Mark Latham Commodity Equity Intelligence Service

Thursday 1st June 2017
Background Stories on www.commodityintelligence.com

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    Macro

    Why the west won- for now. Ian Harris

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    Iraq enjoys cordial, strategic relations with Iran: Ammar Hakim


    Iraq enjoys cordial, deep and strategic relations with Iran, Head of Iraq National Coalition (INC) Ammar Hakim said on Monday.

    He made the remarks in a fast-breaking (Iftar) meal ceremony held at the Iranian embassy in Baghdad.

    Hakim called Iran-Iraq relations historical, adding that the Iraqi groups should prepare for countering challenges they will face after defeat of ISIS.

    In the ceremony, Iraqi Foreign Minister Ibrahim al-Jaafari, for his part, hailed the achievements made in the fight against terrorism.

    Iraq is committed to good neighborly relations with Iran, he added.

    Meanwhile, Iranian Ambassador to Iraq Iraj Masjedi said that cooperation between Tehran and Baghdad can guarantee security, sovereignty and progress of Iran and Iraq.

    He voiced hope for the victory of Iraqi armed forces and volunteer forces over ISIS.

    http://tehrantelegram.com/story-z18987759
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    Sumitomo companies switch from coal to LNG for power generation


    Members of the Japanese Sumitomo Group, Sumitomo Chemical and Sumitomo Metal Mining, intend on scaling down on use of coal and move to liquefied natural gas for power production.

    The two companies are looking to build an LNG receiving terminal as well as a gas-fired power plant at the site of Sumitomo Chemical’s factory in Niihama, the company’s statement reads.

    The overall project cost is estimated at around 60 billion to 70 billion yen (US$541 million to $631 million).

    The 150,000 kW power plant will be operated by Sumitomo Joint Electric Power through a new company which will be formed with Tokyo Gas and Shikoku Electric Power. The facility will also include the LNG tanker mooring as well as the liquefied natural gas storage tanks.

    The design work on the facility, which is set to start operation in 2021 will be completed by Tokyo Gas’ unit, Tokyo Gas Engineering Solutions.

    Once in operation, the facility will provide electricity to nearby Sumitomo group companies, with the operator, Sumitomo Joint Electric Power shutting down the coal-fired power plant.

    http://www.lngworldnews.com/sumitomo-companies-switch-from-coal-to-lng-for-power-generation/
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    Metals recycler Befesa targets pre-summer IPO -sources


    Metals recycling group Befesa is planning to list on the Frankfurt stock market, potentially valuing the group's equity at 1-1.2 billion euros ($1.1-1.3 billion), two people close to the matter said.

    Befesa, which says it has almost half of Europe's steel recycling market and the market for recycling aluminium residues, is expected to announce its intention to float in June, with its planned market debut taking place four weeks later, the sources told Reuters on Wednesday.

    The company is hoping to benefit from buoyant stock markets and a nascent recovery of global equity listings after a 2016 slump and would be the third listing in Germany in the second quarter alongside restaurant chain Vapiano and online food takeaway firm Delivery Hero.

    Shares worth about 450-500 million euros will be offered, including 100 million in new shares, while Befesa's owner, buyout group Triton, will also sell some stock, the sources added.

    Santander, Commerzbank, Berenberg and Stifel are acting as bookrunners alongside global coordinators Goldman Sachs and Citi, they said.

    Triton declined to comment, while the banks also declined to comment or were not immediately available for comment.

    Triton is also weighing an outright sale of Befesa as an alternative to the IPO. Triton has offered Befesa to potential buyers and may opt for the sale if that proves a better deal.

    Befesa, which is headquartered in Luxembourg and was listed until it was bought by Spain's Abengoa in 2000, on Tuesday posted adjusted earnings before interest, tax, depreciation and amortization of 151 million euros on sales of 640 million euros in the year to the end of March.

    It had net debt of 460 million euros and is hoping to reap a valuation including debt similar to that of peers.

    Waste Connections, Stericycle, US Ecology , Umicore and Ecolab trade at 11-15 times their expected core earnings.

    Befesa, which sees itself as market leader in hazardous waste recycling services to the steel and aluminium recycling industries, cited a strong business in its core steel dust and aluminium salt slags units.

    Befesa specialises in recycling steel dust from the steel and galvanizing industry and salt slags from the aluminium industry. Abengoa sold the company to Triton in 2013 for 850 million in cash, or 1.1 billion euros including debt.

    Iron, zinc and aluminium prices have picked up substantially since October.

    http://www.reuters.com/article/befesa-ipo-idUSL8N1IX20Z

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    German power grid redispatch measures, costs down by quarter in 2016

    German power grid redispatch measures, costs down by quarter in 2016

    Germany's need for and cost of power grid stabilizing measures fell by around a quarter in 2016 mainly due to improved grid management and less volatile wind and solar production, the federal grid regulator BNetzA said.

    According to its annual report published Monday, the costs of redispatch measures (throttling or increasing power production to deal with bottlenecks to stabilize the grid) dropped to Eur219 million ($245 million) from a record Eur412 million in 2015.

    Power plants used by the grid operators for such measures produced a total 11.5 TWh to help stabilize the grid last year, down from 15.4 TWh in 2015, it said.

    On top of this, so-called winter reserve power plants were needed on 108 days with output from such plants almost doubling to 1.2 TWh, it added.

    By contrast, curtailments of renewable output due to grid bottlenecks fell by almost 1 TWh to 3.7 TWh with compensation costs paid to renewables operators falling from Eur478 million in 2015 to Eur373 million in 2016, it added.

    According to the grid regulator's annual grid expansion report, Germany has so far only realized 11% of power grid link projects classed as 'high priority' with regional imbalances set to increase over coming years despite a reduced need for winter reserve power plants once the German-Austrian power price zone is split next year.

    The grid regulator's 10-year-grid plan based on TSO calculations, estimates the cost of the grid expansion at around Eur50 billion ($55 billion) over the next 10 years, including the offshore wind grid links needed through to 2030.

    https://www.platts.com/latest-news/electric-power/london/german-power-grid-redispatch-measures-costs-down-26745793
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    BHP lifts force majeure declaration at Escondida copper mine not Aus coal


    BHP Billiton said on Thursday it has lifted a declaration of force majeure at its Escondida copper mine in Chile, more than a month after a costly strike came to an end.

    BHP declared force majeure at the mine in early February at the start of a labor strike that lasted 43 days and cost the world's biggest mining house an estimated $1 billion.

    "I'm pleased to say that our copper FM (force majeure) is lifted as of today. We are back to normal," BHP's chief commercial officer, Arnoud Balhuizen told reporters after addressing a mining luncheon.

    Force majeure remained in place on shipments from its coal mines in Australia's Queensland state, where a cyclone in late March knocked out rail haul lines, Balhuizen said.

    "We still need a bit of time to get to full normal shipments in coal," he said.

    http://www.reuters.com/article/us-bhp-billiton-copper-idUSKBN18S3UA

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    Oil and Gas

    LIBYA'S OIL PRODUCTION RISES TO 827,000 BPD



    LIBYA'S OIL PRODUCTION RISES TO 827,000 BPD AFTER TECHNICAL PROBLEM AT SHARARA FIELD FIXED - NATIONAL OIL CORP CHAIRMAN

    @EnergyBasis
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    Saudi Arabia's Falih dismisses US shale threat


    Saudi energy minister Khalid al-Falih played down the threat of rising US shale production in Moscow on Wednesday, especially in light of the deepening strategic relationship between Saudi Arabia and Russia and the extension of the OPEC and non-OPEC crude production cut deal agreed in Vienna last week.

    Falih, who was meeting with Russian energy minister Alexander Novak and OPEC Secretary General Mohammed Barkindo, outlined four drivers at play in the market: robust oil demand growth, the natural decline in legacy oil fields, investment cuts of $3 trillion over the last few years with a continued lack of sizable investments in long term projects, and the OPEC-led agreement to balance the market.

    "When these factors are taken together I can only conclude that the supplies coming from marginal barrels including shale production will not be sufficient to meet the future need for incremental capacity the mid-term," Falih said. "The market balance is already pointing in that direction," he added.

    "We have made tremendous progress in rebalancing the market and giving the market strong direction through our determined actions and high degree of conformity," Falih said of the agreement among producers to cut output by 1.8 million b/d in November 2016. This was followed up by high levels of compliance by most of the countries involved, with the OPEC/non-OPEC monitoring committee overseeing the deal pegging compliance among the deal's 24 members at 102% for April.

    BALANCED MARKET

    Falih said the nine-month rollover of the current deal would lead to "further and more accelerated inventory drawdowns," adding that "following two consecutive years of decreased global exploration and production investments since 2014, there has been a decline of investments of roughly 40%...but investments will stabilize this year at over $530 billion."

    He was keen to point out that this stabilization should be attributed to the expectation of a balanced market in the very near future.

    "All in all I am confident that the high level of cooperation we have seen among producers over the last six months will remain strong and that by acting with solidarity and in pursuit of our common objective we can steadily overcome the inventory challenge," Falih said, with compliance in the first half of the year defying analysts' expectations.

    Falih said greater collaboration was here to stay and that he foresaw many opportunities to continue and enhance joint efforts between non-OPEC and OPEC in the months and years to come.

    "We want to institutionalize the goal of maintaining and strengthening cooperation between OPEC and non OPEC producers," while also "extending excellent relations with international energy institutions like the IEA, OECD and others to promote better understanding and global economic prosperity," he said.

    https://www.platts.com/latest-news/oil/moscow/saudi-arabias-falih-dismisses-us-shale-threat-26745791

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    Norway 'flags rule change'


    Government in proposal to restrict foreign ownership of offshore fields amid increased Russian interest

    Norway is reportedly looking to implement a regulatory shift that would restrict foreign ownership of its offshore fields in an apparent effort to deflect Russian investment moves.

    The proposed rule changes would enable the Oslo government to reject non-European entities seeking to acquire stakes in oil and gas licences on grounds of national security, Bloomberg reported.

    It comes amid increasing interest from outside investors in Norway’s assets

    http://www.upstreamonline.com/live/1270390/norway-flags-rule-change
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    Matchmaking: OPEC and Russia Want to Formalize a Long-Term Partnership


    Russia is looking to find ways to cooperate with OPEC despite years of saying it has no plans to join the group

    OPEC and Russia hope to institutionalize cooperation between the two beyond the current production cuts, according to Russian Energy Minister Alexander Novak and OPEC Secretary-General Mohammad Barkindo. The group of producers and Russia overcame years of mutual distrust in December to execute the current production cuts, which both extended earlier this month, but Russia has repeatedly said in the past that it has no intentions of joining OPEC as a member nation.

    OPEC and non-OPEC ministers may continue to meet once or twice a year after the current agreement ends, Novak said. “When the action ends and the market is balanced, we will undoubtedly continue working and interacting with OPEC,” he said.

    “The cooperation and collaboration between us — OPEC and non-OPEC — will outlive the implementation process,” Barkindo told reporters. “We are putting in place, if you like, the building blocks for a Catholic marriage. We do not expect a divorce in this marriage.”

    A six-nation committee overseeing implementation of the deal will consider proposals for how to sustain the partnership in the long term when it meets next month in Moscow, Novak said. These will then be presented to ministers when they next gather in November in Vienna.

    Libyan production rattles markets

    Following the extension of the OEPC and non-OPEC production cuts, Novak said Russia could cut production further depending on the market’s reaction. With a presidential election quickly approaching in Russia, higher oil prices could go a long way in improving the economy and helping President Vladimir Putin with his expected attempt to run for another term in office.

    So far, markets have reacted negatively to the production cuts being extended with many hoping the group would remove even more production from the market. News Wednesday that production from Libya, which is exempt from OPEC production cuts, reached a three-year high of 827 MBOPD did little to improve market sentiment.

    Traders appear to be adding to short positions as crude fell sharply Wednesday morning, CNBC reported.

    “The game of chicken between them and the market is back on again,” said John Kilduff, partner at Again Capital.

    “The meeting was much more of a failure than people realize because of what wasn’t achieved. There are no caps on production for Libya, or Nigeria, or Iran,” said Kilduff. Libya has shipped an average of 500,000 barrels per day of oil so far this year, up from 300,000 per day last year. Production reached 800,000 barrels per day earlier this month.

    “There were official statements about production from the Libyan National Oil Co., and that validated it with the market,” Kilduff said.

    https://www.oilandgas360.com/matchmaking-opec-russia-want-formalize-long-term-partnership/
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    BP to sign Azerbaijan oilfield extension deal at end of June



    British oil company BP expects to sign a contract at the end of June extending its production sharing deal for Azerbaijan's biggest oilfields until 2050, the company's regional head said on Wednesday.

    The existing deal is due to expire in 2024 and BP-led consortium and Azeri state oil firm SOCAR signed a letter of intent in December to continue developing the giant Azeri-Chirag-Guneshly (ACG) offshore fields until 2050.

    "End of June is a very reasonable time for it," Gary Jones, BP's regional head for Azerbaijan, Georgia and Turkey, told reporters when asked when the contract was due to be signed. "It's a big deal. We want to get it right."

    The shareholders in the consortium include BP, SOCAR, Chevron, INPEX, Statoil, ExxonMobil, TPAO, ITOCHU and ONGC Videsh.

    Azeri President Ilham Aliyev said on Wednesday he expected the contract to be signed soon.

    "We are thinking about development of the ACG bloc and I think we will reach a final agreement with investors," Aliyev said at the annual Caspian Oil & Gas conference in Baku.

    BP came under fire from Aliyev earlier this decade when the country's leader criticised the oil firm for lower than promised output levels. Oil output at ACG totaled more than 7.1 million tonnes in the first quarter of this year.

    http://www.reuters.com/article/us-bp-azerbaijan-idUSKBN18R1IU
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    Russian Aframax Urals netbacks strengthen as freight rates plummet


    A rapid fall in freight rates for Aframax cargoes loading in the Black Sea and Mediterranean over the past week has helped send the FOB Novorossiisk Urals market to its highest value versus Dated Brent since April 28, S&P Global Platts data showed.

    FOB Novorossiisk Aframax Urals cargoes were assessed at a $2.29/b discount to the Mediterranean Dated Strip Tuesday, up 38 cents/b on the day.

    Platts assesses FOB Novorossiisk Aframax cargoes as a freight netback to the CIF-delivered Rotterdam Urals market, using the Black Sea-Mediterranean 80,000 mt freight route to calculate the Urals value back to its loading point at the Russian Black Sea port of Novorossiisk.

    In this case, the FOB uptick was also helped by a strengthening CIF Augusta assessment as the CIF Augusta quote rose 15 cents/b on the day to Dated Brent minus $1.235/b Tuesday.

    The Black Sea to Mediterranean Aframax route, basis 80,000 mt fell to w100 Tuesday, down w20 from Friday. This route has shed w50 points since May 23 when it reached w150, a four-month high, according to S&P Global Platts data.

    A falling freight rate will make the FOB netback relatively more expensive to the CIF assessment.

    Brisk demand and tight tonnage for end May to early June loading dates drove prices up rapidly but they came down just as quickly as demand tailed-off, sources said.

    The port of Trieste finished maintenance too and re-opened all the crude discharge berths, which meant a lot of vessels came back into the spot market over the weekend, sources said.

    Delays in the Turkish strait have also been steady with the wait estimated at two days southbound and two days northbound, sources said.

    https://www.platts.com/latest-news/shipping/london/russian-aframax-urals-netbacks-strengthen-as-26745796
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    Saudi Aramco signs joint venture deal to build shipyard


    Saudi Aramco said on Wednesday it had signed a joint venture agreement with three firms to build a shipyard on the kingdom's east coast, part of the government's drive to diversify the economy beyond oil.

    A shareholder agreement was signed with National Shipping Co of Saudi Arabia (Bahri), a state-controlled firm which ships oil for Aramco, as well as London-listed Lamprell Plc, a United Arab Emirates-based engineering firm, and South Korea's Hyundai Heavy Industries Co.

    Aramco, which announced a memorandum of understanding for the project in January 2016, gave no financial details of the joint venture.

    It has previously said the project will cost over 20 billion riyals ($5.3 billion).

    http://www.reuters.com/article/us-aramco-shipbuilding-hyundai-heavy-lam-idUSKBN18R0MP
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    Exxon shareholders approve climate impact report in win for activists


    Exxon Mobil Corp's chief executive said on Wednesday the company would reconsider how it communicates the risks its faces from climate change after shareholders approved a measure calling for increased transparency.

    The non-binding proposal passed with 62 percent of ballots cast in a rare defeat for Exxon's management, which had recommended a vote against the measure. The company argued that it already provides sufficient information on the potential impact of changing technologies and energy demand on its asset portfolio.

    The results likely reflected a shift in how big shareholders voted on the measure, as the same proposal last year received only 38.1 percent of shares voted.

    Asset manager BlackRock Inc (BLK.N) backed the proposal, according to a source familiar with the matter. BlackRock holds about 6 percent of Exxon shares.

    Among other top Exxon shareholders, spokespeople for State Street Corp (STT.N) and Vanguard Group declined to comment on the vote on Wednesday.

    "It’s a powerful message," New York State Comptroller Thomas DiNapoli said in an interview. A New York state public employee pension fund he oversees was one of the proposal's sponsors. "They recognized the global community is staying committed to Paris," he said, referring to the Paris global climate accord.

    The proposal asked for Exxon to report on risks its business could face from technology changes and from climate change policies such as the 2015 accord aiming to keep average global temperature increases below 2 degrees Celsius.

    In remarks following the shareholder meeting, Exxon Chief Executive Darren Woods said the board would reconsider its climate change-related communications but did not commit to producing the report requested in the proposal.

    He also said board directors would review a policy designed to bar them from meeting individually with big shareholders, a practice criticized by the climate proposal sponsors.

    "We take the vote seriously will respond to that feedback and look for opportunities" to communicate, Woods said. "That issue along with others is part of dialogue we have with the board."

    Exxon still faces probes by Massachusetts and New York Attorneys General into whether it misled the public and investors by soft-pedaling climate change risks. Exxon has said suits are politically motivated and intended to force it and others to change their positions on climate change.

    Protesters, some in skeleton costumes, held up signs saying "Exxon Lied" across the street from Wednesday's annual meeting.

    Approval of Exxon's executive pay meanwhile received 68 percent of ballots cast, down from 89 percent a year ago. Proxy advisory firm Institutional Shareholder Services had recommended shareholders reject the executive pay plan.

    A proposal calling for a report on Exxon's efforts to reduce emissions of methane, another greenhouse gas, in its operations received support of nearly 39 percent of ballots cast.

    Another proposal calling on the company to increase shareholder payouts in light of climate change-related risks was approved by less than 4 percent of ballots cast. Exxon had opposed both proposals.

    Earlier, Exxon's Woods had said the company supported the goals of many of the proposals, but disagreed with the methods.

    http://www.reuters.com/article/us-exxonmobil-climate-idUSKBN18R0DC
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    LNG ltd company ends funding in QLD gas project


    Liquefied Natural Gas Limited (LNGL) will no longer fund maintenance for Queensland’s Fisherman’s Landing LNG (FLLNG) project, it has announced.

    Following a review of its asset portfolio, the Australian company has relinquished the site to the Gladstone Ports Corporation (GPC), a wholly-owned subsidiary of LNGL.

    “The closure of the FLLNG project was not an easy decision by the company,” said Greg Vesey, LNGL’s managing director and CEO.

    “However, after many years without success in securing the long-term economic gas supply that would be needed to proceed with project construct, we made a strategic decision to close the project.”

    LNGL, which owns gas exploration companies including US-based Magnolia LNG, Canadas Bear Head LNG, and LNG Technology, has notified the relevant regulators of the change.

    The move is also not believed to have a material impact on the company’s cash management plan.

    https://www.australianmining.com.au/news/lng-company-ends-funding-qld-gas-project/
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    API reports strong fall in inventories


                      Actual          Expected        Last Week

    May 31, -8.670M         -2.500M          -1.500M

    https://uk.investing.com/economic-calendar/api-weekly-crude-stock-656
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    US Oil Rig Count To Peak Soon Unless WTI Prices Rise


    U.S. exploration and production companies have hired an extra 400 rigs to target oil-bearing formations since the end of May 2016, according to oilfield services company Baker Hughes.

    The number of active oil-directed rigs has more than doubled over the last year, from 316 to 722, in one of the most remarkable recoveries on record, coming after one of the deepest slumps during the previous two years.

    But the recovery in oil prices has stalled since February and prices are now no higher than they were a year ago. Experience indicates the rig count will stop rising within a few months.

    The active rig count is likely to peak in June or July unless the price of benchmark West Texas Intermediate (WTI) crude starts rising again above $50 per barrel.

    Drilling activity and WTI prices each exhibit a pronounced cycle and are closely correlated.

    Price changes typically lead changes in the number of rigs employed, with an average lag of between 16 and 22 weeks.

    In 2014, oil prices turned lower in the middle of June and the rig count started to fall 16 weeks later, in mid-October.

    In 2016, prices turned higher from the middle of January and the rig count began to recover 19 weeks later, from the end of May (http://tmsnrt.rs/2qFlMKI).

    But prices stopped rising in late February 2017 and have since drifted sideways or slightly lower, which suggests the rig count is likely to peak between mid-June and the end of July.

    In recent weeks, exploration and production companies have added rigs at a slower pace than earlier in the year, which could be a sign that drilling is already starting to level off.

    Baker Hughes reports that an average of six oil rigs were added each week in May, down from more than 13 per week in March (http://tmsnrt.rs/2sdCJhB).

    Prominent shale producers have told investors they can drill new oil wells profitably at prices well below the current level of almost $50 a barrel.

    But further increases in the rig count are likely to require a further increase in prices to make them sufficiently attractive.

    http://www.rigzone.com/news/oil_gas/a/150383/Kemp_US_Oil_Rig_Count_To_Peak_Soon_Unless_WTI_Prices_Rise?utm_source=GLOBAL_ENG&utm_medium=SM_TW&utm_campaign=SHARE_DESKTOP
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    Has Permian Productivity Peaked?


    The U.S. shale industry might have just received a huge windfall with the nine-month extension of the OPEC cuts. Shale output was already expected to come roaring back this year, but the extension of the cuts provides even more room in the market for shale drillers to step into.

    The sky is the limit, it seems. However, there are growing signs that the U.S. shale industry could be reaching the end of the low-hanging fruit. Or, more specifically, drilling costs are starting to rise and the enormous leaps in production that can be obtained by simply adding more rigs also appears to be running into some trouble.

    According to the EIA’s Drilling Productivity Report, productivity (as opposed to absolute production) is set to fall next month in the Permian Basin. In other words, the average rig will only be able to produce an estimated 630 barrels per day of initial production from a new well, down 10 b/d from the 640 b/d that such a rig might have produced in May. That is convoluted way of saying that the ever-increasing returns on throwing more rigs at the problem might be hitting a ceiling.

    This is a very notable development – it is the first time that the EIA predicts falling well productivity per rig since it began tracking the data several years ago. Still, because the rig count has increased so much, there will still be more production coming out of the Permian. It’s just that as drillers gobble up all the best spots to drill, it will become more and more difficult to find easy pickings.

    Moreover, simply drilling the wells is only one part of the equation. As Collin Eaton of Fuel Fix notes, companies are drilling wells at a faster pace than contractors can frac them. The shortage of completion crews means that the backlog of drilled but uncompleted wells (DUCs) has shot up over the past year, rising by more than 60 percent to 1,995 in April 2017 from a year earlier.

    The strain on contractors means that drilling costs will also rise. Oilfield service companies bore the brunt of the market downturn over the past three years, forced to slash their rates because of the lack of work. Oil producers have consistently and repeatedly boasted about their “efficiency gains,” but much of the cost-savings came from soaking service companies.Related: The Mysterious Rosneft Deal And Its Consequences

    That could be at an end. The rise in drilling activity means that oilfield service companies finally have more leverage to hike their prices. The results could be an upswing in costs for producers. Service costs could jump by 20 percent this year, according to an estimate from S&P Global Platts.

    But it isn’t all rosy for service companies either. Fuel Fix notes that they have to rebuild their rig fleets after scrapping so many during the last few years. Also, finding enough people to return to work after savagely cutting payrolls will be a challenge.

    Overall, however, production is still expected to increase. Generous financing from Wall Street will ensure that capital is not a limiting factor. Consequently, the shale industry will continue to shower West Texas with money, rigs and people. Oil will flow in larger volumes this year and probably next year, barring another downturn. The Permian, for instance, is still expected to add more than 70,000 bpd of additional output between May and June.

    Also, OPEC’s determination to prevent another downturn in prices provides some certainty to shale drillers. OPEC is erasing some of the risk for drillers to deploy resources in the Permian. On an annual basis, the EIA estimates that U.S. oil production will average 9.3 million barrels per day (mb/d) in 2017 and a staggering 10.0 mb/d in 2018.

    But if well productivity has peaked, the marginal barrel will be a bit trickier to produce next year than it was in, say, late 2016.

    http://oilprice.com/Energy/Crude-Oil/Has-Permian-Productivity-Peaked.html
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    Cushing hub's crude storage shell, working capacity edges lower: EIA


    Crude oil storage shell capacity at Cushing, Oklahoma, fell to 90.1 million barrels as of March 2017 from 90.4 million barrels six months ago, data from the U.S. Energy Information Administration (EIA) showed on Wednesday.

    Working storage capacity at the U.S. crude hub fell to 76.7 million barrels from 77.1 million barrels in the same comparison, EIA data showed.

    U.S. Gulf Coast crude oil shell capacity rose to 301.3 million barrels as of March, up from 291.3 million barrels. U.S. Gulf Coast working capacity also rose, increasing to 260.3 million barrels from 250.5 million barrels in September 2016.

    http://www.reuters.com/article/us-usa-oil-cushing-idUSKBN18R2UH
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    Alternative Energy

    Trump to announce decision on global climate deal on Thursday


    Rumours have abounded for days

    President Donald Trump said he would announce on Thursday his decision whether to keep the United States in a global pact to fight climate change, as a source close to the matter said he was preparing to pull out of the Paris accord.

    Trump said he would make the announcement at 3 p.m. EDT (1900 GMT) in the White House Rose Garden, ending his tweet with "MAKE AMERICA GREAT AGAIN!"

    During his 2016 presidential campaign, Trump blasted the accord, and called global warming a hoax aimed at weakening U.S. industry.

    The Republican vowed at the time to "cancel" the Paris deal within 100 days of becoming president on Jan. 20, part of an effort to bolster U.S. oil and coal industries.

    A U.S. withdrawal could deepen a rift with U.S. allies. The United States would join Syria and Nicaragua as the world's only non-participants in the landmark 195-nation accord agreed upon in Paris in 2015.

    Trump came under pressure on Wednesday from corporate CEOs, U.S. allies, Democrats and some fellow Republicans to keep the United States in the accord.

    Responding to shouted questions earlier on Wednesday from reporters in the White House Oval Office where he met with Vietnamese Prime Minister Nguyen Xuan Phuc, Trump said: "I'm hearing from a lot of people, both ways."

    The source, speaking on condition of anonymity, said Trump was working out terms of the planned withdrawal with U.S. Environmental Protection Agency Administrator Scott Pruitt, an oil industry ally and climate change doubter.

    The pact was the first legally binding global deal to fight climate change. Virtually every nation voluntarily committed to steps aimed at curbing global emissions of "greenhouse" gases. These include carbon dioxide generated from burning of fossil fuels that scientists blame for a warming planet, sea level rise, droughts and more frequent violent storms.

    The United States committed to reduce its emissions by 26 percent to 28 percent from 2005 levels by 2025.

    Advocates of the climate deal pressured Trump, who has changed his mind on large decisions before even after signaling a move in the opposite direction.

    The chief executives of dozens of companies have made last-minute appeals to Trump. The CEOs of ExxonMobil Corp, Apple Inc, Dow Chemical Co, Unilever NV and Tesla Inc were among those urging him to remain in the agreement. Tesla's Elon Musk threatened to quit White House advisory councils if the president pulls out.

    Musk said: "I've done all I can to advise directly" to Trump and through others in the White House.

    Robert Murray, CEO of Murray Energy Corp [MUYEY.UL], an Ohio-based coal company and major Trump campaign donor, urged Trump to withdraw from the deal. But on Wednesday, U.S. coal company shares fell alongside renewable energy stocks following reports that Trump would pull out.

    Pulling the United States from the accord could further alienate American allies in Europe already wary of Trump and call into question U.S. leadership and trustworthiness on one of the world's leading issues. It also would be one more step by the Republican president to erase the legacy of his predecessor, Democrat Barack Obama, who helped broker the accord and praised it during a trip to Europe this month.

    http://www.reuters.com/article/us-usa-climatechange-trump-idUSKBN18R1J4
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    Precious Metals

    Fosun buys stake in Russia's top gold miner for $887 million


    A consortium of investors led by China's Fosun International Ltd will buy a 10 percent stake in Russia's top gold producer Polyus for $887 million, they said on Wednesday.

    Russia, the world's third largest gold producer, has been looking for investments in Asia, mainly in China, since the West imposed sanctions on Moscow due to its role in the Ukraine crisis and the annexation of Ukraine's Crimea peninsula in 2014.

    China is the world's top consumer, producer and importer of gold and Chinese companies have been targeting gold mine acquisitions.

    Fosun, an acquisitive Chinese conglomerate, will buy 12,561,868 Polyus shares for $70.6025 per share from the family of Russian tycoon Suleiman Kerimov.

    "We are delighted to enter into this agreement to acquire a significant stake in Polyus," Wang Qunbin, Fosun's Chief Executive, was quoted as saying in Polyus' statement.

    The consortium, which includes two of Fosun's affiliates - Zhaojin Mining (1818.HK) and Hainan Mining (601969.SS) - will be a strategic long-term shareholder, he said.

    The deal is the first major foreign investment for Qunbin who replaced Liang Xinjun as CEO in late March. Liang, who was Fosun's public face for years and was instrumental in driving Fosun's overseas expansion, stepped down in a surprise reshuffle that created uncertainty over the group's strategy.

    Fosun has been in talks since last year to buy a Polyus stake, sources have said. The deal was announced one day before the start of the St Petersburg International Economic Forum, the country's annual event to attract investors.

    Kerimov's family also said that their firm Polyus Gold International Limited (PGIL) had granted the consortium an option to acquire up to an additional 5 percent in the company for $77.6628 per share by the end of May 2018.

    Polyus shares were down 0.5 percent in Moscow on Wednesday at 4,425 roubles ($77.87).

    The price for the initial stake purchase values Polyus at $9.0 billion and the deal is expected to be done by the end of 2017.

    The agreement also provides for minimum annual dividend payments by Polyus for 2017-2021 at the greater of 30 percent of its full-year core earnings, known as EBITDA, or $550 million for each of 2017, 2018 and 2019 and $650 million for each of 2020 and 2021.

    Polyus, whose free-float is currently at 6.8 percent, is also considering launching a secondary share offering in London and Moscow in June, sources familiar with the matter have said previously.

    "PGIL and the consortium committed to cooperate to ensure the company complies with the requirements of the Moscow Exchange where its ordinary shares are listed, as well as the requirements of foreign exchanges where the company's equity securities may be listed in the future," PGIL said

    http://www.reuters.com/article/us-russia-polyus-china-idUSKBN18R1Y7
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    Osisko Gold Royalties takes 19.9% stake in Minera Alamos


    Intermediate precious metal royalty company Osisko Gold Royalties has taken a 19.9% stake in Minera Alamos through a C$3.3-million private placement, giving it access to near-term gold production at the La Fortuna project and future opportunities in Mexico.

    Osisko has agreed to buy 22.5-million Minera Alamos shares at C$0.15 a share.

    In parallel with the Osisko placement, Minera Alamos also announced that it has appointed Haywood Securities as lead agent on behalf of a syndicate of agents to sell, on a best efforts private placement basis, up to 23 33-million common shares at the same price, for further gross proceeds of up to C$3.5-million. The agents also have an over allotment option to sell up to a further 20% of the brokered offering in common shares at the issue price, for a period of 48 hours before the offering closes.

    The brokered offering is expected to close on or about June 29.

    “This is a transformative announcement for Minera Alamosand marks the beginning of the next phase of our Mexican production and growth strategy. We look forward to working with Osisko to fast-track La Fortuna toward production and expand our presence in Mexico organically and through additional acquisitions,” Minera Alamos president Darren Koningen said in a statement Tuesday.

    Under terms of the investment agreement, Osisko will have nondilution rights to any future financing activity Minera Alamos might undertake, if it maintains at least 10% ownership of the company, up to maximum of 20%. For as long as Osisko maintains a 10% interest, it will have the right to nominate two directors to the Minera Alamos board. It has put forward the current chief geologist of Talisker Exploration Services Ruben Padilla with immediate effect.

    Further, Osisko will have the right to buy up to a 4% net smelter return royalty (NSR) for C$9-million, and have a participation right on any future royalties and streams granted by the company. Osisko also has the right to participate in half of any buybacks of existing La Fortuna royalties, and the right to acquire a 2% NSR on any property acquired within a 250-km radius of La Fortuna.

    Minera Alamos advised that it will use the proceeds from the financings to develop La Fortuna and for working capital and corporate purposes.

    The La Fortuna gold project includes the historic La Fortuna mine, together with the surrounding concessions, totalling 994 ha. The property is in the north-western corner of Durango state, about 70 km northeast of the city of Culiacan, Sinaloa.

    The project has a current resource block model that produced a measured and indicated resource of 4.8-mmillion grading 2 g/t gold, for 308 000 contained ounces, at a 0.5 g/t goldcutoff grade.

    Meanwhile, Minera Alamos announced the resignation of director and CEO Chris Frostad on May 31, who will be replaced by current president Koningen.

    http://www.miningweekly.com/article/osisko-gold-royalties-takes-199-stake-in-minera-alamos-2017-05-30
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    'Strong hand' may be pushing palladium price higher



    Yesterday was a generally good day for precious metals with the complex recovering much of the losses suffered since mid-April.

    Palladium was once again the best performer on the day, up 1.5% to $816.75. Nymex palladium futures are sporting year-to-date gains of more than 20% and are once again approaching  two-year highs hit at the end of April.

    The fortunes of palladium and sister metal platinum have diverged dramatically over the past year. A new annual report by the GFMS team at Thomson Reuters on the PGM market argues it is "more a case of when, not if, the palladium price will exceed platinum".

    It would be the first time since 2001 that palladium is worth more and its relative strength is even more remarkable given that the gap averaged just over $1,000 an ounce between 2007-2012.

    The superior performance for palladium is unsurprising given that 2016 was the fifth year in a row of substantial deficits (1.2m ounces or 37 tonnes) and the automotive markets in China and the US have enjoyed record breaking runs. Palladium mainly finds application in gasoline engines and the sector is responsible for 70% of overall palladium demand.

    But a  report from Platts News suggests other forces may be at work and that a market participant with a "strong hand" may be putting the "squeeze" on the metal.

    Sponge (semi-finished metal) prices have been stable which suggests the unusual tightness is at the refining end of the market.  The report quotes a senior banking source as saying lease rates for palladium have quadrupled from 1% to 4%:

    "There's certainly a tightness, but I'm not sure if it's fundamentals or a strong hand," he said.

    "People have tried this [possible squeeze] before and it can get ugly, real fast. You'd be a brave man to take a position, short or long, at these levels," the source said.

    A research note from Commerzbank also cautioned on the outlook with the investment bank saying it "cannot understand why the palladium price should be so strong given that automotive markets in the US and China are faltering and ETF outflows are continuing."

    http://www.mining.com/strong-hand-may-pushing-palladium-price-higher/

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    Steel, Iron Ore and Coal

    Russia's Mechel first-quarter net profit jumps


    Russian metals and mining giant Mechel said on Wednesday its net profit jumped to 13.9 billion roubles ($245 million) in the first quarter, compared with a profit of 312 million roubles in the same period last year.

    Mechel, which borrowed heavily before Russia's economic crisis took hold in 2014, has fought back from the brink of bankruptcy after struggling to keep up debt repayments as demand for its products weakened alongside tumbling coal and steel prices.

    Higher prices and a nascent recovery in the Russian economy have since supported earnings and the company said in April it could start reducing debt this year if favourable market conditions continued.

    "In the first quarter of 2017 the group showed good financial results. Favourable price trends had their positive impact," Chief Executive Oleg Korzhov said in a statement.

    "Our net profit attributable to equity shareholders of Mechel for the first quarter went up by nearly nine times, reaching 13.9 billion roubles."

    Mechel's net debt, excluding fines and penalties on overdue amounts, totalled 458.9 billion roubles as of March 31, down from 469.2 billion roubles at the end of last year.

    Revenue increased 24 percent year-on-year to 77.4 billion roubles, while earnings before interest, tax, depreciation and amortisation (EBITDA) rose to 22.8 billion roubles, up from 10 billion roubles a year ago.

    Mechel, controlled by businessman Igor Zyuzin, said earlier on Wednesday its crude steel output increased 8 percent year-on-year in the first quarter to 1.1 million tonnes.

    Coal output and sales of coking coal concentrate both fell 10 percent compared with the same period last year, to 5.2 million tonnes and 2 million tonnes respectively, it said.

    http://www.reuters.com/article/russia-mechel-results-idUSL8N1IX2KD
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    “Clean coal” most expensive new power supply, says BNEF (and not all that clean)


    After a week of energy policy talk dominated by the Turnbull government’s outspoken support for new coal power generation for Australia, the independent energy research firm Bloomberg New Energy Finance has joined the growing chorus of voices saying, “umm, I don’t think so.”

    BNEF released a damning report on the cost of new ultra-supercritical coal-fired power stations in Australia – which the Coalition likes to call “clean coal” – which basically confirms the theory that this would be “the most expensive form of new energy supply” the federal government could possibly choose to invest in, even discounting future carbon liabilities.

    The research puts the Levelised Cost of Energy (LCOE) of a new ultra-supercritical coal-fired power station in Australia at $A134-203/MWh; significantly higher than the LCOE of new-build wind at $A61-118/MWh), solar $A78-140/MWh or combined-cycle gas at $A74-90/MWh.

    As for the cost of coal with carbon capture and storage technology added – which many, including Australia’s chief scientist, have said will be the only way new coal could be built, if we are to abide by our national and internaitonal emissions reduction commitments – BNEF says this is difficult to assess, but comes up with an LCOE in the ballpark of $A352/MWh – or around three times the cost of wind or solar.

    Not only does this research put clean coal firmly in the ‘economically ridiculous’ basket, but it puts lie to the Coalition’s argument that building new coal in Australia will help deliver that “affordable electricity supply.”

    According to BNEF, building new coal in Australia would result in “substantially higher” electricity prices than we would see from a combination of wind, solar and gas – provided gas markets operate efficiently.

    “New coal is made particularly expensive due to the substantial carbon, reputation, trading and construction risks the technology presents to an investor,” explains Leonard Quong, a senior associate with BNEF in Sydney and the report’s lead author.

    “But even if the government were to completely de-risk coal by paying for the whole plant and guaranteeing an exemption from any future liabilities, the lowest LCOE that could be achieved is $A94/MWh, which is still well above wind, solar or gas.”

    On the subject of emissions, BNEF’s research also found that new-coal is far from ‘clean’, with new ultra-supercritical plants found to have an emissions intensity of 0.76tCO2-e/MWh – around double that of combined cycle gas (0.37-0.46tCO2-e/MWh).

    “It is inaccurate and misleading to describe ultra-supercritical coal technology as “clean” without the presence of CCS,” said Quong – and as noted above, adding CCS to the cost of the technology takes it from unrealistic, to out of this world.

    Of course, BNEF is not alone in coming to these conclusions. The director of the Centre for Climate Economics and Policy at the Australian National University, Frank Jotzo, put them in his own words in this Conversation article today; while earlier this week the Melbourne Energy Institute’s Dylan McConnell also crunched the numbers, and found that the Coalition’s clean coal plan would cost $62 billion – and that for a reduction of just 27 per cent of coal power emissions.

    Based on the latest estimates from the CSIRO, McConnell said that achieving the 27 per cent reduction would require 20GW of new coal capacity, at a cost of $3,100 per kW to build.

    “No wonder no one wants to talk about the costs,” McConnell told The Guardian.

    He said the total cost of the exercise, $62 billion, could instead build between 35GW and 39GW of wind and solar energy, amounting to an emissions reduction of between 50 – 60 per cent in the electricity sector as a whole.

    In another scenario, where the 27 per cent emissions reduction was achieved with renewables, rather than with new coal, about 13-19GW of renewable energy would be needed, which would cost between $24 billion and $34 billion.

    http://reneweconomy.com.au/clean-coal-most-expensive-new-power-supply-says-bnef-and-not-all-that-clean-74531/
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    Shanxi to suspend or slow construction of 120 Mtpa coal capacity



    Authorities in Shanxi, one of China's biggest coal-producing regions, have vowed to suspend or slow the construction of 120 million tonnes of coal production capacity from 2016 to 2020, reported the state media recently, citing a recent coal industry development plan published by the local government.

    The northern province will also suspend the construction of more coal mines over the period to further reduce capacity.

    As of the end of 2015, Shanxi had or was constructing 1,078 coal mines with a total production capacity of 1.46 billion tonnes per year.

    By 2020, Shanxi is set to reach the average single-mine production capacity of 1.8 million tonnes per annum via collieries reorganization and structure optimization in the coal sector.

    According to the latest forecast, the coal consumption across the province will reach 400 million tonnes by 2020, and another 600 million tonnes of coal will be distributed outside the region.

    Beijing has vowed to lower coal production over the next few years to reduce an annual capacity surplus amounting to more than 2 billion tonnes.

    The pledges are also part of China's years-long push to reduce the share of coal in its energy mix to cut pollution that has choked its northern cities.

    Shanxi, with a quarter of China's known coal reserves, aims to limit the number of its mines to 900 by 2020, with an average capacity of 1.8 million tonnes annually, according to earlier reports.

    Earlier this month, the province said it will shut 18 collieries and cut 17 million tonnes of coal capacity this year.

    China's government has said it aims to close 800 million tonnes of outdated coal capacity by 2020.

    http://www.sxcoal.com/news/4556682/info/en

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    China iron ore falls 6 pct to 6-mth low, steel sags despite upbeat PMI


    Iron ore futures in China tumbled 6 percent on Wednesday to the lowest since November, posting their biggest monthly decline in a year, amid lower steel prices and a glut of the raw material.

    Industry data showing activity in China’s steel industry expanded at the fastest pace in a year in May spurred gains in Shanghai steel futures earlier in the session. But steel later gave up those gains and slid nearly 4 percent as analysts warned demand may ease in the coming summer months when construction activity slows.

    The most-traded iron ore contract on the Dalian Commodity Exchange fell as low as 423.50 yuan ($62) a tonne, its lowest since November 2016. It closed down 6 percent at 424.50 yuan.

    The contract lost 16.7 percent in May, its biggest monthly decline since May 2016.

    Chinese markets reopened on Wednesday after being shut for public holidays on Monday and Tuesday.

    The decline in Chinese futures, along with a stubborn glut, has fuelled a nearly 40 percent drop in spot iron ore prices from this year’s peak.

    In the medium to longer term, iron ore should move towards $50 per tonne, said Julius Baer analyst Carsten Menke.

    “This is based on the assumption that Chinese steel production has moved beyond its structural peak and would decline steadily over the coming years,” Menke said.

    http://www.hellenicshippingnews.com/china-iron-ore-falls-6-pct-to-6-mth-low-steel-sags-despite-upbeat-pmi/
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    Rio Tinto Looks To Lower Debt Amid Uncertainty In Iron Ore Prices


    Rio Tinto has announced plans to further lower its debt burden, as it looks to strengthen its balance sheet amid an uncertain iron ore pricing environment. The company announced plans to buy back $2.5 billion of outstanding debt earlier this week. The company has been trying to lower its debt burden over the past couple of years due to a business environment characterized by weakness in iron ore prices. Under the simplifying assumption that the company is able to meet its business expenses from its operating cash flows and existing cash balances, the following table indicates the extent to which the company will have lowered its debt by year end. (The debt figures indicate year-end or projected year end gross debt balances.)

    Iron ore prices rose sharply in the fourth quarter of last year and the first quarter of this year, driven by a favorable demand outlook from China and the U.S. A fiscal stimulus instituted by the central government in China targeting the infrastructure sector raised the demand outlook from China, while the Trump administration’s infrastructure plans have raised the prospects of higher demand from the U.S. However, prices of iron ore have fallen sharply in recent months as demand growth in China, the world’s largest market for iron ore, has shown signs of faltering.

    Though Chinese imports of iron ore have continued to remain at elevated levels, the country’s stockpiles of the commodity have reached record levels, indicating that the underlying demand growth may not be keeping pace with the expansion in supply. Moreover, there are concerns over the sustainability of China’s debt-fueled (mainly domestic debt) economic growth, with Moody’s downgrading the country’s sovereign debt rating for the first time in nearly thirty years. Given the concerns over the sustainability of demand from the world’s largest consumer of iron ore, Rio Tinto’s move to shore up its balance sheet would stand the company in good stead in case of a further decline in prices.

    http://www.hellenicshippingnews.com/rio-tinto-looks-to-lower-debt-amid-uncertainty-in-iron-ore-prices/
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    China steel PMI rises to one-year high in May; risks rising



    Activity in China's steel industry expanded at the fastest pace in a year in May, industry data showed on Wednesday, with a rise in new orders giving mills in the world's top producer incentive to further ramp up output.

    However, risks in the market are growing as prices hit historic highs, the China Federation of Logistics & Purchasing (CFLP) said, while analysts warned demand may ease in the coming summer months when construction activity slows.

    China, which makes about half of the world's steel, produced a record volume of the building material in April at a time when Beijing is campaigning to tackle surplus supply.

    The Purchasing Managers' Index (PMI) for the steel sector rose to 54.8 in May from 49.1 in the previous month, climbing above the 50-point mark that separates growth from contraction, according to data from CFLP.

    The new orders index jumped 13.6 percentage points to 60.5, the highest level since May 2016, data showed.

    "Demand from traders and downstream consumers rose as prices rebounded. Sales are good while steel firms are seeing more orders," CFLP said. Shipbuilding surged 72 percent in January-April, it said, while sales of excavators and bulldozers also grew sharply in April.

    "Steel demand fundamentals continue to improve. Currently, extremely low domestic steel stocks mean prices will continue to rally. But risk in the market is growing given that prices and margins for steel mills are at a historically high level," it added.

    Stocks of construction steel product rebar held by Chinese traders have more than halved from mid-February to 3.93 million tonnes as of May 26, according to SteelHome consultancy. SH-TOT-RBARINV

    China's fixed-asset investment grew 8.9 percent in January-April as the government increased infrastructure spending to spur economic growth.

    "There was an improvement in demand but we don't think it will be sustainable because we're approaching summer when construction usually slows down," said CRU analyst Richard Lu.

    There is also weak appetite for Chinese steel products overseas, particularly in Southeast Asia, said Lu. About a third of China's steel exports flow into that region.

    "In March and April, a lot of Southeast Asian importers booked rebar and billet orders from Russia, Ukraine, Iran and Turkey," he said.

    "So it seems their inventories are full now and monsoon season is coming, so their demand might not be as strong in June through August."

    The steel export index slipped 0.2 percentage points to 44.8, falling below the 50-threshold for the sixth consecutive month.

    "Steel mills have difficulty taking new export orders. We expect steel exports to continue to drop in following months," CFLP said, citing higher domestic steel prices and trade tensions between China and foreign markets.

    China's steel exports dropped 25.8 percent to 27.2 million tonnes in January-April

    http://www.reuters.com/article/us-china-economy-pmi-steel-idUSKBN18R05Y
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    Australia's Arrium steel group narrows buyers to two



    Final bids were lodged on Wednesday for the assets of Australian steel group Arrium Ltd, with creditors hoping for a one-price-for-everything transaction completed by the end of the month, two sources familiar with the matter said.

    Britain's Liberty House, the industrials and commodities group that has been snapping up troubled steel plants around the world is one of only two bidders remaining for Arrium, a steel company, with mining and distribution arms that fell on hard times after using debt to expand, according to the sources.

    A spokeswoman for Liberty House declined to comment.

    The other bidder is Seoul-based Newlake Alliance Management, comprising former executives of private equity giant Blackstone, which is looking to employ Finex technology under license from Korean steel group Posco, one of the sources said.

    Newlake could not be reached for comment.

    Arrium collapsed in April 2016 with A$2.8 billion ($2.1 billion) in debt after creditors rejected a $927 million bailout proposal by private equity group GSO Capital Partners that would have paid no more than 55 cents on the dollar on their claims.

    The creditors' committee includes Australian lenders Commonwealth Bank, National Australia Bank, Westpac and ANZ Bank, which are owed a combined A$1 billion.

    Arrium's U.S.-based Moly-Cop division, regarded as the jewel in the company, was sold to private equity firm American Industrial Partners for $1.23 billion in November.

    Since the collapse, the company has been run by financial administrators KordaMentha, which is overseeing the sales process.

    A spokesman for KordaMentha declined to comment

    One source close to the bidding said it could be several weeks before the offers were fully assessed but that creditors were anxious to have a determination by the end of June in order to start the 2017-18 financial year afresh.

    Liberty House, which operates together with energy and commodities business SIMEC under the $9.4 billion Gupta Family Group (GFG) Alliance, hit the headlines last year when it offered to rescue steel plants owned by Tata Steel UK that were on the verge of shutdown.

    Liberty has since bought an aluminium smelter in Scotland and a steel plant in the United States.

    Arrium's main asset is the 76-year-old Whyalla steel mill, which almost seized up after a powerful storm cut power, leaving molten steel to cool in its blast furnace.

    Arrium used debt to expand iron ore production during the mining boom of the last decade. But slowing Chinese demand and a over-production by majors Rio Tinto and BHP Billiton resulted in a collapse in iron ore and steel prices.

    The South Australian state government has pledged A$50 million to a new owner of the Whyalla steelworks to help upgrade the plant.

    http://www.reuters.com/article/us-arrium-australia-idUSKBN18R1F2
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