Mark Latham Commodity Equity Intelligence Service

Wednesday 2nd September 2015
Background Stories on www.commodityintelligence.com

News and Views:

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    Macro

    Quantitative tightening?

    The great global monetary tightening of 2015 is under way, but it’s not being led by theFederal Reserve.

    Even as U.S. policy makers ponder whether to raise interest rates this month, one recent source of central bank liquidity in financial markets is drying up and the loss of it partly explains August’s trading volatility.

    Behind the drawdown are the foreign exchange reserves run by the central banks. Bolstered following financial crises in the late 1990s as a buffer against capital outflows and falling currencies, such hoards fell to $11.43 trillion in the first quarter from a peak of $11.98 trillion in the middle of last year, according to the International Monetary Fund.Image title

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    A major warning from the most reliable bellwether of the world economy


    South Korean exports in August plunged 14.7% from a year ago. This was much worse than the 5.9% decline expected by economists. And it was the biggest drop since August 2009.

    This is a troubling sign, as Korea's exports represent the world's imports. Because it is the first monthly set of hard economic numbers from a major economy, economists across Wall Street dub South Korean exports as the global economic "canary in the coal mine."

    Korea is a major producer of goods ranging from automobiles and petrochemicals to electronics such as PCs and mobile devices.



    cotd korean exports

    Here's a geographic breakdown via Bloomberg:

    China: -7.6%
    Europe: -7.7%
    Japan: -20.9%
    ASEAN: -3%
    US: +3.4%
    Latin America: -19.3%

    China, the world's second-largest economy, is Korea's biggest customer. And while many experts are skeptical of the reliability of China's official trade data, few doubt the quality of Korea's data.

    "In the last decade, China was a major growth driver for Korea," Morgan Stanley's Sharon Lam said on Tuesday. "Korean exporters are proud of their success in China, as witnessed by Korea overtaking Japan to become China's number one import source since 2013. Korea's success in the Chinese market was characterized by its brand name, technology, and marketing efforts. Unfortunately, China is no longer a positive factor for Korea and in fact it has become a negative drag."



    Read more: http://uk.businessinsider.com/south-korean-exports-august-economic-bellwhether-2015-9?r=US&IR=T#ixzz3kUmba6eV

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    China amends pollution law, no specific coal use targets


    Amendments to China's 15-year-old air pollution have been approved by law legislators, which granted the state new powers to punish offenders and create a legal framework to cap coal consumption, state media reported recently.

    China is now trying to equip its environmental inspection offices with greater powers and more resources to tackle persistent polluters and the local governments that protect them.

    The amendments are expected to make local governments directly responsible for meeting environmental targets. They also ban firms from temporarily switching off polluting equipment during inspections and outlaw other behavior designed to distort emission readings.

    However, lawmakers had rejected proposals to include specific coal consumption targets in the law and also ruled out a clause allowing local authorities to set their own restrictions on car use, the official Xinhua News Agency said earlier this week.

    Wang Yi, head of the policy committee of the China Academy of Sciences, has told Chinese media the law fails to set clear goals on emissions and air quality standards.

    According to the Ministry of Environmental Protection, concentrations of hazardous breathable particles known as PM2.5 fell 17.1% in the first half of 2015 to 58 mcg per cubic meter. China doesn't expect to meet the state standard of 35 mcg until 2030.

    http://en.sxcoal.com/0/130751/DataShow.html

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    El Nino:Warm episode

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    Oil and Gas

    Saudi Arabia in dilemma over Asia crude oil prices next month


    A strong Dubai price has again put top oil exporter Saudi Arabia in a dilemma over whether to raise the prices of crude it sells to Asia to match the benchmark’s strength, or to cut to stay competitive in an oversupplied market.

    Record purchases of October-loading crude by Chinaoil during a mechanism that sets the price of Middle East crude in Asia strengthened the benchmark, even as other grades are being pressed lower by a global glut.

    Saudi Arabia is due to release October crude prices later this week, setting the trend for Iranian, Kuwaiti and Iraqi crude bound for Asia.

    “The Dubai market is acting very erratic and it’s been moving in such a way that’s not reflecting underlying fundamentals,” a source with a Gulf oil producer said.

    “Producers are walking on a thin line, but they can change and might need to lower or soften the price a little bit.”

    If state oil giant Saudi Aramco keeps to its monthly price formula, the official selling price (OSP) for Arab Light should edge up in October from a month ago, a survey of five refiners showed.

    Still, it may opt to cut prices to defend its market share in Asia, traders said.

    “I don’t think Saudi will raise Arab Light price,” a trader with a North Asian refiner said. “They may cut prices to stay competitive.”

    Saudi Aramco has deviated from its pricing methodology before. Last month, it increased September prices by less than forecast as it defends market share in Asia.

    The October OSP for Arab Extra Light should also get a boost if Saudi follows its formula, but any price hike may make the grade less competitive to Abu Dhabi’s Murban crude, a trader said.

    Heavier Saudi grades – Arab Medium and Heavy – are expected to post price cuts in October on weaker fuel oil cracks, traders said.

    The OSP for Arab Medium may fall by up to 50 cents, traders said, but its price cut could deepen if Saudi Arabia followed last month’s spot market.

    Similar crude Banoco Arab Medium was traded at discounts of up to $1 a barrel last month against its OSP.

    https://www.energyvoice.com/marketinfo/86479/saudi-arabia-in-dilemma-over-asia-crude-oil-prices-next-month/

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    Russia says oil output could decline if prices stay low


    Russia will not deliberately cut oil production to prop up prices, however its output may decline if prices remain low, local news agencies quoted Deputy Prime Minister Arkady Dvorkovich as saying on Tuesday.

    He also said that Russia was ready to discuss measures aimed at oil price stabilisation with the Organization of the Petroleum Exporting Countries (OPEC) and other key producers, TASS news agency reported.

    "It's quite possible that if oil prices remain at the low levels for long, oil production could decline, as had been the case before. Anyway, we don't expect any significant cuts," Dvorkovich said according to TASS.

    Oil prices almost halved from last year mainly due to oversupply.

    OPEC kingpin Saudi Arabia, in a strategy designed to squeeze out rivals, such as U.S. shale oil firms, has been reluctant to cut oil output in order to support prices.

    Russian President Vladimir Putin and his Venezuelan counterpart Nicolas Maduro will discuss "possible mutual steps" to stabilise global oil prices when both visit China this week.

    OPEC and Russia, one of the world's biggest oil producers, have held regular meetings but have not agreed on any coordinated action to prop up falling prices.

    Dvorkovich reiterated that it would be technically difficult to restore oil production in Russia if output is cut artificially.

    Russia has been pumping oil at a post-Soviet high of more than 10.7 million barrels per day and expects to maintain high levels of output next year.

    http://www.reuters.com/article/2015/09/01/russia-oil-opec-idUSL5N1171X520150901

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    Russian oil exports up 11% in August


    Russia's Aug #crudeoil exports outside the Commonwealth of Independent States jump 11% on year to 4.214 mil b/...Platts Oil
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    OPEC magazine op-ed that fueled oil rally baffles insiders


    An OPEC publication written by the exporter group's public relations team helped oil prices jump and prompted speculation over a possible shift in output policy - to the bafflement of some OPEC insiders.

    The commentary on Monday in the OPEC Bulletin, a magazine issued by OPEC's Vienna headquarters, said downward pressure on prices due to higher production "remains a cause for concern" and OPEC "stands ready to talk to all other producers".

    While the 799-word article helped add another 8 percent to oil's three-day surge, by Tuesday it seemed clear there was no sign of a significant shift in OPEC policy or any indication of a fresh push to shore up markets, analysts and OPEC insiders said.

    A Gulf delegate said the Bulletin reflected genuine concern in the Organization of the Petroleum Exporting Countries about falling prices but it did not signal a policy shift or pending production cut.

    "I see it as a message sent to the market that we are willing to talk to non-OPEC, we are concerned about prices and we are not closing our eyes to what's going on ."

    Another OPEC insider said: "I found it surprising," referring to the jump in prices on Monday. "The Bulletin wasn't saying anything new."

    The Bulletin, a glossy magazine, is written by OPEC's PR department based in Vienna and lists 12 editorial staff. It is reviewed by senior officials at the OPEC secretariat before publication.

    In the magazine, the following disclaimer appears under the heading "editorial policy": "The contents do not necessarily reflect the official views of OPEC nor its member countries."

    While the Bulletin has included similar commentaries on the market before - in April it criticised unidentified non-member countries for not cooperating in propping up prices - it does not tend to move oil prices.

    Traders are wondering whether OPEC and its de-facto leader Saudi Arabia will stick with the policy adopted in 2014 of defending market share, even after the slide in oil prices to their lowest in more than six years last month.

    While Saudi Arabia has not commented publicly, some had seen the Bulletin as indicating a shift.

    "Yesterday the market got somewhat excited by the editorial of the OPEC Bulletin," said Olivier Jakob, oil analyst at Petromatrix. "This was read by some market participants as making a first overture for a change of policy."

    http://www.reuters.com/article/2015/09/01/opec-oil-idUSL5N11737620150901

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    Ohio’s Utica Shale has record-breaking second quarter


    Second quarter production in Ohio’s Utica Shale was record-breaking, according to The Columbus Dispatch.

    During the three month period, 5.6 million barrels of oil and 222 billion cubic feet of natural gas were produced. These numbers are up from 4.4 million barrels of oil and 184 billion cubic feet of natural gas produced during the first quarter of 2015.

    The recent Ohio Department of Natural Resources report shows that the state’s top oil wells are located in Guernsey County and the top gas wells are located in Belmont County.

    http://shalegasreporter.com/news/ohios-utica-shale-record-breaking-second-quarter/57362.html
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    China oil market reform paves way for new crude benchmark


    China may launch a global crude oil futures contract as early as October to compete with the existing London Brent and the U.S. WTI benchmarks, three sources said, as it pushes ahead with reforms to open up its oil markets.

    The long-awaited crude contract would better reflect China's growing importance in setting crude prices, as well as boost the use of the yuan in which it will be traded, although volatile global trading conditions and China's recent interference in stock markets have raised some concerns.

    The Shanghai International Energy Exchange, also known as INE, circulated a draft of the futures contract to market participants last month, saying the launch could happen as early as October, the sources who saw the draft, told Reuters.

    China, the world's second-biggest oil consumer, has already begun to loosen its grip on the physical oil sector this year by granting quotas for imported crude to privately-owned refiners for the first time, surprising market participants with the speed of reform.

    "The development of a futures market is closely linked to the physical market," INE said in a statement issued to Reuters in response to questions about the new contract.

    "The more physical players participate, the better the liquidity of the futures market will be."

    The launch of Shanghai crude futures won state approval last year and would be the first Chinese contract that allows direct participation by international investors.

    A Shanghai-based contract will compete in the crude futures market, which is worth of trillions of dollars and is dominated by two contracts, London's Brent, seen as the global benchmark, and WTI, the key U.S. price.

    Oil traders said Chinese crude futures would eventually compete against Brent, which is priced off small and declining oil fields in the British North Sea, and can be affected by factors with no relationship to Asia.

    INE said that it aimed to have overseas investors, oil companies, and financial institutions participating in its crude futures trading.

    "If China's crude futures don't immediately attract enough liquidity and markets are still as volatile as now, then traders could get really burned and would quickly stop trading Chinese crude futures," said one oil trader, who would likely start dealing Chinese crude futures.

    Recent market interference was also a concern, although he noted China's iron ore and coal futures markets were running smoothly despite similar price routs to oil.

    For futures to work, traders need a widely traded physical market from which prices for futures contracts can be derived.

    Granting independent refiners access to oil imports will put pressure on China's three state-owned oil majors, PetroChina, Sinopec and China National Offshore Oil Corp (CNOOC), which already face headwinds from collapsing oil prices, a stock market rout and corruption charges.

    "These changes are coming much faster than we anticipated," said an official with one of the big three state-owned energy companies. "Reforming and opening up the oil market is the new fashion in Beijing."

    The government has so far granted a total of seven independent refiners quotas for 715,800 bpd of imported crude, roughly 11 percent of the total crude imports, and more are likely to follow.

    http://www.reuters.com/article/2015/09/02/china-oil-market-reform-idUSL3N10V1IB20150902
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    China signs off on $5 bln loan to boost Venezuela oil output -Maduro

    China signs off on $5 bln loan to boost Venezuela oil output -Maduro

    Venezuela and China have signed a deal for a $5 billion loan designed to increase the OPEC country's oil production, Venezuelan President Nicolas Maduro said.

    Maduro, speaking from China in a show broadcast on Venezuelan state television on Tuesday night, said the loan was destined "to increase oil production in a gradual way in coming months," without providing further details.

    A source at Venezuelan state-run oil company PDVSA told Reuters in March that China was set to extend a "special" $5 billion loan that would likely stipulate hiring Chinese companies to boost output in the company's mature oil fields.

    Venezuela has borrowed $50 billion from China through an oil-for-loans agreement created by late socialist leader Hugo Chavez in 2007, which has helped Chinese companies expand into Venezuelan markets amid chronic shortages of consumer goods there.

    That financing has been especially crucial for Caracas since last year's oil market rout, which aggravated the country's severe economic crisis.

    Eulogio del Pino, the oil minister and president of PDVSA , and Finance Minister Rodolfo Marco Torres were among key Venezuelan figures present at the president's "In Contact with Maduro" show, which broadcast this week from Beijing.

    Speaking in front of a huge portrait of Chavez, Maduro also said that Venezuela currently sends around 700,000 barrels-per-day of oil to the Asian giant.

    During the show, which usually lasts for hours and often includes live music and folkloric dance, Maduro lauded traditional Chinese medicine and art.

    http://www.reuters.com/article/2015/09/02/venezuela-china-oil-idUSL1N11801K20150902
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    Fuel Ships Take 4,000-Mile Africa Detour as Oil Prices Plunge


    Slumping oil prices are spurring 4,000-mile (6,400-kilometer) diversions of tankers filled with diesel and jet fuel as the price of ship fuel plunges, opening up trading opportunities.

    At least five tankers will deliver refined products to European ports in August and September, sailing around South Africa rather than using the normal shortcut through Egypt’s Suez Canal, ship tracking data show. The falling cost of fuel oil, used to power ships, has made longer voyages viable at a time when there are advantages for traders to keep cargoes at sea. Long-distance shipments between continents have increased this year, according to Torm A/S, world’s second-biggest publicly traded product-tanker owner.

    Plunging oil opens up new trades as product tankers take the long route to Europe

    Brent crude futures plunged about 50 percent since August last year as OPEC nations kept pumping more than the market needs. Across oil markets, the rout triggered what traders call contango, a price pattern that lessens the need for speedy oil deliveries because future fuel prices are higher than immediate ones.

    “There’s massive demand to move oil products over very long distances,” Erik Nikolai Stavseth, a shipping analyst at Arctic Securities ASA in Oslo, said by phone Aug. 27. “These shipments tell me that there are very good times ahead for product-tanker owners,” he said, referring to ships that carry refined fuels like gasoline and diesel.

    Rates for hauling these fuels are surging. The sort of long-range tankers being used to sail around Africa will earn $28,375 a day this year, according to a survey of shipping specialists compiled by Bloomberg. That’s the most since at least 2010 and 19 percent more than anticipated at the end of last year.

    http://www.bloomberg.com/news/articles/2015-09-01/fuel-ships-take-4-000-mile-africa-detour-as-oil-prices-plunge

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    Cheniere cleared to export more LNG from Corpus Christi

    Cheniere cleared to export more LNG from Corpus Christi

    The United States Department of Energy issued an order authorizing Cheniere to export LNG from its stage 3 project (Trains 4 and 5) of the Corpus Christi liquefaction facility, to be located in San Patricio and Nueces Counties, Texas.

    Cheniere has been authorized to export equivalent to approximately 514 Bcf/yr of natural gas for a 20-year term, according to the order.

    Cheniere’s Corpus Christi liquefaction project is currently under construction and presently consists of Trains 1-3, three LNG storage tanks, two marine berths, and associated facilities.

    Under the Stage 3 expansion project, Cheniere intends to add two 5 mtpa liquefaction trains, as well as a fourth LNG tank, to expand the Corpus Christi project.

    Cheniere anticipates that construction of the Stage 3 project will commence by 2017, with exports commencing as early as 2021.

    http://www.lngworldnews.com/cheniere-cleared-to-export-more-lng-from-corpus-christi/
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    Oil producer Penn West to cut jobs, capex and suspend dividend


    Canada's Penn West Petroleum Ltd cut its 2015 capital budget and said it would suspend its dividend and reduce its workforce by 35 percent, helping it save about C$140 million ($106 million) as it copes with the slump in crude oil prices.

    The oil and gas producer also said it would lower its well drilling and operating costs, and that its board had voluntarily cut the annual retainers payable to non-management directors to help shore up finances.

    The company is the latest oil and gas producer to cut capital spending plans and find ways to lower costs as they struggle to cope with slumping crude prices, which have more than halved since June last year.

    Lower costs had helped Penn West report a smaller-than-expected loss in the second quarter.

    The company, which has been selling assets to reduce debt, will continue to look for more opportunities to reduce capital spending this year, it said in a statement on Tuesday.

    Penn West, which has reserves in Alberta, British Columbia, and Saskatchewan, Manitoba and the Northwest Territories, lowered its 2015 capital spending forecast by 13 percent to C$500 million.

    The revised forecast is 40 percent lower than the company's initial estimate of C$840 million set in November. Since then Penn West had cut its forecast twice, in December and in July.

    Penn West said it would lay off about 400 employees and contractors, with most of the job cuts at its head office in Calgary, Alberta. It had about 1,120 employees as of Dec. 31.

    The company said it expects to save about C$45 million per year due to the reductions, for which it will record a charge in the current quarter.

    Penn West had in March slashed its quarterly dividend to 1 Canadian cent per share from 14 Canadian cents. It said on Tuesday that it expects to save about C$20 million by suspending the payout altogether from the quarter starting October.

    The company said its board had voluntarily lowered the annual retainers for non-management directors. The chairman's retainer will be halved, while the retainers for the remaining non-management directors will be reduced by 40 percent.

    Penn West said it had cut its absolute operating costs by more than 20 percent over the last 18 to 24 months. It expects to cut costs a further 10 percent and lower well costs by 10 percent.

    The company cut its 2015 production forecast to 86,000 to 90,000 barrels of oil per day (boepd) from 90,000 to 100,000 boepd.

    http://www.reuters.com/article/2015/09/01/penn-west-employment-idUSL4N1173VU20150901
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    ConocoPhillips reports first oil at Surmont 2 oil sands facility


    ConocoPhillips has delivered first oil at its Surmont 2 in-situ oil sands facility in Canada, the company said Tuesday.

    Construction of the Surmont 2 facility, the largest single-phase steam-assisted gravity drainage (SAGD) project ever undertaken, began in 2010.

    Earlier this year, ConocoPhillips announced first steam, the initial step towardsproduction. Since that milestone, steam has successfully heated the reservoir to a point where the well pairs can be converted to a SAGD configuration and allows the oil to flow. Production was declared once the inspected product was successfully routed to sales tanks.

    Production will ramp-up through 2017, adding approximately 118,000 bopd gross capacity. Total gross capacity for Surmont 1 and 2 is expected to reach 150,000 bopd.

    “The oil sands are an important part of our portfolio,” said Ryan Lance, chairman and CEO. “We’re pleased to see a project of this magnitude move from the capital phase to theproduction phase, knowing that it will produce for decades to come.”

    The Surmont project is located in the Athabasca Region of northeastern Alberta, Canada, approximately 35 miles southeast of Fort McMurray. Surmont is operated by ConocoPhillips under a 50/50 joint venture agreement with Total E&P Canada.

    http://www.worldoil.com/news/2015/9/01/conocophillips-reports-first-oil-at-surmont-2-oil-sands-facility

    Husky said it has started steam operations at the second of two processing plants at its Sunrise project, a joint venture with BP Plc that will reach full capacity of 60,000 bpd by the end of 2016.


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    Nexen expects Long Lake oil sands shutdown to take two weeks


    Nexen Energy, the Canadian subsidiary of Chinese state-owned CNOOC Ltd, is shutting down its Long Lake oil sands operations in northern Alberta in response to an emergency regulatory order, a company spokeswoman said on Tuesday.

    Nexen estimated the shutdown process would take up to two weeks as it suspends pipeline operations and attempts to demonstrate to the Alberta Energy regulator that its pipelines are safe.

    The provincial regulator ordered Nexen to shut in 95 pipelines at the Long Lake facility last Friday as part of an investigation into one of the largest-ever oil-related pipeline spills on North American soil, discovered in July.

    The incident dealt another blow to Canada's oil sands industry in northern Alberta, which is under fire from environmental groups for its carbon-intensive production process.

    Long Lake was producing about 50,000 bpd of bitumen before the spill, which is upgraded on site into refinery-ready synthetic crude. The upgrader also processes raw bitumen from other oil sands projects.

    Nexen declined to comment on Tuesday about the impact on production, adding that it does not typically disclose production information on an individual asset basis. Nexen spokeswoman Diane Kossman said the suspension order was not expected to have any material impact on CNOOC's operations or financial conditions.

    Synthetic crude prices rallied hard on Monday after news of the Long Lake shutdown. A separate production outage at the Syncrude oil sands project sent traders scrambling to secure supply, and extended those gains on Tuesday.

    The order came three days after Nexen gave the regulator an internal company audit that revealed it was breaking some pipeline safety rules related to maintenance.

    "We're managing the risks associated with safely shutting down this complex and integrated facility," Kossman said in a statement.

    Last week's order suspended 15 pipeline licences for 95 pipelines that carry a range of products including crude oil, natural gas, salt water, fresh water and emulsion, the regulator said. It is also requiring Nexen to demonstrate that its pipelines can be operated safely.

    Nexen apologized for the spill in July, explaining that it would likely take months to find the root cause of the leak, which released more than 31,500 barrels of emulsion, a mixture of bitumen, water and sand.

    The regulator said it would not lift the suspension order until the company demonstrates that it can operate its pipelines safely.

    http://www.reuters.com/article/2015/09/01/nexen-pipeline-spill-idUSL1N1172BY20150901
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    W&T Offshore Announces Sale of its Yellow Rose Field in the Permian Basin


    W&T Offshore, Inc. today announced that it has entered into a definitive agreement with Ajax Resources, LLC for the sale of all of its interest in its Yellow Rose field in the Permian Basin.  Gross pre-tax proceeds from the transaction are expected to be approximately $376,100,000, subject to customary closing adjustments.  W&T also reserved a one to four percent sliding scale overriding royalty interest in the field. The transaction is expected to close during the third quarter of 2015, with an effective date of January 1, 2015.

    W&T's interest in its Yellow Rose field includes approximately 25,800 net acres in Andrews, Martin, Gaines, and Dawson counties in West Texas.  For the month of July 2015, net production from the Yellow Rose field averaged approximately 3,000 barrels of oil equivalent ("Boe") per day.

    We will use the proceeds from the transaction to pay down the outstanding balance under our secured revolving credit facility and provide additional liquidity for future operations and acquisitions.

    Tracy W. Krohn, W&T Offshore's Chairman and Chief Executive Officer, stated, "We are pleased to be monetizing our highly valued Permian Basin acreage. This sale will allow us to strengthen our balance sheet and improve our financial flexibility to pursue the acquisition of Gulf of Mexico assets while valuations are favorable.  We believe that current conditions are good for W&T to identify quality offshore producing assets that offer upside exploration and development opportunity. "

    http://www.prnewswire.com/news-releases/wt-offshore-announces-sale-of-its-yellow-rose-field-in-the-permian-basin-of-west-texas-300135746.html
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    Alternative Energy

    India and South Korea plan USD 1 billion energy park in Iran


    Trade ArabiaIt is reported that a group comprising Iranian, Indian and South Korean companies plan to establish an energy park in Iran’s Khuzestan province in a project worth USD 1 billion.

    The report said that the project will include generation of 1,000 megawatts of solar power.

    Mr Suresh Sharma, coordinator and head of GTPP Oil and Gas, said that enterprise Company has also proposed to build gas-powered and combined cycle plants to produce 600 megawatts of electricity.

    The report said that Iranian project owners have announced readiness to undertake 30 per cent of investment and the foreign side to provide the rest of the funds.

    http://steelguru.com/infra/india-and-south-korea-plan-usd-1billion-energy-park-in-iran/433449#tag
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    US clean energy suffers from lack of wind - FT


    A lack of wind is making the US clean energy sector sweat, with consequences for investors from yield-hungry pensioners to Goldman Sachs.

    Electricity generated by US wind farms fell 6 per cent in the first half of the year even as the nation expanded wind generation capacity by 9 per cent, Energy Information Administration records show.

    The reason was some of the softest air currents in 40 years, cutting power sales from wind farms to utilities. The feeble breezes come as the White House is promoting renewable energy, including wind, as part of its Clean Power Plan to counter greenhouse gas emissions.

    “We never anticipated a drop-off in the wind resource as we have witnessed over the past six months,” David Crane, chief executive of power producer NRG Energy, told analysts last month.

    The situation is likely to intensify into the first quarter of 2016 as the El Niño weather phenomenon holds back wind speeds around much of the US, according to Vaisala, a Helsinki-based weather measurement company.

    “We do know that the strong El Niño cycle that we are now in tends to be correlated with below-average continental wind resource, and we also know that meteorological expectations are for the El Niño phase to continue,” Moray Dewhurst, chief financial officer of NextEra Energy, said on a recent conference call.

    US wind farms are increasingly owned by so-called yieldcos, spinoffs from power producers that promise steady payments based on contracted electricity sales. Shares of wind-exposed yieldcos such as NextEra Energy Partners, Pattern Energy Group and NRG Yield, controlled by NRG Energy, have declined this year. NRG Yield reduced its earnings forecast due to what it called “unusually low wind production across the fleet”.

    http://www.ft.com/cms/s/0/b967b6d4-5058-11e5-8642-453585f2cfcd.html#axzz3kUXGoTOi

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    New graphene supercar will do 0-60 in 2.2 seconds – and it runs on water


    A revolutionary new electric supercar – powered by wonder material graphene and do 0-60 in 2.2seconds – is being developed by engineers in the United States.

    The car will have a simple to use graphene integrated hydrogen fuel cell being developed by Sunvault Energy and the Edison Power Company.

    The companies have agreed to build the electric supercar – named the Edison Electron One – to showcase the graphene energy storage system and will be built by the newly incorporated company Edison Motor Cars.

    It is expected to be ready by the first quarter of 2016 and be rechargeable in five minutes, subject to power availability at charging stations.

    The car’s speed and economy will come from a uniquely designed power system of a electric drive unit for each wheel.

    According to the developers, this will give it unequalled traction control of close to 1,355NM of Torque, which is almost double that of a Ferrari 488 GTB, and a third more than that of the Tesla P85D and slightly more than the Porsche 918 Spyder hybrid which is 1,32NM.

    “The fuel cell will be powered by an on-demand hydrogen generation unit built into the car and will only require water“ commented Dr Robert Murray-Smith, director of Sunvault Energy.

    Chief executive Gary Monaghan, said: “With our energy storage device, reliability and peace of mind are wrapped in one design,” .

    The companies will be collaborating with Canadian motorsport constructor MK Technologies – a specialist in the design and creation of performance cars.

    The makers claim the car will perform to the same level of other competitive electric cars with the exception of being able to get much more of a charge in five minutes.

    The most important safety feature is that there will be no risk of fire or explosion associated to lithium ion batteries.
    The cars will be available to customers on a special order basis only – cost has yet to be announced.

    “We are excited to be producing this truly revolutionary automobile that will put our Graphene Energy Storage Device front and centre on the world stage at the simple turn of a key”, stated Monaghan.

    The Electron One will not only be able to challenge any vehicle in performance, but will also be fully flexible, functional and convenient just as a fuel filled vehicle is today,” he added.

    Graphene was invented by British scientists at Manchester University in 2004.

    It is ultra-light and flexible yet 200-times stronger than steel and is fire-resistant yet retains heat. It is claimed to be the most conductive material on earth and is one million times thinner than a human hair.

    https://www.energyvoice.com/otherenergy/86545/new-graphene-supercar-will-do-0-60-in-2-2-seconds-and-it-runs-on-water/

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    Precious Metals

    Alrosa says may cut diamond prices again as orders fall short


    Russian diamond miner Alrosa said clients cancelled half of the orders placed at trading session in July and it was considering a second price cut of the year because of slack demand.

    The state monopoly's Chief Financial Officer Igor Kulichik said on Tuesday Alrosa was stockpiling an increased quantity of the gems rather than curb production.

    "Cutting production leads to a (relative) rise in costs, so we better grow the stock," Kulichik told a conference call, saying that higher than usual cancellations reflected a wider trend of falling diamond sales also affecting other producers.

    Alrosa's diamond stock had grown to 17 million carats, he said, from 14 million at the start of the year.

    Kulichik added the company, the world's top producer by output in carats, may cut prices again in the second half of the year after already lowering them by 6 percent earlier in 2015.

    http://www.reuters.com/article/2015/09/01/russia-alrosa-diamonds-idUSL5N1173RI20150901

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    Base Metals

    PNG copper mine likely shut until Q1 2016 as El Nino set to worsen


    Ok Tedi Mining Ltd's Papua New Guinea copper mine is likely to stay shuttered until the first quarter of 2016 as an intensifying El Nino worsens a drought that has cut off river transport links to the project, an executive said.

    The state run firm last week put its mine under 'care and maintenance', the latest example of copper mining around the Pacific rim to be hit by changing weather patterns.

    "We don't expect to be up and running until the first quarter. It could be as much as a 7-8 month suspension of operations," executive manager for marketing Garry Martin told Reuters in an interview on Wednesday.

    The current El Nino weather phenomenon is expected to strengthen before the end of the year, potentially making it one of the strongest since 1950, the World Meteorological Organization said on Tuesday. El Nino can lead to scorching weather across Asia and heavy rains in South America.

    The miner, which declared force majeure on its sales contracts on Aug. 17, expects to lose 65,000 tonnes of copper in concentrate if the weather conditions persist, Martin said. It has stood down most of its staff on reduced salaries to conserve capital as it conducts maintenance on the mine.

    Analysts say the mine produced about 76,000 tonnes of copper last year.

    Low water levels have meant river traffic on the Fly River into Ok Tedi's main river port at Kiunga have been unreliable and have also affected operation of the Ok Menga power station, the mine's main source of power.

    European copper smelter Aurubis flagged the potential for El Nino to cut copper supply as worsening storms in South America disrupt output in Chile and Peru, the world's top two copper mining countries.

    Heavy rain and winds forced the precautionary closure of some mines in Chile earlier this month, while floods in late March cut the country's copper production that month and in April.

    http://www.reuters.com/article/2015/09/02/png-copper-output-idUSL5N11803720150902

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    Aurubis flags potential El Nino impact on global copper supply


    Image Source: Science IslandReuters reported that European copper smelter Aurubis said that global copper supply could be hit by worsening storms in South America due to an El Nino weather pattern, potentially disrupting output later this year in the world's top two copper mining countries

    Aurubis said in a note “Strong rainfall, flooding and earthquakes are predicted for South America. If this occurs, the copper industry in Chile and Peru will be affected by impacts on production.”

    Weather bureaus are confirming the return of an El Nino weather pattern this year, with agencies in the United States, Japan and Australia increasing their forecasts for the strength and duration of the event. El Nino, a warming of sea-surface temperatures in the Pacific, can lead to scorching weather across Asia and east Africa but heavy rains and floods in South America.

    Heavy rain and winds forced the precautionary closure of some mines in Chile earlier this month, while floods in late March cut Chile's copper production that month and in April.

    Chile is expected to produce 4.01 million tonnes of copper in concentrate this year, while Peru is forecast to produce 1.7 million tonnes, accounting for 45 percent of global mine supply.

    http://steelguru.com/metal/aurubis-flags-potential-el-nino-impact-on-global-copper-supply/433507#tag

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    Steel, Iron Ore and Coal

    Shandong to rein in growth in coal consumption

    Shandong province, a major coal consumer in eastern China, aimed to rein in the growth in coal consumption by the end of this year, cutting the total coal use below the level in 2012, according to a document released by the provincial Development and Reform Commission on August 28.

    The province planned to cut 10 million tonnes of coal consumption from the 2012 level next year, and achieve the 20-million-tonne consumption reduction set by the central government by 2017.

    Specific coal reduction targets will be allocated to 17 cities of the province, which will be carried out by major coal-consuming firms, according to the document.

    To help realize the target, Shandong will continue to phase out outdated capacities, upgrade existing coal-fired builders and implement energy-saving projects, the document said.

    Clean and efficient use of coal in coal chemical, coke making and industrial boilers will be put forward steadily, and more efforts will be made to develop new and renewable energy sources and to get more electricity and natural gas from other provinces, it said.

    As a major energy consumer, Shandong’s energy consumption accounts for nearly 10% of the national total. In 2012, coal took more than 75% of the province’s primary energy consumption, and 12% of the nation’s total coal consumption.

    The province was ordered to cap its total energy consumption at 344 million tonnes of standard coal by 2015, with annual growth in energy consumption no more than 2.2%, according to document previously released by the National Development and Reform Commission.

    http://en.sxcoal.com/0/130802/DataShow.html
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    Clive Palmer’s Mineralogy takes Citic to court in A$10 billion lawsuit


    Aussie mining tycoon turned politician, Clive Palmer, is suing China’s Citic Limited for $7.1 billion (A$10bn), in the latest twist of a long-dragged legal battle over their joint venture Sino Iron project in Western Australia.

    This time, Palmer’s firm Mineralogy is taking Citic to court over what it claims to be a lack of royalty payments from the project, which was built on Palmer's leases, Sydney Morning Heraldreports.

    Palmer, who was Mineralogy chairman when the first deal with Citic was made, says the Chinese company — which he believes it to have a cash balance of $160 billion — had the financial means to pay its balance. He claims Citic is abusing the Australian legal system to delay its debts.

    According to Palmer's estimates, the foreign company has shipped up to $500 million worth of iron ore concentrate without meeting its contractual obligations.

    In the past, the two firms have fought over several issues, including access to the port used by their iron ore Sino project, claims of corruption, misuse of funds, defamation, and racism.

    The companies first locked horns in 2012 and have continued battling over the past two years, after Citic launched legal proceedings, which accused Palmer of misusing close to $9 million (A$12 million) through his company Mineralogy to finance his election campaign last year.

    http://www.mining.com/clive-palmers-mineralogy-takes-citic-to-court-in-a10-billion-lawsuit/

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