Mark Latham Commodity Equity Intelligence Service

Friday 1st April 2016
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    Macro

    We're about to see a mind-blowing demographics shift unprecedented in human history


    The world is about to see a mind-blowing demographic situation that will be a first in human history: There are about to be more elderly people than young children.

    For some time now, economists have observed that the proportion of elderly adults around the world is rising, while the proportion of younger children is falling.

    But within a few years, just before 2020, people aged 65 and over will begin to outnumber children under the age of 5, according to a recent report by the US Census Bureau.

    And these two age groups will continue to grow in opposite directions: The proportion of the population aged 65 and up will continue increasing, while the proportion of the population aged 5 and under will continue decreasing.

    In fact, according to the Census Bureau, by 2050, those aged 65 and up will make up an estimated 15.6% of the global population — more than double that of children under the age of 5, who will make up an estimated 7.2%.

    "This unique demographic phenomenon of the 'crossing' is unprecedented," the report's authors noted.

    There are and will continue to be differences between regions. Europe will remain the oldest region through 2050 with over 25% of Europeans aged over 65 at that time, even though the pace of aging will slow.

    Additionally, although the percentage of China's and India's populations over the age of 65 may not be as large as that of various European countries or Japan, their overall populations are enormous, which means that the total number of older people living in China and India will be much larger than in other countries.

    By comparison, some of the youngest countries will be located in South-Central Asia (Afghanistan), Western Asia (Kuwait, Yemen, and Saudi Arabia) and South-Eastern Asia (Laos).

    In any case, you can see this incredible demographic trend in the chart below. The spot where the two lines cross indicates the moment when the percentages of elderly and under-5 populations are equal, and after that the share of older people will outnumber the share of younger children.



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    Official China PMI goes positive, highest since June 2015. Caixin still down


    Activity levels across China’s manufacturing sector expanded for the first time in eight months in March, according to a report from China’s National Bureau of Statistics (NBS).

    The government’s manufacturing purchasing managers index (PMI) rose 1.2 points to 50.2, marking the first expansion in activity levels seen since June 2015.

    It beat expectations for a smaller increase to 49.3.

    The PMI measures changes in activity levels from one month to the next, with 50 signifying that activity levels were unchanged from one month earlier.

    The vast majority of the strength was concentrated in larger firms, offsetting persistent weakness in small and medium sized enterprises.

    For larger firms the PMI jumped to 51.5 from 49.9 in February. The readings for smaller and medium sized firms came in at 49.0 and 48.1 respectively, indicating contraction.

    Caixin China March Manufacturing PMI 49.7; Est. 48.3

    http://www.cnbc.com/2016/03/31/chinas-official-manufacturing-pmi-comes-in-at-502-in-march-well-above-forecasts.html?utm_source=twitterfeed&utm_medium=twitter

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    Factors of Production

    The classical economics of Adam SmithDavid Ricardo, and their followers focuses on physical resources in defining its factors of production, and discusses the distribution of cost and value among these factors. Adam Smith and David Ricardo referred to the "component parts of price"[7] as the costs of using:

    • Land or natural resource — naturally-occurring goods like water, air, soil, minerals, flora and fauna that are used in the creation of products. The payment for use and the received income of a land owner is rent.
    • Labor — human effort used in production which also includes technical and marketing expertise. The payment for someone else's labor and all income received from ones own labor is wages. Labor can also be classified as the physical and mental contribution of an employee to the production of the good(s).
    • The capital stock — human-made goods which are used in the production of other goods. These include machinery, tools, and buildings.

    The classical economists also employed the word "capital" in reference to money. Money, however, was not considered to be a factor of production in the sense of capital stock since it is not used to directly produce any good. The return to loaned money or to loaned stock was styled as interest while the return to the actual proprietor of capital stock (tools, etc.) was styled as profit. See also returns.

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    Brazil's Rousseff gets relief from Supreme Court, supporters


    Brazil's Supreme Court ruled on Thursday to take a corruption investigation into former president Luiz Inacio Lula da Silva away from a crusading federal judge, as pro-government protests across the country eased pressure on President Dilma Rousseff.

    Local television showed tens of thousands of supporters clad in red marching for Rousseff, who has faced growing calls for her impeachment since anti-corruption judge Sergio Moro released a wiretapped conversation of her and Lula this month.

    Thursday's 8-2 Supreme Court decision grants Lula and Rousseff a breather from Moro by putting Lula's case temporarily in the hands of the top court, all but 3 of whose members have been named since the ruling Workers' Party took office in 2003.

    Lula, Rousseff's predecessor and mentor, is under investigation for allegedly benefiting, in the form of payments and a luxury apartment, from a massive graft scheme uncovered at state-run oil company Petrobras.

    Rousseff is fighting impeachment over unrelated charges of irregularities in the government budget designed to favor her reelection in 2014. She could lose power as soon as May if she does not gain more support in Congress.

    The corruption scandal, Rousseff's Congressional weakness and a deepening economic recession have led to Brazil's worst political crisis since former President Fernando Collor de Mello resigned to avoid impeachment in 1992.

    Up to three million people joined a protest in favor of her ouster on March 13, the largest demonstration in decades.

    On Thursday, Rousseff held a rally with artists and movie stars who support her and said opponents trying to impeach her were merely trying to "give a democratic tint to a coup."

    Aides said her government had had some success in drawing lawmakers from smaller political parties into her government's alliance, which was shattered by the departure this month of Brazil's largest political party the Brazilian Democratic Movement Party (PMDB).

    "The reconfiguration of the base is ongoing," Rousseff's spokesman Edinho Silva told journalists.

    In a sign of a potential split among the PMDB, Senate leader Renan Calheiros said his party's decision to leave the government was "foolish" and "premature."

    The lower house of Congress is due to vote in mid-April on whether Rousseff should stand trial in the Senate for manipulating government accounts. She is not being investigated for corruption.

    Her woes deepened, however, when she tried to appoint Lula to her Cabinet, which would give him some immunity from prosecution because ministers and elected officials can only be tried by the Supreme Court in Brazil.

    Hours after he was named, Moro released a recording of them discussing the appointment. A Supreme Court justice suspended Lula's appointment arguing that it was aimed at illegally shielding him.

    On Thursday, the Supreme Court overruled Moro's decision to release the recording of his call with Rousseff and said it was the only court authorized to wiretap a conversation involving the president. Several justices said the conversation should not be accepted as valid evidence when the court eventually makes a decision on whether Lula can join the cabinet.

    Moro could still take some parts of the Lula investigation, depending on future Supreme Court rulings and whether Lula is ultimately allowed to become a minister.

    Lula released a video on social media praising Thursday's protests and gathering of artists, saying the "anti-coup" movement was growing.

    http://www.reuters.com/article/us-brazil-politics-lula-idUSKCN0WX2L5
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    Japan's power monopolies face major reform jolt


    Japan's power utilities will lose their monopoly over electricity on Friday in an unprecedented shakeup that could give a much needed jolt to Japan's long stagnant economy.

    Already, a price war has broken out among many of the more than 260 companies that will be allowed to sell electricity in Japan's $70 billion retail market. From April 1, Japanese consumers will be able to buy electricity from suppliers ranging from telecoms conglomerate Softbank and trading firm Marubeni to travel agency H.I.S. and a Hokkaido-based supermarket co-operative that has branched out into solar parks.

    They and others like Japan's biggest city gas operator, Tokyo Gas, are packaging other services, offering loyalty programs and even employing, in the case of Marubeni, the magic of Studio Ghibli, the Japanese animation powerhouse that won an Oscar for "Spirited Away."

    The new entrants are betting they can make money in a low-margin business by undercutting the monopolies brought low financially by the Fukushima disaster and saddled with a high-cost business model after decades of guaranteed profits.

    The government is hoping increased competition in the final remaining restricted part of the electricity market will boost efficiency and innovation and cut prices that are among the highest in the world.

    But the new entrants are competing for space in a market in long-term decline as the population falls and consumers from factories to households look to trim power use.

    What is more likely to happen is regional monopolies would merge and relatively few of the newcomers would survive the coming battle for market share, according to industry officials and specialists, analysts and others contacted by Reuters for this article.

    The regulatory overhaul will only add to the state of flux in the energy sector since the Fukushima nuclear disaster on March 11, 2011 shut down Japan's 54 nuclear plants. Only two of the remaining 42 usable units are operating. The disaster led to rolling blackouts in parts of the country and helped build public support for the liberalization.

    The overhaul leaves the question of atomic power hanging. Major utilities, which still control power distribution grids, are reserving some of that capacity for nuclear, according to a Reuters survey of the utilities.

    Japan has seen explosive growth in renewable energy, particularly solar, since preferential rates were introduced in 2012. By last summer, solar contributed to 10 percent of peak power demand from almost nothing before 2012.

    Wind power could get a boost as well from the regulatory overhaul. Local and foreign companies are stepping up investment with the government maintaining high guaranteed rates for this energy source but cutting those for solar.

    Japan's record use of coal is likely to keep rising, as companies such as Nippon Paper and trading house Mitsubishi Corp plan to build 43 new coal-fired units.

    Liquefied natural gas will remain a key contributor to electricity production in the world's biggest consumer of the fuel.

    Tokyo Electric Power Co, owner of the wrecked Fukushima nuclear plant and the largest of the regional monopolies, is likely to be the biggest loser in the overhaul. Tokyo Gas and JX Holdings are among those targeting Tepco's 29 million customers.

    Six other regional utilities have announced plans to sell electricity to Tepco customers in the Tokyo area, because geographic boundaries among operators will be eliminated.

    Anticipating competition, Tepco has dropped prices for some customers and targeted other regions in Japan. It is changing its logo and tying up with billionaire Masayoshi Son's Softbank Corp to package mobile phone and electricity supplies.

    The second-biggest operator, Kansai Electric Power, is in a more precarious position as the utility most reliant on nuclear power before Fukushima. None of its plants have reopened, after a court order earlier in March kept two reactors at its Takahama plant shuttered.

    "Because of the injunction on Takahama nuclear plant, we were forced to scrap plans to lower fees and we compare very unfavorably in price competition with others," said Kansai Electric chief Makoto Yagi, when asked about the overhaul at a recent press conference.

    Because the utilities still control the grids, they can charge high fees for access to them from newcomers to the industry. Plans to separate the transmission and generation business at the existing monopolies won't be implemented until 2020.

    http://www.reuters.com/article/us-japan-power-reforms-idUSKCN0WX0G1

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    Kunming police say Fanya Exchange used investor savings illegally


    Chinese authorities said they have now determined that illegal activity took place at the controversial Fanya Metals Exchange, which ceased operations last year amid accusations by investors that it was running a multibillion-dollar Ponzi scheme.

    The public security bureau in Kunming in the southwestern Chinese province of Yunnan, where the exchange is based, said investigators had now determined the basic facts in the case, which involved the illegal use of savings held by members of the public.

    "Now, the public security organs are deepening the investigation into the Fanya Metals Exchange, related companies and authorised service organisations, and will comprehensively strengthen work aimed at recovering losses," the bureau said in a statement late on Thursday.

    It called on investors to cooperate with the investigation and report full and accurate information to authorities.

    Dozens of investigators took over the Fanya exchange building late last year, following months of protests by investors outside government buildings in Kunming, Shanghai and Beijing.

    Kunming police arrested the head of the exchange, Shan Jiuliang, earlier this year, along with 15 other suspects, the official Yunnan government news website reported on Feb. 5.

    The Fanya Metals Exchange, launched in 2011, advertised itself as a state-supported organisation aimed at boosting the prices of strategic metals mined in China.

    It attracted funds of more than 40 billion yuan ($6.19 billion) from investors across the country, promising 13.68 percent returns and the flexibility to deposit and withdraw money at will. But it began restricting withdrawals last April, blaming "liquidity problems".

    Investors said that regulatory failures allowed the Fanya exchange to operate without a proper license and without proper regulatory supervision, but local officials insisted last month that they had done their job well.

    "We can see some positive signals because after a year they have finally determined that crimes have taken place at Fanya," said an investor based in Shanghai.

    "But while there will be a solution to Fanya, we still seriously doubt whether it will be a fair one (for investors)."

    http://www.reuters.com/article/china-fanya-idUSL3N1741HH
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    Oil and Gas

    Saudi says no freeze unless Iran behaves..Breaking.

    Saudi Arabia Will Only Freeze Oil Production If Iran Joins Plan
    Deputy crown prince says `without a doubt' Tehran must agree
    Saudi Arabia sees oil price rising over the next two years
    By John Micklethwait, Riad Hamade and Javier Blas
    (Bloomberg) -- 
    Saudi Arabia will only freeze its oil output if Iran and other major producers do so, the kingdom’s deputy crown prince said, challenging the country’s main regional rival to take an active role in stabilizing the over-supplied global crude market.


    Mohammed Bin Salman interviewed on March 30.

    The warning by Mohammed bin Salman, 30, who’s emerged as Saudi Arabia’s leading political force, leaves the outcome of a meeting between OPEC and other big oil producers this month in question. Iran has already said it plans to boost its production after the lifting of sanctions following a deal to curb the country’s nuclear program.

    "If all countries agree to freeze production, we’re ready," bin Salman said in an interview with Bloomberg. "If there is anyone that decides to raise their production, then we will not reject any opportunity that knocks on our door.”



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    Have we reached Peak Oil?


    Pascal BriodPascal Briod, Interested in energy and environmental issues, had some lectures about global... 4.5k Views • Pascal is a Most Viewed Writer in Peak Oil. It depends from the type of oil we are talking about. The short answer is: we reached the peak of conventional oil, but we haven't reached (yet) the peak of non-conventional oil. 

    Peak oil is a hardly debated theme, between those who - considering the fact that oil is a finite resource – think that the production is going to peak soon and those – considering that price reflects resource scarcity – argue that we still have enough oil. The radically different point of views of these two groups, known as the “Geologists” and the “Economists” (The myth of the oil crisis, Mills 2008), certainly reflect two different ways of apprehending and understanding non-renewable resources, but the difference in their conclusions regarding peak oil can often be explained by the fact that they don’t speak about the same oil. 

    Most of the people who think we haven't reached Peak Oil do agree that the production of conventional oil has peaked. Even the International Energy Agency (IEA), who didn’t talked about peak oil at all until recently, had now acknowledged in her 2010 World Energy Outlook, that the production of conventional oil has peaked in 2006: “Crude oil output reaches an undulating plateau of around 68-69 mb/d by 2020, but never regains its all-time peak of 70 mb/d reached in 2006” (International Energy Agency, 2010)

    This chart from the 2010 World Energy Outlook (IEA) shows the peak of crude oil production in 2006, followed by a suspiciously flat plateau until 2035, giving a big importance to the fields “yet to be found”.  But what is important in this figure is that the oil production continues to increase at the global level, thanks to unconventional oil (Natural gas liquids being one type of unconventional oil).
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    The big question here is the potential of unconventional oil (extra-heavy oil, tar sands, oil shales, biomass-to-liquid, coal-to-liquid, gas-to-liquid). It appears that the reserves are enormous, but it is hard to say how much of it we will be able to recover.
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    But what is determinant above all, is the rate of production the industry can achieve: the production of unconventional oil is indeed restrained by important environmental, technological, political and economic constraints. But despite high production cost and big investment requirements, unconventional oil production - if not politically restrained – is likely to play a major role in replacing conventional oil. Moreover, unconventional oil is not only a future energy as most unconventional oils have already been commercialized for a long time and are already profitable at current oil prices.


    The transition from conventional to unconventional oil raises very important issues, because it is more expansive to produce but above all because much more energy is needed to produce it. In other words, the total GHG’s emissions of each liter of oil we consume will tend to increase as unconventional oil progressively replaces conventional oil, multiplying the effects of the growing consumption of energy and the consequent impacts on global climate... but that's another question.

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    Monaco, UK probe ‘vast corruption scandal’ in oil business


    Monaco’s government says it is helping British authorities investigate a “vast corruption scandal” implicating an unspecified number of international oil companies, the tiny European principality said in a statement released late Thursday.

    The statement said several executives of the Monaco-based company UNAOIL had been questioned over the past few days and that their homes and headquarters had been searched following an urgent request from Britain’s Serious Fraud Office.

    “These searches and interviews took place in the presence of British officials as part of a vast corruption scandal which implicates several foreign companies active in the oil sector,” the statement said. “Evidence will be used by British officials as part of their investigations.”

    Few further details were made available and Monaco’s government said going into specifics might compromise the investigation. A UNAOIL spokeswoman said the company “has no comment at this time.” The Serious Fraud Office also declined comment.

    UNAOIL was at the center of a multi-part expose published Wednesday by the Huffington Post and Australia’s Fairfax Media, which accuses the business of having “systematically corrupted the global oil industry” by delivering millions in bribes on behalf of well-known multinationals to secure contracts.

    The company has denied the allegations. Asked by both publications whether UNAOIL paid bribes, the company’s Chief Executive Ata Ahsani was quoted as saying: “The answer is absolutely no.”

    The publications alleged that a slew of global companies were linked to the scandal, including the offshore arm of Australian contract miner Leighton Holdings.

    On Friday, the Australian Federal Police confirmed they were investigating allegations that Leighton employees were involved in the payment of bribes during two oil projects in Iraq in 2010 and 2011. The police agency declined to comment further, citing the ongoing investigation.

    Leighton changed its name to CIMIC last year. Fiona Tyndall, a spokeswoman for CIMIC, said Friday that the company had no comment.

    The publications said they drew on information gleaned from hundreds of thousands of internal emails between 2002 and 2012 for their six-month investigation.

    Fairfax, which described the trove as “the biggest leak of confidential files in the history of the oil industry,” said the files held evidence of bribes paid to Middle Eastern oil chiefs and other officials, sometimes with the knowledge — and occasionally with the active participation — of the multinationals involved. Investigative reporter Nick McKenzie said that initial tip-off about the scandal arrived in the mail, with instructions to place an ad in a French newspaper carrying the code words “Monte Christo” if he wanted to know more.

    Fairfax said UNAOIL did not challenge of the authenticity of the documents involved and instead sent a letter through its lawyers demanding that Farifax wipe the material from its servers.

    http://fuelfix.com/blog/2016/03/31/tag-monaco-uk-probe-vast-corruption-scandal-in-oil-business/?utm_source=twitterfeed&utm_medium=twitter

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    India Cuts Domestic Gas Prices 20% Amid Falling Global Rates


    India cut the price of locally produced natural gas by 20 percent for the six months beginning April 1 in line with the fall in global prices.

    Domestic gas prices will be cut to $3.06 per million British thermal units based on the gross heat value, the oil ministry’s Petroleum Planning and Analysis Cell said in a statement on its website. The government had fixed the price at $3.82 per million Btu for the previous six-month period. This is the third straight cut since April 2015.

    The move will dent cash flows at explorers such as Reliance Industries Ltd. and state-owned Oil & Natural Gas Corp. It may also affect spending plans at ONGC, which this week approved a $5.07 billion development in the Bay of Bengal off the country’s east coast. The New Delhi-based company is seeking to maintain its exploration activities in spite of the collapse in oil, while shrinking costs are allowing it to spend less.

    “For ONGC, onshore and offshore put together, $3.10 to $3.20 is the break even point after they pay taxes and royalty,” said Sachin Mehta, oil and gas analyst at Centrum Broking Pvt. The new price “leaves very little for them,” he said.

    India sets gas prices using a formula based on U.S., Canadian, U.K. and Russian rates. The government also announced a ceiling price of $6.61 per million Btu for natural gas extracted from deepsea fields that start production from this year. The cap is effective for the six months to September.

    Every $1 reduction in gas prices leads to a decline of 40 billion rupees in ONGC’s revenue on an annual basis, said Director, Finance A.K. Srinivasan.

    “Extrapolating from that, the impact will be around 15 billion to 16 billion rupees” for the six months to September, he said.

    The reduction comes weeks after the government announced a new policy on gas from deep-water fields, giving companies a higher price and marketing freedom. That price is linked to four alternate fuels -- liquefied natural gas, fuel oil, naphtha and imported coal.

    http://www.bloomberg.com/news/articles/2016-03-31/india-cuts-domestic-gas-prices-20-amid-falling-global-rates
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    Russia's Sibur talking to Sinopec about gas plant investment


    Russian petrochemical company Sibur is in talks with shareholder Sinopec about investing in a planned gas chemical plant in Russia's Far East, Sibur boss Dmitry Konov told reporters on Thursday.

    Sibur plans to buy gas from fields which Russia's Gazprom will develop in Eastern Siberia.

    "We are discussing (investments into the plant) with a number of possible partners, including Sinopec," Konov said.

    He said a subsidiary of the Chinese firm, Sinopec Engineering Group, may also take part in constructing the plant.

    In December, Sinopec paid $1.338 billion for a 10 percent stake in Sibur and said it planned to acquire an additional 10 percent within three years.

    http://www.reuters.com/article/sibur-amur-sinopec-corp-idUSL5N17325F
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    Australia’s Santos names new executive team


    Australian LNG player Santos revealed on Friday it has appointed a new executive team, called Excom, as the company is transitioning to a new operating model in a low oil price environment.

    The new executive team will report to Kevin Gallagher, who started as new managing director and CEO of Santos in February, following the resignation of David Knox.

    The executive team, based in Adelaide compromises of: Bill Ovenden – VP exploration, accountable for developing and executing a targeted exploration strategy; Brett Woods – VP development, accountable for delivering projects, sustaining capital work programs and non-operated assets; Vince Santostefano – COO, accountable for the profit and loss of all Santos operated producing assets ; John Anderson – executive VP commercial and business development; Andrew Seaton – CFO, and Angus Jaffray – executive VP strategy and corporate services.

    “The appointment of the Excom is a key step in establishing a new operating model for Santos that is focused on both lifting productivity and driving long-term value for shareholders in a low oil price environment,” said Gallagher.

    “The new model involves a move away from geographic based business units to an asset focusedmodel with strong technical capabilities in our primary business of exploration, development and production of oil and natural gas both onshore and offshore,” Gallagher added.

    According to the CEO, corporate functions will be consolidated to further reduce costs and improve effectiveness.

    “We will manage our asset portfolio in a manner which delivers value to Santos shareholders,” he concluded.

    http://www.lngworldnews.com/australias-santos-names-new-executive-team/

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    Mechanical problems halt Gorgon


    US supermajor Chevron has faced a setback at its Gorgon liquefied natural gas project in Western Australia, not long after shipping its first LNG cargo.

    The West Australian newspaper reported Friday that Chevron had suffered a mechanical problem with the propane refrigerant circuit on the first LNG train not long after the project's maiden cargo left for Japan last month.

    The newspaper cited unnamed sources as saying the repair bill was likely to cost more than A$100 million (US$76.7 million) and that the project's second cargo was unlikely to sail until the end of the month.

    Upstream has contacted Chevron for more information on the reported mechanical problems at Gorgon.

    The project only began production from the first of three trains last month after years of delays and cost overruns.

    Gorgon was originally expected to cost roughly US$37 billion and begin production in 2014, however the cost blew out to US$54 billion as the start-up was pushed further back.

    Gorgon, with a capacity of 15.6 million tonnes per annum, is supplied from the Gorgon and Jansz-Io gas fields, which lie about 65 and 130 kilometres off the coast, respectively.

    The plant on Barrow Island includes a carbon dioxide injection project and a domestic gas plant with the capacity to supply 300 terajoules of gas per day to Western Australia.

    The Gorgon project partners include operator Chevron on 47.3%, ExxonMobil on 25%, Shell on 25%, Osaka Gas on 1.25%, Tokyo Gas on 1% and Chubu Electric Power on 0.417%.

    http://www.upstreamonline.com/live/1428394/mechanical-problems-halt-gorgon?utm_source=twitterfeed&utm_medium=twitter
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    As US shale drillers suffer, even the bankrupt keep pumping oil


    As oil prices nosedived by two-thirds since 2014, a belief took hold in global energy markets that for prices to recover, many U.S. shale producers would first have to falter to allow markets to rebalance.

    With U.S. oil prices now trading below $40 a barrel, the corporate casualties are already mounting. More than 50 North American oil and gas producers have entered bankruptcy since early 2015, according to a Reuters review of regulatory filings and other data. While those firms account for only about 1 percent of U.S. output, based on the analysis, that count is expected to rise. Consultant Deloitte says a third of shale producers face bankruptcy risks this year.

    But a Reuters analysis has found that bankruptcies are so far having little effect on U.S. oil production, and a tendency among distressed drillers to keep their oil wells gushing belies the notion that deepening financial distress will prompt a sudden output decline or oil price rebound.

    Texas-based Magnum Hunter Resources, the second-largest producer among publicly-traded companies that have filed for bankruptcy, is a case in point.

    It filed for creditor protection last December, but even as the debt-laden driller scrambled to avoid that outcome, its oil and gas production rose by nearly a third between mid-2014 and late 2015, filings show.

    Once in Chapter 11, its CEO Gary Evans said the bankruptcy, which injected new funds to ensure it would stay operational, could help to "position Magnum Hunter as a market leader."

    The company did not respond to a request for comment for this story. However, John Castellano, a restructuring specialist at Alix Partners, said that all of the nearly 3,000 wells in which Magnum Hunter owns stakes have continued operations during its bankruptcy.

    Production figures can be hard to track post-bankruptcy, but restructuring specialists say that many bankrupt drillers keep pumping oil at full tilt. Their creditors see that as the best way to recover some of what they are owed. And as many bankrupt firms seek to sell assets, operating wells are valued more than idled ones.

    "Oil companies in bankruptcy do not seem to automatically curtail production," said restructuring expert Jason Cohen, a partner at the Bracewell firm in Houston. "Lenders are willing to let them continue to produce as long as economically viable."

    For most companies in bankruptcy or considering it, maximizing near-term production does make economic sense. Day-to-day well operating costs in most U.S. shale fields remain well below $40 a barrel. Bankrupt firms are also eligible for new financing that can allow them to keep pumping for some time.

    50 AND COUNTING

    At least 20 publicly traded companies have filed for creditor protection since the start of 2015. They held at least 95,000 barrel of oil equivalent per day (boepd) in production, according to their last disclosed annual output figures. Another 30 or so privately held companies also have gone bust, in what already is the biggest wave of North American bankruptcies since the subprime mortgage crisis.

    They account for just over 1 percent of U.S. output, but the figure is set to grow with banks expected to slash credit lines to energy firms in their biannual review of borrowing limits in April.

    In what could become the most high-profile reorganization in the sector, Oklahoma City-based SandRidge Energy Inc confirmed on Wednesday that it has hired advisers to review its options, including a bankruptcy filing.

    About a million barrels of U.S. oil production, over a tenth of the total, is under the control of firms considered "financially challenged" estimates Rob Thummel, a portfolio managerat Tortoise Capital Advisors Llc.

    Yet even if many more firms go bust, production is not expected to fall much.

    "I could see (bankruptcies) as a marginal contributor to lower supply, but if you ask me could it ever move the needle, the answer is no," said Bill Costello, a portfolio manager at Westwood Holdings Group.

    The reason is the remarkable gains in productivity of U.S. oil rigs in recent years. The Energy Information Administration (EIA) estimates that a well drilled late in 2015 produces twice as much as one from late 2013.

    As a result, the EIA forecasts output will only drop 7 percent this year to 8.7 million bpd, even after U.S. oil and gas producers have shed more than 100,000 jobs, slashed spending and idled 75 percent of rigs since the end of 2014.

    Many bankrupt firms can sustain their output thanks to so-called debtor-in-possession (DIP) financing for operating and other expenses made available by existing creditors, banks, or private equity firms.

    Magnum Hunter, for example, received $200 million in DIP funding, and so far is being run by the same management as before its bankruptcy.

    Many distressed producers have also drawn down their credit facilities or skipped bond payments prior to filing to conserve cash.

    Among the companies reviewed by Reuters, Swift Energy Co , Samson Resources Corp and American Eagle Energy Corp Co all chose to skip interest payments ahead of bankruptcy filings, citing ongoing talks with lenders to restructure their debt.

    With operating expenses for existing U.S. shale wells between $17 and $23 per barrel, most companies can keep pumping unless oil falls below $20 per barrel, says David Zusman, chief investment officer of Talara Capital Management.

    What bankrupt and financially stretched producers are unable to do is drill new wells and since output from shale wells can fall as much as 70 percent during their first year, a sustained lull in drilling would gradually erode U.S. production.

    Ultimately, the number of bankruptcies may matter less than the lack of funding. The lending reviews now underway are likely to leave more companies without sufficient credit to finance new drilling, analysts say.

    "We could see a 150,000-200,000 bpd fall in oil production if financially challenged producers were to slow spending," said Thummel.

    http://www.reuters.com/article/usa-energy-bankruptcies-idUSL2N1721CW

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    Superior Energy scraps dividend, cuts executives' pay


    Oilfield services provider Superior Energy Services Inc scrapped its quarterly dividend and cut the base salaries of its executives as part of efforts to preserve cash amid a prolonged slump in crude oil prices.

    The executives' base salaries have been reduced by 15 percent, effective April 1, thecompany said in a regulatory filing on Thursday.

    The Houston-based company also approved a 15 percent cut in the annual director fees.

    A near-65 percent plunge in crude oil prices since June 2014 has forced oil and gas producers to slash spending and scale back drilling, hurting demand for services provided by companies like Superior Energy.

    "This downturn has been severe in extent and duration...," Chief Executive David Dunlap said in a statement.

    Superior Energy joins a growing list of energy companies such as ConocoPhilips, Noble Energy and Cimarex Energy who have slashed or eliminated their dividends.

    Superior Energy, which paid a quarterly dividend of 8 cents per share last month, posted a bigger-than-expected loss in its fourth quarter in February.

    The company said in July it had cut 24 percent of its workforce since the end of 2014.

    http://www.reuters.com/article/superior-energy-dividends-idUSL3N1733N9
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    Permian Auction Firm Booms

    The scrapper’s hammer
    One place that is thriving is Terry Dickerson’s Machinery Auctioneers, in Odessa – more evidence of the region’s oil supply chain buckling under the twin pressures of low prices and falling investment. The company does bankruptcy auctions in West Texas for big rigs, hot-oil trucks, frack tanks and other bits of oilfield kit. 

    Its inventory is brimming. In 2014, it did $27m in sales. Last year, that figure rose to $48m and will almost certainly grow this year. The firm used to hold an auction every two months or so. It had three scheduled for March alone.


    Read more: http://www.petroleum-economist.com/Article/3541440/Pain-in-the-Permian.html#ixzz44YwpWtiI
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    Alternative Energy

    Britain's greenhouse gas emissions fell 3.3 pct in 2015 - govt


    Britain's greenhouse gas (GHG) emissions fell by 3.3 percent in 2015, largely due to a decline in coal-fired power generation and marking the third straight yearly drop, preliminary government data showed on Thursday.

    Output of the heat-trapping gases in Europe's second-largest emitter behind Germany fell to 497.2 million tonnes of carbon dioxide equivalent (CO2e), from 514.4 million tonnes in 2014, the Department of Energy and Climate Change said.

    Emissions of carbon dioxide (CO2), the main greenhouse gas blamed for climate change, dropped 4 percent to 405 million tonnes.

    The fall stemmed largely from a drop in energy-sector emissions. Those fell 13 percent to 136 million tonnes of CO2e as low-carbon electricity production from renewable and nuclear power plants rose and carbon-intensive coal generation fell.

    Data released by the government last month showed coal-fired generation fell 24 percent last year while nuclear generation rose by 10 percent and wind generation by 24 percent.

    Thursday's data shows Britain's GHG emissions have fallen 38 percent since 1990, and dropped for a third consecutive year.

    Britain has a legally binding target to cut its GHG emissions by 2050 to 80 percent below 1990 levels and has set out five yearly carbon budgets towards meeting this goal.

    The country is on track to achieve the cuts needed to meet the second and third carbon budgets to 2022 but the government has said it risks missing the fourth, 2023-27 budget, which needs a reduction of 50 percent by 2025.

    Last November the government announced plans to close polluting coal-fired power plants and replace them with gas plants by 2025, but industry experts have warned the new plants are not being built quickly enough.

    They also warned that a decision last year to cancel a 1 billion pound ($1.44 billion) project to help fund technology to capture CO2 emissions and store them underground would make meeting the climate target more difficult.

    The bulk of Britain's emissions, some 27 percent, came from energy supply, followed by transport at 23 percent, business at 14 percent and residential at 13 percent. The rest came from sectors including agriculture and waste management.

    http://www.reuters.com/article/climatechange-emissions-britain-idUSL5N17322V
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    IEA optimistic on China's switch to renewables


    China is very likely to meet the target of having 15 percent of its energy demand coming from renewables by 2020, said the head of the International Energy Agency.

    Fatih Birol, executive director of the Paris-based IEA, said on Wednesday that he doesn't see any reason for China to fail to reach the target as long as the country's push for renewable energy continues.

    "China has made some major moves in energy transition. It is No 1 in wind energy production, No 1 in solar energy production and No 1 in hydropower energy," Birol told China Daily in an exclusive interview in Beijing.

    "At the same time, its coal consumption declines. China last year was the champion of the world in terms of reducing carbon emissions," he said.

    According to a projection made on Wednesday by Sun Longde, vice-president of PetroChina Co, China's energy consumption is expected to peak in 2035 as its economy rebalances.

    Birol didn't project on which source of energy will play major role in China' s energy mix in the long run as he sees the country is diversifying its energy mix and making its energy system more efficient at the same time.

    "We will see more renewable energy, more natural gas, more nuclear power, and less coal in China," he said, adding that the Chinese government's determination is crucial because the low price of oil and natural gas may complicate the growth of renewable energy worldwide.

    Birol, who came to Beijing to attend a ceremony marking the 20th anniversary of China-IEA Engagement, announced on Wednesday that the IEA and China's National Energy Administration started the process of the establishment of a joint energy cooperation center in Beijing.

    The IEA-China Energy Cooperation Center will help China access energy-related advice and share the IEA's expertise in energy.

    http://en.chinamining.com.cn/News/2016-03-31/1459389205d75910.html

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    Vestas breaks first-quarter order record with U.S., China and Spain deals


    Wind turbine maker Vestas has secured three turbine orders to bring this year's total intake to 1,806 megawatts (MW), the highest ever in a first quarter and continuing a strong trend from 2015.

    The Danish company is market leader in an industry benefiting from a new focus on renewable energy generation, encouraged by the Paris global climate summit last year, as well as the extension of a key U.S. tax credit.

    "We still expect an order intake of 7,500 MW this year, but the solid start to the year creates a much stronger foundation for positive surprises in the remainder of the year," Sydbank analyst Jacob Pedersen said in a note to clients on Friday.

    Last year Vestas received orders for 1,750 MW in the first quarter, including 418 MW of smaller orders which are not disclosed continuously but in the quarterly earnings report. Vestas's first-quarter report is expected on April 29.

    Vestas said late on Thursday it had received a 200 MW contract in the United States as well as 48 MW and 27 MW orders in China and Spain respectively. In February the company received a 1,000 MW order in Norway.

    Vestas received orders to build turbines with a total capacity of 8,943 megawatts (MW) last year, beating its previous record of 8,673 MW in 2010.

    "We see support for continued high order intake in 2016, which seems to be a key concern in the market," Danske Bank said in a note.

    Vestas is the world's largest wind turbine maker but would be pushed off that pedestal if rivals Siemens and Gamesa go through with a planned merger.

    http://www.reuters.com/article/vestas-orders-idUSL5N17417K

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    China's Hanergy posts $1.6 bln loss after troubled year


    Chinese solar panel maker Hanergy Thin Film Power Group Ltd posted a HK$12.23 billion ($1.58 billion) loss in 2015, after a tumultuous year in which the Hong Kong securities regulator launched a probe into the firm.

    Full-year revenue for 2015 fell more than 70 percent to HK$2.81 billion, the firm said in a filing to the Hong Kong stock exchange late on Thursday. The net loss compared with a HK$3.2 billion profit a year earlier.

    Shares in Hanergy Thin Film tumbled nearly 50 percent in only a few minutes last May on news that it was under investigation by Hong Kong's market watchdog. Before the crash, the firm's stock had staged a spectacular five-fold rally over nine months.

    Hanergy said on Thursday the ongoing investigation by the Securities and Futures Commission (SFC) had had a significant affect on its business and it was seeking legal advice to address the watchdog's concerns. The firm aimed to resume trading, which was suspended last May, as soon as possible.

    http://www.reuters.com/article/hanergy-tfp-results-idUSL3N1735ZQ

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    Uranium

    Atomic power key to China's energy security


    China, faced with growing energy demand, and ever harsher conditions pertaining to domestic resources and protecting the environment, as well as the challenges of global climate change, including the need to reduce greenhouse gas emissions, has to resolve a series of basic problems in its energy development.

    These challenges include: Striking an energy supply-demand balance; overcoming the environmental and biological problems caused by China's long-standing dependence on coal; easing logistics problems brought about by the transport of coal from its coal-rich western and northern regions to coal-scarce eastern and southern ones and the transfer of electricity from west to east; and how to reduce dependence on foreign energy supplies to ensure the country's energy security.

    The large-scale development of nuclear energy will play a key role in freeing up China's domestic resources, guarantee its energy security, help reduce its greenhouse gas emissions and ensure that a green, low-carbon development model is adopted.

    Nuclear power is so important to China in promoting a clean, sustainable energy system because it is not only free of sulfur dioxide emissions and carbon dioxide pollutants but is also high-power density energy with a high load factor.

    Nuclear power also stands out as an energy source because of its ever-improving safety and reliability, clear cost advantages over coal power and issues of transport.

    For example, nuclear power produces about 1 percent of the greenhouse gas emissions produced by same-capacity coal power. And because nuclear power fuel needs much less transport than does coal, this can ease pressures on transport infrastructure.

    China's nuclear power stations are highly reliable, all of their equipment, buildings and installations and preliminary testing having been built and checked under the strictest quality control conditions. All of China's nuclear power stations are distributed across its coastal area, with their generating units operating in a safe way. No nuclear accident has ever occurred in China, under classification standards of the International Atomic Energy Agency.

    China now leads the world in building third-generation nuclear power stations. Apart from third-generation pressurized water reactor stations of the AP1000 and EPR types that are being built, it is also working on AP1000 technology and promoting research and development of CAP1400 technology.

    The author is an academician with the department of energy and mining engineering, Chinese Academy of Engineering.

    http://en.chinamining.com.cn/News/2016-04-01/1459471745d75925.html
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    Precious Metals

    Silver Wheaton Announces Increase to Previously Announced Bought Deal Financing to US$550 Million


    Silver Wheaton Corp. is pleased to announce that, due to strong demand, the Company has increased the size of its previously announced public offering to 33,135,000 common shares, at a price of US$16.60 per common share, for aggregate gross proceeds to Silver Wheaton of approximately US$550 million (the "Offering"). The Offering is with a syndicate of underwriters led by RBC Capital Markets, BMO Capital Markets, CIBC Capital Markets and Scotiabank (the "Underwriters"). In addition, Silver Wheaton has agreed to grant to the Underwriters an option to purchase up to an additional 4,970,250 common shares at a price of US$16.60 per share, on the same terms and conditions as the Offering, exercisable at any time, in whole or in part, until the date that is 30 days following the closing of the Offering. In the event that the option is exercised in its entirety, the aggregate gross proceeds of the Offering to Silver Wheaton will be approximately US$632.5 million.

    The net proceeds of the Offering will be used to repay a portion of the debt that was drawn on the Company's US$2 billion revolving credit facility (the "Revolving Facility") in November 2015 for the US$900 million purchase of the silver stream on the Antamina mine in Peru. As at December 31, 2015, the Company had approximately US$103 million of cash on hand and US$1,466 million outstanding under the Revolving Facility.

    http://www.marketwired.com/press-release/silver-wheaton-announces-increase-previously-announced-bought-deal-financing-us550-million-tsx-slw-2110697.htm
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    Indonesian Investors Said to Prepare $2 Billion Newmont Mine Bid


    An Indonesian consortium led by veteran investment banker Agus Projosasmito is preparing to offer about $2 billion for control of Newmont Mining Corp.’s operations in the country after lining up bank financing, people with knowledge of the matter said.

    The investor group plans to bid for about 80 percent of local operating company PT Newmont Nusa Tenggara over the next week at the earliest, the people said, asking not to be named before an announcement. It is poised to borrow about $1 billion from banks including BNP Paribas SA, Malayan Banking Bhd. and Societe Generale SA, as well as state-owned lenders PT Bank Negara Indonesia and PT Bank Mandiri, according to the people.

    PT Medco Energi Internasional, the Jakarta-listed oil and gas producer founded by businessman Arifin Panigoro, would be a shareholder of Newmont Nusa Tenggara together with Projosasmito after the planned purchase, the people said. As part of the deal, the investor group will offer to buy the 24 percent stake in the Newmont operations held by the Bakrie family’s PT Bumi Resources Minerals, according to the people.

    Newmont is seeking to sell its local business after Indonesia banned raw ore shipments in January 2014 and put a progressive tax on concentrates, a semi-processed ore that’s shipped to smelters for processing into finished metal. The move is part of a wider policy to boost revenue by turning the country into a manufacturer of higher-value products and encourage construction of domestic smelters and refineries.

    ‘Green Rock’

    Newmont Nusa Tenggara owns Batu Hijau, the second-biggest copper and gold mine in Indonesia, after Freeport-McMoRan Inc.’s Grasberg asset, which has the world’s biggest gold reserves. The open-pit Newmont mine, whose name means “green rock” in Bahasa Indonesia, was discovered in 1990 in the southwest region of Sumbawa island.

    Other banks may join the financing later, according to the people. Details of the transaction haven’t been finalized, and there’s no certainty a firm offer will result, the people said. Newmont Mining owned 31.5 percent of its Indonesian operations at the end of September last year, with other stakes held by Japanese trading house Sumitomo Corp. and local investors, according to a quarterly report.

    “Medco is in talks with various parties, and we are in the process of acquiring some major asset in Indonesia,” President Commissioner Muhammad Lutfi said by phone Friday, declining to comment on the identity of the target. A spokesman for Newmont said by e-mail that the U.S. miner and Sumitomo are in discussions with certain interested parties, “but to date, none has secured fully committed financing or final deal terms.”

    A receptionist at Projosasmito’s company said he wasn’t in the office. An investor-relations official at Bumi Resources Minerals and a representative for Maybank didn’t immediately respond to e-mails seeking comment. BNI Corporate Secretary Suhardi Petrus said he couldn’t immediately comment. Spokesmen for Societe Generale and Sumitomo Corp. declined to comment, while a representative for BNP Paribas said she couldn’t provide immediate comment.

    “Medco is indeed our customer, but we can’t comment on its plan for the Newmont acquisition because it is their corporate action,” Bank Mandiri Corporate Secretary Rohan Hafas said by phone Friday.

    http://www.bloomberg.com/news/articles/2016-04-01/indonesian-investors-said-to-prepare-2-billion-newmont-mine-bid

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    Base Metals

    Workers at Cerro Verde copper mine in Peru plan strike next week


    Workers at Freeport McMoRan Inc's Cerro Verde mine in Peru plan to go on a 48-hour strike April 8 to protest what they describe as the near disappearance of their profit-sharing bonus this year, the union said Thursday.

    Freeport has a 53.56 percent stake in the mine, one of Peru's biggest with 32,000 tonnes of reported copper output in January. Sumitomo Metal Mining Company Ltd controls 21 percent and Peruvian miner Buenaventura owns 19.58 percent.

    Each worker is scheduled to receive an average bonus of 483 soles ($146) this year based on 2015 profits, down from about 30,000 soles ($9,090) the year prior, said union leader Zenon Mujica.

    Copper lost a quarter of its value in 2015, the red metal's biggest slump since 2008.

    Representatives of Cerro Verde could not immediately be reached for comment outside regular working hours.

    http://www.reuters.com/article/peru-copper-idUSL2N17401V

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    Steel, Iron Ore and Coal

    Shaanxi rail freight cut 15pct, effective March 30


    The Xi’an Railway Bureau cut the rail freight by 0.0269 yuan/t.km or nearly 15% to 0.1451-0.1571 yuan/t.km for coal deliveries within its administration, Effective March 30, following China Railway Corporation’s delegation of rail freight adjustment to local administrations on March 18.

    http://en.sxcoal.com/0/143637/DataShow.html
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    Hebei large coal firms to cut 63 mln T capacity


    Hebei-based Kailuan Group, Jizhong Energy, and Hebei State-owned Assets Holding & Operation CO., Ltd. would shut a total 52 mines involving 52.98 Mtpa capacity in the next 3-5 years, one official with Hebei State-owned Assets Supervision and Administration Commission (SASAC) said.

    Meanwhile, these companies will consolidate 62 mines, which will cut 10.09 Mtpa capacity.

    Industry insiders said Jizhong Energy will be the last survivor in the supply-side reform, as the price of its major product coking coal will be easier to rebound after the market restoring balance between demand and supply.

    Since last year, Jizhong Energy has closed many mines under its Jingxing mining district, Hankuang Group and Zhangkuang Group.

    The group also eliminated inefficient capacity and expanded core business, suspending three mining areas and closing operation areas with inferior coal quality, high operation cost and low safety work conditions.

    "Jizhong Energy hasn’t released detailed de-capacity measures yet," one insider with the group said. "But it surely will take great responsibility in the province."

    Hebei’s premium-grade mines are reducing, said the provincial Coal Industry Association, adding that the province is facing great challenge in upgrading and reformation.

    http://en.sxcoal.com/0/143671/DataShow.html
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    Vale says write down of Mozambique coal venture won’t affect project


    Mining giant Vale said Thursday that its venture partner in Mozambique’s coal project, Japan’s Mitsui & Co., has no plans to revise the terms of their association or its involvement in it, as reported by Brazilian newspaper Valor Econômico (in Portuguese).

    Citing unnamed sources, the local paper claimed that Mitsui was mulling a revision of the joint venture after Vale took a $2.4bn charge on their jointly owned Mozambique coal assets.

    The operations continue to cost Vale half a billion dollars per year in losses, according to the financial results released in February. The Mozambique write-down was the second largest single factor behind Vale’s $8.57 billion fourth-quarter net loss. The biggest single write-down was $3.46 billion on a nickel project in Canada.

    The Mozambique coal operations cost Vale half a billion dollars per year in losses.

    Vale has been unable to obtain project financing to complete a 2014 deal to sell a stake in its Mozambique coal operations to Mitsui. That transaction, originally scheduled for completion in the second half of 2015, would have boosted Vale’s cash flows by $3 billion.

    The Rio de Janeiro-based miner noted that Mitsui continues to support Vale in its negotiations with Nexi and JBIC for financing.

    The Moatize basin in Mozambique’s northwest Tete province is said to hold one of the world’s largest untapped coal reserves, being especially rich in coking coal, which is used in steel production.

    But companies operating in the area are battling the sharp drop in coal prices and demand, while the reserves of coking coal have turned out to be not as rich as initially thought. They have also been hurt by infrastructure challenges as they still depend on one colonial-era, multi-use single-track railway line to ferry coal to the Beira port.

    http://www.mining.com/vale-says-write-down-of-mozambique-coal-venture-wont-affect-project/

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    Mechel to supply Baosteel Resources with nearly 1 mln T coking coal


    Mechel PAO, a leading Russian mining and metals company, announced that its cooperation agreement with China's major corporation Baosteel Resources has been prolonged, GlobeNewswire reported on March 31.

    Since April 2016 and until March 2017, Mechel will supply the Chinese company with up to 960,000 tonnes of premium-grade coking coalproduced at Neryungrinsky Open Pit.

    Most of this coal will be shipped via Mechel's own Trade Port Posiet. The price will be determined on a monthly basis.

    "We have established constructive ties with Baosteel Resources. In the future, Mechel intends to adhere to the best of practices in dealing with this company. We supply our partners with high-quality coking coal which has long become a trademark of Yakutia and all of Russia's Far East," Mechel's Chief Executive Officer Oleg Korzhov commented.

    "Baosteel Resources accounts on average for 30% of our coal exports to China, that has always been a priority market for us," Oleg Korzhov noted.

    http://en.sxcoal.com/0/143668/DataShow.html
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    Iron ore revival throws shaky lifeline to small miners


    A surprise spike in iron ore prices this year is shaking out fresh supplies of the steelmaking raw material, but some miners say it is too soon to aggressively restart production shuttered by a years-long price rout.

    Iran said it has increased shipments to top iron ore consumer China, while traders have also seen more cargoes from India and Malaysia as material kept idled in warehouses and ports is pushed out to buyers to take advantage of the price spurt.

    The steelmaking raw material is still the top performing commodity this year despite falling 16 percent from last month's peak, but the wild swings have kept miners wary about the longevity of the price recovery.

    "The trade signals are not strong enough yet for a sustainable lift in demand," said UBS commodities analyst Daniel Morgan.

    Still, in Iran, vessels loaded with iron ore bound for China have increased "remarkably", Keyvan Jafari Tehrani, head of international affairs at the Iron Ore Producers and Exporters Association of Iran, told Reuters.

    "When the price of iron ore rose above $50 a tonne, the number of shipments to China increased and if it stays above $55, more mines will resume production," said Tehrani.


    Iran is the sixth-biggest iron ore exporter to China, but shipments fell 40 percent last year to 13.2 mln tonnes as prices tumbled. Around 70 percent of private iron ore mines in Iran shut in the past two years due to the market rout, Tehrani said.

    "We also heard some Malaysian cargoes being quoted in the market which we haven't seen in a while," said a Shanghai-based iron ore trader.

    "If the price is right there's a market for them," added the trader, who is keen on buying some cargoes from Indian suppliers that have become active in the market in recent weeks as prices climbed.

    India used to be a major iron ore exporter to China until court-imposed mining curbs in a crackdown on illegal extraction halted shipments. Mining in the western Goa state, India's top iron ore exporter, resumed in October after a three-year gap.

    But Goan miners say a 20-million tonne annual production cap will limit any benefit from strong prices. Shipments from Goa reached about 50 million tonnes in 2010/11, during iron ore's boom years when it reached nearly $200 a tonne.

    The price rise is a boost for existing miners such as global giants Rio Tinto and BHP Billiton , where every one dollar a tonne price hike over a year is worth roughly $250 million, according to UBS.

    But small miners say it is too early to restart idled output.

    "It's not easy to turn mines on and off. If you've demobilized staff and equipment, it's no easy feat to suddenly bring it all back, particularly in the absence of real proof these prices are sustainable," said an executive for a smaller-sized Australian iron ore company.

    http://www.reuters.com/article/ironore-miners-prices-idUSL3N16U1OS

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    Iron ore volumes in Dalian jump to record amid market swings


    Iron ore trading on China’s Dalian Commodity Exchange surged to a record last month as prices rallied and some investors who’d bet against the market were caught out, boosting futures volumes of the raw material in the world’s largest buyer.

    Volumes soared to 76.2 million contracts, or 7.6 billion metric tons, surpassing the previous high of 32.6 million contracts that was set in December, according to bourse data. Compared with March 2015, the volumes last month increased 661%. The contracts began to trade in 2013.

    Some industry leaders including Australia’s Fortescue Metals Group and Cliffs Natural Resources, the top US producer, have said that derivatives markets in Asia are playing an increasingly important role in shaping swings in benchmark prices. Last month, spot prices posted their biggest one-day rally after Chinese leaders talked up their commitment to sustaining growth before retracing gains. Iron ore has risen this year, contrary to expectations from some banks for further losses amid a global glut.

    The surge in prices and trading volumes in Dalian was sparked by short-covering and eventually a so-called short squeeze, according to Xiao Fu, a commodities strategist at Bank of China International in London, describing a situation in which investors who’d bet against a price are suddenly forced to reverse wagers as prices jump. The rapid, upward movement in prices had also attracted speculative trading, Fu said in an e-mail.

    Ore with 62% content in Qingdao ended March 8.3% higher at $53.75 a dry ton to cap the biggest quarterly gain since 2012, according to Metal Bulletin. On March 7, the raw material surged 19%, then fell 8.8% two days later. In Dalian, futures swung between a low of 377.5 yuan a ton on March 1 and a high of 449.5 yuan mid-month as sentiment ebbed and flowed. It was at 385.5 yuan on Friday after rising 1.5%.

    “You get universal pessimism and then you get a switch to kind-of universal optimism, that’s why you get such violent moves,” Ian Roper, a Singapore-based director at Macquarie Group’s commodities research division, said by phone. “The whole commodities space is going to be much more driven by these mini-cycles.”

    Dalian’s futures for iron ore, which are restricted to citizens and companies registered on the mainland, are among derivatives tracking the commodity, with Singapore Exchange, CME Group and Intercontinental Exchange also offering products. Three calls to the Dalian bourse’s spokesman Wang Weijun for a comment were unanswered.

    As iron ore is heavily traded in the futures markets, it will be driven by any positive or negative news flow, Fortescue chief executive officer Nev Power told Bloomberg Television last month. The benchmark price is being controlled by the futures market and by speculation on the Dalian exchange, according to Lourenco Goncalves, chief executive officer of Cleveland-based Cliffs Natural.

    http://www.mineweb.com/news/iron-and-steel/iron-ore-volumes-in-dalian-jump-to-record-amid-market-swings/
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    China mid-March key steel mills daily output hit the highest this year


    The daily crude steel output of China’s key steel mills increased 4.71% from ten days ago to 1.66 million tonnes in mid-March, hitting the highest level in 2016, according to the latest data released by the China Iron and Steel Association (CISA).

    The rising crude steel output, mainly due to the expanded production recovery spurred by the rebound of steel prices, may exert pressure on further price increase, said industry insiders.

    By March 20, stocks in key steel mills edged up 0.36% from ten days ago but down 20.7% on year to 13.76 million tonnes.

    Domestic prices of the six major steel products all increased in mid-March, with rebar price averaging 2245.7 yuan/t, up 4.6% from early March. It was the fourth ten-day rise since mid-February this year, with total increase at 311.6 yuan/t, showed data from the National Bureau of Statistics (NBS).

    Most of steel mills reported increased orders, and became much more bullish towards the market over the first half of the year, though the prospect of the second half still remains unclear.

    http://en.sxcoal.com/0/143628/DataShow.html
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    Tata Steel in talks to take stake in Thyssenkrupp's Europe steel unit-paper


    India's Tata Steel is planning to take a stake in Thyssenkrupp's European steel unit, German business paper Rheinische Post reported, citing government sources in Berlin.

    Talks are at an advanced stage, the paper said, adding several scenarios were being discussed, the most likely being a joint venture with Tata Steel holding an option to increase the stake at later stage.

    The paper said a spokesman for Thyssenkrupp declined to comment on the report, but he added a consolidation in the steel sector made sense.

    http://www.reuters.com/article/tata-steel-thyssenkrupp-idUSL5N1740FW
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