Mark Latham Commodity Equity Intelligence Service

Monday 21st November 2016
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    Radical Thoughts.

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    With the blockchain, Wal-Mart will be able to obtain crucial data from a single receipt, including suppliers, details on how and where food was grown and who inspected it. The database extends information from the pallet to the individual package.

    “It gives them an ability to have an accounting from origin to completion,” said Marshal Cohen, an analyst at researcher NPD Group Inc. “If there’s an issue with an outbreak of E. coli, this gives them an ability to immediately find where it came from. That’s the difference between days and minutes.”

    Image titleWork to be done

    Global trade may have peaked. Future supply chains will be less dependent on distant, low-cost labour and natural resources. The race to return home is on, and the world is watching.

    It's no longer necessary for retailers to stock goods themselves

    In the early days of e-commerce, retailers would carry inventory for each product listed on their website. However, in today's model many retailers never physically touch the products they sell online. Instead, online orders for these products are routed to a third party for fulfilment. Both third-party logistics providers and niche e-commerce fulfilment houses offer services in which they will pack and ship items on behalf of retailers.

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    The world of 3D printing has officially booked a new high fashion runway show, now that luxury fashion house Alexander McQueen has developed an edgy, one-of-a-kind 3D printed umbrella as part of its autumn/winter 2016-17 collection. I am not ashamed to admit that I used to watch a lot of “America’s Next Top Model” and “Project Runway,” and so I was especially excited to write this story…those qualify as high fashion, right?

    The limited edition piece is patterned in a black skull motif – too bad it wasn’t out in time for Halloween! It features an ergonomic, 3D printed handle, which perfectly fits the grasp of an actual human fist. Spooky…

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    But something interesting, and a little unexpected, is happening. FFF machines print using reels of plastic filament (usually PLA or ABS). The choice of materials has been limited because the filaments are typically produced by small-scale companies, serving a low-end market. But we’re now seeing large materials firms entering the filament market, and this can’t be explained by a sudden, unexpected growth in the number of people who want to print novelty plastic Eiffel Tower models at home.

    One of the stars of the show of K 2013 was Arburg’s Freeformer. The Germany-based injection moulding machine maker surprised many with a machine that made rapid prototypes using fused droplets of extruded polymer to build up a 3D shape, in a process akin to FFF but without the need for filament.

    A selling point of the Freeformer was the freedom to use materials that weren’t available in filament form because it created a melt stream from ordinary granules.

    Material choice has limited FFF in the past. According to Covestro, one of the large material firms which entered the 3D printing filament market, whilst ‘‘over 3,000 materials are available for conventional component manufacturing, only about 30 are available for 3D printing’’.

    And the process has suffered by association with the ‘homebrew’ hobbyists. Proper, professional, 3D printers used proper, professional 3D printing processes such as stereolithography (SLA) and selective laser sintering (SLS), with high resolution results. FFF has a tendency to create visible stripes, indicating the individual layers of print that have built up on top of one another, leading to a perception of it being a lower-quality technique.

    Three years on, FFF is now being treated as a proper, professional process by proper, professional companies and the problem of limited material choice is being blown away. Covestro demonstrated new materials for 3D printing at K 2016. This portfolio of new materials included TPU powders for SLS and liquid PU-based resins for SLA, but also filaments for FFF from flexible TPUs to high strength PC.

    Love them or hate them, industrial robots are here to stay. While there are plenty of critics who are against the modern advancement and widespread adoption of robotic technology, these devices can be of great benefit to employees, business owners, and even mainstream consumers. In fact, robotics has already found its way into the day-to-day operations of several different industries.

    Here is a look at four of them:


    Generally speaking, manufacturing operations provide the perfect environment for the large-scale implementation of robots and automation technology. In fact, the International Federation of Robotics has forecasted the introduction of no less than 1.3 million industrial robots to global manufacturers by 2018. This is in addition to the robotics already in use around the world.

    Tesco Towers: supermarket enters the fray with a radical new solution to the housing crisis

    Typically, flats are built on top of existing buildings. Recent developments have involved flats being constructed off-site, then crane-lifted into place on a building.

    It won’t be long before the cities of the world begin to look very differently than we know them now. 3D printed houses and other buildings have gone from a distant fantasy to a reality seemingly overnight, and 3D printed construction technology is advancing at an almost dizzying pace. New companies – and new technologies – are springing up everywhere, each with the goal of taking 3D printed architecture and construction further than anyone ever has before.

    Cazza Construction Technologies may be a young company, but they’re already making significant progress towards an ambitious goal – the construction of 3D printed smart cities across the world. It may sound like a far-fetched goal, but Cazza has the the technology and expertise to back it up. CEO Chris Kelsey is only 19 years old, but has already built and sold a major tech company. He created the app development company Appsitude, which brought in over $10 million in revenue per year, when he was only 17.

    Along with co-founder and COO Fernando De Los Rios, a former Ernst & Young employee, Kelsey started Cazza with the goal of making construction faster, more cost-effective, and more environmentally friendly. Over the last two years, he and De Los Rios have been working with more than 50 renowned engineers from across the globe to develop the technology, which is capable of building a 100-square-meter concrete house within 24 hours, or a 1,000-square-foot house within 10 days, using only one machine.

    • We're dying at 1% GDP growth; we don't make things anymore. (Oct 2016)
    • Economic machine to increase US growth rate to 5% or 6%. (Oct 2016)
    • U.S. 1% growth is almost no growth, and due to high taxes. (Oct 2016)
    • FactCheck: Fed keeps interest rates low, but apolitically. (Sep 2016)
    • Our jobs are fleeing to Mexico; China uses us as piggy bank. (Sep 2016)
    • Worst recovery since Great Depression; we're in a bubble. (Sep 2016)
    • The Fed should refinance debt to reduce interest payments. (May 2016)
    • Make economy dynamic; bring back jobs from China & Mexico. (Oct 2015)
    • Use increasing debt ceiling as bargaining chip. (Oct 2015)
    • Strong on debt limit; ask for a pound of flesh. (Oct 2015)
    • Grow the economy at 6% annually by ending inversions. (Oct 2015)
    • Cut defense budget, & entire EPA & Dept. of Education. (Oct 2015)
    • If debt reaches $24T, that's the point of no return. (Jun 2015)
    • We prospered after 9/11; we'll prosper after Great Recession. (Apr 2010)
    • 2006: Warned about impending implosion of financial sector. (Apr 2010)
    • Prepare for upcoming crash, bigger than 1929. (Jul 2000)
    • Rent control only benefits a privileged minority. (Jul 1987)
    • One-time 14.25% tax on wealth, to erase national debt. (Nov 1999)
    • Predicts 35% boost to economy from eliminating national debt. (Nov 1999)

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    Queensland’s new groundwater law a ‘risk’ to resource projects – miners

    Despite objections from the resources sector and dire warnings about the impact it would have on the development of coal projects, the Queensland Parliament has backed the Environmental Protection (Underground WaterManagement) and Other Legislation Amendment (EPOLA) Bill.

    In essence, the Bill is aimed at strengthening the effectiveness of the environmental assessment of underground waterextraction by resource projects, while allowing for the ongoing scrutiny of the environmental impacts of underground water extraction during the operational phase of a resource project.

    The Bill is also aimed at improving the ‘make good’ framework in the current Water Act, ensuring that the administering authority for the Environmental Protection Actis a decision- maker for specific applications relating to environmental authorities.

    Further, the Bill will ensure that mining projects that are advanced in their environmental and mining tenure approvals are appropriately assessed for their impact on the environment and underground water users, and that opportunities for public submissions and third-party appeals are provided before underground water is taken in a regulated area for mine dewatering purposes.

    It is this last objective that is causing havoc among the resource companies in Queensland, which are arguing that additional approval requirements for projects already in the development pipeline could impact on project scheduling and financial investment decisions.

    In its submissions to the Parliamentary committee inquiry into the Bill, the Queensland Resources Council (QRC) pointed out that, to date, the coordinator-general had made decisions and imposed and recommended conditions relating to groundwater on coordinated resource projects, while the Land Court had made recommendations about specific groundwater conditions.

    In particular, detailed groundwater models had been prepared by several miners as part of the environmental-impact statement (EIS) process and the QRC noted that the proponents had proactively entered into ‘make good’ agreements with potentially affected landholders.

    The QRC added that mining projects in Queensland were also subjected to strict environmental requirements through the environmental-impact assessment process and extensive review through the Independent Environmental Scientific Committee and the Commonwealth government’s Environmental Protection and Biodiversity Conservation Act approval process.

    “These Commonwealth processes extensively scrutinise any impact on or [extraction] of groundwater and explicit conditions [are] imposed to deliver environmentaloutcomes,” the QRC said.

    The industry body said the changes imposed by the EPOLA Bill would further increase the duplication with the “increasingly redundant” Commonwealth groundwater laws, unless there was a way of recognising earlier public consultation.

    The QRC told the committee that there should be no requirement for an associated water licence for advanced mining projects that had already completed an EIS process and developed a detailed groundwater model that identified potentially affected third-party landholders and entered into ‘make good’ agreements with the majority of the landholders.

    However, the Queensland Parliament seemed to disagree, ratifying the EPOLA Bill in early November.
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    Hollande says Paris is 'irreversible'

    French President Francois Hollande on Tuesday urged the United States to respect the "irreversible" Paris Agreement on climate change, and said France will lead a dialogue on the topic with President-elect Donald Trump "on behalf of the 100 countries that have ratified" the deal.

    Speaking to a U.N. climate conference in Morocco, Hollande praised U.S. President Barack Obama for his role in getting the landmark pact adopted in the French capital last year.

    "The United States, the most powerful economy in the world, the second-largest emitter of greenhouse gases, must respect the commitments that were made," he said. "It's not simply their duty, it's in their interest."

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    Japan boosts October LNG and coal imports

    Japan, the world’s largest LNG consumer, raised its imports in October by 3.7 percent year-on-year.

    The East Asian island country imported 6.28 million mt of LNG in October, as compared to 6.06 million mt last year, according to the provisional data released by Japan’s Ministry of Finance.

    The data also showed that the Japan’s coal imports for power generation increased 7.4 percent to 10 million mt.

    Japan paid about US$2.18 billion for LNG imports in September, down 32.1 percent on year.

    To remind, the price of spot LNG cargoes arriving in Japan in October was at $5.7/mmBtu on DES basis.
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    Oil and Gas

    Oil Bets Are Biggest in 9 Years Amid OPEC, Trump Volatility

    Money managers, producers and consumers made the biggest bets on West Texas Intermediate crude prices in nine years, amid signals more volatility is coming.

    Global markets were roiled after Donald Trump’s election as U.S. president and as OPEC continued negotiations on a deal to cap output. The U.S. dollar climbed to the highest since January. A measure of oil volatility surged last week to a seven-month high, a sign that traders were anticipating bigger price swings.

    Wagers on higher and lower prices held by speculators and hedgers reached 1.47 million contracts in the week ended Nov. 15, the most since 2007, U.S. Commodity Futures Trading Commission data show. Trading volume of calls giving investors the right to purchase WTI futures surged to a record that day. The CBOE Crude Oil Volatility Index reached the highest since April.

    “There’s tension in the market, with both producers and consumers worried about what OPEC does or won’t do on Nov. 30,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “They want to be protected from surprising price moves.”  

    OPEC Meeting

    Investors are weighing the chances that the Organization of Petroleum Exporting Countries will complete a deal to cap output at its Nov. 30 meeting in Vienna. While Saudi Arabian Energy Minister Khalid Al-Falih told Al Arabiya television he’s optimistic a deal will be reached, only 7 of 20 analysts surveyed by Bloomberg last week expect the group to set output targets for its members.

    OPEC agreed in September to cut their collective output to 32.5 million to 33 million barrels a day and has been trying to persuade other suppliers, notably Russia, to join the cuts. OPEC Secretary General Mohammed Barkindo said he’s confident the group can reduce record oil inventories and bring forward the rebalancing of the market.

    “The Saudis are working hard to reach a deal,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “You don’t fight the Fed in the bond market and when it comes to oil you don’t fight the Saudis.”

    The September agreement marked the end of OPEC’s two-year long experiment with pumping at will. Saudi Arabia led the group in the effort to grab market share and curb the development of more expensive reserves such as U.S. shale.

    U.S. Production

    While U.S. production has dropped from last year’s 44-year high, the decline is slowing. The Energy Information Administration this month raised its output forecast for 2017. Rigs targeting oil in the U.S. rose the most in 16 months last week, according to Baker Hughes Inc.

    Producers and merchants increased short positions, or protection against lower WTI prices, to the highest level since March 2011. They added 66,613 bearish contracts over the past two weeks as prices retreated from last month’s peak at above $50 a barrel.

    “The Saudis want higher prices but won’t sacrifice just to see a major competitor, U.S. shale, benefit,” said Sarah Emerson, managing director of ESAI Energy Inc., a consulting company in Wakefield, Massachusetts. “The Trump election changes things. In one day the U.S. shale business got better. The government will be more responsive to the industry.”

    Money managers’ net-long position in WTI advanced for the first time since mid-October, climbing by 3,906 futures and options to 163,321. Shorts climbed 14 percent while longs rose 8.1 percent. WTI gained 1.8 percent to $45.81 a barrel in the report week. It rose 1.1 percent to $46.20 as of 12:27 p.m. in Singapore on Monday.

    In fuel markets, net-bullish bets on gasoline decreased 35 percent to 25,796 contracts, as futures slipped 2.5 percent in the report week. Money managers were net-short 393 contracts of ultra low sulfur diesel, from net-long 7,791 the previous week. Futures advanced 0.2 percent.

    “I suspect that when the OPEC meeting is over there will have been a lot more smoke than fire,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “If they don’t come up with a convincing agreement, they’ll be forced to revisit the issue before long.”
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    Russia's Putin sees no difficulties for Moscow to freeze oil output

    Russia is ready to freeze its oil output - among the world's highest - at current level as there would be no problems for Moscow to do so, Russian President Vladimir Putin said on Sunday.

    OPEC nations are due to agree a world oil freeze pact with non-OPEC countries on Nov. 30.

    "We will do everything that our partners from OPEC are expecting. To freeze crude production is not an issue for us," Putin told a news conference in Lima after the APEC summit.

    He added that Russia's oil firms are ready to do so.

    Putin also said he has seen a "high probability" that the deal aiming to prop up the markets and boost prices would be reached in an OPEC meeting next week.
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    Iran, Iraq Signal Deal Hope Before Vienna Meeting

     Oil extended gains as Iran signaled optimism OPEC will agree to a supply-cut deal and Iraq said it will offer new proposals to help bolster the group’s unity before members meet next week in Vienna.

    Iranian Oil Minister Bijan Namdar Zanganeh said it’s “highly probable” members will reach a consensus, according to comments published by the country’s Shana news service. Iraq will offer three new proposals for the output cut deal this week that are consistent with the group’s policies, The Wall Street Journal reported, citing Iraq Oil Minister Jabbar al-Luaibi.

    Oil has rebounded since hitting the lowest in almost two months last week as members of the Organization of Petroleum Exporting Countries began making renewed diplomatic efforts before their meeting Nov. 30 to finalize the output deal informally agreed to in September. The group is seeking to trim output for the first time in eight years, a plan that has been complicated by Iran’s commitment to boost production and Iraq’s request for an exemption to help fund its war with Islamic militants.

    “It’s pretty clear that some people are convinced in the market that this could lead to production cuts,” Michael McCarthy, chief market strategist at CMC Markets in Sydney, said by phone. “The potential for breaches of any announced agreement is very high, but it is a solid move and it is coming on pretty reasonable volumes.”

    OPEC Optimism

    It’s likely that OPEC producers will honor the output cut agreement and will try to put it into action, Iran’s Zanganeh said after meeting with OPEC’s secretary-general, Mohammed Barkindo, in Tehran on Saturday. Iraq’s new proposals “are based on other variables and will make it easier for OPEC members to make a decision,” Oil Minister al-Luaibi was cited as saying in an interview with The Wall Street Journal.
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    Iraq to make suggestions to facilitate OPEC supply cut agreement

    OPEC logo is pictured ahead of an informal meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) in Algiers, Algeria September 28, 2016. 

    Iraq's oil minister Jabar Ali al-Luaibi will make suggestions at a meeting of OPEC oil ministers at the end of the month to implement an agreement to restrain crude supply in order to push up prices, according to a statement from his ministry on Monday.

    The statement didn't indicate what these suggestions are but hinted that Iraq would not be contributing to any output cut.

    Iraq's "legitimate demands should not constitute an obstacle to a new agreement to freeze output," Luaibi said in the statement. Iraq "will offer new thoughts and suggestions to bring the members closer to an agreement."

    Luaibi last month said Iraq should be exempted from OPEC crude output restrictions as it needs the income to fight the war on Islamic State, the ultra-hardline group.

    Iran, Libya and Nigeria, whose output has been hit by sanctions or conflict, have also asked to be exempted.

    The Organization of the Petroleum Exporting Countries agreed in Algiers on Sept. 28 to reduce production, its first output cut since 2008, but left aside the delicate task of how much each of the 14 members will produce.
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    Nigerian oil output to slump further as Forcados gets shut-in: market sources

    Nigeria's hopes of ramping up its oil output this year have been diminished, as renewed attacks on oil infrastructure in the Niger Delta have shut-in production of popular export grade Forcados in the past week, market sources said Friday.

    Nigerian oil output had recovered sharply in the past few months on the return of Qua Iboe, Forcados and Bonny Light as militant attacks were slowing down.

    October output rose to around 1.84 million b/d, including condensate grade Akpo, according to S&P Global Platts estimates but with Forcados -- whose production ranged between 150,000-200,000 b/d the previous month -- now out, output for the rest of the year will again plummet.

    Forcados output has been down since last week, after an oil spill caused by an attack on the Trans-Forcados pipeline impacted the transportation of the crude.

    On November 2, the Trans-Forcados pipeline, which transports the popular export grade, was bombed, barely hours after Nigerian President Muhammadu Buhari met with senior Niger Delta leaders to end the militancy, outlining the fragility of a possible peace deal.

    Sources told Platts that Forcados production was affected more than initially expected, and with no signs of a December and January loading program, exports of this grade were likely to be out until early next year.

    "[The situation] in Forcados is not looking good at the moment -- [we're] trying to get some clarity," a trading source said.

    Sources said that incident caused an oil spill which damaged the pipeline, and with exports of this grades also facing loading and operational delays, production has been suspended,

    One source also said the oil spill came about from the explosion that occurred on the Trans-Forcados pipeline while engineers were trying to fix the facility previously attacked by militants.

    The spill was hindering repair works and was seen as one of the reasons why market participants were doubtful that more loading programs would be issued.

    A Shell spokeswoman declined to comment on the oil spill but confirmed that Forcados was still under force majeure.

    Loadings of Forcados briefly resumed in early October for the first time in eight months but barely a month late the grade is again offline.

    Loadings of Forcados were suspended in early-February after the 48-in export pipeline feeding into the Forcados oil terminal was bombed in February by the militant group Niger Delta Avengers.

    Nigerian oil output plummeted to near 30-year lows of around 1.3 million-1.4 million b/d in May from 2.2 million b/d earlier this year as attacks on oil facilities in the Niger Delta rose at an alarming pace due to resurgent militancy.

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    Venezuela taps China credit line for $2.2 billion oil output push

    Venezuela said it would tap $2.2 billion from a Chinese credit line to boost oil output at joint ventures with China National Petroleum Corp, in a boost for the South American country's struggling oil industry and a show of unity with a key ally.

    CNPC, China's largest state energy group, and Venezuela's state oil company PDVSA [PDVSA.UL] will seek to boost production in the OPEC country by around 277,000 barrels per day, President Nicolas Maduro said in a televised address.

    Funds will come from a credit line of up to $9 billion with China, Maduro said after a meeting with CNPC in Caracas on Thursday.

    The agreement will be a boon to Venezuela's oil industry, which has seen its production tumble this year amid a steep recession. It is also welcome public backing for Maduro from a strategic ally amid a political and economic crisis.

    "Many thanks for all the support you have given Venezuela in 2014, 2015, and especially 2016," Maduro said in a televised speech. "Our older sister China has not left Venezuela alone in moments of difficulty."

    Venezuela has borrowed over $50 billion from China under a financing arrangement created by late socialist leader Hugo Chavez in 2007, in which a portion of its crude and fuel sales to the world's second-biggest economy are used to pay down loans.

    The increased oil output at the joint ventures would boost shipments to China to over 800,000 bpd, the president said.

    Venezuela is undergoing a brutal recession due to a collapsing state-led economy, made worse by the tumble in oil prices. The rout in oil markets has also left Maduro's government struggling to meet the original terms of the oil-for-loans agreement, which require that PDVSA set aside more barrels for debt services when prices fall.

    CNPC has minority stakes in oil joint ventures with Caracas-based PDVSA, which oversees the world's biggest oil reserves but has seen output fall amid the country's cash crunch, low investment, and debts with service providers.

    Output increases are planned at the Petrourica, Petrozumano, and Sinovensa joint ventures, Maduro said. A deal was also reached to rehabilitate 500 light crude wells with a potential of some 42,800 bpd.

    Oil Minister and PDVSA president Eulogio Del Pino said the projects would be rolled out in coming months.

    It was not immediately clear if China would free up more oil funds via the credit line.
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    Iraq's exports from Kirkuk fields drop on power outages - official

    Iraq's exports from the Kirkuk oil field through an export pipeline to Turkey have dropped because of power outages, an official at state-run North Oil Co. said on Saturday.

    Export are currently running at 100,000 barrels per day (bpd), compared with 133,000 bpd in October, the official said.

    The pipeline delivers crude to Turkish terminal of Ceyhan, on the Mediterranean. It also carries crude produced in fields developed by the Kurdistan Regional Government (KRG), an autonomous region in north Iraq.

    OPEC's second-largest producer after Saudi Arabia, Iraq exports most of its oil through the southern ports, on the Gulf.

    Total exports for September, including the KRG, were 3.871 million bpd, of which 3.276 million bpd were shipped from the southern ports, according to the last figures published by the nation's state-oil marketer SOMO, in October.

    North Oil resumed exports through the Kurdish-controlled pipeline in August, after a five-month halt caused by a dispute on oil revenue sharing between Baghdad and the KRG.
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    Oil Wildcatters Flee African Deep Water to Weather Rout

    Drillers burned by a two-year slump in crude prices are slowing exploration of deep-water prospects off the coast of Africa, undermining a key driver of growth on the continent.

    In the 25 years since 1982, African oil output doubled to more than 10 million barrels a day. Now, with prices sitting below $50 a barrel, international drillers have cut their plans for capital expenditure in the next five years by $100 billion, according to a Nov. 2 report by Wood Mackenzie Ltd. The change could drop the region’s oil production 46 percent by 2030, the report said.

    Hardest hit: Nigeria and Angola, countries that are already struggling economically and depend on oil for almost all their foreign income. To revive deep-water exploration on the continent, crude prices would have to rise to $60 to $70 a barrel, according to Keith Myers, managing director of the consulting firm Richmond Energy Partners.

    “Africa suffered the most of any region in terms of the decline in frontier exploration," Myers said in an e-mail. Deep-water exploration was “the driver for production growth in the region.”

    In September, the number of offshore oil and gas rigs in Africa fell to just nine, down from a high of 48 in November 2014, according to Baker Hughes Inc. data. That’s the lowest level in more than a decade. Overall, the number of rigs on the continent dropped to a five-year low of 77.

    “We’re being more disciplined,” said Oliver Quinn, director of Africa and global new ventures at Ophir Energy Plc, speaking at the Africa Oil Week conference in Cape Town this month. The London-based explorer has plans to drill three to five frontier wells over the next two years, split between Africa and Asia, according to Quinn.

    “We don’t want to go out and spend capital that we can’t replenish to do exploration,” he said.

    Nigeria, the continent’s biggest oil producer and most populous nation, is dependent on the fuel for more than 90 percent of its foreign income. The country, facing ongoing violence in its crude-producing Niger Delta region, saw inflation accelerate to an 11-year high in October as revenues from oil tumbled and import costs for consumer goods and machinery rose.

    Angola, which depends on oil for almost all its exports, said in July it was generating “barely enough” revenue to pay off its debt.

    Exxon Mobil Corp., Royal Dutch Shell Plc and Total SA are among the biggest players in Nigeria, where deep-water fields have so far escaped the militant attacks that curbed output in the Niger Delta. The biggest deep-water producers in Angola include BP Plc, Exxon and Chevron Corp., which canceled an ultra-deep water semi-submersible rig with Maersk Drilling Services A/s at the end of March.

    Shallower Water

    Tullow Oil Plc has turned away from deep water, even as the Africa-focused explorer prepares to renew its hunt for new discoveries on the continent. The company is more focused on "shallower water" prospects, said Tullow Chief Executive Officer Aidan Heavey.

    In relation to exploration, “a dollar spent today is probably the same as $3 spent a couple of years ago,” Heavey said in an interview in Cape Town.

    Over the past decade, sub-Saharan Africa accounted for 42 percent of global deep water frontier drilling, according to Richmond Energy Partners. That kind of exploration is key to sustaining output in the longer term, Myers said. With the lower price of crude, however, global companies are increasingly looking for easier access to their product.

    Brent, the global benchmark, is down 41 percent in the past two years. The contract for January settlement was little changed at $46.55 a barrel on the London-based ICE Futures Europe exchange at 11:02 a.m. on Friday.

    As an example, Houston-based Noble Energy Inc., which has assets off the coast of Equatorial Guinea, this year will focus two-thirds of its $1.5 billion in spending on U.S. shale. Companies have to “justify investment in new deep water projects,” said Susan Cunningham, executive vice president of exploration and new ventures at Noble, in an interview in Cape Town this month.

    “We’re not going to be doing much in deep water” for the next two years, she said.

    Battered by falling oil prices, some African governments have been slow to trim the share of profits they take from deep-water projects, deterring investment.

    “Deep water can still work but you need to make sure that the fiscal terms in the country you are operating will generate a return in the current commodity price environment,” said Geoff Callow, investor relations manager at Ophir Energy. “Some governments are adjusting terms and they are seeing investment and others are being slower to adjust and are consequently finding it harder to attract investment.”

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    Rig count jumps by 20; largest increase in two years

    The number of oil and gas rigs in U.S. fields boomed this week, rising by 20 — the largest jump since the peak of the shale oil boom two years ago.

    U.S. oil drillers collectively sent 19 more rigs into the patch, the Houston oilfield services company Baker Hughes reported Friday. Gas drillers added one rig.

    The rise was driven largely by drillers in West Texas’ Permian Basin, which added 11 rigs.

    The total rig count rose to 588, up from a low of 404 in May. U.S. oil companies haven’t added this many rigs since May of 2014, when oil was still bringing $100 a barrel.

    The count, however, still lags the same period last year, when 757 drilling rigs were operating in U.S. oil and gas fields.

    The number of active oil rigs jumped to 471 this week. Gas rigs ticked up to 116. Even the number of offshore rigs rose, by 3 to 23, down 7 year over year.

    Total rig counts lifted by eight in Texas, four in Louisiana, four in Oklahoma, three in Ohio and two in Colorado. They fell by one in North Dakota, Pennsylvania and Wyoming.

    Drilling activity has followed the modest rebound in prices, from February’s low of about $26 a barrel to more than $50 in recent weeks.

    Prices stabilized this week at about $45 a barrel.

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    Carl Ichan Sells Rest of his Chesapeake Stock, Good Riddance

    Now that the damage has been done, evil corporate raider Carl Ichan has sold off the rest of his Chesapeake Energy stock–completely exiting the company.

    The one solace we have is that Ichan didn’t make any money from his dalliance with the company. He lost something like over $1 billion, according to our best guess.

    We’ve chronicled the rise and fall of Ichan, and of Chesapeake, over the past four years. The purpose of investing, for people like Ichan, is to seize control of the company, fire a bunch of people, sell off a bunch of assets, which leads to a rise in the stock price. Said corporate raider then sells his shares and makes boatloads of money.

    Except that didn’t happen with Ichan’s investment in Chesapeake…
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    Alternative Energy

    China on-grid wind capacity further up, but utilization rate waning, NEA

    China's grid-connected wind power capacity continued to pick up, but the utilization rate was waning after years of capacity expansion, Xinhua News Agency reported, citing the latest data from the National Energy Administration (NEA).

    China's total installed capacity of wind power generation facilities connected to the power grid reached 139 GW by the end of September, up 28% from a year earlier, according to the NEA.

    The growth rate outpaced that of the nation's total power use, a key barometer of economic activity, which totaled 4.5% year on year for the first nine months, official data showed.

    China also saw newly added grid-connected wind power generation capacity hit 10 GW during the first nine months, said the NEA.

    However, those power generation facilities had average utilization hours of 1,251 over January to September, declining by 66 hours from a year earlier.

    Of all provincial areas, southwest China's Yunnan Province registered the largest gain in grid-connected wind power capacity of 2.26 GW in the first nine months.

    China, the world's second largest economy, has been trying to develop a clean energy network and pursue green growth in recent years.
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    Vestas considers buying Chinese United Power - report

    Danish wind turbine maker Vestas is looking at buying Chinese competitor United Power, reported on Friday.

    The report said several independent sources, with knowledge of both Vestas' and United Power's strategies, had confirmed that a takeover or a partial takeover was on the table.

    However, Vestas Head of Communications Michael Zarin told Reuters the company's strategy is still based on organic growth.

    "We have said before, given our industry-leading position and strong balance sheet, we are open to other opportunities to accelerate our growth strategy should such arise, but the core organic growth strategy remains the same," Zarin told Reuters.
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    Gamesa secures Chinese order for its largest wind turbine

    Gamesa has secured the first order for its largest turbine from the renewable energy subsidiary of Sinohydro, one of China’s largest manufacturing groups.

    The order is a fresh milestone in Gamesa’s sales and product strategy. It is also the first order for the supply of turbines from the company’s 5 MW platform in Asia, specifically in China. Under the terms of the contract, Gamesa will supply, install and commission 18 of these turbines (90 MW) at the Nangang wind complex located in Tianjin. The turbines will supplied during the last quarter of 2017 and commissioned during the first quarter of 2018.

    The 5-MW platform is one of the most powerful in the onshore market. The G132-5.0 MW turbine comes with a blade length of 64.5 metres and a rotor diameter of 132 metres. In addition, it is designed with redundant modules, guaranteeing reliable performance and maximising energy output, thereby streamlining the cost of energy.

    “This contract marks an important strategic landmark for Gamesa: not only is it the maiden order from the 5-MW platform in Asia, it is the first signed order for the G132-5.0 MW” said Álvaro Bilbao, Gamesa's CEO in China.

    The turbine also stands out for its light weight, which reduces the cost of related wind farm civil engineering work. It is capable of generating enough energy to supply 5,000 households a year and last May received type certification from DNV GL, thereby culminating the certification process and endorsing the turbine's technology.

    In addition to its 132 metre rotor, capable of generating power in medium and strong wind conditions, the 5-MW platform can also be configured with a 128 metre rotor featuring the firm's patented Innobladetechnology, enabling the manufacture of the blades in two segments for assembly when the facility is being erected in order to facilitate the transportation and installation of the turbines.

    Gamesa's presence in the Chinese market, where it was the number one non-Chinese OEM by capacity instalments in 2015, dates back 16 years. In total, the company has supplied more than 4,000 MW in China to date. The region accounted for 13 percent of the company's total sales volumes (measured in MW) in 2015.
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    Tesla solar roof cheaper than regular roof, says Musk – electricity “just a bonus”

    Tesla founder and CEO Elon Musk has again set tongues wagging, this time with his declaration that his newly launched integrated solar roof tiles could actually cost less to install than a regular roof – making the renewable electricity they produce “just a bonus”.

    The claims, which are already being carefully dissected by various media pundits, were made by Musk last Thursday, after Tesla and SolarCity shareholders voted in favour of a $2 billion deal to merge the two companies.

    “It’s looking quite promising that a solar roof will actually cost less than a normal roof before you even take the value of electricity into account,” he said.

    “So the basic proposition would be, ‘Would you like a roof that looks better than a normal roof, last twice as long, cost less and by the way generates electricity?’ Why would you get anything else?”

    As we reported last month, Musk unveiled four different types of surprisingly stylish looking solar shingle options at a much-hyped LA launch event in October.

    At the time, the cost of the shingles was unknown – and their release was somewhat overshadowed by the the unveiling of Tesla’s second generation Powerwall home battery storage units, at twice the capacity and half the cost per kilowatt-hour.

    But the shareholder approval of the Tesla-Solar City merger put Musk’s solar roof right back in the picture and gave him the impetus to make his next big announcement.

    According to Bloomberg, it was just minutes after the deal was approved that Musk told the crowd  that he had just been advised by his engineering team that the company’s solar roof would actually cost less to manufacture and install than a traditional roof – even before savings from the power bill. “Electricity,” he said, “is just a bonus.”

    Of course, as Bloomberg and many others have noted, the high-end terracotta and slate tiles that Tesla’s solar shingles have been designed to look like are among the most expensive roofing materials on the market, so this must be taken into consideration against Musk’s rather sensational claim.

    And as Gizmodo noted, how this cost compares to the average cheap Australian corrugated iron roof remains to be seen.

    But then Musk has noted that his tempered-glass roof tiles, engineered in Tesla’s new automotive and solar glass division, will weigh as little as a fifth of current products and are considerably easier to ship – being more robust.

    Thus, as Bloomberg reports, much of the cost savings Musk is anticipating will come from shipping the materials.

    As for the “bonus” electricity generation component of the tiles, Tesla will produce the solar cells for the roof with Panasonic at its manufacturing facility in Buffalo, New York. And at a November conference call, SolarCity CEO Lyndon Rive said the companies were aiming for 40 cents a Watt, which puts it in line with the competition.

    Attached Files
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    Japan's nuclear export ambitions hit wall as Vietnam set to rip up reactor order

    Vietnam is poised to abandon plans for Japanese firms to build a multi-billion dollar nuclear power plant, damaging Prime Minister Shinzo Abe's drive to begin exporting reactors after the Fukushima disaster left the industry in deep-freeze at home.

    The Japanese government said in a statement this week that it had been informed by Vietnamese Deputy Prime Minister Trinh Dinh Dung that Hanoi was close to a decision to cancel the project. Japan's Minister of Economy, Trade and Industry, Hiroshige Seko, described the move as "very regrettable."

    Vietnam's decision, attributed to lower demand forecasts and rising costs as well as safety concerns, also deals a broader blow to the global nuclear business. Countries from Germany to Indonesia have decided to either pull out of nuclear energy or cancel development plans in the wake of the Fukushima nuclear disaster in 2011, the world's worst since Chernobyl in 1986.

    "Vietnam is only the latest in a long list of countries, including more recently Chile and Indonesia, that have postponed indefinitely or abandoned entirely their plans for nuclear new-build," said Mycle Schneider, a Paris-based energy analyst.

    Though it has sought contracts for years, Japan has never led a nuclear project to completion overseas and Abe has lent his office's prestige to attempts to win contracts, most recently in Turkey. The dented ambitions for exports come at a time when Japan is struggling to restart dozens of reactors shut down in the wake of Fukushima.

    "This is a major blow to Japanese ambitions to, finally, export their first nuclear reactors," said Schneider.

    Hanoi first awarded the contract to Japan in 2010. Under the plan, private utility-led Japan Atomic Power was coordinating a consortium of firms, including Fukushima operator Tokyo Electric Power and equipment makers including Hitachi and Toshiba.

    A spokesman for Japan Atomic Power said the company had not been in touch with Vietnam since finishing a feasibility study, without providing further details. According to the World Nuclear Association, the study was completed in 2013.



    U.S. native groups promised input on development as pipeline dispute looms
    UPDATE 3-U.S. native groups promised input on development as pipeline dispute looms

    Vietnam's parliament is set next Tuesday to formally approve scrapping the Japanese deal, as well as the country's first nuclear project, which was awarded to Russia's Rosatom, according to state media. Rosatom said it would not comment until the Vietnam parliament formalised the decision.

    The Japanese and Russian nuclear plants were supposed to have been located in central Ninh Thuan province.

    The two plants would have had a combined capacity of 4,000 megawatts. The Ninh Thuan 2 No. 1 reactor was due to begin operations in 2021, followed by the Ninh Thuan 2 No. 2 unit in 2022, both to have been supplied by Japanese companies. The Rosatom reactors at the Ninh Thuan 1 plant were due to start operating in 2020.

    With its power consumption growth now forecast to slacken, the fate of longer-range plans to build out a nuclear power capacity to 15,000 megawatts is shrouded in doubt.

    Vietnam's annual power demand growth is projected at 11 percent between 2016 and 2020, and 7-8 percent through 2030 , Duong Quang Thanh, chairman of state utility Vietnam Electricity group was quoted as saying by state-run Voice of Vietnam radio.

    That compares with a 17-20 percent annual increase forecast when the government first kicked off its nuclear plans.
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    Morocco's OCP and Ethiopia sign large fertiliser plant deal

    Morocco's Office Cherifien des Phosphates (OCP), the world's largest phosphate exporter, signed a deal with Ethiopia on Saturday to build a $3.7 billion plant to produce fertilisers.

    The North African country's firms, including banks and insurers, have invested heavily in Sub-Saharan Africa in the past few years. Last month, OCP signed an agreement with Rwanda to build a blending unit.

    The agreement signed with state-run Ethiopian firm Chemical Industries Corporation (CIC) will enable the construction of a new plant in the town of Dire Dawa in eastern Ethiopia.

    The project is expected to produce 2.5 million tonnes of fertiliser in its first phase by 2022, and a second phase would see a further $1.3 billion invested to increase production to 3.8 million tonnes three years later.

    "Its funding will first be from equity and the second part through debt," the firm's representative in Ethiopia Faycal Benamer told Reuters.

    Faycal did not give a date when the plant construction will start, and said they were about to complete its designs.

    Ethiopia at present imports around 900,000 tonnes of fertiliser each year. OCP will ship its own phosphoric acid to the plant, while potash will be transported from large reserves in the Horn of Africa country's northeast, he said.

    OCP, a major earner of foreign currency for Morocco, reported a 23.2 percent fall in first-half net profit to 3.07 billion dirhams ($317 million) due to low prices in the international markets.

    It has invested heavily and made a series of acquisitions to improve its infrastructure and boost its output. It aims to raise output to 47 million tonnes of crude phosphate rock in 2017, from around 34 million tonnes in 2013.

    It is also targeting an increase in fertiliser production to 12 million tonnes by 2017 from 7 million in 2014, which would make it the world's leading producer.

    Saturday's agreement was signed during a visit by Morocco's King Mohammed VI. The two countries inked deals to develop several projects.
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    Precious Metals

    Asia Gold-India premiums surge to 2-yr highs on fears of import curb

    Gold premiums in India jumped to two-year highs this week as jewellers ramped up purchases on fears that the government might put curbs on imports after withdrawing higher-denomination notes from circulation in its fight against black money.

    Retail demand was subdued due to a cash crunch following the government's move on high-value banknotes, but dealers in the world's No.2 consumer of the metal were charging a premium of up to $12 an ounce this week over official domestic prices that include a 10 percent import tax.

    The premium was the highest since mid-November 2014, and compared with a premium of up to $6 an ounce last week.

    "There was a rumour that after scrapping 500 and 1,000 rupee notes, the government will ban gold imports. It prompted many jewellers to increase buying," said a Mumbai-based dealer with a private bank.

    "Jewellers were running businesses with limited stocks after good sales during the Diwali festival. Now they are keen to replenish inventory as prices have fallen."

    The government last week withdrew 500 and 1,000 rupee banknotes from circulation, in a surprise move designed to bring billions of dollars worth of cash in unaccounted wealth into the mainstream economy.

    "We are seeing some jewellery demand due to the ongoing wedding season and crash in prices. But the cash constraint is going to be really tough for the gold industry in the near future, especially from rural areas," said Chirag Thakkar, a director with Amrapali Group.

    Two-thirds of gold demand comes from rural areas where jewellery is a traditional store of wealth.

    "Our business has nearly stalled due to the cash crunch," said Mangesh Devi, a jeweller based in Satara, Maharashtra, who caters mainly to farmers.

    Gold was on track to post a second straight weekly fall on rising expectations of a rate hike by the U.S. Federal Reserve. Spot gold has declined 1.5 percent so far this week.

    Meanwhile, premiums in China rose up to $10 an ounce against the international benchmark from $5 last week.

    "It (the buying) could be driven by the panic in reaction to the recent depreciation of the yuan," said Zhirui Ji, an analyst with Thomson Reuters-owned metals consultancy GFMS.

    The yuan fell to an 8-year low on Friday on resurgent dollar.

    In Hong Kong, sellers were offering a premium of up to $1 an ounce compared with 50 to 70 cents last week, while in Singapore premiums were unchanged at 80 cents.

    Demand in Japanese markets continued to remain tepid with premiums flat to a discount of 10 cents.
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    Base Metals

    DRC govt gains additional 15% stake in Ivanhoe’s Kamoa–Kakula project

    TSX-listed Ivanhoe and its joint venture partner Zijin Mining Group have transferred a further 15% interest in the Kamoa-Kakula copperproject to the Democratic Republic of Congo(DRC) government.

    The government now owns 20% of the project, while Ivanhoeand Zijin each hold an indirect 39.6% interest and Crystal River Global an indirect 0.8% interest.

    “This is an historically significant event for the people of the DRC. We now are united as partners committed to working closely together toward our shared objective of ensuring that the major copper discoveries we have made at Kamoa and Kakula during the past eight years can be predictably, efficiently and expeditiously developed into a world-scale mining venture with a lifespan of multiple generations,” said Ivanhoe chairperson Robert Friedland.

    CEO Lars-Eric Johansson added that the agreement “paves the way to fulfil Kamoa-Kakula’s promise of decades of substantial, long-lasting economic and social benefits for the Congolese people and the strengthening of the national government’s capacity to support the development of international trade and building of the country”.

    Kamoa Holding will transfer 300 Class A shares in the capital of Kamoa Copper − representing 15% of Kamoa Copper’s share capital − to the DRC government, in consideration for a nominal cash payment and other guarantees.

    Kamoa Holding will also be required to provide all shareholder loans to Kamoa Copper and/or procure financing from third parties for the development of the project.

    The DRC government has reaffirmed Kamoa Copper’s mineral tenements and has guaranteed that the project will not be subject to any taxes or duties other than those legally required by the applicable statutory and regulatory provisions for the life of the project.

    Kamoa Holding will have a pre-emptive right, and right of first refusal, to buy any or all of the DRC government’s shares in Kamoa Copper should it wish to divest of its interest in the project.
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    Nyrstar hedges more zinc as price downside protection

    European base metals business Nyrstar has entered into further short-term strategic hedging arrangements utilising put and call collar structures to mitigate potential down side risks to the zinc price.

    The global multi-metals business, with a market leading position in zinc and lead, said Thursday that for the first quarter 2017, protective hedges were already in place for 70% of the free metal produced by the metals processing business segment, or 8 000 t/m of zinc metal.

    It has also hedged 3 000 t/m of the payable zinc metalproduced in concentrate by the mining segment, resulting in full exposure for the hedged volume in the first quarter to a floating zinc price between $2 127/t and $2 496/t. In the current and first quarter, Nyrstar retains full exposure at a price above $2 800/t.

    Belgium-incorporated Nyrstar, which has mining, smelting and other operations located in Europe, the Americas and Australia, advised that protective zinc price hedges have also been completed for the second quarter and fourth quarter of 2017, for 70% of the free metal produced by the metals processing segment (8 000 t/m of zinc metal), plus 5 350 t/m of the payable zinc metal produced in concentrate by the mining segment, resulting in full exposure to a floating zinc price between $2 172/t and $2 543/t.

    In the second quarter of 2017 to the fourth, Nyrstar again retains full exposure at a price above $3 117/t.

    Nyrstar's said it will continue to review and potentially apply strategic hedges to limit downside risks for key commodity price and foreign exchange sensitivities during the implementation of the company's transformation and turnaround plan.

    Zinc spot prices have risen about 15% to $1.14/lb in the last 12 months, as an emerging supply gap and a run-down of stock supported the trend.
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    Steel, Iron Ore and Coal

    Indonesia targets to halve coal exports by 2019

    Indonesia aims to halve coal exports over the next three years as domestic demand grows and production falls, Reuters reported, citing an energy ministry official.

    Coal exports are expected to drop to 160 million tonnes in 2019, down from a forecast 308 million tonnes this year, said Hersonyo Wibowo, who heads the coal division at Indonesia's energy ministry.

    "After 2019 production is targeted to be flat at 400 million tonnes, but in the future domestic consumption will increase, especially for electricity, and exports will decline," Wibowo said.

    The world's top thermal coal exporter aims to produce 419 million tonnes of coal this year but it was not immediately clear how the government planned to limit production, the bulk of which is currently shipped to China and India.

    Last year Indonesia produced 460 million tonnes of coal, Wibowo said, noting that he expects output to exceed the targeted amount this year, due to higher prices.

    Demand for coal at Indonesia's power plants, meanwhile, is expected to climb to 119 million tonnes in 2019, up from the 86 million tonnes that are expected to be consumed domestically this year, Wibowo said.
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    China Shenhua Oct coal sales rise 34.9pct on yr

    China Shenhua Oct coal sales rise 34.9pct on yr

    China Shenhua Energy Co., Ltd, the listed arm of coal giant Shenhua Group, sold 35.6 million tonnes of coal in October, rising 34.9% on year but dipping 1.66% on month, the company announced in a statement late November 19.

    The increase was mainly bolstered by a 147.8% year-on-year rise in sales of outsourced coal, which edged up 0.88% from September.

    Sales of self-produced were 24.2 million tonnes in the month, up 11% on year but down 2.81% on month.

    The company sold 323.8 million tonnes of coal over January-October, increasing 6.06% from the year prior. Coal sales price averaged 293 yuan/t during the period, exclusive of VAT, down 1.7% on year.

    Coal sales via northern ports in October climbed 2.03% on month and up 30.5% on year to 20.1 million tonnes, with those from Huanghua port at 14.4 million tonnes or 71.6% of the total, surging 97.3% on year but down 2.7% on month.

    Total coal sales via northern ports stood at 190.4 million tonnes in the first ten months, up 13.9% on year.

    The company produced 25.4 million tonnes of coal in October, up 9.48% year on year and unchanged from September.

    Total coal production stood at 238.7 million tonnes in the first ten months, gaining 2.1% from the year prior, it said.

    Shenhua Group and other three major miners in China would cut prices by 5 yuan/t for spot 5,500 Kcal/kg NAR thermal coal to 680 yuan/t FOB Qinhuangdao with VAT, effective November 21.

    For those who had not signed term contracts, the company has stopped thermal coal supply since November 15.
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    Huanghua port has become China's top one coal handling port, said local marine bureau at a press conference on November 10.

    The port realized coal handlings of 168 million tonnes as of November 6, surging 57.01% from the year-ago level, according to the Cangzhou Marine Bureau.

    This was mainly attributed to increased coal supply from newly-commissioned Zhunchi railway.

    In addition, Huanghua port has been opened to all coal producers since 2015, instead of being exclusive to Shenhua Group.
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    Shanxi launches safety check over coal mines

    Northern China's coal-rich Shanxi province has launched a safety check over coal mines since November 10, according to a notice jointly released by the Shanxi Coal Industry Administration and Shanxi Coal Mine Safety Bureau.

    The safety check, which will last until January 10 next year, will cover coal mines in operation, under construction and those that have suspended production, according to the notice.

    The move came after water inrush accidents at Ping'an Mine owned by Shouyang-based Duanwang Coal Industry Group on October 13 and Yishun Mine owned by Shuozhou-based Xiyi Energy Group on November 2, and a gas explosion at Chongqing-based Jinshangou Mine on October 31.

    The inspection consists of self-examination of coal producers and supervision from municipal and provincial governments, including ten aspects of requirement for coal mines in the province, in order to further improve safety levels at all local mines.

    The province's safety check was aimed at ruling out illegal mining, safety loopholes, unapproved production resumption and production beyond approved capacity, among others.

    Those mines violating the suspension order will be closed according to laws, and those ordered to cut coal capacity yet still in production will be enforced to halt production.

    Attached Files
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    China association protests markup by overseas iron ore producer

    The China Iron and Steel Association (CISA) has protested at a markup by a leading iron ore producer that targets Chinese buyers.

    "It is obviously unfair," a CISA official said on Friday, who did not name the company but hinted it is among the world's top-three iron ore miners.

    When discussing new agreements with Chinese steel firms, the company decided to impose a premium in addition to prices published by Platts, a benchmark price assessment in physical energy markets, the official said.

    The official said the practice damaged the current pricing mechanism and disturbed trade order, and called on the two sides to "sit down and talk" to solve the problem together.

    China is the world's biggest consumer of iron ore, with the imports up 8.9 percent year on year in the first ten months.
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    Brazilian judge accepts criminal charges for Samarco dam disaster – report

    A federal judge in Brazil has accepted the criminal charges brought by prosecutors against four companies and 22 employees for a burst tailings dam at the Samarco mine last November, the G1 news sitereported on Friday.

    Prosecutors last month accused Samarco, its joint venture owners Vale and BHP Billiton, and consultant VogBR of environmental crimes, while employees were accused of homicide for the disaster that killed 19 people and polluted a major river.
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    Tokyo Steel to raise all Dec product prices by 5,000 yen/T

    Tokyo Steel Manufacturing Co Ltd said on Monday it would raise the prices of all of its products by 5,000 yen ($45.12) per tonne for December delivery, reflecting a rally in raw material prices and higher product prices abroad.

    Tokyo Steel's pricing strategy is closely watched by Asian rivals such as South Korea's Posco and Hyundai Steel Co and China's Baoshan Iron & Steel Co (Baosteel) that export to Japan.

    The flat increase means product prices for Japan's top electric-arc furnace steelmaker will rise by about 7 to 11 percent in December depending on the product, Tokyo Steel's managing director, Kiyoshi Imamura, told reporters. The increase comes amid rising prices for scrap metal and a series of price hikes by global steel mills to pass on surging coking coal prices, he said.

    Tokyo Steel left its prices unchanged in November but cut October delivery prices by up to 13 percent.

    "Global steel market has entered in a clear bullish trend as steelmakers worldwide have been boosting product prices in the face of surging coking coal prices," Imamura said.

    Recycled scrap metal, a main feed material for electric-arc furnaces, has soared by 5,000 to 7,000 yen a tonne since hitting a bottom in August, tracking a rally in coking coal, a key steelmaking material for blast furnaces, he said.

    Coking coal has more than tripled this year as China, the world's biggest coking coal producer, has cut supply to curb overcapacity and pollution.

    Based on the flat increase, prices for the Tokyo Steel's main product, H-shaped beams, which are used in construction, will climb by 8 percent to 70,000 yen per tonne. Steel bars, including rebar, will rise by 11 percent to 52,000 yen. The company produces 15 different steel products.

    This is its first across-the-board price hike since May.

    "If the bullish trend in steel market continued, we may raise product prices again for January delivery," Imamura said.

    However, his market outlook was cautious, adding the recent rally has been driven by higher raw material costs instead of stronger demand growth and tighter supply.

    "We are not so confident that the steel market's rally will continue as the fundamental problem of oversupply due to China's massive output has not been changed," he said.
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    China steel exports to remain high in 2017: report

    China's steel exports will remain high in 2017 due to flat consumption domestically and slow capacity rationalization, a recent report pointed out, forecasting exports at 100 million tons next year.

    International rating agency Fitch expects Chinese apparent steel consumption to remain between 700 and 705 million tons next year, reflecting decelerating property growth, stable infrastructure investment growth, and a favorable outlook for Chinese automobile and appliance consumption.

    On the other hand, capacity rationalization will remain a key theme of the sector, with a target of 14 million to 27 million tons annually until 2020.

    As a result, exports should remain high in 2017 as Chinese producers continue to benefit from the yuan's exchange rate and lower raw-material prices, the report concludes.

    China's over-supplied steel sector experienced years of plunging prices and factory shutdowns due to the sluggish economy. However, with encouragement from the upward trend of prices from the beginning of this year, many steel mills are resuming production.

    Official data showed China's crude steel production increased 0.4 percent year on year to 603.78 million tons in the January-September period.
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