Ritchie Bros.' largest Canadian auction ever set new company records for online sales, bidders and number of sellers:
EDMONTON, May 2, 2016 /CNW/ - Selling more than 10,000 equipment items and trucks in five days is a massive undertaking, and last week Ritchie Bros.' Edmonton team showed that it was up for the challenge.
From April 26 - 30, 2016, Ritchie Bros. sold 10,200+ equipment items and trucks for CA$240+ million (US$191+ million) at its 200-acre Edmonton, AB auction site, making it the company's largest Canadian auction ever and the second-largest auction in company history. The five-day auction attracted 16,700+ bidders from 55 countries—a new company record, surpassing the previous record by 19 percent.
Approximately 84 percent of the equipment was sold to Canadian buyers (by dollar value), including 46 percent sold to Alberta buyers. More than 13 percent of the equipment was sold to buyers from the United States.
"We would like to thank all the consignors who put their trust in us to sell their equipment last week," said Brian Glenn, Senior Vice President, Ritchie Bros. "Our ability to attract more than 16,700 bidders from every corner of the world helped us achieve solid results throughout all five days of the auction. In particular, we saw strong pricing on motor scrapers, crawler tractors, wheel loaders, highway transport and gravel hauling equipment. Of particular note, approximately 46 percent of the equipment was purchased by Alberta buyers, showcasing the strength and size of this market even when there are economic challenges."
1,125+ companies sold equipment in the auction, including Newcom Earthmovers Ltd. The Brooks, AB-based earthworks construction contractor sold 400+ items in the Edmonton auction as part of a complete dispersal.
"Ritchie Bros. is a one-stop shop—they know the market and they have resources no one can touch," said Harold Ward, president and owner of Newcom Earthmovers. "We've been buying and selling here since we started the company 12 years ago. With the changing landscape here in Alberta we thought it would be a good time for us to sell and we're happy with the result."
More than 6,150 people (37 percent) registered to bid in person, while 10,550+ people (63 percent) registered to bid online—both of which are new company records. More than CA$140 million (US$111+ million) of equipment was sold to online buyers (58 percent)—also a new company record.
"We continue to invest in both our live and online experience, welcoming our customers and offering them the best of both worlds," said Trent Vandenberghe, Vice President, Ritchie Bros. "The onsite experience in an auction of this size is particularly special. It's hard to understand the scope unless you see it in person."
One highlight of the auction was the charity auction of two classic cars donated by Edmonton couple Reno and Jane Trentini. The cars sold for a combined CA$182,500 with all proceeds donated to two charitable organizations: the MS Society and the Edmonton Community Foundation.
Auction quick facts: Edmonton, AB (April 2016)
On February 15, 2016, Posco shocked the world by announcing that it would start building a new 2,500 ton lithium carbonate plant (to become fully operational in 2017) in Argentina which had nothing to do with Western Lithium's Cauchari-Olaroz Project. Despite Western Lithium's denial that Posco chose an alternate partner, it all indicates that that might be the case. We must remember that the HOA signed was a non-binding document. The agreement signed between Posco and Lithea Inc. to construct a new lithium carbonate plant at Pozuelos Salar, Salta Province, then highlights Posco'sdesires to get into lithium carbonate production as soon as possible. Following the previous Dundee Capital Markets link, it also demonstrates that Western Lithium and Lithea are "just two of Posco's many potential partners."
Furthermore, according to a more recent Korean report, Posco is aiming at shortening the construction period for its lithium plant in Argentina "by moving up the completion date to September this year from the initial target of the end-year." And, in response to the recent surge in demand for the white metal, it plans to hit the unbelievable target of 40,000 tons of lithium carbonate per year in 2017. This last figure can only make sense if we agree that Posco's technology to extract and process lithium carbonate and obtain lithium cathodes for Li-ion batteries developed in cooperation with Research Institute of Industrial Science and Technology (RIST) is truly revolutionary. It then comes as no surprise that Posco's new Chairman served as president of RIST from 2009 to 2011 which implies that he's well aware of the new challenge.
While oil bulls were delighted by yesterday's DOE news of an inventory drawdown refuting the prior day's API news of a major build, what was ignored was the build in Cushing storage (more on that shortly), which according to Genscape hit a utilization just shy of 80%, or more than 70 million barrels, a record high since Genscape began monitoring the hub in 2009. To be sure, the risk of running out of land storage has been one we have previously discussed on various occasions and hinted that one way this is being circumvented is with substantial amounts of oil being stored on tankers at sea, mostly by commodity trading companies who take advantage of the oil contango to generate month to month profits as producers choose to keep their product away from the market until prices rise.
As it turns out, not only is this the case, but according to Reuters, one particular energy trader - a name well-known to Zero Hedge readers - Glencore, has built up a massive inventory stake in the Brent market where it now holds an unprecedented 30% position in Brent, which it is holding for offshore storage in its tankers in hopes of pushing the price of Brent, and thus the entire energy complex higher, by limiting supply.
As Reuters details, citing trade sources, Glencore has built up one of the largest positions in part of the Brent crude market which acts as a benchmark for global oil prices since the start of the year.
For those unfamiliar, the Brent market is based on four North Sea crude oils - Brent, Forties, Oseberg and Ekofisk, or BFOE. And, according to Reuters Glencore is quietly cornering the Brent market, by holding more than a third of the 37 BFOE cargoes loading in June and is expected to acquire more.
The report details that Glencore has been acquiring June BFOE cargoes through the "chains" - a forward market in which cargoes soon to be assigned loading dates are traded, according to trade sources citing data from pricing agency Platts.
"It's definitely a bold statement of market view by Glencore," said a trading source with another company operating in the North Sea. "You'd have to be in their heads and in their books to know exactly what's going on."
To be sure, Glencore has been alleged to "warehouse" oil previously, most recently in January when Bloomberg reported that "Glencore is said to be storing oil on ships off the coast of Singapore and Malaysia as a market structure known as contango allows traders to benefit from holding on to supplies for sale later. The commodities trader has at least 4 very large crude carriers, each of which can hold about 2 million barrels, floating at sea off the nations’ coast in Southeast Asia."
However taking advantage of contango for contango purposes is one thing. Attempting to corner the entire market is something entirely different, and has direct implications on the price of oil, something Glencore can further benefit from if it were to be concurrently long Brent.
According to Reuters, just under half of June's supply of the four benchmark crude grades amounts to nearly 10 million barrels of oil - over 10 percent of daily world production. "Glencore have got big positions all over the place in BFOE," said another North Sea trading source. "They are consistently keeping cargoes in the chains."
The company has taken this position as supply underpinning the Brent contract is set to be smaller than in a typical month. In June, output of the BFOE crudes will fall to 740,000 barrels per day - the lowest in almost two years - mainly because of maintenance at Ekofisk oilfields. This, say analysts, helped Brent futures for June delivery strengthen against the July contract and eventually trade at a premium - a structure known as backwardation and unusual when supply is generally ample.
It also means that Glencore was likely losing money on the actual month to month roll of its inventory, however it was more than offsetting losses if it was concurrently long Brent as removing 30% of the overall market supply has certainly pushed the price of Brent notably higher.
Reuters sources agreed with this assessment: "Glencore have obviously been very bullish," the first trade source said. "Part of the explanation would be that they recognised there would be next to no Ekofisk around and the North Sea market would tighten up. So, why not?"
Why not? Well, because to some this stockpiling reeks of manipulation of the price by keeping a major amount of monthly supply off the market. And snce Brent and WTI tend to trade largely in tandem, the answer to "why not" is because millions of consumers would end up paying far more at the pump than if Glencore was not choking supply just to boost its own earnings.
One way to see the impact of this may be to look at the strip which both in Brent and WTI has flattened substantially as can be seen on the chart below, as prompt month manipulation by the likes of Glencore pushes spot higher even as hedgers and long-term investors continue to sell the long end on expectations of declining future prices.