Mark Latham Commodity Equity Intelligence Service

Thursday 27th October 2016
Background Stories on www.commodityintelligence.com

News and Views:

Attached Files







    Macro

    China's slowing industrial profits show rising debt hampering economy


    Profit growth in China's industrial firms slowed sharply as some key manufacturing sectors stumbled on weak activity and rising debt, suggesting the world's second-biggest economy remains underpowered despite emerging signs of stability.

    The September data from National Bureau of Statistics (NBS) underlined the daunting task facing policy makers as the nation's vast manufacturing industry grapples with slack demand, overcapacity and ballooning debt.

    Industrial sector profits last month rose 7.7 percent to 577.1 billion yuan, slowing markedly after surging 19.5 percent in August, NBS figures released on its website showed on Thursday.

    Earnings in industries such as electronics, steel and electricity were hit by a significant drop in growth, He Ping, a NBS official said in a note accompanying the data.

    "Although industrial profits have got back on track with more stable growth, unfavorable factors still exist," He said, noting weak demand at both home and aboard, and delayed payments put a strain on firms' cash flow.

    The official also cautioned about rising debt levels in the coal and steel sectors, stressing the importance of controlling debt risks as capacity cuts and structural reforms get implemented.

    China's debt has soared to 250 percent of GDP and the Bank for International Settlements (BIS) warned in September that a banking crisis was looming in the next three years.

    Recent data showed some signs of stability, with annual economic growth of 6.7 percent in the third quarter matching the previous quarter, as increased government spending and a property boom offset stubbornly weak exports.

    But the profits data suggest China's economy continues to face a host of challenges as authorities try to wean businesses off cheap credit-fueled growth, temper a surge in home prices and curb rising debt levels and shadow banking activity.

    "If you look at the structure of the economy, it's actually worsening because the growth of SOEs and public sector growth is relatively stronger, but private sector growth is much weaker. This shows the quality of the growth is deteriorating," said Yang Zhao, economist at Nomura.

    OUTLOOK SUBDUED

    Profits in electricity tumbled 23.2 percent on-year, as electricity prices were adjusted lower and revenue growth slowed. Earnings in general and special equipment manufacturing also turned negative, dropping 10.8 percent on-year.

    Total profits for the first nine months stood at 4.64 trillion yuan ($684.77 billion), up 8.4 percent from the same period a year ago, the same pace as in the January to August period.

    Industrial overcapacity, mainly in the traditional sectors, have been a drag on profits in recent months and analysts say the outlook for earnings in the sector could hinge on the progress made by policy makers to cut capacity.

    Beijing has embarked on a campaign to cut capacity in the coal and steel sectors in the economy's most significant transformation in two decades.

    The August profit growth - the fastest pace in three years - was helped by Beijing's splurge on infrastructure projects and a booming real estate industry and so was seen as unsustainable.

    China's producer prices rose in September for the first time in nearly five years, thanks to higher commodity prices.

    "Profits were largely driven by a restoration in commodity prices such as coal and steel," David Qu, economist at ANZ said in Shanghai.

    But Qu said the outlook for steel prices remain cloudy, as "the tightening in the property market means potential demand could shrink." .

    Indeed, a subdued property market is expected to drag on growth in the first two quarters next year, as policy makers introduce curbs to cool home prices.

    "We are optimistic that stable growth will last through end of this year, because they have to finish the projects started earlier," said Merchants Securities economist Xie Yaxuan in Shenzhen.

    "But property and its related industries will definitely affect growth in the first or second quarter next year," Xie said.

    http://www.reuters.com/article/us-china-economy-industrial-profits-idUSKCN12R08Z
    Back to Top

    Audi swaps diesel for electric motor racing


    Audi has announced an end to the German marque’s presence in FIA WEC and the Le Mans 24 Hours.

    In a statement released on Wednesday, Audi said it will shift its primary motorsport focus to the Formula E championship - where it is partner to the Abt Schaeffler team - while maintaining its DTM programme.

    Audi’s Chairman of the Board of Management Rupert Stadler said: “We’re going to contest the race for the future on electric power.

    “As our production cars are becoming increasingly electric, our motorsport cars, as Audi’s technological spearheads, have to even more so.”

    Reports emerged that Audi was considering ending its 18-year involvement in the top flight of sportscar racing in the run-up to this year’s WEC 6 Hours of Fuji, citing the cost of competing and the decreasing relevance of diesel technology in road cars.

    http://www.motorsport.com/wec/news/audi-to-leave-wec-at-the-end-of-2016-843080/?utm_source=RSS&utm_medium=referral&utm_campaign=RSS-WEC&utm_term=News&utm_content=www&utm_source=twitterfeed&utm_medium=twitter

    Attached Files
    Back to Top

    Oil and Gas

    OPEC OIl exports hit 29 mln bbl last week

    OPEC OIl exports hit 29 mln bbl last week

    OPEC OIl exports hit 29 mln bbl last week This is incredible: OPEC crude oil weekly exports reached a record last week, led by SaudiArabia with loadings of 8.4mn bpd 

    Image title

    @ClipperData

    Attached Files
    Back to Top

    Tough OPEC Equation With Mounting ‘Exemptions’


    Saudi Arabia faces the prospect of much deeper -- and financially painful -- oil production cuts after Iraq joined the queue of group members seeking immunity from the deal hatched in Algiers.

    In addition to Iraq, the second-biggest exporter in the group, Iran has already sought to exclude itself. Output is also recovering from fields in Nigeria and Libya, two more countries that were exempted from the Algiers deal because violence has wrought havoc in their oil industries. Taken together, more than a third of OPEC’s production now stands outside the plan.

    Iraq’s plea to be left out prompted Olivier Jakob, a consultant at Petromatrix GmbH, to quip on Twitter that the oil-club stood for the “Organization of Producers Exempt from Cuts."

    The worsening OPEC equation presents Saudi Arabia with a difficult choice after its Algiers U-turn: carry a greater burden within the group, ceding market share to other producers, or lose credibility by softening the terms of the deal. In a worst-case scenario, Saudi Arabia will have to cut production by more than 1 million barrels a day, sending the kingdom’s output to a two-year low.

    While oil has rallied more than 15 percent since Algiers, the growing cost of following through is becoming clear. During the last two weeks, Saudi Arabian Energy Minister Khalid Al-Falih has appeared to give himself room for maneuver. In a speech in London last week, he mentioned the possibility of an OPEC freeze as well as a cut. He’s also stressed the need for non-OPEC nations to take part in a global deal to manage supply.

    “Oil markets started moving into balance recently, but we in OPEC, along with producers from outside the group, started intense consultations to take the right action to quicken the re-balancing and market recovery,” Al-Falih said Sunday in a speech.

    Willing to Cut

    In Algiers, OPEC agreed to reduce its production to a range of between 32.5 and 33 million barrels a day. That leaves Saudi Arabia and other countries willing to cut facing two very different potential outcomes.

    In a best-case scenario -- based on Nigeria meeting its target to restore production, Libya maintaining recent improvements and Iran, Iraq and Venezuela staying at September levels -- reductions of 1.3 million barrels a day would be required to meet the top end of the Algiers target. In a worst case, where Iran, Iraq and Venezuela produce more than they did last month, that rises to over 2 million barrels a day, based on Bloomberg calculations.

    “Everyone has a lot to lose if they do not fill in the details and implement a final agreement at the end of next month,” said Mike Wittner, global head of oil research at Societe Generale SA. “Of all the developments, the one that worries me the most for posing an issue for the other members of OPEC is Iraq.”

    OPEC representatives and counterparts from countries outside the group will meet in Vienna later this week to discuss how the burden of output cuts is shared. The most contentious topic is likely to be how the production of individual countries is measured.

    Since Algiers, Iraq and Venezuela have criticized OPEC estimates of their production, which are compiled from secondary sources that include independent analysts and news organizations. Those estimates will form the basis for any future OPEC deal limiting production, according to the group’s secretary-general.

    Islamic Militants

    Iraq, which said over the weekend it shouldn’t be required to cut production as it’s fighting Islamic militants, says it’s currently pumping more than 4.7 million barrels a day, higher than estimates from OPEC’s secondary sources of 4.46 million barrels a day for September.

    Venezuela is also dissatisfied with its OPEC estimates since they don’t include heavy crude production from the Orinoco basin, Oil Minister Eulogio del Pino said earlier this month.

    OPEC agreed in Algiers that Libya, Nigeria and Iran should receive special treatment as they’re seeking to increase their production after experiencing disruptions due to internal violence, sabotage and sanctions. So far this month, Libya and Nigeria have managed to increase their daily output by 220,000 barrels and 300,000 barrels respectively.

    Russian Stance

    Iran has steadily increased its crude production since the start of the year following the lifting of sanctions. Tehran has repeated it aims to ramp up its production to a level around 4 million barrels day from around 3.7 million a day estimated by OPEC for September.

    Russia -- the biggest oil producer outside OPEC -- has agreed to play a part in stabilizing the markets and is discussing different options including a freeze in output, according to the Energy Minister Alexander Novak. Production cuts are not an option for Russia, the nation’s envoy to OPEC said, according to Interfax.

    While OPEC members from Angola and Gabon to Algeria and Ecuador could contribute to the required output cuts, Saudi Arabia’s main support will come from its Gulf allies of Kuwait and the United Arab Emirates, according to Wittner.

    Torbjorn Kjus of DNB Bank ASA expects OPEC to over-promise in Vienna, but under-deliver on implementation. He expects Saudi Arabia to cut output by about 400,000 barrels a day and the U.A.E. to trim a further 100,000 barrels a day. The other members probably won’t comply, he said.

    http://www.bloomberg.com/news/articles/2016-10-25/saudi-arabia-faces-worsening-opec-equation-as-exemptions-mount

    OPEC: Organisation of Producers Exempt from Cuts

    Attached Files
    Back to Top

    Big Oil Braces for Profit Pain as Refining Safety Net Slips


    The world’s biggest oil companies, supported during crude’s collapse by a buoyant refining business, have lost that buffer as brimming fuel stockpiles swamp demand.

    Profits from turning oil into gasoline and diesel contracted 42 percent last quarter from a year earlier to an average $11.60 a barrel, the weakest for the time of year since 2010, industry datafrom BP Plc show. The impact of that will be apparent as earnings for the period roll in over the coming weeks.

    Refineries benefited from oil’s two-year slide that began in mid-2014 because the cost of feedstock fell while fuel demand rose. That led to over-production and huge stockpiles that now can’t be absorbed. For oil majors including Exxon Mobil Corp. and BP, that erodes a valuable source of income that bolstered earnings for much of the past year amid spending cuts, job losses and project cancellations.

    The “best days are over” for refining, said Alan Gelder, vice president for refining, chemicals and oil-market research at consulting firm Wood Mackenzie Ltd. “Don’t expect 2015 to be repeated. We’re expecting some ‘average’ years.”

    Every $1 decline in the refining margin cuts BP’s adjusted pretax earnings by $500 million a year, according to its website. The London-based company warned back in July that margins had dropped to their lowest in six years and would remain “under significant pressure.”

    BP is expected to report $688.7 million in adjusted third-quarter profit on Nov. 1, 62 percent lower than a year earlier, according to the average of 12 analyst estimates compiled by Bloomberg. Exxon is likely to post a 38 percent decline in earnings on Oct. 28. Royal Dutch Shell Plc may report profit that’s little changed on Nov. 1 following its acquisition of BG Group Plc in February.

    Summer in the U.S. and Europe typically boosts refining margins as the driving season increases demand for gasoline. Yet high fuel stockpiles around the world this year pushed third-quarter margins below second-quarter levels in Europe, according to Wood Mackenzie’s Gelder.

    For an analysis of commodity markets through the end of the year, click here.

    Texas-based refiner Valero Energy Corp. said Tuesday that quarterly net income dropped by more than 50 percent from a year earlier as it announced a cut in 2016 capital spending.

    For European refiners, gasoline was on average $7.51 a barrel higher than benchmark Brent crude last quarter, about half its level a year earlier and 40 percent lower than the preceding quarter, according to PVM Oil Associates Ltd. For gasoil, or heating oil, the premium was $9.10 a barrel, 36 percent lower than a year earlier.

    Refining margins are likely to stay “depressed” next year as inventories remain high, according to Ehsan Ul-Haq, senior oil-market analyst at KBC Energy Economics.

    Making it worse for oil companies is crude’s continued weakness. Though prices have risen more than 80 percent from 12-year lows in January, they’re still half their level before the collapse. Dwindling revenue has forced the industry to cut billions of dollars of investment, boost drilling efficiency and reduce costs. European oil majors are likely to lower capital spending by a third this year from 2014, Barclays Plc analysts wrote in a note last week.

    Brent averaged $46.99 a barrel last quarter, 8.4 percent lower than a year earlier and little changed from the prior three months. The global benchmark lost 1.2 percent to $50.20 a barrel at 12:03 p.m. Singapore time.

    “Third-quarter earnings will likely again be nothing to write home about, given that oil prices were flat on the second quarter,” said Iain Reid, an analyst at Macquarie Capital Ltd. in London. “We estimate earnings per share will fall another 50 percent from a year ago, although this is now becoming more driven by weaker refining margins than oil prices.”

    http://www.bloomberg.com/news/articles/2016-10-25/big-oil-braces-for-more-profit-pain-as-refining-safety-net-slips
    Back to Top

    Greece names Total-led consortium preferred bidder for offshore gas drilling


    Greece named on Wednesday a consortium of France's Total, its biggest oil refiner Hellenic Petroleum and Italy's Edison as the preferred bidder for an offshore gas drilling block in the west of the country.

    Greece, which signed up to a third bailout last summer, has made several fruitless attempts over the last 50 years to find big oil and gas reserves. Its debt crisis and important findings in neighbouring countries has prompted the country to step up those efforts.

    Last year, Athens tendered 20 offshore blocks in the Ionian Sea and south of the island of Crete for deep sea oil and gas drilling and unsealed the offers in February.

    The Total-led consortium has bid for one block in the Ionian Sea, while Hellenic Petroleum has bid independently for two other blocks.

    A committee assessing the bids will invite the consortium to finalise the contract, the country's energy ministry said in a statement.

    Hellenic Petroleum in a venture with Edison, and Energean Oil , the country's sole oil producer, are already searching for oil in three onshore and offshore blocks in western Greece.

    http://www.reuters.com/article/greece-exploration-idUSL8N1CW4O4
    Back to Top

    LNG tanker attacked off Yemen?


    A merchant tanker has been the target of an attack of the coast of Yemen on Tuesday, October 25, according to a report by the crisis management and response consultancy NYA.

    According to various media reports, the vessel in question was Teekay’s LNG carrier, the 2004-built Galicia Spirit with the capacity to transport up to 137,814 cubic meters.

    LNG World News contacted Teekay seeking confirmation of the reports, however, no response has been received by the time this article was published.

    NYA said the merchant tanker was approached by a small boat whose occupants fired an RPG at the vessel. The damage at the time of the report was unknown, however, the consultancy said that crew are safe and that the vessel continued with its passage.

    The AIS data provided by the vessel tracking website, MarineTraffic, shows that Galicia Spirit departed Qatar’s Ras Laffan LNG complex on October 19 and is scheduled to deliver its cargo to one of the FSRUs serving as Egypt’s liquefied natural gas import terminals in Ain Sokhna on October 29.

    http://www.lngworldnews.com/lng-tanker-attacked-off-yemen/
    Back to Top

    CNOOC announces key operational statistics for third quarter 2016


    CNOOC Limited today announced its key operational statistics for the third quarter of 2016.

    For the third quarter of the year, the Company achieved total net production of 117.7 million barrels of oil equivalent ('BOE'), representing a decrease of 7.7% year-on-year ('YoY'), mainly due to the decline of production volume in oil and gas fields and weak demand in the domestic downstream gas market.

    During the period, the Company made one new discovery and drilled ten successful appraisal wells offshore China. During the third quarter, Weizhou 6-9/6-10 comprehensive adjustment project and Enping 18-1 oilfield commenced production. The four projects that were planned to come on stream in 2016 have all commenced production.

    For the third quarter of the year, the unaudited oil and gas sales revenue of the Company reached approximately RMB30.75 billion, representing a decrease of 15.2% YoY. The Company's average realized oil price decreased by 13.5% YoY to US$42.26 per barrel, while the average realized gas price was US$5.22 per thousand cubic feet, down 18.6% YoY.

    To cope with the low oil price environment, the Company continued to lower costs, enhance efficiency and cut capital expenditure for the whole year. During the period, the Company's capital expenditure amounted to approximately RMB11.67 billion, representing a decrease of 20.9% YoY.

    Mr. Yang Hua, Chairman and CEO of the Company, said, 'In view of the market challenges during the third quarter of the year, the Company endeavored to lower costs and enhance efficiency, as well as made proactive efforts in all fields. In addition, the Company is confident in meeting the full year target of its key operating indicators.'

    http://www.oilvoice.com/n/CNOOC-announces-key-operational-statistics-for-third-quarter-2016/89127c23600b.aspx
    Back to Top

    Centennial Pipeline Reversal “a Go” to Send NE NGLs to Gulf Coast


    In September 2015 MDN brought you the news that two joint venture partners, MPLX (Marathon Petroleum) and Enterprise Products Partners, were actively evaluating a plan to reverse the flow of the 795-mile Centennial Pipeline to send natural gas liquids (NGLs) from the Utica/Marcellus to the Gulf Coast.

    The Centennial began operation in 2002 after a 26-inch diameter natural gas line from Longville, LA into Bourbon was converted to refined light product service. At the same time, a new 24-inch diameter line was constructed from Beaumont, TX to connect to the existing 26-inch diameter line at Longville, TX.

    Since last year we had not heard any concrete plans–until now. Yesterday at the S&P Global/Platts ninth annual Appalachian Oil & Gas Conference in Pittsburgh, Enterprise announced it is “a go” to reverse the Centennial…

    http://marcellusdrilling.com/2016/10/centennial-pipeline-reversal-a-go-to-send-ne-ngls-to-gulf-coast/
    Back to Top

    Russia's Gazprom Neft Discovers New Oil Field in Country's North


    Russia's Gazprom Neft energy company has discovered a new oil field in the country's northern Yamalo-Nenets Autonomous Area, the company said in a press release on Wednesday. 

    "According to the results of drilling of the three search and exploratory oil wells, six… deposits of oil, with total geological reserves of more than 40 million tonnes have been discovered. 

    The resources of a new Zapadno-Chatylkinskoye oil field have been approved at the State Commission on Mineral Reserves," the press release said.

    Read more: https://sputniknews.com/russia/201610261046749694-russia-gazprom-oil-field/
    Back to Top

    Statoil Q3 lags forecast, cuts capex again

    Statoil Q3 lags forecast, cuts capex again

    Norwegian oil firm Statoil cut its 2016 capital expenditure again after posting third-quarter earnings below forecast on Thursday due to lower-than-expected output and persistently low oil prices.

    Like other oil companies, Statoil has been slashing investments, jobs and projects to cope with a 56-percent decline in the price of crude since mid-2014.

    On Thursday it said it would cut its capital expenditure for 2016 to $11 billion from $12 billion and its exploration spending to $1.5 billion from $1.8 billion.

    In July, the company had already reduced those figures from $13 billion and $2 billion respectively.

    "The financial results were affected by low oil and gas prices, extensive planned maintenance and expensed exploration wells from previous periods," Statoil CEO Eldar Saetre said in a statement.

    The firm's adjusted operating profit fell to $636 million in the third quarter from $2 billion a year ago, well below analysts' expectations for $950 million. All three divisions of the company missed forecasts.

    http://www.cnbc.com/2016/10/27/statoil-q3-lags-forecast-cuts-capex-again.html
    Back to Top

    Summary of Weekly Petroleum Data for the Week Ending October 21, 2016


    U.S. crude oil refinery inputs averaged about 15.6 million barrels per day during the week ending October 21, 2016, 182,000 barrels per day more than the previous week’s average. Refineries operated at 85.6% of their operable capacity last week. Gasoline production increased last week, averaging over 9.8 million barrels per day.

     Distillate fuel production decreased last week, averaging over 4.5 million barrels per day. U.S. crude oil imports averaged over 7.0 million barrels per day last week, up by 109,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged about 7.4 million barrels per day, 2.1% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 834,000 barrels per day. Distillate fuel imports averaged 74,000 barrels per day last week.

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 0.6 million barrels from the previous week. At 468.2 million barrels, U.S. crude oil inventories are near the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 2.0 million barrels last week, but are well above the upper limit of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories decreased by 3.4 million barrels last week but are above the upper limit of the average range for this time of year. Propane/propylene inventories fell 2.1 million barrels last week but are near the upper limit of the average range. Total commercial petroleum inventories decreased by 8.7 million barrels last week.

    Total products supplied over the last four-week period averaged about 20.4 million barrels per day, up by 4.3% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged over 9.1 million barrels per day, down by 0.1% from the same period last year. Distillate fuel product supplied averaged about 4.1 million barrels per day over the last four weeks, up by 2.5% from the same period last year. Jet fuel product supplied is up 6.5% compared to the same four-week period last year.

    Cushing down 1.3 mln bbls
    Back to Top

    US Oil production increases

       
                                                                        Last Week   Week Before       Last Year

    Domestic Production '000.................. 8,504                 8,464                9,112
    Alaska ................................................ 501                    489                    505
    Lower 48 ........................................ 8,003                 7,975                8,607

    http://ir.eia.gov/wpsr/overview.pdf
    Back to Top

    Shale breakevens down more than 50% in 3 years.

    Image titleBy Christopher Sell
    (Bloomberg) -- Breakeven prices in key shale plays in the
    U.S. have dropped by 55 percent in the last three years,
    according to research by Rystad Energy. Average breakeven prices
    at the Bakken have dropped from around $67 a barrel in 2013 to
    $29 a barrel in 2016. A greater focus on core areas of the shale
    plays and improved well performance are the main drivers to the
    lower price, the report said.
    Back to Top

    BP To Sell US Crude To Australia, Thailand For First Time


    Oil major BP is set to ship 1 million barrels of U.S. crude to Australia and Thailand by the end of this year in what would be the first U.S. crude imports for the two Asian-Pacific countries, Reuters reported on Wednesday, quoting three trade sources.

    BP has sold 300,000 barrels of U.S. crude to Thai company PTT PCL and will ship the other 700,000 barrels to its own refinery in Australia, the Reuters sources said, adding that the London-based oil giant will load the crude from the U.S. Gulf Coast on a tanker expected to dock in Asia in December.

    According to BP’s refining in Australia page, the company’s refinery currently processes crude oil shipped from the Middle East, West Africa, New Zealand, Indonesia and north-west Australia.

    BP’s shipment to Thailand and Australia would be the company’s at least fifth cargo of U.S crude bound for Asia Pacific in 2016, after the U.S. repealed a four-decade-old ban on crude exports in December of last year.

    BP seeks to raise U.S. crude exports to meet the healthy Asia Pacific demand. Traders also want to send more U.S. oil to Asia, but so far, the lower shale production and the very tight spread between the WTI and Brent prices for most of the year have not allowed them to take advantage of a profitable arbitrage window.

    BP may start processing U.S. crude at its Australian refinery, but it has backed out of some of its upstream plans in Australia. BP hasquit a US$600-million drilling operation in the Great Australian Bight. The project was not in line with BP’s “strategic goals,” the company said. Another reason for the withdrawal could be the strong public opposition to drilling for oil in the pristine Bight, and several regulatory delays, including two rejections from Australia’s National Offshore Petroleum Safety and Environmental Management Authority.

    http://oilprice.com/Latest-Energy-News/World-News/BP-To-Sell-US-Crude-To-Australia-Thailand-For-First-Time.html?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+oilpricecom+%28Oil+Price.com+Daily+News+Update%29
    Back to Top

    Hess Corporation announces third quarter 2016 net loss of $339 million


    Third Quarter Highlights:

    * Net loss was $339 million, or $1.12 per common share, compared with a net loss of $279 million, or $0.98 per common share, in the prior-year quarter
    * Adjusted net loss was $340 million, or $1.12 per common share, compared to an adjusted net loss of $291 million, or $1.03 per common share, in the third quarter of last year
    * Reduced E&P capital and exploratory expenditures by 49 percent to $435 million from $849 million in the prior-year quarter
    * Oil and gas production was 314,000 barrels of oil equivalent per day (boepd); Bakken net production was 107,000 boepd
    * Successful Liza-3 well in the Stabroek block, offshore Guyana (Hess 30 percent), confirms world class oil discovery; estimated recoverable resources for Liza now expected to be at the upper end of the previously announced range of 800 million to 1.4 billion barrels of oil equivalent
    * Issued $1 billion of 4.30% notes due in 2027 and $500 million of 5.80% notes due in 2047; proceeds to be used primarily to purchase or redeem higher-coupon bonds and near-term maturities ($750 million of proceeds used through September 30, 2016)
    * Cash and cash equivalents were $3.5 billion at September 30, 2016 ($625 million committed for debt retirement in October)

    Hess Corporation (NYSE: HES) today reported a net loss of $339 million, or $1.12 per common share, in the third quarter of 2016 compared with a net loss of $279 million, or $0.98 per common share, in the third quarter of 2015. On an adjusted basis, the Corporation reported a net loss of $340 million, or $1.12 per common share, in the third quarter of 2016 compared with an adjusted net loss of $291 million, or $1.03 per common share, in the prior-year quarter. Third quarter 2016 after-tax results reflect lower production and realized selling prices compared with the third quarter of 2015, as well as lower operating costs and depreciation, depletion and amortization expenses.'Our company continues to take steps to maintain a strong balance sheet and materially reduce our spending,' Chief Executive Officer John Hess said. 'We also are investing in growth projects including the world-class Liza oil discovery in Guyana that we believe will create significant value for our shareholders. Based on the positive results of the Liza-3 well, we now expect Liza to be at the upper end of the previously announced estimated recoverable resources range of 800 million to 1.4 billion barrels of oil equivalent.'

    http://www.oilvoice.com/n/Hess-Corporation-announces-third-quarter-2016-net-loss-of-339-million/7e0dbf6bc66c.aspx
    Back to Top

    Whiting Petroleum Corporation Announces Third Quarter 2016 Financial and Operating Results


    * Q3 2016 Net Cash Provided by Operating Activities of $151 Million Exceeds Capex by $66 Million
    * Q3 2016 Average Production of 119,890 BOE/d at High End of Guidance
    * Q3 2016 LOE Below Low End of Guidance at $7.98 per BOE
    * Williston Basin 5+ Million Pound Completions Continue to Track 900 MBOE Type Curve after 265 Days
    * Williston Basin 10+ Million Pound Completions Tracking 1,500 MBOE Type Curve
    13 New McKenzie County Wells Test at Average Rate of 3,727 BOE/d

    Whiting’s (NYSE: WLL) 2016 third quarter capex of $85 million was under budget and relatively flat with the second quarter. Production in the third quarter came in at the high end of guidance and totaled 11.0 million barrels of oil equivalent (MMBOE), an average of 119,890 barrels of oil equivalent per day (BOE/d). Production was comprised of 85% crude oil/natural gas liquids (NGLs). Whiting continued to lower its lease operating expense (LOE). LOE for the third quarter averaged $7.98 per BOE, below the low end of guidance. Third quarter LOE benefitted from the sale of higher operating expense North Ward Estes properties, continued operating efficiencies and better than anticipated production results.

    James J. Volker, Whiting’s Chairman, President and CEO, commented, “During the third quarter, we continued to improve our capital efficiency with production at the high end of guidance on lower than projected capital spending, and LOE per BOE improving to $7.98 per BOE on the sale of North Ward Estes. This resulted in our net cash from operating activities exceeding our capital spending by $66 million. In the Williston Basin, the combination of high quality acreage and innovative completion methods drove solid results. Our thirteen new wells completed in McKenzie County tested at an average rate of 3,727 BOE/d and our leading edge design 10+ million pound completions in Williams County are tracking a 1,500 MBOE type curve. We believe the focus on balance sheet strength and capital spending discipline in the first nine months of 2016 provides us with a strong financial base to continue to deliver solid operational results and realize the potential of our world class asset base.”

    Lots more: http://www.businesswire.com/news/home/20161026007005/en/Whiting-Petroleum-Corporation-Announces-Quarter-2016-Financial
    Back to Top

    Range Resources Corporation announces third quarter 2016 results


    RANGE RESOURCES CORPORATION announced its third quarter financial results.

    Highlights

    * Merger with Memorial Resource Development Corp. ('Memorial') closed on September 16th
    * Gulf Markets Expansion pipeline on line in early October improves natural gas netbacks by moving 150,000 Mmbtu per day of Range natural gas from Appalachia to Gulf Coast markets
    * North Louisiana production growth and additional takeaway projects result in better natural gas differentials going forward
    * New condensate sales agreements commenced July 1, improving condensate prices by approximately $7.00 per barrel compared to the previous quarter
    * NGL pricing improved to 25% of WTI compared to 13% of WTI in the prior-year quarter
    *Third quarter production averaged a record 1,508 net Mmcfe per day
    * Southern Marcellus production averaged a record 1,228 net Mmcfe per day, up 23% from the prior-year quarter
    Unit costs improved by 3%, or $0.09 per mcfe, compared to prior-year quarter

    Commenting, Jeff Ventura, the Company's CEO said:

    'Range reached another milestone in the Company's history with the closing of the Memorial merger on September 16th. Combining the North Louisiana stacked pay assets with our extensive Marcellus/Utica inventory makes Range a better and stronger company, with geographic diversity that allows us flexibility in capital allocation and marketing. The integration of North Louisiana's operations is going well and we expect the combined experience and skills from both teams will enhance the value of these high-quality assets.

    Third quarter results were encouraging, as production increased, unit costs improved and unhedged cash margins rebounded. We are excited as we look forward to fourth quarter 2016 and the full year 2017, as we anticipate improving margins on all of our products and continued improvement in capital efficiency across the Company. With our extensive opportunity set in two high-quality natural gas plays, we believe Range is in a great position to drive shareholder value for many years to come.'

    http://www.oilvoice.com/n/Range-Resources-Corporation-announces-third-quarter-2016-results/c73c1da0308b.aspx?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+OilvoiceHeadlines+%28OilVoice+Headlines%29
    Back to Top

    Suncor reports third quarter profit on higher production, refinery throughput


    Suncor Energy Inc, Canada's largest oil and gas company, reported a better-than-expected third-quarter profit on Wednesday thanks to strong upstream production, lower operating costs and record crude throughput at its refineries.

    The company reported net earnings of C$392 million ($293 million), or 24 Canadian cents per share. In the year-prior quarter, Suncor recorded a net loss of C$376 million, or 26 Canadian cents a share, which included an unrealized after-tax foreign exchange loss of $786 million on the revaluation of U.S. dollar-denominated debt.

    Suncor's third-quarter operating profit, which excludes one-time items, was C$346 million, or 21 Canadian cents per share, versus C$410 million, or 28 Canadian cents per share, in the year-ago period.

    Analysts had predicted earnings of 9 Canadian cents per share, according to Thomson Reuters I/B/E/S.

    Calgary-based Suncor is the biggest producer in Canada's oil sands and also has operations offshore Atlantic Canada and in the North Sea. The company produced 728,100 barrels of oil equivalent per day in the third quarter, up from 566,100 boepd in the same period of 2015, due mainly to becoming the majority owner of the Syncrude project.

    Syncrude, a mining and upgrading project in northern Alberta, has been dogged by operating issues over the years, but Suncor said upgrader reliability improved to 98 percent in the third quarter and operating costs dropped to C$27.65 per barrel from C$41.65 per barrel in the year-prior quarter.

    Suncor also owns a number of thermal oil sands projects and a mining and upgrading plant near Fort McMurray, Alberta. Production rebounded after wildfires in the region in the second quarter shut down facilities for several weeks.

    Total third-quarter oil sands production was 433,700 bpd, compared with 430,300 bpd a year previously, with increased output from thermal projects offset by lower synthetic crude volumes as a result of unplanned maintenance.

    Oil sands operating costs fell to $22.15 a barrel in the quarter from $27 a barrel a year prior because of lower natural gas prices, cost reductions and increased production.

    "Our cost reduction efforts combined with safe, reliable operations have delivered the lowest cash costs per barrel at our oil sands operations in over a decade and Syncrude delivered similar improvements," Suncor Chief Executive Steve Williams said.

    The company is divesting non-core assets, and said it had advanced the sales process for its lubricants business, as well as starting the sales process for some assets and liabilities related to its renewable energy business.

    Average refinery throughput improved to a record 465,600 bpd from 444,800 bpd in the prior-year quarter.

    http://www.reuters.com/article/us-suncor-energy-results-idUSKCN12R01H

    Attached Files
    Back to Top

    Alternative Energy

    Tesla turns profit, Musk says no new capital needed for Model 3


    Tesla Motors Inc reported its first quarterly net profit in more than three years on Wednesday, buoyed by nearly $139 million in sales of clean car credits, and Chief Executive Elon Musk said the company could turn a profit again in the fourth quarter.

    The electric carmaker also signaled it has substantially reduced the costs for launching production of its high volume Model 3 sedan next year. Musk told analysts the company's current plan "does not require any capital raise for the Model 3 at all."

    The tech billionaire said Tesla could still raise capital to "account for uncertainty ... and de-risk the business," however.

    The third quarter profit and a leaner capital spending plan could help grease the wheels for Musk if he does seek to tap the markets for cash. Turning a profit, even for one quarter, should help counter skeptics who have questioned his ambitious plans for combining Tesla and solar panel maker SolarCity (SCTY.O) into a company offering roof-to-garage no-carbon energy systems.

    Musk has made promises to investors before related to the timing of product launches, production and profitability, only to walk them back.

    The company has weathered a difficult few months, beginning with the death of a Model S driver using Autopilot, Tesla's much vaunted semi-autonomous driving system, and culminating in the decision to acquire debt-laden SolarCity, which has increased scrutiny on the finances of both Tesla and SolarCity.

    Earlier this month, Tesla told investors it expected to raise capital this year to fund the Model 3 launch, which will involve a substantial investment in machinery and product development. But Musk signaled in a tweet earlier this month that was no longer the case.

    Tesla reiterated that the mass-market Model 3 sedan was on track for deliveries in the second half of 2017. The Model 3 has a starting price of $35,000, about half the price of the current Model S sedan.

    In the short term, Musk said sales of a new 100 kilowatt-hour version of the Model S, which starts at $134,500 and can travel 315 miles (507 km) on a charge, will be key to profitability.

    Tesla said it planned capital spending of $1.8 billion for the year, with just over $1 billion of those outlays coming in the fourth quarter. However, that new total capital spending forecast for this year is about 20 percent lower than the automaker's previous forecast of $2.25 billion.

    Tesla's results were lifted by $139 million in sales of California zero emission vehicle credits. Rival automakers can buy the credits rather than sell electric cars of their own. That was comparable to what the company booked from sales of so-called ZEV credits for all of 2014, said Cowen analyst Jeffrey Osborne.

    "Certainly what drove the upside on profit is the $139 million of those zero emission credits which is a near 100 percent profit business," said Osborne.

    Tesla said it had $3.08 billion in cash and cash-equivalents as of Sept. 30, compared with $3.25 billion at the end of the second quarter.

    Tesla's planned acquisition of SolarCity will be neutral, or a cash contributor to fourth-quarter Tesla results in "a small way," Musk said.

    The automaker's shares initially rose 6.2 percent in after-hours trade but gave back some of those gains and were trading at about $211 a share, up 4 percent from the closing price of $202.24.

    Tesla recorded net income of $21.9 million, or 14 cents per share, for the third quarter ended Sept. 30, marking the first positive earnings since the first quarter of 2013. That compared with a loss of $229.9 million, or $1.78 per share, a year earlier. Total revenue more than doubled to $2.30 billion.

    SolarCity shares rose 3 percent in after-hours trade after closing at $19.99.

    http://www.reuters.com/article/us-tesla-results-idUSKCN12Q2QW
    Back to Top

    Uranium

    End of Nuclear in U.S. Seen by Carlyle Group Without Subsidies


    Nuclear power will come to an end in the U.S. if the industry doesn’t get more government support, according to Carlyle Group LP, one of the world’s largest investment firms.

    The nation’s nuclear reactors need more subsidies to keep running, such as a federal carbon tax that’ll reward them for their zero-emissions power, Bob Mancini, co-head of Carlyle Group’s power unit, said at a conference in New York. Carlyle, which has $176 billion in assets under management across funds, invests in natural gas- and coal-fired power plants and renewable energy projects.

    Its outlook comes as nuclear power generators including Exelon Corp. and Entergy Corp. make plans to shut reactors across the country. Low power prices, fueled by an abundance of natural gas from shale drilling and weakening demand, have squeezed their profits just as their operating costs rise amid mounting regulation.

    “We will see the end of the nuclear industry in the next coming decades” without legislation, incentives or other support to keep reactors open or encourage new builds, Mancini said at S&P Global Platts’s Financing U.S. Power Conference on Tuesday.

    The cost of building a nuclear plant may be more than five times that of a gas-fired one based on U.S. government data, Bloomberg Intelligence analyst Stacy Nemeroff said in a report earlier this month.

    China, India and Russia are among the few places where new nuclear plants are being built, Mancini said. The U.S. is building four new nuclear units in Georgia and South Carolina.

    New York Plan

    Mancini pointed to measures approved by New York as an example of the kind of help nuclear power plant owners are going to need to survive. In August, state regulators there cleared subsidies worth about $500 million a year as part of a clean energy plan to reduce greenhouse gas emissions. They’re being fought by competing power producers who say the measures are unlawful.

    If the upstate reactors shut down, “emissions reductions will be eviscerated and volatility of prices will increase,” Mancini said. “More importantly, from a political perspective, hundreds of millions of dollars of tax revenue will be affected and thousands of jobs lost in parts of the state that are already economically depressed.”

    http://www.bloomberg.com/news/articles/2016-10-25/carlyle-group-sees-u-s-nuclear-industry-s-end-without-subsidies-iupx27u9

    Attached Files
    Back to Top

    Precious Metals

    Barrick earnings climb but miner keeps lid on costs

    Barrick earnings climb but miner keeps lid on costs

    Barrick Gold Corp, the world's largest producer of bullion, reported a bigger quarterly profit on Wednesday, reflecting higher gold prices and lower costs, while cutting its 2016 production costs and lifting its output.

    Toronto-based Barrick, which has been selling off non-core assets and using cash flow to pay down debt, said profits were lifted by lower fuel and energy costs, smaller exploration and project spending, foreign exchange gains and the sale of higher-cost mines.

    Debt has been reduced by $1.4 billion year-to-date and the company said it is on track to meet its 2016 reduction target of $2 billion. In three to five years, it wants to reduce its $8.5 billion debt to below $5 billion.

    Barrick reported adjusted earnings of 24 cents per share in the three months to end-September compared with 11 cents per share in the same period last year. Analysts on average expected earnings of 20 cents a share, according to Thomson Reuters I/B/E/S.

    With mines in the Americas, Australia and Africa, Barrick increased its 2016 production forecast to a range of 5.25 million to 5.55 million ounces of gold, from a previous target of 5.00-5.50 million.

    Barrick also lowered its estimate of all-in sustaining costs to produce an ounce of gold to a range of $740 to $775 from a previous target of $750-$790. Capital spending for 2016 is also forecast lower, at $1.2 billion to $1.3 billion, down from $1.25-$1.4 billion in the second quarter.

    Third-quarter gold production declined to 1.38 million ounces from 1.66 million ounces, while all-in sustaining costs improved to $704 an ounce from $771. Copper output fell to 100 million pounds from 140 million pounds.

    Revenue dipped to $2.3 billion from $2.32 billion, while free cash flow fell to $674 million from $866 million.

    Barrick cut its 2016 production forecast for its Veladero mine in Argentina to 530,000 to 580,000 ounces of gold, from 580,000 to 640,000 ounces, citing severe weather and a near three-week suspension.

    All-in sustaining costs at the site were increased to $800 to $870 per ounce from $790 to $860.

    Veladero operations were suspended in September after falling ice damaged a pipe and some crushed ore saturated with a process solution containing cyanide spilled over a barrier.

    It was the second cyanide spill at the mine in just over a year. The suspension was lifted after Barrick completed measures, such as increasing the height of perimeter banks surrounding the leach pad.

    http://www.reuters.com/article/us-barrick-gold-results-idUSKCN12Q2V8

    Attached Files
    Back to Top

    Gold miner Newmont doubles dividend, says CFO retiring


    Newmont Mining (NEM.N) doubled its dividend on Wednesday and raised its production forecast for the year, as it reported a rise in third-quarter earnings, boosted by a higher gold price.

    The world's second-biggest gold producer by market value also announced that it had appointed Nancy Buese as chief financial officer from Oct. 31 to replace Laurie Brlas, who is retiring.

    Newmont, which also mines copper, kicked off the reporting season for large North American gold miners. They are expected to show improvement thanks to an average 19 percent rise in bullion prices in the third quarter from a year ago.

    The miner said it expects the sale of its stake in the Batu Hijau copper and gold mine in Indonesia to close in the fourth quarter. It had been due to close in the third quarter but Newmont's chief executive told Reuters last month the approvals process was complex.

    Greenwood Village, Colorado-based Newmont doubled its quarterly dividend to 5 cents from 2.5 cents.

    The company also updated its dividend policy, which is linked to the price of gold. The revised policy has the potential to increase payout levels by more than 100 percent starting in the first quarter of 2017, Chief Executive Officer Gary Goldberg said in a statement.

    Newmont reported net income from continuing operations of $169 million, or 32 cents a share, in the three months to end-September, up from $159 million, or 30 cents per share, a year earlier.

    Its adjusted net income increased to $202 million, or 38 cents per share, in the quarter from $70 million, or 13 cents per share in the same period in 2015.

    Newmont also raised the lower end of its 2016 gold production forecast. It now expects to produce between 4.8 million and 5 million ounce of gold this year compared to a previous forecast of 4.7 million to 5.0 million ounces.

    Attributable production at Newmont, which has mines in the Americas, Africa, Australia and Asia, rose to 1.25 million ounces in the quarter from 1.21 million a year ago.

    The miner's all-in sustaining costs, the gold industry cost benchmark, rose to $925 an ounce from $879 an ounce before, hurt by "inventory adjustments" at its Yanacocha mine in Peru and Ahafo mine in Ghana.

    http://www.reuters.com/article/us-newmont-mining-results-idUSKCN12Q2SA

    Attached Files
    Back to Top

    Base Metals

    Suspended Philippine nickel miner mounts first legal challenge to govt crackdown


    A suspended Philippine nickel miner said on Wednesday it has sued governmentenvironment agencies for a nearly four-month stoppage of its operations, in the first legal challenge to the state's environmental crackdown on the mining sector.

    The Philippines is the world's top nickel ore supplier and an environmental audit that has halted a quarter of its 41 mines plus the risk that 20 more may be shuttered has fuelled a rally in global nickel prices.

    Benguetcorp Nickel Mines Inc's (BNMI) mine in Zambales province, north of the capital Manila, is among 10 suspended for environmental infractions in a government clampdown on damage from mining in July and August.

    "Seeing that BNMI is left with no other viable administrative remedy, it is constrained to elevate to the Courts the matter of the unlawful suspension of its nickel mining operations," the company said in a statement.

    The company filed a "petition for certiorari with injunction to assail the suspension order" jointly issued by the Mines and Geosciences Bureau, Environmental Management Bureau and the Department of Environment and Natural Resourcesregional offices with a regional trial court in Pampanga province, said Anna Montes, spokeswoman for parent firm Benguet Corp.

    The petition was filed on Oct. 21 and the first hearing is set on Nov. 9, Montes told Reuters by phone.

    The Zambales mine of BNMI was among the first mines suspended by the government on July 8.

    The suspensions followed "various complaints of environmental degradation," according to Leo Jasareno, who was then director of the Mines and Geosciences Bureau. He said the suspensions would be in effect until the companies complied with conditions set by the agency.

    BNMI said the government environment officials rejected its proposal to address the problems. It said it was forced to lay off more than 1,000 workers since its suspension.

    "To avoid irreversible financial damage to its business and ease the hardship on other affected stakeholders, the company has no choice but to resort to legal action to obtain an equitable resolution to this controversy," it said.

    Environment and Natural Resources Secretary Regina Lopez, who spearheaded the mining audit, did not immediately return a request for comment.

    On top of the audit that was completed in August, Lopez said on Oct. 14 that her agency will review all environmental permits previously granted to the minerals industry.

    http://www.reuters.com/article/philippines-mining-benguetcorp-idUSL4N1CW3OF
    Back to Top

    Steel, Iron Ore and Coal

    German economy minister sees no brown coal exit before 2040


    Economy Minister Sigmar Gabriel does not expect Germany to withdraw from brown coal in its power production before 2040, despite a growing debate over how to protect the climate from rising CO2 emissions.

    "It will on no account be switched off in the next decade - in my opinion not even in the one after that," Gabriel told an energy conference in Berlin.

    Calls have grown for Germany to set out a timetable for a withdrawal from coal in power production following the climate protection deal struck in Paris last December.

    The government has pledged to reduce CO2 emissions by up to 95 percent compared to 1990 by the middle of the century.

    Domestic hard coal mining will cease in 2018 and Germany's coal miners and users expect the country's last brown coal mines to close by around 2045.

    While coal will lose significance, Gabriel said it was important to first come up with alternative business opportunities in affected regions.

    Germany in June distanced itself from initial proposals to set out a timetable to exit coal-fired power production "well before 2050" as part of a national climate action plan.

    Now it plans to set up a committee for climate protection and structural change that will deal with how to exit brown coal production while ensuring jobs for the affected regions.

    The committee will be asked to come up with proposals by 2018.

    http://www.reuters.com/article/us-germany-coal-idUSKCN12Q1IN
    Back to Top

    China's coal industry Jan-Sep profit up 65pct on year


    China's coal mining and washing industry profits surged 65% on year to 35.18 billion yuan ($5.19 billion) over January-September, compared with 22.48 billion yuan over January-August, according to data released by the National Bureau of Statistics (NBS) on October 27.

    During the same period, the coal mining and washing industry realized revenue of 1.6 trillion yuan, dropping 8.2% from a year ago, a slower decline compared with a fall of 10.2% in the first eight months, data showed.

    Total profit of the country's entire mining industry declined 62.1% on year to 76.14 billion yuan from January to September, with total revenue at 3.47 trillion yuan, a decrease of 8.5% from the year-ago level.

    Meanwhile, profit in ferrous and non-ferrous metal mining industry stood at 25.85 billion and 31.96 billion yuan, falling 20% and up 5.2% on year, respectively.

    http://www.sxcoal.com/news/info?lang=en&id=4548540

    Attached Files
    Back to Top

    Shanxi's 58% coal-fired power plants in the red over Jan-Sept


    Northern China's Shanxi province, a major coal production base in China, saw 30 or 57.69% of coal-fired power producers in the red in the first nine months, mainly due to a decline of thermal power output over the period, showed the latest data from the Shanxi branch of National Energy Administration.

    Over January-September, power producers in the province realized profit of 3.02 billion yuan ($445.4 million), falling 55.7% year on year. In September, they suffered losses of 91 million yuan.

    Total profit of top five producers in the black stood at 978 million yuan, data showed.

    In the first nine months, Shanxi generated 168.07 TWh of thermal electricity, sliding 3.17% on year, accounting for 92.4% of the province's total electricity generation, which edged down 0.76% on year to 181.96 TWh.

    Electricity output from wind and hydropower was 9.26 TWh and 2.82 TWh over the same period, increasing 31.49% and 29.35% on year, respectively; solar power output surged 219.28% on year to 567 GWh.

    Over January-September, the utilization hours of power generation units in Shanxi declined 263 hours to 2,546 hours, with that of thermal power down 261 hours to 2,816 hours.

    By contrast, the utilization hours of wind and hydropower generation units stood at 1,332 and 1,156 hours, up 113 and 262 hours, while that of solar power production slid 142 hours to 762 hours.

    Shanxi consumed 130.9 TWh of electricity over the period, rising 1.57% from a year ago.

    The outbound electricity of the province fell 6.27% on year to 51.07 TWh in the first nine months, while the volume dropped 32.47% on month in September.

    http://www.sxcoal.com/news/info?id=4548491&lang=en
    Back to Top

    All these Australian mines are reopening thanks to the rally in coal prices


    An ongoing rally in the price of Australia’s key exports, mainly coal and iron ore, is prompting miners to restart projects and resume operations at mines that were shut only a few months ago, when both commodities were trading close to 10 years-lows.

    At least seven coal mines are expected to resume operations before the end of the year — four in Queensland and three in New South Wales.

    Miner and commodities trader Glencore, for one, has reopened its Collinsville mine in Australia's Queensland state because of higher demand for the product in Southeast Asia and favourable prices

    The move by the world’s biggest supplier of thermal coal is expected to create about 200 jobs in the region.

    At least seven other coal mines are expected to resume operations before the end of the year — four in Queensland and three in New South Wales. These include Collinsville and Isaac Plains, which Vale and Sumitomo sold last year to Stanmore Coal (ASX:SMR) for only $1.

    But the potential multibillion-dollar windfall could be short-lived, economists have warned.

    NAB’s chief economist, Alan Ostler, believes that global production peaked in 2014, which together with action on setting a carbon price after the Paris climate accord will continue to suppress demand, inevitably affecting prices.

    Liberum analyst Ben Davis agrees. He said in a report last week that thermal coal may start a downward trend soon as Chinese policymakers decided to temporarily reverse limits on thermal-coal production until December.

    “We expect the hedging loss to shrink as thermal-coal prices drop faster than what is currently being implied by the forward curve,” he wrote.

    There also are still plenty of major companies including Peabody Energy, Anglo American and Rio Tinto that are trying to sell its coal assets. Meanwhile, BHP Billiton, the world’s largest mining company, warned last week that coking coal supply could grow “more quickly than demand” in the near term.

    http://www.mining.com/all-these-australian-mines-are-reopening-thanks-to-the-rally-in-coal-prices/

    Attached Files
    Back to Top

    Brazil's Vale sees 50m tonnes of iron-ore entering 2017 market


    Brazilian miner Valeexpects 50-million tonnes of new iron-ore production to enter the global market in 2017, but it should be offset by falling production in China and increased steel demand, a company executive said at a conference in Rio de Janeiro.

    Paulo Salles, Vale's head of iron-ore marketing for South America, said that the 50-million tonnes would be composed of 28-million tonnes from Brazil, 18-million tonnes from Australia and 4-million tonnes from India.

    http://www.miningweekly.com/article/brazils-vale-sees-50m-tonnes-of-iron-ore-entering-2017-market-2016-10-25
    Back to Top

    POSCO Q3 profit jumps to more than 4-yr high on steel price gains


    South Korean steelmaker POSCO posted its strongest quarterly operating profit in more than four years, but cautioned results could weaken in the current three-month period as high raw material prices bite.

    POSCO, the world's fourth-biggest steelmaker in 2015, said on Wednesday that its consolidated operating profit rose to 1.03 trillion won ($908.79 million) in the third quarter, up from 652 billion won a year earlier and its strongest quarterly result since the second quarter of 2012.

    The operating profit also beat a consensus forecast of 904 billion won from a Reuters' poll of 15 analysts.

    Steel prices in China, the world's biggest consumer and producer, have rallied 50 percent this year as Beijing's efforts to reduce a crippling overcapacity in the sector there have led to lower inventories of the alloy.

    POSCO said this year's profit would far exceed earlier forecasts, which would lead to higher-than-planned dividends.

    After the earnings announcement, Moody's Investors Service revised POSCO's ratings outlook to stable from negative, citing a recovery in earnings and debt reductions.

    Still, Moody's expects that POSCO's operating income will fall moderately in 2017.

    "The level of earnings achieved in 3Q 2016 is not sustainable, based on overcapacity issues in China and Korea, as well as sluggish key end-markets in Korea, such as in the shipbuilding and automobile sectors," it said.

    POSCO shares fell 0.4 percent on Wednesday prior to the earnings announcement while South Korea's main index declined 1.1 percent.

    The steelmaker's shares have rallied 49 percent so far in 2016, tracking China's higher steel prices, bouncing back after falling a sixth straight year in 2015.

    COKING COAL PRICES

    The outlook for steelmakers has been clouded by a recent rally in coking coal prices that could squeeze profit margins.

    ALSO IN MARKET NEWS

    Comcast posts higher third-quarter revenue, adds video customers
    BRIEF-Exelon reports Q3 GAAP earnings per share $0.53

    As with steel, the pricing surge for coking coal - a key steelmaking material - has been driven by Beijing's efforts to tackle chronic overcapacity.

    "We plan to raise steel prices to cover the expected increase in costs, but it will be difficult to cover them fully," said Chon Jung-son, senior vice president.

    Raw material costs were expected to rise by 50 percent in the current quarter, Chon said.

    In Japan, surging prices for coking coal will likely drive Japan's top two steel producers, Nippon Steel & Sumitomo Metal and JFE Holdings, to miss their earnings forecasts for the year to March 31, adding to the troubles of the companies already reeling from a stronger yen.

    South Korean steelmakers are also facing tough export markets - where they are already struggling with competition from Chinese and other producers - after anti-dumping measures were implemented by the United States and India.

    The U.S. Commerce Department in August imposed anti-subsidy duties of 3.9 to 11.3 percent against most steelmakers in Brazil, Turkey and South Korea, but slapped POSCO with a 57 percent anti-subsidy measure.

    POSCO is considering launching an appeal against the anti-subsidy measure at the World Trade Organization, POSCO executive Jeong Tak said during an earnings conference, calling it an "unfair decision" aimed at "protecting its own industry."

    He also said POSCO will try to offset impact of the duties by expanding sales in other regions, including South Korea.

    http://www.reuters.com/article/posco-results-idUSL4N1CR2U9

    Attached Files
    Back to Top
    Commodity Intelligence LLP is Authorised and Regulated by the Financial Conduct Authority

    The material is based on information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. Opinions expressed are our current opinions as of the date appearing on this material only.

    Officers and employees, including persons involved in the preparation or issuance of this material may from time to time have "long" or "short" positions in the securities of companies mentioned herein. No part of this material may be redistributed without the prior written consent of Commodity Intelligence LLP.