Mark Latham Commodity Equity Intelligence Service

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

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    Macro

    US Unleashes New Sanctions On Iran; Russia Says "Counter-Productive"


    The U.S. imposed fresh sanctions on Iran as President Donald Trump seeks to punish Tehran for its ballistic missile program after warning the Islamic Republic that it is “playing with fire." As Bloomberg reports, the Treasury Department published a list of 13 individuals and 12 entities facing new restrictions, some for contributing to proliferation of weapons of mass destruction and others for links to terrorism.

    Ahead of the announcement, Iran’s foreign minister, Mohammad Javad Zarif, said, "Iran unmoved by threats as we derive security from our people." He added later: "We will never use our weapons against anyone, except in self-defense." In retaliation, Iran also announced it would bar the American wrestling team from a major international meet this month in response to President Trump’s order severely limiting travel from several Muslim-majority countries, including Iran.

    Meanwhile, RIA is reporting that Russian foreign ministry officials have remarked that "sanctions against Iran are counter-productive.

    List below:

    http://www.zerohedge.com/news/2017-02-03/us-unleashes-new-sanctions-iran
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    Peru to seek arrest of ex president Toledo in mega graft inquiry


    Prosecutors in Peru were preparing to request the arrest of former president Alejandro Toledo on Saturday after uncovering evidence that implicates him in $20 million in bribes that the Brazilian conglomerate Odebrecht has acknowledged distributing to win a contract during his government, a source said.

    Authorities searched a house owned by Toledo in Lima early on Saturday, the attorney general's office said on Twitter without providing additional details.

    A source in the attorney general's office who was not authorized to make public comments said the raid follows the detection of $11 million transferred to an associate of Toledo that prosecutors believe is part of $20 million in bribes that Odebrecht has said it gave to help secure an infrastructure contract during his 2001-2006 term.

    A representative of Toledo did not immediately respond to requests for comment. Toledo, reached by phone from Paris by the local daily El Comercio, denied taking any bribes, according to audio of the interview posted on the newspaper's website.

    Peru already has imprisoned one of its former presidents for graft - ex-authoritarian leader Alberto Fujimori, who is serving a 25-year sentence for convictions that include human rights abuses.

    Toledo rose to power denouncing Fujimori and promising to usher in a democratic era free of corruption.

    In a settlement with U.S. prosecutors in December, Odebrecht acknowledged distributing $29 million in bribes to secure public work contracts in Peru over a period spanning three presidencies.

    The agreement said the family-owned engineering conglomerate made $20 million worth of corrupt payments between 2005 and 2008 to benefit an unnamed high-ranking official that offered to help the company win an infrastructure contract in 2005.

    Current President Pedro Pablo Kuczynski was Toledo's finance minister and prime minister and has denied any involvement in Odebrecht's kickback schemes.

    "Justice must be the same for everyone," Kuczynski said on Twitter. "If someone committed acts of corruption, they must be penalized. I've ordered the executive to collaborate with whatever is necessary to guarantee the investigation is efficient. Corruption never again."

    Kuczynski is the subject of a separate preliminary investigation regarding a law he signed off on in 2006 that removed legal obstacles to highway contracts awarded to Odebrecht and other Brazilian companies. He has denied wrongdoing.

    Odebrecht has acknowledged doling out hundreds of millions in bribes to win public work contracts in Latin America, spurring inquiries from Peru to Panama that have shaken the region's elites.

    http://www.reuters.com/article/peru-toledo-idUSL1N1FP0BC
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    US Senate kills SEC "resource extraction" rule


    The Republican-led Congress early Friday morning killed a controversial U.S. securities rule disclosure rule aimed at curbing corruption at big oil, gas and mining companies.

    In a 52 to 47 vote, the Senate approved a resolution already passed by the House of Representatives that wipes from the books a rule requiring companies such as Exxon Mobil and Chevron Corp to publicly state the taxes and other fees they pay to governments.

    Republican President Donald Trump is expected to sign it shortly.

    http://www.reuters.com/article/usa-congress-regulations-idUSL1N1FO029
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    ClimateGate 2: NOAA Ret'd scientist cries 'Fowl!'

    Image title

    NOAA’s 2015 ‘Pausebuster’ paper was based on two new temperature sets of data – one containing measurements of temperatures at the planet’s surface on land, the other at the surface of the seas.

    Both datasets were flawed. This newspaper has learnt that NOAA has now decided that the sea dataset will have to be replaced and substantially revised just 18 months after it was issued, because it used unreliable methods which overstated the speed of warming. The revised data will show both lower temperatures and a slower rate in the recent warming trend.

    The land temperature dataset used by the study was afflicted by devastating bugs in its software that rendered its findings ‘unstable’.

    The paper relied on a preliminary, ‘alpha’ version of the data which was never approved or verified.

    A final, approved version has still not been issued. None of the data on which the paper was based was properly ‘archived’ – a mandatory requirement meant to ensure that raw data and the software used to process it is accessible to other scientists, so they can verify NOAA results.

    Dr Bates retired from NOAA at the end of last year after a 40-year career in meteorology and climate science. As recently as 2014, the Obama administration awarded him a special gold medal for his work in setting new, supposedly binding standards ‘to produce and preserve climate data records’.

    Yet when it came to the paper timed to influence the Paris conference, Dr Bates said, these standards were flagrantly ignored.

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    Officials 'drawing up plans' for diesel scrappage scheme to cut emissions


    Ascrappage scheme for diesel cars could be introduced within months as part of a plan to lower emissions and improve air quality across the country, the Telegraph understands.

    Work is underway by officials in the Department for Transport and Defra on a scheme to offer cashback or a discount on low emission cars if people trade in their old polluting vehicles.

    A Government source confirmed that talks have taken place with the Treasury, which would finance the plan, and officials are developing a scheme which could focus on geographical areas around the country where pollution is worst.

    Chris Grayling, the Transport Secretary, reportedly told industry experts that he supports plans for a scrappage scheme during a private meeting earlier this month, but that it must be properly targeted.

    It came as Mr Grayling said high pollution levels are something ministers "have to deal with now".

    He told the House of Commons: "We have to find the right way to migrate the nature of the cars on our roads and the vehicles on our roads to a point where they cause much less of a pollution problem than they do at the moment."

    An industry source confirmed Mr Grayling spoke of his support for a scrappage scheme at a private meeting two weeks ago where the MP also committed to an expansion of electric cars and charging points for the technology.

    The oldest and most polluting diesel vehicles in areas where emissions levels are particularly high are likely to be the target, the Telegraph understands.

    It follows a dramatic warning earlier this month after a number of London boroughs recorded toxic air quality levels forcing the city's Mayor to call on people to stay indoors and put off exercise until the levels improved.

    Former chancellor George Osborne is understood to have previously blocked the scheme

    It also came as Westminster council introduced a 50 per cent surcharge on parking for diesel cars in a bid to drive them out of the borough.

    Mr Grayling told the BBC: "The irony is that a decade ago, because of concerns about carbon emissions there was a drive towards diesel... that we now know has a different set of negative effects and the department for the environment is currently preparing, and will launch shortly, our strategy to take tackling the diesel problem to the next level.

    "There is no question that in the future we are going to have to move to lower emission vehicles. We need to do it soon... I would like to see a migration of people away from current technologies to lower emission technologies. We are providing  incentives to do that now and we will be doing more in the months ahead."

    Former transport secretary Patrick McLoughlin suggested last year that the Treasury should rethink schemes that encourage people to buy diesel cars or increase taxes in order to deal with the problem.

    Sources said George Osborne, the former Chancellor, was opposed to a diesel scrappage scheme but that Philip Hammond is more open to the idea if it can be proven to work.

    The Telegraph understands MPs on the transport committee have also been in discussion with the Department for Transport about the viability of such a scheme.

    One MP said: "The department is looking at this in a serious way but it simply won't go far enough to tackle the real problem of heavily polluting HGVs, farm vehicles and ships."

    But campaigners and the car industry support the idea, which mirrors a scheme developed by the French Government to remove old diesel vehicles from the roads because of the high levels of pollution they emit.

    Howard Cox, founder of the FairFuelUK Campaign, said: "The decision by Westminster Council to add 50 per cent to the cost of parking diesel vehicles is just greedy unscrupulous money grabbing using dubious emissions evidence as the reason to fleece hard-working motorists.

    “There must be incentives for hard-pressed motorists of older diesels to want to change to EVs, hybrids or ultra-low emission vehicles, such as in the French approach. Punishing millions of diesel drivers for mistakes in past UK government policy is neither fair nor honest. There will be a cost in any scrappage scheme, but in the long term the economy and the environment will be the winners.”

    A Treasury spokesman said: "The Government continues to keep all taxes under review and any changes are announced at fiscal events.”

    While a Department for Transport spokesman said there are currently "no plans" to introduce a scrappage scheme.

    It came as Mr Grayling also announced a consultation into Heathrow expansion and changes to the way air traffic control works in the UK.

    The Transport Secretary promised new technology to cut jet noise from Heathrow runways and announced a  “compensation fund" for noise insulation and community projects in the wake of the decision.

    http://www.telegraph.co.uk/news/2017/02/02/officials-drawing-plans-diesel-scrappage-scheme-cut-emissions/
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    Metso yet to benefit from mining industry recovery


    Finnish engineering group Metso on Friday reported fourth-quarter profit below market expectations, a sign that demand from its mining customers is not picking up despite a recovery in commodity prices.

    The maker of grinding mills and crushers for miners as well as valves and pumps for the oil and gas industry has been battling tough market conditions resulting from miners' spending cuts and uncertainty over growth in top metals consumer China.

    Hurt by lower volumes and project overrun costs at its minerals business, Metso's fourth-quarter profit slumped 30 percent from a year ago and net sales fell 10 percent to 676 million euros ($727 million), well below analyst estimates in a Reuters poll.

    The company said it expected its overall market to improve slightly in 2017, but remain weak for mining equipment and satisfactory for mining services.

    "The year has started in a relatively positive way, but it is still too early to announce a meaningful recovery," Chief Executive Matti Kahkonen said in a statement.

    The company's shares were down 5.4 percent at 1015 GMT.

    Metso's cautious outlook contrasts with its Nordic rivals Atlas Copco and Sandvik, which reported strong fourth-quarter results on the back of rising orders from miners.

    The Swedish mining gear makers both said they expected demand from the mining industry continue to improve in the near term.

    "The companies involved in quarrying and ore finding are the first to benefit from the rising commodity prices, and Metso is further down the chain," said Pekka Spolander, analyst at OP Equities, which has an "accumulate" rating on the stock.

    http://www.reuters.com/article/metso-results-idUSL5N1FO1WK
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    Oil and Gas

    MEPs call for Arctic ban on ships using bunker fuel


    The European Parliament is urging the European Commission to look closely at banning ships from using heavy fuel oil on Arctic shipping routes.

    A resolution adopted by the foreign affairs and environment committees on Tuesday called on the EU "to speak with one voice and push to keep the Arctic an area of cooperation."

    Members of the European Parliament want the commission and member states "to work towards banning the use of heavy fuel oil in maritime transport, through the MARPOL convention," a statement from the European Parliament said.

    "In case this does not prove feasible, the EU should take measures to prohibit the use and carriage of heavy fuel oil for vessels calling at EU ports."

    As ice in the Arctic region is thawing earlier, Arctic shipping lanes have become attractive as a way to save money on transporting goods from Asia to Europe.

    However, a significant drop in the price of bunker fuel in recent years has undermined the commercial case for Arctic transits. The use and carriage of heavy fuel oil is banned in the Antarctic.

    http://www.platts.com/latest-news/shipping/london/meps-call-for-arctic-ban-on-ships-using-bunker-26653259
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    GLOBAL LNG-Asia prices hit parity with British gas benchmark


    Asian spot prices for LNG delivery in March fell to parity with European gas benchmarks on Friday, while importers in India, Thailand and Mexico finalised purchases amid healthy supply.

    Traders said Asian prices for March delivery fell 25 cents to about $7.50 per million British thermal units (mmBtu), matching the UK's National Balancing Point trading hub levels.

    Qatar's liquefaction Train 7 - previously idled for maintenance - resumed production on Friday, raising the possibility of more frequent deliveries to Britain from the second-half of March and April, one trader said.

    However, other sources told Reuters that Train 7 may be due to shut down again in March.

    Meanwhile, Australia's AP LNG project is expected to idle half a train's output towards the end of February.

    But output from the giant Gorgon project was steady, with plant operator Chevron readying to bring a third production line on-stream early in the second-quarter.

    Despite colder-than-average forecasts for the next 45-days in South Korea's capital Seoul, which is also a major LNG importer, traders said a combination of pre-Christmas buying, stored reserves and returning nuclear reactors has kept Korea Gas Corp out of the spot market.

    Traders said they had heard Gail India had bought supplies in the low $8 per mmBtu range, while Thailand's PTT bought a cargo in the high $7 per mmBtu level, possibly from Chevron.

    In the Atlantic, Vitol bought a tender cargo from Angola for delivery to Europe, but looks to be in talks to swap it for a different destination, possibly Egypt, one trader said.

    Mexico also purchased two cargoes for February delivery. Steady cargo demand was seen coming from Spain.

    Around six shipments are due to arrive at the Fos terminal in southern France over the coming weeks, alleviating tight gas markets which followed an outage at an Algerian export facility.

    http://www.reuters.com/article/global-lng-idUSL5N1FO5T3
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    Glencore extends major Libyan oil deal - sources


    Swiss-based commodities giant Glencore has extended a deal with Libya's state oil firm to be the sole marketer of one third of the country's current crude oil production, sources familiar with the matter said.

    It was not clear for how long Glencore would continue to have exclusivity over the output and whether some parts of the deal would be renegotiated.

    The deal extends Glencore's dominance over rivals such as Vitol and Trafigura in handling barrels from the North African country for a second year running.

    A spokesman for Glencore declined to comment. Officials at Libya's state-owned National Oil Corp. (NOC) also declined to comment.

    Libya has struggled for years to end a crippling blockade of its oil ports amid a civil war and Islamic State intrusions. Between security fears and erratic supply, refiners eventually stopped attempting to buy from the North African country.

    With a dwindling revenue stream, NOC needed an intermediary that was comfortable managing the risks, able to market the oil globally and pay cash upfront for the cargoes.

    Glencore snapped up the opportunity in September 2015 to resell the only relatively stable onshore output - from the Sarir and Mesla oilfields loaded at the country's easternmost Marsa el-Hariga port. Libya's small offshore production also continued.

    Since 2015, the trader has been the only company able to buy Sarir and Mesla crude output directly from Libya's NOC and is expected to continue as NOC has largely finalised its 2017 allocations.

    Libya's production has recovered to around 700,000 barrels per day (bpd) and NOC hopes output will rise to 1.2 million bpd by the end of the year.

    "It is a big mosaic at the moment, but Glencore has kept a large chunk of the trade," one of the sources said.

    Glencore's deal entitles it to around 230,000 bpd from the Sarir and Mesla oilfields, the sources added. It also regularly delivers crucial refined fuel as Libya's refining system operates well below capacity. Glencore trades about 4.4 million bpd of crude and refined products.

    Vitol and Petraco have also been picking up cargoes but on a small scale, and producers with stakes in oilfields in the country such as Total, Repsol, OMV have returned to loading tankers, as have buyers such as Unipec, the trading arm of China's state-owned Sinopec.

    http://www.reuters.com/article/us-glencore-libya-oil-idUSKBN15L0JM
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    IMCA slams ‘hasty’ Jones Act move


    The U.S. Border Customs and Border protection in mid-January issued a document in which it proposes to revise several rulings and amendments to the Jones Act, which prevents foreign-flagged ships from shipping merchandise within the U.S.

    While the foreign-built and flagged ships have been prevented from transporting merchandise between the U.S. coastwise points, over the years some exceptions have been made for construction vessels working in the offshore oil and gas industry.

    Until now, the foreign construction vessels were allowed to carry aboard pipeline repair material; anodes; pipeline connectors; wellhead equipment, valves, and valve guards; damaged pipeline; and platform repair material. This was not seen as a Jones Act violation because the goods have been seen as a necessary equipment.

    However, if the proposal is materialized, foreign-flagged vessels would not be able to carry any of the “items” listed above, and would be violating law if they did.

    While the U.S. vessel owners have welcomed the proposed changes, saying the move will secure work for the U.S. flagged ships and the U.S. workers, not everybody is happy.

    Hasty proposal

    Members of the International Marine Contractors Association (IMCA) with vessels active in US waters, together with their clients, have expressed “serious” concern over the “hasty” proposals by the Customs and Border Protection agency to revoke longstanding decisions made over the last 40 years concerning the Jones Act.

    According to the IMCA, these proposals have been introduced with no prior consultation, in the final two days of the Obama Administration, allowing only 30 days for public comment.

    The intention is to prevent non-Jones Act qualified vessels transporting merchandise between coastwise points. However, the effect may be to prevent all foreign flag construction vessels working in the United States. The proposals would also affect US flag vessels which are not coastwise qualified, the IMCA says.

    “We understand the drive to protect US tonnage given the difficulties in the PSV (platform supply vessel) market today, but the deep-water construction market represents a very different sector with very different vessels and technologies,” says IMCA’s Chief Executive, Allen Leatt. “It is a truly international market, as no single domestic market can support the heavy investments of these assets. Consequently, there is a real risk to damaging the whole Gulf of Mexico market as the unintended consequences do not seem to have been thought through.

    IMCA wants more time

    Leatt said: “The Obama Administration attempted similar changes in 2009, but discontinued the effort in the face of serious and substantial concerns raised by a multitude of stakeholders. We are seeking an extension of time for public comment, so that a proper reflection and analysis of the impact can be assessed.

    “Stability in the workings of the Jones Act has enabled many successful businesses to be established in the US Gulf States, both offshore and onshore, over the last 40 years, creating huge numbers of US jobs. Given the tough times our industry has endured in recent years, this additional risk to jobs is very concerning if oil companies are faced with a lack of capacity in the market and inevitably higher costs.

    “The Trump Administration has called for a freeze pending a review of all regulatory initiatives; equally it is well known that President Trump is ambitious for the US to increase domestic production. These proposals seem to run contrary to both objectives.”

    U.S. industry reps rejoice

    The American Maritime Partnership (AMP) – which describes itself as the voice of the U.S. maritime industry – on Monday said the U.S. Customs & Border Protection (CBP) move would “restore American jobs by correcting previous letters of interpretations of the Jones Act.”

    “The men and women of the American maritime industry commend the U.S. Customs and Border Protection’s efforts to rightfully restore over 3,200 American jobs to the American economy and close loopholes that gave preference to foreign workers and foreign shipbuilding,” said Tom Allegretti, Chairman of the American Maritime Partnership. “We applaud President Trump’s commitment to ‘buy American and hire American,’ and the correct and lawful interpretation of the Jones Act will ensure the preservation of American jobs and maintenance of the U.S. shipyard industrial base, both of which are critical to our economic security and national security.”

    “AMP joins a growing list of government and industry leaders that understand the importance of restoring American jobs to the American economy and support the restoration of this lawful interpretation of the Jones Act, which governs the transportation of equipment and cargo between coastwise points,” the organization said.

    The Offshore Marine Services Assiciation’s President Aaron Smith, also supports the CBP proposal.

    He said: “The Offshore Marine Service Association (OMSA) applauds the Administration’s strong step to restore the congressional intent of the Jones Act. This Notice opens a domestic market to U.S. mariners on U.S.-built vessels, owned by U.S. companies. The offshore service industry is ready, willing, and capable of completing this work, having recently invested $2 billion in U.S. shipyards on vessels tailored to safely completing this work.”

    http://www.offshoreenergytoday.com/imca-slams-hasty-jones-act-move/
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    US Rig Count Increases 17 This Week to 729; Oklahoma up 6


    The number of rigs exploring for oil and natural gas in the U.S. increased by 17 this week to 729.

    A year ago, 571 rigs were active.

    Houston oilfield services company Baker Hughes Inc. said Friday that 583 rigs sought oil and 145 explored for natural gas this week. One was listed as miscellaneous.

    Oklahoma increased by six rigs, New Mexico and Texas were each up by four and Alaska, Arkansas, Colorado and Wyoming each increased by one.

    Louisiana lost one rig.

    California, Kansas, North Dakota, Ohio, Pennsylvania, Utah and West Virginia were all unchanged.

    The U.S. rig count peaked at 4,530 in 1981. It bottomed out in May at 404.

    http://abcnews.go.com/Business/wireStory/us-rig-count-increases-17-week-729-oklahoma-45258229
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    U.S. LNG exports hit record high in January

    U.S. LNG exports hit record high in January

    Cheniere’s Sabine Pass liquefaction plant in Louisiana exported fifteen LNG cargoes in January, setting a new record for U.S. monthly exports, the Energy information Agency confirmed in its weekly natural gas report issued on Thursday.

    The Sabine Pass facility, first of its kind to ship U.S. shale gas overseas, started exporting LNG in February last year and has since then exported more than 65 cargoes worldwide.

    Previously, Sabine Pass monthly exports were the highest in December, with twelve cargoes leaving the facility. These cargoes went mostly to Asia, where cold winter temperatures increased residential heating demand and rising spot LNG prices led to larger price spreads between the Atlantic and Pacific basins.

    According to the agency, natural gas pipeline deliveries to the Sabine Pass liquefaction terminal averaged 1.8 Bcf/d for the week ending February 1, unchanged from the previous week.

    “Four vessels (combined LNG-carrying capacity of 14.1 Bcf) departed Sabine Pass last week,” EIA said in the report.

    Henry Hub drops

    Natural gas spot prices in the U.S. fell at most locations in the week ending February 1 with the Henry Hub price dropping 13¢ from last Wednesday.

    The Henry Hub spot price decreased from $3.25/MMBtu last Wednesday to $3.12/MMBtu two days ago, EIA said in its report.

    The agency noted that temperatures moderated throughout the report week almost everywhere except for in the Northeast. As a result, prices generally fell in the report week.

    At the Chicago Citygate, prices decreased 14¢ to $3.08/MMBtu this Wednesday while prices at PG&E Citygate in Northern California fell 16¢, to $3.50/MMBtu.

    http://www.lngworldnews.com/u-s-lng-exports-hit-record-high-in-january/
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    Top Trader Vitol Sees Oil Rattled as Trump Makes Market Fret


    Donald Trump and global crude producers are set to take prices on a bumpy ride this year, according to the world’s biggest independent oil trader.

    As investors are kept on tenterhooks over U.S. policies and whether OPEC and other nations will curb output as pledged, global benchmark Brent crude may vacillate between $52 and $62 a barrel, according to Kho Hui Meng, the head of the Asian arm of Vitol Group. The market’s structure could also shift in the third quarter, with near-term cargoes turning costlier than those for later delivery, flipping from the other way around.

    “I think this market is going to be very volatile,” Kho, the president of Vitol Asia Pte., said in an interview in Singapore. “People are worrying about U.S. policy. With the new administration, a lot of things are being speculated. So we can’t predict the future, we just have to wait.”

    The sentiment reflects the uncertainty gripping markets amid Trump’s ascent, with traders of everything from currencies to metals and stocks trying to decipher the effects of measures by the leader of the world’s biggest economy. The oil market has been ruffled by the prospect of more geopolitical tensions on his harder line on major producer Iran. He’s also mooted a border tax on imports, which Goldman Sachs Group Inc. says had a low chance of being introduced but could trigger an oil selloff if implemented.

    Trading companies such as Vitol and rivals including Trafigura Group and Glencore Plc could reap rewards from volatility. Vitol’s $1.6 billion in earnings in 2015 were boosted as it profited from price swings in the energy market. It posted a 42 percent decline in first-half 2016 profit amid fewer opportunities to benefit from price changes.

    The company, which is formally incorporated in Rotterdam but operates from locations including Geneva, London, Singapore and Houston, has experienced strong growth over the last 20 years on the back of expanding oil trade, large price swings and, more recently, investment in storage and refining. In 1995, Vitol earned just a little over $20 million.

    Oil traders often look to take advantage of a market structure known as contango -- where future prices are higher than current levels, allowing investors to buy oil cheap, store it in tanks or ships and lock in a profit for a later sale. But with global producers cutting output, the market may be poised to go into backwardation, when prompt crude is costlier than later cargoes.

    The structure is now “quite flat so people are still watching,” Vitol’s Kho said. “Once the backwardation comes in, which we’re not there yet, then people begin to look at the viability of the floating storages and ultimately they’ll come out.”

    https://www.bloomberg.com/news/articles/2017-02-05/top-trader-vitol-sees-rocky-2017-for-oil-as-trump-ruffles-market
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    Israeli firm launches takeover offer for Ithaca Energy


    Israeli energy company Delek Group has launched a takeover offer for the oil company Ithaca Energy.

    According to Canada-based Ithaca, the offer is for a cash consideration of C$1.95 per share – this equates to £1.20 per share based on the exchange rate on 3 February 2017.

    Ithaca’s board  has unanimously recommended the offer and values the entire issued and to be issued share capital of the company at C$841 million (US$646 million).

    The target company, with assets in the UK North Sea, said the offer offer provides shareholders with the opportunity to “crystallise” the value of their holdings in cash and represents a 12% premium to the TSX closing price of C$1.74 per share on 3 February 2017 and a 16% and 27% premium to the 30 day and 60 day volume weighted average prices respectively.

    The offer implies a total enterprise value of approximately US$1.24 billion.

    Brad Hurtubise, Ithaca’s Non-Executive Chairman, said: “We are very pleased to announce the offer, which provides an attractive opportunity for all shareholders to secure a premium cash value for their investment following a sustained period of share price growth and at a favorable point in the Company’s evolution.”

     “A Special Committee of independent Directors has fully assessed the offer, with input from the Company’s financial advisor and an independent valuator, and believes the Offer is fair and in the best interest of the Company and its shareholders and unanimously recommends that the shareholders tender their shares to the offer.”

    Apart from announcing the takeover offer, Ithaca also provided an update on its Stella development in the UK North Sea. The company said that good progress has been made on completing the remedial work on the FPF-1 electrical junction boxes, with the start-up of production from the Stella field still anticipated “later this month.”

    As for the takeover, this is the third major North Sea deal announced in the past month. Late in January BP said it would sell portions of its interests in the Magnus oil field and some associated pipeline infrastructure in the UK northern North Sea and in the Sullom Voe Terminal (SVT) on Shetland to EnQuest.

    Last week, Shell agreed to sell “a package” of UK North Sea assets to Chrysaor for a fee of up to $3.8 billion, as part of its previously announced $30 billion divestment program.

    http://www.offshoreenergytoday.com/israeli-firm-launches-takeover-offer-for-ithaca-energy/
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    Border Adjustment will lift WTI?

    The idea — championed by Republican leaders and now under fresh consideration at the White House — includes a “border-adjustment” provision: taxes raised on imports and waived on exports. Commodity traders have been handicapping whether that will happen, and whether it gets applied to oil.

    Analysts at Goldman Sachs Group earlier this week gave such a proposal a 20% chance of passing. But the fact this is even possible makes it worth outlining how dramatic all the changes would be.

    If it passes, the change will be transformative. It would jolt U.S. oil prices up 25% compared to international prices, Goldman said Tuesday. U.S. oil would flip from a $2.50 discount to international oil today to become $10 more expensive. That would drive up U.S. production and refiners would likely buy more of that oil, then pass higher prices directly on to consumers. Drivers would pay an extra 30 cents a gallon at the pump.

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    Enterprise says Seaway pipeline to resume service by Feb. 7


    Enterprise Products Partners LP's Seaway pipeline is expected to resume service on or before Tuesday following its closure due to a leak in Collin County, Texas, earlier this week, the company said on Thursday.

    The company continued to make progress in repairing its 30-inch (76-cm) diameter pipeline, which was struck by a third-party contractor on Monday, according to a company statement.

    The 400,000-barrel-per-day pipeline, which brings crude from Cushing, Oklahoma, down to the U.S. Gulf Coast, is a joint venture between Enterprise Products Partners LP, the operator, and Enbridge Inc.

    http://www.reuters.com/article/usa-pipeline-enterprise-seaway-idUSFWN1FN10S
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    Surge in USGC HSFO liquidity linked to hedging, export demand: sources


    More than a half-million barrels of US Gulf Coast HSFO have traded in the Platts Market on Close assessment process through just two days due to a combination of export demand and hedging, sources said.

    A total of 585,000 barrels traded in the first two days of February, or around 25% of the total volume in January that traded for USGC HSFO, S&P Global Platts data showed.

    One USGC trader said the beginning of a month is a key time for people who want to manage hedging positions in the paper market. This can also result in higher volume moving in the physical market, the trader added.

    The trader also said some companies who have ships loading for export in Early February may need to fill up on barrels, or want to make sure to bid in the MOC process to keep the arbitrage they made on paper work in the physical market.

    Other USGC traders were less convinced on the amount of export demand currently available in the USGC. A second USGC trader said the arbitrage is closed by as much as 90 cents/b to Singapore, with a third trader saying current bids in the MOC process make it "impossible" to export any material to Asia at a profit.

    "It really doesn't make sense to be buying at these levels," the trader said. The trader also said the USGC was flush with supply, and finding motivated sellers outside the MOC process has not been an issue.

    USGC HSFO was assessed at $46.42/b, the first time the product had been assessed at a premium to the front-month swap since November 22.

    Trafigura purchased 360,000 barrels through the first two trading days, accounting for around 60% of the total volume in February. It also matches the amount the trading house purchased for the entire month of February.

    A fixture of 130,000 mt of dirty petroleum products chartered by Trafigura was heard fixed last week out of the USGC to the Far East for loading February 1-3.

    Sources from Trafigura did not immediately respond to comments on the increased trading activity.

    http://www.platts.com/latest-news/oil/houston/surge-in-usgc-hsfo-liquidity-linked-to-hedging-21780475
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    U.S. gasoline stocks are rising much faster than usual


    U.S. gasoline stocks are rising much faster than normal at the start of the year, threatening to leave refiners struggling to clear an overhang of motor fuel later in the year.

    Gasoline stockpiles rose by almost 21 million barrels during the first 27 days of 2017, compared with an average increase of less than 12 million barrels at the same time of year during the previous decade.

    Stocks have only risen this fast on one other occasion in the last 10 years, and that was in 2016, when refiners and blenders ended up with a large surplus which lingered through the summer

    Stocks hit a seasonal record of 257 million barrels on Jan. 27, according to an analysis of data from the U.S. Energy Information Administration.

    Stocks are now 4 million barrels higher than in 2016 and almost 26 million barrels higher than the 10-year seasonal average.

    Stocks are rising faster than normal across the eastern United States but especially on the East Coast and in the Midwest.

    East Coast stocks have risen by more than 8 million barrels since the start of the year, almost double the average increase of 4.7 million barrels .

    Midwest stocks are also up by 8 million barrels, more than double the average increase of 3 million barrels at this time of year.

    Gasoline stocks normally rise throughout January and sometimes into early February as refiners and blenders build reserves ahead of the refinery maintenance season.

    But the stock build in 2016 was exceptionally large as healthy gasoline margins encouraged refiners to process an unusually large volume of crude through the winter months.

    Something similar appears to be happening in 2017 with refineries processing much more crude than normal despite unusual stock levels.

    Refinery throughput has been running around 200,000 to 400,000 barrels per day higher than in 2016 since the turn of the year.

    Refining margins have generally been higher than during the winter of 2015/16 which has encouraged refineries to increase their processing ("Key commodity prices and differentials", Valero, Jan 2017).

    Hedge funds have established the largest bullish position in gasoline futures and options since July 2014 in anticipation that prices will rise.

    The forthcoming maintenance season should lower refinery throughput and start cutting reported stock levels in the next 1-2 weeks. If maintenance is longer and heavier than normal it could help eliminate excess inventories.

    But the build up of stockpiles and concentration of hedge fund positions will eventually have to be unwound at some point and could temper any further rise in gasoline margins.

    http://www.reuters.com/article/usa-gasoline-kemp-idUSL5N1FO3P4
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    U.S. FERC approves ETP Rover natgas pipeline from Penn to Ontario


    U.S. energy regulators late on Thursday approved construction of Energy Transfer Partners LP's Rover natural gas pipeline from Pennsylvania to Ontario, according to a filing made available on Friday.

    The 3.25 billion cubic feet per day project is one of several awaiting decisions from the U.S. Federal Energy Regulatory Commission (FERC) while the agency still has a quorum and can make such rulings.

    ETP has said it expected to put the first phase of the $4.2 billion project on line during the second quarter of 2017 and the remainder in service during the fourth quarter.

    FERC leadership changes last week prompted several energy firms to request the agency make decisions this week on proposed gas pipelines to avoid potential construction delays.

    President Donald Trump appointed Cheryl LaFleur as acting chair, which prompted Norman Bay, the former chairman, to announce he would step down on Feb. 3, leaving the commission without the quorum needed to conduct major business.

    Other companies hoping for decisions this week include units of Spectra Energy Corp on the Nexus pipeline, Williams Cos Inc on Atlantic Sunrise, TransCanada Corp on Leach and National Fuel Gas Co on Northern Access.

    Analysts at U.S. financial services firm Cowen and Co said on Friday the approval of construction of Rover was a positive for summer gas differentials in the Appalachia region.

    The premium of gas at the Henry Hub benchmark in Louisiana over the Dominion South hub in southwest Pennsylvania's Marcellus Shale narrowed to a near three-month low on Thursday and put it within a penny of its lowest in two years.

    Cowen said Energy Transfer can start cutting trees, which must be completed by March 31, but cannot build facilities until FERC staff is satisfied on the Stoneman House issue. Stoneman was a historic house in Ohio that the company demolished.

    Cowen said the approval will benefit several companies that plan to ship gas on Rover, including Antero Resources Corp, Eclipse Resources Corp, EQT Corp, Gulfport Energy Corp, Rice Energy Inc, Range Resources Corp and Southwestern Energy Co.

    Analysts at U.S. financial services firm FBR & Co said "failure to issue the Rover permit could have delayed the project by a year due to seasonal construction constraints."

    FBR said FERC may consider Spectra's Nexus and NFG's Northern Access projects before Bay departs. But FERC has not yet issued any notices on Nexus or Northern Access.

    http://www.reuters.com/article/us-usa-energytransfer-rover-idUSKBN15I24Y
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    Shell 'ramping up construction' on Pennsylvania chemical complex


    Shell Chemicals has been making progress on a petrochemicals complex designed to leverage affordable feedstocks from Northeast US shale-gas plays, the company said Thursday.

    The company has been "ramping up construction" at the site in Potter Township, Pennsylvania, in the Pittsburgh area that will produce 1.6 million mt/year of polyethylene, Shell CEO Ben van Beurden said in a conference call to discuss fourth-quarter results.

    "We are working our way through regulatory approval," he said. "A lot of site preparation is already done."

    Shell has not set a startup date but has previously targeted early 2020s.

    The site will host a seven-furnace ethane cracker which will feed into three polyethylene production lines -- gas-phased high density polyethylene, slurry HDPE, and linear low density polyethylene.

    The location of the project is unique, as recent waves of US ethylene and polyethylene projects have almost exclusively targeted the US Gulf Coast.

    The site will represent the largest ethylene and polyethylene capacities in the region, but Shell pointed to significant advantages in the location.

    "It sits on top of the largest feedstock in the United States," van Beurden said.

    Shell expects to feed the steam cracker with affordable ethane sourced from the Marcellus and Utica shale basins.

    Additionally, more than 70% of North American polyethylene demand stands within a 700-mile radius of Pittsburgh, according to Shell.

    "It's right in the middle of where the main polyethylene demand in North America is," van Beurden said.

    Shell made final investment decision on the project in June. Shell exercised its option to purchase the site in November 2014. In August 2013, Shell said it had secured ethane supply commitments from Hilcorp Energy, Consol Energy, Seneca Resources and Noble Energy.

    http://www.platts.com/latest-news/petrochemicals/houston/shell-ramping-up-construction-on-pennsylvania-21780472
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    Alternative Energy

    Solar power, electric vehicles to upend oil, gas markets by 2050: report


    Rapid growth in solar photovoltaic (PV) power and storage could completely replace coal in power generation and cut natural gas' share of the market to just 1% by 2050, according to a new report by environmental group Carbon Tracker Initiative.

    At the same time, electric vehicles could reach two-thirds of the global road transport market, cutting demand for oil by 25 million b/d compared with current levels.

    The report, titled "Expect the Unexpected", concludes that "a 10% shift in market share can be crippling for incumbents, such as in the value destruction experienced by EU utilities and the near collapse of the US coal sector."

    The authors concede that this has yet to be tested in the oil or gas sectors.

    The 10% threshold "is a hypothetical threshold that we derive from previous experience," Luke Sussams, one of the report's authors, said in an interview. "Because this 10% share hasn't yet been captured by solar or PV, there is no way to know how the oil and gas sectors will react."

    The cost for solar PV cells have dropped by 85% since 2010, according to the report, and this unexpectedly rapid development caught European utilities unawares.

    "Between 2008 and 2013, renewable power generation, of which solar PV was a big part, grew by 8% in total," according to the report. "The five major European utilities were very much misaligned with this shift, costing them Eur100 billion in value over the period."

    In a scenario where nations adopt ambitious commitments to UN climate targets, including widespread deployment of renewables, "coal is phased out of the power mix by 2040 -- 10 years earlier than with original solar PV cost assumptions -- and natural gas follows soon afterwards."

    The report says most projections of the decrease in solar costs are conservative compared with historical evidence, and that this may persuade incumbents that growth will be slower than Carbon Tracker forecasts.

    The trajectory for electric vehicle (EV) costs has followed a similar pattern, according to the report's authors. "According to 2016 research by the US Department of Energy, battery costs have fallen from $1,000/kWh in 2008 to $268/kWh in 2015; a 73% reduction in seven years."

    As a result, electric passenger vehicles are expected to be cost-competitive with internal combustion vehicles as soon as 2020, and under the most conservative scenario may hold a market share of as much as 21% by then.

    "We're crossing the threshold where EVs are competing with internal combustion vehicles," Sussams said. "Our scenario is that EVs are fully competitive by 2020, when battery costs are around $100/kWh. Tesla and General Motors are saying they will be able to deliver batteries at that cost."

    The outcome of the most favorable scenario would be a decline in oil demand of 16.4 million b/d by 2040, and a decrease of 24.6 million b/d in demand by 2050, Sussams said.

    Many oil companies, as well as the International Energy Agency, forecast oil demand reaching more than 100 million b/d by 2040, from its current level of around 96 million b/d.

    The forecast for EV numbers exceeds predictions from the International Energy Agency. Carbon Tracker predicts a global EV fleet of 1.1 billion by 2040, whereas the IEA's recent EV Outlook report sees 150 million vehicles on the road by the same point.

    "We think cost savings will overwhelm what are partly consumer preferences," Sussams said. "We're using a least-cost model that doesn't take into account exogenous factors," such as policy options available to governments.

    Under most of the scenarios modeled by Carbon Tracker, coal demand peaks in 2020 at around 3.7 billion mt of oil equivalent (toe) a year before falling back to 1.5 billion mtoe/year in 2050, while oil demand reaches its highest level between 2020 and 2030 at more than 4 billion mt/year before falling back to 3.3-3.4 billion mt/year in 2050.

    However, despite its prediction that natural gas' market share in the power sector may decline to as little as 1% by 2050, most Carbon Tracker scenarios see total demand for gas increasing from about 3.8 billion mtoe/year in 2020 to between 4 billion mtoe/year and 4.5 billion mtoe/year by 2050, due mainly to increased heating consumption.

    "There are certain elements of the model that see an uplift in gas demand," Sussams said. "Higher EV deployment would incentivize industry and domestic sectors to consume more."

    http://www.platts.com/latest-news/electric-power/london/solar-power-electric-vehicles-to-upend-oil-gas-21780474

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    Base Metals

    Southern Copper sees 1.5 million mt/y copper production by 2023


    Southern Copper expects to increase copper production by 66% to 1.5 million mt/y by 2023 based on a $5.65 billion pipeline of projects in Peru and Mexico, CFO Raul Jacob said Thursday.

    The company aims to match last year's 900,000 mt output in 2017, with annual production rising to 972,300 mt in 2018 and 1.01 million mt and 1.13 million mt in 2019 and 2020, respectively, Jacob said. The company also expects to produce 80,800 mt of zinc, 19,700 mt of molybdenum and 16.6 million oz of silver this year.

    New copper output will come from the company's El Arco, El Pilar and Pilares projects in Mexico, and the Toquepala and Cuajone expansions and Tia Maria and Los Chancas projects in Peru, Jacob said.

    "We believe we can achieve this through one of the best pipelines of profitable projects," Jacob said on an earnings conference call.

    Southern has approved $1.1 billion in capex for this year, with $1.6 billion and $1.2 billion planned for 2018 and 2019, respectively, Jacob said. Southern has lined up $2.9 billion in projects in Peru alone, he said.

    The company aims to finish a feasibility study this year for the $1.8 billion Los Chancas project and hopes to secure government approval for an environmental impact study by 2019, Jacob said. The project will produce an estimated 100,000 mt/y of copper and 4,500 mt/y of molybdenum.

    Southern been has working on community relations at the $1.4 billion Tia Maria project since environmental protests in 2015 left four dead, 300 injured and dozens arrested, forcing the government to declare a state of emergency in the area. Tia Maria is expected to produce 120,000 mt/y of copper.

    Southern, which cut cash costs to 95 cents/lb last year, aims to further reduce costs to 80 cent/lb this year due to lower energy costs in Peru and higher credits from byproducts such as silver and molybdenum, he said.

    Economic recovery in China and the EU plus strong growth in the US and a dearth of new mines are driving copper prices, according to Jacob. Southern expects copper demand to increase by 2%-2.5% this year and copper supply to rise by 0.5%-1%, he said.

    "We're starting 2017 seeing the first signs of the market showing a structural deficit caused by lack of investment," Jacob said. "After five years of copper price reductions, we're seeing supplies underperforming market demand."

    Southern's fourth-quarter profit almost tripled to $172 million as sales rose 11.5% to $1.4 billion and costs fell, the Phoenix, Arizona-based company reported February 1.

    http://www.platts.com/latest-news/metals/lima/southern-copper-sees-15-million-mty-copper-production-21780476
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    Freeport warns of cuts as it awaits Indonesian export permit


    Freeport-McMoRan Inc, the world's biggest publicly-listed copper miner, said on Friday it will cut staff, spending and production in Indonesia if it does not get a new export permit by mid-February, amplifying a warning it made last week.

    The Phoenix-based miner said it continues to work with the Indonesian government to resolve issues after exports of its copper concentrate were halted Jan. 12. The Southeast Asian country banned export shipments of semi-processed ore to boost its local smelter industry.

    Freeport shares were trading 5.7 percent lower at $15.85 on Friday afternoon. Last week, the stock dropped nearly 6 percent after the company outlined its Indonesian challenges, issued disappointing financial results and cut its 2017 production forecast.

    Freeport said it has the right to export copper concentrate from its Grasberg mine in Indonesia without restriction or export duties under its current contract, and was considering alternatives to enforce its rights.

    For every month it awaits export approval, Freeport said its share of production will be reduced by about 70 million pounds of copper and 70,000 ounces of gold.

    "A prolonged production cut could push the market into deficit and prices much higher," RBC Dominion analyst Fraser Phillips said in a note to clients.

    Copper prices touched a two-month peak earlier this week as workers at the world's largest copper mine, Escondida in Chile, voted to strike. On Friday, prices drifted down to $5,772 a tonne, near a two-week low, as the mine's workers resumed wage talks.

    If the export delay in Indonesia continues, Freeport said it would need to make "near-term" production cuts to match capacity at its smelter, which processes about 40 percent of its concentrate production.

    It will also need to "significantly adjust its cost structure," reduce staffing, investments on underground development projects and a new smelter, and spending with suppliers.

    Delays for another new export license, for anode slimes required in smelter operations, could further hurt operations, Freeport said.

    To gain a new special mining license, Freeport must agree to pay taxes and royalties that it is currently exempt from and divest up to 51 percent of its Indonesian unit, up from 30 percent under current rules. To date, it has divested only 9.36 percent.

    http://www.reuters.com/article/us-indonesia-freeport-mcmoran-idUSKBN15I1YZ
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    Teck Resources extends contracts with two Chile copper mine unions


    Teck Resources said on Friday that two of the three unions at its Quebrada Blanca copper mine in Chile have agreed to extend their current contracts for 15 months.

    The managers' union will extend its contract through January 2019 and another union representing other workers will do so through March 2019.

    Those contracts cover some 354 employees at the mine.

    The extensions help Teck avoid the possibility of prolonged contract negotiations that could lead to strikes and lost production.

    Quebrada Blanca, which produced 31,900 tonnes of copper in from January through November 2016, is relatively small by Chilean standards.

    http://www.reuters.com/article/teck-res-chile-labor-idUSL1N1FO1O0
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    Steel, Iron Ore and Coal

    Smoggy Beijing to cut coal use 30 percent this year: mayor


    ntensify its battle against choking air pollution this year and aims to cut coal use by 30 percent, state news agency Xinhua cited mayor Cai Qi as saying.

    Despite repeated pledges to get tough, large parts of northern and central China have been engulfed in thick smog again this winter, often for days at a time, disrupting flights, port operations and schools.

    Cai said the government will take even more steps this year, including cutting coal use by helping residents of 700 villages to use clean energy, Xinhua said.

    "We will try to basically realize zero coal use in six major districts and in Beijing's southern plain areas this year," Cai said.

    "We will slash coal use by 30 percent to less than 7 million tonnes in 2017," he added.

    Beijing will also remove 300,000 old vehicles from the roads this year and promote the use of new energy cars, Xinhua said.

    Cai added that better regional coordination was needed.

    "It is an urgent task for Beijing and its neighboring areas to work together and improve air quality in the region."
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    Indonesia's February HBA thermal coal price falls 3% on month


    Indonesia's Ministry of Energy and Mineral Resources set its February thermal coal reference price, also known as Harga Batubara Acuan or HBA, at $83.32/mt, down 3.4% from January but up about 64% from a year ago.

    The ministry had set the February 2016 HBA price at $50.92/mt, the lowest recorded since the HBA's inception in January 2009. The January 2017 HBA was set at $86.23/mt.

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

    In January, the daily Platts FOB Kalimantan 5,900 kcal/kg GAR coal assessment averaged $72.11/mt, down from $75.94/mt in December, while the daily 90-day Platts Newcastle FOB price for coal with a calorific value of 6,300 kcal/kg GAR averaged $83.73/mt, down from $86.31/mt in December.

    The HBA price for thermal coal is the basis for determining the prices of 75 Indonesian coal products and calculating the royalty producers have to pay for each metric ton of coal they sell.

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

    http://www.platts.com/latest-news/coal/singapore/indonesias-february-hba-thermal-coal-price-falls-27762869
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    Inner Mongolia 2016 coal imports surge 86.3pct on year


    North China's Inner Mongolia autonomous region imported 25.5 million tonnes of coal in 2016, surging 86.3% year on year, data from Hohhot customs showed on February 3.

    The average import price stood at 246.2 yuan/t ($35.7/t), up 6.9% from the previous year, data showed.

    Meanwhile, Inner Mongolia imported 9.74 million tonnes of iron ore in 2016, with average price at 305.4 yuan/t.

    Ganqimaodu border crossing in the region imported 12.87 million tonnes of coal from neighboring Mongolia in 2016, soaring 108.91% year on year, accounting for 50.5% of the total coal imports.

    http://www.sxcoal.com/news/4551871/info/en
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    Glencore 2016 coal production slumps 5% on year to 125 mil mt

    Glencore 2016 coal production slumps 5% on year to 125 mil mt

    Diverse miner Glencore produced 124.9 million mt of coal during 2016, falling 5% year on year, primarily due to the divestment of Optimum Coal in South Africa, the company said Thursday.

    The company said in its 2016 production report that South African export thermal coal output for the year fell 13% from 2015 to 17.2 million mt, while domestic output from its mines in the country dropped 30% to 12.1 million mt. Glencore disposed of Optimum Coal to Tegeta Exploration & Resources in April after having started business rescue proceedings in early August last year. It also closed some smaller mines in the country during the year.

    Australian export thermal coal production for 2016 was steady on the year at 52.5 million mt, while Australian domestic production climbed 44% to 5.6 million mt, the miner said.

    The miner attributed this to planned increases at the Mangoola, Rolleston and Ravensworth North mines and improved production at South Blakefield, which had experienced "geological challenges" in 2015.

    Its Australian mines produced 10% less coking coal during the year at 5.3 million mt due to geological issues at the Oaky Creek mine earlier in the year, with semi-soft coal output up 17% on-year to 4.2 million mt.

    In Colombia, heavy rainfall resulted in thermal coal production from Glencore's Prodeco mine dropping 2% on-year to 17.3 million mt.

    Its 33.3% pro-rata share of production from the Cerrejon mine for the year was 10.7 million mt, 4% lower from 2015, also due to weather-related disruptions.

    Glencore said it planned to produce around 135 million mt of coal in 2017.

    http://www.platts.com/latest-news/coal/london/glencore-2016-coal-production-slumps-5-on-year-26653597
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    Brazil's Vale more optimistic than market on iron-ore prices – exec


    Brazilian miner Vale is more optimistic than the market consensus in terms of iron-ore prices for 2017, Investor Relations Director Andre Figueiredo told reporters on Thursday.

    Figueiredo also said Vale had likely made a profit in 2016, and should pay dividends equivalent to about 25% of net profit.

    http://www.miningweekly.com/article/brazils-vale-more-optimistic-than-market-on-iron-ore-prices-exec-2017-02-03
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    Japan ferrochrome price rises as low offers disappear amid active trade

    Japan ferrochrome price rises as low offers disappear amid active trade

    The S&P Global Platts CIF Japan ferrochrome price rose to $1.13-$1.20/lb CIF Japan Friday, from $1.10-$1.15/lb CIF Japan a week ago as offers as low as $1.10/lb were no longer heard amid active trade.

    One Japanese steelmaker bought 200-300 mt at around $1.13/lb CIF main Japanese port this week, for delivery over March-May.

    An Indian producer reported a sale at $1.25/lb CIF Japan for a few container loads.

    One Japanese trader said he bought at around $1.20/lb CIF Japan, but declined to elaborate further.

    A second Japanese trader said he was offered $1.19/lb CIF Japan, while a third Japanese trader was offered $1.13/lb CIF Japan.

    The deals and offers were for 10-50 mm lumps with 60%-65% chrome, maximum 8%-9% carbon, 8%-9% silicon, 0.03%-0.05% phosphorous and 0.05%-0.06% sulfur.

    Another Japanese consumer bought over 200 mt of low-silicon material at $1.28-$1.29/lb CIF Japan, loading February or later, said two sources familiar with the deal.

    Offers were $1.35-$1.40/lb CIF in Asia, one producer said two weeks ago. The consumer bought 10-50 mm lumps with minimum 65% chrome, maximum 2% silicon, 8%-9% carbon, the sources said.

    Spot trade was active as Japanese consumers who have finalized April 2017-March 2018 production plans started to source for the upcoming quarter, traders said.

    Three other steelmakers are expected to issue buy tenders this month, for April-June consumption, said sources.

    Japanese market participants are closely monitoring the reorganization of Japanese specialty steelmakers as it may impact raw material supply flow.

    Two stainless steelmakers Nippon Steel & Sumikin Stainless Steel Corp. (NSSC) and Nisshin Steel will merge next month, and JFE Bars & Strip's Sendai steelmaking plant will move to JFE Steel in April.

    The mills are currently discussing optimization of their steel production facilities, that may lead to closure of some lines or furnaces. Decisions on raw material procurement have not been made yet, mill sources said.

    "The stainless mills use mostly South African and Kazakhstan ferrochrome, on long-term contracts. It is a matter of spreading out the volume shares among the three producers who have contracts," said one trader.

    JFE B&S Sendai plant has been buying ferrochrome via quarterly tenders, mostly from India. Meanwhile, JFE Steel sources from Kazakhstan and South Africa on contracts.

    It was still uncertain whether JFE B&S will continue the quarterly tenders. The mill has not used Kazakhstan ferrochrome -- with higher chrome content but less iron -- but its furnace is capable of using Kazakh grade, said sources in the JFE group.

    "The likely scenario is that the Sendai plant will be sustained and will inherit the work of JFE Steel. Raw material purchase means will depend on prices realized by spot tenders and term contracts, which is cheaper," said one source.

    Elsewhere in Asia, one major steelmaker has closed January-March term contract at around $1.20/lb CIF for 10-50 mm lumps with minimum 60% chrome, maximum 8%-9% carbon, 3%-4% silicon. The volume is over 3,000 mt/month, sources said.

    The 48%-52% charge chrome was assessed at $1.04-$1.30/lb CIF China Friday, unchanged from a week ago. The 58%-60% ferrochrome was assessed at $1.04-$1.15/lb CIF China this week, up from $1.04-$1.05/lb CIF a week ago.

    Producers said they were not accepting Chinese buyers' bids at $1.04/lb CIF as sales to Japan and South Korea have closed 10-15 cents/lb higher in the past two weeks.

    http://www.platts.com/latest-news/metals/tokyo/japan-ferrochrome-price-rises-as-low-offers-disappear-27762866

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