Mark Latham Commodity Equity Intelligence Service

Thursday 20th October 2016
Background Stories on www.commodityintelligence.com

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    Macro

    China scores WTO victories against some U.S. anti-dumping methods


    China won the bulk of a World Trade Organization complaint against certain U.S. methods of determining anti-dumping duties on Chinese products in a WTO dispute panel ruling released on Wednesday.

    China brought the complaint in December 2013, one of a string of disputes challenging Washington's way of assessing "dumping," or exporting at unfairly cheap prices.

    Specifically, the panel found fault with the U.S. practices of determining dumping margins in certain cases of "targeted dumping," in which foreign firms cut prices on goods aimed at specific U.S. regions, customer groups or time periods.

    Dumping is normally found when a foreign producer's U.S. prices are lower than its home market prices for the same or similar goods, or when the imports are sold at prices below production costs.

    The panel ruled against the U.S. Commerce Department's practise of "zeroing" in cases involving targeted dumping. In zeroing, the department typically assigns a value of zero any time a producer's export price is above that producer's normal home market price, partly to account for freight and customs charges.

    In practice, the zeroing methodology tends to increase the level of U.S. anti-dumping duties on foreign producers.

    Some points of China's argument were rejected by the WTO panel, including a claim that the Commerce Department systematically punishes Chinese state enterprise by assigning them high anti-dumping rates.

    Either side can appeal the ruling within 60 days.

    China's Ministry of Commerce welcomed the ruling saying that the WTO panel had "upheld China's principal claims" on the unlawfulness of targeted dumping and the separate rate applied in certain U.S. anti-dumping measures.

    The dispute related to several industries including machinery and electronics, light industry, metals and minerals, with an annual export value of up to $8.4 billion, it said.

    "The United States is disappointed by these findings," a spokesman for the U.S. Trade Representative's office said in a statement.

    "We will carefully review the report and consider next steps. Nothing in the report will undermine the commitment of the United States to impose antidumping duties to address injurious dumping," the USTR spokesman added.

    http://www.reuters.com/article/us-china-usa-wto-idUSKCN12J1RP
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    Oil and Gas

    IMF Sees Saudi Break-Even Oil Price Falling Less Than Expected


    The average oil price that Saudi Arabia needs to balance its budget will fall this year by only half as much as forecast six months ago, according to the International Monetary Fund.

    The country’s fiscal break-even price will drop to $79.70 a barrel this year from $92.90 in 2015, the IMF said on Wednesday, a fall of 14 percent. In April, the IMF projected that the Saudi break-even price would decrease by 30 percent this year, to $66.70 a barrel from $94.80.

    The new numbers, released ahead of Saudi Arabia’s first-everinternational bond sale, suggest that the government’s efforts to cut costs and diversify its economy away from petroleum are having less of an effect than the IMF forecast previously. Saudi Arabia generates more than 80 percent of its official revenue from oil, according to a World Bank report in July.

    The IMF’s revised projection could also help to explain why Saudi Arabia supported an OPEC deal last month in Algiers that will effectively force it to cut production to support oil prices, even though its regional rival Iran will be exempt from capping its output. In April, Saudi Arabia vetoed a proposed production freeze after Iran refused to take part.

    Iran’s break-even price for this year will be $55.30, the IMF said, down from $60.10 in 2015. That’s lower than the $61.50 the IMF forecast for Iran in April, and much less than the fund’s revised break-even price for Saudi Arabia, showing how Iran’s more diversified economy has given it an edge over the kingdom.

    Both countries will be hard-pressed to balance their budgets this year. Benchmark Brent crude has averaged less than $45 a barrel in 2016 and was trading at about $52 in London on Wednesday.

    http://www.bloomberg.com/news/articles/2016-10-19/imf-sees-saudi-break-even-oil-price-falling-less-than-expected
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    Just Imagine OPEC Reduces Supply And Nobody Cares


    OK, we got it by now. In an unfathomable show of splendor, OPEC has congregated in Algiers in order to show the world that it still matters and that finally, after a zillion attempts and a lot of trepidation (that's what it felt like at least) it will reduce the volume of crude it supplies into the market.

    Nobody knows the exact inner workings of this deal (not even OPEC I suppose) but the traders got what they were waiting for, biting their fingernails to smithereens in the process and as could be expected, the oil price rose. A bit at least. Some dollars. Not really splashy but it was a noticeable rise - if you watch the market with a microscope. And a beer for the long, lonely moments. Or two.

    Looking at the scale of the rise I have a feeling that the oil price had stronger spikes on news that the OPEC secretary general had a bad stomach from the last dinner party.

    Frankly, this whole clues searching exercise often reminds me of some old witches reading the tea leaves. Or maybe the Kremlin watchers at the time of the once mighty Soviet Union. The merest hint of a sigh in the face of one of the Soviet leaders gave rise to endless speculation on new strategic decisions that will shape the fate of the world. Even the teenager - that I have been at this time - had understood quickly what quackery this all was.

    However, OPEC's latest stunt sure can be no quackery. In the end, they will reduce supply and this will make the price rise - right? Saudis (which will most certainly need to bear the brunt of the cuts if they want them to stick) openly believe that the higher prices will compensate them for the shortfall resulting from lower volumes.

    At the same time, I read in an issue of one of the best Austrian broadsheets (not really a place where one would expect outlandishly bold analysis) that the Chinese real estate bubble is hopelessly overstretched and that it must pop soon. Right under the China newsfeed comes a lengthy article on the troubles of Deutsche Bank (and the European banking sector as a whole with Italy transforming into a morass) and how it reminds some bank managers to the 2008 Lehman Brothers disaster. European banks are 900 billion EUROs in the red and I am not even scratching the surface of the big red Ponzi as it unfolds along the Yangtse river.Let's face it. We - as a planetary economy - are far away from having mastered the economic crisis that we became aware of in 2008 - I even think that compared to what is still to come, 2008 will look like the clumsy, nervous fumbling of a teenager making out. The economic and financial world order of the last 40 years is getting ready for the biggest RESET of human history and that will not go without pain - pain that will be felt in the oil world too.

    However, let's no go into that right now. There are plenty of doomsayers out there (pick your favorite).

    What's way more important - to me at the least - is what's going to happen to the energy world and its most cherished gambling chip, the oil price. Because the oil and gas world still waits for the goldilocks time to come back so they can fall back into bubble inducing slumber and central planning. This is what is really at the heart of all this brouhaha. No cost reduction, no reform, no fit for 50 or below. O&G companies loved the high price area and they want it back - please! Pretty please! With sugar on top!

    O&G has ceased being a business in the entrepreneurial sense of the term a long ago. Seemingly eternal high prices have given rise to the numbers pushers, the quants, the technocrats, the system animals and squeezed those who pushed projects that would make economic sense out of the scene. Energy has become a monolith where evolution just happens on the paychecks.

    I mean, has anyone looked at those CAPEX figures from some of the latest LNG projects? The sky is the limit - or it was and instead of working hard to get back to the 'we can do that better, cheaper and faster' way of things, numbers just climb through any ceiling anyone ever imagined. Instead of accepting some Australian projects (and others) as financial Black Holes that will never turn a profit, we sit and wait, hope, hanker for the old high prices times to come back. And the Aussie government wants to know why they are not making a green on LNG export. They must be joking. We are so over the top that we can't see our feet anymore.

    It's like someone who has just been given crack shots for a year and then he tries pulling jackstraws. He will always hope for bigger sticks as fine finger movement has gone out of the window with the crack-bags. The only functional remedy will be to get off crack for long enough so controlled finger movement comes back. This will be no easy process and this is also true for O&G firms.

    Getting ready for USD 50 is no replacement for 'Getting back to where we belong'.

    Some of you will sigh now. Yes, I have beaten this horse to death but look at all this media craze at a simple announcement of an organization that has not really shown us that it means business for years now.

    While on the other side many energy pundits seem to ignore the economic calamities opening up all around us. The world will have no choice but to scale back as a whole and much of the grossly inflated numbers bubbles will have to either be slowly deflated or they will pop and judging by all the bells and whistles that go off right now, there is a lot of market rebalancing coming at us at high velocity.

    When that happens, demand figures for oil will collapse to more sustainable levels (there will be a negative peak even as those things tend to cause short-term panic) and the world will wake up to ever greater stockpiles of something that nobody needs anymore. Does anyone know reliable figures on North American oil in storage, or what the Chinese tin pots are up to, or when Indian and Chinese strategic storage filling will cease, or... Where will that all send the oil price? Go figure.

    What will that do to the oil world? The O&G-alternate-reality-bubbles have survived so far - most of them - in the heads of O&G executives as well as in oil ministries of oil exporting countries. O&G companies and their managers have taken some measures to mask their plight from the outside world but in reality, they just hold their breath and patch-up with short-term measures, hoping the storm blows over. If they had - instead - reformed their companies for real, they would not care what a bunch of 'out-of-touch-with-reality' dudes does in Algiers. Or indeed what they might be up to later on.

    They would not have any time for navel gazing as the world needs O&G - but only if O&G can adapt and service today's requirements. Not yesterday's numbers-games.

    http://www.oilvoice.com/n/Just-Imagine-OPEC-Reduces-Supply-And-Nobody-Cares/ed2c245b5653.aspx

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    Tillerson at Oil and Money


    Tillerson: Our outlook sees enormous demand requirement met through increased efficiency. That could come from new technology too.

    Tillerson: Carbon emissions will peak in next 15 years, and then decline. Developed world will be challenged to meet COP21 targets

    "We share the view that the risks of climate change are real and warrant serious action" Tillerson

    Tillerson: Liza discovery in offshore Guyana is a deepwater development, but it's "very viable at today's prices, easily.

    Tillerson: Oil and natgas are going to continue to play an important role, equivalent to today's portion of energy supply

    Tillerson: We've long supported the carbon tax as the best policy. A revenue-neutral carbon tax

    Unlike rest of OM2016 crowd ExxonMobil CEO Tillerson "difficult for me to see a big supply" crunch in next 3 to 5 years

    Tillerson: Low interest rates have allowed more risks to be accommodated in this down-cycle, unlike under normal monetary policies

    Tillerson: Those of us who dismissed Peak Oil theories weren't more prescient, we just held a different view on innovation

    Tillerson: ExxonMobil built business to be viable at the bottom of cycle. We can't control price, but can control cost structures.

    Tillerson: Dual challenge of increasing global supplies while reducing emissions to face the risk of climate change.

    Tillerson: ExxonMobil is continuing to advance carbon capture and sequestration

    ExxonMobil CEO Rex Tillerson: Advanced technologies in the US have fundamentally changed the global energy landscape.

    @oilandmoney

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    Totals Pouyanné at Oil and Money


    Pouyanné: I'm not planning on $55 for next year. But I welcome what is done by Opec - we need to rebalance in the market

    Pouyanné: Don't just follow your engineers with their new technologies; make things simple.

    Pouyanné: Peak demand and ceiling in the oil market - all that is just wrong.

    Pouyanné: Climate change issue must be addressed collectively by the industry.

    Pouyanné: We need to develop gas demand - investing downstream, going down to the customers

    Pouyanné: Global investment dropped from over $700bn 4 years ago to less than $400bn next year. We're not investing enough

    Pouyanné: Gas has a bright future, and will be the hydrocarbon with larger growth.

    Pouyanné: We have to be selective in our portfolio, and give preference to low-cost assets. Why we've sold part of oil sand business

    Pouyanné: Integrated business model helps us to weather the storm. For the future, we want to be a responsible energy major

    Pouyanné: Deepwater can be perfectly profitable, it's just a matter of the right way to develop

    Pouyanné: We don't control the price, and so we need to be excellent in what we control: safety, costs, the way we allocate cash.

    Total CEO Patrick Pouyanné: We try to bring reliable, affordable & clean energy to world. But oil and gas at heart of our ambition.

    @oilandmoney
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    Exxon boss, Saudi minister differ on oil supply outlook


    Exxon Mobil's boss Rex Tillerson and Saudi Arabia's energy minister on Wednesday took opposing views on declining investment in the oil sector setting the stage for a possible major supply crunch.

    More than two years of downturn that saw oil prices halve to around $50 a barrel today after a boom in U.S. shale oil production have led to a sharp decline in investment.

    But Tillerson, who heads the world's largest listed oil and gas company, said that shale oil producers' resilience in cutting costs to make some wells profitable at as low as $40 a barrel means that North American production has effectively become a swing producer that will be able to respond rapidly to any global supply shortage.

    "I don't quite share the same view that others have that we are somehow on the edge of a precipice. I think because we have confirmed viability of very large resource base in North America… that serves as enormous spare capacity in the system," Tillerson told the Oil & Money conference.

    "It doesn't take mega-project dollars and it can be brought on line much more quickly than a 3-4 year project," he said.

    His stance contrasted with that of Saudi Arabia's Energy Minister Khalid al-Falih, who minutes earlier warned the same event that the sector faces challenges due to the drop in investment.

    "Market forces are clearly working. After testing a period of sub $30 prices the fundamentals are improving and the market is clearly balancing," Falih said.

    "On the supply side, non-OPEC supply growth has reversed into declines due to major cuts in upstream investments and the steepening of decline rates," the minister said.

    "Without investment, that trend is likely to accelerate with the passage of time to the point that many analysts are now wending warning bells over future supply shortfalls and I am in that camp."

    Falih said that OPEC's plan to freeze or even cut production along with several leading producing countries, including Russia, will help reduce a huge overhang of supplies and stimulate new investments in the sector.

    Saudi Arabia, has changed its course this year and decided to support production cuts following two years of refusal to do this in order to win the market share back from U.S. shale producers.

    Tillerson's remarks about the resilience of U.S. supply shone on a fresh light on Saudi calculations of the impact of lower prices, which Riyadh orchestrated in 2014, on the North American oil industry.

    NO PRICE BLOW OUT

    Tillerson said that while U.S. shale production has dropped recently, the declines have largely stopped.

    "I don't necessarily agree with the premise that there is a more steep decline to come (in U.S. shale), in fact that are still some levels of uncompleted wells that can be brought on."

    "It is difficult for me to see a big supply press out there, it is difficult for me to see a big price blow out, there are too many elements in the system that will temper that," Tillerson said.

    "I don't necessarily have the view that we are setting ourselves up for a big crunch within the next 3, 4, 5 years."

    Echoing the Saudi minister, Patrick Pouyanne, the chief executive officer of French oil and gas company Total, expected supplies to fall short by 5 to 10 million barrels per day by the end of the decade after investments in the sector dropped from $700 billion two years ago to $400 billion this year.

    "We are today facing a situation where we do not invest enough... this is not enough to prepare the future supply… Without investment, the oil industry will not be able to offset the natural 5 percent natural decline of fields and meet demand growth of even 1 percent."

    "I know that the shale oil industry is very innovative and they have cut costs and adapt but we won't be able, if we continue this way, to fill the gap," Pouyanne said.

    He said that Total will be able to balance its capital spending of up to $17 billion with oil at $55 a barrel next year.

    http://www.reuters.com/article/us-oil-conference-exxon-mobil-idUSKCN12J1JL
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    Iran Talking With 16 Investors to Bid on Oil and Gas Projects


    Iran is negotiating with 16 international energy companies to help operate and manage 50 oil and natural gas projects around the country to boost production after years of international sanctions.

    The projects are feasible even with oil at $40 a barrel, Gholam-Reza Manouchehri, a deputy director of the National Iranian Oil Co., told reporters in Tehran on Wednesday. The South Azadegan field on Iran’s southwestern border will be the first deal announced, and probably needs $10 billion to add 600,000 barrels a day of output, he said.

    “We have a lot of companies approaching NIOC,” Manouchehri said. “I’m not sure when we’ll sign the first contract. I hope it will be earlier” than a year from now.

    Iran is recovering from sanctions that strangled its economy and choked off investment in its oil and gas industry. An easing of sanctions in January has allowed the country to ramp up oil exports, to 2 million barrels a day in July from 1.4 million at the end of last year, Joint Organisations Data Initiative data show. Brent crude, the international benchmark, was trading at about $52 a barrel on Wednesday.

    $200 Billion

    The Persian Gulf nation is seeking to boost production at oil and gas fields, and will need about $200 billion over the next four years for energy investments, according to figures provided by Iran’s Petroleum Minister Bijan Namdar Zanganeh on Tuesday.

    The International Monetary Fund said Wednesday that economic conditions in Iran are improving and forecast growth of 4.5 percent this year compared with 0.4 percent in 2015.

    Iran wants to produce about 4 million barrels of crude a day to regain its pre-sanctions share of the market, Zanganeh said Tuesday. Iran’s output was 3.63 million barrels a day in September, data compiled by Bloomberg show.

    http://www.bloomberg.com/news/articles/2016-10-19/iran-talking-with-16-investors-to-bid-on-oil-and-gas-projects
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    Venezuela congressional probe says $11 billion missing at PDVSA


    A report by a Venezuelan congressional commission accused Petroleos de Venezuela (PDVSA) [PDVSA.UL] of corruption on Wednesday, saying about $11 billion in funds went missing from the state-run oil company while Rafael Ramirez was at the helm from 2004-14.

    "It is more than the (annual) budget of five Central American countries," said Freddy Guevara, comptroller commission president and a member of one of Venezuela's hardline opposition parties, alleging widespread malfeasance at the state oil producer.

    "We're talking about $11 billion they cannot justify," he added, as he presented a report by the legislative body that audits the state.

    PDVSA, which manages the world's largest oil reserves, brings in about 95 percent of Venezuela's export revenues and has been the country's financial engine during 17 years of leftist rule in the OPEC member nation.

    Critics have long accused PDVSA of corruption, but the company has maintained it is the target of a right-wing smear campaign, led by the United States and compliant international media, to sabotage socialism.

    Neither PDVSA nor Ramirez, currently Venezuela's United Nations envoy, responded immediately to requests for comment on the report by the commission headed by Guevara.

    Venezuela is engulfed in a protracted economic crisis exacerbated since 2014 by a sharp decline in world oil prices.

    Raising the specter of default, cash-strapped PDVSA said on Monday it "could be difficult" to pay large looming debt commitments if a proposed $5.3 billion bond swap does not go through.

    "If PDVSA is unable to pay its international creditors ... it is because they robbed this money," said Guevara, a former student leader and member of the Popular Will Party. As he addressed his fellow lawmakers, he flicked between slides illustrating what he described as various cases of wrongdoing at PDVSA, repeating: "Where is the money?"

    MULTIPLE CASES

    The congressional investigation focuses on 11 cases, ranging from known scandals in an Andorran bank and PDVSA pension funds to alleged overpricing in purchases of oil equipment.

    The accusations are based in part on documents from PDVSA, auditor KPMG [KPMG.UL] and foreign investigations.

    Interviews with a KPMG representative showed the company had informed PDVSA's auditing committee of "frauds," the report said.

    "The representatives of PDVSA had FULL KNOWLEDGE of the existence of administrative irregularities," the report reads, adding KPMG has not provided further details, citing confidentiality policies.

    The U.S. Justice Department has said there is a large, ongoing investigation into bribery at PDVSA.

    In the most high-profile case to date, a Venezuelan businessman pleaded guilty in a U.S. court in June to violating the Foreign Corrupt Practices Act for his role in a scheme involving PDVSA officials. U.S. authorities have linked more than $1 billion to the scheme.

    In the Andorran case, the United States alleged last year that a bank there had facilitated the laundering of $4.2 billion of Venezuelan money.

    In addition to the 11 cases documented in the report, Guevara told Reuters the commission was currently investigating another six.

    One slide displayed by Guevara titled "Those involved," showed dozens of arrows pointing at Ramirez, who served as Venezuela's oil czar for a decade before being sent to the U.N.

    The commission called on the National Assembly to deem Ramirez "politically responsible" for the irregularities and recommended a "no-confidence vote" against current PDVSA President Eulogio Del Pino.

    "We're seeking lawsuits - criminal and civil - against all those involved here," Guevara said, adding he had not received any official reply from PDVSA or its current and former executives.

    The investigation may have little impact, however, as President Nicolas Maduro's government has sidelined Congress since the opposition won control in a December vote and the Supreme Court has annulled all its major decisions.

    Ruling Socialist Party lawmakers did not attend Wednesday's session, where the commission approved the report.

    PDVSA's Del Pino has in recent weeks accused media and opponents of inventing lies about the company. He personally filed a lawsuit for defamation against one Venezuelan newspaper after it said PDVSA was in financial trouble.

    http://www.reuters.com/article/us-venezuela-pdvsa-idUSKCN12J22H
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    South Korea: Sept LNG imports down YoY


    Imports of liquefied natural gas (LNG) by South Korea, the world’s second-largest buyer of the chilled fuel, dropped 13.8 percent year-on-year in September, according to the customs data.

    South Korea imported 2.24 million mt of LNG in September, as compared to 2.59 million mt in the corresponding month last year.

    The country paid about US$786 million for September imports, down 39.3 percent on year, the data showed.

    Qatar, the world’s largest exporter, supplied most of the September volumes (1.11 million mt), up by 5.7 percent as compared to in 2015.

    The rest of South Korea’s LNG imports in September were sourced from Indonesia, Oman, Australia, Malaysia, Brunei, Nigeria and Russia.

    State-owned Kogas, that handles almost all of the LNG imports into South Korea, said last week its sales volume dropped 0.1 percent in September to 1.97 million mt.

    http://www.lngworldnews.com/south-korea-sep-lng-imports-down-yoy/

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    Low GCC gas prices 'unsustainable' says report


    Maintaining the GCC’s low gas prices is unsustainable and will create significant problems for the region in the future, according to a recent study by management consultancy Strategy&.

    While low GCC gas prices have supported local economies in the past, the cost of new gas production is set to rise significantly in the future.

    According to Strategy&, average weighted costs of new gas production across the GCC could rise by a factor of one-third to two-thirds by 2030 as technology requirements necessary for accessing and successfully extracting gas becomes greater — from $1.50 to $4.50 per thousand cubic feet in 2015, to $2.00 to $7.00 per thousand cubic feet in 2030.

    Developing new sources of gas production is therefore not sustainable at current prices which are typically significantly below this level and, if not addressed, will lead to a potential gas supply gap of over 300bn cubic meters by 2030.

    George Sarraf, partner with Strategy&, said: “If the cost of gas does not start to reflect its true market value and appropriate investment in the oil and gas sector is not allocated soon, the GCC will be unable to meet demand for gas in the future.

    "Reforms should define a mechanism that prices natural gas closer to its true value and that in some manner reflects the global and regional dynamics of supply and demand.

    "While abundant and cheap gas has played a critical role in the development and diversification of GCC economies, the current system is not sustainable."

    The best approach to setting gas prices is to use market mechanisms such as “oil indexation” and “gas hub pricing.”

    Oil indexation requires gas prices to be linked to a basket of commodities including crude oil and oil products.

    Gas hub pricing, also known as “gas-to-gas competition,” is when gas is traded based on spot prices set by the market in a liquid trading hub to better reflect the true price of gas to consumers.

    According to David Branson, an executive advisor with Strategy& in Dubai and a member of the energy, chemicals and utilities practice in the Middle East, “Many markets around the world are becoming increasingly liberalized and are gradually moving from oil indexation to gas hub pricing as the preferred pricing method.

    "In 2014, 43% of all gas sold was subject to gas hub pricing and 17% was indexed to oil. However, the Middle East is yet to adopt market-based gas pricing with almost all prices regulated by national governments.”

    For the GCC market specifically, Strategy& suggests four possible effective gas pricing regimes for countries to implement.

    The first is to increase wholesale prices to match – at a minimum – the increasing production costs and encourage investments in new supply sources.

    The second is by indexing gas prices to oil prices. Another viable option would be to link domestic gas prices to prices in existing hubs in other geographies, and lastly to establish a dedicated GCC gas hub price.

    Dr Yahya Anouti, principal with Strategy& in Dubai and a member of the energy, chemicals and utilities practice in the Middle East, commented: “The time to act is now and some countries have already taken steps in this direction but more is needed to advance this vital reform across the region.

    "Although a new regime will result in higher gas prices, carefully crafted mitigation measures can help with the transition.

    "These will allow the economy as a whole to benefit from increased diversification, private investments, true competition and a greater sense of energy security."

    As a consequence of a new pricing regime, Startegy& warns of the possibility for a gas price increase to have an adverse socioeconomic impact on consumers unless managed carefully.

    The impact of a new potential gas-pricing mechanism therefore requires proactive and targeted risk mitigation measures to ensure that the benefits of the new pricing model are captured, the consultancy said.

    According to Strategy&, GCC countries need to proactively communicate with all key stakeholders to evaluate potential risks of higher gas prices and offer appropriate solutions.

    For example, mitigation measures might include offering incentive packages to industrial customers and instituting targeted compensation mechanisms for the poorest households.

    Accompanying a move to market-based gas pricing, a regulator for gas should also be established to govern the new gas pricing regime and monitor its application.

    http://www.arabianoilandgas.com/article-16257-report-calls-low-gcc-gas-prices-unsustainable/

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    Halliburton has posted a surprise quarterly profit.


    The US oilfield services provider said it was helped by higher cost cuts while it also expects a rise in oil prices to boost its rig count.

    Profit was attributable to $6million in the third quarter ended September 30th, compared with a loss of $54million a year previously.

    The firm has warned of weak fourth-quarter activity due to holiday and seasonal weather related down-times.

    Shale oil companies have started putting rigs back to work as crude prices have nearly doubled since their February lows.

    Meanwhile, the number of active rigs in the US has risen for the seventh straight week through to October 14th.

    Halliburton has been making huge cost-cutting and the firm said in July it would reduce its “structural costs” by about 25%, or $1billion, on an annual run-rate basis by the end of the year.

    HAL segment revenue: N.A. $1.7b (up 9% q/q) LatAm $415m (down 13%) Europe/Africa/CIS $744m (down 6%) Middle East/Asia $1.0b (down 3%)

    https://www.energyvoice.com/oilandgas/122145/halliburton-posts-surprise-profit-plans-reduce-structural-costs-quarter/
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    China's record retail fuel prices increases this year


    China's top economic planner announced on Wednesday it will raise the retail price of gasoline by 355 yuan (52.73 U.S. dollars) per tonne and that of diesel by 340 yuan.

    This is the seventh price hike since the beginning of this year, and also the biggest increase, according to the National Development and Reform Commission (NDRC).

    The adjustment, effective on Thursday, means retail prices will rise by about 0.26 yuan per liter for gas and 0.29 yuan per liter for diesel, according to the NDRC.

    The price increase was largely attributed to production cuts from members of the Organization of Petroleum Exporting Countries (OPEC), according to a NDRC report.

    The NDRC urged "China's Big Three," -- China National Petroleum Corporation (CNPC), China Petrochemical Corp. (Sinopec) and China National Offshore Oil Corp. (CNOOC) -- to appropriately organize production and allocation in a bid to keep the market stable.

    China has a pricing regime which adjusts domestic fuel prices when international crude prices change by more than 50 yuan per tonne during a time span of 10 working days.

    China's crude oil output fell 9.9 percent year on year in August, the biggest monthly drop since 2003, latest data from the National Bureau of Statistics showed.

    Imports, on the other hand, have trended upward after private refineries were given permission to import crude last year.

    In the first eight months, China's crude oil imports rose 13.5 percent compared with the same period last year, while refined oil output gained 2.1 percent.

    This year the NDRC has cut retail fuel prices four times and raised them six times before the price hike this time.

    http://news.xinhuanet.com/english/2016-10/19/c_135766727.htm

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    Qatargas signs LNG SPA with Petronas LNG UK


    According to Reuters, Qatargas has signed a five-year LNG sales and purchase agreement (SPA) with Petronas LNG UK.

    Under the agreement, Qatargas will deliver 1.1 million tpy of LNG to the UK-based company until 31 December 2023. This will extend a current five-year contract that was set to expire on 31 December 2018.

    The LNG will be sourced from the Qatargas 4 joint venture (JV) between Shell and Qatar Petroleum. The cargoes will be delivered to the Dragon LNG terminal, which is located in Milford Haven, the UK.

    Reuters reports that Qatargas, in an effort to deal with an impending worldwide gas glut, is looking to expand import deals with Europe’s most liquid markets, including Britain and the Netherlands.

    https://www.lngindustry.com/regasification/19102016/qatargas-signs-lng-spa-with-petronas-lng-uk/
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    Woodside 3rd-qtr production beats forecasts


    Oct 20 Woodside Petroleum, Australia's largest independent oil and gas producer, reported a 14 percent rise in third-quarter production from the previous quarter, beating analysts' forecasts, while revenue rose nearly 20 percent.

    As a result, Woodside narrowed its forecast for full-year production to 92-95 mmboe, tweaking up the bottom end of the range.

    Output in the September quarter rose to 25.2 million barrels of oil equivalent (mmboe) from 22.2 mmboe in the June quarter, due to record output at the Karratha gas plant and the Pluto liquefied natural gas (LNG) operation.

    Two analysts had expected production of around 23.5 mmboe.

    Revenue rose to $988 million, in line with the two analysts' forecasts, as oil and gas prices improved.

    http://www.reuters.com/article/woodside-results-idUSL4N1CP5BT

    Woodside sees deal activity picking up in oil and gas

    The environment for getting deals done in oil and gas is better now than it was a year ago as sellers have lowered their expectations, Woodside Petroleum's Chief Financial Officer Lawrie Tremaine said on Thursday.

    Woodside, Australia's biggest independent oil and gas producer, has announced two deals over the past four months together worth up to $830 million, picking up stakes in a major oil find off Senegal and undeveloped gas fields off Australia.

    It is working on more deals within the $1 billion range, Tremaine said.

    http://www.reuters.com/article/woodside-results-ma-idUSL4N1CQ1D4
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    Small increase in US oil production


                                                                            Last Week    Week Before  Last Year

    Domestic Production '000................... 8,464             8,450             9,096
    Alaska ..............................................    489                 481                490
    Lower 48 ......................................... 7,975              7,969             8,606

    http://ir.eia.gov/wpsr/overview.pdf
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    Summary of Weekly Petroleum Data for the Week Ending October 14, 2016


    U.S. crude oil refinery inputs averaged about 15.4 million barrels per day during the week ending October 14, 2016, 182,000 barrels per day less than the previous week’s average. Refineries operated at 85.0% of their operable capacity last week. Gasoline production decreased last week, averaging 9.5 million barrels per day. Distillate fuel production increased last week, averaging 4.6 million barrels per day.

    U.S. crude oil imports averaged 6.9 million barrels per day last week, down by 954,000 barrels per day from the previous week. Over the last four weeks, crude oil imports averaged about 7.6 million barrels per day, 3.1% above the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 871,000 barrels per day. Distillate fuel imports averaged 32,000 barrels per day last week.

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 5.2 million barrels from the previous week. At 468.7 million barrels, U.S. crude oil inventories are near the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 2.5 million barrels last week, and are well above the upper limit of the average range. Both finished gasoline inventories and blending components inventories increased last week. Distillate fuel inventories decreased by 1.2 million barrels last week but are above the upper limit of the average range for this time of year. Propane/propylene inventories fell 1.2 million barrels last week but are above the upper limit of the average range. Total commercial petroleum inventories decreased by 3.6 million barrels last week.

    Total products supplied over the last four-week period averaged about 20.1 million barrels per day, up by 3.6% from the same period last year. Over the last four weeks, motor gasoline product supplied averaged 9.1 million barrels per day, up by 0.2% from the same period last year. Distillate fuel product supplied averaged about 4.0 million barrels per day over the last four weeks, up by 3.3% from the same period last year. Jet fuel product supplied is up 6.5% compared to the same four-week period last year.

    Cushing down 1.6 mln bbls

    http://ir.eia.gov/wpsr/wpsrsummary.pdf

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    ICF Predicts Marcellus/Utica Gas Will Double by 2025!


    You just can’t get away from the Marcellus/Utica–even at a conference supposedly focused on the Western U.S. Natural gas infrastructure was a key topic at the recent LDC Gas Forum Rockies & West conference held in Denver, CO.

    ICF International vice president Kevin Petak was one of the speakers. He dropped what is (to us) a bombshell when he said he believes the Marcellus and Utica combined will pump out 40 billion cubic feet per day (Bcf/d) by 2025–just 10 short years from now.

    The two plays combined today are pumping around 21 Bcf/d–so Petak is predicting our output will double! If that’s so, there will need to be a whole lotta drillin’ goin’ on between now and then.

    In addition to Petak, Crystal Heter, vice president for commercial operations at the Rockies Express (REX) pipeline, had some VERY interesting things to say about the REX pipeline reversal which sends Marcellus/Utica gas to the Midwest. It looks like even more gas is about to go from our area westward…

    http://marcellusdrilling.com/2016/10/icf-predicts-marcellusutica-gas-will-double-by-2025/

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    Another quarter of weak results looms for U.S. refiners


    U.S. independent refiners such as PBF Energy (PBF.N) and Phillips 66 (PSX.N) are expected to report another quarter of disappointing profits in coming weeks, as hopes that a record summer driving season would turn the industry's fortunes around do not appear to have materialized.

    U.S. refiners are in the midst of their worst year since the shale boom began in 2011. High fuel inventories have punished margins this year, forcing some refiners to voluntarily cut production, delay capital work, lay off workers and slash employee benefits.

    With margins expected to remain under pressure, relief is not coming anytime soon, analysts say. Overall supply levels are still elevated, and the cost to meet U.S. renewable fuel standards will drag on profits for the remainder of the year.

    Earnings expectations have been falling over the last month for an index of nine independent refiners that are part of the S&P 500. Over the last 30 days, the forecast for the third quarter has dropped by 3.8 percent on average, according to StarMine, a unit of Thomson Reuters.

    "2016 is probably a lost year for the U.S. refining industry," Barclays analyst Paul Cheng said.

    The benchmark U.S. crack spread <CL321-1=R, a key measure of margins, steadied in the third quarter, falling about 2 percent after crashing more than 22 percent in the second quarter.

    Motorists hit U.S. roads in record numbers over the summer, but the demand was not enough to deplete the massive buildup in gasoline inventories that existed heading into the summer driving season. Those inventories - the result of overproduction last winter - hurt margins.

    Heading into the winter, distillate stocks are at their highest seasonally since 2010. Refiners built up distillate stocks over the summer as they pushed their plants to pump out gasoline.

    The U.S. refining industry has widely blamed its economic misfortunes on the country's renewable fuel program, which forces refiners to either blend biofuels like ethanol into their fuel pool or buy renewable fuel credits. The fuel credits, known as renewable identification numbers, or RINs, have jumped in price this year.

    Delta Air Lines (DAL.N) opened the earnings season last week, reporting a $45 million loss at its Monroe Energy refinery for the third quarter, versus a $106 million profit a year ago. The company is expecting the refinery to lose more than $100 million this year, versus more than $300 million in profits last year.

    Delta, which does not have a blending operation and must buy credits for the fuel it produces, said it spent $48 million in the third quarter on RINs, nearly triple what it paid last year.

    Another local refinery, Philadelphia Energy Solutions, blamed the rising cost of RINs for its decision to lay off up to 100 non-union employees and slash benefits. [nL1N1CG0U7]

    In May, Marathon Petroleum (MPC.N) laid off 46 employees at its Galveston Bay refinery in Texas.

    Standalone refineries like PES and Monroe will continue to struggle in the Northeast because they have little advantage over international rivals and face tougher environmental obligations at home, Sandy Fielden, director of research, commodities and energy at Morningstar in Austin, Texas, said in a report due Wednesday.

    "U.S. refiner margins as a whole are lower in 2016 versus 2015 and Q4 is not likely to be different with higher crude prices and soft product prices due to higher inventories," he said.

    The U.S. Energy Information Administration expects this winter to be about 18 percent colder than last year's historically mild season.

    http://www.reuters.com/article/us-usa-results-refiners-idUSKCN12J0BA
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    Alternative Energy

    China sets limit on annual rare earth mining volume by 2020


    China announced Tuesday that it will limit its annual mining of rare earth within 140,000 tonnes by 2020 in its latest attempt to overhaul the sector and ensure its sound development.

    The government will continue to investigate and apprehend anyone involved in illegal mining, processing or trade in rare earth metals and better manage market access, according to a rare earth development plan for the 2016-2020 period, released by the Ministry of Industry and Information Technology (MIIT).

    Rare earth comprises a class of 17 mineral elements which are some of the most sought-after metals due to their vital role in green technologies like wind turbines and car batteries. They are also used for military purposes.

    China is the world's largest rare earth producer and exporter, but the industry is beset by myriad problems, such as illegal mining, smuggling and a lack of competitiveness due to weak research and development.Excessive exploration has also caused environmental damage.

    To upgrade the industry, the MIIT plans to improve efficiency across resource management and technological innovation by 2020.

    During the 12th Five-Year Plan period (2011-2015), 14 illegal rare earth mines and 28 companies were closed. More than 36,000 tonnes of illegal rare earth products were seized, and 230 million yuan in fines was imposed, according to statistics from the MIIT.

    http://www.chinamining.org/News/2016-10-19/1476841571d77658.html
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    Base Metals

    Congo miner challenges Freeport sale of Tenke mine in international court


    Democratic Republic of Congo state miner Gecamines has challenged Freeport McMoRan Inc's sale of its majority stake in the Tenke copper mine at the International Court of Arbitration in Paris, Gecamines said on Wednesday.

    Gecamines Secretary-general Deogratias Ngele told Reuters that Gecamines had asserted a right of first offer following Freeport's agreement in May to sell its 56% stake in Tenke, one of the world's largest copper mines, to China Molybdenum for $2.65-billion.

    Freeport did not respond to a request for immediate comment.

    http://www.miningweekly.com/article/congo-miner-challenges-freeport-sale-of-tenke-mine-in-international-court-2016-10-19

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    Turquoise Hill announces lower third quarter 2016 production


    Turquoise Hill Resources today announced third quarter 2016 production for Oyu Tolgoi.

    Jeff Tygesen, Turquoise Hill Chief Executive Officer, said, "Oyu Tolgoi performed as expected during the third quarter as open-pit operations focused on Phases 3 and 6 after the high-gold Phase 2 was nearly complete in Q2'16. Despite the lower copper and gold production in the quarter, we are confident in our ability to achieve the higher end of our annual guidance."

    Oyu Tolgoi set an all-time high in Q3'16 for quarterly material mined of more than 25 million tonnes. This record includes stripping for Phase 4, which is the next area of high-grade ore. In Q3'16, concentrator throughput declined 4.0% over Q2'16 due to planned maintenance and conveyor belt repairs. Copper production in Q3'16 declined 9.9% over Q2'16, as a result of lower recovery from Phase 6 ore. As expected, gold production in Q3'16 declined 47.1% over Q2'16 due to lower grades from the completion of mining Phase 2.

    The Company continues to expect Oyu Tolgoi to produce 175,000 to 195,000 tonnes of copper in concentrates and 255,000 to 285,000 ounces of gold in concentrates for 2016.

    http://www.marketwired.com/press-release/turquoise-hill-announces-third-quarter-2016-production-nyse-trq-2168210.htm
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    BHP spends $2 million a month on nickel unit as recovery looms


    A sign adorns the building where mining company BHP Billiton has their office in Perth, Western Australia, November 19, 2015. REUTERS/David Gray/File photo

    BHP Billiton's nickel business, which faced closure after failing to attract a buyer, is spending $2 million a month on improvements and making headway to extend operations through the next decade, a senior executive said on Thursday.

    Nickel prices have climbed 17 percent this year after a crippling supply glut drove the market into near-free fall 2-1/2 years ago. Global demand rose 6.1 percent over the eight months to end-August, led by an 8 percent rise in China and strong gains in India and China, industry data showed.

    "There are signs that this year could finally be the turning point for nickel," Eduard Haegel, president of BHP's Nickel West mining and processing unit told a mining conference.

    "For the last 10 months and for the remainder of this year and next year, Nickel West is committed to spending $2 million a month," Haegel added, with the funds being used to address structural needs.

    He also flagged a potential return to the development of a promising but as-yet unexploited mine named Yakabindie, stalled since the 2008/09 financial crisis because of its $1.1 billion price tag.

    The new mine is believed to hold 350,000 tonnes of nickel - a fifth of annual world demand - and would help support Nickel West until at least 2032, Haegel said.

    It was less than two years ago that 2,000 Nickel West workers were told to expect operations at the 44-year-old plant in western Australia to end by 2019 after the high-cost, low-grade operation failed to find a buyer.

    In 2013, BHP booked a $1.25 billion after-tax impairment on the assets. Nickel West has since been designated "non-core" by BHP's board.

    Potential buyers including Glencore, First Quantum and China's Jinchuan Group walked away two years ago, put off by plummeting nickel prices and fearful of being left with $1 billion-plus in closure costs.

    http://www.reuters.com/article/us-bhp-billiton-nickel-idUSKCN12K0F4
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    Steel, Iron Ore and Coal

    Coal exporters wary of end to Chinese benevolence


    The problem with coal's spectacular rally this year is that it's largely a Chinese political phenomenon, and what Chinese politicians give they can just as easily take away.

    Australian thermal coal spot cargoes at Newcastle port for November this week breached $100 a tonne for the first time in 4-1/2 years, closing on Tuesday at $102.20 and taking this year's rally to almost 120 percent.

    There was much head-scratching this week at the annual World Coal Leaders conference in Lisbon over how virtually every analyst worldwide had misread the Chinese market, where imports have surged to 180.18 million tonnes in the first nine months of the year, up 15.2 percent from the same period of 2015.

    The majority of analysts had expected China -- the world's biggest coal producer, consumer and importer -- to import less of the fuel in 2016 because of a slowing domestic economy and an official push to limit use of more polluting energy sources.

    What caught most analysts off guard was the reduction in working days for Chinese coal mines to 274 days a year from 330 in an effort to cut output and thereby raise prices and profitability for domestic miners.

    This was a blunt measure that appears to have been enforced rather than talked about and largely ignored, as is sometimes the case in China and happened this year in steel markets, where actual capacity cuts have fallen well short of what was planned.

    Ultimately, the Chinese coal and steel sectors underscore the difficulty in accurately predicting what is likely to happen in the world's commodity epicentre.

    In general terms, the mainly Western analyst community believed that steel capacity would be cut, most likely because there was a firm number to go along with the policy. But they remained sceptical about coal, given the absence of a numerical target.

    What the market ended up with was Chinese domestic coal output down 10.5 percent year on year to 2.46 billion tonnes in the nine months to Sept. 30, while steel production gained 0.4 percent over the same period.

    This means that Chinese domestic coal output is down about 300 million tonnes in the first three quarters -- a drop that is far larger than the reduction in demand from weaker thermal power generation.

    This has resulted in inventory levels falling sharply in China, with Shanghai Steelhome data SH-QHA-COALINV showing stocks at China's major coal port Qinhuangdao of 3.55 million tonnes at Oct. 17, up from recent lows but still less than half the 7.25 million tonnes at the same time last year.

    SCEPTICAL MINERS

    The lower output and falling inventories resulted in a draw on the seaborne market that exporters weren't positioned to take advantage of, given the parlous state of the industry after five years of declining prices.

    Most mines in major regional exporters Australia and Indonesia were being run at capacity and on the smell of an oily rag as operators went into survival mode, paring costs to the bone and deferring capital spending and exploration.

    This meant that when Chinese demand did arrive, it couldn't be met easily, thereby pushing up prices rapidly.

    However, understanding what has happened is only half the battle in coal markets.

    Producers attending the World Coal Leaders conference remain sceptical that the rally is sustainable for the longer term, even if they expect prices to remain biased higher for the next six months or so.

    The thinking is that the Chinese will continue to backtrack from capacity cuts and allow domestic miners to ramp up output to rebuild inventories and prevent prices from going too high
    .

    This will take several months to flow through the system, meaning that the good times for exporting miners will last a while yet.

    But it will take a very brave producer to invest in expanding output on the back of renewed hopes for sustained Chinese import growth.

    As the old saying goes, once bitten, twice shy. Miners are still reeling from the massive expansion from 2010, which left the seaborne market structurally oversupplied when Chinese demand fell short of some extremely bullish forecasts.

    http://www.reuters.com/article/column-russell-coal-china-idUSL4N1CP3MC?feedType=RSS&feedName=basicMaterialsSector&utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+MasterMetalsNews+%28MasterMetals+News+Feed%29&utm_term=MasterMetals

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    China Jan-Sept coal industry FAI turns better

    China Jan-Sept coal industry FAI turns better

    China's fixed-asset investment (FAI) in coal mining and washing industry amounted to 220.0 billion yuan ($32.64 billion) over January-September, with the year-on-year fall narrowing 7 percentage points from a month ago to 26%, showed data from the National Bureau of Statistics (NBS) on October 19.

    Private investment in the sector stood at 133.8 billion yuan, falling 19.8% year on year.

    During the same period, fixed-asset investment in all mining industry in the country posted a yearly decline of 20.9% to 737.7 billion yuan; of this, private investment in mining industry stood at 451.8 billion yuan, dropping 14.6% from the previous year.

    Meanwhile, the total fixed-asset investment in ferrous mining industry in the first nine months witnessed a yearly drop of 28.9% to 75.7 billion yuan; while that in oil and natural gas industry dropped 21% on year to 153.7 billion yuan, according to the NBS data.

    The fixed-asset investment in non-ferrous mining industry stood at 108.7 billion yuan during the same period, down 6.8% from the year-ago level, data showed.

    http://www.sxcoal.com/news/info?id=4548237&lang=en
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    Glencore signs Q4 coking coal contracts at $200/t


    Glencore had managed to reach the fourth quarter settlements with a few north Asian steel mills in the past week for its Oaky premium mid-vol coking coal at $200/t FOB, which was more than double the $92.50/t FOB Australia from the previous quarter's benchmark, according to sources.

    Peabody Energy has sold North Goonyella premium mid-vol at $200/t FOB Australia under contract for the fourth quarter to Japanese steelmaker Nippon Steel.

    But other Australian coal suppliers like Anglo American and Rio Tinto were still holding back — expecting higher-priced settlements.

    The premium mid-vol benchmark agreements for the fourth quarter trail that of Australian low-vol PCI and semi-soft contracts which were signed at $133/t FOB Australia and $130/t FOB Australia, respectively.

    The current spot scramble for premium low-vol coals due to Anglo American's German Creek force majeure declaration on October 7 have widened the price gap between mid-vols and low-vols, sources said.

    Anglo American and Rio Tinto also produce the German Creek and Hail Creek coal brands respectively — premium low-vol coals that have been especially in short supply recently.

    A consistent benchmark accord for the fourth quarter prime hard coal needs to be agreed soon, or the benchmark system will lose its relevance," Platts cited a source of one large Asian steel mill as said.

    http://www.sxcoal.com/news/info?id=4548282&lang=en
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    Glencore to sell Australia coal haulage unit for $874 mln


    Mining and trading giant Glencore Plc agreed on Thursday to sell its Australian coal haulage business GRail to Genesee & Wyoming Inc for A$1.14 billion ($874 million), advancing its effort to slash debt.

    Genesee & Wyoming, which will sell down 49 percent of the business to funds managed by Macquarie Infrastructure and Real Assets (MIRA), beat Australia's top two coal haulers, Aurizon Holdings and Pacific National, in the bidding.

    "We are very pleased with the outcome of the sale process and look forward to continuing our constructive working relationship with Genesee & Wyoming in the years ahead," Glencore's coal head Peter Freyberg, said in a statement.

    The price Glencore fetched was in line with expectations, and takes its asset sales this year to $4.7 billion, within its target range, putting it on track to cut net debt to between $16.5 billion and $17.5 billion this year.

    Genesee & Wyoming, which already operates GRail for Glencore, said the acquisition would double the size of its Australian business and boost its earnings before interest, tax, depreciation and amortisation in 2017 by A$100 million.

    "We are pleased to be enhancing our existing relationship with Glencore through a two-decade rail haulage contract that provides for exclusive rights to rail shipments from some of the premier steam coal mines in the world," G&W President Jack Hellman said in a statement.

    Earnings from GRail, which hauls about 40 million tonnes a year of coal, are expected to grow to A$150 million in the medium term, backed by its long-term contract with Glencore, G&W said.

    The deal is expected to close on Dec. 1, assuming G&W wins approval from Australia's Foreign Investment Review Board.

    Rival bids from Aurizon and Pacific National, Australia's dominant coal haulers, had sparked concerns with Australia's competition watchdog, which said it would welcome a third competitor in the Hunter Valley. It was due to rule on their bids in December.

    A source familiar with the deal said G&W's bid was higher than the other two.

    http://www.reuters.com/article/glencore-divestiture-genesee-wyo-idUSL4N1CQ2C3?feedType=RSS&feedName=basicMaterialsSector&utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+MasterMetalsNews+%28MasterMetals+News+Feed%29&utm_term=MasterMetals
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    China Shenhua Sep coal sales up 15.7pct on year


    China Shenhua Energy Co., Ltd, the listed arm of coal giant Shenhua Group, sold 36.2 million tonnes of coal in September, rising 15.7% year on year and up 5.54% month on month, as sales of outsourced coal surged 59.2% on year and 25.6% from August to 11.3 million tonnes, the company announced in a statement late October 19.

    The company sold 288.2 million tonnes of coal over January-September, gaining 3.33% from the year prior, it said.

    Coal sales via northern ports in September climbed 0.51% from August and up 16.6% on year to 19.7 million tonnes, with those shipped from Shenhua's exclusive-use Huanghua port at 14.8 million tonnes or 75.1% of its total in the month, climbing 48% on year and up 4.96% on month.

    Total coal sales via northern ports stood at 170.3 million tonnes in the first nine months, up 11% on year.

    Meanwhile, the company produced 25.4 million tonnes of coal in September, rising 14.4% on year and up 3.25% on month. The output over January-September increased 1.3% on year to 213.3 million tonnes.

    Shenhua Group had been approved to increase production from September this year, in a bid to curb fast rise of domestic coal prices caused mainly by persisting tight supply.

    14 coal mines of the company were allowed to boost output by combined 2.79 million tonnes a month.

    http://www.sxcoal.com/news/info?lang=en&id=4548272
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    BHP Billiton Q3 thermal coal output stands at 6.9 mln T


    BHP Billiton, the world's largest mining group by market capitalization, saw its thermal coal production take a hit over July-September due to adverse weather conditions, but the company has maintained its guidance for fiscal 2016-2017 (July-June) unchanged at 30 million tonnes, it said in its quarterly operational review on October 19.

    The company's thermal coal output totaled 6.88 million tonnes in the third quarter, down 4% on year but up 9% from the last quarter, the report said.

    The total comprised production from its Australian and Colombian assets, and excludes volumes from its American New Mexico Navajo Mine which BHP completed divested on July 29.

    In Australia, BHP produced 3.95 million tonnes of thermal coal in the third quarter, down from 4.64 million tonnes a year earlier, and from 3.99 million tonnes over April-June.

    Colombian production stood at 2.93 million tonnes over the same period, compared with 2.53 million tonnes in the same period last year and 2.33 million tonnes the previous quarter.

    Prior to the divestment, BHP produced 451,000 tonnes from its US assets.

    "New South Wales Energy Coal production declined by 15%, mainly due to heavy rainfall and rescheduling of the mine plan based on individual pit economics. This partially offset a 16% increase in volumes at Cerrejon of Columbia compared to the third quarter in 2015 which was constrained by drought conditions," the company said.

    BHP's New South Wales Energy Coal consists of the Mt Arthur Coal open-cut thermal coal mine in the Hunter Valley region of New South Wales, Australia, and in Colombia it has a one-third interest in Cerrejon, which operates one of the world's largest open-cut export coal mines, located in La Guajira province.

    http://www.sxcoal.com/news/info?id=4548264&lang=en
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    Atlas increases output in Sept quarter


    Iron-ore miner Atlas Iron has reported an 8% increase in shipped tonnage during the three months to September, compared with the previous quarter, as C1 cash costs declined by 3%.

    Some 4.1-million tonnes of ore was shipped during the September quarter, at a C1 cash cost of A$34/t.

    MD Daniel Harris said on Wednesday that the quarterly results provided further evidence of the company’s turnaround on both the operational and financial fronts.

    “These results continue to demonstrate that Atlas is maintaining its tight control on costs while generating strong production volumes. This combination is enabling Atlas to take advantage of solid iron-ore prices, as shown by our margins and our overall free cash flow generation.”

    Cash on hand at the end of the September quarter increased to A$95-million, compared with the A$81-million at the end of the June quarter.

    Harris said the increased cash flow meant that Atlas will repay A$15-million in debt during October, which will further strengthen the company’s balance sheet. Net debt at the end of September was less than A$90-million.

    “We are increasingly confident that Atlas has a bright future marked by strong cash flows and reducing debt levels,” Harris said.

    http://www.miningweekly.com/article/atlas-increases-output-in-sept-quarter-2016-10-19
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    Whitehaven coal output surges in Q3


    Whitehaven Coal is forecasting higher prices in the current quarter as it looks to cash in on the sharp jump in benchmark coal prices and a continued lift in production from its new mine, The Australian reported.

    The east coast miner produced 5.16 million tonnes of saleable coal during the three months to September 30, up 20% from 4.31 million tonnes a year ago.

    It produced 1.9 million tonnes of coal at Maules Creek mine in NSW, its newest mine, despite the adverse impact of heavy rain. Its production will be ramped up to an annual rate of 10.5 million tonnes in the second half of fiscal 2017, from 8.5 million tonnes now.

    Coal output at Narrabri - its lowest cost and most productive mine - jumped 136% to 2.35 million tonnes, following the completion of a longwall change.

    It realized an average price of $70/t for the steelmaking ingredient in the September quarter, up from $63.2/t in the preceding three months, but this is likely to rise much further given the jump in met coal prices since mid-year.

    Spot prices for metallurgic coal currently trade at $226/t, up from $90/t in June, while hard coking coal contracted prices for the December quarter have been settled at $200/t, up 116% on the September quarter.

    "The increase has been driven by cuts to onshore Chinese coal production, aimed at reducing overcapacity, which have sharply lifted demand for Australian coal," HSBC economist Paul Bloxham was cited as said.

    Metallurgic coal accounts for just 16% of Whitehaven's current production, but the company aims to raise this to 33% on the back of higher production from Maules Creek.

    The company's average realized price for the thermal coal, its main export, was $64/t in the September quarter, up from $51.94/t in the previous three months. The Newcastle globalCOAL Index - a benchmark of thermal coal prices - averaged $67/t in the September quarter, a 30% jump from the previous three months.

    Coal sales for the September quarter rose 12% to 5.03 million tonnes.

    http://www.sxcoal.com/news/info?id=4548262&lang=en
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    Rio cuts 2016 iron ore guidance; Fortescue shipments up


    Global miner Rio Tinto on Thursday cut its 2016 guidance for iron ore shipments by as much as 5 million tonnes after releasing lower third-quarter production data, citing shipping interruptions.

    The downward revision - equivalent to as much as $290 million at current ore prices - comes as the steelmaking commodity stages a recovery on the back of a surprise lift in demand from China.

    Rio Tinto, the world's second-biggest producer of iron ore, said third-quarter shipments from Australia fell 2 percent from the previous quarter to 80.9 million tonnes and 5 percent from the same period a year ago.

    "Shipments were reduced by port and rail maintenance during the quarter and annual shipment guidance is revised to between 325 and 330 million tonnes for 2016," the company said.

    Prior full-year guidance was for 330 million tonnes, according to Rio Tinto. Calendar 2017 production guidance was left unchanged at 330 million to 340 million tonnes

    Rio's cutback came as smaller rival Fortescue Metals Group boosted iron ore shipments by 5 percent in the September quarter to 43.8 million tonnes, adding that its costs had dropped for an eleventh straight quarter.

    Iron ore accounts for the majority of Rio Tinto's worldwide revenue and all of Fortescue's revenue. It is mostly mined in Australia and sold to Chinese steel mills.

    RBC analyst Paul Hissey said in a note said he favoured Rio Tinto over other major diversified producers due to its large exposure to iron ore, which had the potential to sustain current price levels.

    Iron ore was selling for $58 a tonne on Thursday, the highest in more than a month, driven by an unexpected surge in demand from China.

    China's iron ore imports reached 93 million tonnes in September, the second highest on record, as healthy profits pushed steel mills to ramp up output.

    "Steel consumption in China remains stable," Fortescue Managing Director Nev Power said in a statement.

    Fortescue said it sold its ore, which has a lower iron content than its bigger rivals, at 82.5 percent of the benchmark price, or $48.36. a tonne, over the July 1-Sept 30 period.

    Mining costs had declined by 5 percent to $13.55 per tonne, although the figure excluded shipping and insurance, according to Fortescue.

    BHP Billiton on Wednesday held its fiscal 2017 production guidance for iron ore of 265 million to 275 million tonnes after posting a modest 1 percent decline in output in the September quarter.

    http://www.reuters.com/article/us-rio-tinto-output-idUSKCN12J2OU
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