Mark Latham Commodity Equity Intelligence Service

Monday 14th December 2015
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    Trade rows brew as China helps home team tackle slowdown

    China is sowing the seeds of a global trade war as its smelters, refiners and manufacturers increasingly export goods they can't sell into a slowing domestic economy, prompting accusations of dumping and unfair subsidies from its trading partners.

    With China's exporters already gaining a competitive edge from its weakening currency, global metals producers are crying foul over Beijing's plans to cut export taxes, and the United States is complaining that a raft of government subsidy programmes disadvantage rival producers.

    Beijing hopes to gain market economy status under World Trade Organization rules a year from now, which would force trading partners to use China's domestic prices instead of a third party's to assess if it is exporting below market value, and it has warned that it will fight back if countries continue to resort to anti-dumping duties.

    Chin Leng Lim, a trade expert and professor of law at the University of Hong Kong, said a combination of factors could stoke trade tensions to a pitch not seen since the global financial crisis.

    "You've got a slowing economy in China, a huge push on exports, a pushback on the part of producers in the United States and an election looming, while there is a question hanging around some of the rules of the game. It's going to be exciting," Lim said.

    Growth in the world's second-largest economy has slowed to a 25-year low, hitting demand for industrial raw materials like steel and copper, so domestic producers are looking to sell their surplus on a saturated global market.

    "We don't make any big profit by exports, but we don't have other alternatives," said a senior exporter with a small steel mill in Hebei province.

    And Beijing appears to be helping the home team. The government said on Wednesday it would cut export taxes for some forms of steel and chemicals next year.

    "It is worrisome to see the Chinese government continue policies that are essentially aimed at exporting their over-production into the world market," said Jeff Henderson, director of Operations at the U.S. Aluminum Extruders Council.

    China's Commerce Ministry did not respond to a request for comment, but Shi Zihai, spokesman for the state planning agency, denied unfair government influence.

    "China has integrated into the global market. We are engaging in fair trade," he said.


    China's trade partners have already responded with about 330 protectionist policies in the past 12 months, according to Global Trade Alert, a website run by Simon Evenett, a professor at the University of St Gallen.

    The United States in particular, which in the past 12 months has seen import prices from China fall at their fastest rate in five years, has launched a barrage of anti-dumping and anti-subsidy challenges, arguing Beijing is trying to build up industries it sees as its new growth drivers.

    The U.S. Commerce Department on Wednesday hiked discounted anti-subsidy rates on aluminium extrusion imports from 38 Chinese companies and on Tuesday launched a WTO challenge to China's exemptions on value-added tax for locally produced aircraft.

    In February it took out a case at the WTO against "export-contingent subsidies" given to industrial clusters of enterprises in sectors including textiles, agriculture, medical products, light engineering, new materials and hardware.

    The European Union's Ambassador to the WTO Marc Vanheukelen told Reuters that the sensitivity in the United States about unfair Chinese behaviour would "definitely increase".

    "We always knew that China would be a partner with specific characteristics - after all this is state capitalism," Vanheukelen said. "I could well imagine that you are going to have further friction."

    The Economic Policy Institute in Washington said in a December report that the decline of American manufacturing over the past 15 years was due to currency manipulation and unfair trade, including China's "huge investments in 'leading and pillar' industries".

    "There is a sense that the global economy isn't operating fairly, that we face an uneven playing field, and that China lies at the heart of the problem," U.S. Trade Representative Michael Froman told U.S. business chambers in April.

    China, which joined the WTO in December 2001, says its policies comply with its obligations to the global trade body and don't extend an unfair advantage to its companies.

    It has told fellow WTO members that a clause in the accession protocol means it must be considered a market economy after 15 years' membership, and they will have to drop their "outdated, unfair and discriminatory" anti-dumping measures or expect legal action.

    University of Hong Kong professor Lim said there was a prickly debate brewing over that clause, and it was possible China might launch a case in 2017 if Washington didn't recognise its market status. "We are going to see a lot of action in the next year or so," he said.

    Read more at Reuters
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    China signals it might unpeg the Yuan from US dollar

    China may be laying the groundwork for untying the yuan from the value of the US dollar.

    An editorial posted to the People’s Bank of China's website on Friday argued it made more sense to measure the value of the yuan versus that of a basket of currencies instead of just the US dollar's, The Wall Street Journal reported.

    The country’s foreign exchange system was thus set to start calculating a yuan exchange rate index on Friday to provide a reference against just such a basket, the PBoC said.

    Will the news affect the US Federal Reserve's policy decision next week? A strategist from UBS speaking on Bloomberg TV said you would need a "big" market dislocation to affect the result of that meeting, of about -8% in the case of the stockmarket.

    As of 14:48 front month Brent crude futures were lower by 2.397% to $38.80 per barrel in ICE trading.

    The S&P 500 was sent immediately lower and was on track for its worst week in a month, with energy and materials pacing losses and with all the sector gauges in the red.

    The yield on the benchmark 10-year US Treasury note was eight basis points lower to 2.16%.

    According to CME data the odds of a 25 basis point rate hike at the 15-16 December FOMC meeting was at 81.4% as of 15:05 versus approximately 83% before the headlines broke.

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    Chinese officials admit to faking economic data

    Even a time of heightened uncertainty, there’s one thing a majority of markets agree upon: Chinese data is unreliable, particularly figures released by regional governments.

    Making the case for market mistrust, a report from Xinhua, a state-run government news agency, released over the weekend stated that “several” local officials in China’s Northeast region admitted to faking economic data in recent years to show high rates of growth when the real numbers were much lower.

    According to the China Daily website, citing Xinhua, several officials acknowledged they had significantly overstated data ranging from fiscal revenue and household income to GDP.

    “If the past data had not been inflated, the current growth figures would not show such a precipitous fall,” one unnamed official told Xinhua, attempting to explain why growth rates across the region were now among the lowest in the country.

    Reflective of just how sharp the deceleration in regional growth has been, Xinhua notes that three years ago Liaoning province’s GDP growth was reported at 9.5%, more than triple its current rate of 2.7%.

    While he has long moved on, current premier Li Keqiang was formerly the party committee secretary of the province in the 1990s.

    Jilin, to Liaoning’s north, reported growth of 12% three years ago, almost half the 6.3% rate recorded so far in 2015. Speaking to the China Daily, an unnamed source in provinces finance department said local officials competed each other to lure external investment projects.

    “They reported the promised investment value, whether it had been achieved or not, as the investment figure,” said the source.

    Guan Yingmin, an official in Heilongjiang province – the most northern of all China’s provinces – said past investment figures were inflated by at least 20%, which translates to nearly 100 billion yuan ($15.7 billion) according to calculations provided by Xinhua.

    Although the general perception is that national data is more accurate than that offered by regional governments, many analysts believe that official economic data – including closely watched GDP – is overstated by China’s government.

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    Libya's rival factions agree date to sign U.N. peace deal

    Libya's rival factions on Friday agreed to Dec. 16 as a target date for signing a United Nations-backed national unity government agreement meant to end their conflict.

    The U.N. has been negotiating for a year to get Libya's two rival governments and armed factions to end their war that has plunged the North African state into chaos four years after rebellion ousted Muammar Gaddafi.

    Successfully signing an agreement would open the way for the international community to support Libya in the fight against Islamic State, which has gained ground in the chaos and controls the western city of Sirte.

    But hardliners in both camps have been resisting a deal. Several past deadlines to sign have fallen through after opponents balked at details or demanded more concessions from their rivals.

    "There was a wide consensus that only through rapid signature of the Libyan political agreement the country can be brought back to unity," U.N. Libya envoy Martin Kobler said in Tunisia after two days of talks.

    "Many problems remain, but this has to be solved by the new government in place. That's what governments are there for," said Kobler. He briefed the United Nations Security Council on the situation later on Friday.

    The 15-member council said that a unity government must be formed swiftly to counter the threat of Islamic State militants.

    U.S. Ambassador to the United Nations, Samantha Power, council president for December, said the body remained prepared to sanction those "who threaten Libya's peace, stability and security."

    For more than a year, Tripoli has been controlled by an armed faction called Libya Dawn, a coalition of former rebel brigades from Misrata and other armed factions in the capital, after they battled to force out rivals.

    They set up a self-styled government and reinstated the old parliament, known as the General National Congress. The internationally recognized government and the elected House of Representatives were forced to operate out of the east.

    Both factions are backed by loose alliances of former rebel brigades, tribal fighters and former Gaddafi soldiers, including Gen. Khalifa Haftar, who has been appointed armed forces commander by the government in the east.

    Helping to bring those military factions on board, training up a national army and providing assistance in dealing with Islamic State will be where the international community will look to help Libya if a unity government is formed.

    Libya's oil output is also now at less than half of the 1.6 million barrels per day that it produced before Gaddafi fell, leaving the central bank and state oil company struggling to manage an economy heavily dependent on crude.

    "The time has come to sign the agreement," Libya's U.N. Ambassador Ibrahim Dabbashi told the Security Council.

    Read more at Reuters
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    Brazil police to question Lula in bribery probe involving son

    Brazil's former President Luiz Inacio Lula da Silva has been called in for questioning next week by federal police in a bribery investigation involving his son Luis Claudio, according to a summons document seen by Reuters on Friday.

    Lula is not under investigation but will be questioned about the case in which police suspect a 2.5 million-real ($646,000) payment to one of his son's companies could have been a bribe to influence passage of legislation to help the car industry.

    The summons dated Dec. 1 instructs Lula to appear at police headquarters next Thursday to "provide clarifications." The summons was shown to Reuters by a source close to the investigation.

    Lula's attorney said the former president had no relation at all to the event being investigated and had not received the summons but would appear for questioning if summoned.

    Police raided the offices of a company owned by Lula's son on Oct. 26 as part of the bribery investigation that threatens to drag his family into yet another scandal. Police said at the time that evidence of bribery, extortion and influence trafficking prompted the raid.

    The former president is himself under investigation for influence trafficking after he left office in 2010 as Brazil's most popular president. The six-month probe has found nothing illegal, said attorney Cristiano Zanin Martins, of the Teixeira, Martins & Advogados firm that represents the Lula's family.

    "The former president is facing no criminal investigation. Like any citizen he can be called to help in criminal probes, and he has done so in one case before," the lawyer said.

    Lula's reputation has been tarnished by a huge kickback scandal at state-run oil company Petrobras that put the treasurer of his Workers' Party in jail and has implicated dozens of his political allies.

    Neither Lula nor his hand-picked successor, President Dilma Rousseff, are being investigated in the graft scandal spreading to other state companies, but Rousseff's government has been weakened and her opponents are trying to impeach her for breaking budget laws.

    On Wednesday, a judge accepted a police request to break bank and tax secrecy for Luis Claudio's company, LFT Marketing Esportivo, and a former Lula cabinet minister, Gilberto Carvalho.

    Martins said the payment in question was a sports marketing consultancy job duly reported to tax authorities. A police report published by Brazilian media said the advice provided for the contract was cut and pasted from Wikipedia.

    Read more at Reuters

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    Congress averts government shutdown; funding talks drag on

    The U.S. House of Representatives on Friday passed a bill funding the government through Wednesday, giving congressional negotiators more time to work on a $1.15 trillion bill paying for federal programs through September.

    The House approved the stop-gap measure by a voice vote, and President Barack Obama promptly signed it into law.

    Without the legislation, federal agencies would have run out of money at midnight, forcing the closing of national parks and threatening to disrupt programs ranging from veterans' assistance to education loans.

    But Congress looked set to push up against the new deadline next week as talks on legislation to fund the government through September 2016 dragged on over efforts to attach controversial policy provisions to the spending measure. Those included Republican proposals to lift a ban on crude oil exports and tighten screening of Syrians seeking refuge in the United States.

    House Majority Leader Kevin McCarthy said the earliest votes planned for next week would take place on Tuesday evening, giving the Senate just over 24 hours to meet the new funding deadline.

    McCarthy dismissed talk among Democrats that a longer temporary funding bill, known as a continuing resolution or "CR," may be needed to carry the government over a holiday break into January. He said Republicans intended to finish the spending bill early next week.

    "It is our intention to have our work done and not need to pass any further CRs," McCarthy said in an exchange on the House floor.

    Commenting on parallel negotiations over a permanent renewal of several expired tax breaks, House Democratic Leader Nancy Pelosi warned that Democrats would not support the measure as proposed, adding that it should not be combined with the spending measure.

    Pelosi told a news conference that Republicans had loaded up the tax "extender" package was too expensive, with too many breaks for oil companies and other special interests. Republicans also had refused Democratic demands to index a child tax credit for working families to inflation.

    She said Republicans could pass their tax plan separately from the spending bill without Democratic votes, adding, "We will not be accomplices."

    Read more at Reuters

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    With landmark climate accord, world marks turn from fossil fuels

    The global climate summit in Paris forged a landmark agreement on Saturday, setting the course for a historic transformation of the world's fossil fuel-driven economy within decades in a bid to arrest global warming.

    After four years of fraught U.N. talks often pitting the interests of rich nations against poor, imperiled island states against rising economic powerhouses, French Foreign Minister Laurent Fabius declared the pact adopted, to the standing applause and whistles of delegates from almost 200 nations.

    "With a small hammer you can achieve great things," Fabius said as he gaveled the agreement, capping two weeks of tense negotiations at the summit on the outskirts of the French capital.

    Hailed as the first truly global climate deal, committing both rich and poor nations to reining in rising emissions blamed for warming the planet, it sets out a sweeping, long-term goal of eliminating net manmade greenhouse gas output this century.

    "It is a victory for all of the planet and for future generations," said U.S. Secretary of State John Kerry, who led the U.S. negotiations in Paris.

    "We have set a course here. The world has come together around an agreement that will empower us to chart a new path for our planet, a smart and responsible path, a sustainable path."

    It also creates a system to encourage nations to step up voluntary domestic efforts to curb emissions, and provides billions more dollars to help poor nations cope with the transition to a greener economy powered by renewable energy.

    Calling it "ambitious and balanced", Fabius said the accord would mark a "historic turning point" in efforts to avert the potentially disastrous consequences of an overheated planet.

    For U.S. President Barack Obama, it is a legacy-defining accomplishment that, he said at the White House, represents "the best chance we have to save the one planet that we've got."

    The final agreement was essentially unchanged from a draft unveiled earlier in the day, including a more ambitious objective of restraining the rise in temperatures to "well below" 2 degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial levels, a mark scientists fear could be a tipping point for the climate. Until now the line was drawn only at 2 degrees.

    In some ways, its success was assured before the summit began: 187 nations have submitted detailed national plans for how they will contain the rise in greenhouse gas emissions, commitments that are the core of the Paris deal.

    While leaving each country to pursue those measures on its own, the agreement finally sets a common vision and course of action after years of bickering over how to move forward.
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    Trafigura annual net profit rises to $1.1 billion

    Commodities trading firm Trafigura reported on Monday an increase in annual net profit as it racked up record oil trading volumes, as well as an increase in metals.

    The firm said it made a net profit of $1.1 billion, up 6.5 percent from the year before. Gross profit was $2.6 billion, an increase of 28 percent year-on-year, representing a gross margin of 2.7 percent compared with 1.6 percent the year before.

    The company said the volume of commodities traded by its main divisions - oil and metals - increased by 17 percent to 198.4 million tonnes from 169.5 million.

    "Trafigura is well positioned to cope with distressed markets and to seize new opportunities, thanks to our focus on both oil and metals and minerals trading, our sound finances, strong liquidity and careful risk management," Jeremy Weir, Trafigura’s chief executive officer, said in a statement.

    Revenue totaled $97.2 billion, a decrease of 23 percent from the year before, reflecting a sharp decline in commodity prices over the past year. Trafigura's financial year runs from September to September.

    Prices for major commodities, ranging from copper to corn and crude oil, witnessed one of their most rapid year-on-year falls since the depths of the 2008 financial crisis in the 12 months to Sept. 30, dropping by 30 percent. .TRJCRB

    The company said it spent $775 million on share buybacks, down from $885 million the year before, but more than double the $357 million it spent back in 2011.

    Trafigura said it planned to increase spending on buybacks in 2017 provided it generated enough profits.

    The company said current liabilities, including short-term bank borrowings declined to $25.6 billion in 2015, compared with $26.23 billion the year before.

    Read more at Reuters

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    Consol Energy secures 3yr thermal coal sales agreements, increases gas hedges through 2018

    US fossil fuels producer Consol Energy on Friday reported that it had closed several term coal deals totalling 10.8-million tons over a three-year period. 

    These agreements, along with 650 000 t of further commitments for 2016, increased Consol’s Pennsylvania operations’ 2016, 2017 and 2018 sold positions to 93%, 61%, and 49%, respectively, assuming the midpoint of the guidance range of 26-million tons, the company advised. 

    "These agreements demonstrate that even as markets continue to be challenged, customers are still incentivised to contract for term commitments to assure that they have a reliable supply of coal. 

    The Pennsylvania operations coal has a quality advantage due to its high British thermal units (BTUs) that not only optimises plant performance, but also travels well to compete in non-traditional markets,” president and CEO Nicholas DeIuliis stated. He noted that despite the domestic coal market being in the midst of a permanent structural shift, the company was capturing market share in the Upper Midwest, Ohio River Valley and South-Eastern US regions, which had traditionally been served by the company’s competitors in the Central Appalachian and Illinois Basins. 

    Consol expected its Pennsylvania operations to generate positive free cash flow in 2016, despite depressed natural gas prices and their linked effect on coal pricing. “For 2017 and 2018, where we have committed pricing, the pricing is in steady contango. 

    For the sold tons that are not priced in 2017 and 2018, our agreements are structured so that Consol will realise increases as natural gas prices improve and the new market realities begin to bring coal supply and demand into equilibrium,” DeIuliis said. 

    The company affirmed the previous estimated price range across the entire coal division for committed and priced tons in 2016 of $50/t to $55/t. Consol also advised that it had added more natural gas hedges to further reduce risks related to commodity price volatility. The company’s hedged gas volumes included a combination of NYMEX financial hedges and index financial hedges (NYMEX plus basis). To protect the NYMEX hedge volumes from basis exposure, Consol advised that it entered into basis-only financial hedges and physical sales with fixed basis at certain sales points. 

    The company continued to add gas hedges through 2018. Consol’s 2016 NYMEX plus basis hedge position increased to 222 Bcf at an average hedge price of $3.28/Mcf. NYMEX plus basis hedge volumes were not exposed to basis differentials but instead had protected revenue. For instance, in 2016, NYMEX plus basis gas hedges locked in revenue of about $730-million, Consol said.
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    Oil and Gas

    China Nov crude runs climb to new record - statistics bureau

    China's refinery throughput rose 3.3 percent in November from a year earlier to 43.92 million tonnes, or 10.69 million barrels per day (bpd), a Chinese record, data from the National Bureau of Statistics showed on Saturday.

    The daily run rate is up 2.6 percent compared with the 10.42 million bpd recorded in October.
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    BP faces Mexico class action lawsuit over 2010 oil spill

    A few months after reaching the largest corporate settlement in U.S. history, BP Plc faces a class action lawsuit in Mexico over its deadly 2010 Gulf of Mexico oil spill, which a civic group on Friday said it had filed against the company.

    Acciones Colectivas de Sinaloa, a group specializing in consumer and environmental class action claims, lodged the lawsuit against four BP units at a Mexico City court this week, said the head of its board, David Cristobal Alvarez.

    The claim was based on BP's acknowledgement of the damage caused when the Deepwater Horizon oil rig exploded on April 20, 2010, off the coast of Louisiana, and on studies supporting evidence of environmental damage in Mexico, Alvarez said.

    Because the Deepwater Horizon accident did not immediately contaminate the Mexican part of the Gulf of Mexico, no claims were made at the time, he added.

    "But with the maritime currents and the air, the contamination has reached the Gulf of Mexico, it's started to affect people on the coasts of the states in the Gulf of Mexico," Alvarez said.

    The explosion was the worst offshore oil disaster in U.S. history, killed 11 workers and spewed millions of barrels of oil onto the shorelines of several states for nearly three months.

    BP said in July it will pay up to $18.7 billion in penalties to the U.S. government and five states to meet nearly all claims from the spill, adding to the $43.8 billion it had already set aside for criminal and civil penalties and cleanup costs.

    Alvarez said the Mexican suit was seeking compensation for the environmental damage caused, if that was recognized.

    The court would likely need to decide by February or March whether to accept it as a class action suit, he added.

    Read more at Reuters
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    Exxon Names Refining Boss as Heir Apparent to CEO Rex Tillerson

    Exxon Mobil Corp. promoted Darren Woods to president, putting him on a path to succeed Chairman and Chief Executive Officer Rex Tillerson as leader of the world’s largest energy producer by market value.

    The elevation of Woods, who oversees Exxon’s sprawling global network of oil refineries and fuel terminals, signals an apparent end to the internal competition with production chief Jack Williams to replace Tillerson upon retirement some time between now and March 2017. The promotions were announced in a statement Friday by the Irving, Texas-based company.

    Woods, an electrical engineer by training who joined Exxon in 1992 as an analyst, is following the same trajectory as Tillerson in being named president and promoted to director. At 50, he is the youngest member of the 13-person board. Many observers had expected Exxon to favor Williams because he emerged from and runs the oil- and gas-producing business that generates almost 80 percent of the company’s profit.

    “The days of strictly just looking at your biggest business unit and plucking the next CEO from that pool of executives is over,” said Brian Youngberg, an analyst at Edward Jones & Co. in St. Louis. “At Exxon, they look at who they think their best leader is, no matter what they operate.”

    Woods, a native of Wichita, Kansas, worked his way up through the refining and chemicals businesses until his appointment to the management committee that oversees day-to-day operations in 2014 alongside Williams. His promotion to president was made by the board on Dec. 9 but not announced until Friday.

    Stock Awards

    Exxon awarded Woods 26,400 restricted stock units on Wednesday, it disclosed in a filing. That award follows on the heels of 64,400 units in November, another filing shows. The units, which convert to shares, were worth a combined $6.75 million at Friday’s close.

    Tillerson will reach Exxon’s mandatory retirement age of 65 in March 2017. For now, he remains CEO and chairman of the board, according to the statement. Tillerson has been CEO since January 2006.

    Exxon follows big European rivals Royal Dutch Shell Plc and Total SA in tapping refining experts as their next leaders. Shell CEO Ben Van Beurden was director of downstream before his elevation in 2014; Total’s Patrick Pouyanne was plucked from the French company’s refining arm when longtime boss Christophe De Margerie was killed in a plane crash in Russia later that same year.

    “Investors really don’t care about this because nothing fundamentally is going to change based on who is the next CEO,” said Pavel Molchanov, an analyst at Raymond James Financial Inc. “With Exxon, all the executives are lifers who are steeped in the company culture. You don’t rise to the higher levels by rocking the boat so the next person to be put in charge isn’t going to be rocking the boat.”
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    Shell, BG deal snaps up Chinese clearance

    Shell’s multi-billion takeover of BG has been given the go-ahead by Chinese officials, surpassing its final clearance hurdle.

    The Chinese Ministry of Commerce issued unconditional merger clearance.

    BG Group’s chief executive, Helge Lund said: “Following today’s approval from MOFCOM, all pre-conditional regulatory approvals for the combination have been received and we now move to the next phase. I am pleased that we have continued to deliver a strong operating and safety performance throughout the offer period which is a credit to our teams across the business. The proposed combination has strong industrial logic, particularly in deep water production and LNG, and will accelerate the delivery of value to our shareholders.”

    The deal has already been approved by authorities Australia, Brazil and the European Union.

    Shell’s chief executive Ben van Beurden previously said the £55billion deal would be a springboard to profits.

    Commenting on today’s clearance, he said: “We’re grateful to MOFCOM for its thorough and professional review of the recommended combination, and I am delighted we now have all the pre-conditional approvals needed to move to the next important phase.

    “This is a strategic deal that will make Shell a more profitable and resilient company in a world where oil and gas prices could remain lower for some time. We will now seek approval from both sets of shareholders as we move towards deal completion in early 2016.”

    A BG spokesperson added: “The proposed combination will require support from both BG Group and Shell shareholders and BG Group shareholders should now await further communications from their board.”
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    Cheniere replaces CEO Charif Souki

    Cheniere Energy’s board ousted CEO on Sunday, just weeks before the company becomes the first to export liquefied natural gas from the mainland United States.

    Souki’s departure comes after a long-running clash with activist investor Carl Icahn, who has become the Houston-based company’s largest shareholder and named two allies to the company’s board this summer. Icahn has sought to rein in Cheniere’s ambitious expansion plans and has criticized how much it has paid its top officers.

    Neal Shear, a current board member and former head of Morgan Stanley’s commodities business, will serve as CEO while the board seeks a replacement, according to the company’s announcement.

    Under Souki, Cheniere has invested billions into building massive liquefaction plants along the Gulf Coast. The facilities will cool natural gas from U.S. producers into a liquid so it can easily be shipped to customers abroad.

    The company’s Louisiana Sabine Pass plant is expected to begin operating by the end of 2015 after years of permitting and construction. Its first shipment will put Cheniere ahead of many companies rushing to build infrastructure that would allow cheap natural gas from prolific U.S. shale plays to reach higher priced natural gas markets.

    Sabine Pass will also bring a steady stream of cash to Cheniere, which has operated at a loss for years while it poured money into construction. The company has simultaneously launched another, billion-dollar export facility in Corpus Christi.

    The scale of the company’s ambition has irked some investors, including Icahn, who initially bought 19.4 million shares or an 8.2 percent stake in the company in August. Icahn then expanded his holdings to 13.85 percent with several purchases, including one announced last week.

    Icahn has also taken aim at Souki’s large compensation package. In 2013, Souki had the highest compensation package for a U.S. executive across all public companies, with a mostly stock package valued at $142 million, according to the Associated Press.

    In March of this year, Cheniere settled a lawsuit with investors who had sued to limit the company’s stock grants to executives. The agreement limits how much stock Cheniere can grant its corporate officers and requires the company to seek shareholder approval of future grants.

    Souki has since sold about one-third of the stock that he owns, totaling about $116 million, according to Bloomberg.
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    Russia says no OPEC meeting in mid-December

    Russia on Monday poured cold water on prospects for a meeting with the OPEC oil cartel this month, despite oil prices plunging below $40 per barrel.

    Both Energy Minister Alexander Novak and Igor Sechin, the head of Kremlin-controlled oil firm Rosneft, said last month a meeting between independent producers and the Organization of Petroleum Exporting Countries (OPEC) was possible in mid-December.

    "As of now, no meeting is expected," a spokeswoman for the ministry told Reuters on Monday. Rosneft declined to comment.

    Russia, which had initially signalled its willingness to closely cooperate with OPEC, did not send a senior delegation to Vienna prior to the Dec. 4 OPEC meeting, as it did last year.

    Only Deputy Energy Minister Kirill Molodtsov, as well as the heads of Gazprom Neft and Lukoil, which are active in the Middle East, flew to Vienna for some separate meetings.

    Moscow is still unwilling to cut oil production, referring to its harsh climate, which makes it hard to restart oil wells.

    The OPEC meeting ended in disarray as the members could not agree on any policy change.

    Since then, the price of oil has plunged below $40 per barrel to trade at around $38 on Monday, close to the $35 level seen as breakeven by Bank of America Merrill Lynch for Russian oil producers.

    In November, Russia continued extracting oil at a post-Soviet high of 10.78 million barrels per day despite weak oil prices.

    Molodtsov has said Russian oil companies will trim investments next year but keep the pace of oil production growth.

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    Seismic Surveyor Dolphin Files for Bankruptcy as Oil Woes Spread

    Dolphin Group ASA, a Norwegian seismic surveyor that maps the seabed for oil and gas reservoirs, filed for bankruptcy as the collapse in crude prices claimed another victim.

    The Oslo-based company failed to reach a agreement with bondholders, banks and other stakeholders to restructure its debt and capital structure after months of talks and will file a petition for bankruptcy on Monday, it said in a statement. Trading in the company’s stock, which has plunged 96 percent this year to 0.11 krone, was suspended by the Oslo stock exchange and the Financial Supervisory Authority.

    “In light of the unpredictability of the oil price and subsequent spending cuts of our customers, it has become impossible to have the visibility needed to continue our business,” Chairman Tim Wells and Chief Executive Officer Atle Jacobsen said jointly in the statement. Subsidiary Dolphin Geophysical AS will also file a petition for bankruptcy with the relevant court, the company said.

    Oil companies have slashed spending as crude prices have tumbled by about 67 percent over the past June 2014, reducing demand for services and equipment from companies ranging from seismic surveyors to engineering firms and offshore drillers.

    French oilfield surveyor CGG SA proposed last week a sale of as much as 350 million euros ($383 million) of new shares while Petroleum Geo-Services ASA raised about 920 million ($106 million) kroner in a sale of shares in November. Polarcus Ltd., another Oslo-listed seismic surveyor, said last week that it started talks with banks and bondholders to restructure debt and halted all interest and amortization payments.

    Dolphin Group had senior unsecured bonds totaling 900 million kroner and a market capitalization of 45.7 million kroner at market close on Dec. 11.
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    Alternative Energy

    Onshore wind generation ‘up by 62% this year’

    Onshore wind generation in the UK has increased by 62% compared to last year.

    That’s according to the UK Government’s latest report on energy trends for renewables – which compares last year’s Q2 with this year’s.

    Onshore wind generation went up from 3TWh to 4.9TWh whilst offshore wind increased from 2.1TWh to 3.6TWh – a growth of 70%.

    That’s due to higher wind speeds and more capacity, particularly for offshore wind  – even though average wind speeds in 2015 were only “marginally higher” than normal.

    Wind speeds for 2014 were the second lowest for quarter two since 2010.

    Solar generation more than doubled from 1.5TWh to 3.2TWh due to increased capacity.

    Renewable electricity capacity as a whole was 28.4GW in 2015 – which is a 26% growth compared to last year. That’s a 2.2% rise on the previous quarter due to a high growth in solar and wind capacity – especially offshore.

    In 2015 more than 3,500MW of capacity was installed and eligible for the Feed-in Tariff scheme – an increase of 29% – although the initiative was recently cut.

    Liquid biofuels consumption fell by 24% from 464 million litres in 2014 to 355 million litres. Liquid biofuels represented 3% of petrol and diesel consumed in road transport, which is down from 4% a year earlier.
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    Trina Solar withdraws from EU price undertaking

    Chinese solar panel maker Trina Solar Ltd said it withdrew from the European Union's price undertaking but will continue to serve EU customers through overseas manufacturing facilities.

    The European council, in December 2013, imposed anti-dumping and anti-subsidy duties on solar cells and solar panels imported from China.

    Chinese solar companies have been battered in the past few years by low panel prices and anti-dumping duties imposed by the United States and Europe on solar panel imports

    The EU said earlier this month it will extend trade protections aimed at helping European solar power manufacturers compete against cheaper Chinese products. The current trade protections put stiff import duties on Chinese solar products.

    Trina Solar Chief Executive Jifan Gao said on Friday that the current iteration of the EU price undertaking adversely affects the company's global expansion strategy.

    Read more at Reuters
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    Australia reverses ban on wind farm investment under new leader

    Australia has reversed a decision banning its clean energy fund from investing in wind power projects in the first sign that energy policy will be more favourable toward renewables under new leader Malcolm Turnbull.

    A new mandate to the Clean Energy Finance Corporation (CEFC) was issued this month and in a copy seen by Reuters on Sunday it showed that the fund would be allowed to invest in wind projects as long as they incorporate "emerging and innovative" methods.

    The shift is the latest from the government of Prime Minister Turnbull, which has also announced a boost to funding innovation startups and dropped a plan to deregulate university funding since the change in leadership three months ago.

    Former Prime Minister Tony Abbott was a vocal critic of wind farms, once describing them as ugly and noisy.

    Under his leadership, a Renewable Energy Target was cut by a fifth this year and the A$10 billion ($7.2 billion) CEFC was ordered in June to stop investing in wind farms, the country's second biggest clean energy source after hydropower.

    Turnbull replaced Abbott as leader the Liberal-National coalition government in September.

    Turnbull lost the leadership of the Liberal party six years ago over his support for a carbon pollution reduction scheme proposed by the then Labor government.

    Although Abbott's anti-wind farm decree was never ratified by parliament, it helped stall domestic and international investment in the renewable energy sector.

    The new mandate encourages the CEFC to "focus on offshore wind technologies".

    "This recognises that, in many circumstances, the financing requirements for mature and established clean energy technologies such as onshore wind technologies may be met from commercial financing sources," it said.

    The CEFC last week announced A$67 million in financing for what will be Australia's largest wind farm, eventually powering 120,000 homes.

    Debt support from funds such as the CEFC and Export Development Canada played an important part in the overall $200 million debt financing package, the company said in a statement.

    The CEFC was established by the former Labor government in 2012 to mobilise investment in renewable energy, energy efficiency and low emissions technologies.

    Australia is the developed world's highest per capita carbon emitter, and a major producer and exporter of coal. (Reporting by Morag MacKinnon; Editing by

    Read more at Reuters

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    Precious Metals

    Public Investment Corporation increases stake in Lonmin

    South Africa’s Public Investment Corporation (PIC) has increased its stake in platinum producer Lonmin to almost 30% after buying more shares via the company’s rights issue.

    The PIC, which manages South African government employee retirement funds, now owns 29.99% of miner, up from 7%, Lonmin said on Monday.

    Bruised by strikes, rising costs, a weak platinum price and slowing demand, South Africa-focused Lonmin also said it planned to raise another $370 million in loans to refinance debt currently due in May 2016.

    Lonmin said on Friday that its deeply discounted $400 million rights issue was undersubscribed, after its shareholders only bought 19.2 billion shares, or 71%, of its proposed 27 billion share issue.

    The outcome allowed PIC to increase its stake in the company after it had sub-underwritten a material portion of the issue, over and above its entitlement.

    The undersubscribed rights issue also forced underwriters, HSBC, J.P. Morgan Cazenove and Standard Bank, to take up shares in the company.

    Lonmin’s shareholders approved the share issue last month after the company warned that if it could not raise the cash trading in its shares could be suspended.
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    Base Metals

    "We don't understand it" Glasenburg on Nickel.

    Nickel miners are under mounting pressures to reduce production as falling prices have resulted in about half the global sector losing money, Australia's Independence Group said.

    "We are at price levels that are unsustainable in the long term," said Peter Bradford, managing director of Independence, which is expanding its footprint in nickel mining.

    "The capacity that will be shutting down will be the higher-cost nickel mine production," he said.

    Independence is constructing the Nova nickel mine Australia, with an eye to starting production in December 2016.

    The mine's rich ore indicates it will operate on a low-cost basis of around $1.57 per pound - less than half the current price of $3.92 a pound, or $8,660 a tonne - insulating it from much of the weakness underway in the global market, according to Bradford.

    "Nova is an extremely robust project that will be able to weather the commodity price cycle," Bradford said.

    Half the mine's forecast 26,000-tonnes-a-year nickel-in-concentrate production is under contract to BHP Billiton's nearby Nickel West smelting division and half to Glencore Plc

    Development of the mine comes amid mounting calls from within the industry for companies to mine less nickel to address a global supply glut and low metals prices.

    ANZ this month cut its 2016 nickel price forecast by 15.1 percent to $9,690 per tonne and its 2017 forecast by 10.7 percent to $12,504 per tonne.

    Ivan Glasenberg, chief executive of mining and trading group Glencore estimates the figure for nickel companies running at a loss could be even higher at 60 percent.

    "We don't understand it, we won't wait for the markets to turn to justify operations," Glasenberg told an investment briefing on Dec 10, according to media reports.

    Glencore is the world's fifth-largest producer of nickel metal, with operations in Australia, Canada, Norway, New Caledonia and Dominican Republic.

    Read more at Reuters

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    Steel, Iron Ore and Coal

    China Nov coal output down 2.7 pct at 320 mln T - stats bureau

    China produced 320 million tonnes of coal in November, down 2.7 percent from the same time last year, the country's statistics bureau said on Saturday, with struggling miners cutting output in order to minimise losses.

    Coal production for the first eleven months of the year was 3.37 billion tonnes, down 3.7 percent compared to the same period last year, the National Bureau of Statistics said.

    Coking coal production fell 7.8 percent in November to 36.66 million tonnes, with year-to-date output at 412.3 million tonnes, down 5.5 percent.

    The industry has been struggling with a supply glut and faltering demand, as a slowdown in major downstream sectors and government measures to reduce pollution have encouraged the use of cleaner fuels.

    Read more at Reuters
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    Glencore to sell Optimum Coal Mine in South Africa for $136 million

    Glencore has provisionally agreed to sell its troubled South African coal mine for 2.15 billion rand ($136 million), narrowly avoiding closing the operation and saving hundreds of jobs, the unit's business rescue practitioners said on Friday.

    The Optimum Coal Mine went into business rescue, or protection from creditors, in August after a slide in coal prices meant it was selling coal to power utility Eskom [ESCJ.UL], its main customer, for less than the cost of production.

    It is one of many Glencore-owned assets that have been hit by the slump in commodities prices, forcing the Swiss-based mining and trading company to revamp its global business.

    South Africa's business rescue law, similar to chapter 11 in the United States, allows a financially distressed company to temporarily delay creditors' claims against it or its assets.

    Proceeds from the planned sale of Optimum to South Africa's Tegeta Exploration and Resources will be used to pay down part of Optimum's 2.55 billion rand debt and Glencore will pay the balance, the practitioners said in a statement.

    The sale saved 500 jobs that were potentially going to be cut with the closure of the mine.

    Optimum produces 10 million tonnes of coal annually, half of which is sold to Eskom.

    The deal is subject to approval from the mines ministry, the competition watchdog and the final adoption of a business rescue plan for Optimum.

    The deal will be effective from Jan. 1 with the business rescue proceedings due to be completed by the end of February 2016.

    Tageta owns two mining rights for coal and has prospecting rights in four provinces in South Africa.

    Read more at Reuters
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    Cliffs Natural Resources loses billions in bargain sell-off of Bloom Lake assets

    The Bloom Lake iron-ore mine in Quebec shows just how much value is being destroyed in the commodity meltdown.

    Cliffs Natural Resources Inc. acquired the mine as part of a $4.3-billion (U.S.) takeover of Consolidated Thompson Iron Mines Ltd. in 2011 when iron-ore prices topped $190 a metric ton. On Friday, a unit of Champion Iron Ltd. agreed to buy it and other assets for $10.5-million (Canadian) and $42.8-million (Canadian) in liabilities as iron ore falls below $40.

    In January, Cliffs suspended Bloom Lake production and sought creditor protection for an operation that as recently as 2013 was considered a critical part of the Cleveland-based company’s strategy to boost exports and mitigate its dependence on U.S. customers. The mine employed about 600 people when it was operational.

    The sale follows announcements this week from Anglo American PLC and Freeport McMoRan Inc. of deepening cutbacks as producers grapple to preserve cash amid the lowest metals prices in six years.

    “Those are three very strong indicators that we are now in a point of severe distress for the industry,” Garrett Nelson, a Richmond, Va.-based analyst at BB&T Capital Markets, said by telephone Friday.

    Cliffs was founded as the Cleveland Iron Mining Co. in 1846 to produce the commodity, which had just been discovered in Michigan’s Upper Peninsula. While the company has also sold timber, uranium, copper and oil in its history, it divested non-iron-ore assets during economic slumps, according to business historian Hoover’s Inc.

    The company expanded with coal mines and a chromite resource and in 2011 bought Thompson to expand in Eastern Canada. The ill-timed foray cost former CEO Joseph Carrabba his position. His successor, Gary Halverson, was ousted after six months when activist Casablanca Capital installed Lourenco Goncalves after a successful proxy battle.

    Mr. Goncalves has vowed to return the company to profitability by selling iron ore mined domestically to North American steelmakers. He placed coal mines and overseas assets up for sale, while putting Canadian assets including Bloom Lake and its Wabush assets into court-supervised debt restructuring.

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    China Nov steel output down 1.6 pct on yr - stats bureau

    China produced 63.32 million tonnes of crude steel in November, down 1.6 percent on the year, hit by stagnant demand and a collapse in prices.

    Total steel production in the first eleven months of the year reached 738.4 million tonnes, down 2.2 percent on the year, the National Bureau of Statistics said on Saturday.

    The Chinese steel sector, the world's largest, is struggling with weak manufacturing and construction demand, and overcapacity has dragged prices to record lows.
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    India slaps import duties on stainless steel to help local firms

    India imposed import duties for five years on some stainless steel imports from China, the European Union and the United States on Friday, as the government tries to protect local companies suffering from what it says is unfair competition.

    The government said the anti-dumping duties, on cold-rolled flat stainless steel products, ranged from 4.6 percent to 57.4 percent. Imports from South Korea, South Africa, Taiwan and Thailand will also be taxed.

    The moves follows the government's introduction of a 20 percent import tax on some other steel products in September, which failed to contain losses for Indian steel companies struggling to compete due to debts and high raw material costs.

    Firms including the Steel Authority of India, JSW Steel and Essar Steel have in recent months complained that surging imports are squeezing profit margins. They are lobbying the government to impose duties on a wider range of products to protect their market share.

    "It's a welcome step because today what is hurting the Indian manufacturing sector is dumping," said Seshagiri Rao, Joint Managing Director at JSW Steel.

    Other industry experts said the duties were limited in scope and would be easily circumvented because they only applied to products measuring up to a certain width.

    "On paper this step looks good but in the long run it is not going to help unless the government removes the restrictions on width," Indian Stainless Steel Development Association President N. C. Mathur told Reuters.

    The Directorate General of Safeguards, a branch of the finance ministry that can impose temporary import curbs, said on Tuesday it found prima facie evidence that increases in imports "have caused or are threatening to cause serious injury to the domestic producers", as it investigates local industry complaints.

    Indian Trade Minister Nirmala Sitharaman has said New Delhi will lobby for the freedom to raise tariffs temporarily to deal with import surges at upcoming World Trade Organisation talks, which begin in Nairobi next week.

    Imports of iron and steel declined slightly to $6.9 billion in the first seven months of the current financial year ending next March from $7.1 billion a year ago, Commerce and Industry Ministry data shows.

    Read more at Reuters

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