Mark Latham Commodity Equity Intelligence Service

Tuesday 7th February 2017
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    Tax Reform: No quick solutions.

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    "Just one word, son: plastics!"

    It’s not just polypropylene prices that are on the rise this year. Prices for solid polystyrene also climbed an average of 5 cents per pound in January, and prices for nylon 6 and 6/6 resins are under upward pricing pressure as well.

    The 10-cent PP hike is a sharp reversal from a combined 11.5 cents in price drops that market had seen in the last three months of 2016. The January hike was the result of tight supplies of polymer-grade propylene feedstock.

    The PetroChem Wire consulting firm in Houston said that propylene prices in December did not reflect a tight market, because the situation was masked by year-end destocking. When demand resurfaced in January, propylene buyers found they had to pay dramatically higher prices.

    PetroChem Wire added that the run-up in propylene costs caught PP buyers off guard and caused some to lower their order volumes for January.

    The 5-cent PS hike for January wasn’t completely unexpected, as prices for benzene feedstock had climbed for two straight months. North American benzene prices shot up 33 cents to $2.67 per gallon. Prices for that material also had increased 11 cents in December, but the market couldn’t settle on an increase amount for PS resin.

    As a result, regional PS prices were flat in December. PS prices in the region had fallen 2 cents per pound in November after being flat in October. Several factors have caused benzene prices to move up by almost 20 percent in the last two months, according to Robin Chesshier, a market analyst with RTI.

    Those reasons include tight supplies, lack of imports, stronger demand, pull from higher prices in other regions and a move from oil-based naphtha back to natural gas-based ethane as a precursor. Ethane produces less benzene per unit than naphtha does.

    PS maker Americas Styrenics LLC now is seeking an increase of 8 cents per pound effective Feb. 1. North American PS sales for full-year 2016 essentially were flat at just under 4.4 billion pounds, according to ACC. But the largest end market — food packaging and food service — saw sales growth of 1.3 percent, to more than 2.7 billion pounds.

    Pending increases for nylon
    The North American nylon resin market also is facing upward pricing pressure. BASF AG has announced increases of 28 cents per pound for nylon 6 resins since Jan. 1. The firm also planned to increase prices for compounds based on those materials by 7 cents per pound on Jan. 30. That affects compounds sold under the Ultramid, Capron and Nypel brand names.

    Solvay Group is increasing global prices for its Stabamid nylon 6/6 resins and Technyl nylon 6 and 6/6 compounds by an average of 15 cents per pound. Officials with Brussels-based Solvay announced the move Jan. 23. In a news release, they said that the dramatic rise of raw materials costs is affecting the entire nylon value chain.

    Solvay Performance Polyamides President Vincent Kamel said that despite “considerable efforts” to offset cost pressures since mid-2016, Solvay “is now compelled to increase price levels globally to remain a reliable and long-term partner for our customers.”

    DuPont Co. on Feb. 2 announced global price increases of 13-14 cents per pound on all Zytel nylon 6/6 resins and compounds effective Feb. 15. In a news release, officials said the increases “are needed as a result of rapidly rising costs of certain key raw materials.”

    One market watcher said the BASF price move was “too aggressive” and that the firm already was seeing “market pushback.

    “The producers will get something, but how much will need to be negotiated,” the contact said. Some nylon 6 and 6/6 buyers saw price hikes in January, but most are expecting hikes of 5-8 cents per pound to take hold by the end of February. No changes are being shown on this week’s Plastics News resin pricing chart.

    North American nylon 6 resin prices already had climbed an average of 10 cents per pound since August, due in part to tightness of caprolactam feedstock. BASF in September announced plans to remove more than 200 million pounds of annual caprolactam production in Europe by early 2018.

    Higher benzene prices also are putting upward price pressure on nylon resins, market watchers said.

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    Chevron Phillips says plans to raise US PE prices by 6 cents/lb in March

    Chevron Phillips plans to raise US polyethylene prices by 6 cents/lb in March, in addition to its increase currently sought for February, the company said in a letter to customers seen Friday by S&P Global Platts.

    Chevron Phillips joins ExxonMobil Chemical and Dow Chemical who informed customers this week and Equistar Chemicals last week in seeking higher March prices. Equistar told customers last week that it was seeking a second increase on top of the 5 cents/lb producers are attempting to implement for February.

    The letter to customers, sent Thursday, did not provide a reason for the increase.

    Strong domestic demand to open 2017, as well as planned maintenance work and limited supply as factors playing into additional price hikes, sources said.

    February domestic contracts were assessed Wednesday at 61-62 cents/lb ($1,345-$1,367/mt) delivered rail car basis for blowmolding, 61-62 cents/lb ($1,345-$1,367/mt) for injection and 64-65 cents/lb ($1,411-$1,433/mt) for HMW film. Linear low-density butene polyethylene contracts were assessed at 59-60 cents/lb ($1,301-$1,323/mt) for delivered rail cars; and low-density polyethylene contracts were assessed at 71-72 cents/lb ($1,565-$1,587/mt) for delivered rail cars.

    Market sources have said the 5-cent increase will likely go through in February, pointing to strong sales in January amid restocking.
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    South Africa to publish contested mining charter by March - minister

    South Africa will publish its revised Mining Charter by next month, a minister said on Monday, bringing closer legislation meant to redress racial economic inequality but which has concerned companies struggling with lower commodity prices.

    A separate Mineral and Petroleum Resources Development Act will be finalised by June, proposing to give the state a 20 percent free stake in new energy projects and the ability to buy further shares.

    The Mining Charter was introduced in 2002 to increase black ownership of the mining industry, which accounts for around 7 percent of South Africa's economic output.

    However, industry body the Chamber of Mines, has taken the government to court over ownership interpretations in the latest draft, which requires companies to keep black ownership at 26 percent even if black shareholders sell their stakes.

    "We are not challenging the charter. We are fully supportive of the entire transformation journey, but we just need the rules to be absolutely clear to make sure we don't end up making targets that are unobtainable but are pragmatic and realistic," said Roger Baxter, chief executive of the Chamber of Mines.

    In a separate court case, a local law firm is challenging the entire Mining Charter, arguing it is unconstitutional.

    The new charter, which was revised in 2010 as part of a consultative approach to regulations, also requires companies to provide housing and other amenities in mining communities, many of which are mired in poverty and neglect.

    "If government goes ahead and implements the charter in its current form it will be very unfortunate, because it would have a pretty dramatic effect on investment in mining in South Africa," said Peter Leon, a partner at law firm Herbert Smith Freehills African practice.

    South Africa is the world's top platinum producer and has a significant gold industry but firms are struggling with depressed prices, rising costs and bouts of labour unrest.

    "For investors, it goes without saying that regulatory certainty and the sanctity of private ownership under the constitution is paramount," Anglo American Chief Executive Mark Cutifani told delegates at a mining summit in Cape Town.

    Mining companies say they were not consulted in the latest draft but Minister of Mineral Resources Mosebenzi Zwane denied this and sought to reassure investors.

    "We have consulted extensively with stakeholders," Zwane said in a speech at the opening of the summit.

    "We call upon investors to come to South Africa and engage us frankly as we move towards transformation of our economy. We will continue to have an open door policy."

    With rising unemployment, the ruling African National Congress is under increasing pressure to address gaping inequality that persists 23 years after the end of apartheid.

    Black South Africans make up 80 percent of the 54 million population, yet most of the economy in terms of ownership of land and companies remains in the hands of white people, who account for around 8 percent of the population.
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    China's forex reserve falls to six-year low in January

    China's forex reserve continued to shrink in January, falling for the seventh straight month to below the closely watched 3 trillion U.S. dollars, official data showed Tuesday.

    Foreign exchange reserves stood at about 2.99 trillion U.S. dollars last month, down from about 3.01 trillion U.S. dollars in December, the State Administration of Foreign Exchange said, citing figures from the central bank.
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    German coal, gas plant output at 5-year high in January

    German coal and gas-fired power plant output in January rose to its highest in almost five years as cold weather boosted demand while below average wind and record-low winter nuclear availability reduced supply, according to power generation data compiled by think-tank Fraunhofer ISE.

    The increased need to ramp up even less efficient thermal power plants helped to lift the day-ahead monthly average power price to its highest since February 2012 with spot prices spiking at their highest since 2008 at the height of the cold spell in late January, S&P Global Platts data shows. Output from coal-fired power plants was 12.9 TWh in January, up 37% on year and averaging around 17.3 GW for the whole month, a level not reached since the extended cold spell back in February 2012, the data shows.

    Coal also removed lignite from the top of the power mix in January with lignite plants already running near maximum available capacity.

    The increased coal burn may also have aggravated supply issues for coal transport on barges down the River Rhine with both RWE and EnBW warning of potential supply interruptions for some power plants inland and especially in southern Germany.

    Very low Rhine levels still prevent barges from being fully loaded with coal, adding a premium to transport, according to sources.

    Cold weather across Europe also lifted demand not just in Germany but also neighboring countries, especially France and the Alpine region.

    Load in Germany itself was around 7% higher on year at 45.2 TWh, according to the Fraunhofer 'energy charts' data mainly based on TSO reports.

    Output from gas plants also rose to its highest level since February 2012 at 5.6 TWh, up 14% on year, but with only a limited number of gas-fired plants reporting.

    The Fraunhofer ISE data does not capture the full picture for gas plants with many combined heat-power plants (CHP) not accounted for in that data, but cold weather in general will see CHP plant output ramped to near maximum levels with a number of new CHP plants helping to boost overall gas-fired power output.


    Wind power output in January dropped below 8 TWh, down 15% on year and averaging around 10.7 GW despite reaching a new hourly record just below 36 GW, the data shows.

    Daily average wind production swung between 29.5 GW on January 4 and just 1.3 GW on January 24 when German spot power prices spiked above Eur100/MWh for the first time since 2008, the data shows.

    German day-ahead baseload power prices averaged at Eur51.51/MWh this January, 74% above last January, Platts pricing data shows. Finally, nuclear output registered the biggest monthly deficit, down by over 2 TWh compared to last year with just 5.7 TWh generated, the lowest for a winter month in the modern nuclear era -- amid an unprecedented winter refueling schedule for four of the remaining eight reactors due to the expiry of the nuclear fuel tax at the end of 2016.

    German nuclear operators had the short refueling stops scheduled many months in advance amid generally very low power prices over recent years.

    However, this January an extended spell of very cold and calm weather coincided not only with the German nuclear outages, but also reduced nuclear availability in France and Switzerland as well as continued dry weather adding pressure on hydro reserves with both Swiss and French Alpine hydro levels falling to a 20-year low.
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    Oil and Gas

    Jan crude oil output 32.16 million b/d, down 690,000 b/d from Dec: Platts survey

    The 10 OPEC members obligated to reduce oil output under the landmark agreement signed late last year achieved 91% of their required cuts in January, with their production falling 1.14 million b/d from October levels, according to an S&P Global Platts survey released Monday.

    Those cuts were, however, offset partly by output gains in Libya and Nigeria, which are exempt from the accord, and Iran, which is allowed to increase its production slightly.

    Related: Find more OPEC information in our news and analysis feature.

    In all, OPEC's 13 members -- not including Indonesia, which suspended its membership at the group's last meeting -- produced 32.16 million b/d in January, a 690,000 b/d decline from December, the Platts survey showed.

    With Indonesia, the organization's January production totaled 32.89 million b/d.

    Under the agreement, OPEC pledged to cut 1.2 million b/d from its October output levels for six months starting from January 1 and freeze production at around 32.5 million b/d, including Indonesia.

    Eleven non-OPEC countries led by Russia have also agreed to cut output by 558,000 b/d in the first half of 2017.

    The survey shows that several OPEC countries covered by the agreement still need to make some progress in lowering output to their allocations, though the overcompliance of Saudi Arabia, Kuwait and Angola helps compensate.

    Since the deal covers an average of January to June output, some month-to-month fluctuations are to be expected.

    Saudi Arabia has backed up the strong words of its energy minister Khalid al-Falih, who played a key role in negotiating the agreement, with its January production falling to 9.98 million b/d, according to the Platts survey.

    That is below its allocation of 10.06 million b/d under the deal, as crude exports declined by more than 500,000 b/d in the month, Platts shipping tracker cFlow showed. It is also the first month Saudi production has been below 10 million b/d since February 2015, according to the survey archives.

    Falih in recent weeks had said that the kingdom would "strictly adhere to our commitment" and signaled that it would make deeper cuts in February.

    Likewise, Kuwaiti oil minister Essam al-Marzouq, who chairs a five-country committee that will monitor and enforce the production agreement, has said that Kuwait would "lead by example."

    Accordingly, Kuwait's production for January was under its quota of 2.71 million b/d, coming in at 2.7 million b/d, a 130,000 b/d drop from December, the survey showed.

    Besides Kuwait, the monitoring committee comprises fellow OPEC members Algeria and Venezuela, along with non-OPEC Russia and Oman.


    Algeria is slightly above its quota of 1.04 million b/d, with January production at 1.05 million b/d, while Venezuela also exceeds its allocation of 1.97 million b/d, producing 2.01 million b/d in the month, according to the survey.

    Angola is below its allocation of 1.67 million b/d, with January output at 1.63 million b/d, as its crude loadings showed declines in the month.

    Iraq, which had sought an exemption from the deal, has the most barrels to cut to reach its allocation, with January output at 4.48 million b/d, according to the survey, while its quota is 4.35 million b/d.

    The January figure, however, was a decline of 150,000 b/d from December production, as exports from Iraq's southern terminals showed a significant decline from the previous month's record levels.

    Iran, which is allowed to boost production to 3.80 million b/d under the deal, had January production of 3.72 million b/d, a 30,000 b/d increase from December.

    Meanwhile, exempt Libya and Nigeria showed increases of 50,000 b/d and 210,000 b/d, respectively, as they continue to recover from militancy-related outages.

    Libyan output had reached 715,000 b/d during the month, but frequent power shortages and a fire at the Sarir field caused production to fall towards the end of January, for a full-month average of 670,000 b/d, according to the survey.

    Nigerian output saw good signs of recovery after recent attacks on infrastructure in the Niger Delta, as well as the return of key export grade Agbami from maintenance last month, averaging 1.65 million b/d in January.

    The Platts estimates were obtained by surveying OPEC and oil industry officials, traders and analysts, as well as reviewing proprietary shipping data.

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    Dubai crude cash spread to swap at three-month high on robust demand

    Frontline cash Dubai crude rose to its highest against the same-month Dubai swap in over three months Monday as demand for medium, heavy sour crudes was expected to remain supported on the prospect of the OPEC output cuts could be more apparent to Asian refiners in the second quarter.

    The April cash Dubai was assessed at a discount of 6 cents/b to April Dubai swaps Monday, compared with a discount of 12 cents/b Friday, S&P Global Platts data showed.

    The spread was last higher on October 31, 2016 when it was assessed at a premium of 9 cents/b.

    During the Platts Market on Close assessment process Monday, Shell was seen bidding for April cash Dubai partials and it traded with Reliance Global at $55.29/b at the end of the MOC.

    "Obviously medium and heavy sour is well supported, but light sour and sweet seems to be plenty around," a Singapore-based crude trader said.

    Intermonth Dubai crude swaps spreads have also largely remained supported Monday after hitting multi-month and multi-year highs on Friday.

    March Dubai crude swaps were assessed at parity to April crude swaps on Monday, while the spreads between April/May and May/June were both assessed in a contango of 2 cents/b, Platts data showed.

    On Friday, the March/April crude swaps spread was assessed in a backwardation of 2 cents/b Friday -- the highest since September 30 last year when it was in a backwardation of 10 cents/b, the data showed.

    The April/May and May/June crude swaps spreads were both assessed at a contango of 1 cent/b on Friday, the highest since August 31, 2016 and August 14, 2014 respectively.

    Traders have said the stronger spreads reflected expectations that OPEC-related production cuts would be felt most acutely in the second quarter as producers look to comply by June 30.

    Also reflecting support for the medium, heavy crude market, cash Oman crude was assessed at 56 cents/b above cash Dubai crude on Monday, the highest since December 30, 2016 when it was assessed at a 70 cents/b premium, Platts data showed.

    The rise in Dubai crude has narrowed the crude's spread to benchmark Brent sweet crude, opening up options for end-users to seek competitively priced grades from outside the Middle East.

    The second-month Brent/Dubai Exchange of Futures for Swaps -- which enables holders of ICE Brent futures to exchange a Brent futures position for a Dubai crude swap -- was assessed at $1.42/b Monday, down from $1.54/b last Friday.

    The second-month EFS averaged $1.65/b in January, the lowest since September 2015 when it averaged at $1.54/b.

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    Iran to finally launch Azadegan tender in March: NIOC

    State-owned National Iranian Oil Co, or NIOC has started talks with international oil companies ahead of a new licensing round for Azadegan, one of its prized oil fields, a senior NIOC official said Saturday.

    The new bid round will be held before the end of the Iranian year on March 20, NIOC managing director and deputy oil minister, Ali Kardor said in a statement released by the oil ministry.

    Negotiations between NIOC and domestic and foreign companies are under way with a view to signing new-style oil contracts. This is after technical and commercial committee of oil contracts has prepared the necessary documents for putting Azadegan out to tender, Kardor said.

    "The first list of international companies cleared to bid for oil projects has been announced, and given the request of some companies to completing their data, another list would be also drawn up," Kardor added.

    Iran's oil ministry has qualified 29 international companies to bid for upstream oil and gas development contracts on its list. For South Azadegan, NIOC has signed about five memoranda of understanding with international companies to study the large onshore field with a view to bidding on development contracts.

    Bid rounds for the development of West Karoun fields -- Yaran and Yadavaran -- will be held once Azadegan is tendered, Kardor said.


    Kardor also touched on negotiations with India's ONGC Videsh Limited for the development of the 18.75 Tcf Farzad-B gas field in the Persian Gulf.

    "The technical model presented by the Indians is almost finalized, but we have yet to reach agreement on the financial framework because we are at odds over the gas price," he said.

    He added that Farzad field would be developed under an engineering, procurement, construction and financing contract in case talks with India did not reach agreement.

    OVL, the overseas arm of Indian state-owned explorer Oil and Natural Gas Corp., was prequalified along with 29 other oil companies to bid on the upcoming tenders. It discovered the Farzad-B gas field in 2008, but so far the field has not been developed.

    Earlier this month, the company said it was in negotiations with Iran for the field's development rights and had submitted a development plan. India's oil ministry had been hopeful in December that OVL could reach an agreement on gas price formula and a master plan for the development before the end of the Iranian year on March 20.

    OVL's $10 billion plan for development of the Farzad-B field includes an accompanying plant to liquefy the gas for transportation in ships. Kardor said Farzad's gas should feed LNG and petrochemical projects.


    Iran's oil production was 3.9 million b/d, while exports were 2.335 million b/d, Kardor said. Oil production is expected to reach 4 million b/d by March, with the addition of new production from the West Karoun area, adding 40,000 b/d, along with 15,000 b/d from the Azar field and 35,000 b/d from the oil layer of the South Pars gas field.

    Condensate production now stood at 550,000 b/d, having been at 325,000 b/d, in 2013, he added.

    Iran had been storing around 75 million barrels of condensates in vessels on the Persian Gulf, up until the signing of its nuclear agreement early last year.

    "After the implementation of the JCPOA [the nuclear deal], 50 million barrels of gas condensate has been sold," he said. The remaining 25 million barrels is expected to be sold by April, at prices at around $40/b.
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    O&G operators to shift away from troubled deepwater areas

    Hydrocarbon production from the ‘Golden Triangle’ will peak in 2019 due to the lack of projects sanctioned in recent years, the energy intelligence group Douglas-Westwood said in its DW Monday report.

    The Golden Triangle incorporates the deepwater (>500 m water depth) plays of Brazil, the U.S. Gulf of Mexico and West Africa.

    According to the report, production data from Douglas-Westwood’s new online analysis tool, SECTORS, shows combined oil & gas production will reach its crux in two years’ time at some 7.1 million barrels of oil equivalent per day (mmboe/d) before declining into the 2020s. This is largely due to Petrobras’ continuing financial and tendering problems in addition to significant delays to large developments in West Africa – notably Bonga South-West (Shell) and Zabazaba (Eni), DW stated.

    Outside the ‘Golden Triangle’, deepwater hydrocarbon production triples over the next seven years – rising from 1.3 mmboe/d this year to 3.9 mmboe/d. Of this 2.6 mmboe/d growth, 80% is natural gas. This reflects the increasing diversification of the deepwater sector as operators shift focus towards monetizing gas reserves discovered in recent frontier gas plays.

    In the Gulf of Mexico, the larger discoveries in recent years have been in technically-challenging oil reservoirs with higher costs, like the Palaeogene. Operators have therefore focused more on the emerging gas provinces including LNG in East Africa and especially the eastern Mediterranean, where pipeline exports to local markets are possible.

    Additionally, Asia – historically a shallow water-producing region – is now seeing an increase in deepwater projects, with CNOOC exploiting fields in the South China Sea and ONGC and Reliance Industries investing in deepwater gas fields in the Krishna Godavari basin, offshore eastern India.

    DW said it expect operators worldwide to continue to shift away from the troubled waters of the traditional deepwater areas, seeing non-Golden Triangle output climb further from the mid-2020s. Countries within the ‘Golden Triangle’ will need to take steps to maintain production in the long-term by making the investment climate more attractive.
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    Qatar Petroleum is in growth mode, seeks international projects: CEO

    State-owned energy giant Qatar Petroleum aims to expand its liquefied natural gas (LNG) assets abroad, increasing its reserves and production capacity, chief executive Saad al-Kaabi said on Monday.

    "You will see us going internationally with some of the partners we have in Qatar, this year and next year...We are in growth mode," Kaabi told reporters at the company's headquarters in Doha.

    "We will continue to be in growth mode for a while. Some (growth) will be national but the majority will be international."

    Kaabi also said supplies of LNG from the United States were not a threat to business and that his company was interested in exploring in the area of Cyprus.
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    BP turns to profit in 2016

    UK-based energy giant and LNG player, BP reported a slight net profit for 2016, recovering from heavy losses the company logged the previous year.

    BP posted a profit of $115 million, compared with the headline loss of $6.5 billion reported for 2015.

    Theses figures included a total of $4 billion non-operating charges taken through the year associated with resolution of the remaining legacy of the 2010 oil spill.

    BP’s underlying replacement cost profit, the company’s definition of net income, was at $2.59 billion compared to #5.91 billion the year before.

    The company said on Tuesday that the 2016 price environment was “challenging” as the average Brent oil price of $44 per barrel was the lowest for 12 years. The Henry Hub gas marker prices averaged $2.46 per million British thermal units and the refining marker margin was also the lowest since 2010, BP said.

    In the fourth quarter of 2016, BP’s underlying replacement cost profit fell to $400 million, compared with $560 million expected by analysts but better than $196 million made a year earlier, according to Reuters.

    BP said it will balance its books at an oil price of around $60 per barrel by the end of 2017 and expects organic capital expenditure to be in the range of $16-17 billion in 2017.

    BP annual earnings dip to 10-year low, warns OPEC cut could affect 2017 production

    Perhaps the worst is that BP now says it will need $60 a barrel to balance its books in 2017, up from the $50-$55 it has previously guided

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    Statoil’s earnings drop

    Norwegian energy giant and LNG operator Statoil reported a 58 percent drop in its adjusted operating profit for the year 2016.

    Adjusted earning were at US$4 billion for 2016, down from $9.63 billion in the previous year.

    The company’s adjusted earnings in the fourth quarter of 2016 were $1.66 billion, 6 percent down from $1.78 billion in the same period in 2015, attributing the dip to exploration well expenses and the lower European gas prices.

    Statoil reported a net operating income of $80 million for the twelve months period, dropping 94 percent from the 1.37 billion the year before. It also reported a  loss of $1.90 billion in the fourth quarter compared to an income of $152 million in the same period of 2015.

    The company said in its quarterly report that the result was impacted by $2.3 billion in net impairment charges mainly due to reduced long-term price assumptions.

    Eldar Sætre, president and CEO of Statoil said the “result was impacted by the negative result from our international operations due to expensed exploration wells, high maintenance activity and impairment charges,” adding that the company achieved strong results in its improvement programme, saving $700 million above target of $2.5 billion.

    Statoil delivered equity production of 2,095 mboe per day in the fourth quarter compared to 2,046 mboe per day in the same period in 2015.

    The increase was primarily due to the ramp-up of new fields and strong operational performance. Excluding divestments, the underlying production growth was 2 percent compared to the fourth quarter last year.

    Statoil updated its outlook for 2017-2020 period expecting a capital expenditure of around $11 billion for 2017. The company estimates a 4-5 percent production growth in 2017 from 2016, and an annual production growth of around 3 percent from 2016 to 2020.
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    Gazprom Supply Jitters Roil Gas Market Facing Return of Freeze

    European gas traders are once again focusing on exports from its biggest supplier as freezing weather is set to return to the region.

    Moscow-based Gazprom PJSC said on Wednesday that it reduced shipments through the Opal pipeline in Germany, which delivered about 15 percent of Russia’s gas exports outside the former Soviet Union last month, following a legal challenge led by Poland. The relatively minor cut rekindled memories of shutoffs during freezing weather eight years ago and helped to push prices to the highest in almost two years.

    While the reductions along Opal are equal to just 5 percent of Russia’s overall supplies to the 28-nation European Union, they come as the region faces depleting inventories and the return of a winter cold snap. While Gazprom is able to boost deliveries through Ukraine, the cuts helped heating prices in Europe, according to analysts including BMI Research.

    “People react jumpy to Gazprom reducing supplies all the time, often with a valid reason,” said Sijbren de Jong, a strategic analyst at The Hague Center for Strategic Studies. “But here it’s difficult to determine if something more is going on.”

    Day-ahead gas on the Title Transfer Facility in the Netherlands, Europe’s biggest market for the fuel, rose 17 percent last week, the biggest gain since April, according to broker data compiled by Bloomberg. The close at 23 euros a megawatt-hour ($7.25 a million British thermal units) was the highest since April 2015.

    Gazprom only increased flows through Opal in December after the European Commission eased some limits after years of disputes on the use of the pipeline, which is seen as a threat by transit nations including Poland and Ukraine because it can bypass their roles in transit to western Europe. Poland successfully challenged the commission’s decision and Gazprom returned to using about half of Opal’s capacity from Feb. 1.

    Some traders may face a cut in Gazprom supplies down to contractual volumes if they increased orders now, Russia’s Kommersant newspaper reported Thursday, citing people with knowledge of the matter it didn’t identify. The company’s press service declined to comment.

    While there’s no substantial risk to Russian gas shipments, or European gas supply as a whole, prices “could rise more aggressively if the weather turns cold over February,” said Christopher Haines, head of oil and gas at BMI Research.

    After the worst cold blast in a decade and a warmer than usual start to February, temperatures are expected to fall below the seasonal average throughout Europe. The northwest European average is forecast to be 0.4 degrees Celsius next week (33 Fahrenheit), compared with a 10-year mean of 3.3 degrees Celsius.

    European gas storage levels have been drained below 5-year averages after January’s abnormally chilly temperatures. Meanwhile, there has been a dearth of liquefied natural gas imports, with the U.K., Netherlands and Belgium receiving just four cargoes in 2017 through Friday, compared with 13 in the same period last year.

    “Higher prices on European benchmarks will pull in more LNG, particularly as Asian prices soften,” Haines said.

    The Opal pipeline, which is co-owned by Gazprom and BASF SE’s Wintershall AG subsidiary, runs for 472 kilometers (293-mile) from the arrival point of the Nord Stream link on Germany’s Baltic coast toward the Czech Republic. It has a capacity of 36 billion cubic meters of gas a year, with actual supplies of 20 billion cubic meters in 2016
    The EU and Dusseldorf courts handling Poland’s claims don’t disclose hearing schedules. While the procedures may drag on, there could be some interim solution that will allow Gazprom to use more capacity “in emergency situations,” said BMI’s Haines.
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    Shanxi to increase CBM output to 20 bcm

    North China's coal-rich Shanxi plans to increase coalbed methane (CBM) output to 20 billion cubic meters (bcm) by 2020, local media reported.

    In 2017, Shanxi will accelerate system reform in CBM exploration and extraction, in response to the central government's supply-side reform, said Xu Dachun, director of the provincial Land and Resources Department.

    In April last year, the Ministry of Land and Resources delegated part of CBM extraction approval rights to Shanxi. That was the first time the central government delegated CBM extraction approval rights to local government. So far, Shanxi has approved eight CBM exploration projects.

    In 2015, Shanxi extracted 10.13 bcm of CBM, including 4.1 bcm from ground-based operations and 6.03 bcm from underground, accounting for 94% and 44.4% of the country's total.

    By end-2015, Shanxi's CBM reserves stood at around 560 bcm, accounting for around 88% of the nation's total, official data showed.
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    Disruption at UK's Rough gas storage site to extend beyond April

    Britain will not be able to inject additional supplies to its largest gas storage site after six of its wells failed tests, delaying a plan to have them back in service by the end of April, operator Centrica Storage Limited (CSL) said.

    Concerns about integrity of wells at the Rough site, off England's east coast, prompted Centrica to impose limits last year on how much gas could be stored there as a safety precaution.

    Following investigations, Centrica shut down the facility for injections and withdrawals of gas. Withdrawals resumed in December but injections were on hold until April.

    "The return to injection operations in 2017 remains subject to successfully completing well testing on all wells and confirmation that Rough can be safely returned to service," it added.

    Gas is injected usually in the summer months when demand and prices are low. Britain depends on stored gas reserves to help manage winter demand spikes and to ensure security of supply.

    Rough usually provides more than 70 percent of Britain's gas storage capacity. The site is more than 30 years old and repeated outages have highlighted its vulnerability.

    In a review by the Competition and Markets Authority last year, CSL said Rough was an ageing asset which had outlasted its original design life of 25 years and that its reliability was likely to worsen over time.

    If there is reduced injection capacity over the summer months at Rough, other, smaller storage sites will have to be used.

    There could be a risk of low levels of gas in storage for the winter 2017/18 season, traders said. Britain could have to pay for more liquefied natural gas deliveries and imports from Norway and the Netherlands.

    Market reaction was muted. The Summer 2017 wholesale gas contract was down 0.55 pence at 45.95 pence per thermo.

    CSL said it had completed calliper surveys on 20 out of 24 wells at the site and completed pressure testing on 12 of those 20 wells.

    Eight of those 12 passed the tests but two will need further work and will not be able to return to service by April 30.

    Four out of the 12 did not pass the tests and will not return to service by that date either, CSL said.

    "All 6 wells that are not capable of returning to service by 30 April 2017 have been isolated from the reservoir," the firm said in a statement.

    The firm said it is evaluating the consequences of the test results and will provide another market update as soon as it can. CSL is still testing remaining wells.

    "The return to injection operations in 2017 remains subject to successfully completing well testing on all wells and confirmation that Rough can be safely returned to service," it added.

    Withdrawal operations remain unaffected, CSL said.
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    U.S. East Coast Has a Growing Appetite for Foreign Oil

    U.S. East Coast refineries, which have thrived for a few years on a boom of production from the Bakken shale play in North Dakota and eastern Montana, are increasingly looking abroad to supply their needs.

    Last year through November, the region imported 884,000 barrels a day, which would be the highest full-year total since 2011, data from the U.S. Energy Information Administration show. Angola, Nigeria and Brazil have increased shipments to the East Coast this year. Rising supplies overseas made imported oil cheaper than domestic for the first time since 2013, data from the U.S. Energy Information Administration show. Canada is usually the leading importer to the region.

    The price switch opened the doors for refineries like PBF Energy Inc., Philadelphia Energy Solutions and Phillips 66 to boost imports, says Andy Lipow, president of Lipow Oil Associates LLC in Houston. He said the new Dakota Access Pipeline, one of the energy projects supported by President Donald Trump, will make the East Coast even more reliant on imports.

    The 1,172-mile line developed by Energy Transfer Partners LP may start moving crude June 1, according to a person familiar with the matter. It will connect the Bakken to Patoka, Illinois. Existing pipelines can take oil from Patoka to refineries in the Midwest and on the Gulf Coast, not to the East Coast. The East Coast relies mostly on rail to get Bakken oil.

    “When the Dakota Access Pipeline starts, you will see less availability of Bakken in the East Coast and more imports coming,” Lipow said in a phone interview. “It will be more economical to ship Bakken oil to the Gulf Coast by pipeline than rail it to the East Coast.”

    Brazilian Oil

    Angola, Nigeria and Brazil produce the light to medium grades that make up the bulk of imports in the region, Gurpal Dosanjh, an analyst for Bloomberg Intelligence, says by phone from New York.

    “Brazilian production has increased quite a lot because of offshore production,” he said. “We should see these supplies keep coming.”

    Tankers carrying 2.5 million barrels of Brazilian oil are on their way for delivery to East Coast refineries, ship-tracking data show. This would be the most since at least 2002, according to data from the EIA. The vessels are set to deliver Sapinhoa, Ostra and Iracema grades into Philadelphia, where refiners including Philadelphia Energy Solutions and PBF Energy Inc. have bought Brazilian oil.

    Philadelphia Energy Solutions and Phillips 66 declined to comment on their oil purchases. PBF didn’t return calls or e-mails seeking comment.

    Front-month West Texas Intermediate closed at $53.01 a barrel Monday on the New York Mercantile Exchange, up 72 percent in the past year. Prices have held in the $50-$55 range this year since the Organization of Petroleum Exporting Countries and other producers like Russia agreed in November to cut production.

    Those higher prices should spur rig counts and boost U.S. production, which may eventually prompt East Coast refineries to import less, John Auers, executive vice president at energy consultant Turner Mason & Co., said in a phone interview from Dallas. If the U.S. implements a border adjustment tax on imports from Mexico, for example, the East Coast refineries would look to domestic supplies again.

    “Certainly if a BAT is enacted, that would magnify the decline,” he said. “With or without a BAT, I think the overall imported volume may fall with higher output in the Bakken.”
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    Alternative Energy

    China's solar power capacity more than doubled in 2016

    China's installed photovoltaic (PV) capacity more than doubled last year, turning the country into the world's biggest producer of solar energy by capacity, the National Energy Administration (NEA) said on February 4.

    Installed PV capacity rose to 77.42 GW at the end of 2016, with the addition of 34.54 GW over the course of the year, data from the energy agency showed.

    Shandong, Xinjiang, Henan were among the provinces that saw the most capacity increase, while Xinjiang, Gansu, Qinghai and Inner Mongolia had the greatest overall capacity at the end of last year, according to the data.

    China will add more than 110 GW of capacity in the 2016-2020 period, according to the NEA's solar power development plan.

    Solar plants generated 66.2 billion kWh of power last year, accounting for 1% of China's total power generation, the NEA said.

    The country aims to boost the mix of non-fossil fuel generated power to 20% by 2030 from 11% today.

    China plans to plough 2.5 trillion yuan ($364 billion) into renewable power generation by 2020.
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    Scientists find crop-destroying caterpillar spreading rapidly in Africa

    Scientists tracking a crop-destroying caterpillar known as armyworm say it is now spreading rapidly across mainland Africa and could reach tropical Asia and the Mediterranean in the next few years, threatening agricultural trade.

    In research released on Monday, scientists at the Britain-based Centre for Agriculture and Biosciences International (CABI) said the pest, which had not previously been established outside the Americas, is now expected to spread "to the limits of suitable African habitat" within a few years.

    The caterpillar destroys young maize plants, attacking their growing points and burrowing into the cobs.

    "It likely traveled to Africa as adults or egg masses on direct commercial flights and has since been spread within Africa by its own strong flight ability and carried as a contaminant on crop produce," said CABI's chief scientist Matthew Cock.

    Armyworm, known as "fall armyworm" in the United States due to its tendency to migrate there in autumn, or fall, is native to North and South America and can devastate maize, a staple crop crucial to food security in large parts of Africa.

    Suspected outbreaks have already erupted in Zambia, Zimbabwe, Malawi and South Africa and the U.N. Food and Agriculture Organization said last week it had spread to Namibia and Mozambique.

    The CABI research found evidence of two species of fall armyworm in Ghana for the first time and scientists are now working to understand how it got there, how it spreads, and how farmers can control it in an environmentally friendly way.

    "This is the first time it has been shown that both species or strains are established on mainland Africa," Cook said. "Following earlier reports from Nigeria, Togo and Benin, this shows they are clearly spreading very rapidly."

    While armyworm mainly affects maize, it has also been recorded eating more than 100 different plant species, causing major damage to crops such as rice and sugarcane as well as cabbage, beet and soybeans.

    Cook warned that outbreaks can cause devastating losses and mounting debts for farmers and said urgent action is now needed to help farmers figure out the best strategies to control the pest.

    South Africa's agriculture ministry said last week it was registering pesticides for use against armyworm.
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    Precious Metals

    European Election Anxiety pushes Gold

    Funds increased gold net-long by 21% to 72k lots in wk to Jan 31. The 12k rise (longs +6k, short -6k) took the net-long to 8 wk high.

    "Paper" demand for gold picking up. ETP demand jumped the most in 6 mths last week. Funds lifted bullish futures bets to a two-months high.

    Gold Spikes As European Election Anxiety Spreads


    Attached Files
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    Randgold proposes 52% dividend-payout increase as FY16 profits rise 38%

    Africa-focused Randgold Resources has increased production for the sixth consecutive year in 2016, while reducing total cash cost per ounce, and remains upbeat about its future prospects despite global uncertainties.

    Speaking to Mining Weekly Online on the sidelines of the Investing in African Mining Indaba, on Monday, CEO Dr Mark Bristow noted that, with profits of $294.2-million up 38% on the previous year, the board had proposed a 52% increase in the dividend to $1 a share from $0.66 a share in the previous year.

    The dividend will be paid in cash with no scrip alternative being made available. The company’s board agreed that the resolution for the dividend would be submitted to shareholders for approval at the company’s annual general meeting scheduled for Tuesday, May 2.

    Randgold FD Graham Shuttleworth highlighted that, since Randgold paid its first dividend in respect of the 2006 financial year, the company had maintained a progressive dividend policy, with dividends having increased yearly and by 900% over this period, notwithstanding the drop in the gold price since 2011.

    “This increase in dividends validates the business model and reflects the profitability and financial strength of the group,” he said.

    The company’s flagship Loulo-Gounkoto gold mine, in Mali, exceeded its production guidance for the year by 37 000 oz, while also achieving its lowest-ever total cash cost per ounce. Its other mines also recorded solid performances that contributed to the record group production of 1.2-million ounces.

    The group’s total cash cost of $639/oz was down 6% from the $679/oz recorded in the previous year.

    Further, Bristow pointed out that Randgold had passed its net cash target of $500- million, with $516.3-million in the bank at the end of 2016 and no debt.


    Meanwhile, Bristow highlighted that Randgold had been involved in Mali for the past 20 years and, in that time, had made an “enormous difference” for the better in the country. He commented that, at the national level, it had paid more than $2-billion to the government in taxes and dividends and contributed another $2.9-billion to the economy in the form of salaries, community investments and payments to local suppliers.

    “Our Malian operations routinely account for between 6% and 10% of the country’s total gross domestic product,” Bristow stated, adding that the miner had taken great care to ensure that all its stakeholders – and not least the host government and the local communities – had shared equitably in the value that the company had created in the country.

    He said that, in partnership with the government, Randgold had also developed Mali into “one of the world’s premier gold exploration and mining destinations”, by creating a solid foundation for general economic growth, which, together with the new mining companies in the industry, could still be improved upon.

    “At Randgold, we are committed to further investment in Mali, not only with regard to exploration and its own mining businesses, but also in community projects aligned to its sustainability-focused social responsibility policy,” Bristow concluded.
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    Base Metals

    China's 2016 copper concs output surges 11%, moly concs production falls

    China's output of copper concentrate surged 10.9% year on year to 1.85 million mt in 2016, but that of moly concentrate -- 45% pure moly -- fell 5% year on year to 287,000 mt, the Ministry of Industry and Information Technology said in a report on its website over the weekend.

    The higher output of mined copper was attributed to the commissioning of new projects, including the 45,000 mt/day Zijinshan Gold & Copper Mine owned by Zijin Mining Group in Fujian province, and other projects in Anhui and Gansu provinces, according to the Ministry of Land and Resources.

    The lower output of moly concentrate was attributed to less production in central and northwestern China.

    Meanwhile, China's output of top 10 nonferrous metals hit 52.83 million mt in 2016, up 2.5% year on year. The country's production of refined copper and aluminum stood at 8.44 million mt and 31.87 million mt respectively in 2016, up 6% and 1.3% year on year, MIIT data showed.

    China produced 4.67 million mt and 6.27 million mt respectively of refined lead and zinc in 2016, up 5.7% and 2% year on year.

    The higher output of refined copper was attributed to demand from the power and vehicle sectors as well as the clean energy sector.

    China produced 60.91 million mt of alumina last year, up 3.4% year on year. Output of copper and aluminium products hit 20.96 million mt and 57.96 million mt respectively, up 12.5% and 9.7% year on year, MIIT data showed.
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    Sumitomo Metal forecasts 2017 loss on Chile copper mine impairment

    Sumitomo Metal forecasts 2017 loss on Chile copper mine impairment

    Sumitomo Metal Mining 5713.T on Tuesday forecast a loss of 15 billion yen ($134.08 million) for the year ending in March, down from a previous profit forecast, because of an impairment at a copper mine in Chile.

    Japan's second-biggest copper smelter said it booked a 79.9 billion yen ($714.5 million) impairment loss in the October-December quarter for the Sierra Gorda copper mine, co-owned by Poland's KGHM and trading firm Sumitomo Corp, due to a ramp-up delay.

    Sumitomo Metal owns a 31.5 percent stake in the Sierra Gorda mine. In November, it cut its 2016 output estimate for the mine to 92,000 tonnes in copper concentrate from its May projection of 97,000 tonnes.

    The revised full-year forecast is lower than the consensus estimate of 28.58 billion yen profit from 9 analysts polled by Thomson Reuters I/B/E/S.

    For the last financial year, the company posted an impairment loss of about 69 billion yen on the Sierra Gorda mine, forcing it to book a net loss.

    Also, Sumitomo Metal reported a 19 percent drop in operating profit to 48 billion yen for the nine months through Dec. 31.
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    Japan's JX sees higher output from Caserones copper mine

    Japan's JX Holdings Inc expects to exceed the copper concentrate output target at its Caserones copper mine in Chile in the fiscal year ending March 31, reflecting robust output projected in January-March, an executive said on Tuesday.

    The company is aiming for output of a little more than 98,000 tonnes in the current business year, up from its November outlook of 97,000 tonnes, Katsuyuki Ota, JX Holdings director and executive officer, told a news conference.
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    Steel, Iron Ore and Coal

    Shenhua cuts Feb spot thermal coal prices by 16-20 yuan/t

    China's coal giant Shenhua Group has lowered spot prices of thermal coal by 16-20 yuan/t for February, reflecting its downbeat view on the market.

    Shenhua offers spot 5,500 Kcal/kg and 5,000 Kcal/kg NAR coal at 610 yuan/t and 555 yuan/t FOB with VAT, down 20 yuan/t and 18 yuan/t from a month ago, respectively.

    For long-term customers, the price of 5,500 Kcal/kg NAR coal is at 569 yuan/t FOB, down 7 yuan/t from the preceding month, and that of 5,000 Kcal/kg NAR coal is 7 yuan/t lower at 517 yuan/t FOB.

    Weak demand further dragged down the spot price for the same coal grade to 598 yuan/t FOB on February 3, a drop of 17 yuan/t from a month earlier, showed the Fenwei CCI Thermal index.

    The price spread between spot and contract coal seems narrowing, and the price downtrend may continue in the months ahead.
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    India keen to buy foreign coking coal assets - Minister

    Coal India Ltd, the world's top coal miner, plans to acquire coking coal assets abroad as India lacks technology to economically develop local reserves, Coal Minister Piyush Goyal said.

    "The recent spurt in global coal prices, particularly for coking coal, is expected to create an encouraging scenario for such acquisition process," Goyal told lawmakers in a written reply.

    Coking coal futures on the Singapore Commodity Exchange soared in the second half of last year as top consumer China clamped down on local production as part of a campaign against pollution.

    They have since dropped by about 40 percent to around $170 a tonne, but are still double what they were in mid-2016.

    Coal India has surrendered two mining licenses in Mozambique, and currently does not own any foreign coal assets, he said.
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    Domestic coal sales becoming more important than export market – Prevost

    South Africa’s coal exports are dwindling to the point where it will become a minimal part of the market, says XMP Consulting senior coalanalyst Xavier Prevost.

    Speaking at IHS Markit’s 2017 South African Coal ExportConference, in Cape Town, last week, he said that, in 2016, South Africa produced about 253-million tons of coal, which was a small increase of 1.4-million tons from 2015.

    South Africa exported about 69-million tons of coal last year. “It is very important to note that we generated R47-billion from coal exports at an average of R688/t. However,

    South Africa’s local sales of coal, which equated to about 183-million tons created revenue of R60.8-billion in the past year,” he noted.

    Prevost, hence, highlighted that South Africa created more revenue from its local coal market than from the exportsector. He remarked that this was not the case in previous years, as the export market was the “real money maker” for local coal miners.


    South Africa’s Mpumalanga coalfields have traditionally been the most important in South Africa; however, as these deplete, other coalfields have been touted as potential replacements, such as those located in the Waterberg region of Limpopo.

    Prevost highlighted, however, that there were challenges to unlocking the coal in the Waterberg, including that the geology of the Waterberg was totally different from that found in the Mpumalanga Central coal basin.

    He explained that coal from the Mpumalanga coalfields was significantly easier to mine, had better coal qualities and did not require the same expertise in terms of the washing process.

    Prevost further noted that the Waterberg coalfields required specific types of washing plants and highly-skilled technicians to transform the coal into a usable product.

    “These factors could seriously limit the value of the Waterberg,” he warned.

    Meanwhile, Prevost revealed that XMP had recently conducted a study on behalf of power utility Eskom about the coal reserves that were still available for extraction in South Africa for power generation purposes. The study determined that – subject to the use of new technologies and correct mining methods – it possessed about 34-billion tons of coal.


    Anglo American is the single-largest producer of coal in South Africa, accounting for 20.4% of all local production. Small-scale miners contribute 21.8%, Exxaro 17.5%, Sasol 15.6%, South32 13.3% and Glencore 11.4% of all production.

    Prevost predicted that Exxaro would become the largest single local coal producer over the next two years, as Anglo continued to scale back its coal portfolio.
    He also pointed out that, in 2016, South Africa had exported 69% of its coal to the Far East, 11% to Europe, 10% to the rest of Africa, 10% to the Middle East and 2% to North America.

    India is the largest buyer of South African coal, accounting for 55% of the export market, while Pakistan is the second-largest importer of South African coal at 7%.

    Prevost commented that there were “substantial opportunities” for growth into the Pakistani market, as the country was seeking to expand its coal power stations in the coming years to meet growing energy demand.

    However, he noted that South Africa was also facing increased competition from Colombia, which, on average, sold coal at “slightly cheaper prices” and at a similar quality to South Africa.
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    Japan Dec coking coal imports up 15pct on mth

    Japan imported 6.48 million tonnes of coking coal in December, gaining 14.98% from November and 26.78% from a year ago, the latest customs data showed.

    Australia remained the largest supplier of coking coal to Japan in December, shipping 2.78 million tonnes, up 3.84% month on month and 26.95% year on year, of which 33.69% or 937,300 tonnes were primary coking coal, rising 1.21% on the year but down 6.15% on the month.

    Japan imported 1.66 million tonnes of coking coal from Indonesia in the month, decreasing 2.74% from the year-ago level and down 13.84% from the previous month.

    Meanwhile, Canada sent 798,200 tonnes of coking coal to the Asian country, increasing 53.21% on the year and 144.17% on the month.

    In 2016, coking coal imports of Japan rose 4.22% year on year to 73.89 million tonnes.

    Total coal imports of Japan in December stood at 16.32 million tonnes, climbing 3.91% from the year prior but down 0.92% from November.

    Total value of Japan's coal imports in December reached 203.86 billion yen ($29.63 billion). That translated to an average imported price of 1,248.98 yen/t, rising 21.77% from November.

    In 2016, the country's coal imports totaled 189.76 million tonnes, edging down 0.5% from 2015.
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    Rebel creditors file emergency appeal against Peabody reorganization

    Opponents of Peabody Energy Corp's reorganization plan have filed an emergency appeal against a key piece of the coal producer's proposal they say violates U.S. bankruptcy law by prematurely requiring creditors to promise support it.

    At the heart of creditors' complaints are the terms of a $1.5 billion private recapitalization that Peabody has proposed as part of a plan to slash $5 billion of debt and exit Chapter 11 protection.

    The plan by the world's largest private-sector coal company could provide lucrative returns for early subscribers. In order to sign up for the private offering, creditors had to support Peabody's broader reorganization plan, a complex and lengthy document, within days of its publication on Dec. 22 and almost a month before it went to bankruptcy court for approval.

    U.S. Bankruptcy Judge Barry Schermer blessed the plan on Jan. 26, overruling objections from a range of parties and opening the door for Peabody to officially begin seeking creditor votes.

    In a filing with the U.S. Court of Appeals for the 8th Circuit on Friday, an ad hoc committee of dissenting creditors said Peabody "improperly" forced the majority of creditors to commit their votes in favor of the plan well before it received court approval.

    "The choice was to support the plan or suffer severe economic loss," they said in a motion to expedite the appeal, adding that the move undermined "the creditor democracy at the core of Chapter 11."

    In an emailed statement, Peabody spokesman Vic Svec said the company continued to support its plan as submitted.

    While it is normal for a company in Chapter 11 to try to build creditor support for its plan early on, Peabody's opposing creditors say the company negotiated for months with "a favored few" to develop a complex plan and then forced others to quickly accept, according to court papers.

    The select group included Aurelius Capital Management and Elliott Management Corp, some of Wall Street's most litigious investment funds. When Peabody filed for Chapter 11 the two funds disputed the value of its assets, but the disagreement with other lenders later dissipated when coal prices rose, increasing many creditors' chances for recovery.

    Peabody, with attractive coal mines in Australia and the United States, hopes to emerge from bankruptcy in April, a year after its Chapter 11 filing during a commodities crash, with over $8 billion of debt.
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    Jinneng Group predicts a 5.7% rise in 2017 output

    Jinneng Group predicts a 5.7% rise in 2017 output

    Shanxi-based Jinneng Group, a key energy producer owned by the provincial government, expected a year-on-year rise of 5.7% in coal production to reach 75.4 million tonnes this year, said President Wang Qirui at a work meeting held days earlier.

    In 2017, its total coal trades may hit 147 million tonnes, increasing 11.3% from the year prior, Wang added. Last year, its coal sales via railways and roads were 32.59 million and 85.41 million tonnes.

    The company expected to realize 85 billion yuan of operating revenue and 380 million yuan of profit this year.

    In 2016, its operating revenue was 69.66 billion yuan, while profit stood at 260 million yuan.

    Last year, Jinneng Group put a total of 17 coal mines into operation or trial run, adding 14.4 million tonnes per annum (Mtpa) of capacity. Presently, the group has 68 mines in operation or on trial run, with capacity totaling 76.1 Mtpa.

    The group closed two coal mines in 2016, slashing 1.2 Mtpa of capacity, and planned to shut 2.4 Mtpa of capacity at five mines this year, according to Wang.
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    Kailuan kicks off two coal chemical projects

    Kailuan Group, a leading state-run coal enterprise in northern China's Hebei province, put two coal chemical projects -- adipic acid and methanol fuel Phase I projects into operation recently, state media reported.

    The designed production capacity of the adipic acid and methanol projects stood at 150,000 tonnes and 100,000 tonnes per annum, respectively.

    The adipic acid project, a key coal chemical project of the company, will realize deep processing of refined benzene and improve added value of products.
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    Iron ore stockpiles at Chinese ports hit new high

    Iron-ore stockpiles at Chinese ports hit a new high, rising +3.3% to 123.5mln tons. This marks the biggest weekly percentage gain in fifteen months, Livesquawk reports data compiled by Bloomberg.

    Analysts at Citi expect iron-ore prices to retreat sharply to $ 53/ ton in 2H 2017.
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    Port Hedland says weather cuts January China iron ore exports

    Shipping interruptions caused by stormy weather cut iron ore shipments to China from Australia's Port Hedland terminal in January by 7.8 percent from a month ago, port authorities said on Monday.

    The port, used by BHP Billiton and Fortescue Metals Group, saw exports to China slip to 34.5 million tonnes from 37.4 million tonnes in December, after a tropical low swept across the Pilbara iron ore district on Jan. 27, triggering an emergency clearing of vessels for just under 18 hours.

    Overall shipments from the world's biggest iron ore export terminal fell to 40.3 million tonnes in January from 43.9 million tonnes in December, according to the Pilbara Ports Authority.

    Shipping was also suspended for 38 hours at the nearby Dampier port, used by Rio Tinto to ship iron ore, the port said.

    The port interruptions would have a minor impact on overall second-half output from Australia, said two equity analysts who spoke on background. But the impact could be overcome if the miners recover the lost time over the next several months, they said.

    Iron ore was one of the best-performing commodities in 2016, defying analyst forecasts for a correction on the back of plentiful supply and an expected slip in demand from China, the world's biggest buyer.

    This has prompted producers to mine and ship at or near record levels.
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