Mark Latham Commodity Equity Intelligence Service

Friday 13th January 2017
Background Stories on www.commodityintelligence.com

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    China Issues Plans for State Investments, Speeding Up Disposals


    China’s State Council issued guidelines to help optimize state investments to shore up its bloated state-owned enterprises amid an economic slowdown.

    State capital investments will focus on national security, public welfare, strategic industries, major infrastructure and companies with “core competitive advantages,” the nation’s cabinet said in guidelines on government allocation of resources published late Wednesday.

    The State Council pledged to clear obstacles for reforming state-owned enterprises, promote securitization of government holdings and accelerate the disposal of inefficient assets, according to the guidelines.

    https://www.bloomberg.com/news/articles/2017-01-12/china-issues-plans-for-state-investments-speeding-up-disposals
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    China's CCB signs $5 bln debt swap deals with three SOEs - media


    China Construction Bank (CCB) has signed 35 billion yuan ($5.06 billion) worth of debt-for-equity swap framework agreements with three state-owned enterprises in the central province of Henan, a newspaper linked to the local government reported on Thursday.

    CCB, one of China's big four lenders, has led the country's latest round of debt-for-equity swaps, signing deals with struggling, debt-laden state firms to lower their leverage and cut financing costs following instructions from Beijing.

    CCB has signed swap deals with the Henan State-owned Assets Supervision and Administration Commission (SASAC), Henan Energy and Chemical Industry Group, China Pingmei Shenma Group and Anyang Iron & Steel Group, said the Henan Daily.

    The deals will help the firms handle cycles in their profitability and support projects among other things, the paper added.

    The deals come after CCB signed 50 billion yuan of debt swap deals with Shaanxi Coal Industry Chemical Group Co., Shaanxi Energy Group Co., and Shaanxi Non-ferrous Metal Holding Group earlier this month.

    http://www.reuters.com/article/china-ccb-debt-idUSL4N1F21FI
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    Shanxi punishes over 1,300 cos to fight pollution


    A total of 1,315 companies have been punished in Shanxi after it launched an overhaul in mid-December to improve environment, said the provincial environmental protection department.

    The campaign will last three months and focus on construction and production that violated regulations.

    Fines worth 21.5 million yuan ($3.1 million) have been meted out and 33 people punished. More than 200 small heavy-polluting companies have been closed and 95 others ordered to limit or suspend production.

    Those punished companies include Xiangning Jiucheng Coking Co., Ltd. and Shanxi Liheng Coking Co., Ltd., among others.

    The department sent five work teams to supervise the campaign in 67 counties.

    Shanxi is one of the regions suffering the worst smog in the country this winter, so the provincial government is rolling out bunched of measures to battle pollution.

    The province vowed to shed coal capacity by 20 million tonnes per annum in 2017.

    http://www.sxcoal.com/news/4551235/info/en

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    China's commodities appetite shows little sign of waning in December


    China's commodity imports jumped again in December, pushing 2016 shipments of goods from crude to iron ore to record levels and boosting expectations that lower domestic output will help prolong the months-long buying binge.

    For 2016, shipments of oil, iron ore, unwrought copper, copper concentrates and soybeans hit all-time highs, the General Administration of Customs said on Friday. Coal was the exception, but imports were still up by a quarter on a year ago.

    Oil and soybeans also hit record monthly totals in December, while coal shipments were among the highest on record and iron ore notched up the third biggest volumes for the year.

    The splurge helped spur stronger-than-expected imports for the world's largest trading nation.

    The data reflected a major recovery by the world's second-largest economy, as hefty government spending in infrastructure fueled demand for base metals and steel, and Beijing's efforts to clean up dirty industries like coal forced utilities to scramble for lower-priced supplies abroad.

    Concerns linger that slowing economic growth in 2017 will temper demand and the first two months of the year will be weaker due to the Lunar New Year holiday at the end of this month.

    But lower output of major products like crude and coal and buoyant domestic prices could prolong the boom.

    Record oil imports of 8.56 million barrels per day (bpd) in December buoyed crude futures, with shipments expected to continue rising in 2017 as domestic output slows and Beijing issues more import quotas to independent refiners, known as teapots.

    Their rapid expansion drove crude imports and, perhaps more worrying for their Asian refiners, forced the state-owned producers to sell a record amount of product abroad.

    Seng Yick Tee, a researcher with consultancy SIA Energy, said he expected China's crude imports to rise by 600,000 bpd in 2017, with teapots accounting for two-thirds of the increase.

    Coal arrivals were up more than 50 percent from a year ago, the latest sign that government-enforced mine closures have forced utilities to buy from abroad.

    If Beijing renews its effort to curb small, privately owned coal mines after the Lunar New Year, buying could exceed 2016 levels, traders said.

    Iron ore arrivals are expected to remain strong into this year as steel mill demand stays firm, even as the government continues its crackdwon on inefficient capacity.

    http://www.reuters.com/article/us-china-economy-trade-commodities-idUSKBN14X0FR
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    China prepares for upcoming Spring Festival travel rush


    Spring Festival, or Chinese Lunar New Year, will fall on Jan. 28 this year. The travel rush, also known as "Chunyun," will begin on Jan. 13 and last until Feb. 21.

    Spring Festival is the country's most important family holiday, with hundreds of millions of people heading to their hometowns, which puts huge stress on the transport system.

    http://english.cctv.com/2017/01/12/ARTIwAFWckEMPdl9O8gWE6UO170112.shtml
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    Fiat Chrysler Shares Crash After EPA Accuses Automaker Of Using Software To Cheat Diesel Emissions Laws


    It appears they were all doing it. Fiat Chrysler shares are collapsing following EPA accusations that the automaker engaged in a similar scheme as Volkswagen, and used cheating software to beat diesel emissions tests, and this violated pollution laws.

    The U.S. Environmental Protection Authority will accuse Fiat Chrysler of using software that allowed excess diesel emissions in about 100k U.S. vehicles, Reuters reports in tweet, citing people familiar.

    http://www.zerohedge.com/news/2017-01-12/fiat-chrysler-shares-crash-after-epa-accuses-automaker-cheating-pollution-laws-diese
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    Navigation on Danube suspended due to ice floes


    Despite the deployment of icebreakers earlier in the day, shipping on the Danube came to a standstill: In Bratislava harbour the icebreaker Brezno, in Čunovo, the Krupina icebreaker, and in the Komárno harbour, the BD DUNAJ tugboat, were all put into service to deal with the ice, the TASR newswire wrote. In case of thicker ice layers, the Slovak water-management Company (SVP) can also borrow a special icebreaker from Hungary; this step was last necessary in 2006. There were ice-floes everywhere on the surface of the river.

    “We confirm the information on the suspension of navigation,” Eva Oravcová of the Transport Office in Bratislava told TASR. On January 10, navigation had already been suspended on the Hungarian part of the Danube.

    An ice flood appears when a frozen watercourse causes ice-floes to move and these tend to stop at sites with a narrow profile, like gorges or bridges; they collect and impede the flow of the water. It usually occurs after sudden warming.

    This phenomenon – that dates back to early Middle Ages – can cause dangerous, even critical flood situations. The first mention of the frozen Danube goes back to the year 793. However, the worst situation on record arose in the mid-19th century – when on February 5,1850 the Danube quickly rose and flooded Bratislava with up to 1,123 centimetres of water, causing huge damage to buildings along the river and six deaths. After having frozen in the years 1927 and 1928, as well as 1956 and 1963, the Danube was frozen for longest in the winter of 1946/1947 – for 90 days.

    In 2006 , the frozen river complicated the lives of the inhabitants around the Gabčíkovo dam – the villages of Bodíky, Dobrohošť and Vojka. The ferry stopped operating, and the way to the opposite side of the dam was increased from 500 metres to 50 kilometres.

    http://spectator.sme.sk/c/20431261/navigation-on-danube-suspended-due-to-ice-floes.html
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    Oil and Gas

    Saudi Oil Output Drops Under OPEC Quota Close to Two-Year Low


    Saudi Arabia has reduced oil production to less than 10 million barrels a day, below its targeted level, and will consider renewing its pledge to cut crude output in six months, Energy Minister Khalid Al-Falih said.

    The world’s biggest oil exporter is currently producing at a 22-month low. It had agreed to cut 486,000 barrels a day to 10.058 million barrels a day as part of a global deal to reduce output to curb a supply glut. The caps on production, together with rising demand and natural decreases in output in some countries, will help balance the market and support prices, Al-Falih said in a speech at an energy conference in Abu Dhabi.

    “Oil production now is below 10 million so far,” he told reporters later on Thursday. “So we’re going the extra mile to lead our colleagues within and outside of OPEC to make sure that the market sees that there’s serious action in place.” Kuwait has also exceeded its targeted cut, according to that country’s oil minister.

    Saudi Arabia is due to meet fellow members of the Organization of Petroleum Exporting Countries in May at their bi-annual meeting in Vienna to assess the market and the group’s production policy. OPEC states will also gather with major producers outside the group later this month in the Austrian capital to monitor their compliance with the production cuts, which aim at shoring up prices. Benchmark Brent crude was 71 cents higher at $55.81 a barrel in London at 12:17 a.m. local time.

    Oil Inventories

    “We have been moving toward a re-balanced market for some time -- too slowly to my liking,” Al-Falih said. “The pace of re-balancing will be accelerated due to the recent agreements within OPEC and with our party from outside” the group. “We will consider renewing” the agreement after six months, he said. Saudi oil output was last below 10 million barrels a day in February 2015, according to data compiled by Bloomberg.

    Al-Falih’s comments amplified remarks made earlier at the same event by OPEC Secretary-General Mohammad Barkindo, who said global oil inventories will start to fall by the second quarter of this year and that crude-producing countries will decide in May whether to extend their output cuts beyond the first half.

    Global macroeconomic numbers have responded “positively” to the agreement between OPEC and non-OPEC producers to pare output, Barkindo said at the Atlantic Council Global Energy Forum. “We have our target in accelerating those draw-downs to bring them closer to the five-year level -- that is our target,” he told reporters. OPEC isn’t targeting a specific price for crude, he said.

    Kuwait Cuts

    The cuts began on Jan. 1 and are to stay in effect though June. Oil markets should be in balance in six months, and it’s premature to decide whether additional cuts will be needed, United Arab Emirates Energy Minister Suhail Al Mazrouei said at the Abu Dhabi conference. Countries with a naturally declining output of oil are contributing to a decrease in global production, he said.

    Kuwait has cut 133,000 barrels a day of oil output and is currently producing 2.7 million barrels a day, Oil Minister Essam Al-Marzouk said at the conference. The production cut will be reflected in Kuwait’s crude exports, he said. Kuwait had agreed to cut 131,000 barrels a day in the global deal to reduce output.

    Total SA Chief Executive Officer Patrick Pouyanne, speaking at the same event, said he expects that the decline in oil inventories will take two years.

    Barkindo expressed confidence in the level of commitment from all countries participating in the agreement to decrease supply. “I met with the Iraqi minister this morning,” he said. “He has reassured me Iraq will implement its part of the deal fully and on a timely basis.”

    A committee of OPEC and non-OPEC producers responsible for monitoring compliance with the cuts will hold its first meeting on Jan. 22 in Vienna, Barkindo said. The committee, with Kuwait as chairman, also includes Algeria, Venezuela, Russia and Oman.

    https://www.bloomberg.com/news/articles/2017-01-12/opec-boss-sees-producers-deciding-in-may-if-more-oil-cuts-needed

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    OPEC members to meet in Vienna next week to evaluate output cut commitments: UAE minister


    The progress made by a group of major producers from OPEC and outside the organization towards cutting oil output by a combined 1.8 million b/d will be assessed next week at a meeting in Vienna, the UAE energy minister said Thursday.

    "We will meet in Vienna next week to look at and evaluate those commitments, and put together an action plan," Suhail al-Mazrouei told delegates at the Atlantic Council Global Energy Forum in Abu Dhabi.

    Mazrouei said international oil prices had this month made "a fair movement towards a correction," and were on the right trajectory to balance the market.

    "But the real correction will happen when we see some action from the concerned group who came together," he said, referring to a December meeting between OPEC members and certain other major international producers including Russia and Oman.

    "I personally have lots of trust in the commitment of those countries," he said. "There's definitely a sincereness."

    As a major producer, the UAE would be comfortable with an oil price that would convince petroleum-sector investors to return to the market, Mazrouei said.

    "We're not there yet," he added.

    The UAE minister said OPEC was not going to be cutting output alone, and that was only fair.

    He said a natural decline in global output was already underway, predicting it would make itself felt within the next two years due to a large drop in investment in oil exploration and development.

    He reiterated an opinion expressed Wednesday that it was too early to say whether OPEC's late November agreement to cut output by 1.2 million b/d in H1 2017 should be renewed after six months, as it was important to evaluate the reaction of US shale producers to the planned cuts.

    "I tend to believe that the market can and should balance itself in six months to at least equilibrium," he added, noting, however, that the market was apt to prove such prognostications wrong.

    During the same conference panel session, Total CEO Patrick Pouyanne said it was important for the concerned producer group to stay the course on cuts for as long as two years.

    "I think what has been done by OPEC and non-OPEC thanks to dialog ... is very important, but it has to be implemented, not only for six months to a year, but for two years," he said. "We also know our US shale [producer] friends are reinvesting again, which will add another uncertainty to the market."

    http://www.platts.com/latest-news/oil/abudhabi/opec-members-to-meet-in-vienna-next-week-to-evaluate-27749249
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    Big problems in Tripoli


    Armed groups have taken over the ministries of defense, justice, and economy, in Tripoli, Libya, Arabiya and others reporting

    ‏@jmalsin  

    Forces loyal to self-declared PM seize Libyan ministries

    A self-declared prime minister in Libya says his forces have seized at least three ministries in the capital and is declaring a return of his government after what he described as a yearlong failure of the current U.N.-backed premier.

    Khalifa Ghwell told The Associated Press over the phone from Tripoli on Thursday that his forces control the ministries of defense, labor and the "martyrs and the wounded."

    He said conditions have gone "from bad to worse" in the year since Prime Minister Fayez Serraj became head of a U.N.-backed government. Serraj is currently visiting Egypt.

    Ghwell's so-called National Salvation government was formed by the outgoing parliament after a disputed 2014 transfer of power. The new parliament sits in eastern Libya, and does not recognize the leadership of Ghwell or Serraj.

    http://www.thepublicopinion.com/news/associated_press/forces-loyal-to-self-declared-pm-seize-libyan-ministries/article_c3c11056-0dd6-5614-b46a-d74ec6d9e6f2.html
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    Shell oil workers in Gabon begin 'unlimited' strike on Thursday


    A Shell oil and gas sign is pictured near Nowshera, Pakistan's northwest Khyber-Pakhtunkhwa Province September 8, 2010. REUTERS/Morteza Nikoubazl/File Photo

    Royal Dutch Shell workers in Gabon began on Thursday an "unlimited" strike at all the company's operations in the Central African OPEC member country, the workers' union wrote in a letter to employees.

    Shell is trying to sell its Gabon assets, which one source estimated could be worth $700 million, leaving workers worried about layoffs or being moved to new locations, the union said.

    The national union of petroleum employees (ONEP) said the strike "will cover all of Shell Gabon's operations (Libreville, Port-Gentil, Gamba Rabi, Koula and Toucan)."

    There was no immediate response from Shell, and it was not clear if oil production was impacted.

    The union demanded in December that all Shell Gabon employees be transferred to whichever company takes on Shell's assets, and that no redundancies are made for economic reasons within five years of the deal.

    Gabon is Africa's fourth largest oil producer with an output of around 220,000 barrels per day dominated by international oil majors Total and Shell.

    http://www.reuters.com/article/us-gabon-shell-idUSKBN14W1BT
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    Premier’s Catcher remains on target as costs drop further


    Premier Oil, a UK-based oil company, has further lowered the capex for its Catcher development in the UK North Sea. The forecast now says capex will be 29 percent lower than at sanction.

    Premier Oil said in an update on Thursday that the total capex is now forecast at $1.6 billion, which is $100 million less than the forecast from November.

    The Catcher field project is operated by Premier Oil with a 50 percent interest, while Cairn Energy, MOL Group, and Dyas are partners.

    The development entails subsea wells on the Catcher, Varadero and Burgman fields which will be tied back to the BW Offshore-owned FPSO. The oil will be offloaded by tankers while the gas will be exported through the SEGAL facilities.

    Premier said that the Catcher project is still on target to start oil production later this year. Eight development wells have completed, and all came in at or better than prognosis regarding reservoir quality and deliverability, the company said.

    Most recently, the second well on the Varadero template (VP3) was completed in December and achieved eight kboepd on clean up. Due to these strong well results and well placement optimization, the well count required to deliver the base plan has reduced from 22 to 20 wells, significantly reducing the forecast development cost, Premier explained.

    Subsea campaign, FPSO sail-away

    Premier completed the installation of all Catcher subsea equipment in 2016. Only short subsea campaigns, beginning in June, will be required in 2017 to tie-in the new wells drilled and to support the hook up of the FPSO.

    The last of the topside modules was successfully lifted onto the FPSO in November, and good progress was made on the integration of the topsides and turret and with the early stages of yard-based pre-commissioning. The company is now focused on final mechanical completion and pre-commissioning work scopes.

    The sail-away date of the FPSO from Singapore is expected to be mid-year.

    The company added that production in 2017 from Premier’s existing producing assets is expected to be around 75 kboepd, before any contribution from Catcher and adjusted for revised lower Solan production. The extent of the contribution to 2017 production from Catcher is dependent upon the timing of first oil.

    Tony Durrant, CEO of Premier, said: “The Catcher project continues to progress well and will provide another step change in production, generating enhanced, tax-free cash flows for the Group.”

    http://www.offshoreenergytoday.com/premiers-catcher-remains-on-target-as-costs-drop-further/
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    WoodMac: Egypt’s gas market faces more changes


    Egypt’s gas market would undergo significant change over the next five years, impacting global LNG market, according to a research by the natural resources consultancy WoodMackenzie.

    After five years of falling gas production and switching from a net exporter to a net importer, the new production capacity coming on stream over the next few years will push the country’s gas market back into surplus.

    From being the world’s eight largest LNG exporter in 2009, the country turned to the world’s eight largest LNG importer in 2016, however the market could swing to surplus as soon as 2019.

    With BP’s West Nile Delta and Atoll fields and Eni’s massive Zohr find, the North African country will add a cumulative 41 billion cubic meters a year of gas production by 2022, according to WoodMackenzie.

    The analysis, however, predicts that the surplus will be seasonal.

    “Better gas availability will boost domestic consumption in the power sector, peaking in the summer months, while utilisation rates at gas-intensive industries will recover,” WoodMackenzie said.

    This would exacerbate the country’s domestic gas demand seasonality. In the medium-term, LNG imports could still be critical to balance the market in the summer, while Egypt would export surplus volumes during the winter, taking advantage of northern hemisphere winter LNG prices.

    The reversal has been driven by the exploration results and higher gas prices. “The Petroleum Ministry’s pragmatic approach to pricing has secured more than US$28 billion in investment in the Egyptian upstream sector since 2015, at a time when other regions saw inward investment fall,” according to WoodMackenzie.

    A second gas boom is expected as the number of high-impact wells are planned for 2017. Depending on the results, Egypt could turn into a regional hub simultaneously importing and exporting liquefied natural gas.

    http://www.lngworldnews.com/woodmac-egypts-gas-market-faces-more-changes/
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    Hess/ExxonMobil Announces New Oil Discovery Offshore Guyana, Further Increasing Resource Potential


    Hess Corporation today announced positive results from the Payara-1 well offshore Guyana, which is the second oil discovery on the Stabroek Block following the world-class Liza oil discovery in 2015.

    Payara-1 Discovery

    The Payara-1 well, located approximately 10 miles (16 kilometers) northwest of the Liza discovery, was drilled by Esso Exploration and Production Guyana Limited, and encountered more than 95 feet (29 meters) of high-quality, oil-bearing sandstone reservoirs. The well was safely drilled to a depth of 18,080 feet (5,512 meters) in 6,660 feet (2,030 meters) of water.

    Drilling on Payara began on Nov. 12 with initial total depth reached on Dec. 2. Two sidetracks were subsequently drilled, and a production test is planned to further evaluate the discovery. Appraisal drilling is planned beginning later this year to determine the full resource potential of the Payara discovery.

    Deeper High-Quality Reserves Identified Below Liza Field

    In addition to the Payara discovery, the Liza-3 appraisal well, which was completed in November 2016, identified an additional high quality, deeper reservoir directly below the Liza Field, which is estimated to contain between 100-150 million barrels of oil equivalent. This additional resource is expected to be developed in conjunction with the Liza discovery.

    “The Payara-1 results further demonstrate the prospectivity of the Stabroek block,” John Hess, CEO of Hess Corporation, said. “We are excited about Payara as well as the deeper reservoir identified below the Liza Field. While further appraisal is required, we believe that the resources recently discovered are significant and will be accretive to the more than 1 billion barrels of oil equivalent already confirmed at the Liza discovery.”

    Further Evaluation of the Stabroek Block

    The Stabroek Block is 6.6 million acres (26,800 square kilometers). Esso Exploration and Production Guyana Limited is operator and holds 45 percent interest in the Stabroek Block. Hess Guyana Exploration Limited holds 30 percent interest and CNOOC Nexen Petroleum Guyana Limited holds 25 percent interest.

    The co-venture partners plan to appraise the Liza and Payara discoveries and continue to evaluate the resource potential on the broader Stabroek block with additional exploration drilling and seismic analysis planned for 2017. Upon completion of operations on the Payara-1 well, the Stena Carron drillship will move to the Snoek exploration prospect, which is located approximately 6 miles (10 kilometers) south of the Liza-1 discovery well.

    http://boereport.com/2017/01/12/hess-announces-new-oil-discovery-offshore-guyana-further-increasing-resource-potential/
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    Anadarko Petroleum to sell Texas assets for $2.3 billion


    Oil and gas producer Anadarko Petroleum Corporation (APC.N) said on Thursday it would sell its Eagleford Shale assets in South Texas for about $2.3 billion to a strategic 50/50 partnership formed by Sanchez Energy Corporation  and asset manager Blackstone Group LP.

    Al Walker, chief executive officer of Anadarko, said in a statement that the sale would help the company accelerate operations in its more high-return properties such as Texas' Delaware Basin, the DJ Basin in Colorado and the deepwater Gulf of Mexico.

    The divestiture includes about 155,000 net acres mainly located in Dimmit and Webb counties.

    Sales volumes from these assets totaled about 45,000 barrels of liquids per day (bpld) and roughly 131 million cubic feet of natural gas per day at the end of the fourth-quarter

    The company's master limited partnership, Western Gas Partners LP (WES.N), would continue to own and operate its midstream assets in South Texas, Anadarko said.

    Anadarko announced in December the sale of certain natural gas assets in the Marcellus shale for about $1.24 billion to a unit of Alta Resources Development LLC.

    The company said the transaction was expected to close in the first quarter of 2017.

    Andarko shares were little changed in extended trading.

    http://www.reuters.com/article/anadarko-petrol-divestiture-idUSL1N1F22LS
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    WPX Energy buys assets for $775 million in Delaware basin


    Oil and gas producer WPX Energy Inc (WPX.N) said it would buy assets in the Delaware basin for $775 million, the latest company to bolster its position in the oil-rich Permian region.

    The assets include about 6,500 barrels of oil equivalent per day (boe/d), of which 55 percent is oil, the company said on Thursday.

    WPX's shares, however, fell in extended trading after the company said it would part fund the purchase with an equity sale.

    The Delaware basin is located in the larger Permian basin, which is located in West Texas and the adjoining area of southeastern New Mexico.

    The Permian basin has seen a slew of land acquisitions as producers scramble to gain or expand positions in the top U.S. oil field, where drilling costs are low, in preparation for recovering oil prices.

    The acquisition, which will expand WPX's Permian operations to more than 120,000 net acres, is expected to close in about 60 days.

    WPX is buying the assets from Panther Energy Company II LLC and Carrier Energy Partners LLC.

    The company said it planned to fund the deal through cash on hand and an equity offering of 42 million shares.

    http://www.reuters.com/article/wpx-energy-assets-idUSL4N1F25EL
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    MEG Expands Christina Lake, Taps Debt Market in Oil-Sands Rebound


    MEG Energy Corp. is boosting production at its Christina Lake project in Alberta and tapped debt and equity markets for financing, further signs of a rebound in Canada’s oil patch as crude prices stabilize.

    The expansion at Christina Lake Phase 2B will increase output from the site by about 25 percent to 100,000 barrels a day by 2019, the Calgary-based company said in a statement late Wednesday. MEG is raising $750 million in the high-yield bond market to refinance debt and sold C$450 million ($344 million) in stock to help fund the expansion.

    MEG follows Cenovus Energy Inc. and Canadian Natural Resources Ltd in pledging to proceed with the first expansion projects since the oil price crash that began in mid-2014. The announcements follow crude’s rally since the Organization of Petroleum Exporting Countries and other major exporters pledged to cut output late last year and after two pipeline expansions out of Western Canada were announced.

    This expansion “offers some of the highest economic returns available to the company today” with an investment rate of return of 50 percent, Bill McCaffrey, MEG’s chief executive officer, said in the statement.

    MEG will invest C$320 million in the so-called eMSAGP project this year, more than half of the company’s C$590 of capital investment for 2017. The investment will be funded by proceeds from the equity issuance as well as cash flow and cash on hand, MEG said. Production will average between 80,000 and 82,000 barrels a day, reaching 86,000 to 89,000 barrels a day by the end of this year, MEG said.

    High Yield

    The company, whose shareholders include China’s CNOOC Ltd., is selling $750 million in second lien senior secured notes maturing in 2025 to refinance its 6.5 percent 2021 senior notes. MEG also announced Wednesday a refinancing plan for its credit facility and term loan to push out maturities. Moody’s Investors Service upgraded the company’s high-yield credit rating to B3 from Caa2.

    MEG increased a stock sale to C$450 million from C$357 million, selling 58.1 million shares at C$7.75 each. The stock plunged 6.8 percent to C$7.84 at 10 a.m. in Toronto, cutting its gain in the past 12 months to 39 percent.

    Cenovus said last month that it will proceed with the 50,000-barrel-a-day phase G expansion of its own Christina Lake project and Canadian Natural said in November that it was resuming work on its 40,000-barrel-a-day Kirby North project.

    MEG’s Christina Lake unit produced more than 80,000 barrels a day in 2015, according to data posted on the Alberta government’s website.

    https://www.bloomberg.com/news/articles/2017-01-12/meg-to-expand-christina-lake-project-as-oil-sands-growth-returns
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    S Korea to look for more US oil, gas imports under Trump administration


    South Korea will seek more oil and gas imports from the US as part of its efforts to cope with any possible trade disputes after the new administration takes over in Washington, the vice minister of trade, industry and energy said Friday.

    "We are looking for what we can take to expand energy cooperation with the US, such as shale gas imports, with the Trump administration's looming protectionist policies," Woo Tae-hee, vice minister in charge of energy, told S&P Global Platts on the sidelines of a trade forum in Seoul.

    South Korean companies have been increasing oil and gas imports from the US to diversify its supply sources from the Middle East, Woo said.

    GS Caltex imported 2 million barrels of US Eagle Ford crude over November-December, the country's first purchase of American crude other than condensate and Alaskan crude since Washington lifted a 40-year restriction on crude oil exports in late 2015.

    State-owned Korea Gas Corp. planned to import 2.8 million mt/year from the Sabine Pass terminal in Louisiana from July this year under a 20-year contract that will help diversify supply sources, Woo said. This will the first US LNG to be shipped to South Korea.

    SK E&S, a major private power utility and city gas provider, plans to import 2.2 million mt/year from the proposed Freeport LNG terminal in Texas for 20 years from 2019.

    Another major power producer GS EPS also plans to buy 600,000 mt/year of LNG from the US in a 20-year contract with Cameron LNG from 2019 to 2038.

    In addition to the LNG contracts, SK E&S holds a 49.9% stake in the Woodford shale gas field in Oklahoma bought in September 2014 for $1.1 billion.

    GS Energy and GS Global holds 10% and 20%, respectively, in Oklahoma's Nemaha field, a stake that gives the two GS affiliates access to a combined 4 million barrels of crude and 470,000 mt of natural gas.

    The government will provide support to local companies pushing for cooperation in shale gas to take advantage of fossil-focused energy policies, Woo said.

    Minister of trade, industry and energy Joo Hyung-hwan has also stressed the need to import oil and gas from the US to ease trade deficit and boost South Korea's energy security.

    "For South Korea, oil supply from a politically stable ally will help stabilize oil prices, and it will provide an additional layer for energy security. For the US, exporting shale oil to Korea will help create new jobs and reduce the trade deficit against South Korea," Joo told a recent meeting of the American Chamber of Commerce in South Korea.

    In a separate meeting, Joo told CEOs of South Korean crude importing companies to seek more purchases of US oil and gas and look for opportunities to participate in US exploration projects.

    South Korea, the world's fifth-largest crude oil buyer and second-biggest LNG importer, ships in almost all of its crude oil and gas requirements, mostly from the Middle East.

    South Korea's crude oil imports from the US in 2016 are estimated at 2.4 million barrels, compared with 2.91 million barrels in 2015 and 1.66 million barrels in 2014, according to data from state-owned Korea National Oil Corp.

    http://www.platts.com/latest-news/oil/seoul/s-korea-to-look-for-more-us-oil-gas-imports-under-27750022
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    NYMEX February gas popped 16.2 cents to $3.386/MMBtu

    NYMEX February gas popped 16.2 cents to $3.386/MMBtu

    The NYMEX February natural gas futures contract settled 16.2 cents higher to $3.386/MMBtu Thursday, on a larger-than-expected storage withdrawal.

    US natural gas in storage fell 151 Bcf to 3.160 Tcf in the week ended January 6, the US Energy Information Administration said Thursday.

    The withdrawal was significantly larger than an S&P Global Platts survey of analysts who expected a 137-Bcf pull. In the corresponding week in 2015, the EIA reported a 152-Bcf draw, while the five-year average is a withdrawal of 168 Bcf, according to EIA data.

    Total inventories now are 52 Bcf less than the five-year average of 750 Bcf in the East, 14 Bcf more than the five-year average of 851 Bcf in the Midwest, 24 Bcf higher than the five-year average of 173 Bcf in the Mountain region, 36 Bcf less than the five-year average of 299 Bcf in the Pacific, and 46 Bcf more than the five-year average of 1.091 Tcf in the South Central region.

    According to the National Weather Service, the eight- to 14-day outlook calls for above-average temperatures from the Eastern Seaboard to the Rocky Mountains. Meanwhile, the Southwest and the Pacific Northwest are expected to to experience below-normal temperatures.

    Lower-48 natural gas demand reached 135 Bcf on January 6, 2017, according to Bentek Energy, which is only 3 Bcf less than the highest consumption day during the polar vortex three years ago. And yet this winter heating season has been nearly 15% warmer than normal for the country as a whole since October 2016.

    The February gas contract traded in a range of $3.294-$3.450/MMBtu.

    http://www.platts.com/latest-news/natural-gas/houston/nymex-february-gas-popped-162-cents-to-3386mmbtu-21587949
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    British Columbia First Nations groups file suit to stop LNG project


    The proposed Pacific Northwest LNG project, which a consortium led by Malaysia's Petronas plans to build on an island off the northwest coast of British Columbia, ran into another roadblock this week, with the filing of a lawsuit by First Nations groups who argue they were not properly consulted.

    A group of hereditary chiefs with the Gitxsan First Nation, representing several sub-groups of indigenous people who live in the interior of the province, are seeking to overturn the federal government's approval of the project.

    The suit brings to four the number of legal actions filed by Native American groups to try to halt the proposed $8.32 billion (C$11 billion) LNG export project.

    Yvonne Lattie, Gitxsan hereditary chief of the Wilp Gwininitw group, and Charlie Wright Gitxsan, hereditary chief of Wiip Luutkudziwuus, announced the request for judicial review in Vancouver Tuesday.

    The suit calls for the Canadian government to review an environmental approval granted to the project in September.

    Attempts to reach a Pacific Northwest spokesman for comment on the suit were unsuccessful.

    John Ridsdale, chief of Tsayu clan of Wet'suwet'en, whose group was not a party to the litigation, nevertheless said he supports the legal challenge on behalf of all First Nations peoples in the region.

    He said the LNG terminal, which the developers want to build on Lelu Island at the mouth of the Skeena River, could threaten a salmon spawning habitat in the river estuary.

    The legal action filed Tuesday was "filed on behalf of the Gitxsan, our neighbors to the west, who are filing based on the lack of consultation, the protection of the salmon, and the height of the Skeena River," Ridsdale said in an interview Wednesday.

    While several coastal First Nations groups have already expressed opposition to the project, the current latest represents the first by inland groups of indigenous people, who are concerned the environmental impacts of the proposed terminal would extend to their region.

    "We are inland but we are a nation, we have 22,000 square kilometers of territory," Ridsdale said. "Our water flows down to the Skeena, which would be affected by this proposed plant."

    In addition to concerns regarding the impact of the proposed facility on the salmon population, the Gitxsan First Nation suit also charges the government with a lack of consultation among all of the people who could be impacted by project.

    "When they do consultation here in British Columbia, west of the Rockies we have less consultation than anywhere else in British Columbia," Ridsdale said.

    He said the government officials had been conducting consultations on the proposed project only among elected chiefs whose jurisdictions comprise limited areas.

    "They have to talk to the proper rights and title holders, which is us, the hereditary chiefs of our nations," he said. "The hereditary chiefs -- we look after the entire territory."

    In the case of the Gitxsan First Nation, "the Gitxsan are filing because the proposed pipeline crosses their territory and they haven't gotten the permission from the hereditary chiefs to do that," Ridsdale said.

    The proposed LNG project would entail the construction of two gas liquefaction trains, each with a capacity of 6 million mt/year at Lelu Island near Prince Rupert, with an option to build a third 6 million mt/year train later.

    At the initial stage, the project would utilize 2 Bcf/d of gas.

    The Pacific Northwest consortium is looking into whether to redesign the project to address the concerns of First Nations groups and environmentalists who oppose the project.

    In December, a spokesman for the consortium said the project developers would be "conducting a total project review" over the next several months.

    "The project is continuing to work with area First Nations, stakeholders and regulators, to manage any potential impacts through mitigation measures and design optimization," the spokesman said in an email.

    http://www.platts.com/latest-news/natural-gas/houston/british-columbia-first-nations-groups-file-suit-21573822
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    Agriculture

    Bayer says had productive meeting with Trump over Monsanto deal


    German drugs and pesticides maker Bayer, which will need regulatory approval for its $66 billion deal to buy U.S. seeds giant Monsanto, said company chief executives had a productive meeting with U.S. president-elect Donald Trump.

    Trump talked to Bayer Chief Executive Werner Baumann, Monsanto CEO Hugh Grant and some of their advisers in New York, his transition team said on Wednesday, part of meetings before he takes office later this month.

    "It was a productive meeting about the future of agriculture and the need for innovation," a Bayer spokesman said on Thursday, declining to provide more details for the moment.

    The fate of major proposed mergers, not just Bayer-Monsanto but also Dow Chemical (DOW.N) and DuPont (DD.N), which plan to spin off their combined agriculture businesses, will be decided by Trump's nominees to lead antitrust enforcement at the Justice Department and the Federal Trade Commission.

    Antitrust and industry experts see the regulatory hurdles to a deal as manageable because Bayer's main business in agriculture is pesticides while Monsanto's focus is on genetically modified seeds.

    Under such a scenario, Bayer could at worst be asked to divest soybean, cotton and canola seed assets as well as LibertyLink-branded crops that are resistant to its glufosinate herbicide, an important alternative to Monsanto's Roundup Ready seeds.

    But uncertainty remains over what regulators will make of the merged group's grip of the overall agriculture market, with a combined market share in seeds and pesticides of about 28 percent.

    Critics argue this dominant market position will allow it to crimp research and development efforts. Bayer has said that much needed innovation will come from combined seeds-chemicals offerings and that it needs to merge to compete against other integrated suppliers such as the future Dow-Dupont.

    Monsanto shares closed little changed at $108.45 on Wednesday, offering an 18 percent upside to Bayer's takeover bid of $128 per share or $66 billion in total. Bayer shares were down 0.6 percent at 100.40 euros at 0942 GMT (4:42 a.m. ET).

    The meeting took place on the day of Trump's first news conference as president-elect, which also saw him slam drug companies as "getting away with murder" in what they charge the government for medicines.

    Bayer, the inventor of aspirin, is among the world's top 20 pharmaceutical groups, with products including Yasmin birth-control pills and stroke prevention drug Xarelto.

    http://www.reuters.com/article/monsanto-ma-bayer-trump-idUSL5N1F225I
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    Base Metals

    Congo Minister says Glencore can buy Gertler’s copper mine stake


    The Democratic Republic of Congo’s Mines Ministry said it wouldn’t oppose a transfer of ownership in the country’s biggest copper and cobalt producer, marking a departure from previous actions to block or tax changes in shareholding structures.

    Glencore said last week it’s considering increasing its 69% stake in the Mutanda Mining project, also known as Mumi. The rest is owned by Israeli billionaire Dan Gertler’s Fleurette Group.

    “I don’t believe” the state needs to authorize changes in ownership in the Mutunda project, Mines Minister Martin Kabwelulu said late Tuesday in response to questions.

    Congo’s government in May announced it would investigate and tax Freeport-McMoRan Inc.’s sale of its 56% stake in the Tenke Fungurume Mining project, known as TFM, to China Molybdenum Co. for $2.65-billion. The government has since lifted its objections, but State-owned copper miner Gecamines, which owns 20% of the mine, continues to oppose the deal, insisting that its rights to match the offer have been ignored.

    “Don’t confuse Mumi with TFM, these are different regimes,” Kabwelulu said by text message. “TFM is a convention in which the state is a shareholder, while Mumi is a 100% private business.”

    BILLIONS INVESTED

    Glencore and Gertler began investing in mines in Congoalmost a decade ago and now jointly own 100% of Mutanda, despite a provision in Congo’s mining code that usually awards the government a 5% noncontributing stake. The companies have invested $1.8-billion in the mine, of which $440-million has come from Fleurette, according to its website.

    A spokesperson for Fleurette declined to comment on the potential sale.

    In 2015, Mutanda produced 216 100 metric tons of copperand 16 500 tons of cobalt, more than any other mine in Congo, Africa’s biggest producer of the metals. TFM was the country’s second-largest producer that year, mining 203 964 tons of copper and 16 014 tons of cobalt.

    http://www.miningweekly.com/article/congo-minister-says-glencore-can-buy-gertlers-copper-mine-stake-2017-01-12
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    Indonesia eases export ban on nickel ore, bauxite


    Indonesia introduced new rules on Thursday that will allow exports of nickel ore and bauxite and concentrates of other minerals under certain conditions, in a sweeping policy shift from the key global supplier.

    The broad changes cover areas including permit extensions, which can now be applied for up to five years in advance of expiry, and rules on divestment.

    The changes also require nickel and bauxite miners to dedicate at least 30 percent of their smelter capacity to process low-grade ore, defined as below 1.7 percent nickel or below 42 percent aluminum.

    However, the remaining low-grade ore can potentially be exported, Coal and Minerals Director General Bambang Gatot told reporters.

    "Where, considering their installed (smelter) capacity, they can't absorb production, (ore) will be allowed to be sold overseas," he said.

    The policy backflip was welcomed by state-controlled PT Aneka Tambang Tbk, whose revenues were hit hard after Indonesia banned nickel ore exports in 2014.

    "Regional economies will grow, (and) mining areas that died because of the export ban can grow again," Antam CEO Tedy Badrujaman told Reuters on Thursday.

    But nickel prices in London fell as much as 3 percent on the news, and for many investors in Indonesia's budding nickel smelter industry, which was supported by the ore export ban, the new rules are a disappointment.

    Jonatan Handojo, executive director of the Processing and Smelting Companies Association (AP3I), told Reuters the new policy "damages Indonesia's image throughout the world and makes us look like our laws and regulations can be changed just like that."

    "The Chinese companies will be most unhappy because they have invested something like $15 billion in developing smelters that are already in operation," Handojo said, adding the change could damage Indonesia's relations with China.

    The new rules are a mixed bag for U.S. mining giant Freeport-McMoRan Inc, which now has a window to continue copper concentrate exports, but it will also have to divest up to 51 percent of its Indonesian unit from 30 percent under current rules. So far it has divested only 9.36 percent.

    Freeport's Grasberg operation in Indonesia currently exports around two-thirds of its output as copper concentrate.

    Under the new rules, Freeport must first switch over from its current contract of work (COW) to a special mining license in order to clinch a new export permit, a process mining minister Ignasius Jonan said could be done in as little as two weeks.

    Freeport's exports from Indonesia were held up for more than six months in 2014 in a fractious export tax dispute connected to the country's mining rules, costing Southeast Asia's top economy more than $1 billion and putting thousands of jobs at risk.

    http://www.reuters.com/article/us-indonesia-mining-exports-idUSKBN14W1TZ
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    Norsk Hydro to use LNG at its Brazilian plant


    Norwegian aluminium company Norsk Hydro signed agreements with the state of Pará and Shell Brasil Petróleo, aiming to replace fuel oil with natural gas at its Alunorte alumina refinery in Brazil.

    Under its letter of intent signed with the Pará government, aims to develop infrastructure and enable the use of natural gas in the region.

    Hydro Alunorte would be the first consumer of gas, and an enabler for establishing new LNG infrastructure in Pará, according to the company.

    The company’s memorandum of understanding signed with Shell, outlines terms for delivery of LNG and the establishment of necessary infrastructure close to the Alunorte plant.

    Under the MoU, a detailed feasibility study, to assess the technical and economic viability of the project, will be conducted before other agreements with Shell can be signed.

    Alunorte refinery consumes fuel oil for the calcination process and for part of the steam generation, since natural gas has not been an option in Pará due to lack of infrastructure.

    http://www.lngworldnews.com/norsk-hydro-to-use-lng-at-its-brazilian-plant/

    Attached Files
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    Steel, Iron Ore and Coal

    China's state-owned firms to cut more steel, coal capacity: report


    China wants its major state-owned enterprises to eliminate almost 6 million tonnes of steel production and 24.7 million tonnes of coal capacity this year, official media reported on Thursday, citing a government plan.

    China, the world's top producer of both coal and steel, has embarked on a major drive to cut inefficient surplus capacity.

    It cut 45 million tonnes of steel capacity in 2016 and was aiming to reduce 250 million tonnes of coal capacity.

    The State-owned Assets Supervision and Administration Commission, which supervises government-owned firms, also wants to shutter 300 so-called 'zombie' enterprises this year, the Securities Times said.

    The goals were outlined at a meeting of central government-owned enterprises, it said.

    http://www.reuters.com/article/us-china-overcapacity-steel-coal-idUSKBN14W1EN
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    China's smog delays coal and iron ore cargos


    A huge traffic jam of hundreds of ships carrying coal and iron ore into China has built up outside major northern Chinese ports like Tianjin and its nearby terminals at Caofeidian and Huanghua, mainly attributed to heavy smog.

    These ports have suspended loading of ships several times since December 20 due to poor visibility largely caused by smog that has enveloped large parts of northern China at various times in recent weeks.

    Including other northeast Chinese ports like Dalian, the number of dry-bulkers waiting to unload rises to around 300 as power stations and steel mills take in orders to meet heating demand during the coldest time of the year. Many are also stocking up before most of China shuts down for the Spring Festival holiday, which starts at the end of January.

    According to officers onboard and captains, most ships have berthed for 4-7 days sitting in China's Bohai Bay waiting to offload into key Chinese industrial hubs.

    The congestion is also messing up schedules for shippers across the Asia Pacific region as vessels sit idle outside China's ports for several days.

    "Nominating vessels for subsequent shipments is becoming a little more difficult as we can't be 100% sure if we are getting accurate information about when ships will be available," Reuters reported, quoting Ralph Van Der Hoeven, head of Klaveness China, part of Norwegian dry bulk shipper Torvald Klaveness.

    The delays, which mean it could be even weeks before ships are able to deliver their raw materials, are costing hundreds of thousands of dollars in extra shipping fees every day.

    On a few occasions shippers jumped into the market to fix prompt spot tonnage, at rates well above the market, according to Peter Lye, head of shipping at mining major Anglo American, referring to certain shippers who needed to charter at short notice to carry deliveries when other vessels were caught in China's traffic jam.

    The need by miners and operators to charter alternative ships at short notice helped fuel a 29.5% rise in capesize charter rates from Western Australia to northern China from a seven-week low of $4.9/t on December 15 to a five-week high of $6.37/t in January.

    http://www.sxcoal.com/news/4551307/info/en
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    Peabody secures $1.5 billion in financing to exit Chapter 11


    Peabody Energy Corp said on January 12 that a group of banks, including affiliates of Goldman Sachs Group Inc and JPMorgan Chase Bank, has pledged a combined $1.5 billion in loans to help the coal producer exit bankruptcy in the coming months.

    The cash will be used to cover claims by Peabody's secured lenders and provide "a strong foundation" for its capital structure when it emerges from the roughly $8 billion Chapter 11 bankruptcy it filed last April, according to court documents.

    Affiliates of Credit Suisse AG and Macquarie Group Ltd are also part of the group that has signed on to the new financing.

    Peabody, with 6.3 billion tons of proven and probable coal reserves, joined other U.S. coal producers in bankruptcy last year when falling prices left it unable to service billions of dollars in debt taken on to finance expansion in Australia.

    The company expects to exit Chapter 11 in the second quarter of this year with a plan, supported by most of its creditors, to cut more than $5 billion of debt and raise new capital through a $750 million private placement and a $750 million rights offering.

    Peabody has not yet explained how it will guarantee about $1 billion in future mine cleanup costs previously covered by "self-bonding," a federal program that exempt large miners from setting aside cash or collateral to ensure mined land is returned to its natural setting, as required by law.

    The practice came under scrutiny following Chapter 11 filings by U.S. coal producers that held a total of $3.6 billion in self-bonds as of July, raising concerns that taxpayers could some day be stuck with the cost of cleaning up mined land.

    http://www.sxcoal.com/news/4551279/info/en
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    CNOOC coal-to-gas pipeline project passes environmental assessment


    China National Offshore Oil Corporation (CNOOC) has recently passed expert appraisal of the environmental impact assessment report for its coal-to-gas transmission pipeline project in western Inner Mongolia, media reported.

    The review, organized by the Environmental Engineering Assessment Center under the Ministry of Environmental Protection (MEP), indicates the project was one step closer to gain final approval of the MEP. The pipeline will be the first trans-provincial natural gas transmission pipeline for CNOOC.

    The project would help delivery coal-based substitute natural gas (SNG) from coal-to-gas production bases in western Inner Mongolia and Datong in Shanxi to the Beijing-Tianjin-Hebei and Bohai Rim region.

    Major producers include CNOOC, Xinmeng Energy Co., Ltd., Hebei Construction Group Co., Ltd. and Beijing Beikong Energy Investment Co., Ltd.

    The Datong coal-to-gas project under CNOOC and Beijing Beikong Energy coal-to-gas project have received the environmental impact assessment approval.  

    http://www.sxcoal.com/news/4551257/info/en
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    Ganqimaodu 2016 coal imports soar 108.9pct on yr


    Ganqimaodu border crossing in northern China's Inner Mongolia autonomous region imported 12.87 million tonnes of coal from neighboring Mongolia in 2016, soaring 108.91% year on year, showed data from the Wulate Middle Banner Bureau of Commerce.

    Coal imports of the border crossing stood at 1.78 million tonnes in December, increasing 189.85% year on year and up 2.2% from November, the data showed.

    Ganqimaodu borders resourceful Mongolia, whose Tavan Tolgoi coal mine has coal reserves of 6.4 billion tonnes, with primary coking coal at 1.8 billion tonnes and thermal coal at 4.6 million tonnes. The border crossing has been an important hub boosting coal trades between the two countries since its opening in 2009.

    During the 12th Five-Year Plan period (2011-2015), coal imports at Ganqimaodu border crossing totaled some 52 million tonnes, with coal tax revenue at 1.027 billion yuan.

    Coal imports of Ganqimaodu have increased drastically since March last year, as demand from downstream users gained steam after domestic supply was curbed by the national de-capacity drive.

    http://www.sxcoal.com/news/4551287/info/en
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    BC Iron expecting more from Iron Valley


    ASX-listed BC Iron has revised the full-year earnings before interest, tax, depreciation and amortization (Ebitda) for its Iron Valley operationsfollowing a strong quarter.

    Ebitda guidance has now increased from the previous A$6-million to A$16-million to between A$18-million and A$25-million.

    The increase in the guidance followed on from a record Ebitda of A$8.2-million from the Iron Valley operations for the three months to December, based on shipments of 2.1-million tonnes.

    The Iron Valley operation, which is operated by Mineral Resources under an ore purchase agreement with BC Iron, shipped record tonnes in the December quarter, and BC Ironnoted that continued robust iron-ore pricing and strong operational performance during the quarter translated into the record Ebitda.

    “Iron Valley continues to generate solid earnings for BC Ironin the form of low-risk royalties,” said BC Iron MD Alwyn Vorster.

    “This has allowed the company to provide a significant upgrade to the 2017 Ebitda guidance to A$18-million to A$25-million. Iron Valley earnings, coupled with a healthy cash balance and unique asset portfolio, strongly position BC Iron to pursue its growth strategy and generate value for shareholders.”

    http://www.miningweekly.com/article/bc-iron-expecting-more-from-iron-valley-2017-01-12
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    China steel exports fall from record in relief for global steelmakers


    China's steel exports fell in 2016 from a record in the previous year, dragged down by improved demand at home and Beijing's resolve to tackle overcapacity, in a relief for steelmakers elsewhere that have been hit by cheap Chinese shipments.

    China's exports could slip further this year, analysts and industry officials say, as Beijing strengthens its supply-side reforms and overseas markets fight against being flooded with Chinese products.

    China's exports of steel products fell 3.9 percent from the previous month to 7.8 million tonnes in December, customs data showed on Friday. Full-year export volumes dropped to 108.46 million tonnes from a record 112.4 million tonnes in 2015, Reuters calculations showed.

    "It's a relief for steel producers globally, especially in ASEAN," said Roberto Cola, vice president of the ASEAN Iron and Steel Council.

    About a third of China's steel exports go to member countries of the Association of Southeast Asian Nations (ASEAN).

    Trade cases filed by countries from Asia to Europe against Chinese steel products as well as improved domestic demand may have helped limit China's exports this year, said Cola.

    "But I think the big factor was the shutdown of many steel plants due to China's anti-pollution measures which had curbed volume for export," he said.

    China shut at least 45 million tonnes of steel production capacity last year, meeting its target, in a drive to address a glut through 2020.

    "The supply-side reform created some persistent production disruption so China didn't produce as much as it would have in an unconstrained market," said Andrew Driscoll, head of research at CLSA.

    China this week unleashed its boldest reform plan so far for its bloated steel sector, saying it will eliminate all production of low-quality steel products by the end of June, a move analysts say could dent exports further.

    http://www.reuters.com/article/china-economy-trade-steel-idUSL4N1F12QH
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