Mark Latham Commodity Equity Intelligence Service

Friday 18th November 2016
Background Stories on www.commodityintelligence.com

News and Views:

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    Macro

    China: Smog awful!

    In response to continuous fog and haze, on the 17th night, Shijiazhuang municipal government issued a series of emergency measures, from November 17, 2016 to December 31, 2016, the main city of the implementation of motor vehicle odd and even number lines, steel and other major industries 7 all discontinued, commuting time each unit fault.

    Since mid-September this year, Shijiazhuang City, multiple consecutive heavy pollution weather, 74 major cities in the country ranking continued retrogression of the annual PM2.5 concentrations decreased by 10% of the task extremely difficult. Shijiazhuang city government decided that from now to the end of the use of only 45 days, the city to carry out a sword to cut air pollution control pollution action.

    According to the latest introduction of the "Shijiazhuang Municipal People's Government on carrying out a sword to cut pollution action plan", from November 17, 2016 to December 31, 2016, the Shijiazhuang-fired power plants will be the implementation of "Heat-power" to maximize reducing fired power generation capacity; in addition to undertaking residents heating and livelihood security and other key tasks of the production line, all the city's iron and steel, cement, coke, foundry, glass, ceramics, calcium and magnesium and other seven major industries all shut down; the city's pharmaceutical, chemical, packaging printing, furniture and other industries to implement inventory management, in principle, all volatile organic production processes all the cut, special circumstances can not be fully discontinued, must be reported to the municipal government approved limiting the production of emission reductions.

    Meanwhile, non-residents to assume the task of central heating and 20 tons of steam coal-fired industrial boilers, greenhouses, nurseries, greenhouses livestock production facilities did not use clean fuel fired facilities will be discontinued; all involving gas not stable discharge standards enterprises will be shut down, non-residential coal-fired facilities will be disabled; without government approval, the main city and county built-up areas will be prohibited from building demolition, road excavation, earthwork and concrete mixing, spraying, welding, cutting, etc. have dust and toxic construction jobs harmful gas emissions; all the city's open-air mining, sand mining, stone processing, and aggregate processing industries all downtime.

    During this period, the main city of Shijiazhuang odd and even numbers will be implemented vehicle limit line, the limit line during the free city bus ride. After being submitted to the provincial government approval, Shijiazhuang city all administrative authorities and institutions to implement "nine to five" commuting system at fault.

    Shijiazhuang municipal government Du Chashi to deploy specialized personnel to the county (city), district, and municipal departments in the county (city), the Working Group IMPLEMENTATION uninterrupted area supervision and inspection, focusing on a dark night and assault investigation unannounced visits to check highlighting issues identified will be made public, and serious accountability.


    This article mysteel editing, for use, please contact 021-26093490 application for authorization. Without permission reprint, link, reprint or otherwise use, mysteel right to further pursue legal responsibilities reserved.



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    China tries carrots as local governments resist reforms


    China will offer preferential treatment, including subsidies, to regions that outperform in areas such as fixed asset investment growth and entrepreneurship, the State Council said on Thursday.

    China will direct more projects and funds to local governments that show clear progress in developing new industries, promoting job growth and with high participation by private investors in joint investment projects, the notice said.

    Central government officials have cited weak implementation of reforms and new policies at the local level as a reason for weaker economic performance, including record low private sector investment growth this year.

    Factors hindering policy implementation include an ongoing corruption campaign that has made many officials nervous about standing out from the crowd, including by taking the lead on new economic reforms, as well as local protectionism.

    The carrots offered to local governments also cover steel and coal capacity reduction targets, controlling financial risks, improvements to the business environment and upgrades to the industrial sector.

    Government departments must deliver specific details of rewards and incentives to the State Council, China's Cabinet, by Nov. 30, and the new policy will go into effect in 2017.

    http://www.reuters.com/article/us-china-economy-reform-idUSKBN13C145

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    U.S. panel urges ban on China state firms buying U.S. companies


    U.S. lawmakers should take action to ban China's state-owned firms from acquiring U.S. companies, a congressional panel charged with monitoring security and trade links between Washington and Beijing said on Wednesday.

    In its annual report to Congress, the U.S.-China Economic and Security Review Commission said the Chinese Communist Party has used state-backed enterprises as the primary economic tool to advance and achieve its national security objectives.

    The report recommended Congress prohibit U.S. acquisitions by such entities by changing the mandate of CFIUS, the U.S. government body that conducts security reviews of proposed acquisitions by foreign firms.

    "The Commission recommends Congress amend the statute authorizing the Committee on Foreign Investment in the United States (CFIUS) to bar Chinese state-owned enterprises from acquiring or otherwise gaining effective control of U.S. companies," the report said.

    CFIUS, led by the U.S. Treasury and with representatives from eight other agencies, including the departments of Defense, State and Homeland Security, now has veto power over acquisitions from foreign private and state-controlled firms if it finds that a deal would threaten U.S. national security or critical infrastructure.

    If enacted, the panel's recommendation would essentially create a blanket ban on U.S. purchases by Chinese state-owned enterprises.

    The panel's report is purely advisory, but could carry extra weight this year because they come as President-elect Donald Trump's transition team is formulating its trade and foreign policy agenda and vetting candidates for key economic and security positions.

    Congress also could be more receptive, after U.S. voter sentiment against job losses to China and Mexico helped Republicans retain control of both the House and the Senate in last week's election.

    Trump strongly criticized China throughout the U.S. election campaign, grabbing headlines with his pledges to slap 45 percent tariffs on imported Chinese goods and to label the country a currency manipulator on his first day in office.

    "Chinese state owned enterprises are arms of the Chinese state," Dennis Shea, chairman of the U.S.-China Economic and Security Review Commission, told a news conference.

    "We don't want the U.S. government purchasing companies in the United States, why would we want the Chinese Communist government purchasing companies in the United States?"

    The recommendation to change laws governing CFIUS was one of 20 proposals the panel made to Congress. On the military side, it called for a government investigation into how far outsourcing to China has weakened the U.S. defense industry.

    The 16-year-old panel also said Congress should pass legislation that would require its pre-approval of any move by the U.S. Commerce Department to declare China a "market economy" and limit anti-dumping tariffs against the country.

    The United States and U.S. businesses attracted a record $64.5 billion worth of deals involving buyers from mainland China this year, more than any other country targeted by Chinese buyers, according to Thomson Reuters data.

    The push into the United States is part of a global overseas buying spree by Chinese companies that this year has seen a record $200 billion worth of deals, nearly double last year's tally.

    CFIUS has shown a higher degree of activism against Chinese buyers this year, catching some by surprise. Prominent deals that fell victim to CFIUS include Tsinghua Holdings' $3.8 billion investment in Western Digital (WDC.O).

    Overall, data do not demonstrate CFIUS has been a significant obstacle for Chinese investment in the United States. In 2014, the latest year for which data is available, China topped the list of foreign countries in CFIUS review with 24 deals reviewed out of more than 100 scrutinized by CFIUS.

    Although the number of Chinese transactions reviewed rose in absolute terms, it fell as a share of overall Chinese acquisitions, the report noted, and the vast majority of deals reviewed by CFIUS were cleared.

    http://www.reuters.com/article/us-usa-china-idUSKBN13B1WO

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    U.S. Housing Starts Jump 25.5% in October

    U.S. Housing Starts Jump 25.5% in October

    Both housing starts and permits for new construction rose in October, a sign residential construction is ramping up to meet steady demand.

    Housing starts rose 25.5% in October to an annual rate of 1.323 million, the Commerce Department said Thursday, as multifamily housing starts came back with a vengeance.

    Single-family starts also continued to climb, reaching a rate of 869,000.

    Starts in structures with five or more units, such as condos or apartment buildings, posted a 74.5% gain to hit a rate of 445,000 in October.

    Building permits issued for privately owned housing units rose 0.3% in October from the prior month to a seasonally adjusted annual rate of 1.229 million.

    Permits for single-family homes, about 60% of all permits, rose 2.7% to a rate of 762,000.

    Economists surveyed by The Wall Street Journal had expected overall October permits to fall to a 1.20 million annual rate and starts to rise to a 1.15 million pace. Construction typically begins a month or two after a permit is issued.

    Monthly housing figures are often choppy and can be subject to large revisions. September permits were unrevised at 1.225 million. September starts were revised up slightly to 1.054 million from 1.047 million.

    October’s permits figure, based on a survey of local governments, had a margin of error of 2.0 percentage points. Last month’s starts number, based on a survey of builders and homeowners, came with a margin of error of 12.6 percentage points.

    Through the first 10 months of the year, permits were up just 0.7% compared with the same period in 2015, reflecting a drop in permits for buildings with five or more units that nearly erased gains for single-family permits.

    Starts were up 5.9% through October, again led by gains in the single-family sector.

    http://www.wsj.com/articles/u-s-housing-starts-rose-in-october-1479389564
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    Glencore Third Quarter 2016 Production Report Production highlights


     Year-to-date production was in line with expectations, reflecting the various operational suspensions / supply reductions announced and actioned notably in coal, oil, copper and zinc.

     Own-sourced copper production of 1,061,200 tonnes was 6% down on the comparable period, due to the curtailment of African Copper volumes, partly offset by higher grades and throughput in South America.

     Own-sourced zinc production of 789,200 tonnes was 30% down on the comparable period, reflecting the volume reductions that were implemented across our portfolio, principally in Australia and Peru.

      Own-sourced nickel production of 82,400 tonnes was 20% higher than in the comparable period, mainly as a result of major maintenance at the Sudbury smelter in 2015.

     Coal production of 91.9 million tonnes was 11% down on the comparable period, due to the divestment of Optimum Coal, scheduled closures of various depleted mines in South Africa and adverse weather conditions in Colombia.

     Glencore’s share of oil production was 6.0 million barrels, 25% down on the comparable period, reflecting natural depletion of the existing fields. Replacement volumes have yet to be drilled as the resource is being preserved for a stronger oil price environment.

     Full year 2016 Marketing EBIT guidance is $2.5 to $2.7 billion.  Full year 2016 production guidance is detailed on page 19.

     Glencore will host an investor update call on 1 December 2016 at 1300 (UK). Further details will be provided on our website closer to the date.

    More info:
    http://www.glencore.com/assets/investors/doc/reports_and_results/2016/GLEN-2016-Q3-ProductionReport-.pdf

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    Oil and Gas

    Saudi energy minister urges OPEC to cut oil output to 32.5 million bpd


    Saudi Energy Minister Khalid al-Falih said on Thursday that OPEC should cut oil output to 32.5 million barrels per day (bpd), the lower end of a previously agreed range, to balance the market.

    Falih, speaking to Saudi-owned Al-Arabiya TV, said he was optimistic that the Organization of the Petroleum Exporting Countries would formalize a preliminary oil output deal reached in Algeria in September.

    He said the oil market was on a path toward becoming balanced and that "reaching (a decision) to activate that ceiling of 32.5 million bpd will speed up the (market) recovery and will benefit producers and consumers".

    OPEC agreed in Algeria on Sept. 28 to limit supply with special conditions given to Libya, Nigeria and Iran, whose output has been hit by wars and sanctions. The details are meant to be finalised when OPEC ministers meet in Vienna on Nov. 30.

    Falih and other ministers have said previously that OPEC would reduce output to a range of 32.5-33.0 million bpd.

    "I'm still optimistic that the consensus reached in Algeria for capping production will translate, God willing, into caps on states' levels and fair and balanced cuts among countries," Falih said.

    He said talks were ongoing with Qatar's Energy Minister Mohammed al-Sada, who had invited him to Qatar to continue discussions.

    A number of OPEC energy ministers are likely to meet informally in Doha on Friday to try to build consensus over decisions taken by the full group in September in Algiers.

    Russia is ready to support OPEC's decision on an output freeze and sees a good chance that the oil producer group can agree terms by Nov. 30, Russian Energy Minister Alexander Novak said on Wednesday.

    Falih told Al-Arabiya that he hoped an agreement with Russia to cooperate on market stability would correspond with OPEC's meeting on Nov. 30 in Vienna.

    http://www.reuters.com/article/us-opec-saudi-idUSKBN13C15K
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    Iraq's oil contracts make joining OPEC output cut more painful


    Iraq would have to compensate international oil companies for limits placed on their production, according to industry sources and documents seen by Reuters, further reducing the prospect it will join any OPEC deal to curb the group's output.

    The compensation - stipulated in contracts - would compound the financial hit of losing much-needed revenue from crude sales, if the cash-strapped country were to yield to OPEC entreaties to curtail national production.

    OPEC member Iraq pays developers a fixed dollar-denominated fee for every barrel of oil produced in the south of the country - home to its biggest reserves - under technical service contracts agreed between the international firms and the state-owned South Oil Company (SOC).

    "Immediately after (an) SOC notice of ... production curtailment, the parties shall agree ... a mechanism to promptly fully compensate (the) contractor as soon as possible," according to an excerpt of the contract the ministry signed with BP in 2009 for the company to develop the 20-billion-barrel Rumaila field.

    The compensation, according to the excerpt seen by Reuters, "may include, amongst other things, a revised field production schedule or an extension to the term or payment of all or part lost income to contractor".

    The same clause also applies to other fields covered by the technical service contracts in the south, including fields being developed by Anglo-Dutch firm Shell, U.S. major Exxon Mobil and Italy's Eni, according to industry sources.

    A Shell spokeswoman said it did not comment on contracts. Exxon and Eni did not immediately reply to requests for comment.

    A senior oil official with SOC told Reuters the country would not have to worry about curtailment clauses because it had no plans to limit production.

    "On the contrary, we're encouraging the foreign companies to raise production as much as they can," said the official, who declined to be named as they are not authorized to speak publicly.

    'EVERY DOLLAR NEEDED'

    The Organization of the Petroleum Exporting Countries agreed in Algiers in late September to limit its collective output to 32.5-33 million barrels per day (bpd). The group's production hit a record 33.64 million bpd in October.

    Iraq has asked to be exempted from output curbs, arguing it is still trying to regain market share lost when sanctions were imposed in the 1990s during the Saddam Hussein era, and that it needs to keep up a costly battle against Islamic State.

    "OPEC must submit to the fact that Iraq must stay away from any possible output cut deal because the country is in the middle of a tough war and every single dollar is needed to keep it standing on its feet," a senior government official close to Prime Minister Haider al-Abadi told Reuters.

    Iraq put its output at 4.77 million bpd in October and said it would not go back to below 4.7 million bpd.

    "Not for OPEC, not for anybody else," said Falah al-Amri, Iraq's OPEC governor and head of the country's state marketer SOMO.

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    There is, however, no certainty over how the discussions will play out at an OPEC meeting on Nov. 30.

    As a consequence, the Iraqi oil ministry and oil companies will not be able to finalize their 2017 spending plans until after the meeting, to have enough clarity on what route Iraq will take on its near-term production ambitions, an industry source told Reuters.

    Iraq has been making great efforts to ensure it pays its dues to oil firms promptly and oil minister Jabar Ali al-Luaibi has made boosting production in the country a priority.

    "[Iraq] is one of the countries in the region that doesn't have large foreign reserves, so will want to continue to maximize its revenue," said Jessica Brewer, Middle East upstream oil analyst at UK-based consultancy Wood Mackenzie.

    She added that while most Middle Eastern OPEC members had all or most of their production operated by national oil companies, Iraq was one of the few that relied on international oil companies for the majority of its output.

    Iraq would have to compensate international oil companies for limits placed on their production, according to industry sources and documents seen by Reuters, further reducing the prospect it will join any OPEC deal to curb the group's output.

    The compensation - stipulated in contracts - would compound the financial hit of losing much-needed revenue from crude sales, if the cash-strapped country were to yield to OPEC entreaties to curtail national production.

    OPEC member Iraq pays developers a fixed dollar-denominated fee for every barrel of oil produced in the south of the country - home to its biggest reserves - under technical service contracts agreed between the international firms and the state-owned South Oil Company (SOC).

    "Immediately after (an) SOC notice of ... production curtailment, the parties shall agree ... a mechanism to promptly fully compensate (the) contractor as soon as possible," according to an excerpt of the contract the ministry signed with BP in 2009 for the company to develop the 20-billion-barrel Rumaila field.

    The compensation, according to the excerpt seen by Reuters, "may include, amongst other things, a revised field production schedule or an extension to the term or payment of all or part lost income to contractor".

    Britain's BP declined to comment.

    The same clause also applies to other fields covered by the technical service contracts in the south, including fields being developed by Anglo-Dutch firm Shell, U.S. major Exxon Mobil and Italy's Eni, according to industry sources.

    A Shell spokeswoman said it did not comment on contracts. Exxon and Eni did not immediately reply to requests for comment.

    A senior oil official with SOC told Reuters the country would not have to worry about curtailment clauses because it had no plans to limit production.

    "On the contrary, we're encouraging the foreign companies to raise production as much as they can," said the official, who declined to be named as they are not authorized to speak publicly.

    'EVERY DOLLAR NEEDED'

    The Organization of the Petroleum Exporting Countries agreed in Algiers in late September to limit its collective output to 32.5-33 million barrels per day (bpd). The group's production hit a record 33.64 million bpd in October.

    Iraq has asked to be exempted from output curbs, arguing it is still trying to regain market share lost when sanctions were imposed in the 1990s during the Saddam Hussein era, and that it needs to keep up a costly battle against Islamic State.

    "OPEC must submit to the fact that Iraq must stay away from any possible output cut deal because the country is in the middle of a tough war and every single dollar is needed to keep it standing on its feet," a senior government official close to Prime Minister Haider al-Abadi told Reuters.

    Iraq put its output at 4.77 million bpd in October and said it would not go back to below 4.7 million bpd.

    "Not for OPEC, not for anybody else," said Falah al-Amri, Iraq's OPEC governor and head of the country's state marketer SOMO.

    There is, however, no certainty over how the discussions will play out at an OPEC meeting on Nov. 30.

    As a consequence, the Iraqi oil ministry and oil companies will not be able to finalize their 2017 spending plans until after the meeting, to have enough clarity on what route Iraq will take on its near-term production ambitions, an industry source told Reuters.

    Iraq has been making great efforts to ensure it pays its dues to oil firms promptly and oil minister Jabar Ali al-Luaibi has made boosting production in the country a priority.

    "[Iraq] is one of the countries in the region that doesn't have large foreign reserves, so will want to continue to maximize its revenue," said Jessica Brewer, Middle East upstream oil analyst at UK-based consultancy Wood Mackenzie.

    She added that while most Middle Eastern OPEC members had all or most of their production operated by national oil companies, Iraq was one of the few that relied on international oil companies for the majority of its output.

    http://uk.reuters.com/article/us-iraq-opec-oil-idUKKBN13D0MG

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    Iran Oil Boom Hangs in Balance as Investors Weigh Trump Risk


    Iran’s resurgent oil industry has confounded skeptics. Production is up by almost a third since sanctions were eased in January and foreign companies are lining up to help boost output further. Yet Donald Trump’s victory in the U.S. casts doubt on whether the momentum can last.

    “The risk is heightened for future projects,” said Robin Mills, who founded Dubai-based consultants Qamar Energy and worked for Royal Dutch Shell Plc in Iran. “It’s gotten more complicated."

    The U.S. president-elect has vowed to tear apart the international nuclear deal with Iran that unlocked the country’s oil exports this year. Such a move could obstruct its plans to pump a further 800,000 barrels a day with $100 billion of foreign investment. The oil market has been counting on Iran as a key new source of supply, and the current uncertainty may see investors step back.

    "International oil companies are likely to adopt a wait-and-see position on Iran until it becomes clear what Trump does," said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University and a former official in the Obama administration.

    No one knows exactly how Trump’s bombastic rhetoric will transform into government policy. Since his surprise election last week, the billionaire real-estate developer has toned down some of his most contentious campaign promises, including building a wall along the Mexican border and prosecuting presidential rival Hillary Clinton.

    Oil companies will take more time to see what direction Trump takes, according to three executives with knowledge of the situation, who asked not to be identified as their deliberations aren’t public. Even before Trump’s win, progress on Iran’s new oil-contract terms had been slow, and producers are still awaiting full details of the tendering process for fields, the officials said.

    Read more: a QuickTake on Iran’s nuclear accord following Trump’s victory

    Iran’s re-emergence into the global economy goes beyond oil. Jetliner maker Boeing Co. this year won a license to sell planes to Tehran for the first time since 1977. The government also has urged European banks to return to the country. Following last year’s agreement with world powers, Iran has held up its side of the bargain by limiting nuclear development, the International Atomic Energy Agency said last week.

    Regardless, Trump has said his “No. 1 priority is to dismantle the disastrous deal with Iran” that President Barack Obama implemented along with the leaders of China, France, Russia, the U.K. and Germany.

    “Trump will be more negative on Iran and more aggressive toward the country,” said Olivier Jakob, managing director of Zug, Switzerland-based Petromatrix GmbH.

    European Stance

    Iranian President Hassan Rouhani has said Trump won’t be able to undo the international deal on his own. Even if the U.S. reimposes sanctions, countries in Europe are unlikely to support renewed curbs. Iranian officials have dismissed some of Trump’s comments as campaign-trail hyperbole.

    “We expect to see more rationality on positions taken by Trump after he becomes president,” Peyman Ghorbani, vice governor for economic affairs at Iran’s central bank, said in an interview in Frankfurt on Wednesday.

    Among investors, Norway’s DNO ASA has signed an accord this week to study development of the Changuleh oil field, saying Iran presents an “obvious” next step in expanding its footprint in the region.

    France’s Total SA had already said it’s still committed to a preliminary agreement to help develop the South Pars gas field, adding that it won’t “do anything breaching international regulations.” In 2008 the company postponed investment in South Pars citing Iran’s strained relations with the West.

    The uncertainty surrounding future investment is heightened by efforts among members of the Organization of Petroleum Exporting Countries to cut the group’s production. Iran, OPEC’s third-largest producer, remains at odds with de facto leader Saudi Arabia, which is pushing its regional rival to accept an output cap.

    Iran has the world’s biggest gas deposits and fourth-largest crude reserves. As well as Total, other European companies including Shell, Eni SpA, Statoil ASA and Repsol SA worked in the country until sanctions forced them to pull out by 2009.

    http://www.bloomberg.com/news/articles/2016-11-16/iran-s-oil-boom-hangs-in-balance-as-investors-weigh-trump-threat
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    Iran beats Saudi Arabia in India


    IRAN OVERTAKES SAUDI ARABIA AS INDIA'S BIGGEST #OIL SUPPLIER IN OCTOBER -SHIPPING DATA

    @EnergyBasis
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    Tesoro to Buy Western Refining in $4.1 Billion Deal


    Oil refiner Tesoro Corp. agreed to buy Western Refining Inc. for about $4.1 billion, creating a company that will account for about 6 percent of U.S. crude-processing capacity.

    Tesoro will acquire Western Refining at an implied price of $37.30 a share, a 22 percent premium to Wednesday’s closing price, the companies said in a joint statement Thursday. The transaction is expected to close in the first half of 2017, subject to regulatory and shareholder approvals.

    The takeover comes as U.S. independent refiners brace for lower margins after two years of strong profits. The benchmark U.S. refining margin has fallen to about $11.81 a barrel from a peak of more than $30 in early 2015, while government-mandated biofuel credits will cost more than $2 billion this year and more in 2017. Billionaire investor Carl Icahn, who controls CVR Refining LP, has warned of a 2008-style financial crisis in the sector.

    We’re at the bottom of the refining cycle so valuations are low,” Gurpal Dosanjh, an analyst for Bloomberg Intelligence, said by phone Thursday. “This is the best time to be buying companies.”

    The combined companies will deliver $350 million to $425 million of annual cost savings within two years. They will have a refining system with over 1.1 million barrels a day of capacity, according to the statement.

    The deal “extends our portfolio into attractive and growing markets,” Greg Goff, chairman and chief executive officer of Tesoro, said in the statement. “Our increased scale and diversity will enable us to leverage and enhance in-house technical capabilities, which we expect will result in cost efficiencies, the ability to drive more growth and increased productivity.”

    The deal value is $6.4 billion including about $1.7 billion of Western debt and the $605 million market value of a non-controlling interest in Western Refining Logistics LP, according to the statement. The partnership owns pipelines in the prolific Permian Basin of West Texas and New Mexico.

    The combination will transform Tesoro into the fifth-largest U.S. refiner behind Valero Energy Corp, Exxon Mobil Corp., Marathon Petroleum Corp. and Phillips 66 and ahead of Motiva Enterprises LLC and Chevron Corp., according to data from the U.S. Energy Information Administration.

    The announcement was made before the start of regular trading in New York. Western Refining rose 1.1 percent to $30.84 at 6:01 a.m. in New York after rising 1.8 percent yesterday. Tesoro fell 0.86 percent to $85 after closing at $85.74 Wednesday.

    http://www.bloomberg.com/news/articles/2016-11-17/tesoro-to-buy-western-refining-for-6-4-billion

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    South Korean October LNG imports rise 9.4 pct YoY

    South Korean October LNG imports rise 9.4 pct YoY

    Imports of liquefied natural gas (LNG) by South Korea, the world’s second-largest buyer of the chilled fuel, rose 9.4 percent year-on-year in October, according to the customs data.

    South Korea imported 3.25 million mt of LNG in October, as compared to 2.97 million mt in the corresponding month last year.

    The country paid about US$1.2 billion for October imports, dropping 17.9 percent on year from $1.5 billion in October 2015, the data showed.

    During the month under review, imports of LNG from Australia jumped about 170 percent to 522,406 mt.

    However, the world’s largest LNG exporter, Qatar, remains the dominant source of South Korean imports with 1.17 million mt of the chilled fuel imported in October.

    Although the volumes increased by 11.9 percent, the price decreased 24 percent, when compared to October 2015.

    The remaining volumes imported into South Korea were sourced from Brunei, Indonesia, Malaysia, Oman, Papua New Guinea and Russia.

    http://www.lngworldnews.com/south-korean-october-lng-imports-rise-9-4-pct-yoy/

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    Eni approves Coral FLNG investment plan


    Eni of Italy has approved the investment plan for the first phase of the development of the Coral gas discovery in the Rovuma Basin (Area 4), offshore Mozambique.

    The project involves the construction of 6 subsea wells connected to a floating LNG production facility, with a liquefaction capacity of over 3.3 million tons of liquefied natural gas per year, equivalent to approximately 5 billion cubic meters, Eni said in a statement on Friday.

    Mozambique authorities approved the project development plan in February.

    The Coral field, discovered in May 2012 and outlined in 2013, is entirely located within Area 4 and contains about 450 billion cubic meters (16 TCF) of gas in place.

    In October, Eni and its Area 4 partners signed an agreement with BP for the sale of the entire volumes of LNG produced by the FNLG Coral South, for a period of over twenty years. It was the first such agreement signed in Mozambique and a step towards developing the 2400 billion cubic meters (85 Tcf) of gas discovered in Area 4, Eni said.

    The approval of the investment plan brings the project closer to reaching the final investment decision, which will come into effect once all Area 4 partners have approved it ad the project financing, which is currently being finalized, has been underwritten, Eni adds in the statement.

    Eni is the operator of Area 4 with a 50 percent indirect interest owned through Eni East Africa, which holds a 70 percent stake in Area 4.

    The other concessionaires are Galp Energia, Kogas and Empresa Nacional de Hidrocarbonetos (ENH), each owning a 10 percent stake. CNPC owns a 20 percent indirect interest in Area 4 through Eni East Africa.

    http://www.lngworldnews.com/eni-approves-coral-flng-investment-plan/
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    Nigeria reaches a deal to pay $5.1 billion in unpaid bills to oil majors - minister


    Nigeria has reached a deal to pay $5.1 billion in unpaid bills to oil majors including Royal Dutch Shell and Exxon Mobil, the minister of state for oil said on Thursday.

    The Nigerian National Petroleum Corporation (NNPC), the OPEC member's state oil firm, has amassed a total of $6.8 billion in unpaid bills up to December 2015, so-called cash calls, that it was obliged to pay under joint ventures with Western oil firms, with which it explores for and produces oil.

    Oil minister Emmanuel Ibe Kachikwu said the agreed amount, which is $1.7 billion less than the total amount owed, would be paid within five years, interest free.

    Under the arrangement, payment will be in the form of crude oil cargoes but only when Nigeria's production exceeds 2.2 million barrels per day, Kachikwu said, which is the nation's current production when all fields are operating properly.

    "If for any reason we did not meet (the) threshold we will not pay the $5.1 (billion), so that is fantastic," he said of the deal, which has been approved by the National Economic Council, an advisory body to the government.

    Kachikwu last week said Royal Dutch Shell, Exxon Mobil, Italy's ENI, Chevron and France's Total had "accepted" what he described at the time as an "outline settlement".

    All five of the oil majors declined to comment when approached by Reuters.

    The petroleum ministry has for more than a year been trying to reduce its financial obligations, which have accumulated over several years. Kachikwu said there is at least $2.5 billion in additional debt that has accrued this year that it is still working to repay.

    http://www.reuters.com/article/nigeria-oil-idUSL8N1DI57X

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    America’s on Track to Export a Record Volume of Shale Gas


    The U.S. is set to export a record number of cargoes of shale gas this month.

    Nine liquefied natural gas tankers have departed or are scheduled to leave Cheniere Energy Inc.’s Sabine Pass terminal in November, already the most for any month since exports began in February, according to ship-tracking data compiled by Bloomberg and Genscape Inc.

    The exports follow a massive shale boom in the U.S. that’s unleashed a flood of gas supplies from the Marcellus and Utica in the east to the Eagle Ford in Texas. The country is on course to become a net exporter of natural gas next year, a stark turnaround from just a decade ago when it was facing a shortage.

    “The continental U.S. becoming a net natural gas exporter is a milestone of the U.S. energy revolution and transition to ‘energy independence,’” Citigroup Inc. analysts wrote in a note to clients on Wednesday.

    The Sabine Pass complex in Louisiana has exported 40 cargoes totaling about 6.5 million cubic meters of LNG since February, Zach Allen, president of Pan Eurasian Enterprises, said in a research note.

    Cheniere, which became the nation’s first and only exporter of shale gas in February, was cleared by U.S. regulators last month to start loading tankers from a second plant at Sabine Pass.

    Cheniere didn’t immediately return phone calls and e-mails seeking comment.

    http://www.bloomberg.com/news/articles/2016-11-16/america-s-on-track-to-send-a-record-volume-of-shale-gas-overseas
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    S.Korea should invest in U.S. oil, gas to counter Trump policy changes: official


    South Korean oil and gas companies should invest more in U.S. exploration projects to limit the impact of possible energy policy changes planned by U.S President-elect Donald Trump, the country's vice energy minister said on Thursday.

    Trump has called global climate change a hoax and has pledged to walk away from the 2015 Paris Agreement, which was strongly supported by outgoing Democratic U.S. President Barack Obama. Trump has also promised to roll back some of America's environmental policies, which he said would revive the ailing U.S. oil and coal industries.

    "Trump administration's energy policy direction contrasts with that of the Obama administration, therefore, substantial changes in domestic and global energy markets are inevitable," Vice Energy Minister Woo Tae-hee said, according to a copy of a speech he was to deliver at an industry forum in Seoul.

    "As a result, uncertainty of energy policy is increasing greatly," Woo said.

    To minimize the impact of U.S. energy policy changes, Woo urged Korean private companies to look for more opportunities to participate in U.S. exploration projects as U.S. shale gas production is expected to rise.

    Woo also suggested that South Korea should expand other cooperation in the oil and gas sector, citing as an example Korea Gas Corp's (036460.KS) long-term shale gas supply deal with U.S. Cheniere Energy (LNG.A).

    The two companies signed a 20-year deal in 2012, and KOGAS is set to start next year to bring 2.8 million tonnes per annum of liquefied natural gas processed by Cheniere to South Korea.

    In the renewable energy sector, which is likely to be hit hard by U.S. policy changes, the vice minister said South Korea should bolster cooperation with the U.S. in clean energy fields, including solar power, despite worries over slow market growth.

    South Korea unveiled an investment plan worth about $37 billion in early July this year to grow renewable energy and related businesses by 2020 with an aim to cut greenhouse emissions and improve the economy.

    http://www.reuters.com/article/usa-trump-southkorea-energy-idUSL4N1DH2ZI
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    Suncor Energy expects higher production, lower spending in 2017


    Suncor Energy Inc, Canada's largest oil and gas company, said it expected production to rise by more than 13 percent next year and spending to fall by more than C$1 billion ($746 million).

    Oil producers continue to keep a tight lid on spending to cope with a 60 percent fall in oil prices since mid-2014.

    Suncor set a budget for capital spending of C$4.8 billion-C$5.2 billion for 2017 and forecast average production of 680,000-720,000 barrels of oil equivalent per day.

    A fall in prices for oilfield services, combined with improved productivity and more efficient drilling practices are helping oil producers pump more oil, even as they curb spending.

    The company forecast 2017 cash operating costs at its oil sands operations of C$24-C$27 per barrel, below its 2016 forecast of C$25.50-C$27.50.

    Suncor forecast cash operating costs for Syncrude, a joint venture project majority owned by Suncor Energy, of C$32-C$35 per barrel, also below its 2016 forecast of C$37-C$39.

    The company said on Thursday about 40 percent of the 2017 budget was allocated for exploration and development projects, including Fort Hills and Hebron.

    The Fort Hills oil sands mining project is located in Alberta's Athabasca region, about 90 kilometers north of Fort McMurray, and is expected to produce oil by the end of 2017.

    The Hebron oil field, located offshore Newfoundland and Labrador, is also expected to produce oil by the end of 2017.

    Up to Wednesday's close, Suncor shares had risen 14.8 percent this year.

    http://www.reuters.com/article/us-suncor-energy-outlook-idUSKBN13C19B

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


    The United States plans to gather more input from native people as officials contemplate projects like the Dakota Access Pipeline, according to a White House notice posted on Thursday that could delay the controversial plan.

    The Army Corps of Engineers plans to "revise its regulations" to ensure its consultations with sovereign tribes are "confirmed by the U.S. Constitution, treaties, statutes, executive orders, judicial decisions and presidential documents and policies."

    The proposed change comes in the form of what is known as an Advance Notice of Proposed Rulemaking, which states an agency's intention to issue a new regulation.

    The Army Corps of Engineers, which manages many federal infrastructure projects, did not immediately respond to a request for comment Thursday evening.

    The pending rule is being contemplated in the final weeks of President Barack Obama's term when the administration is mulling whether or not to allow the Dakota Access crude pipeline.

    President-elect Donald Trump is due to be sworn in on Jan. 20. Under federal law, the incoming president has authority to invalidate many last-minute decisions from an outgoing administration.

    The notice, which was posted on the website of the U.S. Office Information and Regulatory Affairs, said the public will be able to comment on the proposal until Jan. 1, 2017.

    The Obama administration has been in a quandary over whether to issue a permit to allow the completion of the final leg of the pipeline.

    Demonstrators fanned out across North America on Tuesday to demand that the U.S. government either halt or reroute the pipeline, while Energy Transfer Partners, the company behind the controversial project, asked a federal court for permission to complete it.

    http://www.reuters.com/article/us-north-dakota-pipeline-idUSKBN13C1HV

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    US spot methanol remains on upward trend, hits fresh 15-month high


    US spot methanol reached a fresh 15-month high on Wednesday, sustaining an upward trend that has lasted nearly a month.

    US methanol was assessed at 94.75-95.25 cents/gal FOB USG for November and December, the highest level since reaching 96.75 cents/gal FOB USG on August 5, 2015, S&P Global Platts data showed.

    US spot pricing has been flat or higher for each session since October 21, Platts data showed.

    US pricing has gained 16.5% in that span, rising from 81.50 cents/gal FOB USG for front-month material.

    Global spot pricing has also moved higher during that period, with Chinese spot up 5% to $275/mt CFR China and European spot up 25% to Eur263.50/mt FOB Rotterdam, Platts data showed.

    Market sources have discussed concerns about production in Latin America that could impact imports as a potential driver for the firmer pricing in the US market.

    Methanol pricing typically softens during the fourth quarter due to lower demand from key downstream applications and slower trading activity, sources have said.

    US spot pricing has averaged 83.83 cents/gal FOB USG to date in the fourth quarter, up 7% from the Q4 2015 average of 78.34 cents/gal FOB USG.

    http://www.platts.com/latest-news/petrochemicals/houston/us-spot-methanol-remains-on-upward-trend-hits-27711346
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    Alternative Energy

    JinkoSolar grows Q3 revenue 39% YoY, ups 2016 guidance


    The Tier-1 solar company once again posted world-leading module shipments of 1,606 MW, generating revenue of $855 million. However, both metrics were down on Q2 despite soaring against Q3 2015.

    JinkoSolar’s Q3 performance was slightly weaker than Q2 on some metrics, but the company is looking ahead to a strong finish to 2016.
    JinkoSolar

    JinkoSolar, the leading Tier-1 Chinese solar firm in terms of module shipments, has posted a set of strong third quarter (Q3) financials that serve to highlight the current challenges facing the solar industry.

    Despite achieving strong shipments and revenue growth against Q3 2015, this year’s third quarter performance sunk slightly below the second quarter, and perhaps hints at a few tougher quarters to come for the firm, as well as other large Chinese module producers.

    Revenue for Q3 hit $855.3 million, which represented a 39% increase year-on-year (YOY), but was down 4.4% on Q2. Falling module prices are only partly to blame for this contraction because shipments were also down sequentially – from 1,716 MW in Q2 to 1,606 MW in Q3 as the effects of China’s second half (H2) slowdown were felt.

    Gross margin, however, improved, reaching 22.1% against 20.4% in Q2 (and 21.3% in Q3 2015), and JinkoSolar reported a strong 29.1% increase in the amount of revenue generated across its power projects business – which totaled $55.8 million.

    Yesterday the company confirmed that it had finalized the sale of 55% of its shares in its downstream business, which has now been fully spun off into Jinko Power. Up to September 30, Jinko’s downstream portfolio amounted to 1,314 MW of solar PV.

    Income from operations in Q3 was $90.1 million, which was approximately 20% higher than in Q2 and almost double that achieved in Q3 2015,while non-GAAP net income attributable to JinkoSolar’s shareholders fell slightly to $45.8 million, leaving shares in the company at $0.92, which was again approximately a 20% reduction on Q2.

    JinkoSolar’s gross profit in the third quarter rose against Q2 to reach $188.6 million, which was a healthy return for the company. Operating margin was 11.5%, compared to 12.9% in Q2 and 11.9% in Q3.

    JinkoSolar CEO Kangping Chen called the solar environment in Q3 “challenging”, but added: “Based on our visibility into Q4, we are once again raising our full year 2016 shipment guidance to 6.6-6.7 GW from our previous guidance of 6-6.5 GW. We are well positioned to continue benefiting from the global adoption of solar energy, which is playing a more important role in the global energy landscape.”

    The $250 million cash sale of Jinko Power to Shangrao Kangsheng, completed this week, will serve to improve JinkoSolar’s balance sheet in Q4, lowering its debt and net gearing ratio. “We expect to report a gain on the sale in Q4,” said Chen. “This injection into our already substantial cash position will also provide us with the extra flexibility for our future operations.

    Ahead to 2017
    The CEO stressed that demand for solar modules in China in H2 remained robust as module prices there stabilized, and the company fully expects an uptick in demand in the first half of next year. Hinting at Donald Trump’s recent election victory, Chen diplomatically stated that “demand in the U.S. is stable despite recent market panic, which we believe is only temporary”.

    “We expect the U.S. market will heat up again during the second half of 2017,” Chen said. Moving on to Europe, and following on from today’s confirmation that JinkoSolar is one of five Chinese firms to be removed from the EU’s minimum import price (MIP) undertaking, Chen said that JinkoSolar’s withdrawal will boost its outlook for European markets.

    “We also reinforced our presence on the ground in India by opening a new office to offer local technical and logistical support to our customers there,” said the CEO. “We expanded our emerging market presence to more than 40 countries, and strengthened our leading position in key markets such as Chile, Mexico and the UAE.”

    On the technology front, JinkoSolar’s mono wafer capacity using diamond-wire cutting is now fully operational, and will be scaled to support its PERC lines in 2017, Chen confirmed.

    For Q4, JinkoSolar is forecasting module shipments in the range of 1.7 to 1.8 GW. The company ended Q3 with $547.3 million in cash.

    http://reneweconomy.com.au/jinkosolar-grows-q3-revenue-39-yoy-ups-2016-guidance-59091/

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    Tesla's Musk closes SolarCity deal, more challenges ahead


    Tesla Motors Inc Chief Executive Elon Musk won approval on Thursday from the electric luxury automaker's shareholders for an acquisition of SolarCity Corp, the solar energy system installer in which he is the largest shareholder.

    The stock swap deal, worth about $2 billion, caps a tumultuous year for Musk and Tesla. The proposed acquisition of SolarCity, a money-losing installer of residential solar power systems, prompted a 13 percent fall in Tesla's share price after Musk outlined the deal in June.

    Tesla said the deal was "overwhelmingly" approved by 85 percent of unaffiliated shareholders. Shares rose 1.3 percent in after-hours trade after gaining 2.6 percent in the regular session to close at $188.66.

    "Your faith will be rewarded," Musk told shareholders assembled at the company's Fremont, California, facility.

    Tesla investors have also been rattled by a federal investigation of the death of a Tesla owner operating his car on Autopilot, a driver assistance system, and by concerns Musk may be overextended between ambitious future goals for Tesla, the work of integrating SolarCity, and his CEO duties at SpaceX.

    The automaker's shares are down nearly 20 percent for the year, and took a hit after Donald Trump's victory in the presidential election. A key Trump advisor on environmental issues, Myron Ebell, has said federal tax subsidies for electric vehicles should be cut off.

    Tesla faces more challenges in the months ahead, as the company tries to make a five-fold leap in its annual vehicle production and launch next year its new Model 3 sedan, aimed at mass-market customers able to buy a vehicle with a starting price of $35,000.

    Tesla last month reported a narrow profit for the third quarter, and Musk said he did not expect the company would have to sell more shares to finance the Model 3 launch. However, most analysts expect the company will have to raise capital next year, possibly with a sale of equity.

    Musk and other company insiders recused themselves from the shareholder vote on the SolarCity acquisition. But Musk campaigned hard for the deal, arguing SolarCity's operations would add $1 billion to Tesla's revenue by 2017, and generate an additional $500 million in cash over three years.

    Musk received a boost for the SolarCity deal earlier this month when Institutional Shareholder Services (ISS) recommended that investors in both companies approve the deal. Under the proposed transaction, SolarCity shareholders will get 0.110 of a Tesla share for each share in the solar company.

    As of Sept. 30, SolarCity had $259.3 million in cash and cash equivalents and $6.68 billion in total liabilities, including debt.

    SolarCity has expanded dramatically in the last five years, but it relies heavily on borrowing money to finance its no-money-down residential solar installations. After expanding installations more than 70 percent between 2014 and 2015, SolarCity ratcheted down its forecast three times this year and now expects just a modest increase compared with 2015.

    http://www.reuters.com/article/tesla-solarcity-idUSL1N1DG1ZZ
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    China to boost geothermal power in next five yrs


    China will boost the development of geothermal power in the next five years to reduce coal consumption and improve air quality, Xinhua reported, citing an energy official.

    In particular, China will promote the use of geothermal power in the Beijing-Tianjin-Hebei region to replace coal for heating to reduce carbon dioxide emissions and address air pollution, Li Yangzhe, deputy director of the National Energy Administration, told an international forum on geothermal power on November 17.

    Li said China will provide policy support to boost geothermal power exploitation and consumption during the 2016-2020 period.

    China is expected to more than triple its geothermal power consumption by 2020 to 72.1 million tonnes of coal equivalent from the current level.

    China consumed about 20 million tonnes of coal equivalent of geothermal resources for heating, power generation and other uses in 2015, official data showed.

    By 2020, geothermal power will likely account for about 1.5% of the country's total energy consumption, helping to reduce carbon dioxide emissions by 177 million tonnes.

    http://www.sxcoal.com/news/4549329/info/en
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    Uranium

    EDF buys Areva reactor business for $2.7bn


    EDF has made a binding agreement to purchase Areva’s nuclear reactorassets, in a deal worth $2.7bn.

    Areva’s financial position has been strained through its involvement in the Olkiluoto nuclear power project in Finland.

    The deal allows Areva to raise a further EUR5bn in new capital largely from the French state.

    The contracts for the EPR Olkiluoto 3 project and the resources required to complete that troubled project, as well as certain contracts relating to components forged in Le Creusot plant, will stay within Areva NP, namely in Areva's scope.

    "This signature marks an important stage in the refocusing of AREVA on fuel cycle activities, our core business. The conclusion of these agreements strengthen our resolve to continue to implement our action plan," said Areva chief executive Philippe Knoche in a statement.

    http://www.powerengineeringint.com/articles/2016/11/edf-buys-areva-reactor-business-for-2-7bn.html?utm_content=buffer86279&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

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    Agriculture

    Key U.S. senator remains concerned over ChemChina-Syngenta deal


    A powerful U.S. senator said he is concerned that state-owned ChemChina, which is buying Swiss crop protection and seed group Syngenta (SYNN.S) for $43 billion, could use U.S. sovereign immunity laws to shield itself from claims in U.S. courts.

    Some Chinese state-owned entities have argued that they have sovereign immunity and thus can't be sued in U.S. courts under the U.S. Foreign Sovereign Immunities Act (FSIA) of 1976.

    The acquisition by China National Chemical Corp (ChemChina)of Syngenta, the largest global investment by a Chinese company, won U.S. regulatory clearance in August despite concerns from some lawmakers over U.S. food security.

    This week, a U.S. congressional panel urged lawmakers to take action to ban Chinese state-owned firms from acquiring U.S. companies.

    In a Nov. 9 letter to U.S. Senator Chuck Grassley that was posted on his website, ChemChina said its U.S.-incorporated businesses are subject to U.S. civil law, and that FSIA does not apply to commercial activity.

    Grassley, who represents the U.S. agricultural powerhouse state of Iowa, said in a Nov. 16 response that he remained concerned that ChemChina could seek to shield itself from U.S. court jurisdiction.

    "While ChemChina indicated that immunity would not extend to Syngenta's U.S. business, the company failed to note that immunity would otherwise apply to a wholly state-owned entity," he said on his website.

    Some legal experts say the sovereign immunity defense, intended under international law to shield governments from legal rulings made by a foreign power, typically does not apply to commercial cases.

    ChemChina's acquisition is now in the process of gaining approval from the European Commission, and the deal is expected to be closed around the end of March.

    In its letter to Grassley, ChemChina said the Chinese government does not interfere with ChemChina's operations and has not directed ChemChina or any of its affiliates to engage in price-fixing with competitors.

    "Syngenta will continue to have its same strategy, management, people and culture and its headquarters in Basel. No jobs will be lost and no jobs will go overseas as a result of this transaction," it said.

    ChemChina also said the Chinese government does not interfere with its operations and has not directed ChemChina or any of its affiliates to engage in price fixing with competitors.

    http://www.reuters.com/article/us-chemchina-syngenta-usa-idUSKBN13C12D
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    Base Metals

    Of 22 banks polled NO-ONE sees copper price rally continue


    The surge in the copper price to near 18-month highs following Donald Trump's win in the US presidential election came as a surprise to an industry under pressure since 2011 over growing supply.

    The bullishness about the impact of Trump's $500 billion infrastructure plans on demand for the bellwether metal has cooled down considerably.

    In pre-regular hours trade on Thursday copper for delivery in December declined slightly to trade at  $2.458 per pound ($5,418 a tonne) in New York, a fifth down day in a row. Copper is down 10% from intra-day highs of $2.73 a pound last week.

    After underperforming other metals and steelmaking raw materials in 2016, copper is still looking healthier than pre-Trump with a 15% rise year-to-date.

    However,  according to a new survey of 22 investment banks and other commodity research institutions by FocusEconomics analysts and investors continue to call into question the sustainability of the rally.

    And as the graphs show, the outlook for the copper price has been adjusted downwards for more than a year.

    Of those polled not a single analyst sees copper averaging the final quarter of 2016 above the current spot price. In fact, the median estimate for Q4 is 12% below today's ruling price and sets up copper for a fifth annual average price decline.

    The consensus forecast for Q4 2017 is only a slight improvement over this year with a rise to $2.29 a pound ($5,070 a tonne).

    The most bullish institution is Unicredit which sees copper averaging 2017 at today's price of around $2.45, but the average forecast for the full year 2017 among those surveyed is still a disappointing $2.19 a pound ($4,846 a tonne) and well below the spot price.

    http://www.mining.com/of-22-banks-polled-no-one-sees-copper-price-rally-continue/

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    Al: India to impose minimum import prices?

    InfraCircle on 25 October reported about the Aluminium Association of India—a lobby group with firms such as Vedanta Ltd, Hindalco Industries Ltd and National Aluminium Co. Ltd (Nalco) as members—hiring Mecon to prepare a report to explore the possibility of introducing MIP on aluminium products. 

    “We have recently received a report from Mecon in which it says that MIP shall be imposed on primary aluminium as cost of production of domestic aluminium manufacturers is higher than the London Metal Exchange (LME) prices. We are currently examining the report,” said a senior government official requesting anonymity.

    Another government official, who also did not want to be named, said the consultancy firm will also be submitting a report regarding imposition of MIP taking into account the interests of the downstream industry.


    http://infracircle.vccircle.com/state-owned-mecon-recommends-minimum-import-price-primary-aluminium/
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    Steel, Iron Ore and Coal

    China Coal Oct output up nearly 13 pct on mth


    China Coal Energy Co., Ltd, the listed arm of China National Coal Group, produced 7.45 million tonnes of commercial coal in October, falling 10.7% on year but up 12.9% from September, the company said in a statement late November 16.

    The month-on-month rise was mainly attributed to the government's directive to boost output to ensure supply ahead of the heating season.

    During January-October, China Coal Energy produced 67.52 million tonnes of coal, sliding 15.5% from the year prior.

    The company sold 10.66 million tonnes of commercial coal in October, dropping 1.2% year on year and down 5.6% month on month, the company said.

    Of the sales, 6.85 million tonnes were self-produced commercial coal, dropping 12.2% on year but up 5.7% from September.

    In the first ten months, the company sold 1111.2 million tonnes of commercial coal, falling 0.8% from the year before, with sales of self-produced commercial coal dropping 14.9% to 67.58 million tonnes.

    Chinese government authorities have been urging coal miners to boost output and help bringing prices back to reasonable levels.

    China National Coal Group and Shenhua Group have signed mid- and long-term thermal coal supply contracts with the nation's top five power generators.

    The contract base price was agreed at 535 yuan/t ($79/t) FOB for 5,500 Kcal/kg NAR coal, and the price would be adjusted monthly based on the market conditions.

    China's top economic planner, the National Development and Reform Commission, on November 16 gave green light to all legal mines meeting safety standard to operate at 330 working days until next March when the heating season ends in northern China.

    http://www.sxcoal.com/news/4549321/info/en
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    China's coal use likely peaked in 2013, global energy report says


    China's coal use is likely to have peaked in 2013, the International Energy Agency's (IEA) World Energy Outlook Report estimated, given China's macro economy trend, environmental protection movement and low-carbon development strategy among other factors.

    It was only a year ago that the IEA concluded that China's consumption of coal was unlikely to peak any time prior to 2020.

    China's coal consumption in 2013 reached over 4.22 billion tonnes, and then fell 2.9% on year to 4.1 billion tonnes in 2014. It further declined 3.7% last year, official data showed.

    During 2000-2013, China's coal use posted an average yearly increase of 8.8%, data showed.

    The reduction of energy consumption caused by a slowdown in China's economy growth in the 12th Five-Year Plan period, especially coal consumption decline, indicated that China's low-carbon development entered into a new stage. That's also meaningful to the world's low-carbon development and addressing on climate change.

    In the 12th Five-Year Plan period ended in 2015, China's average annual growth in energy consumption dropped over 1/3 compared with ten years ago.

    The slump in energy consumption was mainly reflected in power production and consumption. Impacted by the decline in power consumption and the shift to renewable energy power generation, China's coal consumption posted a slump since 2013.

    "Coal generated 84% of all electricity in China in 2014, the IEA's current policy scenario forecasts that market share is going to drop down to 54% in 2040," Institute of Energy Economics and Financial Analysis director Tim Buckley said.

    "Under a more aggressive policy scenario where the transition happens faster, that actually has coal dropping to 26% market share by 2040, so you have coal effectively losing two-thirds of its market share in the space of just 25 years which is obviously a profound shift," Buckley said.

    The IEA predicted a 15% yearly drop in China's coal consumption by 2040.

    Last year, it expected a 26% increase in the amount of power China gets from coal by 2040. Now it sees growth of just 4%.

    Also, the IEA has cut its forecast for China's coal-fired power output in 2040 by 907 TWh, from 5,231 TWh to 4,324 TWh. This is equivalent to the total annual electricity demand of the UK (338 TWh) and France (569TWh) combined.

    Chinese coal demand could fall even faster than the IEA expects, given the waning impact of recent fiscal stimulus and reforms that will force grid operations to purchase minimum supplies from renewable sources.

    The IEA expects China to continue building new coal plants, even though they will run less than 50% of the time. Its outlook has operation rate falling to 43% in 2040.

    http://www.sxcoal.com/news/4549360/info/en
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    West Virginia regulator sues Alpha Natural on fraud allegations


    West Virginia's environmental regulator sued Alpha Natural Resources Inc's former management on allegations of fraud on Wednesday, saying top executives should be held accountable for an unusual $100 million funding gap that has emerged just three months after the U.S. coal producer exited bankruptcy.

    The lawsuit accused six senior executives including CEO Kevin Crutchfield of making misleading financial projections about Alpha so its bankruptcy plan would get court approval. After the plan was approved in July, the executives joined the management team of Contura Energy Inc, which bought some of Alpha's most productive mines.

    "In knowingly making or allowing to be made, false and misleading projections to obtain confirmation of (Alpha's) chapter 11 plan, each of the named individual defendants committed a fraud upon this court," the West Virginia Department of Environmental Protection (DEP) said in the lawsuit.

    Contura did not respond to a request for comment on behalf of Crutchfield.

    Alpha said in a Nov. 3 court filing it had uncovered $100 million of "unaccounted-for obligations," including taxes, payroll and royalty payments that were not accounted for when it reorganized.

    Bankruptcy attorneys said companies rarely return to court to address such a large liability so soon after exiting bankruptcy.

    West Virginia said the shortfall threatened Alpha's viability and could saddle the state with cleaning up retired mining sites, which is expected to cost hundreds of millions of dollars.

    Lawyers for Alpha and Contura denied the claims in court on Thursday and said they would begin talks with the regulator to address its concerns.

    Alpha and Contura reached an agreement this month to divvy up the obligations and planned to ask for bankruptcy court approval on Thursday for their settlement.

    U.S. Bankruptcy Judge Kevin Huennekens postponed a decision in light of the lawsuit.

    Alpha's reorganization split the company in two, with its lenders forming Contura to operate more productive mines and the remainder of the company focusing on cleaning retired mining sites, mostly in West Virginia.

    Alpha has said it has more than $1 billion in environmental obligations, much of which were covered by a federal program called "self-bonding" that exempt companies from setting aside cash or bonds to restore abandoned mines to their natural setting.

    Alpha and Contura agreed to provide $400 million over the next decade for mine cleanups. In a court filing this week, Contura said it believed that Alpha will have sufficient liquidity to meet its commitment.

    http://www.reuters.com/article/alphanatural-bankruptcy-idUSL1N1DI02D
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