and CEO, commented:

    'Our third quarter results demonstrate we remain on track to balance capital spending and cash flow in 2016 at approximately $1.0 billion while maintaining our longer term growth profile. Total capital expenditures decreased 46% from the second quarter while production adjusted for asset sales was relatively flat. We spent $266 million in our core Williston Basin Bakken/Three Forks and DJ Basin plays in the third quarter, largely before we dropped three rigs to reach our fourth quarter eight rig program. Non-operated spending and facilities spending during the quarter were $58 million and $32 million, respectively. As they decline during the fourth quarter, we anticipate total capex under $300 million.

    'In addition, we expect production in the fourth quarter to benefit from the continuing transition to high volume, enhanced completions as evidenced by the outstanding results at our P Johnson pad, which tested an average rate per well of 5,224 BOE/d. The pad incorporated 7.0 million pounds of sand per completion versus our typical 5.0 million pound completion.'
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    Alternative Energy

    India likely to propose special session on solar energy in Paris

    Economic TimesPTI reported that India is likely to propose a special session on solar energy and issues related to technology transfer to developing nations during the UN climate change summit in Paris later this year.

    This was conveyed by Prime Minister Mr Narendra Modi to Mozambique President Mr Filipe Nyusi during his bilateral meeting ahead of the 3rd India Africa Forum Summit here.

    Tanmaya Lal, Joint Secretary [E and SA] in the Ministry of External Affairs "Prime Minister Mr Narendra Modi also mentioned that during the upcoming Conference of Parties (CoP21) in Paris, in the context of power requirement. India would be proposing a special gathering to discuss solar energy and issues related to technology transfer in that sector."

    India in its recently-announced climate action plans or Intended Nationally Determined Contributions (INDC) has pledged to achieve about 40 percent cumulative electric power installed capacity from "non-fossil fuel" based energy resources by 2030 in which a major chunk would be solar energy.

    India has already put forward an ambitious solar energy expansion programme which seeks to enhance the capacity to 100GW by 2022 and is also expected to be scaled up further thereafter.

    India has maintained that green technology needs of emerging economies like itself are "crucial" to fight greenhouse gas emissions and has sought financial as well as technological support from developed nations.
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    China Said to Mull Wind, Solar Power Tariff Cuts Through 2020

    China is considering cutting the preferential rate it offers wind and solar power developers because the surcharges slapped onto electricity bills to pay for clean-energy subsidies aren’t high enough.

    The National Development and Reform Commission, China’s top economic planning agency, plans to cut the tariffs annually in the five years through 2020 to make electricity from clean sources more competitive compared with coal power, according to a document seen by Bloomberg.

    China proposes reducing tariffs for wind farms by as much as 5.8 percent in 2016 from current levels and by another 19 percent in 2020 from the 2016 tariff levels. Reductions for solar power projects will be as much as 5.6 percent in 2016 and another 15 percent in 2020, according to the document.

    The mismatch between surcharges and what the government pays out to developers of renewable projects is threatening the nation’s plans to use clean energy as part of efforts to combat climate change.

    The cuts may have a larger impact on wind power because turbine costs are forecast to drop only about 9 percent by 2020, said Zhou Yiyi, a Shanghai-based analyst from Bloomberg New Energy Finance.

    "The room for a reduction in solar technology costs is bigger than that of wind power," Zhou said.

    China Longyuan Power Group Corp., the nation’s biggest wind-farm operator, declined as much as 5.4 percent, the biggest decrease since Sept. 23, 2014, to HK$7.21 in Hong Kong trading. Huaneng Renewables Corp. slumped as much as 6.6 percent.

    "The reductions will be negative for developers or operators’ profitability," discouraging the market, said Louis Sun, an analyst at BOCOM International Holdings Co. in Shanghai.

    Should operational costs decline sharply, the NDRC will study whether to cut the tariffs previously awarded, according to the document.

    The NDRC is seeking comment from the two industries. Once agreement is reached, the cuts will come into effect from Jan. 1, 2016. A fax sent to the NDRC seeking comment wasn’t immediately answered.
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    French power providers face 11 pct rise in renewables surcharge in 2016

    The rising cost of funding renewable energy means utility EDF and other French power providers face an 11 percent rise next year in a surcharge they pay that is used to subsidise the renewable sector, the energy watchdog said on Thursday.

    That is less than the 17 percent rise this year, however.

    France's energy watchdog, CRE, said the surcharge needs to raise 7 billion euros ($7.7 bln) in 2016, up 11 percent from this year.

    "The increase in the cost between 2014 and 2016 is due to the development of solar and wind energy sectors, which represent 39 percent and 17 percent respectively of the total estimated surcharge," CRE said in a statement.

    To cover the surcharge, heavily indebted EDF levies a tax on French households' electricity bills, called CSPE.

    But in recent years, the government has refrained from increasing the CSPE enough to cover these costs to EDF so as to preserve French households' spending power.

    The regulator said the shortfall suffered by EDF by the end 2016 would be 3.4 billion euros, down from 5.5 billion euros in 2014.

    The rising cost of funding renewable energy has also been a prominent issue in Germany, where solar and wind power capacity has risen faster than in France and has led to higher electricity bills for households.

    France passed a new energy bill in August in which renewable energy production will need to increase rapidly to provide 40 percent of France's electricity requirements.

    Currently, 75 percent of French electricity comes from nuclear sources.

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    Canada's Hydro One IPO prices near high end of range

    Ontario electric utility Hydro One's initial public offering priced at C$20.50 per share on Thursday, raising C$1.66 billion ($1.26 billion) and marking one of the biggest IPOs in Canadian history.

    The pricing suggested demand was high for a roughly 15 percent stake in the province's largest electric utility.

    Earlier this month, the government of Ontario outlined plans to sell up to 89.25 million Hydro One shares in an IPO that was expected to price between C$19 and C$21 a share, valuing the company between C$11.31 billion and C$12.5 billion.

    Reuters reported on Wednesday that the offering was expected to price at the high end of that range.

    The shares, which will list on the Toronto Stock Exchange under the ticker symbol "H", are expected to begin trading on Nov. 5.

    The offering saw "extraordinarily strong demand," said Ed Clark, chair of the Ontario premier's advisory council on government assets. "The offering was significantly oversubscribed."

    "This has been textbook run. There's tremendous interest. The market is obviously enthusiastic about it," said Clark, the former chief executive of Toronto-Dominion Bank.

    Some 40 percent of the offering has been allocated to retail investors, the company said in a statement on Thursday.

    If, as expected, the IPO's underwriters exercise the over-allotment option tied to the deal, the province will raise about C$1.83 billion in total from the deal.

    The demand underscores interest for non-resource stocks in Canada, said Colin Cieszynski, chief market strategist at CMC Markets.

    "Having a Hydro One heavyweight will help balance out the resource-heavy Canadian market," he said, adding that it also offers an opportunity to invest in a public utility as it has been "slim pickings" until now.

    The privatization of the utility will allow the province to fund transportation infrastructure projects, including public transit, bridges and highways, Ontario Minister of Energy Bob Chiarelli said in a statement.
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    Copper Foam Could Revolutionize Battery Storage

    Imagine a lightweight battery that can be any size or shape imaginable, that’s economical and environmentally friendly to make and to use, that charges faster than a conventional battery and holds that charge longer.

    You’re not dreaming because it may be a reality in the not-too-distant future, powering everything from electric cars to smartphones.

    And speaking of dreams, the device from Prieto Battery Inc. in Colorado is made of copper foam.

    Prieto Battery is a startup founded by Amy Prieto based on her research as a student at Colorado State University in Fort Collins. The brainchild is what she calls a “3-D battery” made up of the spongy copper, which is meant to be an improvement over the traditional “2-D” battery, which is composed of thin layers of metal surrounded by a current-conducting fluid.

    The copper foam – basically copper transformed into a porous structure – is so lacy that, by volume, it is 98 percent air, or void space, but has so much surface area that ions – electrically charged particles – don’t have to travel as far within the foam to be effective, thereby increasing the battery’s power and energy capacity.

    A battery anode, or entry terminal for current, is affixed to the foam. This anode is made of copper antimonide, a blend of copper and antimony, a brittle metal often used in alloys. Then the anode-coated foam is combined with a conducting medium called an electrolyte that serves as a surface for moving ions. Then a cathode, or exit terminal for current, is added. The cathode is made of a liquid slurry.

    Another drawback of conventional batteries is the use of toxic chemicals, such as sulfuric acid, which can be problematic when they’re being made and when they need to be discarded. Prieto Battery’s products, however, use only non-toxic chemicals, including citric acid.

    Probably the two most important improvements are that the Prieto batteries charge quickly and store up to twice as much energy as a conventional battery of the same size. What’s more, the Prieto batteries aren’t prone to overheating as lithium-ion batteries are. And they’re inexpensive to manufacture.

    Prieto Battery uses a patent-pending technology to create the copper foam that requires fewer steps than are needed to make conventional batteries. It also ensures uninterrupted energy contact over the entire surface of the anode.

    With all this good news, what could be bad? Just this: Prieto Battery says it will be a while before it can mass-produce a working version available to automakers, electronics manufacturers and ordinary consumers.
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    Potash Corp cuts profit view, to sell less potash due to weak prices

    Potash Corp of Saskatchewan on Thursday cut its full-year earnings forecast and said it expects to sell less potash in the year than expected due to weak demand and prices.

    The world's biggest fertilizer company by market capitalization reported an 11 percent drop in quarterly profit, also hurt by weak nitrogen prices and increased phosphate costs.

    The company lowered its full-year profit forecast to $1.55-$1.65 per share from $1.75-$1.95. Analysts on average had estimated $1.74 per share, according to Thomson Reuters I/B/E/S.

    Potash prices have sunk some 20 percent year-over-year in the U.S. Cornbelt, according to Mosaic Co data, as demand weakened due to excessive production and soft crop prices.

    Demand has also been stifled in key export markets by a new Chinese tax that makes potash more expensive in the country, as well as by the strong U.S. dollar and dry crop conditions in India.

    Potash Corp, the second-biggest potash producer by output after Russia's Uralkali OAO, said it expects to sell 9.0-9.2 million tonnes of potash in the current year.

    The company, which also makes phosphate and nitrogen fertilizers, had earlier forecast sales of 9.3-9.6 million tonnes.

    Potash Corp's average realized potash price fell 11 percent to $250 per tonne in the third quarter ended Sept. 30, while nitrogen prices fell 10.4 percent to $319 per tonne.

    Cost of phosphate sold rose 9 percent to $475 per tonne.

    The company's net income fell to $282 million, or 34 cents per share, from $317 million, or 38 cents per share.

    Excluding non-cash charges, mainly in phosphate, it earned 37 cents per share.

    Revenue fell 6.8 percent to $1.53 billion.

    Analysts on average were expecting a profit of 37 cents per share on revenue of $1.45 billion.
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    Precious Metals

    Venezuela selling gold..

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    Goldcorp reports bigger 3rd-qtr loss on writedown, weaker prices

    Goldcorp Inc , the world's biggest gold miner by market value, reported a bigger third-quarter loss and missed estimates, as an inventory writedown and declining bullion prices offset lower costs and a 42 percent jump in production.

    The Vancouver-based miner on Thursday also confirmed its 2015 forecast for production at the high end of a range between 3.3 million and 3.6 million ounces of gold, all-in sustaining costs of $850 to $900 an ounce and capital spending of $1.2 billion to $1.4 billion.

    Its net loss widened to $192 million, or 23 cents a share, from $44 million, or 5 cents a share, in the same period last year.

    The adjusted loss was $37 million, or 4 cents a share, compared with an adjusted profit of $70 million, or 9 cents a share. The adjusted loss included a reduction in the carrying values of inventory stockpiles of $40 million, or 5 cents a share, and noncash, stock-based compensation costs of about $14 million, or 2 cents a share.

    Analysts, on average, expected Goldcorp to earn an adjusted profit of 4 cents a share, according to Thomson Reuters I/B/E/S.

    Free cash flow was $243 million, compared with a negative $355 million in the prior-year period.

    All-in sustaining costs to produce an ounce of gold, which includes sustaining capital, exploration and general expenses, fell to $848 in the quarter from $1,066 last year.

    In the quarter, gold production increased to a record 922,200 ounces from 651,700 as the average realized price fell to $1,114 per ounce from $1,266 ounce.

    In September, the company trimmed its full-year production estimate for its Eleonore mine in Canada. Due to lower gold grades from unexpected folds and faults in the ore body, Goldcorp clipped the forecast to 250,000-270,000 ounces of gold from 290,000-330,000 ounces.

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    Base Metals

    Philippines says $2bn King-King copper mine may get approval soon

    Philippines says $2bn King-King copper mine may get approval soon 

    The Philippines said on Friday it may soon allow development of the $2-billion King-King copper-gold project to proceed in the country's southern mining province of Compostela Valley. A move to issue a "notice to proceed" would mark the first time the country has issued a permit to develop a new mine since 2012, pending legislation to increase the government's share of mining revenues. 

    "We may be able to approve the DMPF (by) mid-November," Mines and Geosciences Bureau (MGB) Director Leo Jasareno said, referring to the developer's Declaration of Mining Project Feasibility. He was speaking at an industry forum organised by the American Chamber of Commerce. 

    The open-pit mine could have an annual output of 138-million pounds of copper, about half a million ounces of silver, and more than 236 000 oz of gold over a period of 22 years. 

    The DMPF's approval means the Filipino-owned Nationwide Development Corporation (Nadecor), which holds the mining rights over King-King, can proceed to the development stage, he said. Toronto-listed St Augustine Gold & Copper Ltd also has a stake in the project. 

    King-King is one of several major Philippine mining projects that are unaffected by a moratorium on approvals for new production because they were already in advanced stage before the ban took effect.
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    Steel, Iron Ore and Coal

    Indonesia 2016 coal exports to slump as low prices hurt miners -industry

    Coal shipments from Indonesia will plunge as much as 17 percent next year, with most miners in the world's No.1 exporter of thermal coal losing money and slashing output, a senior industry official said on Friday.

    Indonesia will export less than 300 million tonnes in 2016 from 330-360 million tonnes this year, the chairman of the country's top coal industry association told Reuters.

    Reduced shipments from the Southeast Asian nation could help bolster international prices hit by oversupply and slowing Chinese demand. Benchmark thermal coal has dropped around 16 percent in 2015 to stand near nine-year lows at $51.84 a tonne.

    "About 60-70 percent of domestic producers are underwater -meaning that their cash flow is not enough to sustain their business," said Pandu Sjahrir from the Indonesian Coal Mining Association. He added that domestic coal demand would be 90-110 million tonnes in 2016 compared to 90 million this year.

    Indonesian miners are now either halting production or doing "selective mining" of easier to access coal, said Sjahrir, who estimates benchmark prices will average $60 a tonne in 2016.

    A mining ministry official last week said Indonesia's exports of coal fell 20 percent from January to September this year.

    To help its coal miners, whose sector and related industries employ about 1 million people, Indonesia's government has abandoned plans to ramp up coal royalties, Sjahrir said.

    The country's finance minister had earlier said that plans to increase government revenues from the mining sector would be shelved if prices stayed low.

    Top coal producers in the Southeast Asian nation include Adaro Energy, Berau Coal, Bukit Asam , Kideco Jaya Agung and Bumi Resources.

    To combat slowing Chinese and Indian demand for Indonesian coal, which accounts for roughly half of the country's total exports, miners are increasingly investing in domesticpower projects, Sjahrir said.

    The government has set an ambitious goal of building 35 gigawatts of new power stations by 2019.

    But with the majority of these new power plants likely to be coal-powered, there are doubts the country can meet its new commitment on cutting greenhouse gas emissions growth by 29 percent by 2030.

    The Indonesian government will have to increase power tariffs for consumers or offer subsidies to attract investment in modern and low-emission power plants to meet both its energy and greenhouse gas emissions targets, Sjahrir said.

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    Large and medium steel mills 3Q losses at 28.1 bln yuan

    China’s large and medium steel producers suffered a combined loss of 28.12 billion yuan ($4.43 billion) in net profit in the first three quarters this year, with loss from core business revenue at 55.27 billion yuan, showed data from the China Iron and Steel Association (CISA).

    49 steel producers or 48.51% CISA members were in the red during the same period, with total loss soaring 352.85% on year to 45.04 billion yuan, data showed.

    The overall loss in the sector was resulted from persisting oversupply and subduing demand amid slowing economic growth.

    Over January-September, China’s consumption of crude steel posted a year-on-year decline of 5.82%, with September consumption down 8.65%.

    The output of crude steel also saw a drop of 2.14% on year to 610 million tonnes during the same period.

    “The production control” would be the only way to tackle the supply glut, given the current economic environment. Additionally, the transformation of steel enterprises and differentiated competition of the market are future developing directions for steel sector, said Zhu Jimin, a senior official with the association.
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