Mark Latham Commodity Equity Intelligence Service

Monday 25th April 2016
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    Gov'ts vs People

    The number of people accessing Facebook via the “dark web” now stands at 1 million per month, the tech giant announced today (April 22). Facebook has maintained an “Onion” site that resides on the Tor network, which forms part of the so-called dark web, for about a year and a half. This is the first time the company has revealed details about its presence in this shadowy corner of the internet.

    Tor preserves users’ privacy by disguising their identity and location by bouncing web traffic randomly through a far-flung network of servers. (Tor is short for The Onion Router, since it adds layers of anonymity to traffic that are tricky to peel away.) The Tor code is open-source and its servers are operated by volunteers.

    The number of people connecting to Facebook over Tor is growing at a steady clip. Facebook said that in June last year some 525,000 people accessed its dark-web site. Traffic has grown in a “roughly linear” pattern sine then, according to Facebook, meaning about 50,000 new users are have been accessing the social network via Tor each month.

    “People who choose to communicate over Tor do so for a variety of reasons related to privacy, security and safety,” wrote Alec Muffett, a Facebook engineer in London who leads the company’s work on its dark-web presence. “It’s important to us to provide methods for people to use our services securely—particularly if they lack reliable methods to do so.”

    Indeed, Facebook has added more ways to access the site on the dark web over time. In January, itmade its Onion site accessible to smartphones running the Android operating system.

    Traffic to the Tor network often spikes in places when governments try to restrict access to social networks. This was the case in Bangladesh at the end of 2015, when the government cut off access to Facebook for around three weeks, citing security concerns following controversial death sentences handed down by the courts. Traffic to the Tor network originating in Bangladesh surged during that period, although Facebook hasn’t clarified whether it saw a similar uptick in traffic to its own dark-web site.

    “To be clear, temporary increases have more to do with current events than access restrictions,” said Melanie Ensign, a Facebook spokesperson.Image title

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    Algos vs Humans

    Lexicon packages the news in a way that its robo-clients can understand. It scans every Dow Jones story in real time, looking for textual clues that might indicate how investors should feel about a stock. It then sends that information in machine-readable form to its algorithmic subscribers, which can parse it further, using the resulting data to inform their own investing decisions. Lexicon has helped automate the process of reading the news, drawing insight from it, and using that information to buy or sell a stock. The machines aren’t there just to crunch numbers anymore; they’re now making the decisions.

    Henri Waelbroeck seems to fit the popular image of the scientist transplanted into the world of high finance and hedge fund trading, the sort of stereotype found in books like "The Fear Index" by Robert Harris.

    Waelbroeck, director of research at machine learning-enhanced trade execution system Portware, was previously a professor at the Institute of Nuclear Sciences at the National University of Mexico (UNAM). His areas of expertise include: complex systems science, quantum gravity theories, genetic algorithms, artificial neural networks, chaos theory.

    The impression Waelbroeck conveys is one of precision. He explains that algorithms have grown in complexity since being introduced to the world of trading around 2000. This has made it increasingly difficult for traders to understand each vendor's full algorithm platform and how to optimally select an algorithm for each particular trade that comes in from a portfolio manager. Portware leverages artificial intelligence to help traders use execution algorithms and in some cases provides automated execution solutions that select the optimal control parameters on algorithms.

    "Our work really has focused on two objectives: the first is to find an optimal execution schedule for each trade, and the second is to interact with the order flow more efficiently to avoid the harmful effects of high frequency trading (HFT)," Waelbroeck told IBTimes.

    A practical implementation approach involves modeling, building, and testing commodities trading strategies using data gathered from datafeeds and databases. An effective workflow enables you to:

    • Set up and calibrate custom commodities derivatives pricing applications
    • Build, test, and optimize custom trading strategies
    • Apply machine learning techniques to enhance strategies
    • CVaR Portfolio Optimization 5:33
    • Manage an automated commodities trading order workflow

    For more information, see MATLAB® and toolboxes for financestatisticsoptimization, and trading.

    Examples and How To

    Software Reference

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    Two narratives on Brazil

    There are vast parts of our country that are poor and without security or education. The state needs to reach these people. Brazil’s history has shown that the free market simply won’t do it,” said Luiz Torelly, a bureaucrat at the state-run Institute for National and Artistic Patrimony in Brasília who defends the size of Brazil’s state.

    At the same time, there are few voices in Brazilian public life to challenge the ideas of people like Mr. Torelly. There is no major political party advocating limited government. Politicians who do are likely to be derided by nationalists as sellouts to the free-market U.S.

    Unlike other nations in the New World, Brazil never had a revolution that set it in opposition to an intrusive state. The Portuguese monarchy brought an entire ship filled with royal files and documents when it relocated to Rio. Successive governments have added new layers of regulation to a state that began as a royal court. In 1979, military rulers tried to pare back the bureaucracy by creating a cabinet post, the Minister of De-bureaucratization.

    The result today is a bureaucracy that spends 41% of the country’s gross domestic product—about double the rate of the U.S. The return for all that tax money is questionable: poorly built roads, ports and bridges, and second-rate education and health services. As one travelers’ cliché goes, Brazil taxes like Scandinavia but has Africa-level infrastructure. In 2013, huge and sometimes violent protests erupted across the country, with protesters upset that the country was spending billions on World Cup stadiums while patients died waiting on the floors of hospital hallways.


    Indeed, most of today’s largest media outlets – that appear respectable to outsiders – supported the 1964 military coup that ushered in two decades of rightwing dictatorship and further enriched the nation’s oligarchs. This key historical event still casts a shadow over the country’s identity and politics. Those corporations – led by the multiple media arms of the Globo organisation –heralded that coup as a noble blow against a corrupt, democratically elected liberal government. Sound familiar?

    Mute Current Time0:00 / Duration Time1:46 Loaded: 0% Progress: 0%
    Brazilian president Dilma Rousseff faces impeachment – video explainer

    For more than a year, those same media outlets have peddled a self-serving narrative: an angry citizenry, driven by fury over government corruption, rising against and demanding the overthrow of Brazil’s first female president, Dilma Rousseff, and her Workers’ party (PT). The world saw endless images of huge crowds of protesters in the streets, always an inspiring sight.

    But what most outside Brazil did not see was that the country’s plutocratic media had spent months inciting those protests (while pretending merely to “cover” them). The protesters were not remotely representative of Brazil’s population. They were, instead, disproportionately white and wealthy: the very same people who have opposed the PT and its anti-poverty programmes for two decades.

    Slowly, the outside world has begun to see past the pleasing, two-dimensional caricature manufactured by its domestic press, and to recognise who will be empowered once Rousseff is removed. It has now become clear that corruption is not the cause of the effort to oust Brazil’s twice-elected president; rather, corruption is merely the pretext.

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    Are we in a recession?

    Are we in a recession right now (April 2016)?

    Marco Annunziata Marco Annunziata, Chief Economist, GE; PhD Economics from Princeton 6.4k Views • Upvoted by Jake Meyer, Econ PhD. Candidate: International Money and Finance/Global Political Economy

    Are you in Brazil, Argentina, Russia or Greece? If so, then yes, you are in a recession. If you live in pretty much any other country, you are not. The US is growing at about 2 ½ %, Europe at about 1 ½ %.  These are not stellar rates, but they are very far from a recession.

    The fact that many of you are asking though, confirms one of my biggest worries: there is an incurable pessimism out there, and many of my colleagues in the economics profession have their share of responsibility. Consider this: over the last five years we have heard over and over that we are still in a recession, or on the brink of a new crisis. And yet, over this period, global growth has averaged 3.8% per year. The average over 1980-2006 was…3.5%. That’s right. We have been doing better than the historical average, all the while telling ourselves we were in stagnation, or a “new mediocre” as the IMF likes to call it.

    I see a few explanations for this. Advanced economies are a bit weaker than they used to be, and most of the economic punditry reflects their point of view. And we still think of the 2003-07 record-growth period as “normal” – instead of admitting that it was a bubble.

    We are not in a recession. Not in the world, not in the US. In the US, there are now about 4.5 million more people employed than at the peak before the crisis.

    All this pessimism troubles me for two reasons. The first is that it holds back consumption and investment – so it holds back growth. The second is that by thinking that the bubble years were normal, we are not focusing on the right things. All the debate is on quantitative easing and negative interest rates as ways to create growth. But you can’t quantitatively ease your way to sustainable growth. You have to invest in infrastructure and education, create a strong business environment, innovate. It’s hard work. But it’s the only way. That is what we should be debating.

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    Reliance Industries posts biggest profit in eight years

    India's Reliance Industries Ltd reported a 15.9 percent rise in fourth-quarter profits on Friday due to strong margins in its oil refining and petrochemicals businesses which account for up to 95 percent of revenues and profits.

    Reliance, controlled by India's richest man, Mukesh Ambani, posted a consolidated net profit of 73.98 billion rupees ($1.11 billion) for the Jan-March period - it's highest quarterly profit since December 2007.

    That compares with the 63.81 billion rupees the company reported it earned in the same period last year and the average of analysts' forecasts of about 69.48 billion rupees, according to Thomson Reuters data.

    The gross refining margin on each barrel of crude processed was $10.80 a barrel, up from $10.1 per barrel a year ago, Reliance said.

    The company's flagship refining operations, with a refinery in the western state of Gujarat that processes 1.2 million barrels of crude oil a day, reported a 30.4 percent jump in operating profit for the quarter to 63.94 billion rupees.

    The petrochemicals business saw a 35.4 percent jump in operating profit to 27.13 billion rupees.
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    Rio moves to repurchase notes

    Mining major Rio Tinto on Friday launched cash tender offers for some $1.5-billion of its 2017 and 2018 notes. 

    The miner told shareholders that it was using its strong liquidity position to reduce gross debt through the early repayment of some near-marturing debt. 

    Subject to a number of conditions, Rio would spend capital to repurchase some $1.75-billion of notes due in 2017, and with any cash remaining, would move to purchase some of the $3-billion in notes due in 2018. The tender period was expected to close in May.
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    Venezuela runs up $1 bln debt for late shipping containers

    V enezuelan state agencies have run up close to $1 billion in debts with shipping firms due to delays in returning containers, potentially boosting the cost of importing staple goods as the country struggles with product shortages and an economic crisis.

    The agencies have held containers for months or simply never returned them, at times leaving the truck-sized steel boxes for years in oil industry facilities or on provincial farms even though this costs $100 per day per container, according to industry sources.

    The debts have piled up over the last six years, coinciding with a steady rise in the role of state agencies in importing goods to Venezuela, particularly food. The country is served by industry giants such as Maersk of Denmark and Hamburg Sud of Germany.

    The container debts put shipping lines on a long list of industries ranging from international airlines to telecommunications giants that have complained of being unable to collect on billions of dollars in unpaid Venezuelan bills.

    Like these groups, it is unclear if shipping firms will ever be able to recover the debt. But it adds to the risks for shipping companies serving the Venezuelan market. Freight rates to Venezuela have risen to become among the highest in region, and in some cases are three times higher than other South American destinations, according to documents seen by Reuters.

    That higher cost creates an additional difficulty for President Nicolas Maduro's government, which is struggling with triple-digit inflation and chronic product shortages reminiscent of the former Soviet Union.

    Government agencies including the Food Ministry and state oil company PDVSA, which is involved in food imports, did not respond to requests for comment.

    Venezuela's shipping industry association last year estimated the debt at $817 million for containers that were not returned or returned late. The figure has now topped $1 billion, according to an industry source with first-hand knowledge of situation who asked not to be identified.

    In the country's main port city of Puerto Cabello, containers worth $20,000 to $40,000 each are piled up in empty lots and along unpaved roads.

    "Puerto Cabello is turning into one big warehouse," said opposition deputy Deyalitza Aray, who has investigated what she calls the growing disorder in public imports.
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    GM to temporarily idle four North American auto plants

    General Motors said on Friday it will close four North American plants, which primarily make cars rather than SUVs or trucks, for two weeks because of a parts shortage following the earthquake this month in Japan.

    GM looked at parts availability and its North American plant operations and decided that these four plants would close to ensure adequate parts supply, a company spokeswoman said.

    GM said the steps are being taken proactively, as it "continues to assess the potential impact on its supply chain" of the earthquake, which has curtailed some auto supplier plants in Japan.

    Operations at Lordstown, Ohio; Fairfax, Kansas; Spring Hill, Tennessee; and the Flex Oshawa plant in Ontario will be shut for two weeks beginning on April 25, GM said in a statement.

    GM will make up the production lost during the shutdowns by the end of this year, the company said.

    It said the "temporary adjustment" was not expected to affect the company's full-year production plan, or its second-quarter or full-year financial results for North America.

    In the past few years and especially as gasoline prices have remained low, GM and other automakers have experienced greater consumer demand for pickup trucks and SUVs than sedans and hatchbacks.

    The Lordstown plant makes the Chevrolet Cruze compact car; Spring Hill makes the Cadillac XT5 midsize crossover SUV; Fairfax makes the midsize Chevrolet Malibu and the fullsize Buick LaCrosse sedans; and Oshawa Flex makes the fullsize Chevrolet Impala and the midsize Buick Regal sedans as well as the fullsize Cadillac XTS sedan.
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    Britain says can't rule out sending troops to Libya: newspaper

    British Foreign Secretary Philip Hammond said on Sunday that he could not rule out sending troops to Libya if requested to do so by the Libyan government, but that any deployment would need to be approved by parliament.

    Western powers are backing a new Libyan unity government, hoping it will seek foreign support to confront Islamic State militants, deal with migrant flows from Libya to Europe and restore oil production to shore up Libya's economy.

    "It wouldn't make sense to rule anything out because you never know how things are going to evolve," Hammond told the Sunday Telegraph newspaper.

    "But if there were ever any question of a British combat role in any form - ground, sea or air - that would go to the House of Commons," he said referring to Britain's elected parliament.

    Last week Hammond told parliament there were no plans to send combat troops to Libya, responding to media reports that British special forces were already operating in the country.

    Libya has been in chaos since Western-backed rebels overthrew President Muammar Gaddafi in 2011.

    Hammond said he did not think it was likely that Libya would invite foreign military intervention, but highlighted the risk that an Islamic State stronghold in the country could pose to mainland Europe.

    "If Daesh (Islamic State) became established in Libya and sought to use that established base to infiltrate terrorists into Europe, that would be a threat to all of us," he said.
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    Freeport Said Offering Packages of Assets to Cut $20 Billion Debt

    Freeport-McMoRan Inc. is trying to sell stakes in packages of mining and energy assets as the biggest publicly traded copper miner steps up efforts to reduce debt, three people with knowledge of the matter said.

    The Phoenix-based company has held talks with potential buyers of a minority interest in a grouping of mining assets in Africa and the Americas, two of the people said, asking not to be identified because talks are private and at an early stage. Those mines were acquired when Freeport bought Phelps Dodge Corp. in 2007.

    Oil and gas assets purchased through a $9 billion debt-fueled deal three years ago have also been included in other packages being floated by the company, the people said. Freeport also is looking at selling 10 percent to 20 percent of its North and South American operations, which includes the Morenci mine in Arizona, as well as Cerro Verde in Peru, one of the people said. In February, Freeport sold a $1 billion stake in Morenci to Sumitomo Metal Mining Co.

    The value of the assets being offered is about $2 billion to $3 billion, the people said.

    Morenci is one of five Freeport mining assets considered core to operations, as is Cerro Verde. The others are Tenke Fungurume in the Democratic Republic of Congo, El Abra in Chile and Grasberg in Indonesia.

    In response to questions on its asset-sale plans, Freeport said it has “nothing to discuss at this time in advance of our earnings call on Tuesday.”

    By selling minority stakes in packages of assets, Freeport would be able to share costs and raise cash to pay down debt while still retaining control of prized low-cost copper mines. In January, Chief Executive Officer Richard Adkerson made it clear that any operation, in full or in part, could be sold as the company continues to struggle under a $20 billion debt load after commodity prices collapsed.

    Freeport spent more than a year looking at options for its stand-alone oil and gas business before opting to fold it back into the company and downsize management to save costs.

    “Frankly, there’s way too many non-core assets for sale across the energy and mining space to expect companies in general to get good values,” Sussman said.
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    Bitcoin Snaps: Surges To Fresh 2016 Highs On Sudden Burst Of Buying

    Just three days ago, on April 21, when looking at the technical picture behind the recent bitcoin price action (having covered theextremely favorable fundamentals last September when it was trading at half its current price), we asked if "Bitcoin is about to soar." We were focusing on the bullish pennant formation which suggested a breakout to the upside was imminent.

    Image title

    Moments ago, we got the answer when "soar" is precisely what bitcoin did when following a burst of high volume buying, the digital currency spiked higher by over 4%, to a price of $470...

    ... hitting fresh 2016 highs.

     Image title

    After the Chinese started buying gold and silver last weekfollowing the launch of the Shanghai gold fix (as reported here), is the "wholesale bid" finally moving into the best way of avoiding capital controls available to several million Chinese?

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    Three Gorges Dam discharges more water, braces for flood

    Inflow from the upper streams of the Yangtze River has hit an eight-year high, forcing the Three Gorges Dam to discharge more water and brace for floods.

    Inflow from the upper streams has been growing since April 16 and shows no sign of relenting, according to a statement from the Three Gorges Corporation.

    The dam started to increase discharging water downstream late on Friday, it said.

    The water level currently stands at 163.5 meters. The Three Gorges Corporation aims to bring it to 145 meters, a safe level to cope with floods.

    Flood season has arrived early around the Yangtze this year, due to ample rainfall in the tributaries of the river.

    The Three Gorges project in Hubei Province is a multi-functional water control system consisting of a dam stretching 2,308 meters long and 185 meters high, a five-tier ship lock and 26 hydropower turbo-generators.
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    Oil and Gas

    Aramco Said to Expand Oilfield in May to Maintain Saudi Capacity

    Saudi Arabian Oil Co. will complete the expansion of its Shaybah oilfield by the end of May, allowing the biggest crude exporter in the world to maintain the level of its total production capacity, according to two people with knowledge of the plan.

    Shaybah’s production capacity will rise to 1 million barrels a day from 750,000 barrels, said the people, who asked not to be identified because the information isn’t public. The field, in the Empty Quarter desert near the border with the United Arab Emirates, produces extra light grade crude with API gravity of 42 degrees, they said.

    Shaybah’s expansion will help Saudi Aramco, as the state producer is known, to keep the company’s output capacity at 12 million barrels a day, they said.

    Saudi Arabia is maintaining investments in oil production as the kingdom pursues a strategy to defend market share amid a global glut. Saudi Aramco will keep investing in its crude oil production capacity, Chief Executive Officer Amin Nasser said last month. The company also plans to complete the expansion of the Khurais oil field to 1.5 million barrels a day in 2018, he said.

    Saudi Arabia set a crude production record of 10.564 million barrels a day in June, exceeding a previous high in 1980, according to data the kingdom submitted to the Organization of Petroleum Exporting Countries. The country increased output after it led the group to change strategy in November 2014, fighting for market share instead of supporting prices by cutting production.

    Saudi Arabia could raise crude output by more than a million barrels a day immediately if there was demand for it, Saudi Deputy Crown Prince Mohammed bin Salman said in an interview earlier this month. Aramco could increase output to 11.5 million barrels a day immediately and go to 12.5 million in six to nine months “if we wanted to,” said the prince, who is also chairman of Aramco’s Supreme Council.

    The country pumped 10.2 million barrels a day last month, according to data compiled by Bloomberg. If the kingdom chose to increase investment in its oil industry, total production capacity could be increased to 20 million barrels a day but not beyond that level, the prince said.
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    India's Reliance looking at long-term oil supplies from Iran

    Reliance Industries Ltd, India's biggest oil refiner, said it is looking to buy more crude from Iran as the company seeks to rebuild ties to benefit from shorter shipping distances.

    The company had made small purchases from Iran in the current quarter and was currently engaged in talks for bigger supplies, indicating that it could also get into a long-term supply contract, said V Srikanth, Reliance's joint chief financial officer.

    "We have had engagements with Iran before the sanctions and they have grades of crude that are attractive to us from where we are," Srikanth said at a news conference on Friday.

    India is set to import at least 400,000 barrels per day (bpd) of Iranian oil in the year from April 1, with refiners looking to ramp up purchases after the sanctions targeting Tehran ended in January, sources had told Reuters.

    Iran was India's second biggest oil supplier before economic sanctions aimed at Iran's nuclear program hampered its trade relations. Now, Indian buyers are being drawn back to Iran in part by freight discounts that increase as more barrels are purchased.

    The comments came as Reliance posted its biggest quarterly profit in over eight years on better margins in the company's core refining and petrochemical business.

    Reliance, controlled by India's richest man, Mukesh Ambani, reported an estimate-topping net profit of 73.98 billion rupees ($1.11 billion) for the Jan-March period -- its highest quarterly profit since December 2007.

    The gross refining margin on each barrel of crude processed was $10.80 a barrel, up from $10.1 per barrel a year ago, Reliance said.

    Srikanth said the company will be able to sustain margins at above $10 -- one of the highest among global refiners -- in the current financial year.
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    Halliburton says it cut 6,000 jobs in first quarter, delays earnings call, "landing point" for rig count

    Halliburton says it cut 6,000 jobs in first quarter, delays earnings call, "landing point" for rig count

    Halliburton Co said it cut more than 6,000 jobs in the first quarter, during which revenue slumped 40.4 percent and it took a $2.1 billion restructuring charge mainly for severance costs and asset write-offs amid the prolonged slump in oil prices.

    Halliburton also postponed its earnings conference call to May 3 from April 25 to accommodate the April 30 deadline to close its acquisition of Baker Hughes Inc, the company said in a statement after the U.S. market closed on Friday.

    The No.2 oilfield services provider is scheduled to report first-quarter results on Monday, April 25. Baker Hughes is due to report on April 27, but has not held conference calls since the merger was announced in 2014.

    While the deal will help Halliburton narrow the gap with market leader Schlumberger Ltd, it faces stiff regulatory hurdles.

    The U.S. Justice Department filed a lawsuit this month to block the deal. European Union antitrust regulators could make its objections to the deal known to Halliburton next week, Reuters reported on Wednesday.

    The merger was in part to help weather the oil price downturn that started in mid-2014, and its aftermath. Since 2014, Halliburton has reduced its headcount by about a third and slashed costs as its clients sharply reduce activity.

    "Life has changed in the energy industry," CEO Dave Lesar said. President Jeff Miller said, "My definition of an unsustainable market is one where all service companies are losing money in North America, which is where we are now."

    The company's first-quarter revenue dropped to $4.2 billion from $7.05 billion. Miller said Halliburton's margins have been resilient, with "decremental margins of only 22 percent for the quarter."

    Schlumberger on Thursday reported negative margins for North America for the first time since the oil slump started. Margins become negative when costs exceed revenue earned.

    Halliburton said it expects spending on drilling and completion services to fall 50 percent in North America this year, following a 40 percent decline last year. It expects global spending to drop 30 percent for the second straight year.

    U.S. energy firms cut oil rigs this week to the lowest level since November 2009, Baker Hughes said.

    Halliburton said it expects that the second quarter will mark the "landing point" for rig count. The company said it typically sees margins improving at least a one quarter after rig count flattens.
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    Texas oil rig count keeps falling

    Texas lost another seven rigs actively drilling for oil in the past week, leaving just 351 oil rigs left nationwide as the energy sector continues to shed jobs by the thousands.

    The U.S. saw a net loss of eight oil rigs and one natural gas rig in the past week, according to weekly data compiled by Baker Hughes. That leaves a U.S. total of 431 rigs, including 88 gas-seeking rigs, which represents the lowest total count since the oil field services company first began compiling the data in 1944.

    The oil rig count alone is now down more than 78 percent from its peak of 1,609 in October 2014 before oil prices began plummeting and at the lowest since November 2009.

    Texas’ Permian Basin took the hardest hit with a loss of five rigs, although it still remains the nation’s most active shale play. Southern Texas’ Eagle Ford lost two rigs. Texas is still home to 43 percent of the nation’s operating rigs.

    Analysts have projected the rig count would dip through most of the first half of 2016. The oil rig count is now down more than 78 percent from its peak of 1,609 in October 2014 before oil prices began plummeting.

    The benchmark price for U.S. oil was up nearly 40 cents on Friday up to more than $43.50 a barrel.

    While many companies have stopped actively drilling new wells, it hasn’t stopped them from producing oil from existing wells. So oil production is taking much longer to fall than the rig count.

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    FERC clears Magnolia LNG construction

    Australia’s Liquefied Natural Gas Limited on Monday informed it’s unit, Magnolia LNG, received the permit from the U.S. FERC to site, construct, and operate its LNG terminal in the Lake Charles District, Louisiana.

    Additionally, Louisiana Department of Environmental Quality approved the air permit for Magnolia LNG, according to the statement.

    FERC also authorized the Kinder Morgan Louisiana Pipeline to install compression and other related facilities on the KMLP Pipeline, facilitating the transportation of full feed gas volumes to the Magnolia LNG project.

    Following permits from FERC and LDEQ, LNG Limited’s managing director and CEO, Greg Vessey said that the company now expects the decision of the US Department of Energy regarding the Magnolia LNG’s non-FTA export permit.

    The proposed Magnolia LNG facility would have up to four trains each with a liquefaction capacity of 2 mtpa or more, two 160,000 cbm storage tanks, ship, barge and truck loading facilities and supporting infrastructure. The construction will be carried out by the KBR‐SKE&C joint venture.

    Vessey added that the focus now remains on completing the marketing of Magnolia LNG’s offtake capacity, finalizing financing arrangements and progressing to the construction phase.
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    Alternative Energy

    China's newly added solar power capacity rise 52%

    China's installed 7.1 GW of new photovoltaic power capacity in the first quarter this year, showed data released by the National Energy Administration (NEA) on April 22.

    This brings the country's total installed photovoltaic power capacity to 50.3 GW, up 52% from the same period last year, the NEA said in a statement.

    The country's photovoltaic power generation jumped 48% year on year to 11.8 billion kWh during the first quarter, according to the statement.
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    French combined wind, solar power output up 32% in March

    An increase in installed renewables capacity saw output from wind and solar farms increase in March this year by 32% compared with the same period last year, according to the latest figures from French grid operator RTE.

    Solar output was up 23% on year at 661 GWh, after installed capacity increased by 16% since March 2015 to 6.31 GW.

    Meanwhile, wind output was up by 35% at 2.42 GWh, with wind capacity having also increased on year by 11.5% to 10.405 GW.

    Together, wind and solar made up circa 6% of the total power generation mix, while fossil-fuel generation accounted for just over 8% of the mix.

    A 300 MW solar power generation park, Cestas, in the Bordeaux region in France, the largest in Europe, entered full service in November last year.

    The Cestas plant holds a 20-year power offtake agreement with EDF at a price of Eur105/MWh ($130/MWh) under France's regulated feed-in tariff mechanism.

    The cost of solar production has fallen sharply in recent years on cheaper component costs, and this price is lower than the 35-year contract price of GBP92.50/MWh (Eur117.0/MWh) agreed on by the UK government for EDF's planned 3.2 GW Hinkley Point C nuclear power plant.

    RTE's report showed that more wind capacity is currently under construction or "in the pipeline" than solar capacity.

    Three onshore wind projects totaling 128 MW are being constructed and 3.26 GW worth of offshore wind projects are "pending". Meanwhile, only 105 MW worth of solar projects are waiting to move into construction phase, with 19 MW in the process of being brought online.
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    Hedge Funds Double Bets on Crops Rally as Weather Gets Nastier

    With drought in Brazil and flooding in Argentina threatening crops, the weather is getting nasty enough for hedge funds to take notice.

    Money managers more than doubled their wagers on a rally for agriculture prices, pushing their holdings to the biggest since July, after betting on declines just last month. The investors are now the most bullish on soybeans since May 2014 and trimmed the bets on declines for corn for the fifth time in six weeks. The Bloomberg Agriculture Subindex of eight farm products is heading for its best April rally since 2010.

    Dryness is such a problem for the corn harvest in Brazil, the third-largest exporter, that the government suspended import tariffs for six months, signaling it may have to import the grain. Excessive rains in Argentina, the third-largest soybean grower, prompted the nation’s two biggest exchanges and the agriculture ministry to cut outlooks for the crop. Adding to the positive outlook for prices is China’s stabilizing economy and a weaker U.S. dollar that boosts the appeal of supplies from American farmers.

    “Now that we’ve started planting, we’re thinking about how the growing season will pan out, and we’re putting some more risk premium into the market, it’s been beaten down so much,” said Chris Narayanan, the head of agricultural research at Societe Generale SA in New York. “If the weather gets worse in Brazil and you have hot, dry weather in the U.S., you could see another massive rally.”

    Combined positions across 11 agricultural products rose to 368,088 futures and options in the week ended April 19, according to U.S. Commodity Futures Trading Commission data published three days later. That compares with 177,770 a week earlier.

    The Bloomberg Agriculture Subindex climbed 1.5 percent last week, after reaching the highest since July. The recent price gains have stoked speculation that futures may be bottoming after reaching multi-year lows this month. Market participation expanded amid the rebound, with surging trading volumes and rising open interest.

    As conditions deteriorate for South American crops, threats are increasing to U.S. growing areas. The shift from El Nino to La Nina weather patterns may come as early as July, Wong said. That would mean higher summer temperatures and drier U.S.conditions, potentially lowering yields for corn and soybeans. Rains in American cotton areas have already disrupted plantings of that crop, and investors more than doubled their net-long position in the fiber to the highest since February.

    Ample global inventories can help cushion crop losses from inclement weather and limit price rallies. While the Bloomberg Agriculture Subindex rose last week, the measure tumbled 3 percent on Friday, the biggest drop since August. The ratio of corn stockpiles to demand will be elevated for the season that starts this year, Goldman Sachs Group Inc. said in a report last week. The bank said it was bearish on corn and soybeans and cut its outlook for wheat prices.

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    Base Metals

    OZ, EMR Capital said among final bidders for Glencore cobar mine

    OZ Minerals and EMR Capital Advisors are among suitors picked to make final offers for Glencore’s Cobar copper mine in Australia, people with knowledge of the matter said.

    The Swiss commodity trader and producer is in negotiations with bidders for the New South Wales mine, which may fetch about $300 million, said the people, asking not to be identified as the details are private. The talks may still fall apart, and Glencore could end up keeping the asset, the people said.

    Glencore chief executive officer Ivan Glasenberg is selling assets to mitigate concern about the company’s capacity to pay down $30 billion of debt as commodity prices tumble. Earlier this month, Glencore agreed to sell 40% of its agriculture unit to Canada Pension Plan Investment Board for $2.5 billion, and the company said in March it’s confident of getting more than A$1 billion ($776 million) for its Australian coal train assets.

    The Cobar mine produces about 50 000 metric tons of copper concentrate a year, Baar, Switzerland-based Glencore said in October. The company is also selling the Lomas Bayas open-pit mine in Chile, which produces about 75 000 tons of refined copper a year.

    OZ Minerals, Australia’s third-largest copper producer, said in July it’s conducting a global search to add new base metals assets. EMR, a private equity firm led by former Rio Tinto Group executive Owen Hegarty, specialises in natural resources investments and manages the EMR Capital Resources Fund, according to its website.
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    French miner Eramet expects first half loss, pursues nickel savings

    French mining and metals group Eramet said on Friday it expects to post another operating loss in the first half due to weak metal prices and would pursue efforts to save cash at its troubled nickel unit.

    The company reported first-quarter sales of 666 million euros, down 14 percent from the same period last year, including a 39 percent fall for its nickel division and a 10 percent decline for its manganese unit.

    It forecast, in a statement after the market close, that first-half current operating profit would be below the level in the first half of 2015, when it recorded a 70 million euro loss.

    The group had said in February it planned to sharply reduce production costs at New Caledonian nickel business SLN over the next two years to cope with a downturn in the global market that has left most producers of the stainless steel ingredient operating at a loss.

    Eramet said in Friday's statement that the average cash cost at SLN had fallen 10 percent compared with the 2015 average, in what it called swift and significant results.

    Eramet has called on the provincial authorities in New Caledonia, which have a minority shareholding in SLN, to help finance a recovery plan, and the issue is expected to be discussed next week when French Prime Minister Manuel Valls visits the Pacific territory.

    At the same time, Eramet forecast a rise in its second-quarter sales of manganese after a fall in ore inventories and a sharp rebound in market prices in March.

    Eramet also announced that Japan's Mitsubishi Corporation had exercised an option to sell a stake in the Weda Bay nickel mine project in Indonesia, following a review of its mining portfolio.

    The French group said the move would lead to an increase by nearly 100 million euros in its net debt, and leave it with a 90 percent stake in Weda Bay, a project it previously put on hold due to the downturn in the nickel market.

    Eramet also announced management changes, with Georges Duval, part of the family that is Eramet's largest shareholder, stepping down as deputy CEO in charge of the alloys division.
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    Steel, Iron Ore and Coal

    China's coal imports surge

    China’s thermal coal imports jumped 46.6% from March’s multi-year low to 7.42 million tonnes in March, which was also 27% higher than the year-ago level, showed data from the General Administration of Customs.

    China’s coking coal imports in March surged 71.5% on month to 5.09 million tonnes, hitting the highest since August 2015, showed the latest data from the General Administration of Customs (GAC).

    That was also a rise of 73.6% year on year, the first yearly increase in the past seven month.

    The monthly increase was mainly impacted by rebounded steel and coke markets, short domestic supply and the appreciation of the RMB.
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    Japan to build 43 coal-burning power stations

    Japan is expected to build as many as 43 coal-fired power stations over the next 12 years, after the Environment Ministry gave the green light to projects in February this year.

    The Asian country currently has a total of 90 coal-fired units with a total capacity of 40.5 GW. Another 50 added by 2028 could represent a total capacity of 61 GW.

    Coal is a cheaper alternative to generate electricity, and new sources of power are essential following the closing of nuclear power stations in 2011, after the tsunami.

    Before these power stations closed, nuclear energy supplied a third of the market.

    According to Global Construction Review, Japan is planning for a scenario where demand for energy rises by 22% to 1.1 trillion kWh by 2030, despite its declining economy.

    The country’s ten regional utilities lost their monopoly over electricity supply on 1 April this year, and 266 companies are now licensed to supply the domestic market. Among those competing for consumers are telecoms firms, trading conglomerates and even a travel agency.
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    China confirms to strictly control coal-fired power capacity

    China's government said on Monday that it would strictly control the total capacity of its coal-fired power sector, confirming a move that had previously been flagged by the country's energy watchdog.

    Beijing will halt the construction of new coal-fired power plants until 2018 in 15 regions even for projects that have already been approved, the country's top economic planner said in a joint statement with China's energy regulator. It will also stop approving new projects in as many as 13 provinces until 2018.

    The National Energy Administration had said in late March that the step was on the way after details were reported by local media.

    China has promised to bring greenhouse gas emissions to a peak by "around 2030" as part of its commitments to a global pact to combat global warming, signed in Paris last year. The country is by far the world's largest emitter of carbon dioxide.

    That has hit international coal markets hard, with miners in key suppliers such as Australia scrambling for business.

    "In the regions with a power surplus or under air pollution control, we will not arrange construction planning for new coal-fired power plants," the government said in the statement, sent to major power companies and local regulatory bodies on Monday.

    Environmental group Greenpeace said the rules, if fully implemented, could involve up to 250 power projects with a total of 170 GW in capacity, according to initial estimates in March.

    The government also said in the statement that it would prioritize building power plants that use non-fossil fuels in regions short of energy supplies.

    It added that it would also retire old coal-fired generators that fall short of meeting efficiency and environmental standards, targeting units smaller than 300 MW that have been serving over 20-25 years.

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    Rizhao Steel and Shenhua Wuhai raise coke prices

    Two major Chinese steelmakers Rizhao Steel Holding Group and Shenhua Wuhai Energy Co., Ltd, one subsidiary of China’s top miner Shenhua Group in Inner Mongolia, have increased their purchase prices for coke used for steel making, in response to positive changes recently observed in the coke and steel markets.

    Rizhao Steel Holding Group, a major Shandong-based steel maker, lifted the purchase price of coke by 30 yuan/t, effective 00:00 of April 20, offering 780 yuan/t with VAT for suppliers inside the province and 790 yuan/t for those from other provinces, sources confirmed with China Coal Resource.

    Shenhua Wuhai increased the price of Grade II met coke by 40 yuan/t to 820 yuan/t with VAT, DDP Tangshan excluding empty-return fee, effective 18:00 of April 20, sources confirmed.

    This is the third time Rizhao Steel and Shenhua Wuhai raised prices of coke this month, after a rise of 30 yuan/t on April 13 and April 14, respectively.

    China’s coke market continued to face low stockpiles and tight supply this week. Meanwhile, some coke plants have started to make money, thanks to the sharp rise of coke price and small uptick of coking coal.
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    Shaanxi Coal posts reduced Q1 loss on cost control

    Shaanxi coal industry Co., Ltd, one major listed coal miner in China, reported a loss of 38.85 million yuan ($5.98 million) during the first quarter this year, narrowing down significantly from 291 million yuan of loss it suffered a year earlier, showed the latest company statement.

    That compared to loss of 1.18 billion yuan in the fourth quarter last year, mainly attributed to better cost control, Shaanxi Coal said in a statement to the Shanghai Stock Exchange on April 22.

    This was the fifth quarterly loss the company has suffered since the first quarter of 2015, hit by the plunge in coal prices amid slackening demand from end users.

    During the first quarter, Shaanxi Coal realized 5.84 billion yuan of operating revenue, down 31.98% year on year. Total operating cost drop 33.44% year on year to 5.71 billion yuan, thanks to the drop in sales cost of its coal business.

    Revenue from coal sales reached 5.524 billion yuan, with sales cost at 3.505 billion yuan, the company said, without giving relevant data comparisons for the same period last year.

    Last year, Shaanxi Coal suffered a loss of 3 billion yuan from 0.95 billion yuan of profit in 2014, while operating revenue tumbled 132.26% on year to 32.51 billion yuan.
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    Samarco continues polluting after dam burst: Brazil prosecutor

    Samarco Mineração SA has not adopted measures to stop the leaking of mine tailings as required by a court after a deadly dam burst, a prosecutor said on Friday, an allegation that could delay the miner's return to operations.

    Prosecutor Carlos Eduardo Ferreira Pinto said in an interview with Reuters he would submit the opinion to court by Tuesday. If a judge agrees, Samarco will have to pay a daily fine of 1 million reais ($277,000) until the leaks stop.

    Environmental protection officials have said Samarco would have to stop all leakage before they would grant permission to resume operations that halted after a disaster in November that killed 19 people.

    Samarco, which is jointly owned by mining companies Vale SA and BHP Billiton Plc, said on Friday that a 2 million cubic meter capacity dam it built is preventing leaks.

    Based on a report prosecutors commissioned from a local technological center, the structure does not stop water from leaking into provisional dikes, picking up tailings sediment from the dam burst, and flowing into the Rio Doce river, Pinto said.

    Samarco hopes to resume operations to be able to pay for a 20 billion reais damages settlement.
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    SSAB announces $615 mln rights issue amid slumping steel prices

    Swedish steel maker SSAB is planning a 5 billion crown ($615 million) rights issue and other measures to shore up its balance sheet amid slumping prices and industry over capacity, it said on Friday.

    European steel companies are struggling to cope with steep price falls and growing overcapacity, with China and Russia accused of exporting massive quantities at artificially low prices, a practice referred to as dumping.

    "This comprehensive financing package will enable us to fully focus on the activities that will restore us to industry leading profitability," SSAB Chief Executive Officer Martin Lindqvist said in a statement. "At the same time, we are well prepared to sustain periods of low demand."

    SSAB's biggest owners Industrivarden and Solidium will subscribe to their share of the issue and remainder is fully underwritten by a group of banks.

    There had been speculation the heavily indebted firm would make a rights issue after ArcelorMittal, the world's largest steel maker, announced in February that it planned to raise $3 billion in capital to reduce debt.

    SSAB also said it would sell non-core assets, extend its debt maturities, and take measures to improve cash flow, which is expected to reduce net debt by about 10 billion crowns by the end of 2017

    SSAB shares dropped to a 20-year low in January, though they have recovered sharply since.

    On Friday, the company reported a smaller than expected first-quarter adjusted operating loss than expected at 190 million crowns ($23.4 million).

    That compared with a profit of 564 million a year earlier and an average loss of 266 million seen in a Reuters poll of analysts.
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