Mark Latham Commodity Equity Intelligence Service

Friday 15th May 2015
Background Stories on www.commodityintelligence.com

News and Views:

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    Macro

    Kansas City Southern Gives Disastrous Economic Update

    How does a company which reveals its business is so disastrous it not only has to withdraw revenue and volume guidance "due to uncertainty around energy-related markets, F/X impact and U.S. fuel price" and says that:

    Q2 to Date Revenue and Carload Growth Well Behind Q1 Trends
    Second Quarter Energy Segment Decline Accelerating
    Service Issues are Impacting Growth
    Key US Economic Indicators Have Deteriorated Since Late ‘14
    Challenging U.S. Rail Volume Environment in Q2

    ... cover it all up in hopes of avoiding a total collapse in its stock price? Simple: it announces a $500 million stock buyback program.

    Because the more one's business deteriorates, the greater the buyback.

    http://www.zerohedge.com/news/2015-05-14/kansas-city-southern-gives-disastrous-economic-update-pulls-guidance-announces-stock

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    Oil and Gas

    Eni’s Libya output above pre-war levels at 300,000 barrels a day

    Eni SpA is producing around 300,000 barrels of oil per day in Libya, bringing output above pre-civil war levels despite ongoing strife in the African country.

    “Our commitment in Libya is very strong, we are there, we are producing about 300,000 barrels per day,” Eni Chief Executive Officer Claudio Descalzi said in an interview in Rome after the company’s shareholders’ meeting.

    The number cited is higher than the 280,000 barrels a day that Rome-based Eni produced in Libya before the ousting of former leader Muammar Qaddafi in 2011. Eni, Libya’s biggest oil producer, is one of the few foreign companies still operating there even after a face-off between rival governments and a surge in strikes and terrorist attacks forced most foreign businesses to leave the country.

    “We don’t have any expatriates there, all the expats are offshore and onshore we have local staff working,” Descalzi said. While the company is concerned about potential terrorist attacks, he said there is a strong push for dialogue among the warring parties and he’s confident the situation will improve in Libya “in the medium-to-long term.”

    Descalzi also said he expects the oil price to average around $55 to $60 this year, and to rise to about $70 by 2016. Low oil prices contributed to a 46 percent slump in Eni’s first quarter net income.

    “There is a positive trend because the demand for oil is increasing and the supply is falling,” he said.

    http://fuelfix.com/blog/2015/05/14/enis-libya-output-above-pre-war-levels-at-300000-barrels-a-day/#30267101=0

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    Freeport CEO: DOE advised against LNG exports to China

    American companies have been reportedly advised by the United States Department of Energy not to accept Chinese investment into LNG export projects.

    As Freeport LNG chief executive Michael Smith told Reuters, DOE advised the company to carefully select its customers as dealing with Chinese investors could create a political issue.

    He said that due to this advice there is a lack of lucrative deals with Chinese companies. He noted that deals that have been previously signed to export U.S. LNG to Chinese companies are worth billions.

    However, U.S. produced LNG can still end up on Chinese market through secondary deals..

    As Smith said, there is no lack of interest from Chinese companies but Freeport LNG took DOE’s advice and turned down potential customers.

    The Department of Energy said, several projects have been granted authorization to export U.S. LNG to foreign markets including China, adding that final destination of the cargo depends on commercial arrangements and is only reported to the DOE upon delivery.

    Smith added that, due to competitive interest, Freeport LNG will file for a permit to add a fourth liquefaction train to its terminal where construction on the first three trains is already in progress.

    http://www.lngworldnews.com/freeport-ceo-doe-advised-against-lng-exports-to-china/

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    Oil Search warns of upcoming hit to revenue

    Oil Search has warned its revenue will slip in the second quarter of its fiscal year, as tumbling oil prices start to weigh on contract prices for liquefied natural gas.

    The Australian company (OSH) is a partner of Exxon Mobil at the $US19 billion PNG LNG project in Papua New Guinea, which started shipping its first cargoes of the fuel to Asian customers in May last year.

    Due to a roughly three-month time lag between spot oil prices and LNG contract prices, Oil Search’s revenue remained relatively robust during the first quarter of 2015, chairman Rick Lee told the company’s annual shareholder meeting in Port Moresby.

    But he added the company’s LNG revenue was expected to fall in the second quarter, as an oil-price slump that commenced in late 2014 starts to have an impact.

    “While the oil price has since rallied a little, it is still trading some 40 per cent lower than the average price realised in 2013,” he said.

    Oil Search’s balance sheet is relatively strong, owing to revenue from the start of LNG shipments earlier this year.

    The company said the Exxon-led venture might make a final decision on an 50 per cent expansion in the size of PNG LNG by 2017.

    A separate LNG venture in the country between Oil Search, Total and Interoil hoped to make a final investment decision on the country’s second LNG project in 2017, too, Oil Search said.

    http://www.theaustralian.com.au/business/news/oil-search-warns-of-upcoming-hit-to-revenue/story-e6frg906-1227356024629

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    Saras to boost Rosneft ties with new trading business

    Italian oil refiner Saras will open a trading business in Geneva in the coming months to boost ties with its Russian investor Rosneft, Chairman Gian Marco Moratti said after reporting a jump in first-quarter core profit.

    The two companies abandoned plans for a trading joint venture last month because of western sanctions over Russia's involvement in the Ukraine crisis, but Saras expects its unilateral move to aid cooperation.

    "We announce the decision to start a trading company in Geneva in the coming months, also with the purpose of developing further the cooperation with Rosneft," Moratti said in a statement without providing further details.

    At the time the joint venture plan was shelved, Saras Managing Director Dario Scaffardi said the company will exchange trading information with Rosneft but without a formal company structure, adding that the new Saras business would be located near Rosneft's trading offices.

    Rosneft bought a 21 percent stake in Saras two years ago and the head of the Russian group, Igor Sechin, has said he would be interested in raising its stake.

    Saras said on Thursday that improved market conditions and a rebound in refining margins pushed comparable core earnings to 144.2 million euros ($165 million) in the first quarter, up from 8.4 million euros in the same period last year.

    Though the figure was up sharply year on year, analysts had expected core earnings of 155 million euros, according to a consensus forecast provided by the company.

    http://www.reuters.com/article/2015/05/14/saras-rosneft-idUSL5N0Y52NH20150514

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    Brazil prosecutors say Petrobras scheme moved $2.1 bln in bribes

    Brazilian investigators believe 6.19 billion reais ($2.1 bln) in bribes were moved in a corruption scheme involving state-run oil firm Petroleo Brasileiro SA, prosecutor Deltan Dallagnol said on Thursday.

    Prosecutors are seeking to restore 6.77 billion reais to public coffers through fines and the return of stolen funds, he said at a press conference to announce criminal charges against four former congressmen.

    http://www.reuters.com/article/2015/05/14/petrobras-corruption-idUSE6N0VG01D20150514

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    Malaysia's Dayang raises stake in Perdana Petroleum

    Malaysia's oil and gas services firm Dayang Enterprise Holdings Bhd is raising its stake in its unit Perdana Petroleum Bhd to 35.51 percent from 29.77 percent, opening the way to a mandatory general offer to take over the latter.

    Dayang is buying a 5.74 percent stake in Perdana Petroleum from Malaysian fund Affin Hwang Asset Management Bhd for 66.6 million ($18.6 million) or 1.55 ringgit per share, according to a local stock exchange filing on Thursday evening.

    The purchase is subject to the approval of Dayang members at an extraordinary general meeting. Once it becomes unconditional, it will be followed by a mandatory general offer to buy the remaining shares Dayang does not own in Perdana Petroleum at 1.55 ringgit per share, and warrants for 84 sen per unit, according to the filing.

    "The proposed acquisition represents an opportunity for Dayang and its subsidiaries to pursue its expansion strategy and long-term objective of evolving into a market leader for the provision of hook-up construction and commissioning services within the oil and gas industry," Dayang said.

    http://www.reuters.com/article/2015/05/14/malaysia-dayang-perdana-idUSL3N0Y55X920150514

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    EnQuest says four-month production rises 20 pct

    Oil producer EnQuest Plc said production rose 20.2 percent in the first four months of the year, thanks to strong performance at its Malaysian asset.

    EnQuest said production rose to 30,768 barrels of oil equivalent per day (boepd) for the four months to April from 25,597 barrels a year earlier.

    The company, which specialises in maximising oil output from old fields that aren't profitable enough for big oil firms, said the start-up of its North Sea Alma/Galia project and Kraken field remained on track.

    EnQuest, which is mostly focused on the North Sea, acquired an interest in the PM8/Seligi oil field in Malaysia last June to grow outside of its core UK market.

    http://www.reuters.com/article/2015/05/15/enquest-results-idUSL3N0Y63LH20150515

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    Delta Air Lines' refinery has stopped importing West African oil - CFO

    May 14 Delta Air Lines Inc's refinery Monroe Energy has stopped importing crude oil from West Africa, the airline's Chief Financial Officer Paul Jacobson said Thursday during a transportation conference that was webcast.

    The Philadelphia-area refinery instead takes its supply from U.S. and some Canadian sources, "dramatically" lowering its transportation costs, Jacobson said. The refinery, forecast to earn about $80 million in the second quarter, is benefiting fully from the U.S. shale oil boom, he said.

    http://www.reuters.com/article/2015/05/14/delta-air-lines-refinery-idUSL1N0Y50V220150514

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    Natural gas prices rise on inventory data

    Benchmark natural gas futures rose in midday trading Thursday after the U.S. Energy Information Administration said inventories rose less than expected.

    The Energy Department agency said that natural gas in storage grew by 111 billion cubic feet for the week ending last Friday. That’s higher than the five-year average for the week, but below what several different analyst firms had projected. A Bloomberg analysis of 19 put the average prediction at a build of 114 billion cubic feet.

    The data suggest that the supply and demand for natural gas are in closer balance than some analysts thought, Tim Evans of Citi Futures said in a note to clients.

    “It’s a bullish report, at least in terms of short-term price impact,” he wrote.

    U.S.  natural gas rose 6 cents on the inventory report, erasing a loss earlier in the trading day and bringing the price to $2.995 per million British thermal unit about midway through Thursday’s action on the New York Mercantile Exchange.

    The price of natural gas has fallen from more than $4 last year as continuing high production from dense shale formations has overwhelmed demand. For much of 2015, the benchmark futures contract for next-month delivery at Louisiana’s Henry Hub has traded well below $3 per million British thermal unit, though it has risen about 20 percent since a mid-April low.

    Prices could keep rising in the long term, as more consumers begin to take advantage of the cheap fuel. Energy companies are  building new gas-fired power plants, petrochemical companies are expanding plants that use gas as fuel and feedstock, and terminals under construction will liquefy gas for shipment abroad.

    http://fuelfix.com/blog/2015/05/14/natural-gas-prices-rise-on-inventory-data/

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    US Gasoline Volumes

    Much of the slowing in overall retail sales is, of course, just a story about fuel costs. With a gallon of regular averaging $2.47 last month versus $3.66 a year earlier, gas-station sales were down 22% from a year earlier.

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    Eagle Ford Shale oil production falls 73K barrels a day as price drops

    New oil wells won’t offset declines in Eagle Ford Shale production in June, according to the Energy Information Administration’s latest projections.

    Crude oil production in the Eagle Ford is projected to be 1.6 million barrels per day in June, down 47,000 barrels per day from May totals, according to the EIA.

    Going back to January, production has declined more than 73,000 barrels per day.

    But that didn’t happen when crude oil was below $50 a barrel as it was earlier this year.

    More than 500 drilling rigs have come out of service in Texas in the past year, with more than 100 of those coming from the Eagle Ford Shale.

    Even with prices flirting with $60 a barrel, statewide and nationwide rig count continues to fall.

    Matador Resources (NYSE: MTDR) has temporarily suspended drilling in the Eagle Ford Shale this year to refocus its efforts in West Texas. The Dallas-based company reported a $50 million loss in the first quarter.

    By contrast, the Permian Basin continues to produce in record amounts with more than 2 million barrels per day projected for June. That’s up nearly 168,000 barrels from January.

    That stacked formation, which stretches into eastern New Mexico, still has 237 rigs going, down from 300 a year ago.

    Pioneer Natural Resources, based in Irving, remains gung ho on its plan to start adding two drilling rigs a month in July, if the price improves. It's also contingent on Pioneer realizing cost savings from oil field service companies and its own drilling efficiencies.

    http://www.bizjournals.com/dallas/blog/morning_call/2015/05/eagle-ford-shale-oil-production-falls-73k-barrels.html?ana=yahoo

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    Oil Sands Land Becomes Alberta’s Hot Real Estate as Oil Rebounds

    Auctions attracted the highest prices since 2007 in the first four months of the year even as Canadian heavy oil slid below $30 a barrel, from $87.23 in June, and producers from Cenovus Energy Inc. to Royal Dutch Shell Plc slashed spending and jobs.

    The trend is a sign that companies see the decline to a six-year low in March as temporary. Western Canadian Select crude has bounced back, gaining about 70 percent since March, almost twice as much as U.S. oil futures, amid rising demand for heavy oil from American refiners. Producers are more efficent than before the downturn after companies including Canadian Natural Resources Ltd. cut costs as much as 20 percent.

    “Right now it makes a great deal of sense to go in and acquire rights in the oil sands,” Trevor Newton, chairman of Strata Oil & Gas Inc., said in a phone interview. “Let’s get this now while we can. We are going to get them cheaper.”

    The province holding most of Canada’s crude reserves, the world’s third largest, drew an average of C$476.14 per hectare ($978 per acre) in offerings of rights through April, the most seasonally since 2007, data on the province’s website show.

    The increase in lease prices is a bright spot for Alberta, where revenue from leases and permits fell to C$24.1 million in the fiscal year ended March 31 compared with C$25.1 million a year earlier.

    Companies have been pulling back rather than investing. Shell withdrew an application to develop the Pierre River oil sands mine in February, the same month Cenovus suspended an expansion of its Christina Lake project.

    Canadian crude’s recent strength has been driven by new pipelines delivering rising volumes to U.S. refiners. Plants in the Midwest, the biggest consumers of Canadian crude, ran at their highest seasonal rates since at least 2010 earlier this month, U.S. Energy Department data show.

    Western Canadian Select has risen above $53 after closing below $30 for the first time since February 2009. Its discount to West Texas Intermediate oil, the U.S. benchmark, was $8 on May 13, the lowest since September 2012. WTI traded near $60 a barrel Friday, up from $43.46 in March amid signs that U.S. shale oil producers are curtailing output.

    “The price they are paying relative to the rights they are securing is very small,” Brad Hayes, president of Calgary-based Petrel Robertson Consulting Ltd., said in an interview. “The reserves in place are immense.”

    http://www.bloomberg.com/news/articles/2015-05-14/oil-sands-land-becomes-alberta-s-hot-real-estate-as-oil-rebounds

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    Agriculture

    Monsanto's Syngenta gambit hinges on sale of seed businesses

    U.S. seeds giant Monsanto is trying to line up buyers for assets worth up to $8 billion to appease competition authorities before making a fresh takeover approach for Swiss Syngenta, possibly within three weeks, industry sources said.

    Monsanto is expected to tap German chemicals group BASF , an existing joint venture partner, as it seeks a buyer for the U.S. seeds business of Syngenta, which can't be part of its proposed takeover, sources said.

    The St. Louis-based group is after Syngenta for its industry-leading crop chemicals, driven by the idea that seeds and pesticides will be better sold and developed together.

    Monsanto produces glyphosate, or Roundup, the world's most widely used broad-spectrum herbicide, and has engineered a range of proprietary crops that resist it.

    Syngenta closely integrated its seeds and crop chemicals operations in 2011 and Monsanto is expected to unravel some of the main strategic decisions that shaped the group over the last four years - selling off seeds and merging Syngenta's crop chemicals with Monsanto's seeds.

    Global antitrust authorities are expected to demand remedies to reshape the balance of power in the crop protection industry before any combination is allowed.

    Syngenta's management will not want to be seen backing a deal that is then shot down by antitrust watchdogs, two industry sources said.

    Monsanto commands about a quarter of the $40 billion global seeds market while Syngenta's own seeds business has a global market share of 8 percent.

    The Swiss group's seeds business could be worth between $6 billion and more than $8 billion, according to analysts. It will have to be sold because authorities are expected to block Monsanto from entrenching its dominance of the U.S. soy and corn seeds market.

    Monsanto has worked closely with BASF since 2007 when the two companies established a joint venture to develop higher-yielding and stress-tolerant versions of corn, soy, cotton and canola.

    But Monsanto could also sound out Chinese companies such as China National Chemical Corp (ChemChina) for Syngenta's glyphosate-based herbicides, a sector banker said, pointing to products containing glyphosate as likely to raise antitrust concerns.

    "What Monsanto needs is a stronger antitrust case," said another source, who is close to a rival chemicals group monitoring the situation and asked not to be named.

    The U.S. group has so far been unable to get a firm commitment from prospective buyers which include German pharmaceutical and chemical company Bayer, another banker familiar with the industry said.

    The bankers said some suitors will likely demand chunks of Monsanto's seeds business as part of any deal.

    Zuercher Kantonalbank analyst Martin Schreiber said Dow Chemical could be another possible bidder for Syngenta's assets.

    Liberum analyst Sophie Jourdier said antitrust issues would not be insurmountable but highlighted the risk that U.S. farmers might lobby authorities to consider the combined group's dominance of the broader agricultural inputs market and not look at seeds and chemicals separately, which would put the entire deal at a risk.

    Monsanto is looking to a new generation of compounds, such as Syngenta's Acuron herbicide to replicate the success of the glyphosate-centred seeds franchise.

    http://www.reuters.com/article/2015/05/14/syngenta-ma-monsanto-idUSL5N0Y51H520150514

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    Base Metals

    Peru probes Southern Copper's knowledge of suspected extortion

    Peru probes Southern Copper's knowledge of suspected extortion

    Peru is investigating whether Southern Copper Corp knew about but failed to report an extortion attempt by an opponent of its stalled Tia Maria project, the mines minister said on Thursday.

    The inquiry comes as the judiciary issued an arrest warrant for Pepe Julio Gutierrez, a lead opponent of the $1.4 billion proposed mine.

    Prosecutors say Gutierrez tried to extort money from Southern Copper in exchange for calling off protests against the mine that have turned violent and left three people dead this year.

    The government said it halted talks with the company over how to start construction on Tia Maria because of the accusations and may take further action.

    "If we receive a notice from the judiciary, we will act," Energy and Mines Minister Rosa Maria Ortiz told reporters on the sidelines of an event without offering specifics.

    Ortiz said she spoke with a vice president of Southern Copper's parent, Grupo Mexico, to schedule a meeting with a company representative to clarify the matter.

    Grupo Mexico and Southern Copper declined to comment but Southern Copper has denied any wrongdoing.

    The extortion accusations followed the broadcast on a local television show of phone conversations between Jesus Gomez, a lawyer who has worked for Southern Copper in the past, and a man heard offering to stop protests if the miner pays him and two other mining opponents.

    Gomez said he recorded the conversations and claims Gutierrez was demanding $1.5 million from the company. Gomez has said Southern Copper rejected the proposal but encouraged Gomez to continue the discussions. Southern Copper said in a statement on Monday that Gomez was never asked to mediate the conflict.

    Reuters could not confirm the authenticity of the recordings.

    Gutierrez could not be reached for comment. He has previously told local media that the recordings are fake.

    Tia Maria has faced delays since 2011, when rallies by farmers who fear mining pollution left three dead. Three people have also been killed in renewed protests this year just ahead of construction.

    Calls for the project's suspension grew in Lima this week, with the head of the mining chamber joined lawmakers on the left and right in advocating for a formal pause to end unrest.

    Ortiz said the government has no basis for suspending the 120,000 tonne-per-year project.

    "That's a decision the company would have to make," Ortiz said.

    She also said the miner did not do enough to build local support for the project's revised environmental plan, which included a desalinzation plant and was approved last year.

    http://www.reuters.com/article/2015/05/15/southern-copper-peru-idUSL1N0Y52DW20150515

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    Steel, Iron Ore and Coal

    China coal use falls: CO2 reduction could equal UK total emissions



    Official data from China shows coal use is continuing to fall precipitously – bringing carbon dioxide emissions down with it.

    The data – which comes months before crucial climate talks in Paris – means China has cut emissions during the first four months of the year by roughly the same amount as the total carbon emissions of the United Kingdom over the same period.

    The figures suggest the decline in China’s coal use is accelerating after data for last year showed China’s coal use fell for the first time this century

    An analysis of the data by Greenpeace/Energydesk China suggests coal consumption in the world’s largest economy fell by almost 8% and CO2 emissions by around 5% in the first four months of the year, compared with the same period in 2014.

    It comes after the latest data – for April – showed coal output down 7.4% year on year  amidst reports of fundamental reform for the sector. China also recently ordered more than 1,000 coal mines to close.

    The reduction in emissions from 2014 to 2015 is roughly equal to the total CO2 emissions of the UK over four months, and the reduction in coal use is equal to four times UK total consumption.

    If the reduction continues until the end of the year, it will be the largest recorded year-on-year reduction in coal use and CO2 in any country.

    Falling coal output in China has already had a big impact on global emissions with early data from the IEA suggesting that global emissions of carbon dioxide from the energy sector stalled in 2014, marking the first time in 40 years in which there was a halt or reduction in emissions of the greenhouse gas that was not tied to an economic downturn.

    http://energydesk.greenpeace.org/2015/05/14/china-coal-consumption-drops-further-carbon-emissions-set-to-fall-by-equivalent-of-uk-total-in-one-year/

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    Atlas Iron to resume mining after near-death experience

    Australia's Atlas Iron said on Friday it will resume full mining operations, surviving near bankruptcy after a slump in iron ore prices last month.

    A series of agreements reached between Atlas and outside contractors as well as the government will cut costs to a break-even price below $50 a tonne, CFR (cost and freight) China, where the majority of its projected 14-15 million tonnes of annual production is shipped, the miner said.

    "This is nothing short of an outstanding result for everyone involved directly and indirectly with Atlas," Atlas Chairman David Flanagan said.

    Australia's fourth-largest iron ore miner has been in talks with its creditors and mining services providers since early April to keep it afloat

    The price of iron ore dropped as low as $46.70 in April, less than half of the price a year ago, though has rebounded markedly since then to stand at $61.20..

    Analysts see iron ore averaging $56 a tonne in 2015 and $58 in 2016, according to a Reuters poll.

    Atlas also said it intended to hold a capital raising for an as-yet undetermined sum to underpin long-term financial strength.

    The capital raising will be put to a shareholder vote on June 19, according to the company.

    Atlas, which last traded on April 2, borrowed $275 million through a term loan in the U.S. markets, which matures in December 2017. The loan, which has no earnings-based covenants, carried a margin of 750 basis points over the Libor benchmark.

    Efforts have been underway with the help of transport group McAleese Ltd and stevedore group Qube Holdings Ltd to persuade lenders to agree to keep one or two of the firm's mines open.

    McAleese warned on May 4 its underlying full-year earnings were expected to fall to about $70 million from $85.3 million in 2013/14.

    Under the agreement with Atlas, contractors will be paid more if the iron ore price rises.

    http://www.reuters.com/article/2015/05/15/atlas-australia-iron-idUSL3N0Y608Y20150515

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    Australian PM backs senate probe into iron ore slump

    Australian Prime Minister Tony Abbott on Friday threw his support behind a proposed senate inquiry into the economic impact of a slump in the price of iron ore, ratcheting up pressure on top producers Rio Tinto and BHP Billiton.

    Leading independent senator Nick Xenophon on Thursday pulled a vote that could have launched an inquiry into the impact of the price collapse on government revenue and to consider whether action is needed to ensure healthy competition in the sector.

    Xenophon postponed the vote to June 16 due to a lack of support in the upper house senate. He now appears to have successfully garnered that support from Abbott.

    "I think we do need an inquiry," Abbott said in an interview on Sydney's 2GB Radio.

    "Certainly I think we do need to know the facts of what's going on here because I am conscious of the claims that are being made by Andrew Forrest and others."

    The iron ore price hit $46.70 a tonne in April, its lowest in a decade, although it has picked up to around $61 this week.

    Top producers Rio Tinto and BHP have been flooding the market with iron ore, which has left smaller, high-cost producers struggling to survive.

    Xenophon's call for a probe coincided with the opening of a new front in a campaign by billionaire Andrew "Twiggy" Forrest, founder of Fortescue Metals Group, Australia's no.3 iron ore producer, against bigger rivals Rio Tinto and BHP.

    Fortescue has created a website called Our Iron Ore (www.ourironore.com), looking to drum up support for his war on Rio and BHP, the world's second- and third-largest iron ore producers respectively.

    "Iron ore is Australia's most important single export earner and a dramatically falling price is putting significant pressure on current and future living standards of all Australians," the home page says.

    It echoes what Forrest has repeatedly said this year, without naming BHP and Rio Tinto. "Multinational companies are failing to act in an economically rational way, choosing to oversupply the iron ore market in the medium term," it says.

    The site urges the public to "join the campaign" by signing a petition, but a link does not lead to any petition so it is unclear what people would be putting their name to.

    One crisis management expert said it would not pay for them to fuel the story by overreacting to Fortescue.

    "There are two games being played here: one is the sort of vaudeville show at the front end but the more important one is going on behind the scenes," said Tim Allerton, managing director of Syndey-based City Public Relations, referring to lobbying on the matter in parliament.

    http://www.reuters.com/article/2015/05/15/australia-iron-miners-idUSL3N0Y601620150515

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    Tata Steel says to take $785 mln non-cash writedown in Q4

    India's Tata Steel Ltd said on Thursday it expected to take a non-cash writedown of about 50 billion rupees ($785.3 million) in the quarter ended March 31, chiefly relating to its loss-making long products business in the United Kingdom.

    Tata Steel, Europe's second-largest steelmaker, has been forced to slash costs and jobs following its 2007 entry into the continent, where steel demand has languished since the financial crisis and clients have turned to cheaper Chinese imports.

    The company said last year it was in talks to sell its long products division, including mills in northern England and Scotland to Geneva-based Klesch Group.

    Tata Steel entered Europe through its $13 billion acquisition of Corus, formerly British Steel, just before the financial crisis.

    The impairment also includes a writedown of investments in overseas raw materials projects in Mozambique, Ivory Coast and a taconite project in Canada because of low commodity prices, Tata Steel said.

    The company's profitability has been hit in recent quarters after a slowdown in China and a devaluation of the Russian rouble led to a surge of cheaper steel products entering international markets, pressuring steel prices and squeezing margins.

    The Mumbai-based company's domestic production has also been hit by a raw material shortage following a string of mining stoppages, causing its plants to operate below capacity.

    Tata Steel's liquidity position or financial covenants will not be affected and the total impairment charge for the year ended March 31 would be around 65 billion rupees ($1.02 billion), the company said.

    Tata Steel reports fourth quarter and full year results on May 20.

    http://www.reuters.com/article/2015/05/14/tata-steel-outlook-idUSL3N0Y562A20150514

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    Steel Mills' managers fall in anti-corruption drive

    Moves by the Chinese government to raise the steel industry's competitiveness by wiping out corruption have brought several senior officials under investigation.

     Shi Xiongliang, former deputy general manager of Ma'anshan Iron & Steel Co Ltd, was recently charged with bribery in Anhui province. He was accused of accepting 1.9 million yuan ($310,000) from material suppliers and dealers in exchange for business.

    "For steel firms, the procurement and sales departments are fertile breeding grounds for corruption," said Wei Zengmin, an analyst at Shanghai-based industry consultancy mysteel.com. He said it is common knowledge that kickbacks are available through purchasing departments.

    Shi, 62, began working at Ma Steel in 1997, when the domestic steel output was far short of the nation's surging demand. He became deputy general manager in 2011 and retired in July 2013. About one year after his retirement, the Yingjiang district prosecutor's office of Anqing city in Anhui indicted Shi for bribery.

    He is not alone in the industry: Four other senior officials from large mills have been detained by investigators just this year.

    Feng Jie, chairman of Jiuquan Iron & Steel (Group) Co Ltd in Gansu province, was placed under investigation for "serious disciplinary violations" on May 7, authorities announced.

    Wang Guoming, deputy general manager of Shandong Iron and Steel Group Co Ltd, was placed under investigation for "financial problems", the company said on May 6.

    Sun Wendong, deputy general manager of Wuhan Iron and Steel Co Ltd in Hubei province, was detained on suspicion of accepting bribes, the listed company said in a statement to the Shanghai Stock Exchange in April. Sun began working at Wuhan Iron in 1997 and served as an assistant to the general manager of Wuhan Iron and Steel's parent company, Wuhan Iron and Steel (Group) Corp.

    Cui Jian, vice-president of Baosteel Group, the parent of the listed Shanghai Baosteel Group Corp, is being investigated for "serious disciplinary violations", officials said.

    Investigation into the steel sector's problems began in December 2013, when Liang Jingli, former president of the State-owned Guangxi Liuzhou Iron and Steel Group, was put under investigation.

    http://en.chinamining.com.cn/News/2015-05-15/1431655617d72218.html

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