Mark Latham Commodity Equity Intelligence Service

Wednesday 23rd November 2016
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    Shanxi coal firm to invest in UK power plant

    A Shanxi-based company principally engaged in the coal business will invest 3 billion yuan ($440 million) in the Hinkley Point power plant in the United Kingdom.

    Wintime Energy Co Ltd, a company principally engaged in the exploitation, operation, washing, selection and processing of coal, recently made the investment, together with China General Nuclear Power Corporation.

    The two companies are to jointly carry out several clean energy projects, including Guangdong Lufeng Power Station, Hinkley Point C power plant and some non-nuclear power plants, according to a project cooperation agreement signed between the two companies on Nov 21.

    CGN signed a final agreement on the 18 billion pound ($23.4 billion) Hinkley Point C power plant two months ago with the French utility EDF and the British government. The project has been hailed as a gateway to promote Chinese nuclear technology.

    He Yu, chairman of CGN, said China's nuclear technology being used abroad will lead to more countries having confidence in Chinese reactors and pushing forward its global market development.

    Wintime Energy, which mainly operates in the domestic market, will become a major partner of the Chinese investment consortium for the project by laying out 10 percent of the total investment in Hinkley Point, which is around 3 billion yuan.

    Chinese power firms are currently pacing up mergers and acquisitions at home and abroad, motivated by their financial strength, poor domestic markets and policy support.

    "The developers' balance sheets are now the strongest in at least five years, enhancing their financial strength for mergers and acquisitions," said Joseph Jacobelli, senior analyst with Asia Utilities and Infrastructure Research of Bloomberg Intelligence.

    "China's power supply has grown at a pace faster than demand, leading to sinking plant utilization rates, especially for coal-fired power. Government policy also strongly supports local power companies' expansion abroad."

    Profit reporting shows that the performance of domestic coal companies turned weaker than earlier expectations in 2015, due to overcapacity, poor demand and lower prices, with 39 listed coal companies reporting a net loss of 5.1 billion yuan in 2015, plummeting 1,120 percent year-on-year.

    Wintime Energy Co Ltd, together with other 18 companies however, still reported net profit last year.

    The company mainly operates in Shanxi province. In addition, it is also involved in hotel business, as well as the production and sale of building materials.

    According to the company, participation in the overseas project, while in accordance with the government's going global strategy and in line with the Belt and Road Initiative, still presents certain risks in investment decision-making and management.

    In addition, the challenge for Chinese enterprises related to the electric power industry in operating overseas may also lie with the understanding of the local market, especially in developed economies such as the UK, said Jacobelli.
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    Oil and Gas

    Iran not exempt from OPEC cuts?

    According to latest update, Iran was to be included in the 4.5 pc production cutting OPEC nations, refuting that it would be exempt.


    OPEC to debate oil output cut next week but Iraq, Iran hesitate

    OPEC will debate an oil output cut of 4.0-4.5 percent for all of its members except Libya and Nigeria next week but the deal's success hinges on an agreement from Iraq and Iran, which are far from certain to give full backing.

    Three OPEC sources told Reuters a gathering of experts from the oil producer group in Vienna had decided on Tuesday to recommend that a ministerial meeting on Nov. 30 debate a proposal from member Algeria to reduce output by that amount.

    Such a cut would bring OPEC's current output down by more than 1.2 million barrels per day (bpd), according to Reuters calculations based on the group's October production, and is towards the upper end of market expectations.

    But sources also said the representatives of Iran, Iraq and Indonesia had expressed reservations during talks that continued for 11 hours about their level of participation in what would be the group's first supply-limiting deal since 2008.

    Brent oil futures were trading slightly up at around $49.2 per barrel at 2010 GMT, having lost most of their earlier gains of around $1 a barrel.

    In September, the Organization of the Petroleum Exporting Countries agreed to reduce production to between 32.5 million and 33.0 million bpd - an effort to prop up prices - from OPEC's own latest production estimates of 33.64 million bpd.

    OPEC's deal faces potential setbacks from Iraq's call for it to be exempt and from Iran, which wants to increase supply because its output has been hit by sanctions.

    Iraq's foreign minister said on Tuesday in Budapest that OPEC should allow Iraq to continue raising output with no restrictions.


    Iran and Iraq raised certain conditions for participating in the deal, according to sources, who were not allowed to speak on the record because the experts were meeting behind closed doors.

    Sources said Saudi Arabia and its Gulf allies have signaled they were prepared to cut close to 1 million bpd of their output.

    The Algerian proposal would see all member countries, except Nigeria and Libya, cutting 4-4.5 percent from OPEC's estimates of their October production with the aim of reaching a total output target of 32.5 million bpd, OPEC sources have said.

    That would mean Saudi Arabia alone could cut up to 500,000 bpd, sources said.

    OPEC's own estimates, based on what it calls "secondary sources", are usually lower than countries' direct submissions to the organization.

    Iraq was asked to cut about 200,000 bpd. Baghdad is also still debating whether it should cut from the levels of OPEC's estimates or its own, higher, production figures.

    "Eighty-five percent of proposed OPEC cuts are from Gulf countries but Iran is still not in favor," one source said.

    Non-OPEC producer Russia was also still not agreeing to cut production but favoring a freeze, a senior OPEC delegate said.

    "This will make it difficult for OPEC alone to rebalance the market and bring prices up," the source said.

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    Libya: Sirte oilfields out of action

    Libya's National Oil Corp. forced to shut production at Sirte oilfields after an explosion at control building Tuesday

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    Singapore's SGX, Japan's TOCOM to jointly develop Asian LNG market

    Singapore Exchange (SGX) and Japan's Tokyo Commodity Exchange (TOCOM) said on Tuesday they have signed a memorandum of understanding to jointly develop Asia's liquefied natural gas (LNG) market, as well as electricity futures.

    As part of the accord, the exchanges plan to explore opportunities like co-listing LNG derivatives, as well as synergies between the pair's market distribution networks.

    SGX, which listed Asia's first electricity futures in 2015, will also share its experience with its Japanese counterpart, Loh Boon Chye, SGX's Chief Executive Officer, said in a statement.

    "We also look forward to drawing on SGX's experience in electricity futures, as a liquid electricity market is closely linked to the development of the LNG market," said Takamichi Hamada, President and Chief Executive Officer of TOCOM.

    SGX began pricing LNG in October 2015 when it launched its Singapore Sling index, assessing cargoes on a free-on-board Singapore basis. In September this year it launched a second index, the North Asia Sling.

    The latter index, which will price the super-cooled fuel for the Japanese, South Korean, Taiwanese and Chinese markets, was seen by market participants as a signal that the market continues to take pricing signals from traditional buyers in North Asia.

    Singapore, already Asia's main trading location for oil and refined fuel products, and Japan, the world's biggest consumer of LNG, had previously been in competition to establish Asia's main LNG hub.

    The city-state of Singapore has so far been seen to lack a big enough consumer base to warrant a real trading hub, although investors and market participants appreciate Singapore's well established trading regulations, as well as the fact that English is its operating language.

    On the other hand, Japan's status as the world's biggest consumer was seen by LNG producers as creating a market that was too importer-biased.

    With the two now cooperating, these concerns may be addressed, making it harder for other aspirant trading hubs - including Seoul and Shanghai - to succeed.
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    Uganda names Sinopec among firms interested in refinery

    Oil firms including China's Sinopec have expressed an interest in developing Uganda's planned oil refinery and an investor for the project will be selected by February 2017, a top government official said on Tuesday.

    The East African country, which discovered oil fields in 2006 but has yet to start production, began trying to secure a private investor for the project nearly two years ago, but a previous tendering process collapsed earlier this year.

    Energy and Mineral Development Minister Irene Muloni told an oil conference in Kampala that some new firms had expressed interest in the project and that fresh talks were underway.

    "There are a number of companies that have expressed interest in joining us in the development of this refinery," Muloni said, adding interested parties included China's China Petroleum & Chemical Corp (Sinopec).

    "We hope by February next year we should have identified a lead investor," she said.

    Ugandan oil fields were found in the Albertine Rift Basin along its border with the Democratic Republic of Congo, but wrangling over taxes and the viability of the refinery have been blamed for delaying production, which is now projected for 2020.

    Uganda said it was negotiating with Russia's RT Global Resources on a final agreement in 2015, but the talks broke down this year. Subsequent negotiations with a consortium led by South Korea's SK Engineering also collapsed.

    Kampala estimates crude resources at 6.5 billion barrels, of which 1.4 to 1.7 billion barrels is considered recoverable.

    This year, Uganda agreed with Tanzania to develop a pipeline to help export its crude, snubbing Kenya which wanted to host the export route via its newly-discovered oil fields.

    Muloni said France's Total, one of the three explorers operating in the country alongside China's Cnooc and Britain's Tullow Oil, had indicated it would take up a 10 percent stake in the refinery project.

    Kenya and Tanzania have also committed to taking up stakes of 2.5 percent and 8 percent respectively, Muloni said.
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    Petronet expects LNG-fueled transport to lift demand

    Petronet LNG, India’s largest importer of the chilled fuel intends to focus on ships and vehicles fueled by liquefied natural gas to push the demand up.

    Prabhat Singh, the company’s CEO said the shift to using LNG as fuel in transportation in India, where a number of industrial users are not linked to the natural gas grid, will create ‘reasonable demand’, Reuters reports.

    In addition, Singh said that a larger portion of 200,000 trucks joining India’s roads on an annual basis could run on LNG.

    He also revealed that India’s government could officially allow the use of LNG as fuel for transport in the coming week.

    The country launched its first LNG bus at the beginning of November. The bus will run on a trial basis as a part of a pilot project before it can be certified for commercial application.

    The bus was delivered to the Kochi LNG terminal for fueling, and as the company prepares to build retail outlets, the terminal, that is currently operating at about 6 to 7 percent capacity due to the lack of connection to the natural gas grid, could start operating at full capacity.

    India is also working on increasing its LNG import capacity from 21.3 million tons per annum currently, to 50 mtpa by 2022.

    Petronet LNG has recently fully commissioned the expanded Dahej LNG terminal raising the its capacity from 10 mtpa to 15 mtpa.

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    Reversing Middle East Dependence: U.S. Begins Exports Of Shale Gas To Oil-Rich UAE And Kuwait

    Here’s a crazy thought: Imagine that exports of American energy began flowing to importing countries in the Middle East, and that those countries were growing increasingly dependent on U.S. exports.

    Sound bizarre?

    Since March of this year, that is exactly what has been happening.

    Amid all the election tumult, the United States quietly began exporting natural gas to the Middle East.

    Two cargoes of shale gas liquefied at Cheniere Energy’s Sabine Pass terminal in Louisiana were exported to Kuwait. A third went to the United Arab Emirates. Jordan imported two more.

    Kuwait and the UAE are two of the most petroleum-rich countries on earth, with a combined 12% of global oil and 4% of global gas reserves.

    The usual narrative suggests that America is dependent on the Middle East for energy, not the other way around. President-elect Trump is even suggesting we reduce our dependence by halting imports from Saudi Arabia.

    Why would Kuwait and UAE need American gas? They sit in a region that holds more than 40% of global gas. Iran alone owns 18% of known reserves. Qatar has 13%.

    And, just 90 miles from Kuwait City, Iraq flares off 700 million cubic feet per day of associated gas from its southern oilfields. Estimates put the value of the wasted gas at $1.8 billion per year.

    How on earth is it possible that these two countries are importing shale gas all the way from America?

    Is it a political deal? Maybe a “thank you” for the security the US Navy provides their oil shipments?


    Even though Kuwait and the UAE each hold more than 100 years of gas reserves at current rates of production, they are genuinely short on natural gas.

    The root cause is government subsidies that fix domestic natural gas prices at very low levels – less than $2 per million BTUs. At those prices, demand for gas is rampant. So is demand for electricity, which is also subsidized.

    But with prices fixed at a dollar or two, nobody wants to invest in natural gas production. There is no money in it.

    As it happens, non-associated gas reserves in Kuwait and the UAE are challenging. The gas is either tight or ultra-deep, or sour – laced with deadly hydrogen sulfide. That makes it expensive.

    The UAE has seen ConocoPhillips drop out of one sour gas production contract. It had to use creative incentives to entice Occidental to take over.

    Kuwait and the UAE have also been frustrated in their attempts to import gas from their neighbors. Some of this is politics. Neither country has good relations with Iran. A gas pipeline crossing the Gulf from Iran to the UAE sits unused because the two countries cannot agree on a price.

    Kuwait and Iraq are not on speaking terms. And Kuwait’s attempt to import gas from Qatar has been blocked by Saudi Arabia, which refused permission for a pipeline to cross its territorial waters.

    Meanwhile, in America, high gas prices led clever entrepreneurs to figure out a way to coax gas from reserves considered too costly and difficult to develop. Now American gas is cheap.

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    Ecopetrol announces 2017 investment plan

    -During 2017 Ecopetrol will invest approximately USD 3,500 million.

    -Nearly USD 2,850 million will be allocated to exploration and production. The planned investment in this segment doubles the amount budgeted for 2016, in line with the 2020 Business Plan.

    -Investment in exploration will be increased from USD 282 million in 2016 to USD 650 million in 2017.

    -The Ecopetrol Group will continue to produce an average of about 715 thousand barrels of oil equivalent per day during 2017. This production level lays the foundation for Ecopetrol's expected increase in production by 2020 of between 760 and 830 thousand barrels of oil equivalent per day, depending on international crude oil prices.

    Ecopetrol S.A. (BVC: ECOPETROL; NYSE: EC) reports that its Board of Directors has approved an investment plan for approximately USD 3,500 million for 2017.

    This plan addresses the goals set forth in the 2020 Business Plan, allocating more than 80% of investments to profitable exploration and production projects.

    Exploration and production projects will largely focus on developing key production assets and identifying Colombian onshore and offshore resources, maintaining our position in foreign assets.

    More than 95% of investments will be made in Colombia, with the remainder made abroad.

    The investments of the Ecopetrol Group are broken down by segment below:

    Image titleThe midstream and downstream segments will complete ongoing projects and required maintenance, ensuring reliable, efficient and safe operations.

    The funds required to finance the Ecopetrol S.A. investment plan will come from internal cash generation, with no need to incorporate additional net financing.

    Under this plan, the Ecopetrol Group will continue to demonstrate its commitment to ethics, clean and safe operations and stronger ties to communities. Our operations will continue to give priority to excellence in HSE, our ongoing promotion of employee satisfaction and our commitment to development by all of our employees and stakeholders. Innovation and knowledge generation will be levers for growth.

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    Colombia, FARC rebels to sign new peace deal on Thursday

    Colombia, FARC rebels to sign new peace deal on Thursday

    A new peace accord between Colombia's government and Marxist FARC rebels will be signed on Thursday and sent to Congress for approval, President Juan Manuel Santos said on Tuesday, bringing a formal end to the 52-year civil war ever closer.

    The revised document will be signed in Bogota between FARC leader Rodrigo Londono and Santos, who won the Nobel Peace Prize last month for his efforts to end the conflict with the insurgent group.

    "We have the unique opportunity to close this painful chapter in our history that has bereaved and afflicted millions of Colombians for half a century," the president said in a televised address.

    The government and the Revolutionary Armed Forces of Colombia (FARC) have been in talks in Havana, Cuba for the last four years, hammering out a deal to end a conflict that has killed more than 220,000 and displaced millions in the Andean country.

    The government published the revised peace deal last week in a bid to build support after the original draft was rejected in an Oct. 2 referendum amid objections it was too favorable to the rebels.

    Santos and Londono signed the original deal two months ago in an emotional ceremony before world leaders and United Nations Secretary General Ban Ki-moon.

    The decision to ratify the revised accord in Congress instead of holding another referendum will anger members of the opposition, particularly former President Alvaro Uribe who spearheaded the push to reject the original accord and wants deeper changes to the new version.

    "This new accord possibly won't satisfy everybody, but that's what happens in peace accords. There are always critical voices; it is understandable and respectable," said Santos, 65, warning another plebiscite could divide the nation and put in danger the bilaterial cease-fire.

    The expanded and highly technical 310-page document appears to make only small modifications to the original text, such as clarifying private property rights and detailing more fully how the rebels would be confined in rural areas for crimes committed during the war.

    Uribe has criticized it as just a slightly altered version of the original and wants rebel leaders to be banned from holding public office and for them to be jailed for crimes.

    The FARC, which began as a rebellion fighting rural poverty, has battled a dozen governments as well as right-wing paramilitary groups.

    An end to the war with the FARC is unlikely to end violence in Colombia as the lucrative cocaine business has given rise to dangerous criminal gangs and traffickers.
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    IMO Low sulphur decision:- 1month on.

    However, the study, performed by CE Delft, a group of consultants in the Netherlands, concluded that the global refining industry will be able to meet increased demand for middle distillates in the marine sector. With its decision, the IMO has now eliminated the uncertainty with respect to the timing of the implementation of the new sulphur regulations. However, question marks remain on the actual impact on the oil and tanker markets.

    Shipowners have two fundamental options on how to deal with the new emissions cap: (1) Burning low sulphur fuel (maximum 0.5% sulphur) or (2) installing Exhaust Gas Cleaning Systems (often called scrubbers), which will allow vessels to continue using high sulphur fuel oil. Existing engines can typically burn low sulphur fuel oil, either lighter gas oil or low sulphur heavy fuel oil, without significant modifications. The use of LNG is also an option but, since using this fuel will require significant modifications to existing vessels, including the installation of separate fuel tanks, LNG is only a viable option for newbuilding tonnage. At the moment, the lack of availability of LNG bunkering facilities worldwide is also a limiting factor, especially for ships involved in tramp shipping such as tankers.

    The sulphur cap creates an interesting dilemma for both ship owners and refiners. Shipowners have to decide whether to install scrubbers at an estimated cost of $3m to $6m, depending on the vessel size and design, or to burn higher cost low sulphur fuel. The payback period for a scrubber investment will be relatively short if the price differential between high sulphur and low sulphur fuel remains high or increases. The spread will be high if there is limited demand for heavy fuel oil (HFO), which happens if not many owners install scrubbers and/or refiners do not convert significant volumes of residual fuel oil into lower sulphur products.

    For refiners, a similar dynamic applies; they have to decide whether to modify their facilities to reduce residual fuel oil output, as the value of this commodity will drop when demand declines. Less sophisticated refineries could reduce the sulphur content in their output by increasing the use of low sulphur crude grades, but such crudes will likely increase in price.

    Currently, global residual fuel demand is about 7.3m barrels per day (Mb/d). The IEA estimated that, in 2014, marine bunker demand accounted for 43% (~3.3 Mb/d) of global residual fuel oil demand. In their market outlook published earlier this year, IEA forecasts that in 2020, about 2 Mb/d of marine HFO demand will convert to MGO.

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    Mexico Set to Receive a $2.9 Billion Windfall From Oil Hedges, IMF Says

    Mexico is set to earn about $2.9 billion from its oil hedges for 2016, reaping a windfall from plummeting crude prices for a second straight year, according to the International Monetary Fund.

    Mexico has spent an average of almost $1 billion a year over the past decade buying put options through deals with banks that have included Goldman Sachs Group Inc., Citigroup Inc., JPMorgan Chase & Co., according to government documents. The payout for 2016 will be about $2.9 billion, the IMF said in an e-mailed response to questions on Tuesday after completing its annual review of the nation’s economy.

    Mexico earned $6.4 billion from hedging in 2015, its biggest payout so far, and $5.1 billion in 2009, in the aftermath of the global financial crisis. Since it started shielding its exposure to crude prices through derivatives contracts in 1990, the Latin American country had never collected a gain two years in a row. The government spent $1.09 billion last year on put options allowing it to sell 2016 oil exports at $49 a barrel; that’s about 42 percent above the $34.43 average price for the nation’s crude mix over the past year.

    "It’s been a tool that has helped the economy to smooth the negative shock from lower oil prices," said Carlos Capistran, the chief Mexico economist at Bank of America Corp. "It has given the Finance Ministry breathing room to adjust other variables. It certainly has been a good tool."

    Mexico’s Finance Ministry declined to comment on the payout before the completion of the hedge, which runs through the end of this month.

    Mexico Set for 2016 Windfall From Sovereign Oil Price Hedge

    Despite Mexico’s hedging success, few other commodity-rich countries have followed suit. Ecuador hedged oil sales in 1993, but losses on the bets triggered a political storm and the nation hasn’t tried again. More recently, oil importers Morocco, Jamaica and Uruguay have bought protection against rising energy prices.

    Hedging is a financial strategy that involves buying or selling a commodity in advance in the expectation the price will be higher or lower, depending on the position, at the time the hedging entity has to take delivery or make delivery of the goods. Put options give the buyer the right, but not the obligation, to sell an underlying commodity when it reaches a specified price.
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    Unconventional wisdom, WoodMac

    How diverse can so-called Diversified Independents* remain? More capital is being allocated to tight oil, increasing their weighting to this resource hotspot. We use our benchmarking by investment, financials, value, production and reserves to understand the importance of tight oil in the next phase of portfolio development for this peer group.

    Get our exclusive benchmarking analysis — companies included: Anadarko, Apache, ConocoPhillips, Hess, Marathon, Murphy Oil, Noble Energy, Occidental Petroleum and Repsol.

    Outlook for
    Diversified Independents:
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    Pioneer denied request to reclassify oil wells

    The Railroad Commission of Texas last week denied Pioneer Natural Resources’ request to reclassify several oil wells as gas wells, citing concerns that the company was looking to take advantage of a tax exemption for gas wells.

    State regulations allow oil and gas operators to classify wells as oil-producing or gas-producing, based on their production ratios. But gas wells grant operators a decades-old tax credit, known as the high-cost gas credit, which was put in place to encourage natural gas production.

    But the request also opened a discussion on how the Railroad Commission, which regulates the oil and gas industry, classifies wells, specifically if it should add another category.

    Pioneer made the argument that several of its oil wells in the Eagleford basin should be reclassified as gas wells, a claim that the commission’s staff disputed. The company’s arguments included a claim that the presence of natural gas liquids in the wells makes them gas wells.

    During an October meeting, Paul Dubois, a technical examiner for the agency, told the commissioners that Pioneer had given them no proof that it would suffer if the wells retained an oil classification. But, Dubois pointed out, reclassifying them as as gas wells  “will get them a significant severance tax reduction.”

    Pioneer disputed Dubois analysis, arguing that the wells were clearly producing gas and the potential for tax breaks was not the company’s motive in seeking reclassification. .

    The commission ultimately denied Pioneer’s request during it’s Nov. 15 meeting, but Commission Ryan Sitton raised the issue of creating a third classification to cover natural gas condensate, or liquids. Natural gas liquids are considered valuable and useable, but regulators aren’t sure if it should be declared natural gas or oil.

    “The essential issue in this case is how we consider condensate,” said Sitton. “There is a a long record of saying it is not oil, but there is no precedent considering it gas.”

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    New infrastructure aims to increase takeaway capacity of natural gas from Utica region

    Image title

    Source: U.S. Energy Information Administration pipeline database
    Note: Proposed capacity shown on the graph reflects only the projects discussed in this article. Other proposed projects in the area are smaller or have not yet progressed through the approval process.

    A number of pipeline projects that have been approved, or are in various stages of the approval process, would increase capacity to transport natural gas from the Utica production region in Ohio to natural gas markets. Collectively, these projects could add up to 6.8 billion cubic feet per day (Bcf/d) of takeaway capacity out of the Utica region by the end of 2018.

    Over the past several years, natural gas production in the Appalachian basin from the Marcellus and Utica shaleshas grown significantly. Because pipeline projects often have longer lead times than production projects, transport infrastructure for accessing natural gas demand centers and export locations in the Appalachian Basin has not kept pace with production capability. This situation has resulted in a lower price for natural gas from the Appalachian region relative to many other natural gas trading hubs in the United States.

    Construction of a new interstate natural gas pipeline in the United States requires approval by the Federal Energy Regulatory Commission (FERC), which can be a lengthy process. Construction on a pipeline can begin once a final environmental impact statement is issued, pending that project receiving Clean Water Act, Coastal Zone Management Act, Clean Air Act, and other necessary state permits.

    Key projects that are undergoing FERC review and may enter service in the next few years include:

    The Rover pipeline, which recently received a final environmental impact statement from FERC, is designed to transport 3.25 Bcf/d of natural gas from the Marcellus and Utica Shale areas to various market hubs.  

    The Leach Xpress project, which received a draft environmental impact statement (DEIS) from FERC, seeks to add 1.5 Bcf/d of natural gas takeaway capacity along the Columbia Pipeline Group’s network.

    The Rayne Xpress project, which received a DEIS, will augment the Leach Xpress project.  The Rayne Xpress Project seeks to add 0.6 Bcf/d in takeaway capacity from the Columbia Pipeline system to Gulf Coast markets, which will help facilitate liquefied natural gas exports, among other uses.

    The Nexus Gas Transmission project, which received a DEIS from FERC in July 2016, is designed to deliver 1.5 Bcf/d of natural gas supplies from the Utica region to markets in northern Ohio, southeastern Michigan, the Chicago Hub in Illinois, and the Dawn Hub in Ontario, Canada.

    Source: U.S. Energy Information Administration

    More information about existing natural gas pipeline infrastructure is available in EIA's spreadsheet of State-to-State Capacity. Projects that are planned or under construction are listed in the Pipeline Projects spreadsheet.

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    Alternative Energy

    Chile regulator says purchase of SQM stake may require public share offer

    Chile's SVS securities regulator said on Tuesday that the eventual buyer of Oro Blanco's stake in Pampa Calichera must make a public offer to shareholders in fertilizer company SQM if the acquisition allows the purchaser to control SQM's board.

    An indirect stake in Chile's SQM , one of the world's biggest lithium and iodine suppliers, has been for sale since December when holding company Oro Blanco invited buyers to make an offer for its entire 88 percent interest in Pampa Calichera.

    Pampa Calichera in turn owns about 23 percent of SQM, also a major producer of potash and fertilizer chemicals.

    The SVS note came in response to a regulatory inquiry by Hong Kong's HK Scott Minerals Company, one of the firms interested in buying the stake.

    "Any person or entity that acquires a controlling stake in Pampa Calichera ... must launch a public share offer to SQM shareholders if the operation allows the buyer to elect enough SQM board members to control decision making," the securities regulator said.
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    Argentina biodiesel producers fear losing access to U.S. market

    Argentina's biodiesel producers fear losing access to the United States, the destination of nearly all their exports, after Donald Trump's surprise victory in presidential elections earlier this month, representatives of the sector said.

    The Republican candidate, who is skeptical of climate change and has advocated scrapping or renegotiating trade deals, has raised alarms in a sector already reeling from a series of setbacks in international trade in recent years.

    Argentina is one of the world's largest biodiesel exporters, and is home to processing plants belonging to multinational producers like Cargill Inc and Bunge Ltd.

    "The level of uncertainty is very high," said Claudio Molina, executive director of the Argentine Biofuel Association in a recent emailed statement. He said the sector was worried Trump might scrap policies meant to reduce the United States' contribution to climate change, affecting demand for biofuels.

    In 2005, the U.S. Environmental Protection Agency (EPA) implemented a policy requiring a minimum level of renewable fuels to be blended into transportation fuel.

    Trump has said he supports the program, known as the Renewable Fuel Standard (RFS).

    Argentine exports to the United States grew substantially after 2015, when the EPA made it easier for Argentine biofuel to qualify for the RFS.

    That filled a vacuum that had been left when the European Union (EU), then the South American country's largest export market, slapped anti-dumping tariffs on Argentine biodiesel in 2013.

    But Trump's promises to slap tariffs on imports and renegotiate trade deals have worried the Argentine sector, which would send more than 90 percent of its 1.5 million tonnes of biodiesel exports to the United States, according to Molina.

    "The outlook, keeping in mind what he said during the campaign, is not good," Gustavo Idigoras, director and specialist in international biofuels trade at consultancy Business Issue Management said on Friday. "These strong protectionist policies could have an unfavorable impact on biodiesel imports."

    Earlier this year, the World Trade Organization ruled in favor of and annulled the tariffs, but that may not mitigate any potential disruption to U.S. exports.

    "The process of revising the (EU) measure will take some time," Idigoras said. "Losing the U.S. market would thus be a nearly fatal blow."
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    EDF in talks on offshore wind partnership in China

    EDF in talks on offshore wind partnership in China

    The renewable energy unit of French state-owned utility EDF (EDF.PA) is in talks with Chinese companies about a possible partnership to build offshore wind parks in China, the company said.

    EDF CEO Jean-Bernard Levy said last year the firm wants to nearly double its renewable energy capacity worldwide to more than 50 gigawatts by 2030 from about 28 GW.

    EDF Energies Nouvelles (EDF EN) CEO Antoine Cahuzac told reporters on Tuesday that EDF will target areas with growing power needs like Latin America, China, India and sub-Saharan Africa.

    It will also focus on offshore wind, a new and growing industry in which EDF is still a minor player for now.

    "We've started discussions with some Chinese partners to see whether we will go into offshore wind in China," Cahuzac said.

    He said that given high power demand and urban density in southern China, offshore wind would make sense there.

    Cahuzac said EDF is the only European utility with a dedicated renewables unit in China following its July 2016 acquisition of UPC Asia Wind Management, which has over 1.3 GW under development, construction or operation in China.

    Including that deal, EDF EN now operates more than 10 GW in installed wind capacity globally.

    Compared to Dong Energy (DENERG.CO) of Denmark and Germany's E.ON (EONGn.DE), EDF is a newcomer in offshore. It operates the small 62 MW Teesside park in Britain, has a 9 percent stake in Belgium's 325 MW C-Power park and this summer launched construction of the 100 MW Blyth park in Britain.

    In 2012 it won a tender to build 1,500 MW on France's Atlantic coast, but due to red tape and legal recourse the turbines will not come online before 2021.

    "We have the capacity to operate in the offshore wind industry," Cahuzac said. EDF will start close to home but wants to develop internationally and China is one of its targets.

    Cahuzac said EDF EN is one of the world's top 10 wind developers and in the top five when excluding Chinese firms, who operate mainly domestically. He said EDF EN the top wind developer in North America in 2015.

    EDF typically develops its own wind parks, then sells stakes to investors, keeping about 50-60 percent ownership.

    He said its developments are mostly funded with project finance, unlike Italy's Enel (ENEI.MI), which uses more corporate funds to finance its developments.

    In recent years, EDF has spent 1.5-2 billion euros per year to develop renewables. Cahuzac said that EDF has a pipeline of about 12 gigawatt of projects in France, the United States, Latin America and other areas.
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    Dismissive of 2037 nuclear timeline in IRP base case, Eskom to release RFP by year-end

    State-owned power utility Eskom indicated on Tuesday that it planned to move ahead with a controversial request for proposals (RFP) for nuclear before the end of 2016, despite the base case in a draft Integrated Resource Plan (IRP) update indicating that the first reactor would only be required by 2037.

    Speaking at the long-awaited release of the draft IRP base case, head of generation Matshela Koko dismissed arguments that the base case lowered the urgency for the issuance of the nuclear tender.

    He also made a distinction between testing the nuclearmarket and actually signing a contract, noting that Eskomissued a Nuclear 1 enquiry in 2008, but had never actually contracted with either Areva or Westinghouse, the two vendors invited to participate, for any new reactors.

    Koko argued that Eskom, which was recently confirmed by Cabinet as the procurer, as well as the owner and operator, of any new nuclear capacity, needed to plan for a scenario of even tighter carbon constraints and for limits on how much new renewable energy could be added in a single year.

    Under this hand-picked scenario, which is one of many that will be debated ahead of the finalisation of the new IRP in the early part of 2017, Koko argued that the model showed that 1 359 MW of new nuclear would be required by 2025. For this reason, he insisted that Eskom could not delay in testing the market by going out on enquiry.

    “We need a ten-year lead time [to plan for nuclear],” he said.

    By contrast, the IRP base case, which includes the same self-imposed limits used in the IRP 2010 for how much renewables can be introduced in a single year, outlines the introduction of the first 1 359 MW of new nuclear only in 2037, climbing to a total of 20 385 MW in 2050.

    It also caters for the addition of 17 600 MW of new solar photovoltaic (PV) capacity between 2021 and 2050 and 37 400 MW of onshore wind over the same period.

    The South African Photovoltaic Industry Association (Sapvia) described the 17 600 MW for solar as a “step in the right direction”. However, it added that the allocation fell short of the immense potential South Africa had to offer in this sector. “Independent modelling, based on up-to-date figures from South Africa’s REIPPPP bidding rounds confirm that renewables are the best policy choice in order to meet South Africa’s energy needs at the least cost, while still maintaining our carbon obligations,” Sapvia said in a statement.

    New coal-fired capacity is limited to 15 000 MW and hydropower to 2 500 MW, while 13 332 MW and 21 960 MW have been allocated to open-cycle gas turbines and combined-cycle gas turbines respectively.

    Interestingly, no provision has been made for concentrated solar power, or CSP, a technology that is the subject of a dispute between Eskom and the developers of the 100 MW Redstone CSP project in the Northern Cape. The projects has been adjudicated and approved, but Eskom is refusing to sign off on a power purchase agreement, citing affordability concerns.


    However, Department of Energy deputy director-general for policy, planning and clean energy Ompi Aphane stressed that the figures changed materially from scenario to scenario and indicated that at least 12 scenarios would be tested before the IRP was finalised. One of these would include an option for “unconstrained renewables”, which could exclude, or at least diminish, the role of nuclear in South Africa’s future mix.

    In a recent study, the Council for Scientific and Industrial Research found that a future mix comprising 70% solar PV and wind and backed up by natural gas would be the cheapest for the South African power system. It argued, too, that this “re-optimised” mix would be almost R90-billion-a-year cheaper by 2040 than the business-as-usual scenario, which relies more on coal and nuclear.

    Energy commentator Johan van den Berg, who previously led the South African Wind Energy Association and who sits on the Ministerial Advisory Council on Energy, which has been critical of the inclusion of nuclear, said the IRP appeared “robust” in terms of the assumptions used.

    However, he stressed that these assumptions included that of major constraints on the deployment of renewable energy, which, if loosened, would materially alter the IRP.

    “The assumptions could have been more optimistic on renewables and we could have moved more towards an unconstrained base case, but I am confident that will get discussed,” Van den Berg said.

    Even given what was outlined in the base case, which was described as a “starting point”, he still expected a “high penetration” of renewables in the future mix, owing to the fact that costs were falling and the solutions could be added incrementally, rather than in large chunks.

    On moving ahead with a nuclear procurement in the absence of a final IRP Van den Berg quipped: “If you were even-handed, you would also plan for an unconstrained renewables future and you should put out similar [procurement] documentation for renewables by the end of the year.”
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    Precious Metals

    Randgold and Newcrest team up in the Ivory Coast

    Randgold announced on Friday it has committed to a joint venture with ASX-listed Newcrest Mining for the exploration and development of an “area of interest” in southeastern Cote d’Ivoire.

    According to the announcement: “Randgold will manage the exploration programme as well as any mines that it produces.  A technical committee of senior geologists from both companies will work closely with the Randgold exploration team and a joint venture board will oversee the exploration programme and any consequent development projects.”

    CEO Mark Bristow has spoken glowingly of the Ivory Coast over the last year or so citing the country’s sound infrastructure and mining regime as making it one of the most attractive countries in Africa to do business. This, together with the country’s relatively unexplored geology, means Randgold is devoting more resources to exploration there than any other country in which it operates.

    The announcement noted the area of interest “covers the extension of some of the more prolific Ghanaian gold belts and associated structures.”

    The creation of the joint venture seems to indicate Randgold anticipates the discovery of another world-class gold deposit in this area. Bristow has defined “world-class” as being a three million ounce deposit that yields a 20% return on based on a gold price of $1 000 an ounce.

    “The bigger the footprint, the greater the opportunity, and both Newcrest and Randgold believe in Côte d’Ivoire and the potential for the discovery of truly world-class gold deposits,” he said.
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    Base Metals

    Global refined copper surplus reaches 154,000 mt in August: ICSG

    The global refined copper market showed an apparent production surplus of around 154,000 mt in August, mainly due to weaker Chinese demand and seasonally weak usage in other regions, according to preliminary data released Monday by the International Copper Study Group.

    When making seasonal adjustments for world refined production and usage, August showed a production surplus of about 56,000 mt, the Lisbon-based research group said.

    For the January-August period, indications suggest a production deficit of around 91,000 mt, and a seasonally adjusted deficit of about 93,000 mt, according to the ICSG.

    That compares with a production surplus of around 10,000 mt (a seasonally adjusted surplus of about 19,000 mt) for the same eight-month period of 2015.

    World apparent refined usage in the first eight months is estimated to have increased by around 3.8% (570,000 mt) compared with the same period of 2015 mainly due to increases in China, the ICSG said.

    "Chinese apparent demand increased by around 7.5% compared with the same period of 2015 based on an 8% increase in net imports of refined copper," according to ICSG analysts.

    "However, July and August net refined copper imports at 176,000 mt and 175,000 mt, respectively, were the lowest since April 2013 and compares to a net monthly imports average of 312,000 mt in the first half of 2016," they said.

    Aggregated usage in the European Union, Japan and the US remained essentially unchanged over the eight-month period, the ICSG said.

    "On a regional basis, usage is estimated to have increased by 2.5% in Europe and 6% in Asia (when excluding China, Asia usage increased by 1.5%), while declining by 11% and 4.5% in Africa and in the Americas, respectively, and remaining essentially unchanged in Oceania.

    World mine production is estimated to have increased by around 5.8% (730,000 mt) in the first eight months of 2016 compared with production in the same period of 2015, according to the ICSG.

    Concentrate production increased by 7.5% while solvent extraction-electrowinning declined by 0.5%.

    "The increase in world mine production was mainly due to a 45% rise in Peruvian output that is benefitting from new and expanded capacity brought on stream in the last two years," ICSG analysts said.

    "A recovery in production levels in Canada and the United States, expanded capacity in Mexico and a ramp-up in production in Mongolia, also contributed to world growth."

    However, overall growth was partially offset by a 4% decline in production in Chile, the world's biggest copper mine producer, and a 7% decline in Democratic Republic of Congo, where output was constrained by temporary production cuts, the ICSG said.

    On a regional basis, production rose by 7% in the Americas, 9% in Asia and 7% in Oceania but declined by 4% in Africa while remaining essentially unchanged in Europe.

    The average world mine capacity utilization rate for the eight-month period of 2016 increased to 85% from 84% in the same period of 2015.

    World refined production is estimated to have increased by about 3.1% (470,000 mt) in the first eight months of 2016 compared with refined production in the same period of 2015: primary production was up by 2.5% and secondary production (from scrap) was up by 5.5%, the ICSG said.

    The main contributor to production growth was China (+7%), followed by the US (+14%) and Mexico (+19%), where expanded SX-EW capacity contributed to refined production growth.

    Output in Chile and Japan, the second and third leading refined copper producers, increased by around 2% and 3%, respectively, during the period, according to the ICSG. Refined production in the DRC and Zambia declined due to the impact of temporary production cuts.

    On a regional basis, refined output is estimated to have increase in the Americas (5%), Asia (6%) and Oceania (10%), while declining in Africa (-13%) and in Europe (-3%).

    The average world refinery capacity utilization rate for the first eight months of 2016 remains practically unchanged from that in the same period of 2015 at around 83%, according to the ICSG.
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    Indonesia to cut royalty for processed nickel to 2 pct -official

    Indonesia will cut the royalty charged on sales of processed and refined nickel to 2 percent, a mining ministry official said on Tuesday, part of a revision of government rules on non-tax revenue from the coal and minerals sector.

    The revision is needed to encourage more miners to develop smelters, said Coal and Minerals Director General Bambang Gatot, referring to a government drive to develop downstream industries and increase returns from Indonesia's mineral resources.

    The royalty, paid by miners to the government, is currently 4 percent of each sale.

    "If it's 4 percent it's as if it gives no incentive for processing and refining. It gives no stimulus to companies to (build smelters)," Gatot told parliament.

    The reduction in royalties may come as welcome news to investors in Indonesia's budding smelter industry, which include Vale Indonesia, China's Tsingshan, Eramet and state-owned miner Aneka Tambang (Antam). The sector has been rocked by recent uncertainties over the country's ban on unprocessed ore exports.

    The revised regulation is currently being checked by the law and human rights ministry, Gatot said, adding that royalties for other metals would also change under the new rules, but stopped short of saying when the new regulation would be released.

    "This is for miners like Vale," he said, referring to the Brazilian miner which is the top nickel producer in Indonesia.

    A royalty of 4 percent would still be charged against sales of nickel ore, Gatot said.

    Indonesia, where thousands of coal mines went out of business as commodity prices cratered, is confident of achieving its target of 30.11 trillion rupiah ($2.24 billion) non-tax revenue from mining this year, Gatot said last month.

    The world's top thermal coal exporter missed its 2015 non-tax revenue target by 43 percent.
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    German authorities approve Iluka’s acquisition of Sierra Rutile

    Australia-based mineral sands miner Iluka’s £215-million acquisition of London-listed Sierra Rutile is back on track after the German competition authorities approved the transaction.

    The German Antirust Authority last month referred the merger for a phase 2 review, which could have lasted up to three months. However, Iluka announced on Tuesday that the competition body had approved the merger, paving the way for the transaction to close before the end of next week.

    The merger has already gained Sierra Rutile shareholder approval.

    The acquisition of Sierra Rutile will enhance Iluka's rutile portfolio position and sits alongside its existing position as the largest global zircon producer.

    Iluka’s stock gained 3.30% on the ASX on Tuesday to trade at A$6.26 a share.
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    Steel, Iron Ore and Coal

    Hebei finishes 2016 coal and steel capacity cut goals

    Hebei province, the biggest steelmaking province in northern China, had eliminated 14.62 million tonnes per annum (Mtpa) of steel capacity by the end of October, achieving this year's target of 14.22 Mtpa ahead of schedule, Xinhua news reported on November 21.

    Hebei, a northern province near the country's capital, is responsible for nearly a quarter of China's total steel output and has pledged to cut steel capacity by 31.17 Mtpa by 2017 and by 49.13 Mtpa by 2020.

    Earlier this year, the province lifted its capacity cutting goals for this year to 14.22 Mtpa from 8.2 Mtpa in steelmaking, and to 17.26 Mtpa from 10.39 Mtpa in ironmaking.

    Hebei had shed 15.79 Mtpa of ironmaking capacity by October, 91.48% of its target for 2016.

    The province had completed its coal capacity cut goal ahead of schedule, by reducing 14 Mtpa at 54 mines by October.

    It planned to shut 141 coal mines in the next three to five years, cutting 75.63 Mtpa of capacity. By 2020, the number of coal mines is expected to be below 60, with capacity combined at some 50 Mtpa.

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    China's coastal coal freight falls on lower demand from power plants

    Freight rates for shipping coal from northern China's Qinhuangdao port to the ports of Zhangjiagang, Shanghai and Guangzhou in the east and south fell in the week ended November 22, the port operator said Tuesday.

    The freight rate from Qinhuangdao to Zhangjiagang in eastern China's Jiangsu province for 20,000-30,000 mt vessels dropped to Yuan 48/mt ($6.96/mt) on November 22, down Yuan 6.80/mt week on week, the Qinhuangdao port operator said.

    The rate from Qinhuangdao to Shanghai for vessels with a capacity of 40,000-50,000 mt fell by Yuan 11.10/mt week on week to Yuan 36.50/mt.

    The rate from Qinhuangdao to Guangzhou in southern China for 50,000-60,000 mt vessels dropped Yuan 6.60/mt week on week to Yuan 50.60/mt on November 22.

    Less coal buying activity by downstream power generators was the reason for the fall in coastal coal freight, the report said.

    Meanwhile, coal stocks at Qinhuangdao port stood at 6.58 million mt on November 22, up from 6.08 million mt on November 15, port figures showed.

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    Shanxi coking coal to ink term contracts with leading steel makers

    Shanxi coking coal group China's top producer of the key steel making ingredient will sign mid to long term contracts with a group if six steelmakers including Baosteel ans Angang Group this afternoon.

    This will be the first time term contracts have been signed for coking coal, following an industry meeting on November 12th.

    It was not clear what terms for pricing and volume would be signed.
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    Iron ore price nudges $75

    Volatility in the iron ore price continued on Tuesday as traders digested the latest news out of China.

    On the Dalian Commodities Exchange iron ore futures climbed 6%, while the import spot price for 62% Fe content ore at the port of Tianjin closed up 6.5% to US$74.90 a tonne, reversing declines seen in the last two trading sessions.

    A frenzied month of trading and the election of Donald Trump pushed the spot price to a two-year high on November 10, and it continued to climb to $80 a day later. That was followed by a 9% drop on the 15th, with the price settling a week ago at $72.20.

    Chinese authorities recently upped trading fees and margin requirements to cool down the credit-fuelled speculation in iron ore, met coal and rebar. The steelmaking ingredient is up 72.1% year to date.

    The fresh gains are down to strength in Chinese steel prices following further production cuts in the Northern China city of Tangshan, a major producer of Chinese steel, according to analysts at Metal Bulletin.

    “The city has imposed restrictions on the production of coke, iron and steel in a bid to improve air quality in the region,” the group said, adding the restrictions will be in place for the next four months. “News of steel and coke production restrictions in Tangshan gave ferrous futures an upward push, sending the rebar contract to its daily limit of 2,900 yuan ($421) per tonne,” said Metal Bulletin.

    The move up could also be a result of a bullish commodity report by influential bank Goldman Sachs.

    The bank today raised its 3-month iron ore price forecast to $65, and 6 and 12-month predictions to $63 and $55, respectively, per tonne.

    “Steel consumption is more resilient than expected and demand for iron ore is likely to be supported further by incremental restocking across the steel supply chain,” said Goldman. “Further, the pace of supply growth has slowed as a result of delayed capital expenditure and operational challenges.”
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    Brazil says China, Russia dumping steel; holds fire on tariffs

    Brazil's International Trade Secretariat characterized exports of hot rolled steel from China and Russia as "dumping" in an announcement in the Official Gazette on Tuesday but requested more information before raising tariffs.

    "A preliminary judgment has determined in the affirmative in regards to dumping," the entry read, adding the secretariat's decision was to hold off on taking any immediate action.

    The investigation was opened in July at the request of Brazilian steel companies CSN and Gerdau SA as well as the Brazil subsidiary of ArcelorMittal .

    The companies complained that cheap steel imports were unfairly eating into the domestic market when steelmakers in Latin America's largest economy are struggling due to a deep recession.
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    China, Brazil should work together on steel overcapacity: MOC

    China and Brazil should work together to address steel sector overcapacity, as protectionism only compounds the situation, China's Ministry of Commerce (MOC) said Tuesday, after Brazil launched probes into Chinese steel products.

    "The Chinese government has always held that trade remedies should be used in a cautious and restrained manner, and encouraged its businesses to solve trade frictions through trade, investment and technological cooperation with their foreign counterparts," said Wang Hejun, head of the MOC trade remedy and investigation bureau.

    Protectionism will do no good in overcoming difficulties in the global economy and steel sector. On the contrary, it will hinder normal trade, Wang said.

    The two emerging economies are closely-related in the steel sector as Brazil boasts vast iron ore deposits, and China is the largest steel producer in the world.

    Wang's remarks came after Brazil announced Monday its first anti-subsidy investigations into hot rolled steel plate from China. Chinese steel products saw 14 anti-dumping probes from the Brazilian government in the past five years, with most cases ending in restrictive measures.

    But Chinese steel accounts for less than two percent of the Brazilian market, according to Wang.

    Plagued by excess production, the global steel sector has seen more trade disputes in recent years, with Chinese companies suffering the most.

    China is calling for unity in tackling severe overcapacity, and has achieved remarkable progress in downsizing its domestic steel industry.

    The country has reduced more than 90 million tons of excess capacity during the past five years, and the government plans to slash more by 2020.
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    Top China steel city orders more plant closures in pollution fight

    China's top steelmaking city has ordered many of its industrial factories to curb production or even close for as long as four months through to March in a bid to clear the skies of smog.

    Tangshan, a city in northern Hebei province, will seek to reduce steel production by requiring producers to cut emissions by as much as 50 percent from Nov. 15 to Dec. 31, according to a document published in the official Tangshan government newspaper late on Monday.

    Steel plants with sinter facilities - those that process smaller particles of iron ore into lumps - that do not have desulfurization equipment are required to partially shut during the period, the document said.

    The curbs may only have a limited impact on steel output from Tangshan since blast furnaces, or the big machines used to make steel, "are basically not impacted," said Richard Lu, analyst at CRU consultancy.

    "That is actually not new to the steel industry there as the Tangshan government has implemented the same measures several times this year," said Lu.

    Tangshan accounts for about half of the steel output in Hebei where nearly a quarter of China's total steel is made.

    The city will also close all cement plants and coal-fired power plants that did not reach the minimum emission standards for four months from Nov. 15.

    Coke production furnaces will be required to extend their production period to 36 hours before the new year. After Jan. 1, the production period will be further extended to 48 hours if the emission standard is still not met.

    Tangshan will also limit the times vehicles can drive in the city between Nov. 23 and March 15.

    "The pollution-related mandates are now increasingly used by local government in northern cities as a key way to fight smog," said a coal analyst with a Shanghai-based securities firm who declined to be named because he was not authorised to speak to media.

    The latest restrictions in Tangshan may further curb supply of coke, he said. "Coke inventory is very low because of weather factors, transportation difficulties and tight coking coal supply," he added.

    On Monday, about half a dozen listed Chinese companies, mainly in the pharmaceutical sector, temporarily halted production in China's northern city of Shijiazhuang as part of an anti-pollution drive.

    China has adopted various measures over the years to reduce the smog that covers many of the country's northern cities in the winter, causing hazardous traffic conditions and disrupting daily life.

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