Mark Latham Commodity Equity Intelligence Service

Monday 10th October 2016
Background Stories on

News and Views:

Attached Files


    Lew calls out China on capacity.

    “I’m talking about steel, I’m talking about aluminum, I’m talking about real estate—when you don’t have market forces driving investment, when you don’t have bad investments allowed to fail, you end up with resources allocated in a way that ultimately chokes the future of economic growth,”

    Attached Files
    Back to Top

    Commodity Trader Trafigura Sells Oil Tankers to Chinese Bank

    Trafigura Group has sold five medium-range oil tankers to China’s Bank of Communications Financial Leasing Co. as the commodity trader ends a brief foray into owning vessels.

    The third-largest independent oil trader will lease back the 50,000 metric-ton capacity tankers ordered in 2013 from Guangzhou shipyard, Trafigura said Friday in an e-mailed statement.

    “While we have a significantly growing cargo program, it is not a must for us to also own the steel,” said Global Head of Wet Freight Rasmus Bach Nielsen. “The sale and lease back concludes an entry and exit for now in owning product tankers for Trafigura.”

    Rental rates for crude tankers may slide 25 percent in 2016 and another 11 percent in 2017 after climbing by more than two-thirds in 2015, according to analysts surveyed by Bloomberg. Expectations for a seasonal rally in rates heading out of the summer months appear to be diminishing, Bloomberg Intelligence analysts said in a report last month.

    “The ships were bought at low entry levels and we saw an opportunity to sell now,” Nielsen said.

    Trafigura’s expects its wet freight fixtures to rise to more than 2,700 in 2016, from 1,959 in 2015 and 1,680 in 2014.

    Trafigura said in June that its fiscal first-half profit fell 10 percent to $602 million from a year earlier, even as oil-trading volumes jumped to a record 4 million barrels a day.
    Back to Top

    Oil and Gas

    Iraq's oil minister wants country to increase output in 2017

    Iraq's oil minister has urged oil and natural gas producers operating in the country to continue increasing output next year, the oil ministry said in a statement on Sunday.

    Jabar al-Luaibi's comments came as OPEC nations are trying to implement an agreement to curb oil output for the first time since the 2008 financial crisis, in order to push up crude prices.

    The ministry's statement quoted remarks Luaibi made to a meeting of Iraq oil industry executives in the southern oil city of Basra to review the ministry's oilfields' development plans.

    It made no mention of the decision by the Organization of the Petroleum Exporting Countries on Sept. 28 to reduce output to a range of between 32.50 million barrels per day and 33.0 million bpd.

    OPEC's production stood at around 33.6 million bpd in September, according to a Reuters survey that put Iraq's output at 4.43 million bpd.

    The minister "has affirmed the need to proceed forth with increasing oil and gas production through enhancing the national effort and those of the licensed companies for the remainder of 2016 and also for 2017," the statement said.

    Foreign companies' oil output targets "should be reached within the assigned periods," the ministry quoted Luaibi as saying.

    The ministry also aims to increase associated gas output by adding 350 to 450 million cubic feet a day to the nation's production in 2017, Luaibi said.

    Natural gas output levels in Iraq's southern region are tied to crude production levels as the two are produced from the same reservoirs.
    Back to Top

    Iranian, Iraqi oil ministers will not attend Istanbul talks - sources

    The oil ministers of Iran and Iraq will not attend informal talks between OPEC and non-OPEC producers in Turkey this week, sources familiar with the matter said on Sunday.

    OPEC sources and the Russian energy minister said on Thursday that ministers from the two countries would be among representatives of OPEC states at the meeting in Istanbul, which is hosting the World Energy Congress.
    Back to Top

    Essar Group Said to Near Sale of $6.5 Billion Refinery Unit

    Essar Group, controlled by India’s billionaire Ruia brothers, is nearing a final agreement to sell control of its refinery unit to Russian energy giant Rosneft PJSC and commodities trader Trafigura Group Pte, people with knowledge of the matter said.

    The Indian conglomerate aims to sign a binding deal in the next two weeks to sell 49 percent of Essar Oil Ltd. to Rosneft, according to the people, who asked not to be identified because the information is private. Trafigura is also in advanced talks to buy a minority stake in Essar Oil, the people said. The suitors have been discussing a valuation of about $6.5 billion for Essar Oil, India’s second-largest private refiner, one of the people said.

    The board of Rosneft, which signed a non-binding pact on the potential purchase in July 2015, plans to meet Oct. 13 to approve the transaction, according to the people. Essar is considering eventually selling down most of its remaining interest in the refinery business and may keep only a residual stake of 5 percent or less, the people said.

    Russia has been cementing energy ties with India, which is expected to surpass Japan as the world’s third-largest oil user this year and be the fastest-growing crude consumer through 2040, according to International Energy Agency estimates. A conclusion to the sale would help Essar Group, which has been grappling with debt after an $18 billion spending spree, generate funds to repay lenders.

    ‘Huge Population’

    “Global players want to bet heavily on the Indian market because India has a huge population as well as rising income,” Jagannadham Thunuguntla, head of fundamental research at Hyderabad-based Karvy Stock Broking Ltd., said by phone Friday. “Its energy needs are growing rapidly both at the consumer level and industry level.”

    Final terms of the deal are currently being negotiated and an agreement could still be delayed, according to the people. Representatives for Essar, Rosneft and Trafigura declined to comment.

    Essar Oil runs the Vadinar refinery in the western state of Gujarat, which can process about 400,000 barrels a day. Most of the refinery’s output is sold locally, either through its own outlets or to government-owned fuel retailers. In July last year, Rosneft signeda pact to supply Essar Oil about 200,000 barrels of crude per day over 10 years.

    The deal being discussed includes the refinery as well as the Vadinar port and more than 2,000 retail gas stations, according to the people. The initial transaction won’t include a power plant serving the refinery, which could be transferred later after getting necessary approvals, the people said.

    Attached Files
    Back to Top

    Australia: LNG exports to rise 40 percent in 2016-17

    Australia’s LNG export volumes are expected to increase by 40 percent year on year to 51 million tonnes in fiscal 2016–17, according to the country’s Department of Industry, Innovation and Science.

    An additional 15 million tonnes of LNG export capacity is expected to be completed by mid- 2017, bringing total operational capacity to around 66 million tonnes, the department said in its latest report named Resources and Energy Quarterly.

    This includes the second and third trains at Chevron’s giant Gorgon project in Western Australia, and the second train at the ConocoPhillips-operated Australia Pacific LNG project in Queensland.

    The value of Australia’s LNG exports is forecast to increase by 41 percent to $23 billion in fiscal 2016–17, supported by higher LNG prices and export volumes, the department said in the report.

    Increased exports to Japan, South Korea and China are expected to drive the rise in Australia’s LNG export volumes.

    “While prospects for total import growth in Japan and South Korea are subdued, Australian producers are expected to capture an increasing share of both country’s imports with the commencement of a number of long-term contracts over the outlook period.”

    LNG export forecast revised down

    The department said in the report that the forecast for LNG export volumes in fiscal 2016–17 has been revised down by 2 million tonnes from the June edition.

    The revised forecast reflects a conservative view of the ramp up of LNG exports at several projects in Australia.

    “Statements from Santos executives in August indicate that GLNG may operate both trains below capacity for some time, with company releases noting that the low price environment is restricting capital expenditure and that the cost of third party gas has risen,” the report said.

    Prices rise

    After declining over the first five months of 2016, prices for Australian LNG delivered to markets in North East Asia rose in June, the department said.

    The average price of LNG into Japan, Australia’s largest market and the world’s largest importer, increased by 18 percent to US$6.51 a gigajoule, it said.

    “The recent uptick in prices reflects the effect of the oil price rally in early 2016, with most LNG delivered into Asia sold under contracts linked to the Japanese Customs-cleared Crude (JCC) oil price, by a time lag of three to four months.”

    The North East Asian spot price has increased over the past few months, averaging $5.80 a gigajoule in August, but remains around historic lows, as a result of growing excess capacity in the market.

    “Prices for LNG delivered to North East Asia are expected to rise in the September quarter before flattening out towards the end of the year, as the lagged response of LNG contract prices to recent oil price movements plays out.”

    LNG contract prices are then expected to rise further in 2017, consistent with the forecast recovery of oil prices to $55 a barrel. In contrast, spot prices are forecast to remain low, as the entry of new capacity in the US and Australia ensures that the market remains well supplied, the department said.

    “The implications of a potential divergence between contract and spot LNG prices remain to be seen, with one scenario that buyers begin to reduce LNG purchases to take-or-pay levels and seek to buy larger volumes on the spot market.”

    Attached Files
    Back to Top

    Venezuela makes new attempt to arrest oil production fall with new ventures

    In a fresh attempt to contain a fall in oil production, Venezuela's state-owned PDVSA announced two alliances with Chinese and Bulgarian companies to reactivate 931 wells in Lake Maracaibo, with the objective of adding 50,600 b/d and 43 MMcf/d of natural gas to output in the short term.

    "China-based Shandong Kerui Group Holding Co. will repair 624 wells, with financing of $30 million provided by the Chinese company," PDVSA said Thursday.

    "Also, PDVSA and the Bulgarian-Venezuelan Consortium Aleco are discussing reactivating 307 wells in Lake Maracaibo, with financing of $100 million that would come from the Bulgarians," PDVSA added.

    In September, PDVSA President Eulogio Del Pino, who also is oil and mining minister, said the company will drill 480 wells in the Orinoco Belt in the next 30 months, with the participation of international companies such Schlumberger and Horizontal Well Drillers, as well as Venezuela's Y&V, Halliburton and Baker Hughes.

    "The goal is to increase production by 250,000 b/d with an investment amounting to $3.2 billion," Del Pino said in September.

    On Monday during an interview broadcast by state television, Del Pino said that the 'well drilling and rehabilitation projects in Lake Maracaibo as well as in the Orinoco Belt are structured with a contract scheme so that financing is paid with future crude output."

    PDVSA's growing debts with its oil field service providers is paralyzing upstream development. Of the 373 wells drilled last year, 51% were contracted to international service companies, which have gradually been halting work due to non-payment.

    "There is a sustained decline of production of light crude, which has not been compensated for with production of heavy and extra heavy crudes," a source in PDVSA's exploration and production division said on condition of anonymity.


    On Thursday, the Oil and Mining Ministry said that Venezuela's crude oil production in September averaged 2.334 million b/d, up 0.2%, or 6,000 b/d, from 2.328 million b/d in August.

    The increase was attributed to greater output from the Orinoco Belt, the ministry said in a release Thursday.

    But over the longer term, Venezuelan oil production has been falling steadily since January 2015, when it totaled 2.812 million b/d.

    Contrary to the Venezuelan report, S&P Global Platts' latest OPEC survey showed Venezuela averaged 2.1 million b/d of crude oil production in September, a 20,000 b/d decrease from August.

    The production of light crude fell to 374,000 b/d in 2015 from 416,000 b/d in 2014, according to official data. The figures for 2016 are not available yet, but output continues to decrease.

    The most pronounced declines occurred in the light crude fields in western Venezuela, especially those located in the Lake Maracaibo basin, the PDVSA E&P source said.

    Declines in eastern Venezuela have been less pronounced. But still, output at El Furrial and Pirital, between Monagas and Anzoategui states, continues to show signs of depletion, the source said.

    To make up for the growing deficit of light crude, PDVSA has since the end of 2014 been importing cargoes of light crude from Nigeria, Algeria, Russia and the United States to process at refineries in Venezuela and Curacao for its export mixtures and for upgraded extra heavy crudes.

    But PDVSA continues to face cash flow problems, and imports have slowed. The lack of light crude supply also hurts PDVSA's diluted crude oil (DCO) production, which in turn means less revenue on exports and compounds the company's cash problems.

    "Assuming an average weighted blending ratio of around 22%/barrel and assuming there's broadly between 50,000-100,000 b/d of diluent material they can't get their hands on, that's around 250,000-500,000 b/d of DCO at risk," said FGE analyst Thomas Olney in an email.


    In August, due to a lack of feedstock, PDVSA shut two crude distillation units at its leased 335,000 b/d refinery on Curacao island.

    Light crude imports from the US to Curacao have been falling for several months and dropped to zero in July, according to the latest US Energy Information Administration data.

    PDVSA has also had to reduce rates at its domestic refineries in Venezuela due partly to a shortage of light crude.

    "We have reports of low availability of light crude, which is an important component of the crude diet processed at the refineries," said oil workers union leader Ivan Freites.

    "PDVSA maintains processing levels below 50% at its refineries because restarts at basic units are months behind schedule and there is not enough crude to process," Freites said.

    PDVSA's largest refinery, at Amuay, is operating at 49.6% capacity or 320,000 b/d.

    The Cardon refinery is operating at 38.7% capacity or 120,000 b/d, according to a technical report seen by Platts on Thursday. The two refineries, with 645,000 b/d and 310,000 b/d maximum capacities respectively, comprise the Paraguana Refining Center, or CRP, in northwestern Venezuela.

    PDVSA's 140,000 b/d El Palito refinery had been shut since April, and the company is conducting maintenance there through October.

    Also, PDVSA's FCC unit at the 187,000 b/d Puerto La Cruz refinery has been closed since May 1.

    Attached Files
    Back to Top

    GLOBAL LNG-Prices rise to highest in nine months on firm Asian demand

    Asian liquefied natural gas (LNG) gas prices reached a nine-month high this week as demand from India, Japan and South Korea underpinned sentiment.

    LNG for November delivery were about $6.20 per million British thermal units (mmBtu), 10 cents higher than last week, as supply-demand balances for the rest of the year appear tighter, said three traders who participate in the market. That is the highest since the week ending Jan. 8.

    Higher crude prices are also lending support to LNG values. ICE Brent futures have gained 3.3 percent to above $52 a barrel this week following the Organizations of the Petroleum Exporting Countries announced plans to curb production.

    LNG demand from North Asia remains firm as nuclear power stations in Japan and South Korea that have been taken offline are expected to stimulate demand for the super-cooled fuel.

    Japan's Kyushu Electric Power Co shut the 890-megawatt No. 1 reactor at its Sendai nuclear plant on Thursday for planned maintenance that is expected to last at least two months, although a restart could be hampered by anti-nuclear local authorities.

    South Korea has also shut multiple nuclear power plants for maintenance and as a precaution after the country suffered its biggest earthquake ever in September.

    "We expect demand to continue to be strong in Korea and Japan. China is also looking for more cargoes," a Malaysia-based LNG trader said.

    The best bids from Asian buyers were pegged at the low-$6 per mmBtu range, while offers were in the mid- to high-$6 per mmBtu range, the traders said.

    "It is still a buyers' market, but for November and December cargoes, sellers can decide who they want to sell to," a Singapore-based trader said, adding that the market may rise due to demand from India and North Asia.

    Indian gas firm GAIL closed a tender seeking a November and a December cargo early this week. The results were not immediately known, but traders expect the firm to have appetite for more cargoes.

    Angola LNG, which closed its sell tender for its Oct. 4-6 loading cargo on Wednesday, is likely to have awarded the tender because of its prompt loading dates. The bids are valid until Friday.

    Despite firm Asian demand, gains in spot prices could be capped by new production from the Australia Pacific LNG (APLNG) project that is due to start-up this quarter, and returning U.S. supplies. Cheniere's Sabine Pass is scheduled to come back from maintenance around Oct. 17, a source close to the matter said on Thursday.

    The Australian project is starting up its second production line, an APLNG spokesman said on Thursday, with traders expecting a first shipment to be loaded later this month.

    Attached Files
    Back to Top

    Russia, Turkey resume gas price talks: Russian energy minister

    A worker checks the valve gears in a natural gas control centre of Turkey's Petroleum and Pipeline Corporation, 35 km (22 miles) west of Ankara, January 5, 2009. 

    Moscow and Ankara have resumed talks on the price of Russian gas for Ankara, Russian Energy Minister Alexander Novak said in an interview with Turkey's Hurriyet newspaper.

    A gas price dispute between Turkish pipeline operator Botas and Russia's state gas producer Gazprom led to Botas launching international arbitration proceedings against Gazprom in October 2015.

    The row had led to talks on their joint Turkish Stream natural gas pipeline project to be suspended earlier that year.

    In November 2015, most contact between Russia and Turkey were halted after the downing of a Russian fighter jet by Turkish military, although since then Moscow and Ankara have made significant progress towards restoring relations.

    "Talks about gas price have resumed, I hope the sides will come to a common position," Novak said, according to the text of the interview published on the Russian Energy Ministry's website on Sunday.

    Botas says it was promised a discount on the price of gas in February 2015 but that Moscow never signed off on the deal.

    Novak said he expected the first hearing in the case to be held in 2017.

    "It is possible that by then Russia's Gazprom Export and Turkey's Botas will be able to resolve their disagreements related to the price of gas," Novak said.

    Novak also told Turkey's state-run Anadolu Agency that an intergovernmental agreement on Turkish Stream was almost complete and would be finalised before the meeting of the presidents of Turkey and Russia in Istanbul this week.

    Novak is due to attend the World Energy Congress in Istanbul this week, and plans to meet representatives of key OPEC producers and OPEC secretary general for informal talks on oil output.
    Back to Top

    Last minute talks end Norway strike threat

    Norway has avoided strike action by unions at three plants serving the country’s energy industry after a deal was agreed.

    The move means industrial action which could have cut gas supplies to Britain has now been avoided.

    The deal was reached after extending talks for three hours past a midnight deadline.

    A strike could have impacted deliveries of liquefied natural gas (LNG) globally.

    Jan Hodneland, a negotiator from the oil industry, said: “We are happy that the parties have agreed during the mediation on a new collective agreement for the next two years.”

    Altogether 338 members of the SAFE union were set to go on strike at Statoil’s Melkoeya LNG plant, Shell’s Nyhamna natural gas processing plant and ExxonMobil’s Slagen refinery terminal if the wage talks had failed.

    The Melkoeya plant turns gas from the Arctic Snoehvit field into LNG, while Nyhamna can supply up to 20 percent of Britain’s natural gas demand from the giant Ormen Lange field offshore in Norway.
    Back to Top

    NOVATEK reports preliminary operating data for the first nine months of 2016

    OAO NOVATEK reported today preliminary operating data for the nine months 2016.

    NOVATEK's marketable production totaled 49.95 billion cubic meters (bcm) of natural gas and 9,387 thousand tons of liquids (gas condensate and crude oil), resulting in a slight decrease in natural gas production by 150 million cubic meters, or by 0.3%, and an increase in combined liquids production by 2,852 thousand tons, or by 43.6% as compared with the nine months 2015.

    The Company processed 9,356 thousand tons of unstable gas condensate at the Purovsky Processing Plant, which represented a 7.6% increase as compared with the corresponding volumes processed in the nine months 2015.

    NOVATEK processed 5,197 thousand tons of stable gas condensate at the Ust-Luga Complex, which was 3.0% higher than the volumes processed at the facility in the nine months 2015. Preliminary nine months 2016 petroleum product sales volumes aggregated 5,211 thousand tons, including 3,247 thousand tons of naphtha, 774 thousand tons of jet fuel, and 1,190 thousand tons of fuel oil and gasoil. Export sales of stable gas condensate amounted to 1,069 thousand tons.

    As at 30 September 2016, NOVATEK had 2.46 bcm of natural gas and 426 thousand tons of stable gas condensate and petroleum products in storage or transit and recognized as inventory.

    NOVATEK's marketable hydrocarbon production including share in production of joint ventures:

                                                 9M 2015       9M 2016       Change,%
    Natural gas, bcm                 50.10           49.95              -0.3%
    Liquids, thousand tons      6,535           9,387             43.6%
    Back to Top

    Australia Pacific LNG second unit starts producing

    The Australia Pacific liquefied natural gas (LNG) plant, run by ConocoPhillips , confirmed on Monday that production had begun in the second of its two units.

    "The second train is up and running, enabling our LNG Facility on Curtis Island to deliver commercial quantities of LNG at sustained output from both trains," Australia Pacific LNG Chief Executive Page Maxson said in a statement.

    APLNG, a 9 million-tonnes-a-year project co-owned by ConocoPhillips, Origin Energy and China's Sinopec , is among three coal seam gas-to-LNG plants to have opened on Curtis Island off Australia's east coast over the past two years.

    APLNG did not say when it would ship its first cargo from the second production train, but traders say it is due in the second half of October. The plant has loaded 47 cargoes since starting up last December.
    Back to Top

    ConocoPhillips sues Venezuela's PDVSA, calls bond swap 'fraudulent'

    Subsidiaries of U.S. oil company ConocoPhillips have sued Venezuelan state oil company PDVSA in a Delaware court, according to a court filing, accusing it of fraudulent operations involving its U.S. subsidiary Citgo.

    ConocoPhillips said PDVSA operations, including an ongoing bond swap that uses shares in Citgo Holding Inc as collateral, are part of an effort to prevent Conoco from collecting compensation in a dispute over a 2007 nationalization of its Venezuela holdings.

    ConocoPhillips has for nearly a decade been pursuing a case against Venezuela in a World Bank tribunal to obtain billions of dollars in compensation for the 2007 takeover of its Venezuela assets by late socialist leader Hugo Chavez.

    The tribunal known as ICSID in a partial ruling in 2013 said that takeover was illegal.

    The U.S. company in an Oct. 6 filing cited numerous operations involving Citgo, including an attempt to sell it in 2014, a debt offering that financed dividend payments to PDVSA, and most recently a bond swap operation that uses Citgo Holding as collateral.

    "The purpose behind each of these transfers is the same: to remove assets from the United States to Venezuela and/or to encumber assets in the United States, with the intent to hinder, delay or defraud PDVSA's and Venezuela's arbitration award creditors, including ConocoPhillips," it said in the document.

    ConocoPhillips says Venezuela has also sought to protect its assets from being seized in any of some 20 arbitration cases filed by companies ranging from U.S. oil giant Exxon Mobil to small Canadian mining company Crystallex.

    Neither PDVSA nor a U.S.-based lawyer who represents it immediately responded to request for comment.

    It was not immediately clear when a decision was expected.
    Back to Top

    Shale Explorers Boost Activity Further After OPEC ‘Lifeline’

    Explorers added oil rigs in the U.S. for a sixth consecutive week after OPEC’s pledge to cut output triggered a crude market rally, allowing producers to lock in higher prices with hedge contracts.

    Rigs targeting crude in the U.S. rose by 3 to 428, adding to the largest level of work since February. Producers haven’t pulled back activity since the end of June. Natural gas rigs fell by 2 to 94 this week, while miscellaneous rigs rose by 1 to 2, bringing the total for oil and gas up by 2 to 524. Despite the overall activity boost, none of the four largest oil basins added rigs.

    "Companies are looking at areas that are under-explored or under-developed," James Williams, president of WTRG Economics in London, Arkansas, said Friday in a phone interview. "But what we’re going to see is continued growth in the major oil plays."

    Oil breached $50 a barrel for the first time since June this week after the Organization of Petroleum Exporting Countries agreed to the first production cut in eight years. By resuming its policy to balance the market, the group threw a “lifeline” to U.S. shale firms and prompted them to hedge “in droves,” Harry Tchilinguirian, head of commodity research at BNP Paribas SA in London, said last week.

    “Every time prices get above the $50 range we see a lot of activity coming in from producers selling into the rally,” said Hamza Khan, an analyst at ING Bank NV in Amsterdam.

    Production Delcine

    Crude output fell by 30,000 barrels a day to 8.47 million last week, the Energy Information Administration reported Wednesday.

    The oil price recovery from a 12-year-low in February prompted producers to begin returning parked rigs to service after idling more than 1,000 rigs since the start of last year. West Texas Intermediate, the U.S. benchmark crude, fell 1.4 percent to $49.73 at 1:15 p.m. on the New York Mercantile Exchange.

    "If the oil price is near current levels two months from now, there’s going to be a significant growth in oil based off of the $50 price we’ve seen," Williams said. "So you’ll also see more oil drilling come November and December."
    Back to Top

    Sanchez Production Partners executes agreements to acquire midstream and other assets from Sanchez Energy

    Sanchez Production Partners LP today announced that the Partnership has executed definitive agreements with Sanchez Energy Corporation pursuant to which the Partnership anticipates:

    SPP will acquire Sanchez Energy's 50% interest in Carnero Processing, LLC for an initial payment of approximately $47.7 million in cash and the assumption by SPP of remaining capital commitments to Carnero Processing, which are estimated at approximately $32.3 million;
    SPP will acquire certain production assets, located in South Texas, from Sanchez Energy for total consideration of $27 million, prior to normal and customary closing adjustments (the 'Production Asset Transaction'); and
    SPP will obtain an option to acquire a lease for a tract of land leased from the Calhoun Port Authority in Point Comfort, Texas.


    Carnero Processing is currently constructing a cryogenic natural gas processing plant in La Salle County, Texas which is expected to be operational in early 2017 (the 'Raptor Plant'). The Raptor Plant will be connected to Sanchez Energy's Catarina asset in the Eagle Ford Shale in South Texas via the Carnero Gathering System, which is 50% owned by SPP through Carnero Gathering, LLC ('Carnero Gathering').

    Carnero Processing and Carnero Gathering, joint ventures that are 50% owned and operated by Targa Resources Corp. (NYSE:TRGP) ('Targa'), have firm capacity, fixed fee agreements with Sanchez Energy for 125,000 Mcf/d of plant processing and associated pipeline capacity for five years. Pursuant to the agreements, Sanchez Energy has dedicated its Catarina acreage and all production developed at the asset to the joint ventures during a 15 year term. Sanchez Energy also has the option to deliver additional volumes and commit additional acreage to the Raptor Plant as production increases. Sanchez Energy plans to spend approximately two-thirds of its 2016 drilling and completion budget at Catarina, and considers the asset a key part of its development focus and growth strategy.


    The Production Asset Transaction includes working interests in 23 producing Eagle Ford wellbores located in Dimmit and Zavala counties in South Texas together with escalating working interests in an additional 11 producing wellbores located in the Palmetto Field in Gonzales County, Texas (the location of SPP's first Eagle Ford acquisition, which closed in March 2015). The Production Asset Transaction is expected to add approximately 700 Boe/d of production, on average, in 2017. The estimated proved reserves from the producing wellbores is approximately 2,136 MBoe, of which 73% is oil, 13% natural gas liquids, and 14% natural gas. Subject to the terms and conditions of its credit agreement, the Partnership intends to execute hedges for up to five years on the incremental production in conjunction with transaction closing.


    The Port Comfort Lease would provide the Partnership with a strategic location for the intended construction of a marine crude storage terminal with a joint venture partner, which is expected to be completed in early 2017. Once complete, the terminal is expected to include 350,000 shell barrels of storage capacity.

    Attached Files
    Back to Top

    NuBlu Energy starts construction work on LNG plant in Louisiana, US

    NuBlu Energy starts construction work on LNG plant in Louisiana, US

    NuBlu Energy has announced that it has started building an LNG plant along the Mississippi River in Port Allen, Louisiana, US.

    The plant will support high-horsepower fuelling applications, such as rail, marine, long haul transportation, power generation, gas interruption, asphalt and other energy markets.

    The facility will have an initial start-up capacity of 30 000 gal./d, which will rise to 90 000 gal./d at total capacity. It will also feature a storage capacity of 100 000 gal., and will be able to load both LNG transport trailers and ISO containers. The plant is expected to become operational in 2Q17.

    Cory Duck, General Partner, NuBlu Energy, said: “This project represents the inauguration of a new direction for the LNG energy market. By ‘making LNG local’, NuBlu will foster the growth of LNG consumption for all current and future consumers of this clean energy fuel. Our patented process allows the production of LNG at a fraction of the cost per gallon of other existing liquefaction technologies and our modular design allows the facilities to be deployed at a relatively low capital outlay.”

    Josh Payne, General Partner, NuBlu Energy, added: “Our site selection process was intense. We wanted to be positioned to meet the demands of the emerging marine market for both brown water and blue water fuelling and we absolutely believe we have achieved that goal.”
    Back to Top

    Alternative Energy

    Argentina expects $1.8 billion investment from renewable energy auction

    Argentina expects investment of $1.8 billion from 17 renewable energy projects awarded in an auction to generate 1,109 megawatts of power, the government said on Friday, as it tries to lessen dependence on imported power.

    Argentine and international companies are among the winners, with Spanish companies Isolux Corsan SA and FieldFare earning a solar contract and China's Envision Energy winning four wind contracts.

    The projects are meant to increase the percentage of national power production from renewable sources to 8 percent of the total next year from 1.8 percent currently.

    "We'll be at about 5 percent of the goal we have established," Undersecretary of Renewable Energy Sebastian Kind told a news conference.

    The average winning price was $59.40 per megawatt hour and $59.70 per megawatt hour for solar.

    Argentina received a total of 123 project bids in September, but said on Friday it awarded 17. Of those, 12 are wind, four solar and one biogas. The government received some bids for hydroelectric and biomass projects but did not accept them.

    The government has said it aims to stop importing light crude oil this year as it moves toward energy self-efficiency. The country has been running an energy deficit since 2011 and investment in its Vaca Muerta shale fields has been slow to arrive.

    Several Latin American countries are turning their attention to renewable energy. In August neighboring Chile awarded contracts to supply power for two decades from the 2020s.

    Attached Files
    Back to Top

    India receives $500m boost for rooftop solar

    India will see an increase in the number of rooftop solar systems in the country, thanks to a £500 million funding.

    The Asian Development Bank (ADB) is providing the money to support the government’s plans to expand energy access using renewables.

    Punjab National Bank – one of India’s largest commercial banks –  will use the fund to provide loans to developers and end users throughout the country to install rooftop solar panels.

    The funding will also help India reach its target of installing 40GW of solar rooftop systems by 2022.

    According to the ADB, the investment will help the nation reduce around 11 million tons of greenhouse gases during the 25-year lifetime of solar rooftop systems.

    The announcement follows India’s ratification of the Paris Agreement.

    Anqian Huang, Finance Specialist in ADB’s South Asia Department said: “There is huge potential for India to expand its use of solar rooftop technologies because of the sharp drop in the price of solar panels, meaning the cost of producing solar energy is at or close to that from fossil fuels. Sourcing more solar energy will also help India meet the carbon emissions reduction target that it has committed to as part of the recent global climate change agreement.”
    Back to Top

    Perovskite breakthrough may fast-track new solar PV technology

    Just over a year after Australian cleantech company Dyesol claimed to have achieved efficiency levels of 10 per cent in its perovskite solar cells, US researchers claim to have topped that, with a breakthrough that could also work to fast-track commercialisation of the technology.

    As reported on RenewEconomy, perovskite PV applications have been one of the most-hyped areas for next generation solar PV technology in recent years, with researchers achieving startlingly fast conversion efficiency increases.

    It has, however, also been plagued with stability and durability issues, with the material sensitive to moisture contact and high efficiency perovskite cells exhibiting high degradation rates.

    Researchers at the US National Renewable Energy Laboratory (NREL) said last week that their work in fashioning a next-generation perovskite PV cell using so-called “quantum dots” had been successfully tested to have better than 10 per cent efficiency.

    NREL researchers with solutions of all-inorganic perovskite quantum dots, showing intense photoluminescence when illuminated with UV light. Source: NREL

    The work, part of the federal Energy Department’s Sunshot initiative, has also led to development of a method to stabilise the crystalline structure of all-inorganic perovskite material at room temperature rather than only high temperatures, according to Recharge News – a key step in commercialisation of the concept.

    By using quantum dots – nanocrystals of cesium lead iodide (CsPbI) – the team has removed the need for the cells unstable organic component, “opening the door” to a high-efficiency perovskite cell that can operate at temperatures ranging from far below zero to well over 600 degrees Fahrenheit.

    “Most research into perovskites has centred on a hybrid organic-inorganic structure,” said the NREL team, which was led by Abhishek Swarnkar. “Since research into perovskites for photovoltaics began, their efficiency of converting sunlight into electricity has climbed steadily and now shows greater than 22% power conversion efficiency.

    “However, the organic component hasn’t been durable enough for the long-term use of perovskites as a solar cell.

    “Contrary to the bulk version of CsPbI, the nanocrystals were found to be stable not only at temperatures exceeding 600F but also at room temperatures and at hundreds of degrees below zero,” said the researchers.

    A report earlier this year from US-based analysts Lux suggest recent advances in perovskite PV could lead to commercial roll-out of the technology “between 2019-21”.

    According to Recharge, approaches to cell design have led to a transformative improvement in the economics of the technology, making it increasingly competitive with market-dominant crystalline silicon (CSi) and thin-film, which boast efficiencies of 17-23 per cent.
    Back to Top

    Precious Metals

    Barrick’s $1bn Super Pit stake said to draw Kinross, Zijin

    Barrick Gold’s stake in the Kalgoorlie Super Pit mine has drawn interest from Kinross Gold and Zijin Mining Group in a sale that could fetch as much as $1-billion, people with knowledge of the matter said.

    Australian producers  Newcrest Mining, Northern Star Resources and Evolution Mining are also reviewing data on the mine ahead of possible indicative bids, which are due by the end of October, according to the people. Chinese companies including China National Gold Group andShandong Gold Mining are also considering offers, the people said, asking not to be identified because the details are private.

    Gold producers have been reining in costs and selling assets after prices dropped for three straight years. Barrick, the world’s largest gold miner, continues to seek asset disposals even as a price surge this year helped spur its highest profit since 2013.

    The Toronto-based firm announced plans to sell the 50% stake in the mine in July and hired Credit Suisse Group to advise on the sale. Its joint venture partner Newmont Mining, the mine’s operator, has signalLed it would be willing to buy the stake at the right price. Barrick President KevinDushnisky said last month the company expects a competitive auction for the Super Pit and that initial indications were “very positive".

    Barrick is considering various ways to structure the sale, according to the people. One possibility involves selling shares in the holding company that owns the mine, which would not include a right of first offer for Newmont and thus would allow other buyers to potentially acquire the stake, the people said.


    Newmont will “participate in the process", and as operator of the asset it has improved the mine’s production and costs, spokesman Omar Jabara said in a mobile-phone text message. The partners in the joint venture agreed last April to changes in the site’s management under which Newmont assumed greater responsibility.

    Spokesmen for Barrick, Kinross, Newcrest, Northern Starand Evolution declined to comment. Zijin, China NationalGold and Shandong Gold didn’t answer calls to their offices and e-mails seeking comment during a public holiday inChina.

    The asset, known as the Super Pit, is 3.5 km long and ranks asAustralia’s largest openpit gold mine, its website shows. It’s located in Kalgoorlie, a city in Western Australia where themetal has been produced continuously since a late 19th-century gold rush.

    Barrick last year sold the Cowal mine in Australia to Sydney-based Evolution for $550-million and a 50% stake in thePorgera mine in Papua New Guinea to Zijin. The company said in July it would divest other non-core assets including the Lumwana copper mine in Zambia, a 64% interest in African gold producer Acacia Mining and its remaining holding in Zaldivar.

    Gold bullion for immediate delivery has risen 19% this year to $1 258/oz as demand for the metal as a store of value climbed on global economic-growth concerns. The metal fell this week to the lowest in almost four months after US jobs data strengthened the case for an increase in interest rates in December.
    Back to Top

    Base Metals

    SolGold tells BHP Billiton to buzz off

    Mining giants are queueing up to get a piece of Solgold and its Cascabel project but, flattered though it is by BHP Billiton's offer, it is going to dance with the girls it came with
    The wedding's off - not that it was ever on

    Mining heavyweight BHP Billiton plc has taken a shine toSolGold plc and its Cascabel project in Ecuador.

    The Anglo-American FTSE 100 heavyweight has offered to take a 10% stake in Brisbane-based SolGold at US$0.22 a share, which comfortably tops an offer on the table from Maxit Capital pitched at 16 cents a share, which in turn was twice the amount Australian gold major Newcrest had offered for a piece of SolGold.

    Even so, SolGold’s board has rejected BHP’s proposals.

    BHP’s US$30mln offer comes with strings attached, in the form of the right to appoint a director to the board of SolGold, but it is also proposing to sweeten the pot further by spending US$275mln to acquire 70% of SolGold’s 85% interest in Exploraciones Novomining (ENSA), the company that owns the mining rights to the Cascabel project tenements.

    It is worth noting that BHP’s proposed cash injection is subjection to a number of conditions, such as completion of due diligence and the SolGold board agreeing to row Maxit and Newcrest out of the picture. The latter looks unlikely, as SolGold’s board expressed the view that BHP’s proposal is not superior to the previously announced US$33mln financing with Maxit and Newcrest.

    “When all of the elements of the BHP Proposal are taken into account, the BHP proposal implies an attributable price paid to SolGold and in respect of the Cascabel project that is at a significant discount to the current trading price of SolGold and the US$33 million financing with Maxit and Newcrest,” SolGold’s statement said.

    "We are very pleased to see BHP join a growing list of international mining companies that are interested in investing in SolGold; however, the current US$33 million financing with Maxit and Newcrest is the preferred option at this time as it leaves us in control of this very exciting project at Cascabel,” said SolGold executive director Nick Mather.

    “There is considerable upside in the additional 13 targets as well as the existing and growing Alpala deposit. We have developed the exploration models and strategies to an advanced level, we are well funded and we are intent on delivering and retaining that upside substantially, for all SolGold shareholders," Mather said.
    Back to Top

    Steel, Iron Ore and Coal

    Inner Mongolia allows 172 coal mines to boost output

    Northern China's coal-rich Inner Mongolia autonomous region has given green light to 172 coal mines with capacity totaling 534.32 Mtpa to operate within 276-330 days, in response to the central government's call to ensure supply during this winter, the regional Economic and Information Commission said on October 9.

    These coal mines will help provide additional coal supply as much as 8.48 million tonnes each month over October-December, roughly 280,000 tonnes each day.

    As one major coal producer in China, Inner Mongolia produced 541.39 million tonnes of coal in the first eight months, down 10.1% year on year, accounting for 24.8% of the country's total. Coal output in August stood at 67.78 million tonnes, down 8.3% on year but up1.9% on month.

    China has been suffering coal shortages in recent months, mainly due to the government-mandated 276-workday at coal mines, as demand from utilities jumped amid strong air-conditioning demand in summer months.

    This helped to spur prices of thermal coal, used primarily for power generation, to surge to 32-month high as of the end of September. Domestic 5,500 Kcal/kg NAR coal jumped to 579 yuan/t on September 30, up 13.8% from the previous month and 58.4% higher than the start of the year, showed the Fenwei CCI Thermal index.

    In a statement released on September 29, the National Development and Reform Commission (NDRC) said more coal mines would be allowed to boost production within 276-330 operating days to ensure supply for winter heating and power generation.

    Besides those identified by China National Coal Association as advanced capacity, coal mines listed as Level I safety mines in 2015 by the State Administration of Coal Mine Safety and those safe and high-efficiency mines recommended by local governments would be allowed to increase output, said official with the NDRC.

    Moreover, due to such restrictions as coal varieties and distance to end users, some coal-producing provinces could select some mines meeting Level II safety standards in 2015 and include them into the category of accommodation, sources said.

    Newly-built coal mines that would replace outdated ones would also be allowed to commence operation before the old ones are closed, which could be allowed to shut later than previously required, the NDRC said.
    Back to Top

    Indonesia's October HBA thermal coal price hits 2-year high

    Indonesia's Ministry of Energy and Mineral Resources has set its October thermal coal reference price, also known as Harga Batubara Acuan or HBA, at $69.07/mt FOB, up 8% from September and the highest level in two years. October HBA also represents a 20% jump from a year ago. The HBA was last set higher at $69.69/mt in September 2014.

    The HBA price rally since May this year has been largely driven by a mix of supply cuts and strong demand from China.

    The HBA is a monthly average price based 25% on the Platts Kalimantan 5,900 kcal/kg GAR assessment; 25% on the Argus-Indonesia Coal Index 1 (6,500 kcal/kg GAR); 25% on the Newcastle Export Index -- formerly the Barlow-Jonker index (6,322 kcal/kg GAR) of Energy Publishing -- and 25% on the globalCOAL Newcastle (6,000 kcal/kg NAR) index.

    In September, the daily Platts FOB Kalimantan 5,900 kcal/kg GAR coal assessment averaged $62.14/mt, up from $57.19/mt in August, while the daily 90-day Platts Newcastle FOB price for coal with a calorific value of 6,300 kcal/kg GAR averaged $72.90/mt, up from $67.37/mt in the previous month.

    The HBA price for thermal coal is the basis for determining the prices of 75 Indonesian coal products and for calculating the royalties producers have to pay for each metric ton of coal they sell locally or overseas.

    It is based on 6,322 kcal/kg GAR coal, with 8% total moisture content, 15% ash as received and 0.8% sulfur as received.
    Back to Top

    Anglo American declares force majeure on Q4 German Creek met coal

    UK-based miner Anglo American declared force majeure on October 7 for fourth-quarter shipments of German Creek met coal to a few long-term contract customers, effective October 3, Platts reported, citing sources.

    It was because of "a significant weighting event on the longwall roof support which impacted the working height of the longwall and created multiple cavities," the report cited one Asian steel mill source as said.

    Anglo American had been plagued with issues including industrial action earlier, due to workers' employment terms and hazardous working environment at the German Creek-Grasstree operation.

    The force majeure declaration comes amid ongoing negotiations for fourth-quarter term contracts with Northeast Asian end-users. The talks have been challenging this quarter with prices of Premium Low Vol HCC spiking since July, and with Anglo American in the middle of divesting its coal business.

    The force majeure declaration affects only the German Creek hard coking coal brand mined from the German Creek-Grasstree underground mine operation in Australia's Queensland state for the fourth-quarter laycan, the report said. Yet there were no details on the volume affected.

    Meanwhile, it will probably squeeze near-term supply for Premium Low Vol HCC – creating increased demand for spot November and December laycan cargoes, it cited sources as saying.

    The German Creek-Grasstree mine produced 6.28 million tonnest of saleable products in fiscal 2014-15, according to the Department of Natural Resources and Mines.

    This means that an estimated 1.5 million-1.6 million tonnes of coal could be disrupted, if all Q4 deliveries will be affected by the force majeure.

    Anglo American's force majeure notification also comes on the heels of production outages at other Australian mining operations earlier this year. A force majeure was declared in early September at South32's Appin mine at its Illawarra project due to roofing problems.
    Back to Top

    Illinois Basin coal netbacks rise on tight supply

    Illinois Basin coal netbacks rise on tight supply

    Higher coal demand from European and Indian markets have pushed up netbacks from the US Gulf Coast, but tight volumes may keep some Illinois Basin producers on the sidelines, sources said Friday.

    Export markets have picked up with increased demand from the European market, along with a "big push" out of the Indian market, an ILB producer said. "There are export deals to be had right now, but most people's volumes for [fourth quarter] are tight. You might have to defer [term] deals into next year."

    ILB producers have cut production 24%, by an estimated 22.9 million st this year, according to S&P Global Analytics.

    Tight supplies have backwardated prices for Q4 2016 against 2017, leaving producers unsettled on whether to sell limited amounts of export coal while deferring shipments to domestic customers, the source said.

    Higher CIF ARA thermal coal prices have increased netbacks at Gulf Coast and eastern ports.

    The Platts USGC netback for Illinois Basin 11,500 Btu/lb 2.9% sulfur GAR thermal coal was $59.08/st Friday, up $3.33 from Monday.

    Larger producers have the option to sell tons into the export market, but how much depends on expectations of future prices that depend on winter weather, gas prices and utility demand, he said.

    Wait too long for higher prices, and producers could become exposed, particularly if increased production in China lowers seaborne thermal prices, the source said.

    "We'll employ the same strategy that we've always had," he said. "We don't play the market. We'll sell the coal as long as we can make money at it."

    ILB coal producers also have several requests for proposals in the market to consider, the coal producer source said.

    Several utilities have released solicitations, including Louisville Gas & Electric/Kentucky Utilities, which has a high sulfur RFP out for Illinois Basin coal due Tuesday. LGE/KU is seeking an unspecified amount of ILB thermal coal starting January 2018, said Mike Dotson, the company's fuel buyer.

    "It's going to be interesting to see what the pricing looks like," he said.

    Other solicitations include Duke Energy's RFP seeking an unspecified amount of coal for its regulated utilities starting January 1, 2017 through December 31, 2019. Offers were due September 26.

    TECO Energy also has an RFP out due Thursday for roughly 500,000 st in 2017, sources said.

    Platts assessed ILB 11,500 Btu/lb, physical barge coal for Cal 2017 at $35.95/st, up 25 cents from last week.
    Back to Top

    FMG picks up BC Iron's Nullagine stake for $1

    Fortescue Metals Group has bought out joint venture partner BC Iron of its 75 per cent stake in the Nullagine iron ore project for the princely sum of $1.

    BC Iron said it would eliminate the care and maintenance costs of the mothballed project and relieve it of its tenement commitments.

    In return, FMG will pay an ongoing royalty on all future iron ore mined from Nullagine if and when production recommences.

    However the future royalty payments would be partly waived to offset the obligations assumed by FMG as part of deal.

    The Nullagine mine was in production for five years before weak iron ore prices forced it to be shuttered in December last year.

    BC said it had sought interest in its 75 per cent stake in Nullagine from interested third parties.

    Operations at the Nullagine iron ore project before it was shuttered late last year.

    “Despite the identification of further operating cost savings and an improvement in iron ore prices, the Nullagine mine has remained marginal from BC Iron’s perspective and, based on projected future iron ore prices, it is unlikely that a restart of operations will become viable in the medium term under the current joint venture structure,” the company said in a statement.

    “Ultimately, a sale has been agreed with Fortescue, and BC Iron’s view is that this is the appropriate transaction to maximise value for the company’s interest in Nullagine.”

    Under the terms of the deal, BC Iron will retain its $US1.5 million debt obligation to Henghou Industries and an obligation to pay $5.2 million in deferred State Government royalties.

    Under the royalty agreement, Fortescue will pay BC Iron a royalty on 75 per cent of the future iron ore that is mined from the Nullagine tenements.

    Specifically, the royalty is 1-2 per cent of free-on-board revenue received by Fortescue for direct shipping ore and 50 cents-$1.50 per tonne for low grade ore adjusted for 15 per cent yield loss.

    There will be a 50 per cent reduction in the royalty rate for all iron ore mined above 15 million tonnes and a 75 per cent reduction for all iron ore mined above 25 million tonnes.

    Fortescue will initially pay BC Iron 33 per cent of the agreed royalty in cash, until the total amount waived by BC Iron equals $7.5 million.

    After that, Fortescue will pay BC 100 per cent of the agreed royalty.

    The amount to be waived by BC Iron is intended to offset the obligations Fortescue assumes as part of the transaction, including rehabilitation liabilities.

    BC chairman Tony Kiernan said Nullagine had been a successful operation and BC Iron shareholders had extracted significant value from it over a number of years.

    BC managing director Alwyn Vorster said BC would continue to have exposure to future Nullagine operations via an ongoing royalty payment.

    “Importantly, the sale will also reduce exposure for BC Iron by eliminating its rehabilitation liability, as well as monthly costs of $150k-$200k associated with holding the Nullagine interest.

    “Management will also be in a position to direct additional time and resources towards maximising the value of our Buckland project, and potentially securing attractive new project opportunities.”

    Fortescue said it would assess the viability of restarting operations at Nullagine.

    Chief executive Nev Power said the decision to purchase BC Iron’s interest in Nullagine reflected the outcome of constructive discussions between the parties since the suspension of operations late last year.

    “We have enjoyed a strong working relationship with BC Iron through the life of the Nullagine joint venture and believe this is a positive outcome for both companies,” he said.

    “We will review operations over the coming months to determine the best path forward, taking into account all relevant factors including market demand and other potential opportunities to extract value from the assets.”

    FMG chief executive Nev Power. Picture: Michael O'Brien/The West Australian.

    BC initially struck a deal to give FMG a 50 per cent stake in its Nullagine project in 2009 in return for access to rail and port infrastructure to move ore from the stranded Pilbara project.

    BC lifted its stake in Nullagine in late-2012 to 75 per cent in a $190 million deal with FMG.
    Back to Top

    China Sep steel sector PMI slid to 49.5 in normally busy season

    The Purchasing Managers Index (PMI) for China's steel industry slid to 49.5 in September, compared with 50.1 in the previous month, showed data from the China Federation of Logistics and Purchasing (CFLP).

    After two consecutive months' fall, the index dropped below the 50-point mark that separates growth from contraction in normally peak season, because of high operating rate and more stocks vis-a-vis few orders and increased cost in domestic steel industry.

    In September, the steel industry output sub-index was 50.2, sliding 0.3 from 50.5 in August, but still above the 50-point mark for the third month.

    Steel producers boosted output during July to August, encouraged by considerable profit, which shrank recently affected by sliding steel prices and increased production cost.

    China's daily steel output is expected to fall back in October, with more furnaces under maintenance and the implementation of new truck overloading policy.

    In September, the new orders sub-index plunged to 49.2, compared with 52.1 in the previous month, as current sluggish demand failed to reach expectations.

    The purchase price index fell back from 61.4 in August to 56.6 in the month, above the 50-point mark for the seventh straight month.

    Entering September, steel demand from end users climbed as construction fastened in the normally peak season. Steel prices, however, dived this year.

    As of September 28, the ex-plant price of steel billets in Tangshan was at 2100 yuan/t with VAT, down 230 yuan/t from the previous month.
    Back to Top

    EU sets import duties on cheap Chinese steel

    The European Union has set provisional import duties on two types of steel coming into the bloc from China to counter what it says are unfairly low prices, in a move likely to anger Beijing.

    The duties are the latest in a line of trade defences set up against Chinese steel imports over the past two years to counter what EU steel producers say is a flood of steel sold at a loss due to Chinese overcapacity.

    Some 5,000 jobs have been axed in the British steel industry in the last year, as it struggles to compete with cheap Chinese imports and high energy costs.

    G20 governments recognised last month that steel overcapacity was a serious problem. China, the source of 50 percent of the world's steel and the largest steel consumer, has said the problem is a global one.

    The duties will be in place eight months after the launch of respective investigations, a month earlier than would normally be the case. The European Commission has committed to speed up its trade defence actions under pressure from EU producers.

    The Stoxx basic resources sub-index was by far the strongest component of the Stoxx 600, propelled by European steelmakers. Shares of the world's largest steel producer, ArcelorMittal were up 4.3 percent, ThyssenKrupp by 2.2 percent.

    European steelmakers association Eurofer, which brought the complaint to the European Commission, said it welcomed the fact that the duties would be in place earlier than normal.

    The duties, which will take effect on Saturday, are provisional, meaning they are in place for up to six months until the European Commission completes its investigation. If upheld, they would typically be set for five years.

    No one was available for comment at a series of steelmakers in China, which was celebrating a week-long national holiday.

    The duties are set at between 13.2 and 22.6 percent for hot-rolled flat iron and steel products and at between 65.1 and 73.7 percent for heavy-plate steel, according to a filing in the European Union's official journal.

    The hot-rolled steel case includes Bengang Steel Plates Co Ltd and Hebei Iron & Steel Co. Ltd [HEBEIH.UL] and units of Jiangsu Shagang Group.

    The heavy plate steel case covers Nanjing Iron & Steel Co Ltd, Wuyang Iron and metals Yingkou Medium Plate Co Ltd..

    Eurofer said Chinese producers' share of the EU market in heavy-plate steel, used in construction, mining and shipbuilding, grew to 14.4 percent in 2015 from 4.6 percent in 2012, while the average price dropped by 29 percent over the same period.

    For hot-rolled, the market share grew to 4.3 percent from below 1 percent over the same period, while import prices fell by about 33 percent.

    European producers of hot-rolled steel include ThyssenKrupp, Tata Steel and ArcelorMittal, while heavy-plate is made by Tata and two unlisted German companies.

    The European Commission is also investigating alleged dumping of hot-rolled steel producers in Brazil, Iran, Russian Federation, Serbia and Ukraine.

    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.

    Company Incorporated in England and Wales, Partnership number OC334951 Registered address: Highfield, Ockham Lane, Cobham KT11 1LW.

    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 guarantee 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.

    © 2018 - Commodity Intelligence LLP