Mark Latham Commodity Equity Intelligence Service

Monday 21st March 2016
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    Support for impeaching Brazil's president rises to 68 percent - poll

    A growing majority of Brazilians favour impeachment of President Dilma Rousseff or her resignation, according to a survey released on Saturday by polling firm Datafolha.

    The poll showed 68 percent of respondents favour Rousseff's impeachment by Congress, while 65 percent think the president should resign. The president's approval ratings have been hammered by Brazil's worst recession in decades and its biggest ever corruption probe.

    Rousseff's popularity also fell, with 69 percent of respondents rating her government negatively. The current percentage is close to the president's lowest ratings on record, in August 2015, when 71 percent of respondents rated the government negatively.

    The poll also showed that rejection levels for former President Luiz Inacio Lula da Silva, who was named as Rousseff's chief of staff on Wednesday, rose to a record 57 percent. That is far higher than the previous high of 40 percent in September 1994, before his 2003-2010 presidency.

    A Supreme Court judge suspended Lula's appointment on Friday, saying it might interfere with an investigation by prosecutors, who have charged him with money laundering and fraud, as part of the probe into political kick back scheme at state oil company Petrobras.

    Even if Brazilians support Rousseff's ouster, voters are not enthusiastic about a governmentled by vice-president Michel Temer. Some 35 percent of respondents say his government would be "bad" or "terrible".

    Datafolha surveyed 2,794 people on March 17 and 18.
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    CAT sales show mining slump only getting worse

    With sales and operations at the ends of the earth, few companies are in a better position to take the pulse of the global economy and the resource sector in particular than Caterpillar.

    The world's number one heavy equipment manufacturer has been hit hard by the decline in mining and construction – sales are down more than $20 billion from its peak just four years ago after a drop of over $8 billion last year.

    And things are only getting worse in 2016. Much worse.

    Sales have been falling for 39 months straight

    After a flicker of hope in January when the rate of decline seemed to slow at least in some regions,Caterpillar's latest sales figures released today shows a renewed slump in the sector.

    Sales to the mining industry make up 19% of total sales for the Peoria, Illinois-based giant (quarrying and aggregates account for another 10%) and worldwide sales to the sector dropped 42% in February on a rolling 3-month average basis.

    Overall sales have been falling for 39 months straight.

    Earlier this week Caterpillar warned of a40% fall in revenues for the first quarter again led by lower sales into the resources industry.

    With the release of its full year earning in January Chairman and CEO Doug Oberhelman  said the company hasn't seen any signs of improvement and was reluctant to predict a bottom for the industry

    Today's figures makes it clear why.

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    OK, lets think bullish.

    Represented by the relatively new Alternative for Deutschland party, nearly two million out of 12.5 million eligible voted marked their “X” for the climate change denying, pro-nuclear, pro-coal, and pro-fracking AfD. In much the same way that Donald Trump has galvanized both the media and either terrified or energized the electorate in the U.S. (depending on one’s position), the AfD has turned what are often sleepy regional contests in Germany into edge-of-your-seat political theater.

    At his news conference at his Mar-a-Lago resort on the night of several Super Tuesday victories, Republican front-runner Donald J. Trump bragged about the new voters he had drawn into to the party’s nomination process. As heexplained:

    Look, we have expanded the Republican Party. When you look at what’s happened in South Carolina and you see the kind of numbers that we got, in terms of extra people coming in. They came from the Democratic Party, or the Democrat Party, and they’re Democrats and they’re longtime Democrats and they were never going to switch and they all switched. And they were independents. And we’ve actually expanded the party.

    As a result of this expansion, he concluded, “I think we’re going to win in November.”

    Is he right?

    In any event, the 2,000 people who packed out the London Palladium for the Guardian’s first live debate on the EU referendum were hungry for both more talk about Europe and, possibly, more pantomime. They booed, whistled, roared, shouted and wanted villains to heckle or applaud. And from the stalls only a few things seemed certain.

    1. People hate it when politicians don’t give direct answers. (“Answer the question!” was a favourite heckle).

    2. Those who show up for debates have probably already decided in which of the two opposing camps – Brexit or Bremain – they belong.

    3. Public engagement on the Europe issue is in fine fettle.

    So which side will prevail in June? Will Britain’s fate be decided by trade, the economy, immigration? What about the third of the electorate who are still dithering? And what about the third within each camp who could start dithering again in the next 100 days?

    If the Palladium’s clapometer is any guide, the Leave side still has more of the energy and momentum. A louder, more vigorous cheer certainly went up for Brexit than for Bremain when warm-up comedian Andy Zaltzman asked us to declare our hands. Although he got an even bigger cheer when he asked how many would vote for Britain to leave Planet Earth altogether.

    Transcript of call between Rousseff and Lula, 16 March

    Rousseff: Hello.

    Rousseff: Lula, let me tell you something.

    Lula: Tell me, my love.

    Rousseff: It’s this, I am sending Messias [Jorge Rodrigo Araújo Messias, deputy head of legal affairs at the cabinet office] round with the papers, so that we have them, just in case of necessity, that is the terms of office, right?

    Lula: Uh-huh. Ok, ok.

    Rousseff: That’s all, wait there, he is heading there.

    Lula: OK, I’m here. I’ll wait.

    Rousseff: Right?

    Lula: OK.

    Rousseff: Bye.

    Lula: Bye, my love.

    (2.4m Brazilians took to the streets in horror)

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    Brazil's Agnelli, who turned Vale into top miner, dies in crash

    Roger Agnelli, the Brazilian banker who turned Vale SA into the world's No. 1 iron ore producer, died on Saturday in a plane crash. He was 56.

    Agnelli, his wife and two children were among seven killed when his Comp Air 9 turboprop monoplane slammed into two homes around 3:20 p.m. local time (1820 GMT), minutes after taking off from an airport in northern São Paulo, authorities said.

    "We have lost a Brazilian of extraordinary entrepreneurial vision," President Dilma Rousseff said in a statement Sunday, adding that Agnelli had devoted his career to big Brazilian companies and shown commitment to the development of his country.

    Sources said Agnelli was traveling to a wedding ceremony in Rio de Janeiro with his wife Andréia, son João, daughter Anna Carolina, and their two spouses. The weather was clear at the time of the crash.

    In a statement, Vale said it learned of Agnelli´s death with "immense sadness" and said his 10-year tenure at the company had intensified its global expansion and transformation into a major global player.

    Known for his discipline and feisty nature, Agnelli clinched the top job at Vale in July 2001 after 19 years as a corporate and investment banker with Banco Bradesco SA BBDC4.SA, a major Vale shareholder.

    He instilled a culture of meritocracy that helped make Vale Brazil's No. 1 exporter. To friends and foes, the key to Agnelli's success was accurately predicting the rise of China as a major minerals consumer, a crucial wager in turning Vale, a former bloated state-controlled firm, into a global powerhouse.

    "He was a visionary that corporate Brazil will miss badly," said Lawrence Pih, who for decades ran flour mill Grupo Pacífico SA and sat on the board at the São Paulo Federation of Industries with Agnelli.

    In a Harvard Business Review's ranking of the world's best-performing chief executive officers published in February 2013, Agnelli came fourth, only behind Apple Inc's Steve Jobs, Inc's Jeff Bezos and Samsung Group's Yun Jong-Yong. He was the top mining CEO in the 100-executive ranking.

    Agnelli earned the spot in the Harvard ranking after racking up a consolidated return of 934 percent during his tenure at Vale, whose market value more than doubled in the period.

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    World Population Growth Sags.

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    More women than ever use family planning, says the UN, and having one child fewer could dramatically curtail the global population by 2030

    The number of women using contraceptives in developing countries has soared to record levels in recent years, such that projections for global population growth could be cut by as much as 1 billion over the next 15 years.

    The latest figures by the UN show more women than ever now use family planning, with some poorer regions recording the fastest pace of growth since 2000.

    In 2015, an estimated 64% of married women, or women living with a partner, aged between 15 and 49, were using modern or traditional forms of family planning. In 1970, the rate was 36%.

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    Emerging Middle Class

    ArticleMcKinsey Quarterly

    Capturing the world’s emerging middle class

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    Rise in demand in UAE for beard and eyebrow implants

    DUBAI // A desire for perfect eyebrows or a more grandiose beard means facial hair transplants are in great demand, according to cosmetic surgeons.

    Fashion dictates that ladies should have an even, sculpted brow and men a long, bushy beard, but many people struggle to live up to that image.

    Men who cannot reach the hirsute heights of their favourite sports or film stars and women who want their eyebrows reshaped or reimagined are keeping the appointment book of Dr Riad Roomi filled.

    “The increase in eyebrow transplants is because a lot of women got their eyebrows lasered when it was the fashion to have a narrow eyebrow or had temporary tattoos and killed the hair follicles," said Dr Roomi, plastic surgery and hair restoration surgeon at You New Plastic Surgery. “The follicles are sensitive, if you destroy them they don’t come back."

    Full density of a beard cannot be achieved in a single visit, and a patient may require several trips to the doctor. Each hair graft costs Dh10 with some procedures involving up to 2,000 hairs.

    “You’re looking at about Dh20,000 for a full beard," said Dr Al Roomi, adding that the number of men opting for beard transplants had doubled in recent years. “The younger generation like beards for fashion," said the doctor, who added that others have religious reasons.

    “I had a man who wanted to go to Mecca and wanted a pious look. He had a transplant before he went for his religious duties.

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    The Rise of White.

    JUST paint it white. That’s what real estate agents say to property owners, who might call in decorators, sign up for Selling Houses Australia or engage their own renovation talents on a property listed for sale.

    If only it were that easy. Painting walls white might once have been a default option for homes but now even experts are challenged by choice.

    In these days of Pantone perfection, white is no longer a colour. It’s a starting point and by the time most get to end of the colour chart, they realise that there may be 50 shades of grey but there are hundreds of shades of white. And every white tells a story.

    Some of that story is told in a book published by Penguin this month called White Rooms by design writers, Karen McCartney and David Harrison. The book presents itself as a guide to using only white in homes.

    An entire book devoted to one colour might seem excessive to those who prefer to wander into a hardware store and order a can of white paint but white is serious business to designers across many industries.Image title

    Is white the most popular new car colour because it's free? Not anymore, 80% of best-selling models charge at least £250 extra for it

    • Rise of white as a popular option sees carmakers cash in on the trend
    • One in five new cars are white - most popular colour for third year in a row
    • Eight out of ten of Britain's favourite cars charge more for white paint 

    Read more: 
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    Oil and Gas

    Low Oil prices due to 800,000 'Missing' Barrels of crude

    The oversupplied global oil market has its mystery – missing barrels of crude. Last year, 800,000 barrels of crude a day were unaccounted for by the International Energy Agency (IEA).
    Where these barrels are, or if they even existed, is key to understand the ongoing crisis in the global crude market, an article in The Wall Street Journal read.

    Some analysts say those barrels may have ended up in China. Others say that the barrels were created by flaws in accounting and they do not actually exist. If this is true then the oversupply in the market could be much smaller and crude prices may rebound faster.

    Barrels have gone missing before, but last year their amount reached the highest level in 17 years.

    "If the market is tighter than assumed due to the missing barrels, prices could spike quicker," David Pursell, managing director at investment bank Tudor, Pickering, Holt & Co., was quoted as saying.

    According to the author, last year the IEA estimated that the average daily output was 1.9 million barrels more that there was demand for. Some 770,000 barrels of that crude went into onshore storage while roughly 300,000 barrels were in transit by sea or via pipelines. Thus, some 800,000 barrels a day were unaccounted for.

    In 1998, the last time the number of missing barrels was so high, the issue was addressed by US Congress. A senator asked the Government Accountability Office to examine the data. The agency found that statistical "limitations can introduce errors into the data." Most analysts agree with this conclusion.

    "The most likely explanation for the majority of the missing barrels is simply that they do not exist," Paul Horsnell, an oil analyst at Standard Chartered, was quoted as saying by the WSJ.

    A representative of the IEA referred to the agency’s website which says that the missing barrels can be explained by overstated supply, understated demand or stockpile changes in non-OECD countries.

    Meanwhile, the IEA estimates crude supply and demand from global data, its numbers on where the oversupply is stockpiled come only from OECD country members. As a result, some of the missing barrels could be found in non-ECD countries, including China.

    But some analysts disagree. "The missing barrels have become such a large proportion of the oversupply that this would imply that stockpiles are building up in non-OECD countries at a much faster pace than those in the organization, something that they question," the article read.

    Over 50 percent of global crude demand now comes from non-OECD countries where statistical gathering is not well developed. Demand in countries outside the OECD could be larger than it is reported by the IEA, according to a report by investment bank DNB Markets.

    Oil data is "an imperfect science," Rob Haworth, senior strategist at US Bank Wealth Management, told the WSJ.

    "Whether these barrels are missing or not, the global glut of crude is still far from over," he concluded.
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    Motiva: ARAMCO wanted the lot, Shell said 'no'.

    The two partners began talks in 2014, four years ahead of the expiration of the 20-year partnership agreement that became Motiva, the sources said.

    Saudi wanted to take all three Motiva refineries and acquire Shell's chemical plant in Norco, Louisiana, but Shell refused to give up the Norco chemical plant and adjoining Motiva refinery that supplies it, they said.

    "They want to acquire refineries," one of the sources said. "They want to get into chemicals. They want to expand and Shell doesn't."

    Shell's reluctance to give up the refineries and chemical plant underscores the financial and strategic value of the plants as it pushes ahead with a large $30 billion asset sale program.

    Shell expects to complete the split some time this year pending necessary regulatory approvals, according to an internal memo from John Hollowell, chief executive of Shell Midstream Partners, Shell's pipeline master limited partnership.

    The companies intend to start running their respective independent businesses "as quickly, efficiently and safely as possible", it said.

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    Eni cuts CAPEX, plans further assets disposals

    Eni of Italy plans to additionally cut its capital expenditure by 21 percent to €37 bln (approx. $41 bln) according to its strategic plan covering the period from 2016 to 2019.

    Additionally, the company has already achieved 90 percent of its transformation target in the previous 4-year plan and it intends to shed a further €7 billion (approx. $7.9 billion) of assets by 2019.

    Claudio Descalzi, Eni’s CEO said the company plans to dispose of the assets “mainly through the dilution of our stakes in recent and material discoveries as part of our dual exploration model strategy.”

    Operational expenditure is targeted to remain bellow the $7/boe throughout the plan, Eni said.

    Investment during the four-year plan is focused on high-value projects with accelerated returns and the development of conventional projects.

    Eni expects its hydrocarbon production to grow by over 3 percent over the period from 2016 to 2019 despite an 18 percent upstream CAPEX reduction.

    It expects new discoveries of 1.6 million boe at a cost of $2.3/b and an overall cumulative growth in production of 13 percent by 2019. The average breakeven price for the new projects has been reduced from $45 to $27/boe, Eni said

    Eni ‘not far’ from selling stake in Mozambique gas project

    According to Reuters, the CEO of Italian energy company, Eni – Claudio Descalzi – has stated that the company is ‘not far’ from selling a stake in its Mozambique gas project. Descalzi reportedly said that the company will aim to sell a stake in the project in 2016.
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    China Feb LNG imports up 12.1 pct on year to 1.85 mln tonnes -customs

    China's liquefied natural gas imports were 1.85 million tonnes in February, up 12.1 percent compared to the same month last year, data from the General Administration of Customs showed on Monday.
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    Platts: April LNG spot prices to Asia plummet YoY

    Prices of spot LNG for April delivery to Asia averaged $4.46 per MMBtu, according to latest Platts Japan/Korea Marker data for month-ahead delivery.

    At $4.46/MMBtu, the April JKM was 38.7 percent below prices for the same delivery month in 2015.

    Platts adds in its report that the latest marker for April delivery is also at the lowest monthly average level seen since July 2009, when the monthly average for August-delivered cargoes was $4.23/MMBtu.

    Sentiment for April and further out in May continued to remain bearish due to expectations of extra supplies from both new and recently commissioned projects in the United States and Australia, as well as additional volumes from the Angola LNG project starting in the second quarter of 2016.

    The JKM had begun the trading month at $4.7/MMBtu, before sliding to an intra-month low of $4.25/MMBtu in the first half of the month. Expectations of oversupply from the projects coming online weighed on the market sentiment, Platts said.

    However, the downward pressure on prices was short-lived, as demand for April cargoes emerged at the same time from several buyers looking to quickly fill their April positions. Buy tenders from Argentina, PTT, SK, Posco, GSPC, Gail, and IOC for prompt April cargoes reversed the downward trend in prices. The Platts JKM rebounded back up to $4.60/MMBtu by March 11.

    Max Gostelow of Platts said “While there are still valid concerns that 2016 will be an oversupplied market for most of the year, it’s evident that if buyers all adopt the same attitude and all wait for prices to bottom out before entering the market to buy cargoes, then we could definitely see more volatility in the markets like what has happened in early March.”

    He added, however, that the price recovery has stalled as the market expects sellers who had bid unsuccessfully into Argentina’s 15-cargo tender to make those volumes available to the spot market.

    “We are also noticing that the Qataris are growing increasingly competitive on price due to their long position, and offering very good price for volumes delivered to their term buyers,” Gostelow said.

    The price of fuel oil, a possible competing fuel, decreased 53.6 percent year over year, while thermal coal was down 24.8 percent from the same month in 2015.

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    Dreaded 'stealth' supply becomes reality as U.S. drillers turn on 'ducks'

    Some U.S. shale oil producers, including Oasis Petroleum and Pioneer Natural Resources Co, are activating drilled but uncompleted wells (DUCs) in a reversal in strategy that threatens to bring more crude to a saturated market and dampen any sustained rebound in prices.

    When oil prices started their long slide in mid-2014, many producers kept drilling wells, but halted expensive fracking work that brings them online, waiting for prices to bounce back.

    But now, with crude futures hovering near multi-year lows and many doubting recent modest gains that brought oil prices near $40 a barrel can hold, the backlog of DUCs is already shrinking in some areas. In key shale areas such as Eagle Ford or Wolfcamp and Bone Spring in Texas such backlog has fallen by as much as a third over the past six months, according to data compiled by Alex Beeker, a researcher at Wood Mackenzie.

    "If the number of DUCs brought online is surprising to the upside, that means U.S. production won't decline as quickly as people expect," said Michael Wittner, global head of oil research at Societe Generale. "More output is bearish.”

    In the Wolfcamp, Bone Spring and Eagle Ford, the combined backlog of excessive wells remains around 600, Beeker estimates.

    About 660 wells could be the equivalent of between 100,000 and 300,000 barrels per day of potential new supply, according to Ed Longanecker, president of Texas Independent Producers and Royalty Owners Association (TIPRO).

    For now, most of the wells are activated in Texas, where proximity to refiners allows producers to sell their crude closer to benchmark prices, and by well-hedged companiesthat have locked in higher prices.

    Still, the pace of fracking of the uncompleted wells may quicken if cash-strapped producers facing debt repayments can no longer afford to store their oil in the ground.

    While the potential additional supply is a fraction of total U.S. production of around 9 million bpd, the fresh flow would reinforce concerns about a growing global glut just as Iran ramps up output and inventories in domestic storage tanks from the Gulf to Cushing, Oklahoma, test new highs on a weekly basis.

    Wood Mackenzie reckons that the backlog of excess DUCs will decline over the next two years, and return to normal levels by the end of 2017. It is expected to fall 35 percent from current levels in the Bakken and 85 percent in the Eagle Ford by the end of 2016. (

    With service costs down, now is a good time to bring a well online if a company has hedged its production and covered its costs, said Jonathan Garrett, an analyst with Wood Mackenzie. The U.S. crude breakeven for such wells is one-third lower than for new ones, according to Wood Mackenzie.

    Typically, average DUC inventory is around 550 in the Wolfcamp/Bone Spring formations and around 300 in the Eagle Ford, Beeker estimates.

    In each of those formations, the excess has fallen by about 150-175 over the past six months, bringing the surplus to around 300 wells in each. "We're just going to be continuously completing the wells there (in the Permian) with our fleets and so you will not see any DUCs in Midland basin," Pioneer Chief Operating Officer, Tim Dove, told a recent earnings conference.

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    Oil rigs rise by one, ending months-long slide

    U.S. oil drillers added one rig back to a desolate oil patch this week, according to the latest Baker Hughes rig count.

    The number of oil rigs chasing crude rose by one to 387 in the week ending March 18. Rigs drilling for natural gas fell by five to 89. Combined, the rig count fell by four to 476.

    The oil rig remains down 75.9 percent from its October 10, 2014 peak and down more than 53 percent from this week last year. The last time producers added rigs was in the week of Dec. 11 through Dec. 18, when the count rose from 524 to 541.

    Today’s rock-bottom rig count, and the declining production it has driven, has helped pushed oil prices back above $40 per barrel.

    On Friday, oil was hovering around $40 per barrel after briefly touching a high of $41.19 per barrel. Shortly after the count was released, oil traded down 20 cents or 0.5 percent to $40.00 per barrel.
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    U.S. oil exports going around the world

    Three months since the U.S. lifted a 40-year ban on oil exports, American crude is flowing to virtually every corner of the market and reshaping the world’s energy map.

    Overseas sales, which started on Dec. 31 with a small cargo aboard the Theo T tanker, have been picking up speed. Oil companies including Exxon Mobil Corp and China Petroleum and Chemical Corp have joined independent traders such as Vitol Group and Trafigura Pte in exporting American crude.

    The “growing volumes of exports” from the U.S. are now “spooking the markets,” Amrita Sen, chief oil analyst at consultants Energy Aspects Ltd. in London, said in a note. The “flurry of export activity” is helping to support spot oil prices in the U.S. relative to contracts for later delivery, she wrote.

    With American stockpiles at unprecedented levels, oil tankers laden with U.S. crude have docked in, or are heading to, countries including France, Germany, the Netherlands, Israel, China and Panama. Oil traders said other destinations are likely, just as supplies in Europe and the Mediterranean region are also increasing.

    Small Scale

    That said, the U.S. is likely to remain for the foreseeable future a small exporter compared with OPEC giants Saudi Arabia, Iran and Iraq and non-OPEC producers Mexico and Russia. Ian Taylor, chief executive of Vitol, the company behind the first export, believes exports will remain a “very marginal business.”

    Yet, tanker by tanker, overseas sales are growing.

    Enterprise Products Partners LP, one of the biggest operators of oil ports in the U.S., told investors this month it alone expected to handle exports of crude and condensates — a form of ultra-high quality oil — of about 165,000 barrels a day during the first quarter, up almost 28 percent from the 2015 average.

    Cheaper Transport

    One reason behind the rise in exports is cheap pipeline and railway fees to move crude from the fields in Texas, Oklahoma and North Dakota into the ports of the U.S. Gulf of Mexico. Another is that U.S. oil prices have been trading at a discount to Brent crude, allowing traders to move oil from one shore of the Atlantic to another at a profit.

    The exports could relieve pressure on storage capacity in the U.S. after stockpiles rose to the highest level in official data going back to 1930. The tanks at the oil hub of Cushing, the biggest in the country and the delivery point for benchmark West Texas Intermediate crude, are 92.5 percent full, according to the Energy Information Administration.

    The risk is that the U.S. could shift the glut into Europe and the Mediterranean, where there are higher-than-usual loadings from the North Sea and the arrival of the first barrels of Iranian crude to the region since 2012.

    Texas to Sicily

    The export ban was imposed in the aftermath of a 1973 to 1974 oil embargo by the Arab members of OPEC, the Organization of Petroleum Exporting Countries. It crippled the U.S. economy and highlighted its dependence on imports.

    Before it was lifted, the U.S. sold as much as 500,000 barrels a day overseas, from Alaska and a few other origins allowed under federal law.

    Exxon in early March became the first major U.S. oil company to ship American crude from elsewhere, sending the Maran Sagitta tanker from Beaumont, Texas, into a refinery it owns in Sicily, Italy. Days later, Sinopec lifted on the Pinnacle Spirit tanker a cargo of U.S. crude, a first for a Chinese oil group.

    Oil traders are starting to export American crude to store it overseas and profit from a market condition called contango. That’s where prices of oil for delivery today are lower than those in future months. Buyers with access to storage can fill up their tanks with cheap crude and sell higher-priced futures contracts to lock in a profit.

    Gunvor Group Ltd., a commodities trader with main offices in Geneva, plans to ship 600,000 barrels of U.S. crude to a storage terminal in Panama. It’s then likely to ship the crude in Europe.

    Oil traders are expecting more vessels to depart over coming weeks, with companies seeking to open new export routes from the U.S. West Coast and also moving barrels from new locations, including directly out of Cushing.
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    Alternative Energy

    Tendering Regime Reduces The Cost Of Connecting Offshore Wind Farms By At Least £700m

    New figures show that competitive tendering is cutting the costs for connecting offshore wind farms to the GB high voltage grid by at least £700m.

    The tender regime is run by Ofgem, which chooses the most competitive bids made by firms to own and run links to offshore wind farms over a 20-year period. It was launched in 2009.

    The latest figures published by Ofgem today have been produced by independent consultants. They are based on the first three tender rounds. The savings are accumulating in the 20 year period over which new owners will run the links. 15 tenders have now been completed and the first licence for a firm to run one of the links was granted in 2011.

    The fourth tender round will be officially launched next month where bidders will compete for the right to own and run the link to the Burbo Bank Extension, a 258MW wind farm in the Bay of Liverpool. Ofgem expects to launch a fifth tender round this autumn.

    - See more at:
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    SunPower Delivers 70 Percent More Energy with 70 Percent Fewer Visible Parts

    Today, SunPower introduces the SunPower Equinox™ system, now available to U.S. homeowners. It is the first residential solar solution in the nation in which every major component has been designed and engineered by one company to work seamlessly together, delivering unbeatable power, long-term performance and curb appeal. With a typical SunPower Equinox installation, only the solar panels and a Smart Energy management device are visible, reflecting SunPower’s minimalist architectural approach at the system level.

    The SunPower Equinox platform was engineered based on the company’s The Power of One™ philosophy, which drives innovation of preconfigured solutions that simplify solar for consumers. In 2010, SunPower introduced its Oasis® Power Plant, the world’s first fully integrated utility solar platform, which enables rapid, cost-effective construction of large-scale power plants, now with over 1.8 gigawatts deployed. In 2015, SunPower introduced the industry’s first fully integrated solar solution for commercial customers, the SunPower® Helix™system, which can be installed on commercial rooftops more than 2.5 times faster than any commercial solar solution on the market. Now, the SunPower Equinox™ system brings The Power of One™ to homeowners.  

    “The SunPower Equinox system is a game changer for home solar,” said Howard Wenger, SunPower president, business units. “This powerfully elegant solution produces 70 percent more energy with 70 percent fewer visible parts compared to conventional solar, and we’re backing it by the best combined power and product warranty in the industry. SunPower continues to raise the innovation bar by delivering solutions that make the complex simple, reducing costs, speeding installation, and increasing satisfaction for our customers – while improving quality and aesthetics.”
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    Precious Metals

    Gold Fields successfully closes R2.5bn bookbuild

    Following the launch of an accelerated bookbuild on Thursday, JSE- and NYSE-listed Gold Fields raised R2.5-billion through the oversubscribed placing of 38.9-million new Gold Fields ordinary shares. Gold Fields on Friday successfully priced and closed the private placement, representing some 5% of the company’s issued share capital, to qualifying institutional investors at a price of R59.50 a share, the proceeds of which would be allocated to an existing dollar-based revolving credit facility that was used to buy guaranteed notes in February.

     Last month, after launching a tender offer to buy back up to $200-million of its $1-billion, 4.875% guaranteed notes, which were due in October 2020, the company accepted $147.61-million of the notes tendered, at a purchase price of $880 per $1 000, using the revolving credit facilities. 

    The placing price represented 6% discount to the 30-day volume weighted average traded price of Gold Fields ordinary shares for the 30-trading day period ended March 17. Trading of the shares was expected to start on March 24.
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    Base Metals

    Private capital is ready to invest $7 billion in mining

    According to a study of private capital in the resources sector from industry tracker Preqin, finds half of investors in the mining and metals sector will deploy more capital this year despite two-thirds of institutional investors displaying less appetite for the sector compared to a year ago.

    The pullback comes after fundraising for natural resources investment reached record levels in 2015, with 74 funds raising a total of $67.8bn.

    In total natural resources investment firms have $400 billion assets under management. Of this $243 billion represent unrealized value with the remaining  $157.3 billion so-called dry-powder capital ready to invest. The vast majority is destined for North America.

    A full two-thirds of institutional investors have a decreasing appetite for metals and mining investments

    Only $6.9 billion of the dry powder money in 2016 is for metals and mining although a portion of the diversified funds' $9.7 billion will also go into projects and assets in the sector.  Fund managers also still have to exit some $8.3 billion in mining investments.

    The survey found that fund managers’ views differed most widely in their approach to metals and mining assets. Although 50% of fund managers investing in metals & mining expect to increase the amount of capital they deploy in 2016, 25% expect to decrease the amount of capital deployed, including 8% that plan to invest significantly less capital:

    While this partly reflects the relative lack of success by metals and  mining-focused funds in raising capital in 2015, it may also be the case that some non-specialists, including diversified and energy-focused funds that also invest in mining, are holding off deploying capital in this area until metals markets show greater signs of recovery.

    The number one concern according to the survey is commodity prices. Global market volatility and uncertainty is also a top concern. At the same time 50% of surveyed fund managers believe it's easier to find attractive investments in the sector.

    The five biggest mining and metals funds of the past ten years in terms of aggregate capital raised  have zero funds currently in the market

    Tellingly, the five biggest mining and metals funds of the past ten years in terms of aggregate capital raised – Resource Capital Funds, Orion Resource Partners, Sentient Group, Pamodzi Investment and Waterton Global Resource Management – have zero funds currently in the market.

    In terms of fundraising, as of March there are 256 natural resources funds in the market targeting $141.5bn in aggregate capital.

    Mining is the smallest subset with 13 metals and mining focused private closed-end funds hoping to raise $3.8bn in 2016 representing 5.4% of the total.

    A Preqin survey of fund managers showed significant changes in appetite for natural resources. A full two-thirds of institutional investors have a decreasing appetite for investments in metals and mining compared to a year ago, the only sector where investors interest are, on the whole, on the wane.

    Attached Files
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    Glencore closer to selling Lomas Bayas copper mine in Chile

    Mining and commodities giant Glencore is getting closer to selling its Lomas Bayas copper mine in Chile’s Atacama Desert, after receiving at least two significant offers for the asset, local media reports.

    According Diario Financiero (in Spanish), the bidders include former Barrick Gold CEO Aaron Regent's company — Magris Resources —, and Chilean energy firm Copec.

    Bidders include former Barrick Gold CEO Aaron Regent's company and Chilean energy firm Copec.

    In October, the Swiss firm confirmed it had received a number of unsolicited expressions of interest for the Lomas Bayas open-pit operation and also its Cobar mine in Australia’s New South Wales.

    Glencore said at the time the potential buyers may purchase "either one or both of the mines and may or may not result in a sale.”

    These mines are over and above the asset sales, share offerings and other money raising efforts including by-product forward sales detailed by Chief Executive Officer Ivan Glasenberg last year, as part of its plans to reduce its crippling debt load by $13 billion over the near term.

    The operations are definitively not among the largest in Glencore’s portfolio. Cobar generates about 50,000 tonnes of copper concentrate a year, while Lomas Bayas — acquired by Glencore as part of its 2013 takeover of Xstrata —produces 75,000 tonnes.

    According to analysts including Citigroup Inc. and UBS Group AG, the mines may worth between $500 million to $1 billion.

    Glencore has said it expects to finalize the sales in the first half of the year.
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    Steel, Iron Ore and Coal

    China COSCO, Vale sign agreement on iron ore shipping

    China COSCO Shipping Corp Ltd and Brazilian miner Vale on Friday signed an agreement on iron ore shipping, the latest cooperation between the two companies.

    COSCO's subsidiary China Ore Shipping will ship around 16 million tons of iron ore for Vale annually for the next 27 years.

    China COSCO Shipping Corporation is a new company formed by the restructuring of China's top two shipping firms, officially established in February.

    By amalgamating COSCO and China Shipping, the new conglomerate has the world's largest total shipping capacity and the fourth biggest container fleet.
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    U.S. Steel to lay off workers, idle plants

    United States Steel Corp said it would idle plants and lay off workers in Alabama, Ohio and Texas as it tries to keep a lid on costs to tackle a steep fall in steel prices.

    The company said the layoffs could impact 650 union and 120 non-union workers at Fairfield Tubular in Alabama, Lone Star Tubular in Texas and Lorain in Ohio, along with its Oilwell Services and sales office in Houston.

    Steelmakers worldwide have struggled for years as a global surplus has expanded, weighing on prices and stoking tensions between major exporting countries.

    The U.S. Commerce Department said on Wednesday it will slap anti-dumping duties on certain hot-rolled steel products from seven countries in a preliminary ruling that followed a complaint by U.S. steelmakers last year.

    U.S. Steel reported a bigger-than-expected loss and a 37 percent fall in sales in its latest fourth quarter.

    Shares of the Pittsburgh, Pennsylvania-based company closed up 2.2 pct at $15.76 on the New York Stock Exchange on Friday.
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    Wugang to let go of up to 50,000 of its 80,000 workforce

    Wuhan Iron and Steel Co., Ltd. (Wugang), one of China's biggest steel producers, would cut up to 50,000 jobs, which marks more than 60% reduction of its total workforce of 80,000 employees, it said lately.

    Ma Guoqiang, chairman of the state-owned company, warned "probably 40,000 to 50,000 people will have to find other ways forward". He added the company was facing lower demand because of which it had reduced its production capacity by 25% to 30%.

    Ma said the company has eliminated 4-5 million tonnes of backward capacity in the past ten years. At present, Wugang has a total capacity of 18 Mtpa; it arranged production of 15-16 million tonnes in 2014-2015.

    China has been accused of selling steel at reduced prices and dumping excess production on the world's markets. This made it very difficult for steel manufacturers in the West such as those in Europe and the US because they have higher costs.

    This steel crisis has cost the UK more than 5,000 British jobs in 2015 alone. Tata Steel and Caparo Industries are among the steel companies that had to close their plants or reduce production in the UK owing to this pressure of low prices from China.

    Beijing in the past had promised to cut annual steel production from 1 billion tonnes in the world's second largest economy to 850 million tonnes within 5 years. Industry experts, however, argue there is no sign of progress in this regards.

    The Chinese government fears that imposing such cuts would cause social unrest from the huge Chinese workforce that currently works in the iron and steel sector. Seth Rosenfeld, an analyst with Jefferies, in a recent note on the global steel sector said this fear by Beijing would withhold any chance of improvement in this sector during the near to medium term.
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    Tangshan expo & summit to impact 5-6 mln T steel output in Apr-Oct

    Tangshan, the major steel producing city in northern China’s Hebei province, would take mandatory measure to cut emissions during a series of activities to be held in the city over April-October, according to a document released by the local government.

    These activities include World Horticultural Exposition (April 27-May 3), China-CEEC local heads meeting and Hebei international economic and trade fair (June 14-21) among others.

    A total of 986 enterprises in the city will be ordered to reduce production, and cut emissions by 30-50% during these activities, according to the document.

    Coal-fired power plants that have realized ultralow emission upgrading and steel mills using clean energy such as natural gas and pipeline gas are not included, it said.

    Meanwhile, stricter measures would be adopted if heavy pollution or extreme weather occurs.

    Industry insiders estimated this may impact crude steel output by only 5-6 million tonnes, less than previous market anticipations, as restrictions would be tightened only before and during these activities.

    China’s steel market rebounded recently, prompting many furnaces to resume operation, though the strength of demand from end users remains fragile and uncertain.
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