Mark Latham Commodity Equity Intelligence Service

Friday 11th September 2015
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    Bluedog Democrats back Oil exports.

    The Blue Dog Coalition announced their support today for H.R. 702, a bill to repeal the ban on crude oil exports in the United States. The Coalition backs the bill as changing market conditions have proven that the 1970’s-era ban on crude exports is hopelessly outdated. Among countries with the largest energy reserves, the United States is the sole nation that prohibits the export of its own domestically-produced oil.

    The bill repeals a section of the Energy Policy and Conservation Act of 1975, which gives the president the authority to restrict oil exports.

    "It makes no sense that the U.S. can export refined oil products, but not crude oil," said Blue Dog Co-Chair for Administration Kurt Schrader (OR-05). "Currently, crude oil from the U.S., one of the world’s leading producers, is excluded from determining the global market price of oil. In order to expand our markets and decrease gasoline prices globally, this ban must be lifted. Allowing U.S. oil into foreign markets also has the potential to increase stability in volatile regions of the world by creating competition on the global market and limiting the ability of countries like Russia to use crude oil as a political weapon. Lifting this ban would help improve the U.S.’s trade balance problem and improve the future budget picture for America. It’s high time that Congress moves forward on this commonsense, bipartisan and straightforward solution to a ban which has outlived its usefulness.”

    “For the first time in two decades, we are producing more oil than we are buying from foreign countries,” said Blue Dog Co-Chair for Policy Jim Cooper (TN-05). “And our gas production is at an all-time high and growing so fast that we will soon be producing more than we will be able to use at home. The boost to job creation that comes from low energy prices and weaning ourselves from foreign oil is huge, and gives us an international competitive advantage. All of this, including exporting crude, gives us a chance to become an energy leader and we shouldn’t squander this opportunity.”

    “The ban on crude oil exports is an outdated policy that frankly, no longer makes sense,” said Blue Dog Co-Chair for Communications Jim Costa (CA-16). “New technologies have provided the United States with an abundance of domestic crude oil production and expanding our export opportunities to include crude oil, in addition to gasoline and natural gas products, will further stimulate our economy and create jobs.  Additionally, and importantly, providing our domestic producers the ability to sell crude oil to the global market will reduce the geopolitical influence of bad actors like Iran and Russia. This is commonsense, bipartisan legislation that will have a positive impact here in the United States and abroad.”

    “As the representative for one of the largest oil-producing regions in the country, I have seen the negative effects of the crude oil export ban on industry in my district,” said Congressman Henry Cuellar (TX-28), lead Democratic whip for the bill. “With jobs being lost and equipment being taken offline, we need to take proactive steps to ensure that the new product being drawn out of the ground with new extraction technologies can be sold. Lifting the ban will benefit the U.S. economy and will likely lead to lower gas prices. It will also jump-start the economy by creating as many as 800,000 new jobs.”

    H.R. 702 currently has 123 cosponsors from both parties and will receive a vote in the House Subcommittee on Energy and Power tomorrow. The legislation received a hearing in the Subcommittee in July.

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    U.S. Senate Democrats block move to derail Iran nuclear deal

    A Republican-backed measure to derail the Iran nuclear agreement was blocked in the U.S. Senate on Thursday, in a major foreign policy victory for Democratic President Barack Obama.

    The vote was 58-42 against clearing the way for debate of the bill, meaning opponents of the nuclear pact failed to get the 60 votes necessary to advance a resolution of disapproval.

    All 42 of the votes not to advance the measure were from Democrats or independents who normally vote with them. Four Democratic senators voted with Republicans to move ahead.

    But Senator Mitch McConnell, the Senate Republican leader, immediately took steps that would allow the Senate to have another vote on the nuclear agreement.
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    E.ON drops nuclear spin-off

    Germany's biggest utility E.ON has abandoned plans to spin off its German nuclear power plants, bowing to political pressure to retain liability for billions of euros of decommissioning costs when they are shut down.

    The move, deals a massive blow to the group's plan to restructure by hiving off its power plants, energy trading and oil and gas activities into a separate unit, named Uniper.

    It leaves E.ON with the burden of 16.6 billion euros ($18.6 billion) in provisions needed to fund the shutdown of its nuclear plants which Germany is phasing out by 2022.

    Those provisions could limit vital investments the group needs to make in its main remaining business areas following the spin-off -- renewables, networks and services, which E.ON has called the pillars of the new energy world.

    E.ON said including its German nuclear plants in Uniper, due to be set up next year, no longer made sense after recent regulatory changes, conceding that the spin off as a whole could even be delayed.

    "The risks are high," Chief Executive Johannes Teyssen told journalists on Thursday, adding that the timetable had always been ambitious.

    Teyssen confirmed that the carve out of Uniper would be completed on Jan. 1 as planned, with the spin-off scheduled for the second half of 2016.

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    China uncovers more accounting problems with Three Gorges Dam

    Chinese government auditors have found more accounting problems with projects linked to the $59-billion Three Gorges dam, the world's biggest hydropower scheme, following a critical report last year that revealed nepotism and other corrupt practices.

    The state audit office has conducted 21 inspections since construction began in 1992, uncovering issues such as embezzlement, but continues to find problems, it said in a statement on its website on Thursday.

    The National Audit Office found accounting problems amounting to almost 2 billion yuan in the final accounts for a 7.1-billion-yuan ($1.11 billion) underground hydroelectric plant, it said.

    These included 1.54 billion yuan from improper bidding and 337 million yuan in duplicate calculations, it said, adding that too much money had been spent on some equipment, while management oversight was lax.

    The Three Gorges Corporation, which runs the dam, is now "proactively organising rectifications" having received the report, the auditor said, adding that it would watch developments.

    "At present all the problems pointed out by the audit have already been finished or rectified."

    Last year the ruling Communist Party's anti-graft watchdog slammed the Three Gorges Corporation for shady property deals and dodgy bidding procedures.

    In 2011, then-premier Wen Jiabao presided over a government meeting that said that despite the benefits from the dam, it had spawned a myriad of urgent problems, from the relocation of more than a million residents to risks of geological disasters.

    In 2000, six years before the project was completed, authorities busted a ring of officials who had siphoned off hundreds of millions of yuan in resettlement funds.
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    El Nino to strengthen in winter but gradually weaken in spring -CPC

    A U.S. government weather forecaster on Thursday said El Nino conditions would gradually weaken through the northern hemisphere spring after peaking in late fall or early winter.

    The National Weather Service's Climate Prediction Center said the likelihood that El Nino conditions would persist through the northern hemisphere winter was about 95 percent, up from a more than 90 percent chance in last month's forecast.

    There has been a growing consensus among forecasters for a strong El Nino, the warming of Pacific sea-surface temperatures. The World Meteorological Organization said last week that this year's phenomenon could be the strongest on record and was likely to peak between October and January.

    The weather pattern can roil crops and commodities prices. Japan's weather bureau said earlier on Thursday that there was a strong possibility that El Nino would stretch into the winter.

    El Nino conditions would probably contribute to a below-normal Atlantic hurricane season and to above-normal seasons in both the central and Eastern Pacific hurricane basins, the CPC said.

    It added that across the contiguous United States, the effects of El Nino were likely to remain minimal during the early northern hemisphere autumn and increase into the late fall and winter.

    The CPC said this month that "all models surveyed" predicted that El Nino would last into the northern hemisphere spring, up from an 80 percent chance it estimated last month.

    The El Nino phenomenon would mean increased likelihood of rain for parched areas of drought-stricken California later in the fall, although the Pacific Northwest States of Oregon and Washington would probably not get much relief.
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    China to prosecute former China Resources chairman for graft

    China will prosecute the former chairman of state-owned conglomerate China Resources Holding Co Ltd on suspicion of corruption after accusing him on crimes including embezzlement, the anti-graft watchdog said on Friday.

    Song Lin was sacked last year after coming under investigation for suspected "serious violation of discipline", the usual terminology for corruption.

    Song took bribes, used public funds for personal expenses like playing golf and is an adulterer, the ruling Communist Party's Central Commission for Discipline Inspection said on its website in a brief statement.

    Party members can be punished for adultery as they are supposed to be upstanding members of society. The charge is frequently levelled at high-ranking graft suspects as a way of showing they are morally degenerate and deserve punishment.

    His case has been transferred to the legal authorities, the watchdog said, meaning he will face prosecution.

    A former company vice chairman, Wang Shuaiting of the company will also face charges after being accused of similar crimes, the watchdog added.

    Both men have been expelled from the party, it said.

    The state prosecutor said separately that it had approved the detention of both men and had begun to build cases against them.
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    Oil and Gas

    Oil Supply Outside OPEC to Fall Most Since 1992, IEA Forecasts

    Oil supplies outside OPEC will decline next year by the most in more than two decades as the price rout curbs U.S. shale output, according to the International Energy Agency.

    Production outside the Organization of Petroleum Exporting Countries will fall by 500,000 barrels a day to 57.7 million in 2016, the Paris-based adviser said Friday in its monthly report. While fuel demand this year will be the strongest since 2010, record-high oil inventories in developed nations won’t start to diminish until the second half of next year, and the revival of Iranian exports with the removal of sanctions may swell supplies further, it said.

    Shrinking supplies outside OPEC show that Saudi Arabia’s strategy to defend the group’s market share by pressuring rivals with lower prices “appears to be having the intended effect,” the IEA said. Brent crude futures, a benchmark used around the world, slumped to a six-year low near $42 a barrel on Aug. 24 amid a persisting global glut.

    “The big story this month is one of tightening supply,” said the agency, which advises 29 nations on energy policy. “The lower price environment is forcing the market to behave as it should by shutting in output and coaxing demand.”

    Shale Shrinkage

    U.S. shale output will shrink by almost 400,000 barrels a day next year as futures contracts for 2016 trade below the price needed for most projects to break even, the agency said. As recently as July, the IEA had projected that U.S. shale supply would expand by 60,000 barrels a day in 2016.

    The decline in total non-OPEC supply next year will be the biggest since a drop of 1 million barrels a day in 1992 following the collapse of the Soviet Union, it said.

    As a result of the projected drop in non-OPEC output, the amount of crude needed from OPEC next year will increase by 1.6 million barrels a day to 31.3 million. That’s still less than the 31.57 million daily barrels the organization’s 12 members pumped in August. Their output slipped by 220,000 barrels a day last month because of lower production in Saudi Arabia, Iraq and Angola, according to the report. High-cost projects in the group are “at risk” because of the price slump, the agency estimated.

    Global oil demand will climb by 1.7 million barrels a day this year to 94.4 million as low prices stoke consumption, before growth eases next year to 1.4 million barrels a day. China, the world’s second-biggest oil consumer, will “keep up its purchases” even as signs of slowing growth and the country’s surprise devaluation of its currency fan concerns about its economic stability, the IEA said.
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    Iran Said to Cut Pricing for All October Crude to Asia

    Light crude at narrowest premium to Saudi oil since 2012
    Iran seeking to win market share from Saudis after sanctions

    Iran cut pricing for all its oil grades for sale to Asia next month, according to two people with knowledge of the decision, trimming the premium on its main Light crude over the comparable Saudi blend to the narrowest since the end of 2012.

    National Iranian Oil Co. will sell the Light blend at a premium of 25 cents a barrel more than the regional benchmarks, according to the people, who asked not to be identified since the information is not yet public. No one answered a call to NIOC’s public relations department in Tehran on Thursday, the first day of the country’s weekend.

    Saudi Arabia, the world’s largest crude exporter and biggest member of OPEC, cut the premium on its main light oil grade to Asia by 30 cents a barrel to 10 cents a barrel more than the regional benchmark, it said on Sept. 4. Today’s pricing from NIOC puts Iran’s Light crude at a premium of 15 cents to the Arab Light blend from Saudi Arabia. That’s the lowest premium since it stood at 10 cents in December 2012, according to data compiled by Bloomberg.

    NIOC will sell its Heavy grade crude at a discount of $1.37 a barrel in October, compared with 85 cents below the benchmark this month, the people said. The discount on Forozan crude will widen to $1.20 a barrel from 68 cents, while Soroosh and Norooz blends will sell for $6.78 less than the Heavy grade, compared with a $6.30 discount to Heavy for September.

    Iran, formerly the second-largest producer in the Organization of Petroleum Exporting Countries and now fourth, aims to regain market share from other regional sellers like Saudi Arabia once international sanctions over its nuclear program are lifted. The removal of sanctions would allow Iran to boost oil shipments. Middle Eastern producers are competing increasingly with cargoes from Latin America, North Africa and Russia for buyers in Asia.

    Regional sellers market their crude mostly under long-term contracts to refiners. Most of the Persian Gulf’s state oil companies price their crude at a premium or discount to a benchmark. For Asia the benchmark is the average of Oman and Dubai oil grades.
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    Saudi sees no need for oil summit, best leave market alone-sources

    Top oil exporter Saudi Arabia sees no need to hold a summit of producing countries' heads of state if such discussions would fail to produce concrete action towards defending oil prices, sources familiar with the matter said on Thursday.

    The comments followed a meeting of Gulf Arab oil ministers with Qatar's emir in Doha, at which a Venezuelan proposal for an OPEC and non-OPEC summit was discussed.

    Oil prices have more than halved since summer last year on an oversupplied market as well as a decision by OPEC to defend market share and discourage competing supply sources, rather than cut its output in the face of cheaper crude.

    Riyadh believes it is best not to interfere in the market at present, the sources told Reuters on condition of anonymity.

    One OPEC source said that should such a meeting produce no concrete outcome, it would have a negative impact on prices.

    "If we are meeting for the sake of meeting, it would backfire," the source said.

    Earlier on Thursday, Qatar's energy minister said members of the Organization of the Petroleum Exporting Countries and non-OPEC producers were studying the Venezuelan proposal for a heads-of-state summit to address low oil prices.

    "The different countries are studying this proposal and if there was a response from OPEC and outside OPEC then OK," Qatar's Mohammed al-Sada said. "But we are in the study phase."

    Sada was speaking to reporters after a meeting of ministers from the six-nation Gulf Cooperation Council in the Qatari capital, Doha.

    Cash-strapped Venezuela has for months been pushing for an emergency OPEC meeting with Russia to stem the tumble in prices.

    Venezuelan President Nicolas Maduro said on Saturday he had suggested to the emir of Qatar that an OPEC summit be held, and that the leader of the Arab Gulf state "liked" the idea.

    Maduro also suggested non-OPEC countries, including Russia, take part.

    Non-Gulf members want OPEC to take action. Algeria has written to OPEC expressing concern about the market and Iran has supported the idea of an emergency meeting.

    But the Gulf OPEC members have opposed holding an early meeting and show no sign of changing strategy, especially given the refusal of Russia and other big non-OPEC countries to cut output.

    Attached Files
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    Gazprom's Bovanenkovo field hits by breakdown in Russia-Ukraine ties

    KyivPost reported that Russian gas giant Gazprom, whose big Bovanenkovo field on the Yamal Peninsula is equipped with compressors manufactured in Ukraine, has had to cope with difficulties that have emerged in the technical servicing of that equipment.
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    Gazprom closes gas auction, volume low, price high

    The first ever auction of Gazprom and its unit Gazprom Export for sales of natural gas conducted from the 7th till the 10th of September 2015 has been finalized.

    As a result of the auction, over forty deals with 15 clients were concluded, with a total volume of over 1 bcm being sold which corresponds to over one-third of the volumes initially offered, the company informed in a statement.

    The auction contract prices were higher than Gazprom Export contract prices’ average for the coming winter (October 2015 through March 2016) for the whole portfolio, and for Central and Northern Europe including Germany; auction prices were higher than the spot and forward prices on the European gas hubs, too.

    Gazprom offered 3.2 bcm of gas to be supplied during the delivery period winter 2015/2016 with 39 companies taking part in the auction.
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    BHP weighs more oil and gas capital spending cuts

    BHP Billiton petroleum president Tim Cutt says capital spending could be cut again for its diminished United States onshore shale business amid depressed prices but is confident in a "medium-term" oil and gas price recovery.

    Mr Cutt said volatility in oil and gas prices would continue in the near term, and depending on how the oil price tracks, BHP could again reduce its 2016 capital spend of $US1.5 billion for its onshore US division.

    That spend is already 60 per cent lower than last year's, when oil and gas prices began to fall off a cliff.

    "The capital reduction this year could be even more pronounced," Mr Cutt said at a conference in New York.

    The resources house has a capex spend of $US1.6 billion flagged for conventional oil in the current year.

    BHP has dramatically pulled back from its ambitions in the US onshore shale oil and gas sector, also known as unconventionals, because the division has been rendered largely unprofitable by the oil and gas price collapse.

    It has slashed its drilling rig numbers from 26 to just 9, and took a pre-tax write-down of $US2.8 billion on the business in June.

    But Mr Cutt insists high-cost oil and gas supply will eventually be needed. A recovery in prices, and cheaper development costs will be needed to incentivise investments needed to deliver new supply to meet growing demand, Mr Cutt argued.

    However, "the near term will be volatile until the imbalance of approximately 2 million barrels per day works through".

    Read more:
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    BHP Billiton highlights the potential of Australia's Beagle sub-basin

    BHP Billiton believes Australia’s next big oil find - if there is one - could be hiding beneath the waters of the Beagle sub-basin off the coast of northwest Western Australia. Tim Cutt, the president of the group’s petroleum unit, said BHP had identified four leads, or prospects, in the sub-basin that each have the 'potential of over 400 million barrels recoverable'.

    BHP is known to have been evaluating WA waters as a host of world-class finds. But Mr Cutt’s comments to a conference in New York is the first indication of the potential size of the prize. The Beagle sub-basin (a basin within a basin) sits within the comparatively lightly explored northern reaches of the Carnarvon Basin, one of Australia’s most prolific oil and gas provinces.
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    Summary of Weekly Petroleum Data for the Week Ending September 4, 2015

    U.S. crude oil refinery inputs averaged over 16.1 million barrels per day during the week ending September 4, 2015, 279,000 barrels per day less than the previous week’s average. Refineries operated at 90.9% of their operable capacity last week. Gasoline production decreased last week, averaging 9.6 million barrels per day. Distillate fuel production decreased last week, averaging 4.8 million barrels per day.

    U.S. crude oil imports averaged about 7.5 million barrels per day last week, down by 396,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged over 7.6 million barrels per day, 0.5% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 589,000 barrels per day. Distillate fuel imports averaged 130,000 barrels per day last week.

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 2.6 million barrels from the previous week. At 458.0 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. Total motor gasoline inventories increased by 0.4 million barrels last week, but are in the middle of the average range. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories increased by 1.0 million barrels last week but are in the middle of the average range for this time of year. Propane/propylene inventories rose 0.2 million barrels last week and are well above the upper limit of the average range. Total commercial petroleum inventories increased by 3.2 million barrels last week.

    Total products supplied over the last four-week period averaged over 20.2 million barrels per day, up by 4.2% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged over 9.3 million barrels per day, up by 3.8% from the same period last year. Distillate fuel product supplied averaged 3.7 million barrels per day over the last four weeks, down by 1.2% from the same period last year. Jet fuel product supplied is up 7.5% compared to the same four-week period last year.

    Attached Files
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    US Domestic oil production

                                            Last week     Week before       Last year
    Domestic Production '000 .....9,135            9,218                8,590
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    Marathon Oil trims jobs, $150 million from exploration spending

    Marathon Oil Corp. is shedding 40 jobs, mostly in the United States, and is scaling back plans to explore for oil and gas in conventional plays, the company confirmed Thursday.

    The Houston oil company said it plans to suspend new venture funding for its conventional exploration program and re-direct the funds to its oil fields in the Gulf of Mexico and off the coast of West Africa. It doesn’t plan to drill any conventional exploration wells next year.

    The job cuts are a small addition to Marathon’s layoff of 400 employees earlier this year, and will bring staff reductions to 13 percent of its workforce. Employees were notified of the additional layoffs this week. Some were geologists and engineers. Marathon had 3,300 employees at the end of 2014.

    “A leaner and more focused conventional exploration team will drive execution and value capture in our existing Gulf of Mexico and Gabon opportunities but at substantially reduced spending,” Marathon spokeswoman Lee Warren said in an emailed statement.

    The Gulf of Mexico and Gabon projects will continue to be staffed and it will explore in shale and other unconventional plays.

    Marathon CEO Lee Tillman told investors at a Barclays conference this week the company is in the early stages of planning its 2016 capital budget but it has already found $600 million it can trim.

    He said the company is spending $100 million on its conventional exploration program next year, 60 percent less than the $250 million it spent on exploring those plays this year. It had spent $500 million in 2014.

    “Every dollar is under scrutiny and there are simply no spend too small to challenge,” Tillman said. “And as we move through the second half of 2015 and into 2016, there will be more to come.”

    Marathon’s main unconventional plays are in the Eagle Ford Shale in South Texas, the Bakken Shale in North Dakota and in Oklahoma. It has other conventional exploration prospects in Ethiopia, Kenya and the Kurdistan region in Iraq.

    Attached Files
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    Alternative Energy

    India’s unconventional plan to increase solar power

    Think Progress reported that India’s government is ordering its state-owned utility, NTPC, to sell electricity from solar power along with electricity from coal-fired power in order to boost solar’s position in the country.

    The decision, mandates that the utility sell currently-cheaper coal power bundled into one unit with solar power, which is currently more expensive.

    This could have the effect of expanding the production and usage of solar power, making it less expensive for distribution companies to bring it to customers. India’s power distribution companies are also run by the government, and had been losing money when buying more expensive electricity and selling it at a lower price.

    The other effect, of course, will be the continued use of quarter-century-old coal plants that will get their power output bundled with newer solar plants coming online. This helps guarantee the coal plants’ operation, as well as their carbon emissions.

    Mr Rupesh Agarwal, a partner at BDO India LLP, said that “These plants are already 25 years old. Will they function for that many more years? Do we need to extend the lives of these plants to bundle with solar energy when solar on a stand-alone basis is becoming competitive?”

    NTPC will construct 15 GW of solar over the next four years as a part of this deal.
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    World nuclear capacity set to grow by 45 pct by 2035

    Global nuclear power generation capacity could increase by more than 45 percent in the next 20 years but the pace of growth will still fall short of what is needed to curb climate change, an industry organisation report showed on Thursday.

    The World Nuclear Association Nuclear Fuel report forecasts global nuclear capacity will grow to 552 gigawatts equivalent (GWe) by 2035 from 379 GWe currently, as many countries build new plants as a lower-carbon option and for energy security.

    The International Energy Agency has estimated that nuclear capacity needs to reach 660 GWe in 2030 and more than 900 GWe by 2050 to help keep a rise in global temperatures within 2 degrees Celsius this century, a threshold scientists say should avoid the worst effects of climate change.

    However, this would require $81 billion a year investment in new nuclear plants from 2014 to 2040.

    "Nuclear electricity output is set to increase at a faster rate over the next five years than we have seen for more than two decades," said Agneta Rising, director general of the World Nuclear Association.

    "More must be done so that nuclear energy can make the contribution being asked of it, to deliver a clean, affordable and reliable electricity supply in harmony with other low-carbon options," she added.

    To meet the pace of capacity growth, the world will likely need 103,000 tonnes of elemental uranium (tU) by 2035, up from 62,000 tU now, the report said.

    Uranium production has stalled because depressed uranium prices have curtailed exploration activities and the opening of new mines.

    The market should still be adequately supplied to 2025 if all planned mines and those under development start up as forecast but will need additional supplies and projects soon after 2025.

    Attached Files
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    Potash miner Belaruskali expects fall in 2015 exports

    Belarussian potash producer Belaruskali expects its exports to decline to 9 million tonnes this year due to a lower demand for the fertiliser, the head of the company's trading division said on Thursday.

    Belaruskali, which has major clients in China, India and Brazil, is facing with lower demand for potash, a fertiliser that helps yield and root growth, amid weaker economies.

    "I think, it (exports) will be close to 9 million (tonnes). A difficult fourth quarter is ahead of us," Elena Kudryavets, the head of Belarusian Potash Company (BPC), told reporters.

    BPC exported 9.5 million tonnes of potash last year.

    BPC does not want to "overload" the market with additional exports, Kudryavets added.

    Attached Files
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    U.S. court finds EPA was wrong to approve Dow pesticide harmful to bees

    A U.S. appeals court ruled on Thursday that federal regulators erred in allowing an insecticide developed by Dow AgroSciences onto the market, canceling its approval and giving environmentalists a major victory.

    The ruling by the U.S. Court of Appeals for the Ninth Circuit, in San Francisco, is significant for commercial beekeepers and others who say a dramatic decline in bee colonies needed to pollinate key food crops is tied to widespread use of a class of insecticides known as neonicotinoids. Critics say the Environmental Protection Agency is failing to evaluate the risks thoroughly.

    The lawsuit was filed in 2013 against the EPA by organizations representing the honey and honey beekeeping industry. The groups specifically challenged EPA approval of insecticides containing sulfoxaflor, saying studies have shown they are highly toxic to honey bees.

    The court said in its ruling that sulfoxaflor is a neonicotinoid subclass.

    Dow AgroSciences, a unit of Dow Chemical Co, first sought EPA approval for sulfoxaflor in 2010 for use in three products. Brand names include Transform and Closer.

    "It's a complete victory for the beekeepers we represent," said Greg Loarie, an attorney who represents the American Honey Producers Association, the American Beekeeping Federation and other plaintiffs in the case. "The EPA has not been very vigilant."

    Dow said in a statement that it "respectfully disagrees" with ruling and will "work with EPA to implement the order and to promptly complete additional regulatory work to support the registration of the products."

    The EPA said it was reviewing the court's decision and would have no further comment.

    California's Department of Pesticide Regulation issued a statement Thursday noting that it has long had concerns about sulfoxaflor's impact on bees and has never allowed unconditional registration in that key farming state.

    Honeybees pollinate plants that produce roughly a quarter of the food consumed by Americans. The demise of the bees has become a hotly debated topic between agrichemical companies, which say the insecticides they sell are not to blame, and those who say research shows a direct connection between neonicotinoids and large bee die-offs.

    The White House has formed a task force to study the issue and the EPA has said it is trying to address concerns.

    In its ruling, the court found that the EPA relied on "flawed and limited data" to approve the unconditional registration of sulfoxaflor, and that approval was not supported by "substantial evidence."

    Dow had asked the EPA to approve sulfoxaflor for use on a variety of crops, including citrus, cotton, canola, strawberries, soybeans and wheat.

    The EPA analyzed studies and data provided by Dow about the effects of sulfoxaflor on various species, including bees, and initially proposed several conditions on approval due to insufficient data provided by Dow, the court found.

    However, in May 2013 the EPA decided to go ahead with unconditional registration even though the record revealed Dow never completed additional requested studies, the ruling stated.

    In vacating the EPA approval, the court said that "given the precariousness of bee populations, leaving the EPA's registration of sulfoxaflor in place risks more potential environmental harm than vacating it."

    The EPA must obtain further data regarding the effects of sulfoxaflor on bees as required by EPA regulations before it grants approval, the court said.

    The U.S. Department of Agriculture said earlier this year that losses of managed honeybee colonies hit 42.1 percent from April 2014 through April 2015, up from 34.2 percent for 2013-14, and the second-highest annual loss to date.
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    French court confirms Monsanto guilty of chemical poisoning

    A French court upheld on Thursday a 2012 ruling in which Monsanto was found guilty of chemical poisoning of a French farmer, who says he suffered neurological problems after inhaling the U.S. company's Lasso weedkiller.

    The decision by an appeal court in Lyon, southeast France, confirmed the initial judgment, the first such case heard in court in France, that ruled Monsanto was "responsible" for the intoxication and ordered the company to "fully compensate" grain grower Paul Francois.

    Monsanto's lawyer said the U.S. biotech company would now take the case to France's highest appeal court.

    Francois, who says he suffered memory loss, headaches and stammering after inhaling Monsanto's Lasso in 2004, blames the agri-business giant for not providing adequate warnings on the product label.

    Lasso, a pre-emergent soil-applied herbicide that has been used since the 1960s to control grasses and broadleaf weeds in farm fields, was banned in France in 2007 after the product had already been withdrawn in other countries such as Canada, Belgium and Britain.

    Monsanto phased out of Lasso in the United States several years ago for commercialreasons, its spokesman in France said.

    Though it once was a top-selling herbicide, it gradually lost popularity, and critics say several studies have shown links to a range of health problems.

    Monsanto said in a statement after the ruling that experts, including those nominated by the French civil court, had not found any causal link between the alleged accidental exposure and the alleged damages for which Francois claims compensation.

    The company's lawyer, Jean-Daniel Bretzner, said a potential fine to compensate for the farmer's loss would be decided after the decision of the highest court but he said that in any case it would be very low.

    "We are speaking about modest sums of money or even nonexistent. He already received indemnities (by insurers) and there is a fundamental rule that says that one does not compensate twice for a loss, if any," Jean-Daniel Bretzner said.

    Lasso is not Monsanto's sole herbicide accused of being harmful.

    The International Agency for Research on Cancer (IARC), part of the World Health Organization (WHO), said in March that glyphosate, the key ingredient in Monsanto's Roundup, one of the world's most used herbicides, was "probably carcinogenic to humans."
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    Precious Metals

    Botswana's Debswana cuts diamond production due to market downturn

    Botswana's Debswana, the world's biggest diamond producer by sales value, has cut its 2015 production target to 20 million carats from 23 million carats, its secretary for economic and financial planning Taufila Nyamadzabo said on Friday.

    "We had to revise our 2015 growth forecast from 4.9 percent to 2.6 percent due to (a) downturn in the global diamond market," Nyamadzabo said.

    Sluggish demand in the diamond market saw sales at rivals De Beers and Okavango Diamond Company (ODC) fall by over 20 percent in the first six months of the year.
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    Steel, Iron Ore and Coal

    Indonesia's September HBA thermal coal price further slide

    Indonesia's September thermal coal reference price, also known as Harga Batubara Acuan (HBA), was set at $58.21/t FOB, the lowest ever recorded since its inception in January 2009, said the Ministry of Energy and Mineral Resources.

    The September HBA price represents a drop of 1.57% from August, when it was set at $59.14/t.

    The HBA is a monthly average price based 25% on the Platts Kalimantan 5,900 kcal/kg gross as received assessment; 25% on Argus-Indonesiacoal index 1 (6,500 kcal/kg GAR); 25% on the Newcastle Export Index -- formerly the Barlow-Jonker index (6,322 kcal/kg GAR) of Energy Publishing -- and 25% on the globalCOAL Newcastle (6,000 kcal/kg NAR) index.

    It is based on 6,322 kcal/kg GAR coal, with 8% total moisture content, 15% ash and 0.8% sulfur.

    The HBA for thermal coal is the basis for determining the prices of 73 Indonesian coal products and for calculating the royalties Indonesian producers have to pay for each metric ton of coal they sell locally or overseas.

    Attached Files
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    Shenhua may resume coal exports to Japan

    China’s coal giant Shenhua Group hoped to expand coal exports and gradually resume exports to Japan, amid fluctuations in international coal market and persisting sluggishness in domestic market

    Invited by Shenhua, delegates from Japan’s major power companies including Tohoku Electric Power visited the group’s mining areas and power plants in late August, seeking ways to enhance further cooperation.

    Han Jianguo, vice president of the Group, said Shenhua has always attached great attention to the exports to Japan, and hopes to resume coal exports to the Japanese market steadily, against the backdrop of new economic and coal trades situations.

    The delegates fully affirmed the stable coal quality, safe supply of Shenhua, and they were willing to further build partnership with the group.

    In late August, two South Korea-based traders said Shenhua had dispatched a delegation to South Korea in mid-August to meet traders and power utilities. Shenhua offered thermal coal with 5,800 Kcal/kg NAR and 0.3% sulfur from Yujialiang mine in Shaanxi province at $80/t (513 yuan/t) FOB, inclusive of export tax.

    However, some South Korean utilities were bidding this variety at $54/t FOB, far lower than the offered price.

    China Shenhua, a listed company of Shenhua Group, exported 600,000 tonnes of coal or 0.3% of the total sales in the first half of the year, down 33.3% on year. The export price averaged 467.9 yuan/t, falling 18.2% from the year prior.

    Trade sources said Shenhua started preliminary talks to export coal to South Korean and Japanese utilities back in April. Meanwhile, Shenhua is lobbying with the Chinese government to further lower the export tax or completely exempt the company from paying the tax to allow them to be more competitive in the market.

    China lowered its export tax from 10% to 3% in January this year.

    Chubu Electric Power and Tokyo Electric Power, which founded a joint venture in April this year, planned to finish the integration of energy transport and trading business into the new company before October 1.

    Presently, the new company is focusing on integrating thermal coal and other energy purchasing across the globe, with annual thermal coal imports at 85 million tonnes.

    Attached Files
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    FMG not in a hurry to sell a stake in its mines – Mr Power reported that Fortescue Metals Group has been approached by two parties interested in buying a stake in its mining operations, but the company is not in a rush to sell. In an interview on Wednesday FMG’s chief executive, Mr Nez Power, said the miner would wait for the iron ore price to recover before entering serious discussions about a sale.

    Mr Power said he believes the commodity is still trading at unduly depressed prices, and that FMG was not in a hurry to sell. He said “We are in very strong shape and therefore we can be patient. That might mean we need to wait until potential investors think the iron ore price is about to go up again, and then they will be more motivated.”

    It was March this year when Power told The Australian the company may look to sell a minority stake in its Pilbara assets. It came after the company posted a first-half profit of $US331 million, down from the $US1.7 billion it posted a year earlier, due to the depressed price of iron ore.
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    China key steel mills daily output down 4.4pct in late-August

    Average daily crude steel output of China's key steel mills posted a ten-day drop of 4.43% to 1.64 million tonnes in late-August, in the wake of the third straight ten-day rise, according to the latest data from the China Iron and Steel Association (CISA).

    That was mainly due to extensive production cut at north and northwest China before the Beijing military parade.

    Stocks in key steel mills stood at 15.32 million tonnes by August 31, edging down 0.85% from August 20 but up 1.32 % from July.

    In addition, key steel mills’ daily output of pig iron reached 1.61 million tonnes during the same period, dipping 4.8% from the past ten days.

    Domestic steel products prices saw a week-on-week drop of 0.7% from end-August to September 6, with rebar price averaging 2,155.5 yuan/t, edging down 2.5% from ten days ago and down 1% from last week, showed data from the Ministry of Commerce.

    Steel mills are pressing down the purchase price of coke, due to weak demand from building materials industry. Steel mills in Tangshan, Hebei asked for a 20 yuan/t cut in coke purchase price, which has been accepted by some coke producers.

    Some steel mills at other areas in Hebei and east China also planned to lower coke purchase price by 20 yuan/t.

    Crude steel output may rebound in mid-September, as steel mills may return to normal operation after production suspension and furnace maintenance due to environmental protection campaign amid slack season, analysts said.
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