Mark Latham Commodity Equity Intelligence Service

Monday 18th January 2016
Background Stories on www.commodityintelligence.com

News and Views:

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    Macro

    Bears storm the market.

    Bearish sentiment, measured by the number of respondents who believe the market will fall in the next six months, jumped to 45.5% in the latest week, the highest since the week of April 18, 2013, when it hit 48.2%. That compares with 38.3% in the previous week and 23.6% in the last week of 2015.

    In contrast, investors who are bullish and expect the market to rise in the next six months fell to 17.9%, the lowest since April 14, 2005, when only 16.5% respondents expressed optimism. Last week, 22.2% of survey participants said they were bullish. The eight-week moving average of the bullish sentiment gauge also slid to 25.7% this week, recordImage titleing its seventh week of decline.

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    China 2015 power consumption up 0.5pct on year

    China 2015 power consumption up 0.5pct on year

    China’s power consumption rose 0.5% on year to 5500 TWh in 2015, showed data from the National Energy Administration on January 15.

    Power consumption by the residential segment was 727.6 TWh, rising 5.0% on year.

    For the non-residential segment, the primary industries – mainly the agricultural sector – used 102 TWh in 2015, up 2.5% from the year prior.
     
    The secondary industries – mainly the industrial sector, consumed 4004.6 TWh, dropping 1.4% on year.
     
    The industrial sector specifically, consumed 3934.8 TWh of electricity in 2015, down 1.4% on year, with the heavy industry accounting for 82.9% or 3262 TWh, dropping 1.9% on year.
     
    Power consumption by tertiary industries – mainly the service sector – increased 7.5% on year to 715.8 TWh.
     
    In 2015, the average utilization of power generating units (annual capacity over 6 MW) across the country was 3,969 hours, 349 hours or 8.08% lesser than the year before.
     
    Of this, hydropower plants logged average utilization of 3,621 hours, a yearly decline of 1.31% or 48 hours; the average utilization of thermal power plants decreased 410 hours to 4,329 hours, dropping 8.65 % on year.
     
    In addition, China added 129.74 GW of power generating capacity in 2015, including 16.08 GW of new hydropower capacity and 64 GW of new thermal power capacity.

    http://en.sxcoal.com/0/139521/DataShow.html
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    Henan 2015 power output down 4.32pct on year


    Central China’s Henan province produced 255.89 TWh of electricity in 2015, down 4.32% on year, showed data from the National Energy Administration (NEA) on January 15.

    Of this, output of hydropower and new energies-fueled power in 2015 climbed 12.98% and 25.38% on year to 10.87 TWh and 3.97 TWh, respectively; thermal power output stood at 241.06 TWh, sliding 5.35% from the year prior, data showed.

    The average utilization hours of power generating units stood at 3,902 hours in 2015, falling 446 hours from a year ago.

    By end-December, total installed capacity across the province rose 8.85% on year to 67.44 GW. Of the total, the installed capacity of thermal power was 61.63 GW or 91.39%; that of hydropower stood at 3.99 GW or 5.91%; that of power from new energies stood at 1.82 GW or 2.7%.

    Power consumption of the province in 2015 reached 288 TWh, a decline of 1.37% on year.

    Of this, power consumption by the residential segment was 36.9 TWh in 2015, down 4.81% from the year prior.

    For the non-residential segment, the primary industries – mainly the agricultural sector – used 5.44 TWh of electricity, decreasing 20.5% on year.

    The secondary industries – mainly the industrial sector – consumed 217.9 TWh of electricity during the same period, falling 0.73% on year.

    The industrial sector, specifically, consumed 215.48 TWh of electricity in 2015, decreasing 0.79% from the year before, with the heavy industry accounting for 86.58% or 186.56 TWh, dropping 1.55% year on year.

    Power consumption by tertiary industries – mainly the services sector – reached 27.7 TWh last year, increasing 3.26% year on year.

    http://en.sxcoal.com/0/139452/DataShow.html

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    Manufacturing in America continues to struggle.

    Image title
    The New York Fed's Empire Manufacturing index plunged to -19.37 in January from  -6.21 in December.



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    India's Dec exports fall for 13th month, exporters brace for tough times


    Jan 18 India's merchandise exports fell for the 13th successive month in December, as orders from the United States and Europe shrank and exporters grappled with a competitively weaker Chinese yuan.

    The deteriorating global economic growth outlook and rising volatility in currency markets have dampened Indian exports, although the blow has been softened by a collapse in the country's oil import bill.

    "We are facing terrible times as orders from the U.S. and Europe have dried up," said S.C. Ralhan, president of the Federation of Indian Export Organisations (FIEO), referring to shipments to India's two largest markets.

    "The slowdown in China and depreciation of its currency have further hit exports," he said, adding that total merchandise exports could fall to about $250 billion in the fiscal year ending on March 31.

    Exports in December fell 14.75 percent from a year earlier to $22.3 billion while imports stood at 33.96 billion, data from the Ministry of Commerce and Industry showed on Monday.

    India's merchandise exports declined 3.5 percent in 2014/15 to $310 billion from the previous year while imports were down 0.5 percent to $448 billion.

    Cheaper Chinese exports have undercut exports of Indian engineering goods, which constitute around a quarter of total merchandise exports.

    Engineering exports could fall to near $60 billion in the current fiscal year from $72 billion a year earlier, said T.S. Bhasin, chairman of the Engineering Export Promotion Council.

    "My own exports are down by more than 30 percent, forcing me to retrench contract workers and sell in the local market at a lower price," he said, adding more than 100,000 employees in engineering might lose their jobs.

    Prime Minister Narendra Modi has made his Make in India programme, which seeks to attract foreign investment in export-oriented manufacturing, a centrepiece of an economic recovery plan that needs to create a million jobs a month to succeed.

    India's trade deficit with China widened to $35.6 billion during the April-Nov period from $32.4 billion a year earlier. During that period, its exports to China fell to $6.2 billion from $7.9 billion a year ago, reflecting a severe imbalance in trade between the world's two most populous countries.

    The government offered a fiscal package of about 27 billion rupees ($400 million) a year, in November to provide subsidised credit to exporters, hoping it could marginally help stabilise exports in coming months.

    Finance Minister Arun Jaitley, who will present his annual budget for 2016/17 on Feb. 29, is unlikely to provide much relief to exporters, officials said, as he faces a tough challenge to meet his fiscal deficit targets.

    "We do not have much hope though exporters' survival is at stake," Ralhan from the FIEO said.

    http://www.reuters.com/article/india-trade-idUSL3N1521YZ

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    Oil and Gas

    Iran Back.

    On Saturday, Iran marked what President Hassan Rouhani called a “golden page” in the country’s history when the IAEA ruled that Tehran had stuck to its commitments under last year’s nuclear accord.

    Moments after the ruling was handed down, the US and the EU each lifted nuclear-related financial and economic sanctions on the “pariah state,” much to the chagrin of Israel and Tehran’s regional rivals who view the West’s rapprochement with the Iranians with deep suspicion.

    "Everybody is happy except the Zionists, the warmongers who are fuelling sectarian war among the Islamic nation, and the hardliners in the U.S. congress,” Rouhani said, referring directly to Israel, the Saudis, and GOP lawmakers in the US.

    In addition to the never-ending feud with the Israelis, Tehran is embroiled in a worsening conflict with Riyadh triggered by Saudi Arabia’s execution of prominent Shiite cleric Nimr al-Nimr and subsequent attacks on the Saudi embassy and consulate in Iran. The argument has raised the specter of an all-out conflict between the Sunni and Shiite powers and stoked sectarian discord across the region.

    With sanctions lifted, Iran will now have access to some $100 billion in frozen funds and will be able to increase its oil revenue exponentially even as prices remain suppressed.

    It’s easy to see why the Saudis and other Gulf Sunni monarchies are nervous. Iran plans to immediately boost output by 500,000 b/d with an additional 500,000 b/d coming online by year end. “The oil ministry, by ordering companies to boost production and oil terminals to be ready, kicked off today the plan to increase Iran’s crude exports by 500,000 barrels,” the official Islamic Republic News Agency reported on Sunday, citing Amir Hossein Zamaninia, deputy oil minister for commerce and international affairs.

    Iran could haul in more than five times as much cash from oil sales by year-end as the lifting of economic sanctions frees the OPEC member to boost crude exports and attract foreign investment needed to rebuild its energy industry,” Bloomberg reports, adding that “the lifting of sanctions means Iran can immediately boost oil revenue to about $2.35 billion a month, based on the country’s estimated current output of 2.7 million barrels a day and oil at $29 a barrel.”

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    Russia rules out coordinated oil output cuts


    The Russian Energy Minister Alexander Novak has said coordinated oil production cuts with OPEC to help support falling oil prices would be unlikely.

    The politician said he felt it was unlikely all countries within OPEC would be able to agree on how to prop up prices.

    The comments come after some countries called on Russia to cut its own output.

    Novak said: “From our point of view, it is unlikely that all the countries within OPEC can agree on production cuts, let alone those countries which are not in the OPEC coalition.

    “Such consultations have been underway for the past year and a half since oil prices started to fall in mid-2014.

    “(But) we see that in 2015 countries like Saudi Arabia in OPEC have increased total production by 1.5 million barrels per day.”

    Novak said the critical oil price level for domestic oil producers was $5-$15 per barrel, which amounted to the cost of production.

    https://www.energyvoice.com/oilandgas/98816/russia-rules-out-coordinated-oil-output-cuts/
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    Russia's Lukoil leaving projects in Ivory Coast - Interfax


    Russia's second-largest oil producer Lukoil is leaving projects in Ivory Coast, Interfax news agency reported on Friday, citing a source.

    Lukoil has been operating in the Gulf of Guinea offshore Ivory Coast since 2006 and is operator of the offshore exploration projects at the CI-401, CI-205 and CI-504 blocks, according to website of its subsidiary www.lukoil-overseas.com.

    http://www.reuters.com/article/russia-lukoil-idUSR4N14X016
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    Brazil's Petrobras cancels plan to sell local-market bonds


    Brazil's state-led oil company Petroleo Brasileiro SA said on Friday it had canceled plans to sell as much as 3 billion reais ($744 million) of local-market bonds after being unable to sell the debt at rates acceptable to both the company and investors.

    Petrobras, as the company is commonly known, had interrupted its plan to sell the debt in October in the hope that market conditions would improve.

    http://www.reuters.com/article/brazil-petrobras-bond-sale-idUSL2N14Z0JV
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    LNG throughput increases at Port of Rotterdam


    The Port of Rotterdam has reported a 91.3% increase in LNG throughout in 2015. In total, the port received 2.3 million t of LNG.

    The sharp increase has been attributed to falling LNG prices in the Far East. These prices are now comparable to those in Europe, which has increased the trade and shipping volume of gas in the region.

    In total, goods throughput in Rotterdam increased by a total of 4.9% to 466.4 million t in 2015. The growth was attributed almost entirely to the increased throughput of crude oil and oil products.

    http://www.lngindustry.com/regasification/15012016/LNG-throughput-increases-at-Port-of-Rotterdam-1877/

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    Gazprom Loss Lower Than Forecast on Higher Sales, Cost Cuts


    Gazprom PJSC’s third-quarter loss was lower than expected as rising export sales and lower costs offset foreign-currency losses.

    The world’s biggest natural gas producer reported a net loss of 2 billion rubles ($26.1 million), compared with a profit of 105.7 billion rubles a year earlier. That was better than the average estimate of a loss of 17.6 billion rubles from 10 analysts surveyed by Bloomberg News. Earnings before interest, taxes, depreciation and amortization rose 3 percent year-on-year to 491 billion rubles, beating the estimate by 7 percent.

    “Gazprom pleased the street with better than expected results,” said Maxim Moshkov, an energy analyst at UBS Group AG in Moscow, also highlighting a 10 percent cut in operational costs in rubles, “which saved the company’s bottom line.”

    Russia’s falling currency supported Gazprom’s ruble-denominated revenue, helping to offset export prices that fell to near the lowest in a decade. Most of the company’s costs are in rubles while most of the profit is from abroad, with a majority of its gas-export contracts linked to oil. Brent slumped 35 percent last year.

    Gazprom shares fell 0.7 percent to 129.98 rubles in Moscow at 1:05 p.m. after rising as much as 1.2 percent earlier.

    Currency Loss

    The quarterly loss was the first since the fourth quarter of 2014 as it revalued its dollar and euro-denominated loans and borrowings. Gazprom reported a foreign currency loss of 400 billion rubles as the Russian currency fell 16 percent against the dollar in the third quarter.

    While revenue from gas supplies to its key European marketdropped more than 25 percent last year to about $38 billion, full-year sales may hit a record in ruble terms. The third-quarter revenue increased 14 percent to 1.29 trillion rubles, according to the report. Gazprom’s export gains were higher than expected, Moshkov said.

    Brent has extended declines to 20 percent this year and is trading at $29.76 a barrel, which means Gazprom’s gas prices in Europe will fall further. The company’s third-quarter results reflect oil price that was $55 to $60 a barrel, so the “key question is what happens with Gazprom’s profitability at $30,” said Renaissance Capital analyst Ildar Davletshin.

    ‘Tougher’ 2016

    There’s still not much certainty with commodities prices in 2016 although it’s clear that this year would be “tougher” for Gazprom than the previous, Moshkov said.

    The state-controlled company had positive free cash flow of 29.4 billion rubles in the third quarter, after a negative result in the previous three-month period. It may be between of $4 billion to $5 billion for the full year, according to Moshkov’s estimate.

    Gazprom still plans to keep dividends at no less than 7.2 rubles per share, the payout in 2014 and 2015, despite the market situation, deputy head Andrey Kruglov said last month.

    http://www.bloomberg.com/news/articles/2016-01-15/gazprom-swings-to-quarterly-loss-on-weaker-prices-ruble-slump

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    Statoil Trims Costs on Giant Sverdrup Field Amid Oil Collapse


    Statoil ASA and partners have cut costs to develop the giant Norwegian Johan Sverdrup oilfield by more than 10 percent as a devaluation sweeps through the offshore industry of western Europe’s largest crude producer amid a collapse in prices.

    Total investments on the North Sea field are now seen at 160 billion kroner ($18 billion) to 190 billion kroner, down from an earlier estimate of 170 billion kroner to 220 billion kroner, Det Norske Oljeselskap ASA, one of the field’s owners, said Monday. The estimate for the first phase was cut to 108.5 billion kroner from 123 billion kroner in nominal terms.

    “The development costs of the field are expected to decrease further,” the company said in a statement.

    The Sverdrup field, which holds 1.7 billion to 3 billion barrels of oil and is due to start producing in 2019, is Norway’s biggest offshore development in decades. The development is going ahead as oil companies are delaying and canceling projects to counter a deepening slump in crude prices. Benchmark Brent is now trading below $30 a barrel compared with about $115 in June 2014.

    The owners of the field, which also include Lundin Petroleum AB, are taking advantage of of lower rates from suppliers squeezed by spending cuts. The Sverdrup project represents a lifeline as investments in Norway are set to drop for a third consecutive year and won’t rise again until 2019, according to the Norwegian Petroleum Directorate.

    About 60 percent of capital expenditure on Sverdrup’s first phase are in kroner, a currency that has slumped against the dollar as oil fell, Det Norske said, citing estimates from Statoil.

    Statoil spokespeople didn’t immediately reply to an e-mail seeking comment on the new estimates.

    http://www.bloomberg.com/news/articles/2016-01-18/statoil-trims-costs-on-giant-sverdrup-field-amid-oil-collapse

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    Suncor, Canadian Oil in talks aimed at clinching friendly deal-source


    Suncor Energy Inc, which recently extended its hostile bid for Canadian Oil Sands Ltd , is now in talks with its target and a friendly deal could be clinched as early as Monday, according to a source familiar with the matter.

    Suncor, Canada's largest oil producer, is contemplating improving the exchange ratio around the all-stock offer in an attempt to sweeten the deal, said the source, who asked not to be named as the talks are private.

    The two Canadian companies have been working on a revised bid since Friday, the Wall Street Journal reported earlier on Sunday, citing a source, who said talks were still ongoing.

    Suncor is currently offering Canadian Oil Sands shareholders 0.25 of a Suncor share for each Canadian Oil Sands share they hold.

    The offer, launched in early October, initially valued the company at about C$4.3 billion ($2.96 billion). The recent oil price rout has hurt the value of Suncor's shares, so the bid currently values Canadian Oil Sands at C$3.8 billion.

    Canadian Oil Sands has a 36.7 percent stake in Syncrude, the oil-sands mining consortium in northern Alberta that is Canada's largest single source of crude oil.

    Suncor extended its bid for Canadian Oil Sands earlier this month after its target's poison pill expired with it failing to find a white knight.

    At the beginning of last week Suncor had received more than 40 percent of the votes in favor of its bid for Canadian Oil Sands, a source familiar with the situation told Reuters. It was however, still short of the two-thirds majority it required in order to clinch a deal.

    http://www.reuters.com/article/canadian-oil-suncor-energy-wsj-idUSL2N15202J
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    Cnooc's Nexen Stops Long Lake Oil Sands Work After Fatal Blast


    Cnooc Ltd.’s Nexen Energy unit is halting work at its Long Lake oil sands operations in Canada after an explosion killed a worker and injured another.

    The Nexen 72,000 barrel-a-day upgrader has been shut and pumping stopped on oil sands production wells, Vice President Ron Bailey said Saturday at a press conference in Calgary. The blast occurred Friday in the upgrader’s hydrocracker unit while it was undergoing maintenance.

    The shutdown adds to the strain on Nexen from plunging oil prices and a pipeline leak that caused an oil spill in July. The Alberta Energy Regulatory ordered the company to shut operations for part of September after that incident.

    Oil closed below $30 a barrel Friday for the first time since 2003, bringing bigger losses to oil sands producers. The industry may burn through about C$12 billion ($8.4 billion) of cash a year as revenue fail to cover costs, analysts at Calgary-based investment bank Peters & Co. wrote in a report this past week.

    http://www.bloomberg.com/news/articles/2016-01-16/cnooc-s-nexen-stops-long-lake-oil-sands-work-after-fatal-blast
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    Permian, Eagle Ford combine for 10 shut down rigs


    Just one oil rig went dark this week, slowing the pace of oil patch losses that have been mounting in recent weeks as crude prices remain stuck in dismal territory.

    The number of rigs drilling for oil in the United States has now fallen to 515, down more than two-thirds from its peak of 1,609 in October 2014 during the heydays of the domestic drilling renaissance.

    Drillers idled another 13 rigs hunting for gas, bringing the total number down to 135, according to weekly data released by oil field services firm Baker Hughes.

    The oil-soaked Permian Basin in West Texas, which had remained a favorite among U.S. exploration and production companies despite the prolonged crude slump, showed continued signs of weakness this week, with producers sidelining seven more rigs. Another sweet spot shale play, the Eagle Ford in South Texas, also saw a retreat, with the rig count tumbling by three. Losses were also seen in some gas-rich shale plays, including the Barnett, the DJ Niobrara, the Utica and the Williston.

    Texas, the nation’s number one drilling destination, posted the steepest drop this week, losing 7 more rigs and bringing the state’s total rig count to 301. That’s down 61 percent from the same time last year. Colorado, Louisiana, New Mexico, North Dakota, Ohio and Wyoming also lost rigs.

    The modest rig count declines fueled traders’ concerns that the world remains oversupplied with oil at a time when demand growth appears to be slowing. Fears of Iranian oil hitting the market spurred a dramatic sell-off in oil that pushed oil below $30 early Friday morning, and that decline continued following the rig count release.

    http://fuelfix.com/blog/2016/01/15/permian-eagle-ford-combine-for-10-shut-down-rigs/

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    Alternative Energy

    World biggest solar power plant to be set up in Isfahan


    World's biggest solar power plant with the capacity of 1,000 megawatts will be set up in Sagzi in Isfahan with the contribution of German experts.

    Addressing the closing ceremony of the International Investment Opportunities Summit in Creative City of Isfahan late on Thursday, Ashton Flooring, representative of German Company, said that Germany boasts of big experience in producing clean energies and is interested to present the technology to the entire world.

    Describing the sun as divine valuable gift bestowed on mankind, he said that the great source of energy is available to the mankind for free.

    Despite Iran's access to fossil fuels, it has supported the law for clean energies and is seeking to take advantage of clean energies, he said.

    Referring to Isfahan province's suitable climatic situation, the German expert said that the province has the best conditions for establishing solar power plant.

    Solar power plants are environment-friendly, he said, noting that one kilowatt sunlight produces 2,000 kilowatts of clean energy and prevents emission of 1,200 kilograms of dioxide carbon, he said.

    The two-day International Investment Opportunities Summit in Creative City of Isfahan was attended by 40 economic delegations from Kuwait, UAE, Turkey, South Korea, Spain, Georgia, Switzerland, Germany, Iraq, Oman, Austria, China, Afghanistan, Poland, Canada, Russia and Greece as well as two political delegations from Spain and Austria.

    http://www.irna.ir/en/News/81921109/
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    Base Metals

    Will the Transition to Renewable Energy Be Paved in Copper?


    We've just completed a record-breaking year for renewable technology of all kinds. No matter where you look – be it on television or in newspapers, your neighbor’s roof or along a rural countryside – the presence of wind turbines, solar energy panels andenergy storage systems is growing weekly. In August 2015, U.S. President Barack Obama lauded climate change as “one of the most important issues not just of our time, but of any time,” and cited renewable energy as a solution. Soon after in early September, Elon Musk, CEO of SpaceX and Tesla Motors, named sustainable energy this century’s most pressing issue.

    More and more, sustainable energy systems are being installed throughout the country, driven by diminishing costs and government incentives. The U.S. is now leading the world in wind energy production as advances in technology have made it more affordable than ever, according to a recent U.S. Department of Energy report. Meanwhile, energy storage systems saw a six-fold increase in deployment in 2015, and the latest solar energy reports show that solar PV panel installations exceeded more than 20 GW of capacity in the first two quarters of 2015.

    While innovations and the ambitions of leaders like Obama and Musk have helped to drive the growing renewable energy market, there is also a little-known source fueling virtually all of these technologies – copper. From wind turbines and solar panels to electric vehicles and efficient motors, copper is essential to renewable energy systems and the infrastructure that powers them. Its superior electrical and thermal conductivity, performance and efficiency keeps these systems running reliably and connects them to the grid. In fact, copper itself is a sustainable material. Its recycling rate is higher than that of any other metal, and each year nearly as much copper is recovered from recycled material as is derived from newly mined ore.

    As the world continues to transition to new energy technologies, copper will be increasingly trusted. These systems require more copper than traditional energy sources. PV solar power systems contain approximately 5.5 tons per MW of copper, while grid energy storage installations rely on between 3 tons and 4 tons per MW. A single wind farm can contain between 4 million and 15 million pounds of copper. The use of copper wiring, tubing, busbar, cable, bushings, bearings and myriad electrical and mechanical parts keeps these systems operating longer and at higher efficiencies.

    Copper’s use in the renewable energy market will continue to expand as these technologies become more widely used. The market has already seen a trend in the rise of companies and commercial buildings installing green energy systems. These sectors value sustainability and are looking to lower their energy costs by utilizing them.

    As of mid-2014, there were 4,531 MW of commercial solar PV installed on 41,803 business, non-profit and government locations throughout the U.S. More than 23 percent of the wind power contracts signed in 2014 were with corporate buyers and other non-utility groups. These figures are expected to continue to rise as new technology makes these commercial installations even more affordable.

    Homeowners make up another upward trend in the sustainable energy market, as more and more roofs have solar PV panels mounted on them. New innovations and government incentives mean this trend will only grow larger as we move into 2016. In August, Obama announced a new series of executive actions and private sector commitments that would make renewable energy more accessible and affordable for homeowners. This push would allow homeowners to install these systems without any upfront cost. They could then pay back the cost over time through property taxes.

    New digital tools are also making it easier than ever for homeowners to educate themselves about renewable energy and begin to implement it. A recent Google Maps service called Project Sunroof enables homeowners to see how much solar power their roof can generate and how much money they could save by installing solar panels. It is now easier than ever for anyone to incorporate renewables into their energy plan.

    This growing number of commercial wind, solar and energy storage installations will continue to expand the market for renewable technologies. As these trends grow more prevalent, copper will remain an irreplaceable component in delivering reliable, sustainable energy globally. The world’s oldest metal has been integral to new technology from the copper era in 6,000 BC, to the middle ages and industrial revolution. As global market trends push the world into a new renewables boom, copper will maintain its ability to fuel modern, more efficient tools.

    http://www.renewableenergyworld.com/articles/2016/01/will-the-transition-to-renewable-energy-be-paved-in-copper.html

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    Australia's Queensland Nickel calls in administrators


    Australia's Queensland Nickel (QNI) appointed voluntary administrators on Monday, just days after the company owned by mining magnate and politician Clive Palmer announced a restructuring after nickel prices plunged to decade lows.

    QNI and the administrators, FTI Consulting, said they intended to run the business as usual, while FTI reviews the future of the company.

    "We will undertake an urgent assessment of the financial position and ongoing viability of the company and its business operations," FTI Consulting Australia leader John Park said in a statement.

    FTI said it would update creditors at a meeting expected in late January.

    QNI last week cut more than 200 workers, saying it was forced to do so as the Queensland state government had refused to shore up the business.

    Palmer, who bought the refinery from BHP Billiton in 2009, said QNI had sought "minimal" assistance from the state, asking it to act as guarantor for a A$35 million ($24 million) bank loan to avert closure.

    "I believe QNI has the ability to continue its operations and trade out of administration," QNI managing director Clive Mensink said in a statement on Monday.

    The company has a production capacity of 35,000 tonnes a year.

    Nickel producers are under pressure following a more than 40 percent slump in nickel prices last year to their lowest since 2003, with stockpiles having hit record highs largely due to a downturn in stainless steel demand.

    http://www.reuters.com/article/queenslandnickel-bankruptcy-idUSL3N1510NQ
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    Steel, Iron Ore and Coal

    Over 1,000 coal mines in China to be shut down


    China will shut down more than 1,000 coal mines in Guizhou, Yunnan, Heilongjiang and Jiangxi provinces as parts of efforts to trim production capacity, a top work safety watchdog said on Friday.

    Huang Yuzhi, deputy director of State Administration of Work Safety, the country's top safety regulator, said that China reached its target by controlling the total number of coal mines within 10,000m and will continue its efforts to reduce outdated capacity this year.

    "More than 1,300 coal mines were closed last year, and small coal mines with a scale of annual production of less than 300,000 tons that had major accidents will be gradually closed this year, as well as those mines that are operating illegally," Huang said.

    The total number of coal mines in China stands at 9,624.

    China, the world's largest energy consumer, plans to stop approving new coal mines for the next three years.

    http://en.chinamining.com.cn/News/2016-01-18/1453082035d75017.html
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    U.S. halts new coal leases on federal land in wide-ranging review

    U.S. halts new coal leases on federal land in wide-ranging review

    U.S. Interior Secretary Sally Jewell on Friday ordered a pause on issuing new coal leases on federal land in another step by the Obama administration to control climate change in the first major review of the country's coal program in three decades.

    The pause could last three years, Jewell said, while officials determine how to protect taxpayers' stake in coal sales from public lands and how burning coal could worsen climate change.

    Federal land accounts for over 40 percent of U.S. coal production.

    The review is the latest move by the administration to combat climate change using executive authority rather than wait for Congressional action.

    Republican lawmakers were quick to criticize the reform effort, accusing the administration of "ravaging" coal country.

    "Congress will continue to fight back against the president’s ruthless pursuit of destroying people’s low-cost energy sources in order to cement his own climate legacy," said House Speaker Paul Ryan.

    President Barack Obama, in his annual State of the Union address on Tuesday, hinted at Friday's announcement, saying he would "change the way we manage our oil and coal resources, so that they better reflect the costs they impose on taxpayers and our planet."

    Jewell said the review will examine concerns flagged by the Government Accountability Office and the Interior Department’s Inspector General, as well as members of Congress and the public.

    "We have an obligation to current and future generations to ensure the federal coal program delivers a fair return to American taxpayers and takes into account its impacts on climate change,” she said.

    Jewell said the Interior Department will also adopt measures to boost transparency of federal coal leasing.

    Measures include creating a public database to show the carbon emitted from fossil fuels developed on public lands, posting online pending requests to lease coal or reduce government royalties, as well as capturing methane emissions from mines.

    Jewell said the pause will not apply to existing coal production and that the government will allow mining of metallurgical coal used in making steel, as well as emergency leases if more reserves are needed for power generation.

    "We have plenty of coal," Jewell said, adding that reserves already under lease are enough to sustain current levels of production from federal land for 20 years.

    http://www.reuters.com/article/us-usa-coal-idUSKCN0US2WB
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    Hebei to reduce steel capacity by 18 mln T in 2016

    Hebei to reduce steel capacity by 18 mln T in 2016

    Hebei province, one major coal producer in central China, plans to reduce 18 million tonnes of steel capacity in 2016, including 10 million tonnes of iron-making capacity and 8 million tonnes of steel-making capacity, said the provincial governor Zhangqingwei in his government work report on January 8.

    The province aimed to cap its steel production capacity at 200 million tonnes by 2020.

    In 2016, the government will help a hundred enterprises to realize informatization and industrialization, speed up restructuring and relocation of Jinan Steel Group and Tangshan Guofeng Iron & Steel Company, and expand development space for the industry to the fields of communication, transportation, water conservancy, etc..

    Hebei has made breakthrough in reducing excess capacity during the past five years, cutting production capacity of 33.91 million tonnes in iron-making and 41.06 million tonnes in steel-making industries.

    Meanwhile, Hebei aims to decrease 5 million tonnes of coal consumption in 2016 by further prompting energy saving and emission reduction campaign combined with the promotion of clean energy and coal-burning pollution management.

    http://en.sxcoal.com/0/139463/DataShow.html
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    China steel firms suffered $8 bln in losses in Jan-Nov 2015


    China's major steel firms lost 53.1 billion yuan ($8.07 billion) from January to November last year, as prices fell because of overcapacity and slumping demand, the China Iron and Steel Association (CISA) said on Monday.

    China's steel sector, responsible for around half of global output, has been one of the biggest casualties of the country's economic slowdown, with prices now at multi-decade lows as a result of a massive supply glut.

    China's total annual crude steel capacity is now 1.2 billion tonnes, CISA's chairman Zhang Guangning said in a speech at the association's annual conference last week that was posted on the group's website (www.chinaisa.org.cn) Monday.

    With about a third of the country's total capacity now standing idle, Zhang said China has still not established a mechanism that would allow loss-making steel enterprises to exit the market.

    "Some enterprises want to exit, but an exit route has not been opened up.. and some local governments continue to urge steel firms to produce in the interests of local economic development and social stability," said Zhang, who is also chairman of the state-owned Anshan Iron and Steel Group.

    He said CISA member firms saw their total earnings decline 19.3 percent over the 11 months, with more than half making losses, he said.

    The association consists of around 100 medium- and large-sized steel mills covering nearly 80 percent of national output.

    Steel consumption in China peaked in 2013, while output in the world's biggest producer peaked the following year, Zhang said.

    "The period of high market demand growth has already passed into history, and from now on... overall demand will slowly decline," he said.

    Crude steel output in China fell 2.2 percent to 738.4 million tonnes
    in the first 11 months of 2015, but apparent steel demand fell 5.5 percent to 645 million tonnes over the 11-month period, Zhang said.

    Exports have offered a lifeline for Chinese steelmakers, with falling domestic prices allowing them to undercut overseas producers, leading to a surge in trade disputes.

    Zhang said there were 36 anti-dumping investigations into Chinese steelmakers last year, double the 2014 number.

    A composite price index of eight steel products compiled by CISA was at 56.37 in early January, compared to the 1994 baseline of 100.

    http://www.reuters.com/article/china-steel-cisa-idUSL3N1521SM

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    Hebei Steel plants told to relocate


    A steel plant has been ordered to move out of Shijiazhuang, capital of North China's Hebei province, within the next two years to cut pollution in one of the nation's 10 most-polluted cities.

    It is one of at least four such plants ordered to move from downtown areas in the nation's premier steelmaking province.

    The Shijiazhuang Iron and Steel Co has also been told to reduce its production to help lessen China's overcapacity problem, and modernize its operations to become cleaner and more efficient, officials said.

    The company, a subsidiary of China's largest steelmaker, Hebei Iron and Steel Group, must finish the move from the Chang'an district of Shijiazhuang to Jingxing county by the end of 2017, according to a government announcement.

    The new location is about 70 kilometers from its old site near the center of Shijiazhuang.

    "The plant's relocation will decrease the smoke and dust in the city's air and thereby help improve downtown's air quality greatly," a government official surnamed Guo said.

    The company, founded in 1957, has been emitting sulfur dioxide, smoke, dust and nitrogen oxide for nearly 60 years.

    The steelmaking capacity of the plant is 2.6 million tons a year, making up 5.2 percent of the group' production capability, according to the company's official website.

    When the relocation is complete, its capacity will be reduced to 2 million tons.

    "Relocation is not just transferring of capacity and pollution. Companies like mine are required to upgrade their production process and greatly reduce pollutants after the relocation," said Wang Liping, chairman of Shijiazhuang Iron and Steel. "It's like a process of purification."

    The relocation will cut the company's emissions of sulfur dioxide by 73 percent, and that of smoke and dust by 23 percent, Wang said.

    Other plants to be moved are those of Bohai Steel Group in Tangshan and Jinan Steel Group and Taihang Steel Group in Handan. They will be moved from city centers to coastal zones or special industrial zones far from downtowns by 2017.

    For the three companies, a total of 16.2 million tons of steel capacity will be moved.

    Preparations for plant relocations started in 2014, right after the State Council designated Hebei as a key province in the structural readjustment of the iron and steel industry.

    Hebei is the nation's top iron and steelmaking province, accounting for about a quarter of the nation's total steel production.

    In 2014, as the province launched a restructuring program, steel production there reached 185 million tons. It has ranked first in the country for 14 straight years, according to Zhang Qingwei, governor of the province.

    Relocation of steel plants is one of the major aspects of the program.

    By 2017, the province is expected to cut its steelmaking capacity by 60 million tons, in accordance with goals set in 2014.

    By the end of last year, the province had cut its steelmaking capacity by 41.1 million tons, according to the province's government work report released last week.

    http://en.chinamining.com.cn/News/2016-01-18/1453082492d75019.html

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