Mark Latham Commodity Equity Intelligence Service

Monday 6th March 2017
Background Stories on www.commodityintelligence.com

News and Views:

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    Macro

    China reduces growth expectation


    China aims to expand its economy by around 6.5 percent this year, Premier Li Keqiang said in his work report at the opening of the annual meeting of parliament on Sunday.

    That is lower than the 6.7 percent growth achieved last year.

    China also plans to cut steel and coal output this year in an effort to tackle pollution, its top economic planner said on Sunday, while China's newly appointed banking regulator vowed on to strengthen supervision of the lending sector.

    http://www.reuters.com/article/us-global-oil-idUSKBN16D03L
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    Indian Economy Collapses As 'Demonetization' Crushes Small Business


    The Sales Managers Index (SMI) is one of the earliest monthly indicators of Indian economic activity. February's data shows the catastrophic after-effects of the December demonetization policy which was intended to crack down on corruption and 'black money'.

    The February Headline SMI has fallen to an index level of 60.2 in unadjusted terms, the lowest level in over 3 years.

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    Managers are reporting a big drop in monthly sales for both the consumer and industrial sectors, with small to medium size businesses that predominantly deal with cash transactions, being hardest hit.

    Furthermore, the cash policy has had the effect of forcing up the overall Prices Charged Index (53.6) to levels not seen since spring 2013, when the Rupee was valued at ?53.92 against the USD, it is now trading at ?67.29. Some panel members are expecting the currency to continue to fall.

    Higher inflation in the consumer goods and services sectors, represented by the Prices Charged Index for Services (54.7), is pushing the valuation of the Rupee to even greater levels of undervaluation on the World Price Index (WPI) scale. The WPI under valuation level for the Indian Rupee is currently -41% using February data. Businesses are taking advantage of the situation created by such an undervalued currency, with the majority of panel members feeling that the current FX level is becoming advantageous for their businesses.

    Overall, February SMI data suggests an erratic situation for Indian businesses as they meet market challenges with considerably lower levels of confidence, slower monthly sales and higher prices caused by the currency situation.

    http://www.zerohedge.com/news/2017-03-02/indian-economy-collapses-demonetization-crushes-small-business
     

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    White Van Brigade buying new vans!

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    Bitcoin above Gold

    For the first time ever, the price of one #bitcoin has surpassed the price of one ounce of #gold. While today’s swap can be attributed to a good day for bitcoin (up ~3%) and a bad day for gold (down ~1.3%), the big picture is that bitcoin has more than doubled in the last year (up ~185% from a year ago) while gold is essentially trading exactly at the price it was a year ago.

    Even though bitcoin and gold are both thought of as alternative assets, they don’t usually trade in correlation. Still, it’s notable that bitcoin has (at least temporarily) surpassed the price of gold. Gold is quite literally the “gold standard” of alternative assets, often used by investors to hedge against potential losses in more traditional assets like real estate and the stock market.
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    Russia tells Libyan PM it is ready to help unify his divided country


    Russia said on Friday it was ready to help unify Libya and wanted to foster dialogue between rival authorities in Tripoli and factions in the east of the country.

    Russian Foreign Minister Sergei Lavrov held talks in Moscow with Fayez Seraj, the head of the U.N.-backed government in Tripoli, on Thursday.

    The Russian Foreign Ministry said in a statement on Friday that the talks had focused on how efforts to unite Libya could best be advanced. Moscow was ready to mediate and wanted to cooperate with all sides in the oil-rich country, it said.

    "Moscow confirmed its readiness to work closely with all sides in Libya with the aim of seeking mutually acceptable solutions to create the grounds for the stable development of Libya as a united, sovereign and independent state," the ministry said in a statement.

    Seraj's visit was seen as part of efforts to overcome a deadlock in the country between the Tripoli government and Khalifa Haftar, a military commander supported by factions in the east of the country.

    A statement from Seraj's office quoted him as saying that Russia could play a positive role in Libya "thanks to its ties with various Libyan parties."

    On Feb. 19, Seraj told Reuters he hoped Moscow might act as an intermediary between him and Haftar.

    "The passage of time does not allow for the political maneuvers that (some) Libyan groups are trying to play," Seraj's office said.

    It said the Libyan political delegation had been accompanied by officials representing the National Oil Corporation and the defense ministry.

    Lavrov and Seraj had discussed the progress of the U.N.-sponsored reconciliation dialogue, the Russian Foreign Ministry said.

    "The Russian side stressed the need for an inclusive intra-Libyan dialogue aimed at setting up unified organs of power, including an army and police force capable of maintaining security and law and order and of effectively countering a terrorist threat," it said.

    http://www.reuters.com/article/us-russia-libya-idUSKBN16A18G
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    No debt-to-equity swap plan for zombie companies, regulator


    China will not allow hopeless zombie companies to gain a new lease on life through debt-to-equity swap plans, said Guo Shuqing, chairman of China Banking Regulatory Commission (CBRC) at a press conference on March 2, state media reported.

    Guo said low performing zombie companies will be banned from converting debt into equity if they are believed to be hopeless and have no prospects.

    To date, signed debt-for-equity agreements total debts of more than 400 billion yuan ($58 billion), about 40 billion yuan of it having already been swapped into equity. Regulations and policies will be gradually improved in the process of implementation, the report said.

    Guo said the debt-to-equity program could be helpful for functioning companies to overcome financial difficulties.

    http://www.sxcoal.com/news/4552932/info/en

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    Brazil prosecutor plans to investigate ministers, senators for graft: source


    Brazil's top prosecutor will seek authorization from the Supreme Court as soon as this week to investigate senior ministers in President Michel Temer's Cabinet and senators from his PMDB party for corruption, a source familiar with the situation said on Sunday.

    Folha de S. Paulo newspaper reported on Sunday that the request by Prosecutor General Rodrigo Janot will include Presidential Chief of Staff Eliseu Padilha and Wellington Moreira Franco, the minister in charge of a major infrastructure and privatization program.

    According to the paper, Janot is also considering whether to include Temer himself in the request.

    The source confirmed the thrust of the Folha report but did not name the ministers and senators involved in the request, which is based on recent plea bargain deals by 77 employees of Brazil's largest construction group Odebrecht S.A. [ODBES.UL]

    The source, who asked not to be identified because he was not authorized to speak publicly, said prosecutors will also ask the Supreme Court to make public the content of the executives' depositions, which are under seal.

    Odebrecht - which agreed to pay a record $3.5 billion to Brazilian, Swiss and U.S. authorities to settle bribery charges in December - is at the heart of a sprawling investigation into illegal political payments by firms in return for contracts with Brazilian state oil company Petrobras.

    The statements by Odebrecht executives are expected to further tarnish the image of Temer's government, which is already struggling with rock-bottom ratings as it seeks to pass austerity measures aimed at curbing Brazil's massive budget deficit.

    However, the slow pace of justice in Brazil would likely allow the government to press ahead with pension and labor reforms in Congress before any impact was felt, analysts say.

    "I don't see a short-term effect on Temer's clout in Congress," said Luciano Dias, partner at consultancy firm CAC, noting the Supreme Court typically takes around 8 months to formally indict suspects and a further year before a trial begins.

    A presidential aide said on Sunday that any minister would only be suspended if prosecutors decided to bring formal charges against them following an investigation, and would only be dismissed if a judge accepted the charges and placed them on trial.

    The departure of Padilha, who is already absent on health leave, would deprive the government of one of its most effective political operators but Congressional leadership could take up the slack in ushering through reforms, said Christopher Garman of Eurasia Group.

    TEMER IN CROSSHAIRS

    The allegations against Padilha and Moreira Franco stemmed from testimony by Odebrecht's former head of government relations in Brasilia, Cláudio Melo Filho, which was leaked to the media.

    The testimony alleged that Odebrecht cultivated ties with senior members of the PMDB for years and that Padilha received an illicit 10 million real ($3.21 million) payment for the party's 2014 election campaign.

    A spokesman for Padilha declined to comment. A representative for Moreira Franco said he had never talked about party issues or financing with Melo Filho.

    Folha said the prosecutors' list included other senior members of the PMDB, including the government's leader in Congress, Senator Romero Jucá, former Senate head Renan Calheiros, and the current Senate president Eunicio Oliveira.

    Senior members of the allied PSDB party including former presidential candidate Senator Aécio Neves and Senator José Serra, who resigned as foreign minister two weeks ago, are also being targeted by prosecutors, the paper said.

    Former presidents Dilma Rousseff and Luiz Inácio Lula da Silva of the Workers' Party are also among the politicians that Janot intends to investigate, the paper said.

    The Constitution forbids investigating a sitting president for crimes committed before the start of his term, but prosecutors are considering whether they should also seek to investigate Temer.

    The prosecutors are discussing whether his term as a vice-president, before Rousseff's impeachment last year, counts as part of his current term, according to the paper.

    The president has repeatedly denied accusations of soliciting illegal funds and insisted any donations were legal and duly registered with electoral authorities.

    http://www.reuters.com/article/brazil-corruption-idUSL2N1GI0AU
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    Oil and Gas

    Armed faction enters major Libyan oil ports, putting output at risk


    An armed faction entered two major Libyan oil ports on Friday, pushing back forces that captured and reopened the terminals in September, officials and residents said.

    The move risks increasing the fighting around the ports and casts new doubt over Libya's attempt to revive its oil production. The terminals at Es Sider and Ras Lanuf are two of Libya's largest, with potential combined production capacity of about 600,000 barrels per day (bpd).

    It was unclear late on Friday to what extent the faction that attacked, the Benghazi Defence Brigades (BDB), had gained control over the area. There was no statement from the Libyan National Oil Corporation (NOC) in Tripoli, which restarted operations at the ports after the eastern-based Libyan National Army (LNA) took them over seven months ago.

    Since then the LNA's opponents have launched several unsuccessful attacks against the ports in Libya's eastern Oil Crescent, in a campaign linked to a broader conflict between factions based in eastern and western Libya.

    The LNA had said the ports were well secured. But it said the BDB had launched a rapid, three-pronged attack early on Friday that pierced its defenses.

    Air strikes repelled an attack targeting a third port, Brega, but the LNA withdrew men and equipment around Es Sider and Ras Lanuf to avoid a damaging fire fight, LNA spokesman Ahmed al-Mismari said.

    Port engineers, oil sources and residents said the BDB entered both Es Sider and Ras Lanuf ports after the attack.

    The BDB posted pictures of its fighters at Ras Lanuf's nearby air strip, though the LNA later said it had retaken control there.

    At least nine men loyal to the LNA were killed and eight wounded in the fighting, a medical source said.

    The LNA took Es Sider, Ras Lanuf, Brega and Zueitina oil ports in September. All but Brega had long been blockaded. After the NOC reopened them, Libya's oil production more than doubled.

    The Benghazi Defence Brigades are composed partly of fighters who were ousted from Benghazi by the LNA, where LNA commander Khalifa Haftar has been waging a military campaign for nearly three years against Islamists and other opponents.

    The LNA brands its opponents as Islamist extremists, and each side accuses the other of using mercenaries from Libya's sub-Saharan neighbors. Some in the east also accuse elements of the U.N.-backed Government of National Accord (GNA) in Tripoli of backing the BDB and their allies.

    The GNA's leadership strongly condemned Friday's escalation, saying in a statement that it "did not give any order to any forces to move towards that area". It suggested the attack could be an effort to scupper Libyan and international efforts to bring peace.

    Libya has recently been producing about 700,000 barrels per day (bpd) of oil, more than double its output early last year but still far less than the 1.6 million bpd the OPEC member was pumping before the 2011 uprising.

    The Oil Crescent ports suffered major damage in previous rounds of fighting and are still operating well below capacity.

    Tankers have been loading at Es Sider since December, with the Amalthea due to arrive on March 7 to load 630,000 barrels for Austria's OMV, according to shipping sources.

    The NOC has been lobbying foreign firms to return to Libya and invest in the oil and gas sector as it tries to push production to 1.2 million bpd later this year.

    http://www.reuters.com/article/us-libya-security-oil-idUSKBN16A1D4
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    Asia seen spoilt for choice as more US light oil becomes available


    The recent approval of the Dakota Access Pipeline and rising Permian production is expected to leave Asian refiners spoilt for choice as more US light crude oil from the Gulf of Mexico becomes available to them.

    Once Dakota Access comes online, roughly "couple of hundred thousand barrels per day of US light oil could be available by capacity for exports," said Takayuki Nogami, chief economist at Japan Oil, Gas and Metals National Corp.

    Nogami said more US light oil could be available for exports as US refiners in the Gulf generally process medium to heavy grades.

    The delayed 470,000 b/d Dakota Access Pipeline received final federal approval in early February to complete construction, and start up is targeted between March 6-April 1.

    The four-state $3.8 billion pipeline is designed to deliver Bakken and Three Forks crude to Patoka, Illinois, where it will connect with the Energy Transfer Crude Oil Pipeline to Texas, leaving more crude available for export from the Houston terminals.

    The Permian is the US' most active crude play by far and the site of most of rig count increases. Production at the Permian Basin has been climbing steadily since September and is projected to reach 2.25 million b/d in March, according to the US Energy Information Administration.

    A number of refiners in China, Japan and South Korea said that they are closely watching the developments and will consider importing more light oil and possibly sour grades from the US whenever they became competitive against their main sour crude imports from the Middle East.

    "We will definitely watch this [development over the Dakota Access Pipeline and increasing US oil production] and seek more opportunity," said a refiner in South Korea.

    "Our principle has not changed. We intend to buy attractive [crudes] from around the world, regardless of whether they are from the Gulf of Mexico or the pipeline coming onstream," said Jun Mutoh, president of Japanese refiner TonenGeneral, an active buyer of US oil including WTI crude and shale.

    Gaven Chen, a senior refining engineer with China's state-owned Sinopec, said he expected US refiners will need at least five years to complete their infrastructure reform to crack shale oil, which could result in more availability of light oil for exports until around 2022.

    NO INFRASTRUCTURE CONSTRAINTS

    A buildout of pipelines and rising production means that exports of US crudes to Asia will not be limited by infrastructure constraints, said Sandy Fielden, director of oil and products research at Morningstar.

    But Fielden said the volumes will eventually depend on price.

    "You've got a potential for exports into the Asia market, and you're seeing the first talk of exports of offshore Gulf of Mexico sour crude like Southern Green Canyon potentially going to Asia to make up for a lack of barrels due to the OPEC cuts," Fielden said.

    "There's going to be circumstances where the price is right and the arbitrage opens up, but I'm thinking this is kind of a sporadic -- it's based on circumstance, it's not going to be a big, sudden opening up of the market that results in a massive outpouring of crude from the Gulf Coast," he said. "It's all going to depend on the relative price."

    Some of the US light oil production could also be used for blending with heavier grades, said Nobuo Tanaka, former executive director of the International Energy Agency.

    So increasing availability and production of US light oil production may not necessarily lead to a spike in crude exports, although the current crude price is supporting incremental shale oil production, he added.

    Currently, pipelines can transport 1.85 million b/d of crude into the Houston area from offshore Gulf of Mexico and Texas oilfields, including the Permian Basin and Eagle Ford, according to Morningstar. Another 1.55 million b/d of crude can be shipped through pipelines originating at Cushing.

    In the next year, an additional 500,000 b/d of pipeline capacity from the Permian Basin to Houston will come online, including the expansion of the BridgeTex pipeline and a new Enterprise Products Partners project.

    Export capacity is rising at Corpus Christi, where Occidental Petroleum inaugurated its 200,000 b/d Ingleside export terminal in 2016. Plains All American plans to expand its Cactus pipeline by 140,000 b/d to 390,000 b/d this year, supplying more Permian crude to Corpus Christi export terminals.

    RISING US CRUDE SUPPLY TO ASIA

    Following the December 2015 US Congress decision to lift crude export restrictions, US crude exports to Asia skyrocketed from just 4,000 b/d in 2015 to 54,000 b/d in 2016, according to US Census Bureau data. China received 23,000 b/d of US crude in 2016 and shipments also arrived in Japan, South Korea, Singapore and Thailand.

    This year Chinese independent refiners have started buying US crudes, with 2 million barrels of Mars and Thunderhorse crudes arriving in April, according to market sources. Until last year, only state-run refiners imported US crudes in China.

    HEIGHTENED ACTIVITY

    A widening Dubai premium to WTI and refinery maintenance season in the US are likely to keep export demand healthy in the near term.

    A significant amount of coking capacity is currently under maintenance in the region, meaning that previously hard to find grades, like Mars and Southern Green Canyon, may be available for export, market sources said, adding that sour grades have departed the USGC for North Asia in recent weeks.

    WTI FOB Houston differentials point to heightened export demand in recent months. The differential rose to average front-month NYMEX WTI plus $2.35/b in December and plus $2.34/b in January, up from plus $1.73/b in November.

    The tightening of the Dubai crude market following OPEC's coordinated supply cuts has led Dubai crude to flip to a premium to WTI in recent months, making US crude more competitive in Asian refineries.

    Dubai's premium to WTI widened to average 95 cents/b in January and $1/b in February, leading many Asian crude buyers to look beyond the Middle East for supply.

    The lack of demand for Middle East sours is reflected in weak forward freight rates.

    Persian Gulf-Far East VLCC rates declined to $10.47/mt in January from $12.96/mt last December as the Dubai/WTI spread widened.

    The market continues to expect weak demand going forward, with February rates to date averaging $8.78/mt.

    By comparison, US Gulf Coast-Asia Suezmax freight has held firm, averaging $23.27/mt and $23.94/mt in December and January, before dipping slightly to $21.39/mt in February.

    A Suezmax fixture is the latest example of increasing inquiries for Asia. Mercuria was reported to have put the Tony on subjects to lift a 130,000 mt crude cargo for a USGC-Singapore voyage loading March 1.

    "USGC to East is the new hot thing," said a shipbroker.

    An industry source said the Suezmax market on Far East runs should continue to firm as tonnage remained tight in the Gulf of Mexico and traders were looking to ship cargo to the East.

    http://www.platts.com/latest-news/oil/tokyo/analysis-asia-seen-spoilt-for-choice-as-more-27781634

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    China's largest 'teapot' refiner, CEFC team up in Shandong oil terminal venture


    Dongming Petrochemical, China's largest independent or 'teapot' refiner, has signed a deal with privately run CEFC China Energy and a local port authority to build a crude oil terminal in Shandong province, seeking to ease a logistics bottleneck gripping the country's teapot oil sector.

    The 3.9 billion yuan ($566 million) project with conglomerate CEFC China Energy and Rizhao port authorities comes as China's teapots refiners emerge as a catalyst in the global oil market, ramping up Russian and U.S. imports in frenzied buying that has led to tanker queues and scarce storage space.

    Executives at Dongming, formally known as Shandong Dongming Petrochemical Group, and private firm CEFC said on Friday that publicly owned Rizhao Port Authorities will take 51 percent of the project, CEFC 25 percent and Dongming 24 percent. Plans include a 300,000 deadweight tonnage (DWY) crude terminal, two 150,000-DWT crude berths and a 9.8 million barrel storage farm.

    "With Qingdao port nearly saturated, Rizhao stands out with its ideal location, with easy access to teapots to the north and close also to Lianyungang, one of China's planned future petrochemical hubs to the south," a CEFC executive told Reuters, declining to be named as he was not authorized to speak to media. CEFC has interests spanning finance and travel as well as oil.

    Qingdao port is the country's largest oil port by volume, accounting for 27 percent of China's total crude oil imports last year, with crude shipments into the port up nearly 50 percent over 2015, according to Chinese customs data.

    The Rizhao terminal project will be one of a series in Shandong, as other firms have also planned to add new pipeline and storage facilities in the area to provide much-needed infrastructure.

    Dongming's vice president Zhang Liucheng told Reuters by telephone that construction of the project is slated to start by mid-year. The teapot refiner already operates a crude oil pipeline connecting Rizhao and its 240,000 barrels per day (bpd) refinery in Heze city of Shandong.

    In Lianyungang, a port city in neighboring Jiangsu province, Dongming runs another smaller plant with 60,000 bpd capacity, according to the company website.

    There are two existing crude oil berths in Rizhao able to anchor supertankers, according to the CEFC executive. The project marks the firm's second major investment in storage and terminal facilities in China, after its 17.6 million-barrel tank farm in the country's southernmost Hainan province.

    http://www.reuters.com/article/us-china-teapot-terminal-idUSKBN16A0FS
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    India's GAIL signs first time-swap deal for US LNG


    Reuters are reporting that GAIL India has signed a time-swap deal with Swiss trader Gunvor to sell some of its US LNG, as the Indian company tries to ease the burden of its costly foreign LNG supplies.

    It is the first time-swap agreement by GAIL, which is trying to juggle its LNG portfolio to cut costs for price-sensitive Indian customers after a sharp fall in Asian spot prices made its US gas unattractive.

    The deal equates to around 5% of India's 2015/16 LNG imports and will support a government push to promote use of the cleaner fuel.

    Under the agreement, Gunvor will supply 15 cargoes or about 0.8 million t of LNG to GAIL on India's west cost between April and December this year in oil-linked prices on a delivered basis in India.

    In return GAIL will sell 10 cargoes or about 0.6 million t next year from Sabine Pass on the US Gulf coast in 2018 at a premium to its pricing formula on a free-on-board basis.

    The deal means GAIL could get gas from Gunvor at US$6.50 – 7.00 per million British thermal units.

    GAIL is saddled with long-term contracts to take expensive US gas after embarking on a buying spree between 2011 and 2013 when the fuel was scarce and prices kept rising.

    LNG booked by GAIL under a long-term deal with Cheniere Energy, which owns the Sabine Pass Liquefaction terminal, will cost 115% of Henry Hub prices plus a fixed cost of US$3 per mBtu. At current prices, this equates to a cost of about US$8.50 per mBtu on a delivered basis to India.

    The Indian company has a deal to buy 3.5 million tpy of LNG for 20 years from Cheniere Energy and has also booked capacity for another 2.3 million tpy at Dominion Energy's Cove Point liquefaction plant.

    It has so far sold about 0.5 million t of its LNG from the US projects to Royal Dutch Shell, but has not been able to attract Indian customers despite repeated attempts.

    https://www.lngindustry.com/liquid-natural-gas/03032017/indias-gail-signs-first-time-swap-deal-for-us-lng/

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    Macquarie to buy Cargill's global oil business -sources


    Australian bank Macquarie Group Ltd is planning on buying Cargill Inc's global oil business, according to people familiar with the matter, marking the second energy business the global commodities trader has shed this year.

    Terms of the deal have been agreed upon, but the integration could take several weeks or longer, one of the sources said.

    The deal comes as Cargill has spent the past year streamlining its business amid a nearly three-year slump in global commodity prices. In January, sources said that Cargill sold its U.S. gas and power business to commodities trader and investor TrailStone Group.

    A Cargill spokeswoman said the company continues to operate its U.S. gas and power business and its global oil business, but declined to comment on the acquisition by Macquarie. Macquarie also declined to comment.

    Macquarie had also bid on Cargill's gas and power business, a source said.

    Privately held Cargill in January reported a higher quarterly profit, buoyed by strong results in its meats and U.S. crops business.

    Many banks exited physical oil trading following the implementation of the Dodd-Frank Act's financial reform. President Donald Trump in February signed an executive order that would scale back the act, potentially creating a better environment for banks to trade physical commodities.

    http://www.reuters.com/article/cargill-inc-divestiture-macquarie-group-idUSL2N1GG1BN
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    Onshore Rig Count Increases by Just One,oil rigs up 7


    Eagle Ford adds 5 rigs, Williston adds 3, Permian adds 2 for the week

    Onshore drilling activity remained more or less unchanged for the week ended March 3, 2017, according to Baker Hughes’ (ticker: BHI) weekly report. The number of active rigs drilling onshore in the U.S. increased by just one rig to 734 this week. Total U.S. rigs increased by two to a total of 756, up 267 (55%) from the same period last year.

    The number of rigs drilling for crude oil increased by seven week-over-week, but the total rig count was held back a small decline in the number of rigs targeting natural gas. Rigs drilling for gas fell by five from last week to 146, up 49 (51%) from this time last year.

    Looking at variance by basin, the Eagle Ford saw the largest increase with five additional rigs this week bringing the total number in the play to 69 rigs. The Williston saw the next largest increase with three rigs, while the Permian added two rigs, and the Arkoma Woodford and Granite Wash added one rig each. The Permian remains the most active basin with 308 rigs drilling in the play.

    The Barnett, Cana Woodford, DJ-Niobrara, Haynesville, Marcellus and Utica all reported one fewer rig this week compared to last.

    http://www.oilandgas360.com/onshore-rig-count-increases-just-one/

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    Chesapeake delays release of 2016 financial results until Monday

    Chesapeake delays release of 2016 financial results until Monday

    Chesapeake Energy will be forced to delay the release of its complete financial results for the full-year 2016 until Monday as a result of "a material weakness in its internal control over financial reporting," the producer said in a filing with the US Securities and Exchange Commission Thursday.

    "Chesapeake Energy is unable to file, without unreasonable effort or expense, its Annual Report on Form 10-K for the year ended December 31, 2016," the Oklahoma City-based company said in the SEC filing.

    The company said it expects to report a net loss of $4.399 billion for the year, compared with a net loss of $14.635 billion for 2015.

    In the company's February 23 fourth-quarter 2016 earnings call, Executive Vice President and CFO Nick Dell'Osso said the financial reporting weakness causing the delay in the release of the 10-K was an isolated problem and was the result of "an oil basis pricing differential calculation in one region for a discrete period of time."

    http://www.platts.com/latest-news/natural-gas/houston/chesapeake-delays-release-of-2016-financial-results-21045457

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    Occidental’s massive petrochemical plant comes online in Texas


    The first of several new petrochemical plants coming online this year became operational this week when Houston-based Occidental Petroleum opened its new facility near Corpus Christi.

    The $1.5 billion ethylene plant in Ingleside is a joint venture between Occidental’s OxyChem subsidiary and Mexico-based Mexichem. The facility, called an ethylene cracker, takes ethane from natural gas production and converts it into ethylene, which is the primary building block for most plastics.

    The project is the smallest and first of several Texas Gulf Coast ethylene crackers being completed this year. Others are under construction in the Houston area by Exxon Mobil, Chevron Phillips Chemical and Dow Chemical.

    The plant will churn out 1.2 billion pounds of ethylene a year that Occidental will turn into vinyl chloride mononers, which Mexichem will then convert into polyvinyl chloride to make PVC piping.

    While the project included thousands of construction jobs, the plant only created about 150 permanent positions. The facility was built by The Woodlands-based CB&I.

    The slew of petrochemical plants in Texas are the result of the cheap and ample shale gas supplies that serve as the feedstock for the facilities.

    http://fuelfix.com/blog/2017/03/02/occidentals-massive-petrochemical-plant-comes-online-in-texas/

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    730-mile Epic Permian-to-Corpus pipeline in the works


    A trio of companies hope to build a 730-mile-long crude oil and condensate pipeline from West Texas to Corpus Christi.

    The so-called Epic pipeline would have a maximum capacity of 440,000 barrels per day of crude oil and condensates, a form of ultralight crude oil. The pipeline would take crude from points in Orla, Pecos, Crane and Midland in West Texas’ Permian Basin and transport it to an affiliate’s terminal in the Port of Corpus Christi and other drop-off points in the area, according to a news release.

    It is being built by San Antonio-based TexStar Midstream Logistics, Connecticut-based Castleton Commodities International and Texas-based Ironwood Midstream Energy Partners.
    Ironwood maintains its engineering and operations in Dallas while its business development and finance units are based in San Antonio.

    The companies are currently bidding out the first 200,000 barrels of pipeline capacity and have not said how much it will cost to build the pipeline or when they plan to start construction. The companies say the pipeline will be operational by the first quarter of 2019.

    “TexStar and its partners are excited to extend our business into the Permian Basin, where we see tremendous opportunity and continued growth,” said Phil Mezey, CEO of TexStar. “TexStar has a proven track record of building crude oil pipelines in emerging areas and looks forward to expanding upon its relationships with producers to make the project a success.”

    http://fuelfix.com/blog/2017/03/02/730-mile-epic-permian-to-corpus-pipeline-in-the-works/
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    Alternative Energy

    Li-ion for grids.

    Stored power from lithium-ion batteries can do the work of a natural-gas peaker plant at an average cost of between $285 and $581 a megawatt-hour, according to a December report by Lazard Ltd. In contrast, electricity from a new gas peaker plant costs between $155 and $227 a megawatt-hour, according to Lazard.
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    US EPA not involved in White House talks on RFS point of obligation: official


    Neither the US Environmental Protection Agency nor its new chief Scott Pruitt are involved in White House talks surrounding a potential major change to the Renewable Fuel Standard, a senior agency official said Thursday.

    The source, who asked not to be named, said the White House was driving the RFS point of obligation debate, which has roiled US oil and biofuel markets this week.

    "This is a big-time issue," the official said. "At some point, just like they did with the 'Waters of the US' [rule], the president is going to say to his agencies, 'This is how we're going to move forward.'"

    Asked whether EPA would then weigh in before a final decision, the official said: "We'll follow the president's orders, that's our job."

    The Renewable Fuels Association, the largest US ethanol trade group, reached a deal with major CVR Energy shareholder and White House adviser Carl Icahn to present a plan to the Trump administration proposing moving the RFS point of obligation from refiners and importers to blenders at the wholesale rack. The biofuels group has embraced the change it once campaigned against in exchange for support on approving year-round sales of gasoline blended with 15% ethanol.

    RFA President Bob Dinneen said moving the point of obligation was presented as "not negotiable."

    Icahn has long railed against the RFS, arguing it has imposed too heavy a burden on merchant refiners like CVR Energy that have to buy Renewable Identification Numbers (RINs) in the market to satisfy annual RFS requirements.

    The apparent deal has fractured the biofuel lobby, with Fuels America -- which represents Archer Daniels Midland, Poet, and other major corn growers and ethanol producers -- immediately severing ties with RFA. "Moving the point of obligation and messing with the RFS in that way is just a bad deal," Chris Hogan, vice president of communications for ethanol trade group Growth Energy, said in an interview Wednesday.

    "It's bad for consumers, it's bad for the retailers who are trying to sell more biofuel. It's certainly not good to have folks speaking for federal policy who shouldn't be doing that and aren't authorized to do so," he added.

    Reports that the White House was poised to accept such a deal and take swift action to move the point of obligation made ethanol RINs and RBOB futures plummet Tuesday. Both regained some ground after the White House said no executive order on ethanol was imminent.

    Ethanol RINs for 2017 compliance were assessed at 38 cents Wednesday, down 20% compared with Monday, before talk of possible White House action on the point of obligation.

    http://www.platts.com/latest-news/agriculture/washington/us-epa-not-involved-in-white-house-talks-on-rfs-21045458

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    Fret on Vestas.

    The National Energy Administration (NEA) has issued red alerts, or the highest warning, in six provincial regions where new wind power projects will be prohibited this year, Securities Daily reported, citing a statement published on the NEA's official website on February 22.

    The six restricted regions include northeastern Heilongjiang and Jilin, northwestern Gansu, Ningxia and Xinjiang, as well as northern Inner Mongolia.

    In these regions, new construction approvals and access to grid connections will be put on hold.

    Large amounts of wind power were wasted in these regions last year, an industry analyst told the newspaper, adding that the NEA hopes to urge local governments to more actively solve the problem through administrative measures, which have active significance for the healthy development of the industry.

    According to official data, last year the waste proportion of these regions were Gansu (43%), Xinjiang (38%), Jilin (30%), Inner Mongolia (21%), Heilongjiang (19%).

    China had 149 GW of installed wind power capacity as of the end of 2016, with 19.3 GW added last year, according to the NEA.

    Wind power facilities generated 241 TWh of electricity in 2016, 4% of the country's total electricity production, compared with 3.3% in 2015.

    However, nearly 50 TWh of wind power was wasted last year, up from 33.9 TWh a year earlier, due to distribution of wind resources and an imperfect grid system.

    The three-tier warning system distinguishes the risk levels by green, orange and red and the NEA releases the results annually.

    http://www.sxcoal.com/news/4552618/info/en
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    Precious Metals

    U.S. extends scrutiny of U.S. miner takeover by S.Africa's Sibanye

    U.S. extends scrutiny of U.S. miner takeover by S.Africa's Sibanye

    The Committee on Foreign Investment in the United States will extend its scrutiny of a $2.2 billion takeover by South Africa's Sibanye Gold of the only U.S. miner of platinum and palladium, Stillwater Mining , Sibanye said on Friday.

    The committee, which examines deals for potential U.S. national security concerns, extended the deadline for its review from February 28 to no later than April 14, 2017.

    http://www.reuters.com/article/stillwater-minng-ma-sibanye-gold-idUSFWN1GG0BL
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    Base Metals

    Copper Set to Drop as China's Jiangxi Looks to Boost Output


    Copper is poised to drop this year as higher U.S. interest rates and elections in Europe curb demand, according to the chairman of China’s second-largest refiner of the metal.

    Prices will end the year lower than where they started, Jiangxi Copper Co.Chairman Li Baomin said Sunday in an interview in Beijing as the government announced growth plans for 2017. Jiangxi Copper plans to increase production to the maximum capacity of 1.36 million metric tons, compared with about 1.2 million tons last year, he said.

    Copper got a lift in November on speculation that U.S. President Donald Trump will increase spending on roads, bridges and airports, expanding demand for metals. After a surge in January, copper has slipped on mounting expectations that the U.S. central bank will raise interest rates again just three months after a quarter percentage point increase.

    “There are things worrying us,” Li said, including Trump’s “not clear” policies, higher U.S. rates and uncertainties about who will win European elections. “In addition, some emerging economies’ development is losing momentum.”

    Copper will average 45,000 ($6,524) to 46,000 yuan a ton in 2017, Li said. That’s lower than the year-to-date average of 47,513 yuan. Futures in Shanghai traded at 48,220 yuan at 9:04 a.m. local time on Monday.

    Global demand still looks set to exceed production, with China’s consumption growth at 6 percent this year compared with 5.8 percent last year, Li said. Demand is getting a boost from power grid spending and a push toward more energy-efficient vehicles that use copper, he said.

    https://www.bloomberg.com/news/articles/2017-03-05/copper-set-to-drop-as-china-s-jiangxi-looks-to-boost-production
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    Indonesia won't budge on divestment rule for Freeport: minister


    Indonesia will not back down from new rules requiring Freeport-McMoran to divest a majority stake in its local unit, Energy and Mineral Resources Minister Ignasius Jonan said, in a dispute over rights to the world's second-biggest copper mine.

    Freeport's exports of copper concentrate from its Grasberg mine have been at a standstill since mid-January, when Indonesia introduced rules that are intended to improve revenues from its resources and create jobs.

    The dispute has threatened to cut government revenues and unsettle business sentiment in Southeast Asia's biggest economy at a time when President Joko Widodo's reform agenda has been buffeted by political instability and social tensions surrounding gubernatorial elections in Jakarta.

    The new rules require the U.S. company to give up its 1991 contract before it can resume exports of copper concentrate. They also require that Freeport divest a 51 percent stake in its Indonesian unit, pay more taxes, and build a second copper smelter.

    The government was willing to "sit down and have more beneficial solutions for both sides," Jonan told Reuters in an interview late on Thursday, referring to discussions with Freeport on the new rules.

    However, "the 51 percent is mandatory," he said.

    "Freeport has been here for 50 years," he said, "doing business in the soil of Indonesia."

    The president had proposed that Freeport continue operating the Grasberg mine, while state-owned pension funds would provide finance for the stake, Jonan said.

    "The government will be the silent partner."

    No time frame has been set for the divestment.

    Earlier this week, Freeport Chief Executive Richard Adkerson said Indonesian ministers had been "aggressive" and that the new regulations were "in effect a form of expropriation".

    Adkerson said the attempts to enforce the new rules were in violation of Freeport's contract and he warned that if there were no resolution by mid-June it could go to arbitration.

    Freeport's exports and output have been paralyzed by the dispute. The Phoenix, Arizona-based company this week slashed its Grasberg copper mining target and shelved plans to invest $1 billion a year in a long-term underground expansion.

    Jonan denied that relations between the two parties had deteriorated and said both hoped to conclude negotiations as soon as possible.

    While the government was "more than ready" to go to arbitration, Jonan said: "If we can sit down and discuss this amicably, it would be better."

    Union representatives say more than 1,500 workers have been sent home, work has ground to a halt, and unprocessed ore has begun to pile up.

    "We hope the government and the company can reach an understanding. We don't want this to be a drawn-out process," said Aser Gobai, head of the workers union in Mimika regency.

    The company has brought in billions of dollars of investment to Indonesia's easternmost Papua province, and employs thousands of its people.

    Copper prices moved above $6,000 a tonne to 20-month highs on the London Metal Exchange in mid-February on the back of Freeport's diminished output and a strike at BHP Billiton's Escondida mine in Chile.

    http://www.reuters.com/article/us-indonesia-freeport-idUSKBN16A1BC
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    No zinc TC/RC deal struck at IZA, price escalators are sticking point: sources


    Zinc miners and smelters reportedly failed to reach a benchmark agreement on 2017 treatment and refining charges this week at the International Zinc Association conference in Rancho Mirage, California.

    A major sticking point in the negotiations, according to sources, were the price escalators in his year's fee, amid significant uncertainty in zinc price direction going forward.

    Miners and smelters were far apart in their negotiating positions on the fee itself going into the TC/RC talks, sources said, spurring doubts at the outset that the parties would conclude a deal by the end of the three-day IZA forum.

    "They're very behind," an IZA attendee said, referring to the lagging talks. Parties were negotiating in a wide range of $100-$180/mt, according to one source, with a range of $140-$150/mt heard later in the conference.

    The parties particularly clashed over the level of the fee's price escalators, the built-in adjusters that allow for rises in the zinc price during the year. A miner at the IZA meeting was pushing to exclude price escalators from the 2017 fee, a source said, following other markets like copper, which has eliminated escalators in the benchmark TC.

    Another source attending the conference said miners were also pressing for a bigger percentage recovery -- the metal value contained in the zinc concentrates -- to 90% from the current 85%, but he doubted miners would win such a concession in this year's talks.

    A source with one of the negotiating parties said a base price of at least $2,800 was likely in this year's TC/RC, reflecting the substantial rally in zinc prices over the last year.

    The 2016 benchmark fee was reportedly settled at $188, basis $2,000. Miners went into this year's negotiations with a clear edge carried over from the 2016 talks, when major mines like MMG's 500,000 mt Century mine tapped out.

    But a dramatic concentrates squeeze has hit the market during the course of last year, giving miners even more of an advantage in this year's talks, with all signs pointing to a sharply lower fee.

    However, analysts said earlier this year that miners would be unlikely to play too heavy a hand in pushing for a fee reduction, as the zinc market's supply dynamics will eventually shift back to favor the smelters.

    http://www.platts.com/latest-news/metals/washington/no-zinc-tcrc-deal-struck-at-iza-price-escalators-21045492
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    Rio Tinto aluminium smelter to slash jobs as power prices bite


    Rio Tinto’s Boyne aluminium smelter in Gladstone is set to slash more than 100 jobs and about 80,000 tonnes of annual production — worth $US160 million at current prices — because it has been unable to secure economically-priced power from state power providers.

    The production and job cuts are almost double those flagged in January, when Rio Tinto (RIO) said it would cut 8 per cent of production, or 45,000 tonnes, and about 30 jobs because power price spikes were hitting production cuts.

    The wider cuts are a result of Boyne being unable to negotiate power contracts that will let it run profitably.

    “Gladstone’s Boyne Smelters Ltd will be reducing production by 14 per cent after failing to secure a competitively priced electricity contract,” a Rio spokesman said.

    “There will be a significant number of jobs lost as a result.”

    With about 1,000 workers at Boyne and 14 per cent of production being cut, the job losses are expected to number more than 100.

    In January, Boyne had been saying power prices were way above power costs. But the tone has softened, with Boyne now accepting the generators have tried as hard as they could to provide economic power.

    “Boyne Smelters has been working hard to secure a competitive energy deal. Both parties have been negotiating in good faith but ultimately could not reach agreement,” the spokesman said.

    Aluminium is often called solid electricity because the process of turning its raw material, alumina, into metal requires so much power.

    Boyne gets about 85 per cent of its power from the Gladstone power station, in which it has a 42 per cent stake and 810MW of power supply locked in until 2029.

    The rest of the power needs to be sourced from the market, something Rio now says it is not able to do economically.

    As a result 140MW of power will be dropped from its production circuit, up from a January plan to cut 80MW and 45,000 tonnes of annual production.

    Boyne has total capacity of about 584,000 tonnes of production.

    Rio owns 59.4 per cent of Boyne.

    Boyne made $US12m of profit last year, down from $US40m the year before.

    http://www.theaustralian.com.au/business/mining-energy/rio-tinto-aluminium-smelter-to-slash-jobs-as-power-prices-bite/news-story/b22c667e1b48e759eb9c5576b56e0f72

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    Steel, Iron Ore and Coal

    China vows new steel, coal capacity cuts to make sky blue


    China will cut steel capacity by 50 million tonnes and coal output by more than 150 million tonnes this year, its top economic planner said on Sunday as the world's No. 2 economy deepens efforts to tackle pollution and curb excess supply.

    In a work report at the opening of the annual meeting of parliament, the National Development and Reform Commission (NDRC) said it would shut or stop construction of coal-fired power plants with capacity of more than 50 million kilowatts.

    The pledges are part of Beijing's years-long push to reduce the share of coal in its energy mix to cut pollution that has choked northern cities and to meet climate-change goals while streamlining unwieldy and over-supplied smoke-stack industries such as steel.

    Speaking at the opening of parliament on Sunday, Premier Li Keqiang reiterated the government's plan to ramp up monitoring of heavy industry and crack down on companies and officials that violate air quality rules.

    "Officials who do a poor job in enforcing the law, knowingly allow environmental violations, or respond inadequately to worsening air quality will be held accountable," he said.

    "We will make our skies blue again."


    In its report, the NDRC said it would cut energy consumption per capita by 3.4 percent and curb carbon intensity by 4 percent this year.

    By 2020, the government has said it aims to close 100 million-150 million tonnes of steel capacity and 800 million tonnes of outdated coal capacity.

    This year's targets come after the world's top coal consumer and steel maker far exceeded its 2016 goals to eliminate 250 million tonnes of coal and 45 million tonnes of steel capacity.

    Much of the steel capacity was already idled and output actually rose 1.2 percent to 808.4 million tonnes. Coal output fell 9 percent to 3.64 billion tonnes.

    A new round of capacity cuts was widely expected, although some executives may be disappointed the NDRC did not give an update on the government's policy that sets a limit on the number of days thermal coal mines can operate each year.

    Coal prices have rallied in recent months amid speculation the government would reinstate a limit of 276 days.

    "The smaller target this year is a natural move as the government gradually replaces low-efficiency coal capacity with more efficient ones," said Li Rong, analyst with consultancy SIA Energy.

    Speaking on the sidelines of the annual meeting, industry minister Miao Wei said the government would continue to weed out low-grade steel that uses recycled material, which it says is a major source of smog and a safety hazard.

    http://www.reuters.com/article/us-china-parliament-steel-coal-idUSKBN16C00H

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    Shaanxi launches half-year crackdown on illegal coal mining


    Five provincial government departments in northwestern China's coal-rich Shaanxi have jointly launched a campaign to crack down on illegal coal mining operations, local media reported.

    The move, start from March and last for half a year till the end of August, is in response to requirement of the state safety watchdog, which ordered a nationwide safety overhaul at a video-conference on March 1.

    The campaign will focus on coal mining beyond the approved area of operation stated on the mining license, mining illegally among other unlawful operations that could give rise to potential safety hazard.

    It will target all the coal mines in the province, particularly those in Shenmu, Fugu, Hengshan and Yuyang of Yulin city, and mines in Yan'an, Weinan, Xianyang and Tongchuan cities.

    Coal enterprises were asked to conduct self-check first, while local safety officials will also conduct inspection regularly.

    Public supervision is also encouraged, and the Department of Land and Resources of Shaanxi Province will award 20,000-50,000 yuan to first informer once the illegal operation is confirmed.

    http://www.sxcoal.com/news/4552979/info/en
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    Investment in Australian thermal coal to remain subdued unless prices stabilise: CommBank


    There are 12 thermal coal projects featuring on the list of the most expensive upcoming resource projects in Australia, but investments in them may remain on hold unless coal prices stabilise, the Commonwealth Bank of Australia said in a report Friday. Just one thermal coal project was listed among Australia's top 20 highest cost committed projects, while five made the "uncommitted" list -- meaning a feasibility study has been undertaken -- and six have been publicly announced.

    "Producers are still reluctant to invest in new capacity despite the recovery in commodity prices over the last 12 months," the bank said.

    The collapse in prices seen at the end of 2015 is still fresh in the minds of most producers, it said.

    All but two of the listed thermal coal projects are based in Queensland. "While potential job opportunities are opening up in Australia's coal mining sector in Queensland, investors need to commit to these projects for the new jobs to become realised," the bank said.

    "Thermal coal prices though are down almost 30% since late November. We think new investment will remain subdued in Queensland's thermal coal sector until those prices become steady," it added.

    Stanmore Coal's Range Project in Queensland is the only listed committed project, coming in at No. 20 on the list of the 20 most expensive resource projects in the country, with an indicative cost estimate of $599 million. An estimated start date for the project was not available.

    Adani's Carmichael Coal Project, which includes mine and rail, is the most expensive uncommitted project in Australia, estimated at $16,500 million. The Commonwealth Bank expects it to start up this year.

    Waratah Coal's China First, GVK-Hancock Coal's Alpha Coal, GVK's Kevin's Corner and BHP Billiton Mitsubishi Alliance's Red Hill Mining were the other thermal coal projects on the uncommitted list. Their cost estimates ranged from $3,000 million for Red Hill to $8,800 million for China First.

    Alpha Coal and Kevin's Corner are expected to begin in 2018 and 2019, respectively, while China First is expected sometime after 2018 and Red Hill no earlier than 2021, it said.

    MacMines Austasia's Project China Store in Queensland topped the list for Australia's highest-cost publicly announced resource project, estimated at $5,000 million, with an estimated start-up date of 2018, the bank said.

    Also on the list were the Queensland-based Wiggins Island Coal Terminal stages two and three, valued at $2,000 million, with no estimated start-up date given, and Baosteel Resource's Talwood Coking Coal Project at $750 million.

    For New South Wales, MACH Energy's $2,000 million Mount Pleasant Project and POSCO's $750 million Hume Coal Project were listed. Mount Pleasant is expected to start in 2019 while no date was given for the Hume Coal Project.

    http://www.platts.com/latest-news/coal/sydney/investment-in-australian-thermal-coal-to-remain-27781758

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    Indian iron ore shipments up 169%


    The amount of iron ore handled by India's ports has more than doubled in the period between April 2016 and January 2017.

    In a recent report by the Indian Ports Association, quoted by Economic Times, the country's 12 major ports handled 169% more iron ore cargo – a total of 38.61 million tonnes – in the April to January period compared to the same period the year previously, when just 14.37 million tonnes crossed the nation's docks.

    The increase in tonnage can partially be explained by a resumption in production from India's top iron exporting state of Goa in the summer of 2015, led by Vedanta Resources (LON:VED), after an almost three-year hiatus.

    Iron ore output contracted 9.4% every year between 2012 and 2016 following mining bans in Goa, Odisha and Karnataka, Economic Times points out. Those bans are no longer in place, meaning analysts are bullish on Indian iron ore production.

    BMI Research said last month it projects output to increase to 185 MT in the next four years, from 136 MT in 2017.

    The boost is not only due to the spike in the iron ore price, which reached a 30-month high on Feb. 20, but also a surge in global steel production.

    World Steel Association data released in February showed a 7% jump in global steel output in January to 136.5 million tonnes.

    World number three steel producer India recorded the biggest gain of the major producing countries, with output increasing by 12% year-on-year. India's infrastructure push should keep blast furnaces on the subcontinent humming throughout this.

    http://www.mining.com/indian-iron-ore-shipments-169/
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    Thyssenkrupp eyes Plan B for European steel: report


    Germany's Thyssenkrupp (TKAG.DE) has looked at the option of splitting its European steel business into a separate company that could be floated if a merger with Tata Steel (TISC.NS) assets fails, German weekly WirtschftsWoche reported on Friday.

    The report, which did not cite sources, said a merger was still the preferred option but that investor pressure could force Chief Executive Heinrich Hiesinger to consider another route.

    "There is no new status," a spokesman for Thyssenkrupp told Reuters.

    Thyssenkrupp and Tata have been talking for over a year about merging their European steel units to cut costs and overcapacity, but the plan is complicated by Tata's huge pension deficit in Britain.

    Hiesinger said at the German industrial group's annual shareholders' meeting on Jan. 27 that he would not be pressured to rush a deal with Tata, but there was no "Plan B" for the steel business.

    He also told German daily Handelsblatt on Feb. 23 that the company was prepared to move forward on its own if necessary but would prefer consolidation. He also said that Thyssenkrupp would remain part-owner of the steel business in any merger scenario.

    http://www.reuters.com/article/us-tata-thyssenkrupp-idUSKBN16A0KU
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    U.S. finds China steel plate imports injure U.S. industry


    The U.S. International Trade Commission said on Friday it had made a final finding that the U.S. industry was being harmed by the dumping and subsidization of imports of carbon and alloy steel cut-to-length plate from China.

    The finding allows for the final imposition of duties by the U.S. Commerce Department.

    The investigation into the imports was prompted by a petition from Nucor Corp and U.S. subsidiaries of ArcelorMittal SA and SSAB AB.

    China's Ministry of Commerce, however, said issues in the U.S. steel industry were not related to Chinese imports, pointing to obsolete equipment and subsequent low yields as the reason for decreased profits.

    In a statement, Wang Hejun, head of China's trade remedy and investigation bureau, called on the U.S. to make "objective" judgments to avoid negative impacts on trade relations between the two countries.

    European Union regulators last month imposed anti-dumping duties of between 65.1 percent and 73.7 percent on imports of heavy plate non-alloy or other alloy steel, spurring concern form China.

    http://www.reuters.com/article/us-usa-steel-plate-idUSKBN16A1ZL
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    Keystone XL builders can use non-U.S. steel, White House says now


    The Keystone XL oil pipeline does not need to be made from U.S. steel, despite an executive order by President Donald Trump days after he took office requiring domestic steel in new pipelines, the White House said on Friday.

    "It's specific to new pipelines or those that are being repaired," White House spokeswoman Sarah Sanders told reporters on Air Force One, when asked about a report by Politico that Keystone would not need to use U.S. steel, despite Trump's order issued on Jan. 24.

    "Since this one is already currently under construction, the steel is already literally sitting there, it's hard to go back. Everything moving forward would fall under that executive order," Sanders said. The southern leg of Keystone is completed and started pumping oil in 2013. Some pipe segments that could be used for Keystone XL, which would bring oil from Alberta, Canada to Nebraska, have already been built.

    Former Democratic president Barack Obama rejected TranCanada Corp's (TRP.TO) multibillion-dollar pipeline, saying it would not benefit U.S. drivers and would contribute emissions linked to global warming.

    Trump's order expedited the path forward for TransCanada to reapply to build Keystone XL.

    In weeks after issuing the order, Trump said in speeches and in meetings, including one with manufacturing CEOs, that Keystone would be required to use U.S. steel. In a speech this week to a joint session of Congress, Trump softened that stance saying new pipelines would have to be made with it.

    Economists told Reuters days after Trump issued the order that the steel requirement had many loopholes, would not be easily enforceable, and could violate international trade law.

    Even if there were no loopholes, U.S. steelmakers would receive negligible benefit from Keystone XL, because they have limited ability to meet the stringent requirements for the project.

    The office of Canadian Prime Minister Justin Trudeau said it welcomes the allowance of non-U.S. steel, calling it a "recognition that the integrated Canadian and U.S. steel industries are mutually beneficial."

    TransCanada said it was encouraged by the White House statement on non-U.S. steel and that its presidential permit application on Keystone was making its way through the approval process.

    Canadian Public Safety Minister Ralph Goodale said on Twitter that allowing non-U.S. steel was "important for companies like Evraz Steel," a local subsidiary of Russia's Evraz PLC, which had signed on to provide 24 percent of the steel before Keystone XL's rejection by Obama.

    http://www.reuters.com/article/us-transcanada-keystone-steel-idUSKBN16A2FC
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