Mark Latham Commodity Equity Intelligence Service

Monday 24th April 2017
Background Stories on www.commodityintelligence.com

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    Macro

    Cyber Attacks?

    A series of subsequent power outages in Los Angeles, San Francisco, and New York City left commuters stranded and traffic backed up on Friday morning. Although the outages occurred around the same time, there is as of yet no evidence that they were connected by anything more than coincidence.

    The first outage occurred at around 7:20 a.m. in New York, when the power went down at the 7th Avenue and 53rd Street subway station, which sent a shockwave of significant delays out from the hub and into the rest of the subway system. By 11:30 a.m. the city’s MTA confirmed that generators were running again in the station, although the New York subways were set to run delayed into the afternoon.

    Later in the morning, power outages were reported in Los Angeles International Airport, as well as in several other areas around the city.

    Via : Inverse

    The San Francisco Fire Department was responding to more than 100 calls for service in the Financial District and beyond, including 20 elevators with people stuck inside, but reported no immediate injuries. Everywhere, sirens blared as engines maneuvered along streets jammed with traffic.

    Traffic lights were out at scores of intersections, and cars were backing up on downtown streets as drivers grew frustrated and honked at each other.

    Via: SF Gate

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    Historian says 'change'.

    By  Ben Sasse252 COMMENTS

    I am a historian, and that usually means I’m a killjoy. When people say we’re at a unique moment in history, the historian’s job is to put things in perspective by pointing out that there is more continuity than discontinuity, that we are not special, that we think our moment is unique because we are narcissists and we’re at this moment. But what we are going through now—the past 20 or 30 years, and the next 20 or 30 years—really is historically unique. It is arguably the largest economic disruption in recorded human history. And our politics are not yet up to the challenge.


    https://www.wsj.com/articles/the-challenge-of-our-disruptive-era-1492800857?mod=trending_now_5

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    Anglo American on target as diamonds and iron balance copper drop


    Copper production fell in the first quarter at Anglo American, but full year guidance was kept unchanged across the board as amounts of iron ore, coal and diamonds unearthed all rose strongly.

    Chief executive Mark Cutifani said it was "a strong operational performance" helped by the continued ramp-up of Gahcho Kué diamond mine, Minas-Rio copper mine and Grosvenor coal project, which together delivered the group a 9% increase in production on a copper equivalent basis.

    Copper production of 142,600 tonnes for the three months to 31 March slipped 3% compared to the same period last year as continued strong performance at the 44%-owned Collahuasi mine in Chile was offset by increased ore hardness further south at Los Bronces and the temporary suspension of mining operations at nearby El Soldado after a mine plan was rejected by regulators, which resulted in around 3,000 tonnes of lost production.

    Full year production guidance remained unchanged at 570,000-600,000 tonnes, of which El Soldado represents 50,000-60,000 tonnes.

    Iron ore production rose 21% to 14.8m tonnes, with full year guidance from South Africa's Kumba unchanged at 40-42mt and 16-18mt from Minas-Rio in Brazil.

    Diamond production was up 8% to 7.4m carats thanks to the contribution of Gahcho Kué in Canada and increases in response to improved demand for lower value goods in stock.

    Platinum production was broadly flat at 572,000 ounces, as, following the sale of Rustenburg, production there has been treated as purchase of concentrate (which increased by 93%) rather than own mined production (which decreased by 26%).

    Nickel production decreased by 12% to 9,900 tonnes due to unplanned maintenance of Barro Alto's electric furnaces, impacting throughput.

    Analysts at Deutsche Bank had forecast Anglo would maintain copper volume flat, platinum production to be down 5%, iron ore down 14%, diamond production to remain flat and metallic coal production to be down 7%.

    https://www.digitallook.com/news/news-and-announcements/anglo-murcan--2634240.html
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    Inspection: 62% of Beijing, Tianjin, Hebei enterprises fail to meet environmental standards


    On April 19, China's Ministry of Environmental Protection (MEP) released the results of an inspection on air pollution control, which included enterprises in Beijing, Tianjin, Hebei and their surrounding areas. A total of 62.6 percent of the inspected enterprises, or 248 out of 396 companies, failed to meet stated environmental protection standards.

    According to the MEP, among the unqualified enterprises, 27 failed to install pollution-reducing facilities, and 21 had devices that were not functioning properly. In addition, two companies failed the inspection because of issues related to volatile organic compounds (VOC).

    During the inspection, some enterprises were found to have faked monitoring data. For instance, a cement factory in Zibo, Shandong province fudged its overall area, impairing the accuracy of emissions figures reported to its online monitoring system. Other companies manually interfered with monitoring devices to alter data.

    The MEP said its inspection teams have transferred these cases to related local departments for further investigation.

    http://en.people.cn/n3/2017/0421/c90000-9206024.html
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    BMI expects gradual price recovery for industrial metals


    Since bottoming out in early 2016 and staging an impressive, albeit largely speculative, rally over the past year-and-a-half, industrial metals will experience a gradual price recovery over the coming years, as improving fundamentals support a stabilisation, rather than rebound, in prices, research firm BMI said on Friday.

    The traditional bellwether metal, copper, was expected to most closely follow this narrative, with BMI forecasting a 12.9% year-on-year price increase for this year.

    Meanwhile, BMI noted that steel and iron-ore prices would remain relatively weaker, as years of oversupply and slowing Chinese consumption growth provided limited upside pressure.

    “Although steel prices will return to a modest uptrend beyond 2018, the global long-term outlook for steel demand remains comparatively downbeat, as rising efficiency reduces overall consumption and the acceleration of Chinese economic rebalancing limits upside potential,” it pointed out.

    On the other hand, while zinc's outperformance is no surprise, given the constrained ore supply, tin and lead prices will also prove particularly resilient.

    “We forecast tin and lead prices to increase by an average of 4.7% and 4.3% yearly over 2017 to 2021, respectively.”

    The global tin market is expected to experience significant tightening over the coming years, on both the supply and demand side, posting the largest decline in stock-to-use ratio from 15.5% in 2016 to 6% by 2021.

    “Specifically, tin's versatility and use in multiple sectors, such as electronics manufacturing and chemicals, will sustain demand for the metal over a multidecade horizon, while depleting ore reserves and a sparse global project pipeline will curb tin supply,” BMI said.

    BMI further pointed out that it expected lead prices to rise and average above-consensus at $2 300/t by 2021, as the global market deficit widens further, reflected in the low stock-to-use ratio forecast of 3.1% by 2021.

    Deficits will be due to stagnating production growth from major producers and more resilient consumption growth, driven by the automotive sectors in key markets, such as India and China.

    http://www.miningweekly.com/article/bmi-expects-gradual-price-recovery-for-industrial-metals-2017-04-21
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    Trump to set new executive orders on environment, energy this week


    U.S. President Donald Trump this week will sign new executive orders before he completes his first 100 days in office, including two on energy and the environment, which would make it easier for the United States to develop energy on and offshore, a White House official said on Sunday.

    "This builds on previous executive actions that have cleared the way for job-creating pipelines, innovations in energy production, and reduced unnecessary burden on energy producers," the official said on condition of anonymity.

    On Wednesday, Trump is expected to sign an executive order related to the 1906 Antiquities Act, which enables the president to designate federal areas of land and water as national monuments to protect them from drilling, mining and development, the source said.

    On Friday, Trump is expected to sign an order to review areas available for offshore oil and gas exploration, as well as rules governing offshore drilling.

    The new measures would build on a number of energy- and environment-related executive orders signed by Trump seeking to gut most of the climate change regulations put in place by predecessor President Barack Obama.

    A summary of the forthcoming orders, seen by Reuters, say past administrations "overused" the Antiquities Act, putting more federal areas under protection than necessary.

    Obama had used the Antiquities Act more than any other president, his White House said in December, when he designated over 1.6 million acres of land in Utah and Nevada as national monuments, protecting two areas rich in Native American artifacts from mining, oil and gas drilling.

    The summary also says previous administrations have been "overly restrictive" of offshore drilling.

    Late in Obama's second term, he banned new drilling in federal waters in parts of the Atlantic and Arctic Oceans using a 1950s-era law that environmental groups say would require a drawn out court challenge to reverse.

    Interior Secretary Ryan Zinke said during his January confirmation hearing that Trump could “amend” Obama’s monument designations but any move to rescind a designation would immediately be challenged.

    Last month, Trump signed an order calling for a review of Obama's Clean Power Plan, and reversed a ban on coal leasing on federal lands.

    In addition to the energy-related orders, Trump is also expected this week to sign an order to create an office of accountability in the Veterans Affairs department.

    He is also expected to create a rural America interagency task force to recommend policies to address issues facing agricultural states.

    http://www.reuters.com/article/us-usa-trump-energy-idUSKBN17P0JC
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    Oil and Gas

    China exports record diesel volumes in March - data


    China exported record volumes of diesel in March and boosted sales of gasoline and kerosene as refiners continued to turn to foreign markets to offload their excess product, while liquefied natural gas imports also jumped, customs data showed on Sunday.

    Diesel exports jumped 53 percent to 1.91 million tonnes, data from the Chinese customs authority showed, outpacing the previous record of 1.78 million set in December.

    Gasoline exports rose 25 percent in March compared with the same month a year earlier to 840,000 tonnes, but were down 21 percent from February.

    Kerosene shipments abroad were 1.25 million tonnes, up 21.4 percent year-on-year and up 23 percent from February.

    The high monthly shipments led to big increases in the first quarter and will reinforce concerns that China, one of the world's top energy markets, is contributing to a fuel overhang as refiners churn out more products like gasoline and diesel than the market can absorb.

    China became a net exporter of fuel products in late 2016.

    LNG imports totalled 1.99 million tonnes in the month, up 18 percent year-on-year but down 19.5 percent from February and the lowest monthly total since October last year.

    That may reflect waning demand as temperatures rise, reducing the need for the fuel for heating.

    http://www.reuters.com/article/china-economy-trade-oil-idUSL4N1HV02J
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    Iran's crude exports set to fall in May to 14-month low


    Iran's crude oil exports are set to hit a 14-month low in May, a person with knowledge of the Middle Eastern country's tanker loading schedule said, suggesting the country is struggling to raise exports after clearing out stocks stored on tankers.

    Part of the drop may also be attributable to a decline in demand, as loadings bound for India are set to slump to a one-year low after a dispute over the award of a contract for a gas field and Japan's orders fall by more than half from April.

    Iran is also putting about 3 million barrels back into storage in May, according to the source, underlining how much oil remains available in the market despite an agreement between the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers to cut output and boost prices.

    Crude oil loadings from Iran are expected to total nearly 1.7 million barrels per day (bpd) in May, with almost 100,000 bpd being put into storage on tankers, according to the source.

    Loading figures for condensate, an ultra-light crude, were not available for May.

    In April, the country is expected to export 1.8 million bpd of crude and a little over 370,000 bpd of condensate, down sharply from a six-year high of nearly 2.9 million bpd reached in February for both forms of oil.

    In March, Iran loaded around 2.6 million bpd a day of both crude and condensate, mostly the former, according to the source. No barrels of either crude or condensate were put in storage in March and April.

    The final figures for February exports were significantly higher than preliminary numbers reported earlier by Reuters and show Iran took full advantage of its exemption from the production cuts by OPEC and non-OPEC producers, including Russia.

    Still, Indian buyers are cutting purchases after state-owned refiners agreed to cut their annual imports deal with Iran by a fifth to put pressure on Tehran to award the Farzad B gas field to an Indian consortium.

    Crude liftings for India in May are expected to about 370,000 bpd, while in April Indian customers are lifting nearly 470,000 bpd of both crude and condensate.

    Japan is scheduled to lift nearly 40,000 bpd in May, the lowest since March.

    Loadings of crude and condensate for China this month are to hit a four-month low of a little over 500,000 bpd.

    http://www.reuters.com/article/iran-oil-exports-idUSL3N1HT1QS

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    Australian court dismisses Chevron appeal in landmark tax case


    Chevron Corp lost an appeal on Friday against the Australian tax office in a landmark case in which the U.S. energy giant contested a tax bill of A$340 million ($260 million), including penalties and interest.

    The full bench of the Federal Court dismissed the appeal against an earlier ruling that Chevron underpaid taxes by setting up a A$2.5 billion intercompany credit facility with an abnormally high interest rate which effectively lowered its taxable income within Australia.

    Chevron said it was disappointed by the judgment in the case, which covers the five tax years from 2004 through 2008.

    "We will review the decision to determine next steps, which may include an appeal to the High Court of Australia," a Chevron spokesman said in an emailed statement.

    The case is a first test of how Australia's transfer pricing rules apply to interest paid on a cross-border related-party loan. It is being closely watched by multinational companies as governments around the world clamp down on what they deem elaborate means of reducing tax obligations.

    "The economic effects of the internal financing structure put in place ... included CAHPL's (Chevron Australia Holdings Pty Ltd's) Australian taxable income being reduced by the deductions it claimed for the interest payments it made to its United States subsidiary," the court said in its latest ruling.

    The Australian Taxation Office (ATO) said it was heartened by the ruling but noted Chevron could appeal to the High Court.

    "This decision is significant and has direct implications for a number of cases the ATO is currently pursuing in relation to related party loans, as well as indirect implications for other transfer pricing cases," an ATO spokesperson said in emailed comments.

    http://www.reuters.com/article/us-australia-chevron-taxavoidance-idUSKBN17N08V
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    Gaz-System green-lights Polish LNG terminal expansion


    Polish gas transmission operator, Gaz-System has decided to expand the country’s first liquefied natural gas (LNG) import terminal in Swinoujscie.

    The facility would be upgraded to have a capacity of 7.5 billion cubic meters instead of 5 bcm, Gaz-System said on Thursday.

    The company said it is currently preparing to launch the tender procedure for the execution of front end engineering design (FEED) work.

    The expansion work includes the addition of a second berth, the addition of a third storage tank with Gaz-System planning to develop LNG bunkering facilities.

    In addition, the company is looking to advance the supply of LNG as fuel for the transport industry as well as to develop facilities enabling it to deliver LNG by rail.

    http://www.lngworldnews.com/gaz-system-green-lights-polish-lng-terminal-expansion/
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    Neptune nears Engie E&P deal after CIC ups stake


    Neptune Oil & Gas moved closer to the $2 billion purchase of a majority stake in the exploration and production arm of French utility Engie after agreeing Chinese sovereign fund CIC could increase its minority stake in the target firm, sources said.

    China Investment Corporation (CIC) will increase its stake in Engie E&P to 49 percent, after buying the initial 30 percent in 2011 for 2.3 billion euros ($2.47 billion), two sources close to the matter told Reuters.

    Neptune Oil & Gas, set up in 2015 by private equity funds Carlyle Group and CVC Capital Partner to build a North Sea E&P company led by former Centrica CEO Sam Laidlaw, is set to announce the acquisition of a majority stake in Engie's business within weeks, banking and industry sources said.

    Some details of the deal are yet to be finalised and the upcoming French elections could further delay the completion of the deal, according to the sources. The French state owns around 29 percent of the company, according to Engie's website.

    The full value of the business is estimated at around $4 billion.

    A Carlyle spokeswoman declined to comment. Engie and CIC were not immediately available to comment.

    The size of CIC's stake following the sale became a major stumbling block as the Chinese partners initially sought to increase their holding to above 50 percent, the sources said.

    The French utility, formerly known as GDF Suez, last year hired Bank of America-Merrill Lynch to exit from oil and gas exploration and stop burning coal. Its upstream assets span from the UK to Norway and Germany, Algeria, Egypt and Asia.

    http://www.reuters.com/article/engie-divestitures-ep-idUSL8N1HT2IH
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    ExxonMobil inks deal to supply LNG to Indonesia’s Pertamina

    ExxonMobil inks deal to supply LNG to Indonesia’s Pertamina

    U.S.-based oil and gas giant ExxonMobil has signed a 20-year deal to supply liquefied natural gas (LNG) to Indonesian state energy company Pertamina.

    Under the memorandum of understanding, Pertamina will buy 1 million tonnes of LNG per year starting in 2025.

    No further details of the LNG supply agreement have been disclosed.

    The deal is a part of 11 agreements signed by U.S. and Indonesian companies on Friday as part of the efforts of the two countries to reduce trade barriers and boost investment.

    The $10 billion-worth deals were announced by visiting US Vice President Mike Pence in Jakarta who is on a business trip in Asia.

    http://www.lngworldnews.com/exxonmobil-inks-deal-to-supply-lng-to-indonesias-pertamina/
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    U.S. drillers add oil rigs for 14th week in a row -Baker Hughes


    U.S. drillers added oil rigs for a 14th week in a row, extending an 11-month recovery that is expected to boost U.S. shale production in May in the biggest monthly increase in more than two years.

    Drillers added five oil rigs in the week to April 21, bringing the total count up to 688, the most since April 2015, energy services firm Baker Hughes Inc said on Friday.

    That is more than double the same week a year ago when there were only 343 active oil rigs.

    U.S. crude futures dropped below $50 a barrel on Friday, for the first time in two weeks and putting it on track for its biggest weekly loss in six weeks, due to doubts the OPEC-led production cut will restore balance to an oversupplied market, especially as U.S. drillers keep producing more oil. [O/R]

    U.S. shale production in May was set for its biggest monthly increase in more than two years as producers stepped up their drilling activity, according to U.S. energy data.

    Analysts projected U.S. energy firms would boost spending on drilling and pump more oil and natural gas from shale fields in coming years with energy prices expected to climb.

    Futures for the balance of 2017 were fetching around $50 a barrel and calendar 2018 was trading at about $51.

    After taking a hit last year when dozens of U.S. shale producers filed for bankruptcy, private equity funds raised $19.8 billion for energy ventures in the first quarter - nearly three times the total compared with the same period last year, according to financial data provider Preqin.

    Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, this week forecast the total oil and gas rig count would average 842 in 2017, 1,037 in 2018 and 1,170 in 2019. Most wells produce both oil and gas.

    That compares with an average of 762 so far in 2017, 509 in 2016 and 978 in 2015, according to Baker Hughes data.

    Analysts at U.S. financial services firm Cowen & Co said in a note this week that its capital expenditure tracking showed 57 exploration and production (E&P) companies planned to increase spending by an average of 50 percent in 2017 over 2016.

    That expected spending increase in 2017 followed an estimated 48 percent decline in 2016 and a 34 percent decline in 2015, Cowen said according to the 64 E&P companies it tracks.

    http://www.reuters.com/article/us-usa-rigs-baker-hughes-idUSKBN17N272
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    U.S. offshore rig count decline continues


    Following a one-rig-drop in the week before, last week’s U.S. offshore rig count was down by one more rig, according to a Friday report by the oilfield services provider Baker Hughes.

    http://www.offshoreenergytoday.com/u-s-offshore-rig-count-decline-continues-2/
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    Core Lab Exposes Four Trends Shaping the Industry’s Future


    In its first quarter conference call, Core Laboratories (ticker: CLB) identified four major industry trends that it believes will shape tomorrow’s oil field:

    Increasing interest in EOR from tight oil reservoirs
    Finer proppants in the initial portion of hydraulic fracturing treatments
    Increasing in proppant loads and frac stages per well
    Big data and artificial intelligence to increase efficiency and reduce cost in evaluating reservoirs

    Unconventional EOR

    Enhanced oil recovery from unconventional formations has been sought since unconventional development first began. While recovery factors in conventional reservoirs commonly exceed 25%, unconventional development seldom recovers more than 9%. There is, therefore, a tremendous amount of oil and gas still in place in unconventional fields, waiting to be recovered.

    One of the few successful uses of EOR on unconventional formations was performed by EOG. Gas injection in the Eagle Ford produced 30-70% additional oil recovery, giving the project strong economics.

    Core Lab reports that early work it has performed on unconventional EOR processes has yielded recovery factors of 13% to 15%. While still below the recovery from conventional fields, this represents an increase of about 50% over primary recovery.

    Finer proppant enhancing fractures

    Finer proppant is believed to be able to enter secondary and tertiary fracture patterns. If these additional fracture systems can be propped open, the reservoir volume stimulated by a given treatment increases significantly.

    As the host company of Stim-Lab, an industry consortium with a 30-plus year history and consisting of over 40 companies, Core is boosting its evaluation of 100, 200 and 400 mesh sand. These sizes are significantly smaller than the 40 and 70 mesh sand that is typically used in fracture treatments. According to Core, the use of micro proppant during the pad stage of fracturing can boost production by tens of thousands of barrels with little added cost.

    Increasing intensity of fracture jobs

    Increasing proppant and frac stages is a trend that has been apparent since the beginning of the U.S. unconventional boom. Early Barnett wells used perhaps 1 million pounds of sand per well, with few proppant stages.

    Today companies regularly use more than 10 million pounds of sand in each well, and continue to intensify. Chesapeake Energy announced in late 2016 the completion of a truly massive fracturing job the company named “Prop-A-Geddon.” This 10,000 foot well used more than 50 million pounds of sand during completion, which Chesapeake claims is a new record. Proppant loading in wells is likely to continue to increase, as higher oil prices encourage continued development.

    Lateral lengths have also increased significantly, but the longest wells are beginning to encounter difficulties. Wells with lateral lengths beyond 10’000 ft. can encounter significant friction forces, which make fracturing and other operations difficult. Core Labs reports that it is testing friction reducing additives that would make longer lateral lengths possible.

    Big data

    Big data is a recent industry trend that seeks to use large amounts of data to more accurately describe reservoirs. For example, Core is currently analyzing data from the Deepwater Gulf of Mexico II joint industry project with machine-learned computers. Analytics will then be used to characterize and identify key properties of deepwater reservoirs. If successful, this process can be applied to deepwater projects worldwide.

    Integrating Reservoir Management

    Core also announced a change in its business structure this quarter. The Reservoir Management section of the company’s business, which accounts for less than 5% of total company revenue, will be subsumed into the company’s two primary segments, Reservoir Description and Production Enhancement.

    Q&A from Core Lab’s conference call

    Q: the North American market, particularly the Permian, is exploding with activity here. On your Production Enhancement business, I know we’re hearing about a lot of longer lead times or wait times for frac spreads and even wireline trucks, stuff like that. How do you see or what have you done with your manufacturing of your perf charges in order to catch up with the increasing demand? And are you guys now running kind of full out in terms of manufacturing?

    CLB COO Monty L. Davis: On the charge production, we have increased the number of active manufacturing base. Obviously during the downturn, those were decreased to a lower number and we have reactivated some of those with plans through the second quarter to reactivate most of what we had active capacity when the downturn started.

    Q: How does the resuming trend towards more pad – or more multi-well pads affect the Diagnostics business? I would think there could be a positive benefit if you want to make sure that the wells aren’t bashing or even maybe are bashing, depending. Does that affect the Diagnostics business for you guys?

    CLB President and CEO David M. Demshur: Yeah; sure does. For us, that is a big part of their business right now. As people try to concentrate wells on spacing and then landing zones in these sweet spots, we are seeing more wells bash each other. It’s a concern in the industry now that more bashing is leading to the loss of initial production, especially EURs. So, their business on the diagnostics side is being aimed more towards that now than it ever has in the past.

    Q: Okay, and then shifting towards the SRV [stimulated reservoir volume] concept, I know you guys have been talking about that for a little while. Help us frame that. What do you think stimulated reservoir volume was, say, in 2014 versus today versus where you think that might go?

    David M. Demshur: Yeah. I think – Rob, actually on the conference calls back then, we talked the amount of stimulated reservoir volume was probably in the low-20 percentile range. Now, with the use of finer and micro proppants, we think that is expanding rapidly. And the reason for that is the use of 400-, 200- and 100-mesh sand in the pumping the pad stage are opening up tertiary and secondary fracture systems to the exposure of surface area. That has never happened before, so it is significantly increasing the amount of stimulated reservoir volume; read that the amount of surface area in the reservoir that is open to a micro fracture.

    So, I would put that right now probably in the 50% range. So, we’ve significantly increased it since 2014. You can see that in the production figures and also in the type curves, you can plot that pretty much right alongside of that. How much further it can go, we just now entered looking at 200- and 400-mesh sand, so we’ll give you an update over the next couple of quarters on the effectiveness of using those micro proppants.

    https://www.oilandgas360.com/core-lab-exposes-four-trends-shaping-industrys-future/

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    Schlumberger sees pricing improve but high costs weigh on margins


    Schlumberger NV said on Friday a ramp up in drilling activity in North America boosted pricing for its oilfield services, but the cost of reactivating equipment idled during the oil price downturn dragged down margins.

    The U.S. rig count rose more than 25 percent in the first three months of the year, according to data from Baker Hughes Inc (BHI.N).

    "In the first quarter, the North America land market continued to strengthen in terms of both activity and pricing, leading us to begin accelerating deployment of idle capacity for multiple product lines," Chief Executive Paal Kibsgaard said.

    The world's No.1 oilfield services provider said revenue rose 5.7 percent to $6.89 billion in the quarter ended March 31, but its cost of revenue increased 11.3 percent to $6.08 billion.

    Schlumberger and its rivals are reactivating idled rigs and equipment as crude oil prices stay above $50 per barrel, encouraging oil producers to resume drilling after a more than two-year lull in activity.

    The company's pre-tax operating margins fell to 11 percent in the latest quarter, from 13.8 percent a year earlier.

    Net profit attributable to Schlumberger fell to $279 million, or 20 cents per share, in the quarter, from $501 million, or 40 cents per share, a year earlier. (bit.ly/2ox4Wg5)

    Excluding items, Schlumberger earned 25 cents per share in the latest quarter, in-line with analysts' estimates, according to Thomson Reuters I/B/E/S.

    Analysts' on average had estimated revenue of $6.96 billion.

    Up to Thursday's close, Schlumberger shares had fallen nearly 9 percent this year.

    http://www.reuters.com/article/us-schlumberger-results-idUSKBN17N1B1
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    Exxon treats XTO as startup

    The changes made by Exxon

    What has changed on the bureaucracy side of Exxon concerning XTO is its purchasing order system, which, according to Bloomberg, "governs project spending at the rest of Exxon," citing people familiar with the matter.

    The particular system was put in place for primarily offshore projects that could take as long as a decade to develop, and which had price tags of up to $50 billion. That model is obsolete when it comes to the development of shale wells, which can cost around $6 million or so to build. Not only that, but they can be built in few weeks.

    This is also why the process of submitting a 12-month operating blueprint, which is expected to be totally adhered to by other units of the company, has also been removed from the XTO shale unit.

    It's not that these protective filters weren't viable for prior projects, or existing projects requiring a long time and a lot of money to develop, it's that they don't work with shale development and drilling.

    This isn't to suggest the unit is just winging it. After Exxon acquired XTO, it put 30-year veteran, Jack Williams, in place to head it up. He's in the inner circle of leadership at the company.

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    Alternative Energy

    India Gets Record Low Bid to Build Solar Power, Minister Says


    The price of solar power in India fell to a record low of 3.15 rupees (5 U.S. cents) a kilowatt-hour in a competitive tender where French firm Engie SA’s local arm won rights to develop 250 MW.

    Power Minister Piyush Goyal confirmed the results on Twitter, saying the prices bid were a record low in the auction in the southern state of Andhra Pradesh. The result is part of Prime Minister Narendra Modi’s ambition to install 175 GW of renewables by 2022 and will spur discussion about whether India can rely on solar for more of its electricity.

    Engie bid under the name Solairedirect Energy India Pvt, according to Bridge to India, a research firm that tweeted a list of companies involved. An official at Engie had no public comment.

    Other participants in the auction include Adani Group; Ostro Energy Pvt, which is backed by private equity firm Actis LLP; Canadian Solar Inc.; Greenko Energy Holdings; Azure Power Global Ltd.; and Mahindra Renewables Pvt Ltd., the renewable energy arm of automaker Mahindra & Mahindra Ltd.

    This bids beat the previous record of 3.30 rupees a unit seen in February, when companies got rights to build 750 MW in the central India state Madhya Pradesh.

    India currently has 51 GW of installed clean energy capacity, according to government data.

    http://www.renewableenergyworld.com/articles/2017/04/india-gets-record-low-bid-to-build-solar-power-minister-says.html?utm_content=buffer8648c&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

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    Precious Metals

    Argentina mulls $500 million safety plan for Barrick's Veladero mine


    Barrick Gold Corp and its new Chinese partner presented a $500 million plan on Friday to make safety and environmental improvements to the Veladero gold mine in Argentina after a third cyanide spill in 18 months, a company executive said.

    Argentina told Barrick earlier this month it had to overhaul environmental and operating processes at the mine following the latest spill on March 28.

    "We've got a plan over two years to invest half a billion dollars to develop Veladero operations," Barrick Chief Operating Officer Richard Williams told reporters after meeting government officials in Buenos Aires.

    Local authorities say the company needs to make improvements in pipelines and in its control and monitoring systems as well as expand its leach processing facility.

    Barrick will submit the technical plan next week, Williams said. "The leach pad is going to be extended and developed and improved. So it's going to be re-engineered."

    Argentina's Energy and Mining Minister Juan Jose Aranguren said that analyzing the plan would take about two weeks and approval would depend on guarantees of investment by Barrick aimed at improving safety at the mine.

    Barrick, the world's largest gold miner, has been temporarily restricted from adding cyanide to the mine's gold processing facility in Veladero, although other operations continue.

    Alberto Hensel, mining minister of San Juan province where the facility is located, told local radio he hoped the sale of 50 percent of the mine to China's Shandong Gold Mining Co announced this month would improve its operations.

    "What we know about Shandong is that it is a company that has extensive experience meeting the highest environmental standards, which we believe will contribute to the improvement of the Veladero mine," Hensel told radio station Radio Sarmiento in San Juan on Thursday evening.

    The Toronto-based company, which counts Veladero as one of its five core mines, says no material impact was expected on the mine's projected 2017 production.

    The provincial government, which rejected a first work plan from Barrick on April 5, is still evaluating a potential fine for the company for the March 28 incident.

    Hensel said penalties could surpass the $9.8 million the company was fined for a 2015 spill. A fine has not yet been applied for a September 2016 incident in which solution containing cyanide flowed over a berm.

    http://www.reuters.com/article/us-barrick-gold-veladero-idUSKBN17N2GW
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    Base Metals

    Las Bambas proves a winner for MMG


    The Las Bambas operation, in Peru, has set a new copper production record for base metals miner MMG, with production in the March quarter reaching 111 314 t.

    The March quarter production was up 6% on the fourth quarter of 2016, and has delivered its third consecutive quarter of production above nameplate capacity since achieving commercial production in June of last year.

    Total copper production for the March quarter was up by 5% on the previous quarter, to 111 684 t, with the Rosebery operation, in, also contributing 343 t during the quarter under review.

    Meanwhile, copper-in-cathode production for the three months to March was down 16% on the previous quarter, to 36 199 t, as production from the Sepon project, in Laos, suffered declining grades and more complex ore.

    MMG on Friday reported that zinc production for the quarter was down 3% on the fourth quarter of 2016, to 19 146 t, while lead production was up 6% to 6 253 t.

    Looking ahead at the full year, MMG expected to produce between 560 000 t and 615 000 t of copper and between 65 000 t and 72 000 t of zinc in 2017.

    http://www.miningweekly.com/article/las-bambas-proves-a-winner-for-mmg-2017-04-21
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    Freeport warns Indonesia copper mine workers as Grasberg strike looms


    Copper miner Freeport-McMoRan Inc warned on Friday it would punish workers for absenteeism at its Indonesian unit, a day after one of its main unions announced plans to go on a one-month strike over employment conditions.

    Tensions are rising around Grasberg, the world's second-biggest copper mine, after operator Freeport laid off thousands of workers there to stem losses from an ongoing dispute with the Indonesian government over mining rights.

    While Freeport is expecting to soon seal agreements with Jakarta to allow it to temporarily resume copper concentrate exports after a more than three-month hiatus, a strike could impact its efforts to ramp up production.

    "Freeport Indonesia has experienced a high level of absenteeism over the last several days," Freeport spokesman Eric told Reuters.

    "Absenteeism is being tracked and disciplinary actions will be enforced under the terms of the Collective Labor Agreement," Kinneberg said.

    As of last week Freeport had "demobilized" just over 10 percent of its workforce of 32,000, a number expected to grow until its dispute with the government is fully resolved.

    Further adding to tensions around Grasberg, several Freeport workers and police were injured in a clash in Papua on Thursday, when officers fired rubber bullets at demonstrators in Timika.

    The Freeport workers' union said in a statement on Thursday that the company's efforts so far to reduce its workforce have had "extensive impacts on workers and their families".

    Workers are worried about the layoffs "because there are no limits or specific criteria on workers who will be furloughed," the union said. It demanded an end to the furlough policy, and notified Freeport of plans to strike for 30 days from May 1.

    'AGITATED'

    "Efforts by the company to cut costs and reduce their numbers of workers, this is what has made them feel agitated," said Virgo Solossa, a Freeport workers' union member told Reuters. He added that in his view Freeport was only doing what it needed to survive, and that he and many other workers would not join the strike.

    Some workers on Thursday "carried out acts of anarchy ... so police took action and fired rubber bullets," Solossa said. He said four workers and seven police were injured in the clash but that the dispute was not related to the planned strike.

    Timika Police Chief Victor Machbon confirmed the details of the incident, adding that approximately 1,000 demonstrators attempting to free a union leader at a court hearing had not dispersed when tear gas was fired.

    Indonesia halted Freeport's copper concentrate exports in January under new rules that require the Arizona-based company to adopt a special license, pay new taxes and royalties, divest a 51 percent stake in its operations and relinquish arbitration rights. The stoppage has cost both the company and Indonesia hundreds of millions of dollars, but negotiations over sticking points is expected to continue for the next six months at least.

    In February Freeport served notice to Jakarta in the dispute, saying it has the right to commence arbitration in 120 days if no agreement is reached.

    http://www.reuters.com/article/us-indonesia-freeport-idUSKBN17N16D
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    Pence told Widodo more steps needed on Freeport issue


    U.S. Vice President Mike Pence told Indonesian President Joko Widodo that more steps were needed to resolve the dispute between mining giant Freeport McMoRan Inc and the Indonesian government, a White House foreign policy adviser said on Friday.

    Pence briefly raised the issue during a meeting in Jakarta on Thursday at the presidential palace, thanking Widodo for an interim fix for the dispute over his government's changes to mining rules which had prompted Freeport to slash output at its Grasberg copper mine.

    http://www.reuters.com/article/indonesia-freeport-pence-idUSL1N1HT0AY
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    Supply disruption hits Vedanta's aluminium plant in eastern India


    Diversified miner Vedantasaid on Thursday its 500 000 t aluminium smelter in the eastern state of Odisha was hit by a power outage this week that damaged over one-third of its processing capacity.

    The company said 228 out of a total of 608 pots that process molten aluminium were damaged by the outage.

    "The impacted pots will require to be repaired over the next few months, and put back into production. Timelines will be announced in due course," the statement said.

    The per day output of each pot is about 2.5 t, a source familiar with the company's operations said.

    The incident could result in a loss of roughly 30 000 t of production in the next three months, a customer who does business with the company told Reuters. That would equate to roughly 25% of the plant's quarterly production.

    "It usually takes three months in case of damaged pots to bring them back to production," the customer said.

    Vedanta runs two smelters at its Jharsuguda plant, the second is a 1.25-million tonnes smelter.

    Aluminium production is a highly power intensive activity and requires constant supply of power 24 hours a day. Any power supply cut beyond four hours could lead to molten aluminium solidifying in the pots leading to wastage of metaland cost to the company. "This requires an expensive rebuilding process," said a note available on the company's website.

    The recovery process is underway, however, the scope of the impact is being analysed, two Vedanta executives said.

    http://www.miningweekly.com/article/supply-disruption-hits-vedantas-aluminium-plant-in-eastern-india-2017-04-20
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    U.S. makes preliminary determination that China is dumping aluminum foil


    The U.S. International Trade Commission has made affirmative determinations in its preliminary phase anti-dumping and countervailing duty investigations of aluminum foil from China, the agency said on Friday.

    The USITC voted to continue the investigations into aluminum foil imports from China, it said in a statement.

    U.S. aluminum foil producers have filed petitions with their government accusing Chinese manufacturers of dumping the product in the United States, the first such case since the inauguration of U.S. President Donald Trump.

    http://www.reuters.com/article/us-usa-china-aluminum-idUSKBN17N1O7
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    Steel, Iron Ore and Coal

    Coking coal price correction turns into crash


    The price of coking coal plunged again on Friday with the industry benchmark price tracked by the Steel Index dropping 9% or $26.10 to $263.40 a tonne as supply disruption following tropical storms in Australia begin to ease.

    Last week the price of Australia free-on-board premium hard coking coal jumped to highest since the second quarter of 2011. That price spike was also the result of flooding in Queensland that saw quarterly contract prices negotiated at an all time high of $330.

    While coking coal is returning to more expected levels, iron ore's unnerving decline appears to have been arrested

    Cyclone Debbie caused serious damage to key rail lines serving mines in the state of Queensland and while three lines have now reopened according to operator Aurizon, but large sections of the Goonyella railroad in the centre of the network is only be expected to be up and running in a week's time.

    Earlier expectations were that roughly 12–13 million tonnes of Australian met coal cargoes destined for China, India and Japan could be delayed, but Aurizon said this week up to 21 million tonnes have been affected.

    A total of 221 million tonnes of coal was exported last year from Queensland, according to the Queensland Resources Council quoted by Reuters and of that at least 75% be steelmaking coal. The global met coal market is around 300 million tonnes per year with premium hard coking coal or PHCC constituting more than a third of the total market. More than half of PHCC seaborne coal come from Australian producers according to TSI data.

    A survey of economist and investment bank analysts by FocusEconomics show prices are expected to decline substantially later this year. The median forecast is for met coal to average $146 per tonne in Q4 2017 and $130 during the final quarter next year. Coking coal averaged $121 a tonne in 2016.

    While coking coal is returning to more expected levels, iron ore's unnerving decline –  a third over just the last month  – has now turned around.

    The Northern China import price of 62% Fe content ore advanced for a third day on Friday trading at $67.40 a tonne, up 4.2% on the day and just into positive territory for the week. The steelmaking raw material after dipped to a six-month low of $61.50 per dry metric tonne on Tuesday according to data supplied by The Steel Index.

    http://www.mining.com/coking-coal-price-correction-turns-crash/
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    US weekly coal output rises


    Analysis by the US Energy Information Administration (EIA) points to the country’s coal output rising 40% year-on-year to about 14.9-million short tons in the week ended April 15.

    The production estimate, issued on Thursday, was about 8.5% higher week-on-week.

    According to the EIA, production in coal regions east of the Mississippi river totalled six-million short tons, while west of the Mississippi river coal output totalled nine-million short tons.

    US year-to-date coal output totalled 230.4-million short tons, 17% higher than the comparable year-to-date coal production in 2016.

    Coal production decreased to 728.23-million short tons in 2016, from 896.94-million short tons in 2015. The country's coal production exceeded one-billion short tons in 2014.

    Despite coal prices having seen somewhat of a rebound over the last six months, several analysts argue that natural gasremains a strong, low-cost fossil energy competitor, adding to coal’s risk profile despite the pro-coal policies under US President Donald Trump’s administration.

    In 2016, natural gas-fired generators accounted for 42% of the operating electricity generating capacity in the US. Natural gas provided 34% of total electricity generation in 2016, surpassing coal to become the leading generation source.

    The IEA states that the increase in natural gas generation since 2005 is primarily a result of the continued cost-competitiveness of natural gas relative to coal.

    http://www.miningweekly.com/article/us-coal-output-on-the-up-2017-04-21

    Attached Files
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    BHP announces Qld coal investment


    Mining giant BHP Billiton and its coal joint venture (JV) partner Mitsubishi have approved a $204-million investment in the Caval Ridge southern circuit (CRSC) project, in central Queensland.

    The project will create up to 400 new construction jobs and will require 200 ongoing operational roles.

    CRSC, which is an 11-km overland conveyor system that will transport coal from the Peak Downs mine to the coalhandling and preparation plant at the Caval Ridge mine, will result in the plant throughput increasing to its full 10-million tonnes a year.

    “This investment furthers our productivity agenda, reduces costs, releases latent equipment capacity, and strengthens our coal business’ global competitiveness,” said BHP president of operations, Minerals Australia, Mike Henry.

    Henry said that the project formed the missing link between the Caval Ridge and the Peak Downs mines, and would accelerate growth and productivity.

    “We are committed to Queensland’s Bowen basin and this project creates new employment opportunities during construction and locks in ongoing operational roles. The investment flowing from the project will help support the local community and state economy after what has been a difficult time in the region.”

    Construction is slated to start in mid-2017, and will take 18 months to complete.

    Henry noted that in addition to the new conveyor and associated tie-ins, the project would also mean a new stockpile pad and run-of-mine station at Peak Downs and Caval Ridge, the while the existing coal handling and preparation plant and stockyard will be upgraded.

    The JV will also invest in new mining fleet, including excavators and trucks.

    The Queensland Resources Council has welcomed the investment, with CEO Ian Macfarlane saying the investment was great news for the local community and the broader Queensland coal industry.

    http://www.miningweekly.com/article/bhp-announces-qld-coal-investment-2017-04-21
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    Japan steelmakers scramble for coking coal to make up Debbie losses


    Japanese steelmakers have bought coking coal from the United States, Canada and China to replace supply lost after a cyclone closed rail links in Australia, their biggest supplier, industry and trader sources said.

    Still, the Japanese buyers are paying nearly double the $150 a tonnes price that they were discussing with sellers for second-quarter supply before the supply disruption. The supply talks are now on hold and prices will likely stay high until full volumes start flowing again.

    In 2016, Japan bought about 71 percent of the 59.9 million tonnes of coking coal it consumed from Australia.

    "We've tapped supplies by bringing forward shipping schedules of cargos from Canada and the United States, and buying some extra coal from China," an official at a major Japanese steelmaker who deals with raw material procurement told Reuters.

    The emergency supplies were purchased at about $300 a tonne, said the official and a second source a major producer. (Graphic link on Japan's coking coal imports - here)

    Premium coking coal prices from the east coast of Australia were quoted at $289.50 a tonne on Thursday, down from $314 a week earlier, but still more than 90 percent above levels four weeks ago, according to Platts TSI.

    About 300,000 tonnes of coking coal from the U.S. is steaming for Japanese ports on bulk carriers, while dozens of empty ships sit offshore ports in Queensland awaiting loading, according to Reuters Eikon Data.

    Buyers have also tapped supplies from Russia, according to a source at a major Japanese trading house.

    Australian rail operator Aurizon Holdings Ltd temporarily closed four of its coal lines the Bowen Basin in the state of Queensland, which produces about 50 percent of global coking coal, after Cyclone Debbie made landfall on March 28.

    Three of the rail lines hit by floodwaters and landslides have reopened already and Goonyella, largest in terms of export tonnage, is expected to open on April 26 - about 10 days ahead of schedule.

    Still, Aurizon said on Tuesday that the Goonyella line will be operating at a reduced level with trains moving at lower speeds for an undetermined amount of time.

    "The Goonyella situation is going to keep the spot price up. The coal coming off that line is pretty much the basis for the spot price," said Peter O'Connor, an analyst at Australian investment firm Shaw and Partners.

    "It'll be important to keep an eye on when Aurizon finally gets the line back to full operating levels. No one knows that yet," he said, a sentiment echoed by the producer source.

    BHP Billiton, the world's biggest coking coal shipper, was among five miners in the region to declare force majeure, a clause typically invoked after natural disasters when companies cannot meet supply commitments.

    Japan's steelmakers were already running down inventories of coking coal prior to the current supply disruptions.

    "You did see Japanese steelmakers ... actually run down their stocks quite considerably," said Paul Flynn, the chief executive officer for Australia's Whitehaven Coal Ltd on an earnings call last week, adding there would be a "lingering impact on ... coal sales for some time."

    The price talks for the second-quarter coking coal term contracts may restart next month, said the source from Japanese steelmaker source.

    http://www.reuters.com/article/us-japan-steel-shortage-idUSKBN17N16Y
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    China says enforcing North Korea coal ban seriously, no violation


    China is enforcing its policy against North Korean coal imports seriously, and there have been no violations, the foreign ministry said on Friday after a report that North Korean ships had entered a Chinese port where coal imports are offloaded.

    Following repeated North Korean missile tests that drew international criticism, China in February banned all imports of coal from its reclusive neighbor, cutting off its most important export product.

    Reuters reported on April 11 that several North Korean cargo ships, most fully laden, were heading home after China's customs department issued an official order, on April 7, telling trading companies to return their North Korean coal cargoes.

    But on Friday, the website NKNews.org reported several North Korean ships in and around Tangshan port, in northern China.

    Chinese Foreign Ministry spokesman Lu Kang, asked about the ships and whether China was allowing North Korean coal back in, said China was "seriously enforcing" the provisions in its announcement banning North Korean coal imports for the remainder of the year, which were in line with U.N. resolutions.

    "If the ships are still at sea or outside a port, there will always be some mariners who need to be looked after for humanitarian reasons," Lu said.

    "There is no such thing as any violating of this announcement or China violating its obligations to enforce U.N. Security Council resolutions."

    Data from Thomson Reuters Eikon confirmed that three North Korean vessels were at the Tangshan port, and others were holding offshore in the port's anchorage.

    It was not clear what the laden vessels were hauling.

    At port were the Ryon Hwa 3, a Tanzania flagged cargo vessel owned by a North Korean shipping company that was sanctioned last year by the United States, and the North Korean flagged Woory Star.

    The Su Pung, which also flies a North Korean flag, was shown to be at a berth at the port's Jintang coal terminal, data showed.

    The cargo ships Kumgangsan 2 and the Haesong 2 were offshore near the port. The Ryon Hwa 2, also holding off the port, is registered in Malta but suspected by the United Nations to be under North Korean control.

    None of the vessels showed recent changes to their draft, a measure of how deep in the water they are floating which rises or falls depending on their load.

    North Korea is a significant supplier of coal to China, especially of the type used for steel making, known as coking coal.

    In April last year China said it would ban North Korean coal imports in order to comply with sanctions imposed by the United Nations and aimed at starving the country of funds for its nuclear and ballistic missile programs.

    But it made exceptions for deliveries intended for "the people's wellbeing" and not connected to the nuclear or missile programmes.

    March customs data this year showed that China did not import coal from North Korea.

    http://www.reuters.com/article/us-china-northkorea-coal-idUSKBN17N12A
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    China iron ore, steel resume decline as slack demand weighs


    Steel and iron ore futures in China fell 1 percent on Monday, as the two commodities retreated on lingering worries over weak demand in the world's top steel consumer after a two-day spike.

    China's crude steel output surged to a record 72 million tonnes in March as mills ramped up output, hoping an early-year rally in prices would be sustained as the country headed for its usually brisk second-quarter period.

    But supply growth has so far outpaced consumption this month.

    "Demand is okay. It's just that production is much stronger than demand," said Helen Lau, analyst at Argonaut Securities.

    The most-active rebar on the Shanghai Futures Exchange was down 1.3 percent at 2,881 yuan ($419) a tonne by midday, after falling as far as 2,851 yuan.

    Iron ore on the Dalian Commodity Exchange was off 1 percent at 496.50 yuan per tonne, having dropped to as low as 486.50 yuan earlier in the session.

    A sustained decline in inventory of steel products among Chinese traders suggests demand remains firm, said Lau, but may be not as strong as many in the market had initially expected.

    Stocks of five major steel products - including construction-used rebar - held by traders stood at about 12.9 million tonnes as of April 21, the lowest since late January, said Lau, citing data from Mysteel consultancy.

    While Chinese mills may have not cut production so far, a "further decline in prices would be the catalyst," said Lau.

    Coal used in steelmaking also dropped. Coking coal on Dalian fell 4.6 percent to 1,085.50 yuan a tonne and coke slid 4 percent to 1,573.50 yuan.

    Further weakness in futures could push down spot iron ore prices again after a three-day rally.

    Iron ore for delivery to China's Qingdao port .IO62-CNO=MB climbed 4.4 percent to $68.22 a tonne on Friday, marking its biggest single-day increase since Feb. 13, according to Metal Bulletin.
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    Liberty House to buy ArcelorMittal's U.S. Georgetown steel plant


    Metals group Liberty House Group has agreed to buy the Georgetown Steelworks plant from Arcelor Mittal in its first major U.S. acquisition, the companies said on Friday.

    London-based Liberty will buy the plant based in South Carolina, including its 540,000 tonne a year electric arc furnace and 680,000 tonne a year rod mill, the joint statement said. It did not disclose the cost of deal.

    The Georgetown plant was closed in August 2015 and directly employed more than 320 workers.

    "Acquiring the plant at Georgetown, with its ability to recycle scrap steel in an arc furnace, gives us a strong platform from which to launch our strategy in the USA," said Liberty House executive chairman Sanjeev Gupta.

    The provisional deal marks the "first significant step in Liberty's plan to make major investments in the U.S. steel industry", the statement said.

    Liberty House was in talks with the United Steelworks union on recruiting a workforce to re-open the plant.

    ArcelorMittal said in February that it expected apparent steel consumption in the United States and in Brazil to rise 4 percent this year.

    http://www.reuters.com/article/us-libertyhouse-m-a-arcelormitta-idUSKBN17N1E9
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    Nearly 30 Chinese steel firms have licenses revoked for violations: ministry


    Twenty-nine Chinese steel firms have had their licenses revoked as a result of long-term production suspensions or failing to comply with state capacity and pollution requirements, China's industry ministry said on Monday.

    The Ministry of Industry and Information Technology (MIIT) released a list of 29 firms that will be removed from its official register of steel enterprises. Most have already stopped producing steel, but some had illegally expanded production or violated state closure orders.

    China is now in the middle of a concerted effort to reduce the total number of its steel enterprises by shedding 100 million-150 million tonnes of excess production capacity over the 2016-2020 period and by shutting around 100 million tonnes of low-grade steel production by the end of June this year.

    Another 40 steel firms have been asked, according to the statement posted on the website of the MIIT, to make changes in areas such as environmental protection and safety.

    The majority of the 40 steel firms were accused of failing to comply with emergency output restrictions during periods of heavy pollution, and they must fully "rectify" their violations within a prescribed period, the industry ministry said, without giving a specific timeframe.

    China set up an official steel firm register in 2009 in a bid to impose order on a chaotic and poorly regulated industry. It blamed ill-discipline and "malicious competition" for undermining the position of Chinese steel companies during price negotiations with major overseas iron ore suppliers.

    Before the register was launched, even large-scale state steel producers were not technically authorized to produce steel, and the industry was dominated by a gray economy consisting of hundreds of low-end private producers.

    One of the aims of the register was to help identify the mergers and closures required to meet a target to put 60 percent of China's total steel capacity in the hands of its 10 biggest producers by the end of 2015.

    However, industry consolidation rates actually fell to 34.2 percent over the 2011-2015 period, from 48.6 percent in the previous five-year period, and China has now pushed back the 60-percent target until 2025.

    According to figures published by the official China Metallurgical News earlier this month, 292 out of a total of 635 firms in 12 provinces and cities have already ceased production or been shut down completely.

    Metallurgical News also said 18 out of 64 firms in China's biggest steel producing city of Tangshan have ceased production or been shut down as a result of the latest campaign.

    http://www.reuters.com/article/china-steel-idUSL4N1HW1U8
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