Mark Latham Commodity Equity Intelligence Service

Friday 05 April 2019
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Oil and Gas


Uncoated Free Sheet: Paper demand.

We don't use printing paper anymore. 

Here' the odd one, even corrugated shipments are flat over 20 years. 

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Venezuela streets witness protest against power cuts and drinking water; President announces 30 day strike

Venezuela's President Nicolas Maduro announced 30 days of electricity rationing Sunday after his government said it was shortening the working day and keeping schools closed due to blackouts. Angry Venezuelans meanwhile took to the streets of Caracas to protest the power cuts and water shortages.

The measures are a stark admission by the government -- which blamed repeated power outages in March on sabotage -- that there is not enough electricity to go around, and that the power crisis is here to stay. The blackouts have worsened already dire economic and living conditions in the country, which sits on the world's largest proven oil reserves.

Power failures come alongside a political showdown between Maduro and opposition leader Juan Guaido, who is recognised as interim president by the United States and more than 50 other countries. Speaking on state television, Maduro said he had approved "a 30-day plan" to ration power.

He did not detail how it would work but said there would be "an emphasis on guaranteeing water service". Maduro also acknowledged that many Venezuelans could not watch his broadcast because they had no electricity.

Crippled infrastructure, little investment in the power grid and poor maintenance have all contributed to electricity problems. A "brain drain" of qualified personnel has also hit the industry, with about 25,000 people in the electricity sector among the 2.7 million Venezuelans who have emigrated since 2015.

Add to that the country's deep economic crisis, which includes a soaring inflation rate. Earlier on Sunday, authorities announced other measures as a result of the electricity shortage.

"To achieve consistency in the provision of electricity, the Bolivarian government decided to maintain the suspension of school activities and establish a workday until 2:00 pm in public and private institutions," Communications Minister Jorge Rodriguez said on state television. With no electricity, pumping stations can't work, so water service is limited.

Street lights and traffic lights go dark, pumps at fuel stations stand idle, and cell phone and internet service are non-existent. Children don't have "a drop of water" to drink, complained Maria Rodriguez, a Caracas resident.

But people try to find it wherever they can: from springs, leaky pipes, gutters, government-provided tankers, and the little that flows through the Guiare River in Caracas. "We fill up from a well near here but we don't know if it's drinkable. But we're using it," said Erimar Vale, a resident of the capital.

Angel Velazquez said he bathed at work because they did not have water at home. Opposition leader Guaido asked people to protest each time there was a blackout.

"This is going to continue. The situation is very serious, there will be more blackouts and rationing," said Winton Cabas, president of the Venezuelan Association of Electrical and Mechanical Engineering. "The whole power grid is barely generating between 5,500 and 6,000 megawatts when it has the capacity to generate 34,000 megawatts," he told AFP.

The Maduro government has blamed "terrorists" for alleged attacks that have damaged the Guri hydroelectric power plant, which generates 80 per cent of Venezuela's electricity. The Guri plant, however, was already showing signs of trouble: back in 2010, then-president Hugo Chavez said electricity would be rationed in some Venezuelan states because water was low at the Guri dam due to a drought.

Jose Aguilar, a Venezuelan consultant living in the United States, said the problems with the power grid run deep. "Over the past 20 years, the infrastructure has been abused due to a lack of maintenance and the postponing of upgrade plans," he told AFP.

Another problem was the "de-professionalisation" of the sector, when Chavez nationalized the privately-run power company in 2007, in which pro-government loyalists took positions as managers and engineers. Demonstrations by Venezuelans angry about the blackouts broke out Sunday in Caracas.

With cooking pots, whistles and flags, dozens of residents spontaneously took to the streets in scattered protests. Protesters and human rights groups said some demonstrators were attacked by "colectivos", pro-government enforcers that the opposition describes as paramilitary thugs.

Maduro has given the "colectivos" permission to contain protests that he describes as violent mobs aiming to oust him from power. Joaquin Rodriguez, a 54-year-old lawyer, was among those protesting in Los Palos Grandes, a once-prosperous neighbourhood that has endured blackouts for more than a decade.

"Once again a nationwide blackout is affecting our quality of life," he told AFP. "We don't have water. We don't have any light. We don't have internet access, our phones don't work... we are even worse off than we could have imagined."

(With inputs from agencies.)

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Aramco Reveals Sharp Output Decline at Super-Giant Oil Field (1) 2019-04-03 08:17:20.985 GMT

By Javier Blas

(Bloomberg) -- It was a state secret and the source of a

kingdom’s riches. It was so important that U.S. military

planners once debated how to seize it by force. For oil traders,

it was a source of endless speculation.

Now the market finally knows: Ghawar in Saudi Arabia, the

world’s largest conventional oil field, can produce a lot less

than almost anyone believed.

When Saudi Aramco on Monday published its first ever profit

figures since its nationalization nearly 40 years ago, it also

lifted the veil of secrecy around its mega oil fields. The

company’s bond prospectus revealed that Ghawar is able to pump a

maximum of 3.8 million barrels a day -- well below the more than

5 million that had become conventional wisdom in the market.

“As Saudi’s largest field, a surprisingly low production

capacity figure from Ghawar is the stand-out of the report,”

said Virendra Chauhan, head of upstream at consultant Energy

Aspects Ltd. in Singapore.

The Energy Information Administration, a U.S. government

body that provides statistical information and often is used as

a benchmark by the oil market, listed Ghawar’s production

capacity at 5.8 million barrels a day in 2017. Aramco, in a

presentation in Washington in 2004 when it tried to debunk the

“peak oil” supply theories of the late U.S. oil banker Matt

Simmons, also said the field was pumping more than 5 million

barrels a day, and had been doing so since at least the previous


In his book “Twilight in the Desert,” Simmons argued that

Saudi Arabia would struggle to boost production due to the

imminent depletion of Ghawar, among other factors. “Field-by-

field production reports disappeared behind a wall of secrecy

over two decades ago,” he wrote in his book in reference to

Aramco’s nationalization.

The new details about Ghawar prove one of Simmons’s points

but he missed other changes in technology that allowed Saudi

Arabia -- and, more importantly, U.S. shale producers -- to

boost output significantly, with global oil production yet to


The prospectus offered no information about why Ghawar can

produce today a quarter less than 15 years ago -- a significant

reduction for any oil field. The report also didn’t say whether

capacity would continue to decline at a similar rate in the


In response to a request for comment, Aramco referred back

to the bond prospectus without elaborating.

Lost Crown

The new maximum production rate for Ghawar means that the

Permian in the U.S., which pumped 4.1 million barrels a day last

month according to government data, is already the largest oil

production basin. The comparison isn’t exact -- the Saudi field

is a conventional reservoir, while the Permian is an

unconventional shale formation -- yet it shows the shifting

balance of power in the market.

Ghawar, which is about 174 miles long -- or about the

distance from New York to Baltimore -- is so important for Saudi

Arabia because the field has “accounted for more than half of

the total cumulative crude oil production in the kingdom,”

according to the bond prospectus. The country has been pumping

since the discovery of the Dammam No. 7 well in 1938.

On top of Ghawar, which was found in 1948 by an American

geologist, Saudi Arabia relies heavily on two other mega-fields:

Khurais, which was discovered in 1957, and can pump 1.45 million

barrels a day, and Safaniyah, found in 1951 and still today the

world’s largest offshore oil field with capacity of 1.3 million

barrels a day. In total, Aramco operates 101 oil fields.

The 470-page bond prospectus confirms that Saudi Aramco is

able to pump a maximum of 12 million barrels a day -- as Riyadh

has said for several years. The kingdom has access to another

500,000 barrels a day of output capacity in the so-called

neutral zone shared with Kuwait. That area isn’t producing

anything now due a political dispute with its neighbor.

While the prospectus confirmed the overall maximum

production capacity, the split among fields is different to what

the market had assumed. As a policy, Saudi Arabia keeps about 1

million to 2 million barrels a day of its capacity in reserve,

using it only during wars, disruptions elsewhere or unusually

strong demand. Saudi Arabia briefly pumped a record of more than

11 million barrels a day in late 2018.

“The company also uses this spare capacity as an

alternative supply option in case of unplanned production

outages at any field and to maintain its production levels

during routine field maintenance,” Aramco said in its


Costly Strategy

For Aramco, that’s a significant cost, as it has invested

billions of dollars into facilities that aren’t regularly used.

However, the company said the ability to tap its spare capacity

also allows it to profit handsomely at times of market

tightness, providing an extra $35.5 billion in revenue from 2013

to 2018. Last year, Saudi Energy Minister Khalid Al-Falih said

maintaining this supply buffer costs about $2 billion a year.

Aramco also disclosed reserves at its top-five fields,

revealing that some of them have shorter lifespans than

previously thought. Ghawar, for example, has 48.2 billion

barrels of oil left, which would last another 34 years at the

maximum rate of production. Nonetheless, companies are often

able to boost the reserves over time by deploying new techniques

or technology.

In total, the kingdom has 226 billion barrels of reserves,

enough for another 52 years of production at the maximum

capacity of 12 million barrels a day.

The Saudis also told the world that their fields are aging

better than expected, with “low depletion rates of 1 percent to

2 percent per year,” slower than the 5 percent decline some

analysts suspected.

Yet, it also said that some of its reserves -- about a

fifth of the total -- had been drilled so systematically over

nearly a century that more than 40 percent of their oil has been

already extracted, a considerable figure for an industry that

usually struggles to recover more than half the barrels in place


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Hebei closes 51 tailings dams.

This year, Hebei Province plans to close 40 mines and 51 tailings ponds.

Hebei News Net

03-31 00:36

Hebei News Network (Reporter Pan Wenjing) On March 29th, the Hebei Non-coal Mine Work Conference was held in Shijiazhuang. The reporter learned from the meeting that this year the province plans to close 40 mines and 51 tailings ponds. The Provincial Emergency Management Department has formulated the tasks of each city on the basis of the investigation.

The meeting requested that all relevant departments of all localities should vigorously promote the management of goaf in our province, the closure of tailings ponds, the treatment of high and steep slopes, and the work of “mechanization substitution, automation and reduction of people” to further improve the conditions of safe production. It is necessary to focus on the safety supervision of tailings ponds, and strengthen the safety supervision of the tailings pond during the spring thawing period to ensure the stability of the dam body during the spring freezing period of the tailings pond, and the safety indicators meet the design requirements. It is necessary to strengthen supervision and inspection during the flood season, strictly implement the responsibility system for the tail bank's leadership package and the "four uniforms" and "five in place" measures, strictly implement the safety technical measures for non-coal mine defense in the rainy season, and ensure the realization of the tailings pond. Security level.

The reporter learned from the meeting that in recent years, the province has continued to carry out the "expert consultation" hidden danger investigation activities in the way of government purchasing services, which has greatly promoted the discovery of hidden dangers of enterprises and promoted the management of hidden dangers. However, due to the lack of timely follow-up of law enforcement work in some areas, some enterprises have also become a bad problem of waiting for experts to check for hidden dangers. In 2019, the Provincial Emergency Management Office did not arrange special funds for the investigation of hidden dangers of “expert consultations” to the cities. Each city should continue to deepen the large-scale investigation and rectification activities according to local conditions, and continue to do a good job in the investigation of hidden dangers of enterprises.

At the meeting, the Shijiazhuang City, Tangshan City, and Handan City Emergency Management Bureau made a typical speech and exchanged work experience. The municipal emergency management bureau is not the leader of the coal mine mountain, the person in charge of the non-coal mine enterprise, and the relevant person in charge of the various offices of the hall organizing the meeting.

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That Hebei Announcement on tailings dams affects all mined commodities.

Rio Tinto Plc (RIO.L) are on trader’s watchlists today as the shares have moved below a key Mass Index level of 26.5. When Donald Dorsey developed the Mass Index indicator, his rationale was that if the prevailing trend were going to change, the price range would have to widen. Dorsey looked for “reversal bulges” to signal a trend reversal. According to Dorsey, a bulge occurs when the Mass Index moves above 27. This initial bulge does not complete the signal though. Dorsey waited for this bulge to reverse with a move back below 26.50. Once the reversal bulge is complete, traders should use other analysis techniques to determine the direction of the next move.

There are plenty of different types of stocks that investors have to choose from. Some will opt to be more aggressive with their portfolios while others will choose to play it a bit safer. Blue chip stocks include companies that typically have a high market cap and have been profitable over a long period of time. Growth stocks are typically expected to have a high P/E ratio and a low dividend yield. The idea is that a growth stock will continue to expand and grow into the future. Many investors will be searching for value stocks. Value stocks are typically cyclical in nature and investors may be looking to buy and hold these types rather than try to squeeze out some short-term profits.

In terms of moving averages for Rio Tinto Plc (RIO.L), the 200-day is currently at 3832.31, the 50-day is 4213.82, and the 7-day is resting at 4471.57. The moving average is a popular investing tool among traders. Moving averages can be used to help filter out the day to day noise created by other factors. MA’s may be used to identify uptrends or downtrends, and they can be a prominent indicator for detecting a change in momentum for a particular stock. Many traders will use moving averages for different periods of time in conjunction with other indicators to help gauge future stock price action.

Traders may also be paying close attention to RSI levels on shares of Rio Tinto Plc (RIO.L). The current 14-day RSI is presently sitting at 73.91, the 7-day is 84.73, and the 3-day is 97.41. The RSI, or Relative Strength Index is a popular oscillating indicator among traders and investors. The RSI operates in a range-bound area with values between 0 and 100. When the RSI line moves up, the stock may be experiencing strength. The opposite is the case when the RSI line is heading lower. Different time periods may be used when using the RSI indicator. The RSI may be more volatile using a shorter period of time. Many traders keep an eye on the 30 and 70 marks on the RSI scale. A move above 70 is widely considered to show the stock as overbought, and a move below 30 would indicate that the stock may be oversold. Traders may use these levels to help identify stock price reversals.

When completing stock analysis, investors and traders may opt to review other technical levels. Rio Tinto Plc (RIO.L) currently has a 14-day Commodity Channel Index (CCI) of 152.15. Investors and traders may use this indicator to help spot price reversals, price extremes, and the strength of a trend. Many investors will use the CCI in conjunction with other indicators when evaluating a trade. The CCI may be used to spot if a stock is entering overbought (+100) and oversold (-100) territory. The Average Directional Index or ADX is often considered to be an important tool for technical trading or investing. The ADX is a technical indicator developed by J. Welles Wilder used to determine the strength of a trend. The ADX is often used along with the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI) to identify the direction of the trend. Presently, the 14-day ADX is resting at 18.28.

Generally speaking, an ADX value from 0-25 would indicate an absent or weak trend. A value of 25-50 would indicate a strong trend. A value of 50-75 would signal a very strong trend, and a value of 75-100 would indicate an extremely strong trend.

As we close in on the end of the calendar year, investors may be trying to visualize potential trades for the New Year. There are many professionals that believe that there is still plenty of room for stocks to run even at current levels. Preparing the game plan for the next few quarters may give the investor some new ideas. Staying focused and maintaining discipline may help guide the investor to unchartered territory in the coming months. Tracking market events from multiple angles may also help provide some enhanced perspective.

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A tax on a tax: U.S. customs demands bigger bonds as trade tariffs rise

Stephen Wang is counting the costs of President Donald Trump’s trade war. He had to put down 12 times more cash as a guarantee to U.S. customs that he would pay the bill for tariffs on the Chinese-made pumps, valves and motors he imports.

The cost of the guarantee - a U.S. customs bond - has shot up, an additional hit to importers already facing steep customs bills adding up to tens of billions of dollars for tariffs imposed by the Trump administration on incoming Chinese goods, as well as steel and aluminium imports.

Since coming into effect last year, the tariffs have pushed up manufacturing costs, upended decades-old global supply chains and inflated prices for consumers, resulting in lower sales and forcing companies to defer investments. This, in turn, has dimmed global growth outlook, roiling financial markets.

Other ripple effects are less obvious, among them the rising expense of U.S. customs bonds. But for small companies that can ill afford the added cost, the impact can be crippling.

Given the extra duties associated with Trump’s tariffs, importers have been forced to post bonds that are worth much more to guarantee they can cover the added cost of bringing Chinese imports, and foreign steel and aluminium, into the United States.

In some cases, customs bond requirements have increased 500-fold, according to Reuters interviews with a dozen importers, underwriters and customs brokers.

“Managing the cash flow has become tough,” said Wang. If the tariff war drags on, he warns, companies operating with thin profit margins and a weak capital base could go bust.

Wang is the chief executive of Hengli America, which procures supplies from China for customers such as CNH Industrial’s construction and farm equipment units.

After duties on its merchandise surged from zero to $6 million a year, U.S. Customs required Hengli to post a $600,000 bond. Its previous bond was $50,000.

Other importers reported similarly sharp increases.

Lisa Gelsomino, chief executive officer at underwriting firm Avalon Risk Management, said one client recently had to replace a $50,000 bond with one worth $26 million.

The rise in tariffs means that U.S. Customs and Border Protection (CBP) has issued thousands of importers with notices that their bonds are inadequate.

The CBP has issued about 3,500 insufficiency notices since January, it said. That compares to an average of 2,070 notices a year for the period between 2006 and 2017, according to data compiled by Roanoke Insurance Group.

If importers fail to post a new bond within a month of receiving an insufficiency notice, customs officials can hold the cargo and charge additional fees. The CBP has around 224,000 active bonds on file.

No importer can ship goods into the country without posting a customs bond. The bonds are set at 10 percent of the importer’s total estimated annual duties, fees and taxes.

The Trump administration’s 25 percent import tariff on $50 billion of Chinese imported goods, and another 10 percent on $200 billion of imports, has added up. The annual tariff bill on Chinese goods alone stands at $32.5 billion - requiring $3.25 billion in additional customs bonds.

Separately, Washington has levied a 25 percent duty on imports of steel and a 10 percent duty on those of aluminium.

“You are talking millions of dollars that is going out,” said David Meyer, head of customs brokerage and freight logistics company DJS International Services Inc.

“But you don’t have a million dollar tree that you are shaking in your backyard to make sure that you have got that has definitely become a burden for importers.”

More than half of Meyer’s clients have seen at least a tenfold increase in their bond amounts.


What is proving painful for some importers has been a bonanza for the firms that underwrite the bonds.

More costly bonds mean higher underwriting fees. They also mean higher collateral requirements. Since underwriters are on the hook if importers fail to pay duties, they want collateral that matches the value of the bond; underwriters usually require 1-1.5 percent of the bond amount to guarantee the bond.

At Roanoke Insurance Group, the workload has increased so much that staff are working on weekends to handle it, said Colleen Clarke, vice president at Roanoke.

In one example, she said, Roanoke required $9 million in collateral from a steel importer that was asked to post a $9 million bond after duties on its imports surged from zero to $90 million a year.

The steel importer also paid $90,000 in premium for the bond. The end result: the importer needed to come up with just over $99 million a year to continue to import $360 million of steel.

That is complicating finances for importers. The trade war has also driven up some raw material, freight and warehousing costs, raising the risks that some importers might default on payment obligations.

“Most of the importers are not used to paying these duties,” said Roanoke’s Clarke. “The risk is – do they have cash infusion from somewhere else to pay these duties?”

Amy Magnus, who heads the National Customs Brokers & Forwarders Association of America, whose members work with over 250,000 importers and exporters, said a client who used to import Canadian steel went bankrupt after his shipments were subjected to a 25 percent tariff. She declined to share more details.


Four customs brokers told Reuters that some of their small-size clients had stopped importing goods altogether.

Hengli’s Wang says his cash flow needs have risen fourfold since July, forcing him to delay payments to his Chinese suppliers. In addition to higher costs, he is losing customers - some have switched to cheaper non-Chinese goods suppliers.

Precision Components, whose customers include Fortune 500 companies, imports bearings from China. Since July 6, when U.S. tariffs on bearings imports rose 25 percent, the cost of each container it receives from China has risen by $15,000, said Dave Hull, the firm’s president. The company imports around 40 containers a year.

It has been borrowing on average $200,000 a month since last July to meet its working capital requirements, Hull said, up from around $50,000 prior to that.

What’s more, custom brokers, who sometimes pay duties on behalf of their clients, are demanding quicker repayment, said Jane Sorensen, president of the Chicago Customs Brokers & Forwarders Association.

They are asking importers to repay in 7-10 days, she said, compared with the more typical 30-day time frame.

Bill Sharpe, a customs broker in Chicago, says he has halved his collection time to 15 days. Even so, he worries about the risks of clients defaulting.

“We are having to keep a close eye on all our clients to make sure they don’t turn into a credit risk,” Sharpe said.

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Shell working to become world’s top electricity producer

Royal Dutch Shell could ramp up acquisitions of electricity producers to achieve its target of becoming the world’s biggest power company by the 2030s, according to analysis by Sanford C. Bernstein Ltd.

To become the biggest low-carbon electricity provider, the company must produce 214 terawatt-hours of clean power every year by 2035, the analysis shows. That’s 11% more than Egypt, a country of nearly 100 million people, generated last year, according to data from BP.

Shell could achieve that through organic growth, ultimately managing 61 gigawatts of power capacity, said Bernstein. However, it will probably want to move even faster and expand acquisitions of electricity producers, a strategy that has already divided investors.

“Shell wants electricity to be the fourth pillar of their business, alongside oil, gas and chemicals,” analysts including Oswald Clint said in the report. “In much the same way they dominate the value chain in oil and gas, they want to do the same in electricity.”

The Anglo-Dutch major made an aggressive move into the UK retail power market this month by offering one of the cheapest tariffs available and supplying its 700,000 customers with power entirely from renewable energy.

Cutting Carbon

A key challenge to the company’s plan to become the world’s biggest power company is the fact that Shell has pledged to cut its carbon footprint in half by 2050. This means most of the capacity it adds to its portfolio must come from wind and solar power.

Today, Shell manages 10 gigawatts of electricity in the U.S. and only a third of that comes from renewables. To reach the 61-gigawatt target, calculated by Bernstein, the company needs to add 3 gigawatts of clean capacity each year.

That’s affordable within Shell’s current “new energies” budget of $1 billion to $2 billion a year, Bernstein said. However, the company will probably want its clean-power capacity to grow faster than that, Clint said by phone.

In terms of generation, the company will still fall short of Europe’s biggest clean energy supplier, Electricite de France SA, which controls 93 gigawatts of nuclear and hydro power capacity. Clint said that’s not directly comparable, because Shell is trying to generate most of its electricity from renewable energy.

Yet other big power producers that generate electricity from renewables, such as Enel SpA and Iberdrola SA, are also adding around 3 gigawatts a year, he said.

“That means we should absolutely expect Shell to also grow inorganically to the potential No #1 spot,” said the note. “Investors remain divided on this diversifying capital allocation.”

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Most northern China cities fail to meet winter smog targets: data

A majority of 39 northern Chinese cities have failed to meet anti-pollution targets over the six-months to end-March, a Reuters study of official data showed, adding to fears the war on smog has lost momentum.

Chinese Premier Li Keqiang declared a “war on pollution” in 2014 and the government has spent billions of yuan to bolster monitoring and enforcement, raised industrial standards and shut thousands of small “backward” enterprises.

But Reuters calculations based on online monitoring data show 30 out of 39 cities in the key northern pollution control zones of Beijing-Tianjin-Hebei and the Fenwei Plain failed to meet air quality targets over the autumn-winter period to end-March, despite imposing special restrictions.

The Ministry of Ecology and Environment (MEE) did not immediately respond to a request for comment on Monday, but it has already warned that momentum had slowed as a result of a slowing economy in some regions.

The cities were under pressure to cut concentrations of hazardous airborne particles known as PM2.5 by around 3 percent year on year, with some targeted to make bigger reductions.

Official data shows big improvements in air quality in March, with average PM2.5 readings falling 29 percent to an average of 52 micrograms per cubic meter in the 39 cities.

But over the six-month period, concentrations rose 6 percent to 82 micrograms, more than double the national standard of 35 micrograms. PM2.5 actually increased in 24 cities, with central China’s Henan province performing especially badly.

The Henan steel city of Anyang was the worst performer, with PM2.5 rising 27 percent to 111 micrograms. Residents blamed the weather and the city’s position downwind from large steel bases in neighboring Hebei province.

“The key thing is that Anyang has the strictest pollution controls of all ... but it ranks the worst for air quality,” Li Xianzhong, co-owner of the privately-owned Xinyuan Iron and Steel Corporation, told Reuters.

The capital Beijing was one of eight cities to meet its targets. It was ordered only to “improve” from last year and saw average PM2.5 fall by 3 percent, thanks to a cut of 39 percent in March.

The environment ministry has vowed not to relent in fighting pollution and will implement special restrictions from October. It also said it would not tolerate attempts by local governments to blame slowing growth on tougher environmental rules.

But in a sign China was trying to avoid economic disruptions, ministry spokesman Liu Youbin told a briefing last week that China would not allow overzealous officials to shut large swathes of industry.

“We will resolutely oppose anyone using environmental protection as an excuse to perform simplistic and crude actions such as the emergency closure of business operations,” he said.

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Unexpected bounce in China's factory activity, but Asia broadly weak

Factory activity in China showed a slight, surprising recovery last month, in a sign that stimulus injected into Asia’s growth engine may be yielding results, but worries of a global slowdown persisted due to weakness elsewhere in the region.

Even in China, growth in new domestic and export orders was marginal. Factory activity in Japan, South Korea, Malaysia, and Taiwan shrank further, adding to expectations of a dovish turn from central bankers in the region.

The U.S.-China tariff war and slowing Chinese demand after a campaign to reduce financial risk-taking have caused broad damage, hurting everyone from small firms in the supply chains of Chinese manufacturers to global tech behemoths such as Apple and across the map from Australia to South Korea and Japan.

Later on Monday, euro zone activity surveys were expected to show contraction due to its own trade frictions with the United States, Brexit uncertainty, and fallout from the U.S-China trade dispute.

The weak external environment is feeding back into the U.S. economy, prompting the Federal Reserve to abruptly end its policy tightening last month and causing the Treasury yield curve to briefly invert last week - a potential signal of a looming recession.

Fed’s pause has changed the game for many Asian central banks and investors are betting on a growing list of potential rate cutters.

“The PMI data ... is telling us that the stimulus measures that have been put in place by the Chinese authorities since the middle of last year are finally starting to have an impact,” said Khoon Goh, head of Asia research at ANZ.

“Now, of course, this is just one month. I’m expecting Asian central bankers to continue to be accommodative and some of them to cut interest rates. There’s no doubt that overall growth still slowed.”

China’s Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) expanded at the strongest pace in eight months in March, rising to 50.8 from 49.9 in February, above the 50-mark dividing expansion from contraction and the highest level since July 2018. [L3N21G2F6]

An official survey on Sunday also showed modest expansion.

Economists also cautioned there were seasonal factors in play, with activity in March traditionally picking up markedly whenever the Chinese Lunar New Year holidays fell in February, as they did this year.

If the trend is sustained, it could mark the turnaround that China’s policymakers had hoped for after some heavy fiscal and monetary stimulus, including five cuts in bank reserve requirements in the past year, although analysts say more such measures may still be in the pipeline.

BofA Merrill Lynch analysts took note of the “green shoots” from the March PMI readings, but said real activity growth could have stayed under pressure in the first quarter, especially given the tougher environment for exports.

“We believe policymakers will stick to their commitment on policy easing to stabilise growth,” the BofA Merrill Lynch analysts said in a note to clients.Chinese Premier Li Keqiang said last month the government has additional monetary policy measures that it can take, and will even cut “its own flesh” to help finance large-scale tax cuts.

On the trade front, U.S. President Donald Trump said on Friday that talks with China were going very well, but cautioned that he would not accept anything less than a “great deal” after top U.S. and Chinese trade officials wrapped up two days of negotiations in Beijing.

“A set of better economic numbers on the Chinese side could raise the bargaining chips in negotiations with the U.S., as they could show that the Chinese economy can still bounce back from the tariffs imposed by the U.S. so far,” said Kevin Lai, chief Asia ex-Japan economist at Daiwa Capital Markets.


Activity in Vietnam, Indonesia and the Philippines grew at a modest pace, but in economies with a larger impact on regional growth the outlook remained bleak.

South Korea’s factory activity in March contracted for a fifth straight month.

Japanese manufacturing activity contracted at a slower pace in March than the previous month, but output fell at the sharpest rate in nearly three years. Japanese business confidence worsened to a two-year low in the first quarter of this year, a central bank survey showed.

Corporate spending in Asia is likely to fall for the first time in three years, with capital expenditure at 2,137 Asian companies seen slipping an average 4 percent this year, a Reuters analysis of Refinitiv data showed.

An analysis by Oxford Economics showed nominal Asian export growth fell 3.8 percent year-on-year in January-February combined, primarily driven by a sharp fall in North Asian exports, although growth in Southeast Asia was also weak.

“So far, there are few signs that the global trade cycle has bottomed, and we see global growth still synching lower in the near term,” said Joachim Fels, global economic advisor for PIMCO, adding, however, that the Fed’s change of tack and China stimulus could lead to stabilisation or even a moderate pick-up.

“These factors could enable a soft landing of sorts for the global economy – albeit with further air pockets along the flight path.”

When Chinese New Year takes place in February, the NBS mfg PMI generally jumps in March. This year's increase is in the same ballpark as in previous such years. The slightly less seasonal Caixin PMI did however also beat expectations


German Markit’s Purchasing Managers’ Index (PMI) for manufacturing, which accounts for about a fifth of the economy, fell to an 80-month low reading of 44.1, down from 47.6 in February and lower than the flash reading of 44.7.

It was the third successive month that the index was below the 50.0 mark that separates growth from contraction.

“Both total new orders and export sales are now falling at rates not seen since the global financial crisis, with more and more firms reporting lower demand linked to Brexit, trade uncertainty, troubles in the automotive industry and generally softer global demand,” said IHS Markit’s Phil Smith.

New orders posted their steepest drop since April 2009.

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Emerging Signal flashes positive?

A leading London conveyancer has claimed that Stamp Duty and the ongoing Brexit mess have jointly deadened many parts of the capital’s housing market and in particular the investment sector.

Simon Nosworthy, Head of Property at Osbornes LLP, one of London’s largest law firms, says searching for property at the moment is like ‘going into a Tesco store and finding half the shelves empty’. “It can be off putting for people,” he says.

His comments follow last week’s Nationwide house price index which showed that London has been the weakest performing region of the UK during the first three months of the year, and that prices are now nearly 4% lower than a year ago.

Nosworthy (left) says there has been a significant reduction in the number of transactions in the solid upper end of the market his firm deals with and in particular four- and five-bedroom houses.

The company says that prices are beginning to drop as the Brexit chaos continues and that the only thing preventing them falling further and faster is the lack of stock in the market.

“The days of the property boom are gone for the moment – so the market is broadly just catering for those that have to move due to life changes such as divorce, death and relocation.

“There are not the number of property investors in the market that there once were. These are generalisations and there are exceptions to this on a local level, but one generalisation which is true is the Help to Buy is market is booming.”

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The Value Screen

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Versarien becomes Graphene Council's first verified producer

Advanced materials engineering group Versarien announced that it was the first graphene company in the world to successfully complete the Graphene Council's ‘Verified Graphene Producer’ programme on Monday.

The AIM-traded firm described the US-based Graphene Council's programme as an independent, third party verification system that involved a physical inspection of the production facilities, a review of the entire production process, a random sampling of product material and “rigorous characterisation and testing” by an international materials laboratory.

It said the programme was based on the most recent developments in globally-recognised graphene standards, surveys of graphene producers, researchers and users, as well as analysis of commercially available graphene products.

The Graphene Council had designed the programme to be an “important step” in providing customers and end-users with a degree of confidence that had not existed before, the board said, in that they were sourcing material from a reputable supplier.

That, Versarien claimed, would bring “transparency and clarity” to a rapidly-changing and opaque market for graphene materials.

“Successful commercialisation of graphene materials requires not only the ability to produce graphene to a declared specification, but to be able to do so at a commercial scale,” said Terrance Barkan, executive director of the Graphene Council.

“It is nearly impossible for a graphene customer to verify the type of material they are receiving without going through an expensive and time-consuming process of having sample materials fully characterised by a laboratory that has the equipment and expertise to test graphene.”

Barkan said the Verified Graphene Producer programme developed by the council provided a level of independent inspection and verification that was not available anywhere else.

“We are pleased to have worked with the National Physical Laboratory in the UK, regarded as one of the absolute top facilities for metrology and graphene characterisation in the world.

“They have provided outstanding analytical expertise for the materials testing portion of the programme.”

Neill Ricketts, chief executive officer of Versarien, added that the company was “delighted” that it was the first graphene producer in the world to successfully complete the Verified Graphene Producer programme.

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China’s local govt bond issuance soars more than fivefold in Q1

China’s local governments issued a total of 1.4 trillion yuan of bonds in the first quarter of 2019, up 540.82% from a year earlier, according to Securities Daily’s calculation.

About 624.5 billion yuan of bonds were issued by local governments across the country in March, rising 226.96% from a year ago.

Amid Beijing’s push to revive flagging economic growth, local governments were allowed to issue debt earlier than normal this year. This, together with larger issuance, accounted for the sharp growth in first-quarter local government bond issuance.

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China to cut more fees and service charges on July 1

China will cut government-related fees and service charges to reduce costs for companies and individuals from July 1, state media said on Wednesday, part of a wider pledge to pare trillions in taxes and fees this year.

China’s state council, or cabinet, said the measures, including a cut in real estate registration and mobile traffic fees, will yield at least 300 billion yuan ($45 billion) in tax and fee reductions this year, state television said.

To expand imports and spur consumption, China will also cut import duties on travelers’ luggage and personal mailed parcels from April 9, the state council added, with the rate on imported food and medicines to be cut from 15 percent to 13 percent.

For textile products and appliances the rate will be cut to 20 percent from 25 percent, it added.

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Anglo taking tailings dam monitoring to next level

Diversified mining company Anglo American is implementing new techniques that give the company far more control over its tailings dams, which have been thrown into the spotlight after the tragic loss of life at Brumadinho, in Brazil, where an iron-ore tailings dam collapsed at Vale’s Corrego do Feijao mine earlier this year killing hundreds of people.

The London- and Johannesburg-listed company has developed a new technique that provides information on the amount of water in its tailings dams and fibre-optic installations at some of its tailings storage facilities provide real-time monitoring of strain, deformation and seepage.

“Nobody else in the industry is doing this,” Anglo American technical director Tony O’Neill disclosed during Wednesday’s sustainability presentation, covered by Creamer Media’s Mining Weekly Online.

At the Quellaveco copper mine in Peru, Anglo is introducing micro-seismic monitoring of tailings dam foundations, which checks on geological and structural features in the dams and their foundations.

“It’s another industry first,” said O’Neill.

While these initiatives provide the company with a high level of assurance, Anglo’s ultimate aim is to eliminate tailings dams altogether.

Against that background, it has done a lot of work on coarse particle flotation and engineering design that will be implemented at its El Soldado copper mine in Chile next year and hopefully also at Quellaveco, where Mitsubishi is a co-owner.

The company has also developed polymer systems that clean up water quicker and allow for the coagulation of the coarse particles into even larger coarser particles.

It has had a lot of success with that and is now starting to implement an initial pilot plant. The aim is to create particle sizes of around 250 microns to 300 microns, with water naturally releasing out of the tailings dams.

“Our ultimate aim is to take that into dry stacking but, as we sit here today, that technology isn’t practicable for operations at scale. That’s something that we’re working on,” he said.

The company is also working on a step change in capital intensity and footprint equation, with coarse particle flotation reducing water consumption by 30%, and energy by 30%, and increasing output by 30%.

Bulk sorting is poised to increase head grade by 5% to 7%. New crushers being developed with a group in Germany provide a 10% energy reduction. “We’ve made tremendous progress in the last 12 months. Our first bulk sorter is now operating in Chile. We’ve got another two imminent for Brazil and South Africa. The early signs are very promising on that work and they’ve been enabled by a new generation of sensors and we think that these sensors, as they combine with artificial intelligence, will give us a whole range of new applications," he said.

A number of crushers have been destroyed in the development process. “We haven’t quite got that one right. But the signs are that we’ll get there and these will replace, in many instances, some of these really large energy consuming SAG mills,” O’Neill divulged.

He described the most exciting area as that of novel leach, new chemistry that could deal with issues at legacy tailings dams.

Overall, Anglo is advancing human-centred operation to its absolute limit through its P101 programme, before entering into the realm of autonomous operation.

“We’ve made some tremendous progress in the last 12 months. We’ve seen productivity in some of our key processes doubling. But, at its essence, it’s about reliability and predictability,” O’Neill added.

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Eastern Libyan commander orders forces to move on Tripoli

After years of sabre-rattling, eastern Libyan commander Khalifa Haftar ordered his troops on Thursday to march on the capital Tripoli, escalating a conflict with the internationally recognised government.

Seeking to encircle the capital his forces approached from south and west, seizing one town south of the city before stopping for the night some 60 km (37 miles) south of Tripoli, eastern officials said.

The offensive marked a dramatic escalation of a power struggle that has dragged on in Libya since the overthrow of Muammar Gaddafi in 2011.

The capital is the ultimate prize for Haftar’s eastern parallel government. In 2014 he assembled former Gaddafi soldiers and in a three-year battle seized the main eastern city of Benghazi, then this year took the south with its oilfields.

The offensive surprised the United Nations, whose Secretary-General Antonio Guterres flew on Wednesday to Tripoli to help organise a reconciliation national conference.

Asked about the offensive, Guterres said Libya needed a political, not a military, solution. His Libya envoy Ghassan Salame sat next to him stone-faced with folded arms.

Guterres stayed in the fortified U.N. compound on Tripoli’s outskirts for the night and plans to meet Haftar on Friday, a U.N. spokesman said.

But there was no sign that the east was willing to stop a move that was announced by Haftar in a speech full of talk about victory.

“To our army which is stationed at the outskirts of Tripoli. Today we complete our march,” he said in an audio tape.

Haftar, called “Mushir” by supporters, which means “field marshal” in Arabic, has built his name by fighting Islamists. But many of his opponents see him as a new Muammar.

Since Gaddafi’s downfall, the country has been divided between the U.N.-backed government in Tripoli and the parallel administration allied to Haftar.

Armed groups from the coastal city of Misrata, who oppose Haftar, moved to Tripoli to defend it, residents said.

The governments of France, Italy, the United Arab Emirates, Britain and the United States said in a joint statement that they were deeply concerned about the fighting.

The offensive stared with the capture of Gharyan, a city some 80 km south of Tripoli after brief skirmishes with forces allied to Tripoli-based Prime Minister Fayez al-Serraj.


The offensive is a setback for the United Nations and Western countries which have been trying to mediate between Serraj and Haftar, who met in Abu Dhabi last month to discuss a power-sharing deal.

The conference the U.N. is helping to organize is aimed at forging agreement on a road map for elections to resolve the prolonged instability in Libya, an oil producer and a hub for refugees and migrants trekking across the Sahara in the hope of reaching Europe.

Haftar enjoys the backing of Egypt and the United Arab Emirates, which see him as bulwark against Islamists and have supported him militarily, according to U.N. reports.

Haftar has also fostered ties with Saudi Arabia where he was received by King Salman last week. No details have emerged, but analysts say the visit likely helped him boost ties with ultra-conservative Muslim Salafists, who are counted among his troops and follow Saudi preacher Rabae al-Madkhali.

The Salafists are also based in the west of Libya including Tripoli, where a Salafist force controls the airport. It is allied to Serraj, but has changed sides before like other groups in the capital. Serraj has no full-time troops.

The offensive followed the same pattern used by anti-Gaddafi rebels in 2011, with the main thrust at Tripoli coming from the south. Gharyan is strategic because it is the last town before a coastal plain, and a base for fighters to fall back to if a battle for the capital drags on.

A group allied to Haftar also moved to take a checkpoint 27 km west of the capital, hoping to cut the coastal road to Tunisia, Tripoli’s lifeline, residents said.

Haftar’s biggest opponent is Misrata, a western city home to strong forces which also have aircraft, analysts say. It is known for resisting old regime figures, including in 2011 when forces loyal to Gaddafi besieged it for three months.

Evoking this spirit, members of Misrata armed groups said in video message they will they stop Haftar and his “zahaf”, Arabic for crawl, a word used by Gaddafi for his popular marches.

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Trump says U.S.-China trade deal may be reached in four weeks

Trump says U.S.-China trade deal may be reached in four weeks

U.S. President Donald Trump said on Thursday the United States and China were close to a trade deal that could be announced within four weeks, while warning Beijing that it would be difficult to allow trade to continue without a pact.

The two countries are engaged in intense negotiations to end a months-long trade war that has rattled global markets, but hopes of a resolution soared after both sides expressed optimism following talks in Beijing last week.

Speaking to reporters at the White House at the start of a meeting with Chinese Vice Premier Liu He, Trump said some of the tougher points of a deal had been agreed but there were still differences to be bridged.

“We’re getting very close to making a deal. That doesn’t mean a deal is made, because it’s not, but we’re certainly getting a lot closer,” Trump said in the Oval Office.


Trump declined to say what would happen to U.S. tariffs on $250 billion worth of goods as part of a deal. China wants the tariffs lifted, while U.S. officials are wary of giving up that leverage, at least for now.

Asked about the benefits of an agreement for China, Trump said: “It’s going to be great for China, in that China will continue to trade with the United States. I mean, otherwise, it would be very tough for us to allow that to happen.”

KATSUJI NAKAZAWA, Nikkei senior staff writerAPRIL 04, 2019 15:19 JST

TOKYO -- China's top trade negotiator Vice Premier Liu He arrived at the Office of the U.S. Trade Representative, just steps from the White House, on Wednesday morning and was greeted by his counterpart Robert Lighthizer.

Despite a recent incident in which a Chinese woman was caught intruding into U.S. President Donald Trump's Mar-a-Lago estate in Florida carrying a thumb drive coded with malicious software, the two negotiators shook hands with big smiles. By now, after multiple rounds of negotiations, they know each other well.

Tasked with setting up a summit between Trump and Chinese President Xi Jinping by the end of the month, however, Liu has an uphill climb.

Liu's boss, President Xi, would prefer to visit the U.S. and put the trade talks behind him before he hosts the second Belt and Road Forum for International Cooperation in Beijing late this month. For that to happen, Liu has to clinch a near-full deal as soon as possible.

Furthermore, the Chinese side is looking for the U.S. to follow proper protocol and deliver an official red-carpet invitation to Xi. Time is running out.

Trump administration officials have touted progress in the trade talks, but as was seen at the recent U.S.-North Korean summit in Hanoi, negotiations with China could collapse if differences masked by Washington's talking points cannot be bridged.

Against this backdrop, a source familiar with U.S.-China relations had some interesting thoughts about the future of the negotiations.

Chinese Vice Premier Liu He was all smiles as he greeted U.S. Trade Representative Robert Lighthizer in Washington ahead of trade negotiations on April 3, but tensions between the two nations are simmering.   © Getty Images

"China will not make any unilateral concessions," the source said. "Pay close attention to a possible U.S.-China summit in Japan."

Such a summit would coincide with a meeting of the leaders of leading industrial and emerging-market nations in Osaka, scheduled for June 28-29. Both Trump and Xi will attend the Group of 20 gathering -- a golden opportunity for the two to sit down together.

If the U.S. and China are still fighting over trade in late June, all eyes would be on Osaka for a breakthrough.

Meanwhile, Beijing also has the option of pursuing a Xi-Trump summit one month earlier, in late May. The U.S. president is already planning a trip to Japan at that time. He is to be the nation's first state guest in the Reiwa era, which begins on May 1 with the ascension to the throne of a new emperor.

From Japan, it would be a short trip to China.

Yet a May summit in China has its complexities. For one, Trump has already visited Beijing, in November 2017, and by protocol, it is Xi's turn to visit the U.S.

Furthermore, under the current tense security environment, including a recent incident in which Chinese warplanes crossed the "median line" separating mainland China and the self-ruled island of Taiwan, it would be difficult to ask Trump to break with protocol and fly on to Beijing.

U.S. President Donald Trump, left, and Chinese President Xi Jinping sit side by side to watch an opera performance at Beijing's Forbidden City in 2017.   © AP

A U.S.-China summit on the sidelines of the G-20 gathering in Osaka in late June, however, would allow both sides to save face.

The negotiations toward a trade deal resemble high-stakes diplomatic poker. But China partially revealed its hand with the recent passing of a foreign investment law. Approved in March at the annual session of the National People's Congress, the nation's parliament, the law, in effect, admits that the Chinese government has until now not adequately extended protection to foreign companies' investments and assets.

The law contains measures to protect foreign investors. It includes a ban on forced technology transfers, an apparent acquiescence to one of the U.S.'s big demands.

At first glance, the ban seems to be a significant Chinese concession. On second glance, it has its limits.

To start with, it would not take effect until Jan. 1, a long way off.

In China, even all-important revisions to the national constitution usually take immediate effect. In March 2018, a revision that scrapped the two-term limit imposed on Chinese presidents was implemented the day it was enacted.

But with the new foreign investment law, China is in no rush. Implementation -- and taking the binds off some foreign companies operating in the country -- can wait until next year.

The annual session of the National People's Congress, China's parliament, is held at the Great Hall of the People in March. Here, a foreign investment law was approved. (Photo by Taro Yokosawa)

Furthermore, for the new foreign investment law to be smoothly implemented, additional legislation and detailed rules would be needed. Without these subsidiary laws, local governments would not budge, and orders from the central government would not be carried out.

"It will take about two years for the new foreign investment law to have an actual impact," said one source familiar with the law.

Another problem regarding the new law is that the ban on forced technology transfers only applies to government actions.

But foreign companies entering China are usually pressured to handover technology by private Chinese companies, not the government. Associations of Western companies operating in China have repeatedly pointed this out, but their concern has gone unheeded.


The embattled envoy: Xi critics take aim at trade negotiator Liu He

Lighthizer and other members of the U.S. negotiating team are well-versed in U.S.-China relations and the myriad issues they entail, including the possibility of Beijing not enforcing the rules it has agreed to.

The U.S., therefore, is demanding the inclusion of a verification mechanism that would consist of regular meetings, implementation reviews and a penalty regime for violations.

Call it a substitute for trust.

For China, this demand represents unacceptable interference in its domestic affairs. Still, China has continued to make strenuous efforts to try to find common ground with the U.S.

In February, after one round of trade negotiations, Vice Premier Liu as well as vice ministerial- and bureau chief-level officials returned to Beijing while division chief-level Chinese officials remained in Washington to search for that mutual understanding.

But it takes considerable time to nail down the specific details and wording in huge numbers of consensus documents. Learning lessons from the past, the U.S. is not tolerating slight discrepancies between the Chinese and English versions of the documents.

U.S. and Chinese officials have held telephone talks to discuss important points. But this kind of negotiating also takes time. In China, top-down decisions must be minded, and negotiators need to seek permission from higher authority before they can make major concessions.

Meanwhile, signals coming out of Beijing hint to a prolonged fight.

"Capitalism will perish eventually and socialism will achieve a victory ultimately," Xi said in a speech. "But socialism will continue to cooperate and struggle with capitalism, which has developed productivity, for a fairly long period and it is necessary to learn from the beneficial results of civilization created by capitalism."

This speech by Xi was given six years ago, but on Monday, with Beijing and Washington still battling it out in trade negotiations, the speech was republished in the Communist Party's theoretical journal.

In the speech, Xi declared that while learning from and taking advantage of the U.S., socialist China will defeat the capitalist America in the end.

Xi has set a deadline for China to vanquish the U.S. -- 2049, the 100th anniversary of the founding of the People's Republic of China, or "a new China." On the way to the target year, China also aims to catch up with the U.S., at least economically, by 2035.

This means China cannot afford to accept demands from the U.S. that could shake the foundation of its socialist system. For China, cutting off subsidies to state-owned companies and implementing other structural reforms is out of the question.

What is important for China is "political security," which means maintaining its socialist system -- the system that is to defeat the U.S.

The trade negotiations represent nothing less than two great powers' battle for hegemony, as does the skirmishing over private Chinese tech giant Huawei Technologies.

If a U.S.-China summit does materialize, possibly in Japan, any agreement that might be concluded is likely to be tentative. The two countries face an extremely bumpy road to a sustainable and permanent deal.

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Carlyle takes step forward on $1 billion U.S. oil-export project

A proposed $1 billion deepwater oil-export project moved ahead on Thursday with U.S. private equity firm Carlyle Group agreeing to a 50-year lease on land near Corpus Christi, Texas, for a terminal.

Officials of Carlyle-backed Lone Star Ports LLC on Thursday agreed to lease 200 acres along the port of Corpus Christi where it has proposed a terminal and docks to load U.S. shale onto supertankers.

The project is one of two proposed for the Corpus Christi area and among eight deepwater ports planned along the U.S. Gulf Coast. They are vying to move shale from fields in South and West Texas to markets in Asia, Latin America and Europe.

Port of Corpus Christi Commission on Thursday also agreed to authorize the contract, said Sean Strawbridge, chief executive of the port. A dredging project that will increase the water depth to 54 feet from 47 feet in the channel will begin on Friday, he said.

“The coast desperately needs more capacity and infrastructure to handle the anticipated oil production growth,” Strawbridge said.

A Texas court on Monday lifted a temporary injunction that had prevented Corpus Christi officials from entering into the contract, he said. Carlyle, which a spokesman said has not made a final investment decision on the project, has said it hopes to begin operations by October 2020.

Carlyle has pledged $400 million to continue to dredge the ship channel to a 75-foot depth to allow very large crude carriers, which carry up to 2 million barrels of crude, to dock at the terminal. That portion of the project faces an extended environmental review.

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Canadian Indigenous Groups Look To Buy Into Controversial Pipeline

At least five indigenous groups are looking to buy a stake in the Trans Mountain pipeline that the Canadian federal government bought from operator Kinder Morgan last year, CBC reports, adding that one of these groups yesterday met with finance minister Bill Morneau for early discussions of the issue.

Participants in the discussion from the First Nations group said the talks were preliminary and not an acquisition discussion. The federal government has already stated it would rather sell the project once the expanded pipeline is built.

"Any group that is interested in the Trans Mountain pipeline can be doing whatever they see fit from their perspective," Morneau told CBC, adding "The government has not yet gotten to a decision point."

In January, media reported that a group of First Nations was mulling over a bid for the project and would likely place it in April or May, the Vancouver Sun reported citing one representative of the group.

There were even reports that the First Nations were discussing buying 100 percent of the pipeline.

"We all want a safe and proper environment; the environment is so key," the chief executive of the Indian Resource Council said at the time. “"But we can continue to still do some economic development and have that balance. And that's what we need to strive for — to find that balance."

The federal government of Canada last year bought the Trans Mountain expansion project from TransCanada for US$3.4 billion (C$4.5 billion) when the latter said it was reluctant to pursue the project in the face of too many delays and strong opposition from environmentalists and the new government of British Columbia. It then said it would seek other buyers for the project to carry it out. The expansion project will cost more than US$5 billion (C$7 billion).

The Trans Mountain project is currently suspended while the British Columbia Court of Appeals hears a case brought against it by the government of the province and a First Nation that is against the project.

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ClipperData Forecasts IMO 2020

With only nine months to go before the implementation of IMO 2020, the only certain thing about the forthcoming regulation is that there will be uncertainty. In an effort to better understand the impact, ClipperData has prepared a forecast for marine fuel consumption that covers the period between 2020 and 2025.


We expect marine gasoil (MGO), an ultra-low-sulfur option, will become the fuel du jour, accounting for about 40 percent of total marine fuel demand. Robust demand for MGO is expected in emissions control areas in particular.

Another option to meet the sulfur limit is low sulfur fuel oil (LSFO). Though availability and compatibility issues will be concerns, its anticipated lower price relative to MGO suggests LSFO will be central to the post-2020 marine fuel marketplace. We expect LSFO to make up 32 percent of marine fuel demand in 2020.

High sulfur fuel oil (HSFO) cleaned by scrubbers will account for 17.5 percent of marine fuel demand, while LNG will only represent a small fraction.


Our forecast for noncompliance is a bit more conservative than other estimates. While OPEC put noncompliance measured by illegal consumption of HSFO at around 30 percent, we expect something closer to 10 percent. We think physical bunker suppliers will be reluctant to sell non-compliant HSFO to vessels without a scrubber for fear of reprisal from port states.

…and Beyond

By 2021, shipowners will be more comfortable with LSFO compatibility. MGO will fade away as LSFO increases its market share. By 2025, we expect LSFO and MGO to take up roughly the same market share at approximately 35 percent of global bunker fuel consumption apiece.

The economic incentive to install a scrubber continues beyond 2020 as the global market grapples with the glut of HSFO. After making up 17.5 percent of demand in 2020, we expect scrubbed HSFO will constitute 28 percent of marine fuel demand in 2025. LNG remains a niche fuel.

Noncompliance, meanwhile, drops off after 2020 because we believe HSFO prices will recover and penalties from noncompliance will discourage the incentive to cheat. Here too, we are bit more conservative relative to our peers. We believe noncompliance will fall from 10 percent in 2020 to 1.5 percent in 2024, while the IEA believes noncompliance will fall from 16 percent in 2020 to 2 percent in 2024.

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U.S. drillers cut most oil rigs in a quarter in three years -Baker Hughes

U.S. energy firms this week reduced the number of oil rigs operating to their lowest in nearly a year, cutting the most rigs in a quarter in three years despite a 30 percent hike in crude prices so far in 2019.

Drillers cut eight oil rigs in the week to March 29, bringing the total count down to 816, the lowest since April 2018, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday. RIG-OL-USA-BHI

That is the first time the rig count declined for six weeks in a row since May 2016 when it fell for eight consecutive weeks.

For the month, the rig count fell by 37 in March, the most in a month since April 2016 when it declined by 40 rigs.

For the quarter, the rig count fell by 69, the most in a quarter since the first quarter of 2016 when it fell by 164 rigs.

The U.S. rig count, an early indicator of future output, is still a bit higher than a year ago when 797 rigs were active after energy companies boosted spending in 2018 to capture higher prices that year.

Drilling this year has slowed as independent exploration and production companies cut spending as they focus on earnings growth instead of increased output with crude prices projected to decline in 2019 versus 2018.

U.S. crude production slipped in January to 11.87 million barrels per day (bpd), from a monthly record high of 11.96 million bpd in December, the U.S. Energy Information Administration said in a monthly report on Friday.

U.S. crude futures rose to a four-month high over $60 a barrel on Friday, putting the contract on track for its best quarter since 2009, as U.S. sanctions against Iran and Venezuela as well as OPEC-led supply cuts overshadowed concerns over a slowing global economy.

Looking ahead, crude futures were trading around $60 a barrel for the balance of 2019 and about $59 in calendar 2020.

U.S. financial services firm Cowen & Co said this week that projections from the exploration and production (E&P) companies it tracks point to a percentage decline in the mid single digits in capital expenditures for drilling and completions in 2019 versus 2018.

Cowen said independent producers expect to spend about 11 percent less in 2019, while international oil companies plan to spend about 16 percent more.

In total, Cowen said all of the E&P companies it tracks that have reported will spend about $81.0 billion in 2019 versus $85.5 billion in 2018.

There were 1,006 oil and natural gas rigs active in the United States this week, according to Baker Hughes. Most rigs produce both oil and gas.

Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, this week forecast the average combined oil and gas rig count will fall from 1,032 in 2018 to 1,016 in 2019 before rising to 1,092 in 2020.

That was an increase in Simmons’ prediction last week of 999 rigs in 2019 and 1,087 in 2020.

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Trump issues new permit for Keystone XL pipeline circumventing court order

The move aims to undercut legal challenges to the $8 billion project, including a November ruling by a Montana-based district judge that faulted the State Department’s previous environmental analysis, according to a person familiar with the matter. It could pave the way for beginning some preliminary work, according to Clearview Energy Partners.

“It looks like the intent is to wipe the slate clean and replace the previous presidential permit with this new one,” Height Securities LLC analyst Katie Bays said. Keystone XL doesn’t need the changes to the supplemental environmental impact statement “because Trump invalidated that whole process and issued this new president permit.”

The pipeline, proposed more than a decade ago, would carry crude from Canada’s oil sands to the U.S. Midwest. Trump’s State Department approved the project in 2017 after President Barack Obama denied TransCanada a permit on grounds its oil would contribute to global warning.

It’s good news for Canada’s energy producers after delays to planned expansions of the Trans Mountain pipeline and Enbridge Inc.’s Line 3. The lack of pipelines is partially blamed for a slowdown in oil sands investment and the partial pullback of some international oil companies including Royal Dutch Shell Plc.

Unlike the earlier State Department permit, which was issued after a deep environmental analysis required under the National Environmental Policy Act, the new presidential permit is not directly tied to any such review. And the NEPA statute that generally compels environmental study of energy projects and major agency actions does not apply to the president.

Pipeline developers are generally required to receive presidential permits for border-crossing facilities. The State Department has been tasked with vetting permit applications for oil pipelines since 1968, when an executive order put the agency in charge.

But Trump still retains the authority to issue presidential permits himself, said the person, who asked for anonymity to discuss internal deliberations. And because Trump’s permit is not subject to environmental review requirements in federal law, it effectively restarts the process and undercuts the Montana lawsuit.

TransCanada, which is yet to make a final investment decision on the project, applauded the White House’s action.

“President Trump has been clear that he wants to create jobs and advance U.S. energy security and the Keystone XL pipeline does both of those things,” Russ Girling, president and chief executive officer, said in a statement.

November Ruling

U.S. District Judge Brian Morris’s November ruling found that the 2014 environmental assessment by the Obama administration fell short. Trump had used that review in a March 2017 decision allowing the project to proceed. Morris said the government must consider oil prices, greenhouse-gas emissions and formulate a new spill-response strategy before allowing the pipeline to move forward.

Administration lawyers could file a motion seeking to dismiss the Montana case, which it has appealed to the 9th Circuit Court of Appeals.

“Rescission of the prior presidential permit appears to render those proceedings moot,” ClearView analysts said in a note. Mooting the Montana case could end delays related to further State Department environmental review of the project and void an injunction blocking pre-construction work, possibly allowing it to begin in August, ClearView said.

Although the move may help resolve concerns in Montana that focused on the State Department’s environmental review, it does little to address a case before Nebraska’s Supreme Court, which is is yet to rule on an opposition challenge to the state Public Service Commission’s approval of an alternate route to the path championed by TransCanada. TransCanada also appears to need multiple water quality permits for the project in South Dakota, according to Clearview.

Refiner demand

U.S. refiners have been seeking alternative supplies of heavy crude oil after sanctions against Venezuela and a political crises in the Latin American country brought imports from the country to zero in recent weeks. At the same time, Canadian oil producers have been desperate to get new export pipelines built after a surge of new production last year caused a glut that depressed prices and prompted Alberta to impose production curtailments.

“The interest in having Keystone completed has never been higher, from a security standpoint,” Kevin Birn, IHS Markit’s director of North American crude oil markets, said in a phone interview. “The U.S. refiners demand heavy oil in the absence of Venezuelan” crude, he said.

Conservationists blasted the decision, saying it did nothing to address deep environmental problems with the project.

“The Keystone XL tar sands pipeline was a bad idea from day one and it remains a terrible idea,” said Anthony Swift, director of the Canada project at the Natural Resources Defense Council. “If built, it would threaten our land, our drinking water, and our communities from Montana and Nebraska to the Gulf Coast."

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Saudi Aramco Was the World’s Most Profitable Company in 2018

Saudi Aramco was the world’s most profitable company in 2018, easily surpassing U.S. behemoths including Apple Inc. and Exxon Mobil Corp., according to accounts published by ratings agencies before the firm’s debut in the international bond market.

Yet the Saudi kingdom’s influence on the state oil producervia high taxation is also denting its profitability and credit-worthiness, with cash generated per barrel below that of Big Oil companies such as Royal Dutch Shell Plc. That’s getting in the way of Aramco achieving a much higher credit rating.

Aramco generated net income of $111.1 billion in 2018, Moody’s Investors Service said Monday, after Fitch Ratings said the company had earnings before interest, tax and depreciation of $224 billion last year -- significantly above figures for Apple and Exxon Mobil. Both agencies gave the Saudi firm’s debt their fifth-highest investment grade level.

Profit King

The credit ratings, a first for Aramco, offer a glimpse into the accounts of the company, which have remained secret since its nationalization in the late 1970s. The information will help investors assess the possible value of a once-in-a-generation deal for financial markets: the firm’s proposed initial public offering, originally targeted for 2018 but last year delayed until 2021.

The company is preparing to raise debt in part to pay for the acquisition of a majority stake in domestic petro-chemical group Sabic, worth about $69 billion. The deal is a Plan B to generate money for Saudi Arabia’s economic agenda after the IPO was postponed. In effect, Crown Prince Mohammed bin Salman is using the firm’s pristine balance sheet to finance his ambitions.

Heavy Burden

Dependence on the company to finance social and military spending, as well as the lavish lifestyles of hundreds of princes, places a heavy burden on its cash flow. Aramco pays 50 percent of its profit on income tax, plus a sliding royalty scale that starts at 20 percent of the company’s revenue.

Aramco reported cash flow from operations of $121 billion and $35.1 billion in capital spending, and paid $58.2 billion in dividends to the Saudi government in 2018, according to Moody’s. The company had $48.8 billion of cash relative to $27 billion of reported group debt at the end of last year, said the agency, which gave the firm an A1 rating.

Fitch said its A+ rating reflects the “strong links” between the company and the kingdom, and the influence the state has on Aramco through regulating the level of production, taxation and dividends.

“Over time, a low oil price environment could cause a sustained fiscal deficit for Saudi Arabia that could result in changes down the line for Aramco’s fiscal regime,” said Neil Beveridge, an energy analyst with Sanford C. Bernstein & Co. in Hong Kong. “You can’t disassociate the sovereign government from Aramco given the very close relationship and the contribution Aramco makes to the overall funding for Saudi Arabia.”

Aramco reported funds flow from operations -- a measure closely watched by investors and similar to cash flow from operations -- of $26 per barrel equivalent of oil last year, according to Fitch. That’s below what Big Oil companies such as Shell and Total SA enjoy, at $38 and $31 per barrel, respectively.

“Funds from operations, which is operation cash flows before working capital changes, is the best measure to compare oil companies profitability, since Ebitda does not take into account taxation,” Dmitry Marinchenko, senior director at Fitch in London, said in an interview.

Middle of the Pack

Using data provided by Fitch about the company’s total oil and gas production last year and the cash flow per barrel, Bloomberg estimates that Aramco reported total fund flow from operations of about $130 billion last year. Although that’s significantly higher than what Big Oil produces, the difference isn’t a large as the Ebitda. Shell, for example, reported cash flow of $53 billion. Exxon reported cash flow last year of $36 billion.

Fitch’s A+ rating for Aramco is one level below the AA- for both Shell and Total. The Moody’s rating is well behind Exxon’s top Aaa level.

The oil giant has mandated banks to hold a roadshow for dollar-denominated notes from April 1, potentially including tranches from three to 30 years, according to a person familiar with the matter. Fitch said that Aramco planned to pay for the 70 percent stake in Sabic “in installments over 2019-21.”

The company will hold meetings with investors in coming days in cities including London, New York, Boston, Singapore, Hong Kong, Tokyo, Los Angeles and Chicago. Aramco picked banks including JPMorgan Chase & Co. and Morgan Stanley to manage the debt offering.

The bond plan, credit rating and the publication of the first extracts of Aramco’s accounts are all part of the ambitions of Prince Mohammed, who controls most of the levers of power in the kingdom, wants to pursue an IPO as part of his ambitions to ready the country for the post-oil age. Yet his ambition to secure a $2 trillion valuation has faced push back from global investors, prompting a delay in the IPO.

If he achieves the target, the offering will raise a record $100 billion by selling a 5 percent stake, dwarfing the record $25 billion raised by Chinese internet retailer Alibaba Group Holding Ltd. in 2014.

“Saudi Aramco has many characteristics of a Aaa-rated corporate, with minimal debt relative to cash flows, large scale of production, market leadership and access in Saudi Arabia to one of the world’s largest hydrocarbon reserves,” said Rehan Akbar of Moody’s. “The final rating is however constrained by the government of Saudi Arabia’s A1 rating because of the close interlinkages between the sovereign and the company.”

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Saudi Aramco Gets High First-Ever Credit Ratings

Saudi Aramco received on Monday high first-time credit ratings from Fitch Ratings and Moody’s as Saudi Arabia’s oil giant is getting ready to launch its first bond in U.S. dollars.

Fitch Ratings and Moody’s came to their respective A+ and A1 ratings of Saudi Aramco on the strong balance sheet of the world’s largest oil company, a very conservative financial profile with low debt, the acquisition of one of the world’s top petrochemical producers, SABIC, low costs of production, and strong profitability.

The rating, however, is capped by the very close linkage between Aramco and the government of Saudi Arabia, Fitch and Moody’s say.

According to Fitch Ratings, Saudi Aramco’s long-term issuer default rating (IDR) is capped at A+, because it takes into account “strong links between the company and the sovereign, and the influence the state has on the company through regulating the level of production, taxation and dividends.”

One of the key rating drivers for Fitch is the fact that Aramco is the world’s top oil producer with 2018 liquids production and total hydrocarbon production averaging 11.6 million and 13.6 million barrels of oil equivalent per day, respectively—this is well ahead of the upstream production of integrated producers such as Abu Dhabi National Oil Company (ADNOC), Shell, or Total. To compare, Fitch rates ADNOC at AA with a “stable” outlook, Shell at AA-/Stable, Total at AA-/Stable, and BP at A/Stable.

Moody’s, for its part, also says that Aramco’s rating would have been even higher were it not for the close link between the company and the government. Related: Study Blames White American’s Diet For Climate Change

“Saudi Aramco has many characteristics of a Aaa-rated corporate, with minimal debt relative to cash flows, large scale of production, market leadership and access in Saudi Arabia to one of the world’s largest hydrocarbon reserves. These features position it favourably against the strongest oil and gas companies that Moody’s rates,” Rehan Akbar, a Vice President - Senior Credit Officer at Moody’s, said in a statement.

Moody’s rates the integrated international majors as follows: ExxonMobil - Aaa stable, Chevron - Aa2 positive, Shell - Aa2 stable, and Total - Aa3 positive.

The ratings of both agencies came as Aramco is set to meet this week investors in Asia, the U.S., and Europe for a roadshow for its first-ever U.S.-dollar denominated bond issue, expected to be worth at least US$10 billion.

By Tsvetana Paraskova for

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Reuters: OPEC’s Oil Production Drops To Lowest Since 2015

OPEC’s oil production in March 2019 fell to its lowest level since February 2015, as Saudi Arabia cut more than it had pledged under the output cut deal and Venezuela continued to struggle amid U.S. sanctions and a major blackout, the monthly Reuters survey showed on Monday.

The combined production of all 14 OPEC members stood at 30.4 million bpd last month, down by 280,000 bpd compared to February and the lowest level of OPEC production since February four years ago, according to the survey.

Production in March beat the previous four-year-low record of the cartel’s oil production from February 2019. As per Reuters survey last month, OPEC’s oil production fell by 300,000 bpd in February compared to January to stand at 30.68 million bpd.

The figures in the survey for March suggest that Saudi Arabia continues to over-deliver in its share of the cuts, as it has promised multiple times since the new OPEC+ deal began in January 2019.

Under the OPEC/non-OPEC agreement for a total of 1.2 million bpd cuts between January and June, Saudi Arabia’s share is a cut of 322,000 bpd from the October level of 10.633 million, to reduce output to 10.311 million bpd.

The rate of compliance from the eleven OPEC members bound by the pact—with Iran, Venezuela, and Libya exempted—also suggests that the Saudis and their Arab Gulf partners are deepening the cuts.

The eleven OPEC members with quotas had a combined compliance of 135 percent in March, surging from 101 percent in February, according to the Reuters survey tracking supply to the market and based on shipping data and information provided by sources at oil companies, consulting firms, and OPEC.

The survey did not provide figures for the Saudi production, but estimated that exempt Venezuela—under U.S. sanctions and suffering from a major power blackout in March—saw its oil production plummet by 150,000 bpd in March compared to February.

By Tsvetana Paraskova for

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Aramco's Ghawar field had 58 bln barrels of oil equivalent end-2018 - prospectus

Saudi Aramco’s Ghawar field, the largest oilfield in the world, had 58 billion barrels of oil equivalent in combined reserves at the end of 2018, and 48.3 billion in liquid reserves, the company said in its bond prospectus on Monday.

Aramco, the world’s largest oil producing company, said it expected international crude oil prices to remain volatile after the significant fluctuations of recent months.

“Fluctuations in the price at which the company is able to sell crude oil could cause the company’s results of operations and cash flow to vary significantly,” Aramco said.

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Colombia's Ecopetrol to share three oil fields with Canada's Parex

Colombia’s state-run oil company Ecopetrol will split its participation in three oil fields equally with Canada’s Parex, which will operate the fields, the government said on Monday.

Colombia recently modified contractual terms for offshore exploration and launched a permanent bidding process in an effort to boost its long-stagnant oil sector.

Investment in at least 15 wells in the Aguas Blancas, Boranda and De Mares fields in northeastern Colombia will reach at least $150 million, the national hydrocarbons agency (ANH) said in a statement.

The ANH did not provide further details or say what financial arrangement the two companies had reached under the agreement.

The three fields cover more than 92,000 hectares (227,300 acres), the statement said.

“We have been able to sign three contracts and incorporate a first class partner in our activities in the Medio del Magdalena Valley,” Ecopetrol vice-president Juan Manuel Rojas said in the statement.

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EMEC to assess New York tidal turbine

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The European Marine Energy Centre (EMEC) will cast an independent eye on a new tidal turbine based in New York City.

Verdant Power’s 5th Generation (Gen5) tidal turbine will be deployed for commercial demonstration in New York City’s East River in 2020.

The marine energy firm secured £4.6 million funding for the project in 2018.

EMEC will provide a performance assessment of three of Verdant’s Gen5 tidal turbines.

Elaine Buck, technical manager at EMEC, said: “This will be the first time EMEC has carried out an off-site performance assessment, and potentially the first marine energy test report issued through the IECRE. This will set a new bar for tidal energy technologies globally.

“As a stage for EMEC’s first tidal energy performance assessment outside Orkney, you couldn’t ask for somewhere higher profile than New York City.”

Ron Smith, president at Verdant Power, added:“Working with EMEC, the world’s premier marine energy test facility, is a natural fit for us.

“The addition of their technical expertise and particularly their independent third-party verification of our system’s performance is key as we bring the technology to market.

“Furthermore, utilizing the newly formed IECRE System and issuing the world’s first Renewable Energy Test Report (RETR) for the assessment of power performance for a tidal energy converter not only supports our company mission but also advances the marine energy industry at large.”

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South Korea's crude oil imports from the US could surpass 40 mil barrels in H1 2019

South Korea will likely maintain its voracious appetite for US crude oil with at least 40 million barrels expected to reach the Asian consumer over the first half of 2019, as the import cost for lighter and sweeter North American grades have flipped to a discount against heavier Saudi grades.

According to a survey of major South Korean refiners as well as market analysts from Seoul-based securities companies and state-run think tanks, conducted by S&P Global Platts, Asia's fourth biggest oil consumer is expected to import a minimum of 7 million/month from the US during the first half of 2019.

This is equivalent to a total of at least 42 million barrels for the first six months, close to 70% of the annual import of 60.94 million barrels in 2018.

South Korea imported a total of 20.94 million barrels of crude from the US over January-February, up from 5.85 million barrels received in Q1 2018, latest data from state-run Korea National Oil Corporation showed.

"The average is already 10 million barrels/month so far this year ... even after taking the spring refinery maintenance season and the expected cut in Q2 run rates into account, imports could total at least 40 million barrels in H1," a market research manager at Korea Petroleum Association based in Seoul said.

Industry sources and trading desk managers in Seoul indicated that the lofty Dubai benchmark price structure on the back of OPEC's strong production cut commitments could lead to lower Persian Gulf crude intake in Q2, while competitive offers from North American crude suppliers may continue to lure local refiners.

Favorable arbitrage economics and attractive price tags bode well for increased US crude imports over the coming months, said an official from the country's biggest refiner SK Innovation.

The spread between front and third-month Platts Cash Dubai -- often used as an indicator for the strength of the Middle East sour crude market -- rallied to $1.06/b Monday, the highest level since October 23, 2018, when it was at $1.09/b.

The spread between the front-month WTI swap and same-month Dubai crude swap remained in a steep discount, averaging minus $8/b in Q1.


The average import cost for US crude cargoes fell below that for oil from Saudi Arabia earlier this year, making a case for South Korean refiners to pick up more North American grades than heavier and sour Middle Eastern crude.

For the February shipments from the US, South Korea paid on average $62.75/b, $2.20/b less than the $64.95/b average paid for crude imported from its biggest supplier Saudi Arabia during the same month, latest data from KNOC showed.

In comparison, import costs for US crude in January averaged 26 cents/b below that for Saudi crude, KNOC data showed.

The average import cost from the US in 2018 was $72.52/b, 97 cents/b higher than the average $71.55/b paid for Saudi crude cargoes last year.

KNOC's import cost figures include freight, insurance, tax and other administrative and port charges.

"Not in every trading cycle you get a chance to buy lighter and sweeter grades cheaper than heavy crudes, it's best to make the most of it while the discount remains," said a source at a South Korean refiner that regularly buys Eagle Ford and WTI Midland crude.


A small portion of the 20.94 million barrels of US crude received over January-February have been re-directed to Chinese buyers in recent weeks due to quality issues, refinery, port and trading sources in South Korea and China said.

Around 1.4 million barrels of the January-February shipments have been re-routed from South Korea to China, with Chinese independent refiner Hongrun Petrochemical picking up around 600,000 barrels of the supply, a company official confirmed last month.

SK Innovation and Hyundai Oilbank were said to have rejected the light sweet US Eagle Ford barrels, but both company officials declined to comment on the matter.

However, South Korean end-users have long been accustomed to dealing with the issues surrounding Eagle Ford crude contamination, such as inconsistency in the grade's metals, and arsenic and mercury content, industry and refinery sources said.

"Also, it's not the actual problem with the crude itself, but rather it is the complex maze of logistics involved [in bringing the oil from the production field to South Korean ports] that raises the contamination risk," a source at another South Korean refiner that regularly buys light sweet US grades said.

South Korean end-users would rarely reject US cargoes despite the occasional quality issues, the second refinery source added.

"The latest incident was nothing but a one-off trade hiccup ... we would continue to actively procure US crude oil," the SK Innovation official said.

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Exxon weighs sale of Nigerian oil and gas fields for up to $3 billion

Exxon Mobil recently held talks on the sale of a suite of oil and gas fields in Nigeria as the company focuses on new developments in U.S. shale and Guyana, industry and banking sources told Reuters.

The potential disposals are expected to include stakes in onshore and offshore fields and could raise up to $3 billion, two sources said.

“Exxon is actively divesting in Nigeria,” one source who was briefed on the divestment plans said.

Exxon declined to comment.

The Irving, Texas-based company is one of the largest oil and gas producers in Nigeria, with 106 operated platforms. Its oil output in the West African country reached 225,000 barrels per day (bpd) in 2017, its website says.

Exxon officials have held talks in recent weeks with several Nigerian companies to gauge their interest in the fields.

One source said Exxon was soon due to open a “data room” - which would provide technical information on the fields, such as seismic and production details - in Nigeria.

The discussions focused on a number of onshore fields Exxon shares in joint ventures with Nigerian state oil firm NNPC, including oil mining leases 66, 68, 70 and 104, one source said. Exxon’s share of oil production in those fields reached 120,000 bpd in 2017, the last year for which data was available.

Exxon is also weighing the possible sale of stakes in offshore fields in Nigeria, two sources said.

It is looking into offering for sale assets in Equatorial Guinea and Chad, according to two sources.

The Nigerian government has in the last decade supported a drive by domestic firms such as Oando, Seplat and privately held Aiteo to expand their operations in the country as international companies including Royal Dutch Shell sought to lower their presence due to oil spills resulting from pipeline sabotage.

Exxon recently launched the sale of its stake in Azerbaijan’s largest oilfield, which would mark its retreat from the former Soviet state after 25 years.

Exxon announced earlier this year plans to boost its capital spending from $26 billion in 2018 to $30 billion in 2019 and up to $35 billion next year as it seeks to develop oilfields in Guyana and the U.S. Permian basin as well as gas projects in Mozambique and the U.S. Gulf Coast.

In an analyst presentation last month, Exxon said it would accelerate its divestments to around $15 billion by 2021.

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API says U.S. oil inventories rose 3 million barrels last week: sources

The American Petroleum Institute on Tuesday said U.S. crude oil inventories rose 3 million barrels last week, sources said. The Energy Information Administration will release its more closely watched inventory data Wednesday morning.

Analysts polled by S&P Global Platts expect the EIA data to show crude inventories dropped 100,000 barrels. The API on Wednesday also reported a 2.6 million barrel fall in gasoline stocks and a 1.9 million barrel fall in distillate stocks, according to sources.

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Energy secretary says U.S. should debate shrinking the oil reserve

U.S. Energy Secretary Rick Perry said on Tuesday that Congress should consider whether to shrink the government’s emergency oil reserve as the boom in domestic oil production has cut reliance on petroleum imports.

The Strategic Petroleum Reserve (SPR), which stores crude oil in a series of salt caverns at heavily guarded sites on the Texas and Louisiana coasts, was authorized by Congress after the Arab oil embargo of the 1970s sparked a U.S. fuel crisis.

It has been tapped by presidents during Hurricane Katrina in 2005 and conflicts in oil-producing countries. Most recently, it was tapped by President Barack Obama in June 2011 in coordination with partners in the International Energy Agency (IEA) responding to supply disruptions in Libya and other countries.

The SPR currently holds 649.1 million barrels of oil, far more than required under agreements with the IEA.

Perry, noting that the United States was now the globe’s largest oil and gas producer, said the world had changed since the reserve was created and that Congress should debate the proper size of the SPR.

“Do we need that big of a reserve, particularly with the growth of the pipeline infrastructure we have and the growth in that infrastructure that’s going to occur over the next decade?” Perry said during a Senate hearing. Perry suggested the bigger network of pipelines could ease the transfer of crude from oilfields to consumers.

An appropriate topic for Congress to debate is whether the government should rent part of the reserve to the private sector for storage, Perry said.

Over the past several years, Congress has authorized sales of nearly 290 million barrels to fund SPR improvements, the federal budget and a drug program. The sales, some of which have occurred, will reduce the reserve’s size to about 410 million barrels by the end of 2027.

Last month, the Energy Department authorized a sale of up to 6 million barrels mandated by law to improve the SPR. Metal pipelines and other SPR infrastructure are constantly exposed to moist, salty air.

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Mastercard, Carrizo Oil & Gas, Duluth Holdings: 'Mad Money' Lightning Round

Here's what Jim Cramer had to say about some of the stocks during the Mad Money Lightning Round:

Mastercard (MA - Get Report) : "Mastercard is so good. Buy it."

Carrizo Oil & Gas (CRZO - Get Report) : "I can't believe the stock is this low."

Duluth Holdings (DLTH - Get Report) : "I like the clothes but I can't recommend the stock."

Alnylam Pharmaceuticals (ALNY - Get Report) : "I want you to be careful."

United States Steel (X - Get Report) : "Look at Nucor (NUE - Get Report) . You want quality and Nucor is quality."

To watch replays of Cramer's video segments, visit the Mad Money page on CNBC.

To sign up for Jim Cramer's free Booyah! newsletter with all of his latest articles and videos please click here.

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On why Phillips Petroleum can solve most Oil industry problems in under 18 months.

TOKYO, April 3 (Reuters) - Oil prices rose for a fourth day on Wednesday, holding firm despite an industry report showing that U.S. inventories rose unexpectedly last week, with supply cuts and sanctions supporting the market.

Brent futures rose 22 cents, or 0.3 percent, to $69.59 a barrel by 0028 GMT, after earlier reaching $69.68, the highest since Nov. 13. The global benchmark closed half a percent higher on Tuesday.

U.S. West Texas Intermediate crude rose 6 cents, or 0.1 percent, to $62.64 cents a barrel. On Tuesday, the contract rose 1.61 percent, to settle at $62.58 a barrel, after touching $62.75, its highest level since Nov. 7.

“With output falling for a fourth month thanks to continued OPEC production cuts and sanctions on Iran and Venezuela, oil prices are well supported,” Fiona Cincotta, senior market analyst at Cityindex said in a note.

“On the demand side, easing economic slowdown fears are also offering support,” she said.

Supply from the Organization of the Petroleum Exporting countries hit a four-year low in March, a Reuters survey found earlier this week.

Three of eight countries granted waivers by Washington to import oil from Iran have cut the imports to zero, a U.S. official said on Tuesday, adding that improved global oil market conditions would help reduce Iranian crude exports further.

“In November, we granted eight oil waivers to avoid a spike in the price of oil. I can confirm today three of those importers are now at zero,” Brian Hook, the special U.S. envoy for Iran, told reporters, without identifying the countries.

Vice President Mike Pence said on Tuesday the United States would continue to pressure Venezuela’s oil industry and those who support it with economic sanctions, citing world oil prices as low enough to allow for the measures.

Venezuela’s state-run energy company, PDVSA, kept oil exports near 1 million barrels per day in March despite U.S. sanctions and power outages that crippled its main export terminal, according to PDVSA documents and Refinitiv Eikon data, Reuters reported later in the day.

U.S. crude stocks rose unexpectedly last week, while gasoline and distillate inventories drew, industry group the American Petroleum Institute said late on Tuesday.

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Brent approaches $70 as oil prices rise for fourth day

Oil prices rose for a fourth day on Wednesday, with support from OPEC-led supply cuts and U.S. sanctions overshadowing an industry report showing an unexpected rise in U.S. inventories last week.

Brent futures rose 35 cents, or 0.5 percent, to $69.72 a barrel by 0207 GMT, after earlier reaching $69.87, the highest since Nov. 12 and within touching distance of $70.

U.S. West Texas Intermediate crude rose 22 cents, or 0.4 percent, to $62.80 cents a barrel, earlier rising to $62.90, the highest since Nov. 7.

"The production cuts by OPEC plus are providing a nice backdrop here for higher prices and until we see U.S. production reassert itself, the easier move is higher for oil," said Edward Moya, senior market analyst at OANDA.

Supply from the Organization of the Petroleum Exporting countries hit a four-year low in March, a Reuters survey found earlier this week.

Oil production from Russia, which has joined OPEC in agreeing to supply cuts to prop up prices, fell to 11.3 million barrels per day (bpd) last month, but missed the country's target under the deal.

Three of eight countries granted waivers by Washington to import oil from Iran have cut the imports to zero, a U.S. official said on Tuesday, adding that improved global oil market conditions would help reduce Iranian crude exports further.

Vice President Mike Pence said on Tuesday the United States would continue to pressure Venezuela's oil industry and those who support it with economic sanctions, citing world oil prices as low enough to allow for the measures.

Venezuela's state-run energy company, PDVSA, kept oil exports near 1 million barrels per day in March despite U.S. sanctions and power outages that crippled its main export terminal, according to PDVSA documents and Refinitiv Eikon data, Reuters reported later in the day.

U.S. crude stocks rose unexpectedly last week, while gasoline and distillate inventories drew, industry group the American Petroleum Institute said late on Tuesday.

Official numbers from the U.S. Department of Energy (DoE) are due out later on Wednesday.

"As long as we don't see a major build with the DoE crude oil inventories, we could see a clean move higher," Moya said.

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Sinopec dials back oil-purchase strategy after record Q4 loss -sources

China’s Sinopec Corp has ended a five-year crude oil purchasing strategy to rein in the speculative derivatives activity of its trading arm Unipec after a record trading loss late last year, four people with direct knowledge of the matter told Reuters.

Sinopec, Asia’s largest crude oil buyer and its largest refiner, in January abandoned a buying formula used since 2014 to establish performance targets for Unipec and aimed at driving down its crude feedstock costs to a pre-set discount to global oil benchmarks.

Under the strategy, Unipec had raked in a total 16.6 billion yuan ($2.5 billion) in net profit between 2014 and 2017, including a record year in 2016 at 6.17 billion yuan, according to Sinopec’s annual reports.

The formula-based cost target, though, was blamed by two of the sources for driving speculative trades that led to a nearly $700 million loss for Unipec in the final quarter of 2018.

“The headquarters believes that the purchasing scheme may be accountable for the trading debacle,” said one of the sources, “They are struggling to find a better way to manage (Sinopec’s) buying, but chose to drop it for now.”

The changes are expected to make the state trader a less active player than in recent years in both physical and derivatives markets, the sources said, although it is not possible to quantify the exact impact on volumes.

Unipec cut back its over-the-counter (OTC) paper activities shortly after news of the fourth-quarter loss broke, said a trader active in derivatives.

“They used to be doing more OTC trades, like taking positions in forward curves for Brent and Dubai, but I don’t see them doing that anymore,” the trader said.

Ending the purchase strategy will see Unipec - which last year bought some 4.2 million barrels per day (bpd) of crude oil for Sinopec refineries - reduce its activities in both paper and physical markets, said the sources.

The sources declined to be named because of the sensitive nature of the matter. Sinopec declined to comment on the change in purchasing strategy.

Adding in global oil products trading, crude oil for China’s independent refiners and liquefied natural gas, Unipec handled more than 7.3 million bpd of oil equivalent last year, on par with top independent trader Vitol SA.


Over 2017 and 2018, Unipec was asked to buy crude at $1 a barrel below a weighted average of benchmark crudes U.S. West Texas Intermediate, North Sea Brent and Middle East Dubai, two of the sources said.

“That’s an aggressive goal but it gave Unipec large scope to optimize purchasing cost through active paper and physical trades, and also the freedom to market their trading cargoes to refineries as they saw fit,” said a trading executive familiar with Unipec’s strategies.

But it also was a factor in the fourth-quarter loss, which occurred amid an unexpected plunge in global oil prices that caught many traders off-guard, and led to Unipec posting a net loss of 4 billion yuan for the whole of 2018 as reported by Sinopec last month.

The trading executive said the trader would likely now be less active and less aggressive in benchmark spot markets such as Dubai and curb its exposure in Brent-WTI spread trades.

Sinopec in January blamed “inappropriate trading strategies” in crude oil hedging for the record fourth-quarter loss, without giving further details.

With the departure of former president, Chen Bo, who was suspended in December for the loss, traders expected Unipec to err on the conservative side under new management.

Chen, a chemical engineer by training who joined Unipec around 1993 as a crude desk operator and worked his way up to the presidency in 2013, was known in the industry as an aggressive front-line crude oil trader.

The new acting president Chen Gang, a Unipec veteran, has spent most his career on the products desk and risk management.

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Private equity firm buys Permian Basin-focused Oryx Midstream in $3.6 billion deal

New York private equity firm Stonepeak Infrastructure Partners bought Permian Basin-focused pipeline operator Oryx Midstream in a $3.6 billion deal.

New York private equity firm Stonepeak Infrastructure Partners bought Permian Basin-focused pipeline operator Oryx Midstream in a $3.6 billion deal.

The two companies announced the deal on Tuesday with Stonepeak buying all of Oryx's assets.

With more than 1,200 miles of pipeline and 2.1 million barrels of storage, Oryx is touted as the largest privately-held crude oil pipeline and storage terminal operator in the Permian Basin of West Texas and New Mexico.

"As we begin our next chapter and new partnership with Stonepeak, we look forward to the operational and capital support they will provide our team as we continue to aggressively grow our footprint in the Permian Basin," Oryx Midstream CEO Brett Wiggs said in a statement.

Under the deal with Stonepeak, Oryx will be able to keep its name and headquarters in Midland. Oryx was in the middle of an expansion project at the time of the sale. Once complete, the company will be able to move 900,000 barrels of crude oil per day for its 20 customers.

In a statement, Stonepeak partner and energy business head Jack Howell described Oryx as the most attractive Permian Basin midstream company that the private equity firm had evaluated.

"Our critical focus will be on continuing to provide Oryx's diversified customer base with best in class service offerings to accommodate their growing production while also pursuing new commercial opportunities across the value-chain," Howell said.

Oryx was launched and owned by affiliates of Quantum Energy Partners, Post Oak Energy Capital, Concho Resources, WPX Energy and other investors in 2013.

The Midland pipeline operator recently completed construction on the first phase of a crude oil gathering system in an area of the Permian Basin known as the southern Delaware Basin, which includes parts of southern New Mexico and West Texas.

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Summary of Weekly Petroleum Data for the week ending March 29, 2019

U.S. crude oil refinery inputs averaged 15.8 million barrels per day during the week ending March 29, 2019, which was 18,000 barrels per day more than the previous week’s average. Refineries operated at 86.4% of their operable capacity last week. Gasoline production increased last week, averaging 9.8 million barrels per day. Distillate fuel production decreased last week, averaging 4.9 million barrels per day.

U.S. crude oil imports averaged 6.8 million barrels per day last week, up by 223,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 6.7 million barrels per day, 12.1% less than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 746,000 barrels per day, and distillate fuel imports averaged 144,000 barrels per day.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 7.2 million barrels from the previous week. At 449.5 million barrels, U.S. crude oil inventories are at the five year average for this time of year. Total motor gasoline inventories decreased by 1.8 million barrels last week and are about 2% above the five year average for this time of year. Finished gasoline inventories increased while blending components inventories decreased last week. Distillate fuel inventories decreased by 2.0 million barrels last week and are about 6% below the five year average for this time of year. Propane/propylene inventories increased by 1.6 million barrels last week and are about 17% above the five year average for this time of year. Total commercial petroleum inventories increased last week by 7.2 million barrels last week.

Total products supplied over the last four-week period averaged 20.6 million barrels per day, down by 1.6% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.2 million barrels per day, down by 1.5% from the same period last year. Distillate fuel product supplied averaged 4.3 million barrels per day over the past four weeks, up by 6.4% from the same period last year. Jet fuel product supplied was up 3.7% compared with the same four-week period last year.

Domestic production up 100,000 bbls day

Exports down 163,000 bbls day

Cushing up 200,000 bbls

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China data: Independent refiners' Mar crude imports fall for 3rd month to 8.19 mil mt

Crude oil imports by China's independent refineries fell for the third consecutive month in March to 8.19 million mt, or 1.94 million b/d, after hitting a historical high of 12.6 million mt in December, a monthly survey by S&P Global Platts showed Wednesday.

On a barrels per day basis, the March imports fell by a sharp 24.1% from 2.55 million b/d (9.75 million mt) in February. The volume was also 17.2% lower than imports in March 2018.

The decline was within market participants' expectations as more refineries are ready to start maintenance in March amid a high build-up in feedstock in the previous months.

Those refineries included a total 13.9 million mt/year capacity from ChemChina's Changyi Petrochemical, Lanqiao Petrochemical and Haihua Petrochemical, which was shut for maintenance in March.

In addition, ChemChina's 7 million mt/year Huaxing Petrochemical will also start its maintenance program from end-April till early-June.

Ahead of the maintenance, imports into Laizhou and Longkou, which rely heavily on imports by ChemChina -- have already halved to around 691,000 mt in March, compared with 1.41 million mt in February.

Looking into April, on top of Huaxing, another 5.3 million mt/year capacity from two refineries are expected to start maintenance from April, which could dampen imports for April.

In April, expected arrivals are likely to be slightly lower from March levels as more scheduled maintenance are likely to begin from April onwards, according to market participants.

Platts' survey covers barrels imported by 38 refineries with quotas, and others without quotas, through ports mostly in Shandong province and Tianjin.

These refiners were awarded a combined 72.21 million mt in the first batch of quota allocations for 2019, accounting for 85.9% of the county's total allocation for independent refineries in the batch.

The barrels include those imported directly by refiners and trading companies that will be used by the independent sector.

Only cargoes discharged over the month -- including those that arrived in previous months -- were counted as imports for the month.


Dongming, ChemChina, Qirun, Tianhong and PetroChina, were the top five importers in March, receiving a total 3.28 million mt of crudes, or 40% of the total imports in the month.

ChemChina, usually the top buyer, was surpassed by Dongming again in March same as in February -- to receive just 791,000 mt of crudes in March, down 10.8% month on month.

March was also the month with the lowest imports by ChemChina since September 2018.

Dongming remained the top buyer with around 1.04 million mt of crudes, which arrived last month, down 14.2% from February.

The company had also received the most number of crude grades in March -- five in total -- some of which had arrived in Shandong for the first time.

A total of 26 independent refineries and two trading companies imported around 29 grades of crudes from 16 countries in March, compared with 23 buyers importing 33 grades from 21 countries in February.


Dalian Hengli Petrochemical in northeastern Liaoning province, which has started up the second 10 million mt/year crude distillation unit end-March, will resume crude imports in April. The company has not imported any crude over the first-quarter, after huge imports of around 3 million mt in 2018.

"A VLCC crude cargo from UAE is expected to arrive late this month," a company source said.

Qirun Petrochemical has so far imported a total of around 1.56 million mt of crudes over the first-quarter, against its quota volume of 1.54 million mt.

The other two refineries -- Hualian Petrochemical and Chengda Petrochemical -- also imported more than its quota allocation in the first batch.

Some of the imported crude grades are unlikely to be processed by their importers, as some typically import more than they can digest. Some could have been imported on behalf of other refineries without quotas, or even resold to others, according to market sources.

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EIA: The Effects of Changes to Marine Fuel Sulphur Limits in 2020 on Energy Markets

Introduction With a planned effective date of January 1, 2020, the International Maritime Organization’s (IMO) new regulations (IMO 2020) limit the sulfur content in marine fuels that ocean-going vessels use to 0.5% by weight, a reduction from the previous limit of 3.5% established in 2012. The IMO adopted the plan for this policy change in 2008, and in 2016 reaffirmed an implementation date of 2020. The change in sulfur limits has wide-ranging repercussions for the global refining and shipping industries as well for petroleum supply, demand, trade flows, and prices. The shipping and refining industries have already begun making preparations and investments to varying degrees to accommodate IMO 2020 regulations. As the implementation date for the 0.5% sulfur cap approaches, the U.S. Energy Information Administration (EIA) expects that shifts in petroleum product pricing may begin as early as mid-to-late 2019. EIA anticipates that the effects on petroleum prices will be most acute in 2020, and the effects on prices will be moderate after that. However, the regulations will affect petroleum supply, demand, and trade flows on a more long-term basis.

EIA shows the effects of these new regulations in both the Short-Term Energy Outlook (STEO), published monthly, and the Annual Energy Outlook 2019 (AEO2019), released in January 2019. Because IMO 2020 will affect petroleum markets across several years, EIA’s STEO forecast and AEO2019 projections provide complementary insights into the effects of the regulations.

Both STEO and AEO2019 are based on current laws and regulations. AEO2019 centers around a Reference case based on relationships and general equilibrium models that satisfy projected energy demand under a set of constraints.

March 2019 U.S. Energy Information Administration | The Effects of Changes to Marine Fuel Sulfur Limits in 2020 on Energy Markets 2 STEO provides forecasted data that are updated every month. EIA uses a combination of econometric models based on historical data to forecast where EIA anticipates energy markets will move in the next two years. The STEO relies on historical data, short-term trends, and analyst judgment in creating this forecast. Although the STEO forecasts fewer variables than the Annual Energy Outlook, STEO’s publication frequency allows EIA to incorporate developments related to the IMO rule more regularly than AEO2019, which projects variables at an annual frequency through the year 2050. In addition, because the STEO is published monthly, EIA adjust its forecasts continuously to incorporate new information.

Because the current STEO forecasts end in December 2020, the data in AEO2019 provide EIA’s projections with insight into how IMO 2020 will affect petroleum markets beyond 2020. In addition, AEO2019 has more detailed data on refinery operations, marine fuel use, and fuel costs than the STEO. Projections in the Annual Energy Outlook are generated from EIA’s highly detailed, structured equilibrium models in its National Energy Modeling System. The first section of this report explains the findings related to IMO 2020 from the STEO and AEO2019 analysis. The second section discusses the uncertainties that might affect the way that actual outcomes deviate from EIA’s forecasts and projections.

Full report:

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Eastern Libya forces move west, skirmish south of Tripoli

Eastern Libyan military forces have moved to western Libya and were briefly locked in a skirmish with a rival force south of the capital Tripoli, an eastern official and residents said on Wednesday, in an escalation between rival camps in the oil producer.

The advance took diplomats and analysts by surprise, exploiting their focus on neighbouring Algeria where President Abdelaziz Bouteflika resigned on Tuesday after protests, to the relieve of Western countries valuing stability there.

Libya — in trouble since the overthrow of Muammar Gaddafi in 2011 — is divided between the internationally recognised government in Tripoli and a parallel administration allied to Khalifa Haftar.

Haftar has turned into major player in the North African country, enjoying the backing of Egypt and the United Arab Emirates which see him as bulwark against Islamists. His opponents see in him a new Gaddafi.

His forces control the east and recently expanded to southern Libya.

Now in a new escalation Haftar’s Libyan National Army (LNA) moved in the past days discreetly forces west with the LNA media office publishing on Wednesday videos of troops travelling on a coastal road from Benghazi, the main eastern city.

In the evening a brief skirmish lasting one hour was reported near Gharyan, a town south of Tripoli between the LNA and forces allied to Tripoli Prime Minister Fayez al-Serraj, who relied on patches of armed groups with flexible loyalties.

“Right now they are clashes south of Gharyan,” LNA spokesman Ahmed Mismari told al-Arabiya channel.

No casualty figures were or details were immediately available.

There was no immediate comment from the Tripoli government, which had issued earlier a general alert for its forces in response to the eastern advance.

“There is no military solution,” Serraj said in the statement.


Analysts doubt the LNA is capable of launching a full-scale attack as it has stretched itself with the southern advance and it also relies on tribesmen and other auxiliary forces.

Some diplomats say the advance is mainly a psychological campaign to pressure Serraj into a power-sharing deal on eastern terms, allowing Haftar to become commander of a national army.

FILE PHOTO: French President Emmanuel Macron stands between Libyan Prime Minister Fayez al-Serraj (L), and General Khalifa Haftar (R), commander in the Libyan National Army (LNA), who shake hands after talks over a political deal to help end Libya’s crisis in La Celle-Saint-Cloud near Paris, France, July 25, 2017. REUTERS/Philippe Wojazer

The confrontation is in any case a major setback for the U.N and Western countries which have been trying to mediate between Serraj and Haftar. Both men had met in Abu Dhabi last month to discuss a power sharing deal and a national conference is set to follow this month to agree on a road map for elections.

Some of Haftar’s supporters have called the U.N. efforts a waste of time, urging him to carry out a military solution to establish himself as national army commander.

During the day the LNA had turned up pressure on Tripoli, warning of a military campaign to “liberate the homeland from terrorism”.

“We expect the women of Tripoli to welcome the Libyan army like the women of Benghazi and Derna did,” said Mismari, referring to two eastern cities which the LNA took by force.

NATO chief warns Congress of Russia threat

Mismari also called on young people in Tripoli to focus on the battle between LNA and Daesh, or Islamic State, in another hint that military action might be looming.

The comments suggest the LNA might seek to takeover Tripoli working with local groups instead of seeking an invasion.

In January, the LNA, which is loyal to Haftar, started a campaign to take control of the south and its oilfields with a similar rhetoric.

The announcements coincided with the arrival in Tripoli of U.N. Secretary General Antonio Guterres who is on a regional tour seeking to help avoid a confrontation between the rival Libyan camps.

On another potential frontline, a resident in Ras Lanuf, an oil town located on the coastal road, said tanks and military convoys were seen heading westwards in the direction of Sirte.

Sirte is in central Libya controlled by a force from the western city of Mistrata allied to the Tripoli administration.

Misrata, a port east of Tripoli, is home to powerful armed groups, which could match at least partly the firepower of LNA ground troops, analysts say. Haftar’s forces enjoy air superiority.

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Saudis Quietly Raised Aramco Royalties by Switching Benchmark to Brent Oil

Saudi Arabia quietly raised taxation on Aramco by switching the oil benchmark used to calculate royalties, from the actual value of the kingdom’s crude to the more expensive benchmark Brent.

The switch, made in 2017 but revealed this week in the prospectus for Saudi Arabian Oil Co.’s first ever international bond, shows how the kingdom is squeezing its oil company for money even after lowering other taxes. The change could add nearly 7 percent to the price used to determine the royalty, according to Bloomberg News calculations based on the prospectus. It also exposes Aramco to a significant new risk, related to the price difference between Saudi crude and Brent, which over the past decade has been extremely volatile.

Aramco declined to comment on the switch. The company said the most significant change to its fiscal regime was publicly announced in 2017, when its income tax was lowered to 50 percent from 85 percent.

"An effective royalty rate will be applied to production value and will be based each month on the average daily price quotes for Brent crude on the Intercontinental Exchange (or any successor exchange) for each day during such period," according to the prospectus.

Aramco currently sells its flagship Arab Light crude at a discount of nearly $2 a barrel to Brent in Europe. In late 2016, the gap was as wide as $5 and it set a record of more than $7 in 2005.

The company said in its prospectus that in December 2017 -- a reference point used throughout the document -- it realized an average global price for its five export crude grades of $60.76 a barrel, compared with a Brent price of $64.37 a barrel.

The changes to the royalty scheme were applied in 2017, but weren’t publicly announced. Bloomberg News reported most of the changes last year, including a sliding royalty system that increases taxation as the oil price rises. At the time, Aramco said Bloomberg’s reporting on its financial performance and fiscal regime was inaccurate, but those changes were confirmed in the bond prospectus released on Monday.

Since January 2017, Aramco’s royalties have been "calculated based on a progressive scheme" linked to oil prices, replacing the old flat rate of 20 percent. The new system has a marginal rate of 20 percent of revenue for oil prices up to $70 a barrel, 40 percent between $70 and $100, and 50 percent when crude’s above $100.

Saudi Arabia’s economy relies heavily on oil. While Crown Prince Mohammed Bin Salman is implementing an economic program, dubbed Vision 2030, intended to reduce dependence on hydrocarbons, the government still gets most of its revenue from petroleum exports. According to the prospectus, the oil sector accounted for more than 60 percent of the Saudi government revenue in 2017.

"The government is expected to continue to rely on royalties, taxes and other income from the hydrocarbon industry for a significant portion of its revenue," Aramco said.

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Edinburgh oil and gas firm suffers setback off Norway

EDINBURGH-based Cairn Energy has suffered a drilling disappointment in the Norwegian North Sea with a pioneering well.

The oil and gas independent noted the Norwegian Petroleum Directorate had said a well on the Presto prospect, in which it has a stake, was dry.

The well was the first drilled on production licence 885 which is in the Northern North Sea.

Cairn made no comment on the announcement.

In its annual results in March, Cairn said it expected to drill four wells in the UK and Norway region this year including Presto.

The programme includes a well on the Chimera prospect in UK waters and three off Norway.

Presto was operated by Norwegian oil giant Equinor. Cairn will operate the other three wells.

The company’s chief executive, Simon Thomson, has underlined Cairn’s belief in the potential to make big finds off the UK and Norway.

In November Cairn made a find thought to contain up to 50 million barrels oil equivalent with the Agar-Plantain well drilled east of Shetland with Azinor Catalyst and Faroe Petroleum.

Under Mr Thomson’s lead the company has combined what it regards as relatively low risk activity in the UK with potentially high impact exploration work in areas where there has been little drilling by industry standards, such as Senegal.

Cairn said last month it expects to start production in 2022 from its SNE find off Senegal. First production from the Nova field off Norway is due in 2021.

Cairn Energy shares closed up 3.3p at 160.6p.

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BP Plc (BP) Shares RCI Trending Higher

Company shares of BP Plc (BP) have seen the Rank Correlation Indicator climb higher over the past 3 trading days, suggesting that it could be nearing a turning point if the reading crosses the 80 mark.

The Rank Correlation Indicator, or RCI will find the highest high and the lowest low with a given range and will find out if the security is over or undervalued. It is very much like Stoachastic but with different time periods. Created by Charles Spearman, the indicator oscillates between +100 and -100. At +100 there is a maximum positive correlation between rising price and date. However, if the indicator shows -100, the price falls continuously while the date continues to rise. There is hence a maximum negative correlation. The interpretation is analogous to that for other oscillators. If RCI is higher than 80 (overbought), then a sell signal is triggered, and if RCI is lower than -80 (oversold), a buy signal is given.

When getting into the markets, most investors realize that riskier stocks may have an increased potential for higher returns. If investors decide to take a chance on some of these stocks, they may want to employ some standard techniques to help manage that risk. This may involve creating a diversified stock portfolio. Mixing up the portfolio with stocks from different sectors, market caps, and growth potential, may be the right move. In general, the goal is to maximize returns in accordance with the individual’s specific risk profile. It should be obvious that no matter how well rounded the portfolio is, there are always risks in the equity markets. Having a sound plan before investing can help ease the burden of knowing that markets can sometimes do crazy things without any rhyme or reason.

In order to get a full picture of the charts, we can take a look at some additional key indicators. BP Plc (BP) currently has a 14 day Williams %R of -41.81. In general, if the level goes above -20, the stock may be considered to be overbought. Alternately, if the indicator goes under -80, this may signal that the stock is oversold. The Williams Percent Range or Williams %R is a technical indicator that was developed to measure overbought and oversold market conditions. The Williams %R indicator helps show the relative situation of the current price close to the period being observed.

We can also take a look at the Average Directional Index or ADX of BP Plc (BP). The ADX is used to measure trend strength. ADX calculations are made based on the moving average price range expansion over a specified amount of time. ADX is charted as a line with values ranging from 0 to 100. The indicator is non-directional meaning that it gauges trend strength whether the stock price is trending higher or lower. The 14-day ADX presently sits at 17.33. In general, and ADX value from 0-25 would represent an absent or weak trend. A value of 25-50 would indicate a strong trend. A value of 50-75 would indicate a very strong trend, and a value of 75-100 would signify an extremely strong trend. At the time of writing, BP Plc (BP) has a 14-day Commodity Channel Index (CCI) of 48.80. Developed by Donald Lambert, the CCI is a versatile tool that may be used to help spot an emerging trend or provide warning of extreme conditions. CCI generally measures the current price relative to the average price level over a specific time period. CCI is relatively high when prices are much higher than average, and relatively low when prices are much lower than the average.

A commonly used tool among technical stock analysts is the moving average. Moving averages are considered to be lagging indicators that simply take the average price of a stock over a certain period of time. Moving averages can be very helpful for identifying peaks and troughs. They may also be used to assist the trader figure out proper support and resistance levels for the stock. Currently, the 200-day MA for BP Plc (BP) is sitting at 42.35. The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of stock price movements. The RSI was developed by J. Welles Wilder, and it oscillates between 0 and 100. Generally, the RSI is considered to be oversold when it falls below 30 and overbought when it heads above 70. RSI can be used to detect general trends as well as finding divergences and failure swings. The 14-day RSI is presently standing at 63.48, the 7-day is 65.25, and the 3-day is resting at 80.75.

Active investors are typically interested in the factors that drive stock price movements. Buying an individual stock means that you own a piece of the company. The hope is that the company does very well and becomes highly profitable. A profitable company may decide to do various things with the profits. They may reinvest profits back into the business, or they may choose to pay shareholders dividends from those earnings. Sometimes stocks may eventually become undervalued or overvalued. Spotting these trends may lead to further examination or the underlying fundamentals of the company. A company that continues to disappoint on the earnings front may have some issues that need to be addressed. It is highly important to make sure all the research is done on a stock, especially if the investor is heavily weighted on the name. Sometimes earnings reports may be good, but the stock price does not reflect that. Having a good understanding of the entire picture may help investors better travel the winding stock market road.

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Profit to be Found in Organic Greenhouse Vegetable Production

Profit to be Found in Organic Greenhouse Vegetable Production

Walker Farm has been producing its own quality Certified Organic transplants for our customers since the early ‘90s. Folks come from all over New England and nearby New York because they can’t find the organic varieties they like to grow. While we are not certified organic in our flower-producing greenhouses due to the quantity of non-organic rooted cuttings we receive during spring, what’s surprising to us is that more grower-retailers don’t adjust to the times and realize that the organic movement is a billion-dollar industry and growing.

Certification Isn’t as Hard as You Think

It’s really not that difficult to certify a greenhouse and grow organic vegetables. Many companies now offer organic mixes, and there’s new OMRI (Organic Materials Review Institute)-approved products for fertilization, pest and disease control, or biostimulant application showing up every day.

At Walker Farm, we’ve done well with compost-based mixes from either McEnroe Organics or Vermont Compost. We get the lighter mixes with added vermiculite and perlite to help young roots take off quickly. Since we use mixing and filling machines, we also like to have a nicely screened product with no stones. Most of our vegetable varieties are seeded in flats and then transplanted into pots or packs. Herb varieties that can only be produced by cuttings are purchased from Certified-Organic producers. Because vine crops and some herbs like basil do not transplant well, we seed them directly into the containers. Most of the young starts are happy at 60°F to 65°F night temperatures and comfortable daytime temperatures. Our rule of thumb is if you feel good in the greenhouse, the plants will too.

To help distinguish the organic packs from non-organic flower varieties, we have custom-made green 806 and 606 packs. We find the tomatoes and eggplants hold up better in a compost mix with the larger cells and do especially well in 4½-inch pots.

Still, when the weather gets hot, or when rainy days require a longer holding period, we supplement with Nature’s Source Organic 3-1-1. All soil mixes for tomato starts also have Sustane 5-2-4 mixed in to help with the long-term nitrogen needs. Quick-growing varieties like vine crops seldom require any additional nutrients, as the compost mix does the job. Fertilizer applications are adjusted according to weather conditions and plant needs, but we find fertilizing lightly and more often works best for us.

IPM for Organic Vegetables Has Come a Long Way

Thanks to our partnership with the University of Vermont Entomology Research Laboratory, we’ve been able to deal with pest problems extremely well. We now use trap plants, banker and habitat plants, as well as a consistent integrated pest management (IPM) scouting routine to nab the bad guys before they get out of control. Each week we scout, write down any potential or actual hot spots, and then call our IPM consultants so they can determine the good bugs we’ll need to keep the plants healthy. Although we appreciate that time spraying has gone down about 90%, occasionally a spot spray of organic material is necessary to bring an area back under control.

Some growers are surprised that a small garden center in Vermont has to hire law enforcement to help with traffic control on busy May weekends. We’re surprised that more growers don’t realize the profit potential with organic production.

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Colombia inks offshore oil deals deals with Ecopetrol, Repsol, ExxonMobil

Colombia's National Hydrocarbons Agency has inked upstream contracts with state-controlled oil company Ecopetrol, Spain's Repsol and ExxonMobil for two offshore blocks, the latest move by the country to boost its waning oil production.

Colombia currently produces just shy of 900,000 b/d of crude, down from 1 million b/d in 2015, according to S&P Global Platts Analytics, which forecasts output rising to roughly 925,000 b/d in 2020.

News of recent upstream deals "shows that the dormancy created by the last administration is officially over," said Jeremy Martin, vice president of energy and sustainability at Institute of the Americas, a public policy think tank. "Companies are ready to go. The government is fully engaged and the [Ivan] Duque administration sees the upside to seizing/rebooting the oil sector and upstream investment."

"Directionally, these two contracts for offshore and other contracts we expect to be signed support our view that there eventually will be Colombian crude production from offshore," said Platts Analytics analyst Bill Fuller. "This is still highly uncertain as only gas has been discovered so far."

Colombia's onshore conventional crude production has "little chance of returning to its former peak," Fuller said. "Colombia's onshore conventional oil fields tend to be small and heavy oil which make them relatively expensive. This is why Colombia is pursuing offshore leasing and fracking onshore shale deposits."

The deal, signed Tuesday, was for the Gua Off-1 and Col-4 blocks, sited in Caribbean waters. They carry exploratory investment commitments that if fully executed would total more than $700 million, ANH said in a statement Wednesday.

Last month, Shell signed two E&P contracts with ANH for Caribbean Sea blocks Gua Off-3 and Col-3, requiring $100 million in initial investments.

Repsol will operate both blocks, each of which is sized at around 988,000 acres, with a 50% stake. Its 50% partner for Gua Off-1, located 48 miles from the coast near La Guajira Province, is Ecopetrol. For Col-4, sited about 62 miles off the coast near Bolivar Province, Repsol is partnering with ExxonMobil.

The Colombia Petroleum Association has blamed the drop in production since 2015 on reduced spending, chiefly in exploration. But Colombia has recently revised its terms for offshore blocks, incentivizing exploration and production activity.

Colombia has made similar efforts in the past too boost its production, but "permitting agencies in terms of environmental and social issues became a major bottleneck," Martin said. "Many companies (particularly the smaller independents and juniors without deep pockets) grew impatient and walked away."

If all the exploratory programs reach full development, estimated investment commitments would exceed $1.6 billion, ANH said in its release.


Both ExxonMobil and Repsol operate various Colombian projects and assets.

Fernando Sarria, President of ExxonMobil Exploration Colombia, said the major has operated in Colombia for more than 100 years.

"Signing of this contract reinforces our interest in identifying opportunities to expand our operations in the country, both onshore and offshore," Sarria said in a statement Wednesday.

ExxonMobil is currently nearing completion of its first of many planned oil developments in nearby Guyana. First oil in that country is expected in early 2020; five producing projects are contemplated by 2025 totaling 750,000 b/d.

Repsol also has at least two other offshore exploratory blocks and several onshore producing projects in Colombia.

"Signing of these contracts [with Ecopetrol and ExxonMobil] shows our interest in continuing exploration ... in the Colombian Caribbean," Giancarlo Ariza Merello, Repsol's exploration manager of Colombia and the Occidental Caribbean, said in the statement.

In addition, Occidental Petroleum also acquired six onshore blocks in Colombia in recent months with an estimated resource of more than 700 million barrels of oil equivalent. The company has said it expects to begin exploring the acreage this year.

Oxy also operates Colombia's giant Cano Limon field, which it discovered in 1983.

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China's Chimbusco agrees low-sulphur marine fuel deal with COSCO unit

China Marine Bunker (PetroChina) Co Ltd, known as Chimbusco, has agreed a one-year supply deal with a COSCO Shipping Corp unit for low-sulphur marine fuel that meets new global environmental rules, according to a Chimbusco statement posted on a social media platform.

A Chimbusco executive told Reuters on Thursday that the marine fuel company will supply 500,000 tonnes of low-sulphur fuel oil in 2020 to COSCO Shipping Lines Co Ltd, a unit that operates container vessels for the China shipping conglomerate.

The executive said the 500,000 tonnes makes up half of the annual marine fuel demand at Chinese ports by the whole fleet of COSCO Shipping Corp, adding that Chimbusco expects to source most of the supplies from imports.

COSCO operates a fleet of 1,274 vessels, with a combined carrying capacity of 102 million dead-weight tonnes, the world’s largest, according to the group’s website. The fleet includes 480 container ships, 418 dry bulk vessels and 195 oil tankers.

The executive also said “a tiny percentage” of COSCO Shipping’s fleet have installed sulphur-stripping scrubbers.

In a global effort to combat air pollution from the shipping industry, International Maritime Organization (IMO) rules will ban ship from using fuels with a sulphur content above 0.5 percent from 2020, compared with 3.5 percent now unless they are equipped with so-called scrubbers to clean up sulphur emissions.

China’s state-run refineries have in recent months started pilot production of low-sulphur fuel ahead of the IMO rule taking effect next year, and a Sinopec executive has asked the government to introduce tax rebates and a quota system to boost output of the cleaner fuel.

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South Korea tests U.S. super light oil as Iran waiver uncertainty grows - sources

South Korea has begun testing super-light U.S. oil sold by energy firm Anadarko Petroleum Corp as a substitute for Iranian crude as it awaits word from Washington whether it can keep buying oil from the Middle Eastern nation, sources said.

South Korea is one of Iran’s biggest Asian customers, and was one of eight importers that received waivers to keep buying Iranian oil when the United States re-imposed sanctions in November.

Washington is expected to reduce those waivers in May, disrupting South Korea’s supply of Iranian condensate, an ultra-light crude oil that is used in its large refining and chemical industry.

West Texas Light (WTL) is seen as a potential substitute for Iranian condensate because, when refined, WTL yields a large volume of the refined product naphtha, which can be used to produce petrochemicals. Most WTL is produced in the western part of the Permian Basin in Texas.

Anadarko spokesman John Christiansen confirmed the company is exporting WTL, and said they “anticipate those volumes will continue to grow in the future”, although he did not confirm whether South Korea was testing this grade.

South Korea’s top refiner SK Energy, and the country’s smallest refiner Hyundai Oilbank are studying the crude’s assay and testing samples, the sources said.

“The crude’s API seems to be 48 degrees so in a way it’s possible (to replace Iranian condensate) but again we need to check the oil’s quality,” one of the sources said.

The source is referring to the so-called API gravity of the crude, which measures its density and indicates the type of fuels an oil yields when refined.

A spokeswoman from SK Innovation, owner of SK Energy, and a spokesman from Hyundai Oilbank declined to comment.

South Korea’s interest in West Texas Light is occurring as record U.S. oil production and exports have allowed the Trump administration to use energy as a pressure point in foreign policy. Its largest-scale efforts have been sanctions against Iran’s and Venezuela’s oil industry.

Seoul has been negotiating with the United States to extend its waiver, saying there are few alternatives to the Iranian condensate it buys, according to a former U.S. official. Yet to gain an extension South Korea will likely have to reduce its current imports by between 5 percent and 20 percent, three sources familiar with the matter said.

South Korea, a close U.S. political ally, also does not want to jeopardize its relationship with Washington.

“They’re scared of Trump. They want to be able to say, ‘Look at me, I am buying all your crude,’” said Sandy Fielden, director of oil and products research at Morningstar.

In talks last week with government officials, South Korea asked for maximum flexibility by stressing the importance of Iranian condensate for the South Korean petrochemical industry, according to a statement from the Ministry of Foreign Affairs released last week.

Washington is trying to cut Iran’s oil exports to less than 1 million barrels per day (bpd), down from more than 2.5 million bpd last May.

South Korea imported about 176,237 bpd of Iranian crude in the January to February period, according to data from the Korea National Oil Corp (KNOC), down 38.5 percent from the same period a year earlier.

U.S. crude exports to South Korea averaged about 256,000 bpd in 2018, according to the U.S. Energy Department. But, imports in February surged to 443,000 bpd, the KNOC data showed.

South Korea has been buying other types of U.S. light crude, but two buyers - SK Energy and Hyundai Oilbank - recently turned down cargoes of Eagle Ford condensate from Texas after the oil was found to contain impurities.

WTL has largely been blended with other oil grades to be sold at the Cushing, Oklahoma, delivery point for U.S. crude futures.

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Western Canadian oil inventories rise in March despite curtailments

Western Canadian crude oil storage inventories rose in March, data from energy information provider Genscape showed on Wednesday, as reduced crude by rail volumes offset mandatory oil production cuts imposed by the Alberta government.

It was the first monthly increase since the government of Canada’s largest crude-producing province introduced curtailments on Jan. 1 2019 and highlights the difficult balancing act Alberta faces as it intervenes in the market.

Crude stocks rose 221,000 barrels between the weeks ending March 1 and March 29 to hit 35 million barrels. Inventories are only 2 million barrels lower than record high levels set on Jan. 4, according to Genscape.

Landlocked Alberta is home to Canada’s vast oil sands but struggles to get its crude to markets outside the province.

Congestion on export pipelines last year pushed the discount on Canadian heavy crude versus U.S. barrels to record levels as a glut of crude built up in storage tanks, hammering producer revenues and prompting the Alberta government to impose curtailments.

That move saw the discount on Canadian barrels shrink dramatically at the start of this year to the point where it became uneconomic for many producers to ship crude by rail, effectively cutting off a conduit for crude out of western Canada.

“The narrow differentials spurred by production cut announcements are not wide enough to support rail movements at levels high enough to work off the inventory glut,” Genscape analysts said in a note.

Canadian crude-by-rail loadings were 150,000 barrels per day in March, Genscape said. That was an increase of 6,000 bpd for February, but still around half of what rail movements were in January.

Alberta’s New Democratic Party (NDP) government has leased 4,400 rail cars to start moving 20,000 bpd of crude in July, ramping up to 120,000 bpd by the end of the year when it plans to end curtailments.

The province will hold an election in less than two weeks and Cheryl Oates, spokeswoman for the NDP campaign, said there were many reasons storage may increase in any given month.

“We’re happy to see that the overall trend shows storage inventories are decreasing, (pipeline) apportionment is decreasing and that our plan to curtail and slowly allow for more production as rail and other takeaway capacity comes on line is working,” she said.

Alberta Energy Regulator data released this week also showed inventories in the province rose in February.

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Venezuela Oil Exports Remain Surprisingly Stable In March

Venezuela exported a little over 980,000 bpd on average in March despite a string of severe blackouts, Reuters reported, citing documents from state oil company PDVSA and its own data.

The blackouts suspended operations at Venezuela’s largest oil export terminal Jose and, according to, caused a slump in exports to 650,000 bpd, the co-founder of the tanker data provider, Samir Madani, told Reuters. The catchup, according to Madani, was impressive.

This suggests PDVSA, against all odds, was able to quickly ramp up shipments when power was restored.

The Reuters figures are higher than those from Kpler, a France-based energy commodity shipments tracking provider, which calculated Venezuelan March exports at an average daily of 928,000. However, Kpler estimated these had fallen by 355,000 bpd from February, dipping below 1 million bpd for the first time in more than five years.

Reuters numbers for February had Venezuela’s average daily oil exports at 990,355 bpd. calculated the March decline from February at around 100,000 bpd, from over 995,470 bpd in February to 898,383 bpd in March, Madani told Oilprice.

The bulk of what Venezuela exported last month went to China, India, and Singapore: these three destinations constituted 74 percent of PDVSA’s oil exports in March. That’s up from 70 percent in February, Reuters noted.

As the South American country grapples with its numerous problems, the U.S. plans to tighten the sanction noose around it soon. Beginning in May, importers of Venezuelan crude that use U.S. subsidiaries in their transactions with PDVSA or the U.S. banking system would have to stop buying the commodity as a grace period granted by Washington to these entities expires.

“(We will) continue to take action to ensure Venezuela’s energy resources are preserved for the legitimate government of interim president Juan Guaido, for the people of Venezuela, and the reconstruction of a country destroyed through mismanagement and corruption,” a U.S. official told Reuters earlier this week. What’s more, Washington was considering extending the sanctions to non-U.S. companies buying Venezuelan oil even if they do not use the U.S. banking system.

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Saudi Arabia threatens to ditch dollar oil trades to stop 'NOPEC' - sources

Saudi Arabia is threatening to sell its oil in currencies other than the dollar if Washington passes a bill exposing OPEC members to U.S. antitrust lawsuits, three sources familiar with Saudi energy policy said.

They said the option had been discussed internally by senior Saudi energy officials in recent months. Two of the sources said the plan had been discussed with OPEC members and one source briefed on Saudi oil policy said Riyadh had also communicated the threat to senior U.S. energy officials.

The chances of the U.S. bill known as NOPEC coming into force are slim and Saudi Arabia would be unlikely to follow through, but the fact Riyadh is considering such a drastic step is a sign of the kingdom’s annoyance about potential U.S. legal challenges to OPEC.

In the unlikely event Riyadh were to ditch the dollar, it would undermine the its status as the world’s main reserve currency, reduce Washington’s clout in global trade and weaken its ability to enforce sanctions on nation states.

“The Saudis know they have the dollar as the nuclear option,” one of the sources familiar with the matter said.

“The Saudis say: let the Americans pass NOPEC and it would be the U.S. economy that would fall apart,” another source said.

Saudi Arabia’s energy ministry did not respond to a request for comment.

A U.S. state department official said: “as a general matter, we don’t comment on pending legislation.”

The U.S. Energy Department did not respond to a request for comment. Energy Secretary Rick Perry has said that NOPEC could lead to unintended consequences.


NOPEC, or the No Oil Producing and Exporting Cartels Act, was first introduced in 2000 and aims to remove sovereign immunity from U.S. antitrust law, paving the way for OPEC states to be sued for curbing output in a bid to raise oil prices.

While the bill has never made it into law despite numerous attempts, the legislation has gained momentum since U.S. President Donald Trump came to office. Trump said he backed NOPEC in a book published in 2011 before he was elected, though he not has not voiced support for NOPEC as president.

Trump has instead stressed the importance of U.S-Saudi relations, including sales of U.S. military equipment, even after the killing of journalist Jamal Khashoggi last year.

A move by Saudi Arabia to ditch the dollar would resonate well with big non-OPEC oil producers such as Russia as well as major consumers China and the European Union, which have been calling for moves to diversify global trade away from the dollar to dilute U.S. influence over the world economy.

Russia, which is subject to U.S. sanctions, has tried to sell oil in euros and China’s yuan but the proportion of its sales in those currencies is not significant.

Venezuela and Iran, which are also under U.S. sanctions, sell most of their oil in other currencies but they have done little to challenge the dollar’s hegemony in the oil market.

However, if a long-standing U.S. ally such as Saudi Arabia joined the club of non-dollar oil sellers it would be a far more significant move likely to gain traction within the industry.


Saudi Arabia controls a 10th of global oil production, roughly on par with its main rivals - the United States and Russia. Its oil firm Saudi Aramco holds the crown of the world’s biggest oil exporter with sales of $356 billion last year.

Depending on prices, oil is estimated to represent 2 percent to 3 percent of global gross domestic product. At the current price of $70 per barrel, the annual value of global oil output is $2.5 trillion.

Not all of those oil volumes are traded in the U.S. currency but at least 60 percent is traded via tankers and international pipelines with the majority of those deals done in dollars.

Trading in derivatives such as oil futures and options is mainly dollar denominated. The top two global energy exchanges, ICE and CME, traded a billion lots of oil derivatives in 2018 with a nominal value of about $5 trillion.

Just the prospect of NOPEC has already had implications for the Organization of Petroleum Exporting Countries. Qatar, one of the core Gulf OPEC members, quit the group in December because of the risk NOPEC could harm its U.S. expansion plans.

Two sources said that despite raising the dollar threat, Saudi Arabia did not believe it would need to follow through.

“I don’t think the NOPEC bill will pass but the Saudis have ‘what if’ scenarios,” one of the sources said.


In the event of such a drastic Saudi move, the impact would take some time to play out given the industry’s decades-old practices built around the U.S. dollar - from lending to exchange clearing.

Other potential threats raised in Saudi discussions about retaliation against NOPEC included liquidating the kingdom’s holdings in the United States, the sources said.

The kingdom has nearly $1 trillion invested in the United States and holds some $160 billion in U.S. Treasuries.

If it did carry out its threat, Riyadh would also have to ditch the Saudi riyal’s peg to the dollar, which has been exchanged at a fixed rate since 1986, the sources said.

The United States, the world’s largest oil consumer, relied heavily on Saudi and OPEC supplies for decades - while supporting Riyadh militarily against its arch-foe Iran.

But soaring shale oil production at home has made Washington less dependant on OPEC, allowing it to be more forceful in the way it deals with Saudi Arabia and other Middle Eastern nations.

Over the past year, Trump has regularly called on OPEC to pump more oil to lower global oil prices, and linked his demands to political support for Riyadh - something previous U.S. administrations have refrained from doing, at least publicly.

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Oil and Gas

B.C. VIEWS: Is the NDP giving away our natural gas reserves? – Keremeos Review

B.C. Green Party leader Andrew Weaver debates in the B.C. legislature. His efforts to stop new tax incentives for LNG Canada have been voted down 83-3 by the NDP and B.C. Liberals. (Hansard TV)

B.C. Green Party leader Andrew Weaver ridiculed the minority NDP government last week for its “generational sellout” of exporting the province’s abundant natural gas reserves to Asia.

“I sat opposite for four years as I watched the members now in government hurl abuse at the B.C. Liberals,” Weaver roared in debate over Premier John Horgan’s latest tax breaks to seal the huge LNG Canada deal in northern B.C.

Weaver summed up his objection to the NDP’s liquefied natural gas policy this way.

“That’s the base level of politics and natural gas in B.C. ‘We’re going to try to deliver what Christy Clark couldn’t.’ The only way to do that is to take the giveaway … to a whole new level like we’ve never seen in Canada in terms of corporate welfare.”

Weaver has expressed fury since Horgan surprised everyone last fall by announcing his government had reached a deal with LNG Canada partners Shell, PetroChina, Mitsubishi and Korea Gas to make the largest private investment in Canadian history. Petronas, the Malaysian energy giant that walked away from a similar project for Prince Rupert, soon bought in to LNG Canada’s Kitimat shipping complex and Pacific GasLink pipeline to bring the vast gas reserves from the Dawson Creek area to the coast for compression and export as LNG.

READ MORE: B.C. gas investment taxes second highest in Canada

READ MORE: B.C.’s carbon tax costs more than the natural gas

Weaver’s accusation of a giveaway focuses on B.C.’s deep-well royalty credit program, which allows gas producers to deduct credits from royalties once qualifying shale gas wells start producing. He notes that the accumulated credits for B.C. producers are now more than $3 billion, as thousands of wells have reached into deep shale formations for decades worth of gas production.

The latest B.C. budget projects natural gas royalty revenues of $229 million for the current year and $206 million next year. Weaver’s argument is that much of this revenue is clawed back by the deep well credit, and then Shell and other producers get to use nearly free gas to power the refrigeration and compression plants used to turn gas into liquids for loading on ships.

Energy Minister Michelle Mungall reminds me that there is a minimum royalty that all producers must pay. It’s not much: three per cent on gas revenue for wells deeper than 1,900 metres, and six per cent for wells shallower than 1,900 metres.

Royalties also vary with price, which has dipped to historic lows as B.C. gas remains landlocked and our only export customer, the U.S., has developed and started exporting its own shale gas reserves. I reported last fall on the surprise that hit natural gas heating customers when B.C.’s latest increase in carbon tax made the tax more than the charge for the gas they used.

Horgan and Mungall, like former premier Clark and former minister Rich Coleman before them, emphasize that B.C. is in a fiercely competitive market that includes Russia, Qatar and other huge gas producers. Either we compete or we wind down the biggest industry in northern B.C.

For an independent look at whether B.C. is giving away its gas, University of Calgary economist Jack Mintz has a new study that finds B.C.’s total tax rate on new natural gas investments is 31.9 per cent, fifth highest of producing regions in North America. Only Saskatchewan’s is higher among provinces.

Then there are the environmental impacts of B.C.’s shale gas boom, including hydraulic fracturing and greenhouse gas impact. I’ll examine those in a future column.

Tom Fletcher is B.C. legislature reporter and columnist for Black Press Media. Email:


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Gulf of Mexico well permits rise

The U.S. Department of the Interior has issued new well permits despite the 2019 government shutdown. Twenty-four new well permits had been issued for the Gulf of Mexico as of March 26, a 26% increase from the 19 new well permits that were issued during the same period in 2018. Thirty-eight percent of these new wells are classified as exploratory wells.

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LPG cylinder price hiked: But, here is how you can get it for cheap

The price of LPG cylinder has been hiked but at slower pace, especially in non-subsidized category. Prices have been hiked in all categories like 14 kg per subsidized cylinder, 14 kg per non-subsidized cylinder and 19 kg per subsidized cylinder. Data given by Indian Oil shows that, from April 01, the price of 14 kg per subsidized cylinder is set at Rs 495.85 in Delhi, at Rs 499 in Kolkata, at Rs 493.57 in Mumbai and Rs 483.74 in Chennai. These four metro cities have seen Rs 0.25 each hike in their subsidized cylinder for 14 kg in April month. Coming back to non-subsidized LPG cylinder in 14 kg, the prices were hiked by Rs 5 each in Delhi, Kolkata, Mumbai and Chennai to Rs 706.5, Rs 732.5, Rs 678.5 and Rs 722 respectively. 

On the other hand, 19 kg per subsidized cylinder saw hefty increase in its price. It was hiked by Rs 68.5 each in Delhi and Mumbai, to Rs 1,305.5 and Rs 1,253.5, respectively. Meanwhile, the price in Kolkata which stood at Rs 1,354.5 saw Rs 67.5 hike. However, it was Chennai were prices were increased most by Rs 69 and were sold at Rs 1,405.

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ACWA Power's Zarqa IPP enters commercial operations

ACWA Power's Zarqa IPP enters commercial operations


Muscat: ACWA Power on Monday announced the National Electric Power Company (Nepco) commenced commercial operations of its ACWA Power Zarqa combined cycle power plant on September 29, 2018.

The plant can generate up to 485 megawatts (MW), the equivalent electricity required to supply up to 350,000 Jordanian households. The project is the most efficient thermal power plant in Jordan, capable of operating at over 51 per cent combined cycle efficiency, leading to lower fuel consumption and fewer emissions per megawatt-hour (MWh) of electricity generated.

ACWA Power Zarqa plant deploys three 9E gas turbines, provided by GE Power, following an agreement executed in September 2016 with ACWA Power, the developer of the plant, and SEPCOIII Electric Power Construction Co., which is the engineering, procurement and construction (EPC) contractor.

The independent power project (IPP) supports Jordan’s Vision 2025 to boost economic growth and the Master Strategy of the Energy Sector of Jordan (National Energy Strategy) to drive stronger investments in private and public power projects to boost domestic energy generation by 40 per cent by 2020.

Paddy Padmanathan, President and CEO of ACWA Power, said, “We are delighted to announce the launch of Zarqa CCGT plant, which reaffirms our commitment and contribution to the Jordanian power sector, economy, and social development.""The completion of construction and commencement of operations of the ACWA Power Zarqa plant represents our pragmatic approach to serving the power needs of growing countries and communities while increasing efficiency and delivering power at low cost. The fact that this project is capable of delivering electricity at one of the lowest tariffs in the country is a source of great pride to us.” he added.Mohamad Ali, President & CEO of GE's Gas Power Systems – Projects business in the Middle East, Pakistan and India, added, “GE has supported the development of Jordan’s power sector for almost 40years, with advanced solutions that bring high levels of operational efficiency and productivity. GE’s 9E gas turbines are an excellent fit for Jordan as they operate reliably and efficiently in extreme conditions such as desert heat and offer tremendous versatility and fuel flexibility, capable of running on more than 50 different kinds of fuels, thus allowing Nepco to utilise more economical fuels and leading to lower costs of power production.”Located to the north-east of Zarqa city, the project is constructed next to the decommissioned Hussein Thermal Power Station (HTPS). In addition to the three GE heavy-duty gas turbines, the power plant also features three heat recovery steam generators and one steam gas turbine generator. The plant consists of six stacks, one for each gas turbine and HRSG. The natural gas for the project is supplied by NEPCO through a new gas pipeline connecting the project with Jordan’s main gas pipeline.GE Power has a strong footprint in Jordan, having also signed a multi-year services agreement with Samra Electric Power Company (SEPCO) for full-plant maintenance services, including parts and repairs for critical power generation equipment for the 1,175 MW Samra Combined Cycle Gas Turbine (CCGT) Power Plant in the Zarqa region, which feeds power into the national grid for both residential and commercial use. The agreement covers seven GE gas turbines that are installed and operating at the Samra Station.

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Merkel crisis: Germany under fire over Russia pipeline - Denmark in last minute appeal

The Nord Stream 2 project, which will pump natural gas from Russia to Germany, is expected to be completed this year - however, Denmark's last-ditch attempt to stop the project could mean years of delays. Two pipelines are currently being built along the floor of the Baltic sea, adding on to two existing pipes - increasing the capacity of natural gas flowing into Germany by 55 billion cubic metres. The project is nearing its way to completion, but the Danish island of Bornholm has yet to issue a permit for construction in its waters.

Authorities have said the construction will threaten wildlife and human safety, despite initially proposing two routes around the island.

Last week, the Danish Energy Agency (DEA) proposed an alternative route further south near Polish waters, but will draw up an environmental impact assessment and consult other countries before granting a permit for building works.

In a letter revealed by Polish news website Biznesalert, Matthias Warning, the chief executive of Nord Stream told his colleagues: “This proceeding will already take several months and can be taken to appeal again — two possible court proceedings.

“All in all it may take years. During such proceedings the DEA could put a parallel southern route application on hold.”

Germany faces a road block in their €11 billion project after Denmark cited environmental concerns

The pipelines will bring in natural gas from Russia to Germany

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Decision made by Gazprom and RusGazDobycha to implement major gas processing and liquefaction project near Ust-Luga

2019 April 1 15:46

Decision made by Gazprom and RusGazDobycha to implement major gas processing and liquefaction project near Ust-Luga

Gazprom and RusGazDobycha have made a decision on the final configuration of the project for a large-scale complex that will process ethane-containing gas and produce liquefied natural gas (LNG) near the settlement of Ust-Luga, Leningrad Region. The parties have thus moved to the implementation stage in the project, Gazprom says in a press release.

The project envisages the construction of capacities for the processing of 45 billion cubic meters of gas and for the production and shipping of 13 million tons of LNG, up to 4 million tons of ethane and over 2.2 million tons of liquefied petroleum gases (LPG) per year. The complex will be processing ethane-containing gas produced by Gazprom from the Achimov and Valanginian deposits of the Nadym-Pur-Taz region. The gas remaining after the processing (about 20 billion cubic meters) will go into the Company's gas transmission system.

It is expected to put the first train of the complex into operation in the second half of 2023 and the second train in late 2024. The project operator is RusKhimAlyans, a special-purpose company established on a parity basis by Gazprom and RusGazDobycha.

The operator's priorities include the development of basic and detailed design documentation and the launch of land planning activities at the leased site of the future complex in the southern part of the Ust-Luga port (1,400 hectares). It is also planned to devise contracting arrangements within the project, designate EPC contractors, and place orders for long lead items.

The technical configuration selected for the project will help maximize financial benefit for the participants, primarily through integrating technological capacities within a single site, optimizing the industrial and logistical infrastructure of the complex, and using a common offshore shipping terminal. The complex is estimated to yield over USD 4 billion per year in revenue, while investment in the project is expected to exceed RUB 700 billion.

This large-scale project is of great significance for Russia's social and economic development. During its most active phase, the construction will involve over 25,000 specialists, with more than 5,000 permanent jobs to be created to man the operation of the facility.

The plant will make it possible to increase Russian LNG exports and to take LPG exports up by 30–40 per cent. The production of ethane, which is in high demand in the domestic industry, will also grow substantially. The ethane produced at the plant is to be supplied to a high-potential gas chemical facility whose construction is to be independently sponsored by RusGazDobycha (through a special-purpose entity, Baltic Chemical Complex). The estimated capacity of the future gas chemical facility is over 3 million tons of polymers per year.

“Today, we have launched the implementation of an ambitious project that is simply unparalleled in Russia. Within a short time, we are going to build the most powerful gas treatment and liquefaction plant in the country. Together with the technically affiliated gas chemical facility, it will grow into a large modern industrial cluster in the northwest of Russia.

The decision made today is a practical manifestation of the new economic model for the comprehensive monetization of hydrocarbon resources. Combining the production of LNG and ethane within one industrial site will have a beneficial effect on the economics and specific indicators of the project and will allow us to considerably mitigate our resource and price risks,” said Alexey Miller, Chairman of the Gazprom Management Committee.

In May 2017, Gazprom and RusGazDobycha signed a Memorandum of Intent to implement projects aimed at advancing petrochemical production on the basis of the Achimov and Valanginian deposits within the Nadym-Pur-Taz region, as well as extracting and processing gas and condensate from the fields within the Tambey cluster (Tambeyskoye and Tasiyskoye fields owned by Gazprom).

RusGazDobycha is a special-purpose company created by the National Chemical Group to increase the efficiency of the production chain, get access to resources (natural gas), and invest in feedstock production and processing facilities.

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Spot deals make up more of global LNG market as sellers get flexible

Spot trades and other short-term deals are making up more of the transactions in the global liquefied natural gas (LNG) market as producers in the United States and Russia offer more flexible volumes and traders increasingly handle cargoes.

Spot and short-term LNG trades, defined as cargoes delivered through contracts of four years or less, made up 32 percent of overall import volumes in 2018, up from 27 percent of imports in 2017, the Paris-based International Group of LNG Importers (GIIGNL) said on Monday in its annual report.

Cargoes delivered in less than three months from the transaction date increased to 25 percent of the market in 2018, compared with 20 percent in 2017, the GIIGNL said.

“For LNG importers, long-term partnerships, destination and volume flexibility as well as the ability to optimize or arbitrage between Asian and European markets remain key,” said GIIGNL President Jean-Marie Dauger in an emailed statement.

“In China, in India and South East Asia, in particular, LNG’s environmental benefits and its versatility make it particularly attractive as a destination fuel for thermal power generation and cogeneration, in the industrial and commercial sectors as well as in a growing variety of fields like marine and road transportation.”

Australia was the biggest exporter of spot and short-term volumes in 2018 as new projects in the country started up, followed by the United States and Qatar, the GIIGNL said.

Qatar’s share of spot volumes dropped to 12 percent from 20 percent as it lost its position as the leading supplier of flexible volumes, the group said.

The three biggest LNG importing countries - Japan, China and South Korea - absorbed just over half of the global spot volumes traded, while India’s spot purchases increased as its natural gas demand growth exceeded domestic production, the group said.

Re-exports also increased due to better arbitrage opportunities.

Overall, the global LNG market grew by 8.3 percent from the previous year to nearly 314 million tonnes in 2018, more than three times the size of the market in 2000, GIIGNL said.

That was the third-largest annual increase after 2010 and 2017.

The market is likely to reach a tipping point this year, with many long-term contracts starting to expire and as new supply comes on stream, Dauger said, adding that the industry needs to become more innovative and efficient in trading.

GIIGNL has 81 member companies headquartered in 26 countries and handles more than 90 percent of global LNG imports.

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NextDecade says it is first to sign U.S. long-term, Brent-linked LNG contract

U.S. company NextDecade Corp said on Tuesday it has signed the country’s first long-term contract for liquefied natural gas (LNG) produced out of the United States to be indexed to Brent oil prices.

It signed a 20-year binding sales and purchase agreement (SPA) with Royal Dutch Shell for the supply of two million tonnes per annum of LNG from NextDecade’s Rio Grande LNG export project in Brownsville, Texas, with full destination flexibility.

Shell will buy LNG on a free-on-board (FOB) basis starting from commercial operation of the project, which is expected in 2023, NextDecade said in a press release issued at an industry event in Shanghai on Tuesday.

Three-quarters of the LNG will be indexed to Brent crude oil prices, and the remaining volumes will be indexed to domestic U.S. gas price markers, including Henry Hub, the company said.

“Shell was the first to sign a long-term SPA from the United States indexed to Henry Hub in 2011, and so it is fitting they are the first to sign a long-term SPA from a U.S. LNG project indexed to Brent,” said Matt Schatzman, NextDecade’s president and chief executive, in the statement.

“We look forward to finalizing additional commercial agreements and to proceeding with the development of our Rio Grande LNG project,” he said.

Many LNG export projects are now vying for financing amid an already crowded market, and developers are competing to offer flexible pricing options to potential offtakers.

Apart from Brent, NextDecade is also offering buyers LNG priced on other U.S. gas indexes such as Agua Dulce, Waha and Henry Hub, the company said in presentation materials.

It expects Brent-indexed volumes to form a significant portion of the first phase of its Rio Grande project, based on interest from potential LNG customers, it said.

With the majority of Asian LNG contracts priced off oil, U.S. LNG projects that can offer a diversity of price indexation beyond U.S. gas prices may be able to capture more market, said Saul Kavonic, an analyst with Credit Suisse.

“Asian buyers have some appetite for U.S. gas price linked LNG, but are also opting for a diversification of pricing in their portfolios,” Kavonic said.

The agreement with NextDecade will secure more volumes for Shell’s portfolio in the 2020s and ensures the company can meet growing demand from its global customers, said Slavko Preocanin, vice president of Shell’s LNG marketing and trading division.

NextDecade expects a final investment decision on up to three trains at its Rio Grande project by the end of the third quarter this year.

Rio Grande is planned as a six-train facility at the Port of Brownsville, with a project cost estimated at $17.3 billion and capacity of 27 million tonnes of LNG a year.

It will be supplied with natural gas from the Permian Basin, Eagle Ford Shale and other resources.

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Investors drop out of two groups vying for Petrobras' gas pipeline unit - sources

At least three investors left separate groups interested in acquiring a gas network pipeline that will be sold by Brazil’s state-controlled oil company Petroleo Brasileiro SA, three sources with knowledge of the matter said.

Those departures will likely leave a third group, led by France’s Engie SA with Canadian pension fund Caisse de Depot et Placement du Quebec, stronger. The final bids for TAG, as the unit is known, are due on Tuesday.

After the previously reported departure of Australia’s Macquarie Group Ltd from one of the groups, which still includes Brazilian investment firm Itausa Investimentos SA and Singapore sovereign wealth fund GIC, the other two investors that were supporting the bid, sovereign wealth fund Abu Dhabi Investment Authority, known as Adia, and investment manager Wren House Infrastructure, also pulled out.

A second group, led by Mubadala Investment Company and EIG Global Energy Partners, had been in talks with the world’s largest investment firm, BlackRock Inc, but the company gave up.

Wrenhouse, Adia, EIG, Mubadala and Itausa did not immediately comment on the matter. BlackRock, which would have a small stake in TAG, declined to comment.

The weakening of the Itausa Investimentos and Mubadala groups raises the chance of Engie, which was the winner of the first bid round, winning the deal. It is not clear if the three groups will deliver the proposals as it was previously expected.

The sale of TAG is expected to be the largest divestment in Petrobras’ asset sale program. The oil company expects to fetch around $8 billion.

All bids were expected to use a large amount of debt to finance the acquisition, as banks are eager to fund the pipeline, which has an extremely stable cash flow. Still, last-minute changes in the group complicate the financing, one of the sources said.

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Gazpromneft and IBM sign AI venture.

More than 30 Gazprom Neft research geologists and IBM Research Brazil machine-learning research scientists have come together for the first time to share their unique knowledge, experience and skills in a research project, “Cognitive Geologist”*. The Cooperation Agreement signed by both companies aims at the development of state-of-the-art broad AI technologies, such as, knowledge-enhanced Machine Learning which combines deep-neural networks as surrogate of existing geological models and advanced probabilistic reasoning techniques for modelling and supporting data-driven geological decision making. In so doing, they aim to optimise analytical processes and characterize the value of information related to the most relevant geological models to advance exploration workflows and automate the model creation for exploration. These technologies will help automate routine operations and significantly augment the geological and geophysical data analyses for use in oil exploration or production activities other than deepwater, Arctic offshore, or shale projects.

The system aims at identifying, modelling, integrating, and predicting critical prospective geological object information in support of decision-making, using data from already discovered analogues and Big Data technologies for processing extensive data arrays. Thanks to this initiative, the typical geological exploration cycle could be significantly reduced, with processes previously taking up to half a year now completed within a month. In addition, forecasting quality would be further improved with each new project, through the use of cognitive technologies and continuous-learning models.

Mars Khasanov, Head of Technology Directorate, CEO, Gazprom Neft Science and Technology Centre: “As part of Gazprom Neft’s Technology Strategy, we are paying particular attention to developing digital projects in exploration and production. Together with leading international companies we are developing the oil production tools of the future.”

Alexei Vashkevich, Director for Geological Exploration and Resource Base Development, Gazprom Neft: “Data volumes are becoming ever larger, and reserves ever more challenging — which is why we have to improve processes in extracting, sourcing and analysing information, and find new opportunities for using machine learning methodologies. To that end we are developing a unique digital solution that could lead to a breakthrough in working with geological information.”

Ulisses Mello, Director, IBM Research Brazil: “At the IBM Research Natural Resources practice, it is our mission to collaborate with leading Oil and Gas partners to ensure that the industry benefits from the application of the most advanced AI technologies by maximizing its ability to deal with the challenges and opportunities presented by the ever growing amounts of data generated in the exploration and production activities.”

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Noble Energy JV to build pipeline from Equatorial Guinea's offshore gas fields

Noble Energy and partners will build a pipeline linking Equatorial Guinea’s offshore gas fields to an onshore liquefied natural gas (LNG) plant to boost exports, the African nation’s government said on Monday.

Under a deal with the government the 70 km (44 miles) pipe will have capacity for 950 million cubic feet of gas per day from fields operated by Noble and will be ready in the first quarter of 2021.

Once liquefied at the export plant, which is run by Marathon Oil, the gas will be shipped to markets across the globe.

Sonagas GE, the state-run gas company, will increase its stake in the project to 30 percent from 25 percent.

The gas will come from a joint venture called the Alen Unit, located in two offshore blocks, and is expected to contribute between $1.5 billion and $2 billion to state revenues over the course of the project, the government statement said.

Equatorial Guinea hopes to create a gas export hub from its offshore fields after revenues were hit by a dip in oil prices and production since 2014.

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Papua New Guinea LNG project to supply Sinopec unit

The ExxonMobil operated Papua New Guinea LNG project has agreed a deal to supply liquified natural gas (LNG) to a unit of China Petroleum & Chemical Corp , Australia’s Santos, a partner in the project, said on Tuesday.

The four-year deal is for the supply of about 0.45 million tonnes of LNG a year to Unipec Singapore, Santos, which holds a 13.5 percent stake in the PNG LNG project, said in a statement.

The deal will take the $19 billion PNG LNG project’s total contracted LNG volumes to about 7.9 million tonnes per annum (mtpa), it said.

“The supply and purchase agreement (SPA) with Unipec ... is the final mid-term LNG SPA that the project has been seeking to secure,” said Peter Botten, managing director at Oil Search , which has a 29 percent interest in PNG LNG.

The project signed similar LNG supply deals with PetroChina Co Ltd and a unit of British oil giant BP last year.

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Surging E&P Profits, Lower Costs Belie Negative Sentiment

Crude oil and natural gas prices went through a lot of ups and downs in the 2014-18 period, but the general trend was down. The average price of WTI crude topped $100/bbl in the first half of 2014; by year-end 2018 it stood at $45/bbl. Similarly, the NYMEX natural gas price topped $6.00/MMBtu in early 2014 but fell to a low of about $2.50/MMBtu last year and averaged little more than $3.00/MMBtu. The 44 major U.S. E&P companies we track sought to weather this storm of declining prices by drastically repositioning their portfolios and slashing costs to stay competitive in a new, lower price environment. Their efforts appear to have worked: 2018 profits surged in comparison with 2017 results and approached returns recorded in 2014, when commodity prices were much higher. So why are E&P stock prices languishing? Today, we look at the divergence between investor sentiment and the actual financial performance of U.S. E&P companies.

U.S. exploration and production companies (E&Ps) have found it very difficult to shake the aura of doom and gloom that shrouded the industry after the 2014-15 oil price crash brought many to the brink of insolvency. Investor sentiment, as reflected in the S&P Oil and Gas E&P stock index, tells the tale. After reaching a high of more than 12,000 in mid-2014, the index plunged to as low as 3,600 in early 2016. With crude prices and profits rising after that, the index climbed back to about 6,600 in the fall of 2018, but plummeted nearly 40% to 4,000 — one-third of the 2014 high — in the second half of December (2018) on fears of a return to red ink as oil prices dipped to $45/bbl. But recently released 2018 financial results from our universe of 44 major U.S. E&Ps provided strong evidence that belied the negative sentiment about the sector. Despite the fourth-quarter oil price decline, the industry roared back to profitability in 2018. More tellingly, the industry has streamlined its cost structure so dramatically that overall 2018 profits were just 20% below those generated in the $100+/bbl environment in 2014. Remarkably, the Diversified E&P Peer Group — whose portfolios are roughly balanced between oil and gas — generated $14.10 per barrel of oil equivalent (boe) in profits in 2018, 7% higher than the $13.20/boe the group netted in 2014, when revenues were much higher. And with first-quarter 2019 oil prices rising 30% — the largest quarterly increase since 2009 — the industry appears to be on track for solid profitability again in 2019.

After a dramatic plunge from $57 billion in pre-tax operating profit in 2014 to $128 billion in losses in 2015 and $30 billion in losses 2016, the industry clawed its way back to breakeven in 2017. As shown in Figure 1 below, which shows pre-tax operating revenues and profit comparisons on a per-boe basis for our 44-company universe, revenues in 2018 rose a solid 20% year-on-year to $35.86/boe, up from $29.95/boe in 2017. But the group netted a profit of $11.26/boe (blue segment in right bar), a far higher net profit than the $0.07/boe earned in the previous year. The disproportionate increase in net profit was the result of significantly lower costs, including DD&A (depreciation, depletion and amortization) expenses, Impairments, and Exploration/Other expenses, which fell 8%, 59%, and 38%, respectively. The only negative was in lifting costs (yellow segments), which rose 3% to $10.21/boe in 2018 on increased industry activity that placed upward pressure on some service costs as well as production taxes. Underscoring the health of the industry — and nudged by U.S. corporate tax reform — our universe of 44 E&Ps repurchased nearly $16 billion in common shares in 2018, about 50% more than in 2014.

Figure 1. E&Ps’ Per-Unit Profit, 2017 vs. 2018. Source: Oil & Gas Financial Analytics, LLC

Between 2014 and 2018, revenues for the companies we track fell from $50.30/boe to $35.86, down $14.44/boe (almost 30%) in realized prices. In response to lower prices, the industry slashed operating costs so that the decline in profitability fell only about $3.00/boe, from $14.25/boe in 2014 to $11.26/boe in 2018. A large part of the difference was operational efficiency and portfolio rationalizations that led to a dramatic ~25% decline in lifting costs, from $13.24/boe in 2014 to $10.21/boe in 2018. A part of this lifting cost decline was a 42% drop in price-sensitive severance and ad valorem taxes, from $2.15/boe in 2014 to $1.26/boe in 2018. DD&A charges were cut by one-quarter to $10.94/boe, no doubt triggered by the massive impairment charges suffered over that time period. Impairment and Exploration/Other expenses were lower by 52% and 72%, respectively, to $2.36/boe and $0.74/boe. Amongst the peer groups — Oil-Weighted E&Ps, Gas-Weight E&Ps and Diversified E&Ps — the last group actually increased profitability by 7% between 2014 and 2018, while the Oil-Weighted E&Ps’ profits fell 13% and Gas-Weighted E&Ps earnings were 35% lower. Oil and gas production for the 44 E&Ps increased 12% over the period, from 3.94 billion boe in 2014 to 4.40 billion boe in 2018, led by a 56% increase in output from the Gas-Weighted Peer Group.

Between 2014 and 2018, our universe of 44 companies lost a combined $53 billion on the back of $193 billion in asset write-downs. Still, $441 billion in cash flow was generated, which adequately covered the $378 billion in organic capital spending over the same time period.

Oil-Weighted E&Ps

As seen in Figure 2, the 18 companies in our Oil-Weighted Peer Group generated the strongest results in 2018. Revenues per unit were the highest of the three peer groups, rising 25% to $44.61/boe, from $35.75/boe the year before. The group also generated the highest pre-tax operating profit at $15.75/boe in 2018 (blue segment, right bar), a $17.10/boe reversal from the $1.35/boe loss recorded in 2017. Again, lower costs drove the results, as Impairments (gray segments) fell by nearly $6.00/boe, Exploration/Other costs (gold segments) by about $2.00/boe, and DD&A costs (orange segments) by more than $1.00/boe. Lifting costs (yellow segments) increased 6%, or $0.65/boe, as a majority of producers in the group are focused on the burgeoning Permian Basin.

Figure 2. Oil-Weighted E&Ps Per-Unit Profit, 2017 vs. 2018. Source: Oil & Gas Financial Analytics, LLC

Since the oil price crash, the Oil-Weighted E&P Peer Group suffered a more than $15/boe decline in revenues, from nearly $60/boe in 2014 to $44.61/boe in 2018, but managed to limit the drop in pre-tax operating profits over that period to less than $3.00/boe. The peer group was able to cut nearly 20% from lifting costs, from $14.33/boe in 2014 to $11.54/boe in 2018. That included a $0.50/boe decline in production taxes, from $2.23/boe to $1.73/boe. DD&A expenses were trimmed an additional $2.08/boe, to $14.29/boe. Exploration/Other expenses and Impairment charges were slashed 60% and 80%, respectively, to $1.75/boe and $1.28/boe. Production for the peer group increased 13% between 2014 and 2018, to 1.39 billion boe last year.

Between 2014 and 2018, the 18 companies in the Oil-Weighted Peer Group lost a de minimis $2.4 billion. The peer group generated $169 billion in cash flow, $26 billion more than the $143 billion in exploration and development outlays.

Diversified E&Ps

The 17 companies in our Diversified Peer Group reported that 2018 per-unit revenues increased 23% over 2017, to $40.51/boe, reflecting the higher gas weighting of their total output. Figure 3 shows that the group rebounded from a $1.89/boe loss in 2017 to a $14.10/boe profit in 2018 (blue segments), a reversal of nearly $16.00/boe. The most dramatic improvement was a 79% plunge in Impairments (gold segments), from $7.69/boe in 2017 to $1.63/boe last year. DD&A and Exploration/Other costs (orange segments) decreased by $1.06/boe and $1.63/boe, respectively. 2018 lifting costs were $0.35/boe, or 3% higher than a year earlier.

Figure 3. Diversified E&Ps Per Unit Profit, 2017 vs. 2018. Source: Oil & Gas Financial Analytics, LLC

Despite a $12/boe decline in revenues — from $52.68/boe in 2014 to $40.51/boe in 2018, the Diversified Peer Group actually increased earnings by $0.90/boe to $14.10/boe. This peer group was the most aggressive in repositioning its portfolio by selling nearly 7 billion boe between 2014 and 2018, about half of the total divestitures of the 44-company universe. The Diversified E&Ps cut lifting costs by 23%, from $14.13/boe in 2014 to $10.90/boe last year. That included a 45% decline in production taxes, from $2.76/boe in 2014 to $1.54/boe in 2018. In addition, DD&A expenses fell by 21%, to $12.61/boe. The Diversified E&Ps slashed Exploration/Other expenses by 69%, to $1.27/boe, and Impairments by 70%, to $1.63/boe. The effort to reposition many of the companies in the peer group resulted in a 7.3% decline in production, from 1.89 billion boe in 2014 to 1.76 billion boe in 2018.

The Diversified E&P Peer Group lost nearly $28 billion between 2014 and 2018 while generating $218 billion in cash flow, compared to $183 billion in exploration and development capital. That left enough cash to repurchase $18.1 billion in common shares and pay out another $19 billion in dividends. Only five of the 16 companies in the peer group posted a profit for the five years ended December 31, 2018.

Gas-Weighted E&Ps

In contrast with the other two peer groups, pre-tax operating profits for the 10 Gas-Weighted E&Ps in 2018 declined by 48% year-on-year to $2.48/boe, despite a 7% increase in revenue to $19.98/boe. Figure 4 shows that the culprit was impairment charges (gold segments), which more than tripled to $4.53/boe in 2018 as a result of write-downs by EQT Resources (following its merger with Rice Energy) and Southwestern Energy (following the sale of its legacy Fayetteville Shale assets). Excluding the impairments (orange segments), pre-tax operating profits were about $7/boe in 2018, a 47% increase over 2017. Lifting costs (yellow segments) for this group dipped 1% and Exploration/Other costs (gray segments) fell 7%, while DD&A (orange segments) was 3% higher at $5.00/boe.

Figure 4. Gas-Weighted E&Ps Per Unit Profit, 2017 vs. 2018. Source: Oil & Gas Financial Analytics, LLC

While much attention was paid in late 2014 and beyond to falling crude oil prices, natural gas producers suffered more severe revenue declines. The Gas-Weighted E&P Peer Group saw per-unit revenues decline 35% from $30.73/boe in 2014 to $19.98/boe in 2018. This peer group was able to cut costs, but not as effectively as the other groups, resulting in a 77% decline in Gas-Weighted Peer Group profits, to $2.48/boe. As we mentioned earlier, the big cost issue for this peer group was a more than tripling in impairment charges between 2014 and 2018. Lifting costs declined 18% to $7.82/boe, while DD&A expenses declined 42% to $5.00/boe, including a halving of production taxes to $0.29/boe. Exploration/Other expenses fell 36% to $0.14/boe. Primarily on the back of the Marcellus Shale development, the Gas-Weighted Peer Group increased production by 56% over the period, from 810 million boe in 2014 to 1.26 billion boe in 2018.

The gas-focused peer group collectively lost $23 billion, thanks to $48 billion in asset write-downs between 2014 and 2018, while only two of the 10 companies in the group posted earnings.

In an upcoming blog, we’ll drill down to individual company performance to shine more light on the drivers that contributed to higher industry profitability and improved operational efficiency. We will also review the investment strategies of the companies in our universe and preview the expected impacts on production and profitability in 2019.

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Novatek, Vitol agree Arctic LNG 2 supply deal

Novatek Gas & Power Asia, a trading unit of Russia’s largest independent natural gas producer and LNG operator, Novatek, signed a heads of agreement with Vitol for the supply of LNG from the Arctic LNG 2 project.

The agreement envisages concluding a 15-year contract with annual supply of one million tons of LNG from the Arctic LNG 2 project as well as other Novatek’s projects, the company said in a statement.

The LNG will be shipped on FOB basis to Novatek’s transshipment terminals in the Murmansk region and Kamchatka.

“We commenced contracting LNG volumes from our new project Arctic LNG 2,” noted Novatek’s first deputy chairman of the management board Lev Feodosyev.

“LNG volumes sold at our transshipment terminals ensures the flexibility of LNG supplies around the world and allows us to create LNG hubs in the Asia-Pacific and Atlantic basins,” he said.

The Arctic LNG 2 project envisages constructing three LNG trains at 6.6 million tons per annum each, using gravity-based structure (GBS) platforms.

The project is based on the hydrocarbon resources of the Utrenneye field.

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Australia lifts LNG export forecasts, expects to be world's leading supplier in 2019

The Australian Government has again lifted its forecast for the country's LNG exports over the coming years and said in 2019 it will be the world's leading exporter of the fuel and hold pole position until 2024.

Exports will be 79 million mt in calendar year 2019, which will be higher than current leader Qatar, according to the country's chief economist's Resources and Energy Quarterly report. On a fiscal year basis, the country is expected to export 75.6 million mt of LNG in fiscal 2018-2019 (July-June) year, which is up by 1% from the 74.9 million mt forecast it gave three months earlier. In 2019-2020, it's tipped to export 82 million mt, which is a 5% lift from the previous 78.3 million mt forecast.

The outlook has steadily improved since the June quarter edition of the report last year when it forecast 73.3 million mt and 76.6 million mt for the two fiscal years, respectively.

The report, which comes via the Department of Industry, Innovation and Science, also forecast 82.6 million mt of exports in 2020-2021, which is up 7% from the 77 million mt figure given a year earlier; 82.6 million mt in 2021-2022, up 6% from the previous 78 million mt forecast; and 80.9 million mt in 2022-2023, up by 3% from 78.9 million mt, it said.

"While Australia is expected to remain the largest LNG exporter in the world until 2024, both Qatar and the US should close the gap on Australia towards the end of the outlook period," it said, citing Qatar's plans to increase export capacity to 110 million mt by around 2024, and the US' 2024 start-up of the Golden Pass LNG facility as well a other potential new US projects and expansions.

"Australia seems likely to be surpassed as the world's largest LNG exporter by both Qatar and the US sometime in the mid-2020s," it said.


It did note, however, that the discovery of substantial shale gas resources in the Beetaloo sub-basin in Australia's Northern Territory represents a longer-term opportunity for Australia.

"The Northern Territory government's gas strategy aims to create a gas-based manufacturing industry in Darwin, as well as increasing LNG exports," it said.

"Inpex's Ichthys project has room for another four LNG trains, and Inpex's chief executive has flagged the possibility that the facility could be expanded down the track," it said.

There could also be another train added to the ConocoPhillips-operated Darwin LNG facility, it said.

However, in the shorter-term, Darwin LNG's production is at risk of declining in the early 2020s, it said. "The project will require backfill from 2023, when gas supply from the Bayu-Undan field is expected to be exhausted."

While ConocoPhillips' Barossa project and Eni's Evans Shoal field are competing to provide backfill for the project, ConocoPhillips is aiming to take a final investment decision in the Barossa project at the end of 2019, but first gas is not expected until the October-December quarter of 2023 and Eni is aiming to start production at its Evans Shoal field by the end of 2022, according to the report.

Likewise, Woodside's North West Shelf project in Western Australia also faces backfill issues as production from existing fields are likely to decline in the early 2020s.

"To what extent this can be offset by the development of new gas resources in the short term in unclear," it said.

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Waha cash natural gas trades as low as negative $5/MMBtu

Waha cash natural gas prices plummeted as low as negative $5/MMBtu Tuesday on the back of a combination of strong local production, limited takeaway capacity and maintenance on the El Paso Natural Gas system.

Currently, the Waha index is averaging minus $3.38/MMBtu, which is an all-time low. Previously, Waha's lowest settle was minus $1.95/MMBtu, which came on March 28.

Meanwhile, El Paso Keystone has averaged $3.61/MMBtu so far on Tuesday, wandering between minus $1.45/MMBtu and minus $5/MMBtu.

Permian Basin production is down about 500 MMcf/d from all-time highs posted last week, according to data from S&P Global Platts Analytics. But Permian output averaged 9.1 Bcf/d during the last week of March, compared with a three-year average of 5.9 Bcf/d during the same time period, hitting a high of 9.4 Bcf on March 26. Permian production is expected to total 8.2 Bcf on Tuesday, according to Platts Analytics.

There is still a force majeure declaration in place on the El Paso system. The declaration, the result of unplanned maintenance, has lasted for two weeks so far.

Work at the Florida compressor station wrapped up Saturday and a force majeure declaration there was lifted.

The force majeure declaration at Lordsburg Station is expected to be lifted April 5.

Another reason for this historic weakness in prices is the softer demand expectations for the shoulder season. Total Southwest demand averaged about 7 Bcf/d over the past two days after averaging 8.4 Bcf/d in March.

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Exxon offers first glimpse of results from expanded trading unit

Exxon Mobil Corp has offered a glimpse of the scale of its nascent energy trading operation, disclosing operating profit and losses of about $230 million during each quarter last year, the first time it has revealed the figures.

The world’s largest publicly traded oil producer last year launched a major push into energy trading, hiring veterans from Glencore, Noble Group, BP Plc and elsewhere in the United States, Europe and Asia. It also recruited market analysts and specialists with experience in crude, natural gas, gas-liquids and gasoline.

The trading unit’s pre-tax gains and losses averaged $230 million in each quarter of 2018, according to a presentation delivered to analysts last week at the Scotia Howard Weil investor conference. For the full year, trading provided an operating profit of $10 million, up from a $99 million loss in the prior year, according to a regulatory filing.

The profit was a fraction of Exxon’s $20.8 billion in earnings last year. But the disclosure of even an range of operating profit was a milestone in shedding light on its fledging business.

Rivals Royal Dutch Shell and BP, which have larger commodities trading businesses, traditionally also have not provided detailed results for that activity. Shell for instance wraps its trading results in with its oil refining business. BP also includes its trading as part of its downstream operations.

Comparing the majors’ operations are difficult because of the lack of consistent and specific financial disclosures, said Lysle Brinker, executive director of upstream equity research and analysis at energy consultancy IHSMarkit.

“Exxon Mobil has not historically been into that business, but they’re getting into it now,” Brinker said. “They realize now they probably can be just as successful as the other guys.”

An Exxon spokesman declined comment, pointing to the quarterly range figures in the presentation and full-year results in its annual report to the Securities and Exchange Commission.

Under Chief Executive Darren Woods, Exxon has sought to use trading to boost earnings, applying its knowledge of regional oil and gas prices, and its extensive array of pipelines, storage terminals, ships and railcars to profit from price differentials around the globe. It also has bulked up its risk management systems.

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Total invests further in Tellurian’s Driftwood LNG project

French energy major Total has decided to make a further investment in the Driftwood LNG project led by US LNG export project developer Tellurian.

Total said on Wednesday that it signed a series of agreements set to strengthen the partnership between the two companies to develop the Driftwood LNG project located in Louisiana, USA.

The deals include a heads of agreement upon which Total will invest in Driftwood Holdings and will offtake 2.5 Million tons per annum (mtpa) of LNG.

More precisely, Total will make a $500 million equity investment in the Driftwood LNG and purchase 1 mtpa of LNG from the proposed project.

Tellurian and Total will also enter into a sales and purchase agreement for a further 1.5 mtpa of LNG from Driftwood LNG. The agreement will be for the purchase of free on board LNG for a minimum term of 15 years, at a price based on the Platts Japan Korea Marker.

Total added that it would purchase around 20 million shares of Tellurian common stock for an amount of $200 million.

Patrick Pouyanné, chairman and CEO of Total, said: “These agreements increase our commitment to Driftwood LNG, a highly cost-competitive project that benefits from the low gas production costs and prices in the US.

“As a strategic partner of Tellurian, we are confident to further invest in the company and become an investor and a customer of Driftwood LNG.”

As for Driftwood LNG, it is an integrated LNG project that includes building gas pipelines from gas producing areas in Texas and a low-cost modular concept liquefaction plant with a capacity of 16.6 Mtpa and a possibility of increase to 27.6 Mtpa.

Total is a shareholder of Tellurian since 2017 after the group acquired approximately 46 million shares of Tellurian for an amount of $207 million.

It is worth reminding that Tellurian said last month that it would reach a final investment decision on Driftwood LNG in the first half of 2019.

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Civil works under way on Surat Basin gas processing plant – Industry Queensland

Civil works have begun on the Project Atlas gas processing facility in the Surat Basin.

Toowoomba-based company FKG Group has commenced civil works on the Project Atlas gas processing facility in the Surat Basin.

Senex Energy partnered with major infrastructure provider Jemena in June last year to build the processing facility, with gas expected to flow to the domestic market by late this year.

Jemena has awarded the construction contract for the facility to Australian-owned energy services group Valmec, with the civil works component sub-contracted to FKG Group.

FKG Group has a 40-year track record of delivering construction and engineering services.

Senex managing director and chief executive officer, Ian Davies, said the company was pleased that a local supplier would benefit from Senex’s significant investments across the Surat Basin.

“Senex is directly investing around $250 million and supporting a further $140 million of investment via the Jemena contract across its Surat Basin natural gas projects,” Mr Davies said.

“Senex is focused to ensure these investments support local jobs and benefit local businesses and communities.”

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China urges LNG industry to deepen collaboration

LNG's potential to become Asia's dominant fuel, as the region transitions away from coal to cleaner energy, will only be realised if the industry can work together to lower costs and overhaul trading conditions , senior Chinese energy officials said at LNG2019 in Shanghai.

Competition from pipelines and renewables is fierce, costs still high and the natural gas system is causing bottlenecks said \yang \\\\\\\\\\\\hua, chairman of CNOOC

The ministry of transport plans to quadruple the countries import capacity within the next two decades from 21 terminals to 34 terminals with capacity growing from 2.86tn cu feet/year to 11tn cu feet/yr

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China's LNG imports could reach 110 bln cubic meters by 2025: CNPC

China’s imports of liquefied natural gas (LNG) could reach 110 billion cubic meters, or about 80 million tonnes a year, by 2025, a senior executive from China National Petroleum Corp (CNPC) said on Wednesday.

The growth will be driven by a stringent environmental policy and an accelerated restructuring of the country’s energy mix, among other factors, Ling Xiao told the LNG2019 conference in Shanghai.

China’s LNG imports last year were about 54 million tonnes. CNPC accounts for about 60 percent of China’s overall gas imports and 70 percent of domestic production, Ling said.

“LNG price will become one of the decisive factors for the amount of LNG imports,” he also said in his presentation.

And that will become even more important with the startup of a gas pipeline between China and Russia - expected later this year - that could threaten LNG imports, he said.

“LNG import prices are not competitive with pipeline gas now, and the opening of the Russia pipeline will pose further threat to LNG imports,” he said.

“We are hoping for cheaper and shorter term LNG contracts and only in that way can LNG be truly competitive.”

Deliveries of gas to China via the Power of Siberia pipeline were due to begin at the end of December 2019, but the project is only expected to reach full capacity in 2025.

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Colorado lawmakers pass law overhauling oil and gas drilling regulations

Colorado lawmakers approved a bill on Wednesday overhauling regulations governing the state’s robust oil and gas industry to prioritize public health and safety, over opposition by Republicans and industry groups.

Governor Jared Polis, a Democrat, is expected to sign the bill passed by majority Democrats, into law.

The controversial measure, which proponents say is the most sweeping changes to regulations in energy-rich Colorado in decades, would give local communities more oversight over development in their jurisdictions.

The legislation requires the Colorado Oil and Gas Conservation Commission, which oversees the industry, to hire a full-time staff of experts who will evaluate drilling impacts to air quality, among other controls.

The bill’s sponsor, Democratic state Senator Steve Fenberg, said in a statement that the revamped regulations were “long overdue.”

“This bill will ensure that public health and safety are the top priority in regulating oil and gas development in Colorado, and will empower local governments with the tools they need to address the concerns of their individual communities,” Fenberg said.

Colorado ranks as the fifth-biggest state in the nation in crude oil production and sixth in natural gas production, according to the U.S. Energy Information Administration.

The Colorado Oil and Gas Association, an industry group which opposed the bill, last month released a study it commissioned that said oil and gas production employs 89,000 people and pours $1 billion in tax revenues to state and local government coffers.

The association said new rules could jeopardize what it called an “economic juggernaut.” The association said in a joint statement with the Colorado Petroleum Council after the bill’s passage that despite some amendments to the original bill that allayed some of the industry’s concerns, it still opposes the measure.

“State officials have committed to working with industry experts during the highly complex regulatory rulemakings following the bill’s enactment,” the statement said. “That will be critical to minimizing the bill’s negative impacts on our state, and we hope that process can begin immediately.”

Environmental groups that pushed the legislation hailed its passage.

“Coloradans can breathe easier today knowing that our state is finally on track to put the health and safety of workers and residents, and our environment ahead of oil and gas industry profits,” Kelly Nordini, executive director of Conservation Colorado, said in a statement.

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Venture Global starts construction at Louisiana Calcasieu LNG plant

U.S. company Venture Global LNG Inc has started construction at its Louisiana Calcasieu liquefied natural gas (LNG) plant after receiving authorisation, a senior company executive said on Thursday.

The Calcasieu Pass facility is designed to produce about 10 million tonnes per annum (mtpa) of LNG, or about 1.3 billion cubic feet per day (bcfd) of natural gas, said Michael Sabel, co-chief executive and co-chairman of Venture Global.

“We received our final FERC authorisation and DOE export authorisation,” he said at the LNG2019 conference in Shanghai, referring to approvals from the U.S. Federal Energy Regulatory Commission and the U.S. Department of Energy.

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UK LNG gas grid sendout reaches post-Fukushima moratorium high

London — Natural gas supply through regasification at the UK's three LNG terminals on Wednesday reached the highest level since the aftermath of the Fukushima disaster in 2011, aided by rising demand as wintry weather sweeps the country and an unplanned Norwegian outage reducing UK gas imports.

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Combined sendout from the Isle of Grain and the two Milford Haven terminals -- Dragon and South Hook -- aggregated to 92 million cu m according to S&P Global Platts Analytics. This surpassed the most recent high of 90 million cu m set on December 5, 2018, reaching levels last seen in May 2011, two months after the Japanese nuclear disaster at Fukushima, when LNG imports to Japan rose.

The South Hook terminal led the way, providing 41.5 million cu m, while Dragon and Isle of Grain supplied 22.8 million cu m and 27.7 million cu m, respectively. The South Hook terminal received five Qatari LNG vessels during March, discharging 696 million cu m of natural gas equivalent, and is set to receive another four Qatari cargoes in the first half of April, shipping sources said.

Overnight temperatures close to zero in the UK have brought snowfall in northern areas, and with it greater local distribution zone domestic demand tantamount to an above-average winter day. Allocated demand for Wednesday amounted to 315 million cu m, and is set to remain at this level for Thursday's gas day.

The UK's National Balancing Point virtual trading hub received greater interest in day-ahead contracts as shippers sought to cover the unexpected demand. Platts assessed the contract up 4.25% at 33.10 pence/therm on Wednesday, recouping losses following a near two-year low as April delivery began. Intra-day valuation of the NBP day ahead showed a continued rise, up 0.60 p/th to 33.70 p/th.

An unplanned outage at the Norwegian Kollsnes gas processing plant also prompted spot LNG interest in the UK. The outage primarily affected deliveries to the UK through the Langeled pipeline that makes landfall at the UK's Easington natural gas terminal. After starting April at maximum flow, deliveries amounted to 60 million cu m/d on Wednesday, approximately a fifth lower, with Norwegian operators likely choosing to curtail shipments to the UK due to the daily gas balancing regime in the country, unlike the hourly equivalent in continental Europe.


The current level of sendout is nearly two-thirds of the 150 million cu m/d combined technical capacity of the UK's LNG terminals.

Last winter, LNG supply delivered into the UK gas system topped multi-year highs, reaching 8.17 billion cu m of regasified natural gas between October and March, over 3 1/2 times higher on the year.

However, in the gas winter prior to Fukushima -- between October 2010 and March 2011 -- LNG supplied 12.90 billion cu m to the UK gas grid, and continued to deliver an average of 70 million cu m/d for the subsequent gas summer.

The Fukushima disaster -- in which a high-magnitude earthquake triggered a tsunami that devastated the Daiichi nuclear power plant, causing a meltdown of three reactors at the site -- initiated an immediate moratorium on nuclear power generation. Japan sought alternative fuels for power production as a result, drawing Middle Eastern LNG supply away from Europe.

Following strict appraisal of safety and disaster response standards, Japan has incrementally been restoring nuclear power to its generation mix in a bid to meet global emissions targets and phase out fossil fuel-fired production. This has contributed to softer LNG demand in Japan, and a weakening of the Platts global JKM benchmark price for Asian spot LNG.

JKM has recently fallen below NBP for the first time in over three years. Average JKM and NBP month-ahead prices from April 16 for May LNG delivery equate to $4.61/MMBtu and $4.71/MMBtu, respectively.

-- Neil Hunter,

-- Edited by James Burgess,

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EU Gas Directive amendments affecting Nord Stream-2 approved

The European Parliament has approved amendments to the EU Gas Directive, affecting the undersea parts of pipelines, including Russia’s Nord Stream-2.

The amendments must be submitted to the EU Council at the level of ministers for a final hearing, Prime news agency reported.

The European Commission put forward the amendments to the EU gas directive in 2017, suggesting applying the EU third energy package to all pipelines that run through the EU territory to and from the third countries. The bills require non-discriminatory regulation of tariffs and provision of access of third parties to gas pumping.

This means that the pipelines must have an operator independent of Russian gas giant Gazprom, and third parties must receive access to the capacities. However, only Gazprom can supply gas to the Russian end of the pipeline and is the only company with the right for exports.

The initial draft amendments were softened in Strasbourg in February. The milder version of the amendments envisages temporary exceptions for the pipelines built before the changes come into force.

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Chevron, Woodside apply to nearly double size of Canadian LNG project

Chevron Canada Ltd and Woodside Energy Ltd have applied for a new license for their Kitimat LNG plant in northern British Columbia that could see it nearly double in size to produce 18 million tonnes per annum (mtpa), Chevron said on Wednesday.

The companies submitted the application to Canada’s National Energy Board on Monday, with a revised plant design that may include up to three LNG trains, instead of two.

“Chevron and Woodside have re-evaluated the originally proposed 2-train, 10 MPTA LNG plant development concept, with a focus on improving Kitimat LNG cost of supply competitiveness relative to other global LNG projects,” Chevron said in a statement.

Chevron Canada is a unit of global oil major Chevron Corp and Woodside is the largest Australian natural gas producer, according to its website.

The Kitimat LNG application follows the approval last October of the massive LNG Canada project, also located in Kitimat. That project is led by Royal Dutch Shell and will initially produce 14 Mtpa, with the option to increase to 28 Mtpa.

A growing LNG industry in northern British Columbia would be a boon for western Canadian natural gas producers that would supply the projects, analysts said.

“While very early days, the new LNG export license application by Chevron Canada for its Kitimat LNG project could represent a nice source of long-term demand for domestic gas in Western Canada,” BMO Capital Market analyst wrote in a research note.

Chevron and Woodside, which have a 50/50 joint venture in the project, have not yet set a date for a final investment decision for Kitimat LNG or disclosed cost estimates.

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Oil Search cheers North Slope flows

Results to be evaluated ahead of FEED entry decision later this year

Australia-listed Oil Search has flowed oil from two wells at its Pikka unit on Alaska’s North Slope. Oil Search confirmed Thursday the Pikka B well flowed last month

Details of Oil Search wells here

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Alternative Energy

Brazil's Petrobras to take part in Israeli gas tender: Israeli minister

FILE PHOTO: A logo of the Brazil's state-run Petrobras oil company is seen in Rio de Janeiro, Brazil March 25, 2019. REUTERS/Sergio Moraes

JERUSALEM (Reuters) - Brazilian state-run oil firm Petrobras will take part in Israel’s latest tender for offshore oil and gas exploration, Israel’s energy minister said on Sunday.

Yuval Steinitz announced the agreement as Brazilian President Jair Bolsonaro began a four-day visit to Israel.

Bolsonaro was joined in Israel by his Energy Minister Bento Albuquerque, with whom Steinitz said he had met three weeks ago.

“It was agreed that Petrobras, which is among the biggest energy companies in the world ... will take part in the process of oil and gas exploration in Israel,” Steinitz told Army Radio.

Israeli news website Calcalist had reported that an official announcement could be made during Bolsonaro’s visit.

Petroleo Brasileiro SA, as the company is formally known, was not reachable for immediate comment.

A number of large gas discoveries offshore Israel and in nearby eastern Mediterranean waters in the last decade have made Israel a potentially lucrative prospect for big energy firms.

Israel is tendering 19 new offshore blocks to oil and gas companies. A previous auction elicited bids from only two groups of companies, and the Energy Ministry said it expected more to compete this time as conditions have improved. [L8N1XF0BY]

Exxon Mobil Corp, in a major policy shift, is also considering bidding in the auction.

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Feb lithium imports rise in Japan, South Korea; China slumps

February imports of lithium carbonate and hydroxide, used for batteries, rose in Japan and South Korea from a year ago, but those to China slumped, according to customs data of respective countries.

Japan's imports of lithium hydroxide in rose 79% year on year to 2,687 mt in February, while lithium carbonate imports were up 53% to 2,707 mt.

South Korea imported 950 mt of lithium hydroxide and 3,353 mt of lithium carbonate in February, up 45% and 28%, respectively.

China, on the other hand, imported only 45 kg of lithium hydroxide and 720 mt of lithium carbonate in February, a year-on-year decline of 100% and 58%, respectively.

China's lithium hydroxide imports in February 2018 stood at 656 mt, which was almost on par with South Korea's 657 mt import, but below Japanese imports of 1,500 mt.

China imported 2,517 mt of lithium carbonate in February 2018, which was more than Japan's 1,774 mt imports, but below South Korea's lithium carbonate imports of 2,627 mt.

Chile is the leading supply origin of the two lithium raw materials to Asia.

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Innio Supplying Jenbachers For Microgrid Project

Innio will supply six Jenbacher gas engines for the Lemene microgrid project in Finland, helping the Finnish government reach its climate goal of having 100% of its energy come from renewable sources by 2030.

The Lemene flagship project will be the largest energy self-sufficient business district using renewable energy in Finland, Innio said. The combined heat and power (CHP) plant is designed to enhance the security of the electricity supply in the Marjamäki area, located close to the city of Tampere, and the thermal energy will be used for district heating.

“The Lemene project is key to helping the Finnish government reach its national energy decarbonization goals and to make the Marjamäki industrial district energy self-sustaining,” said Toni Laakso, chief executive officer, Lempäälän Energia Ltd. “We chose Jenbacher gas engines because of Innio’s long-standing experience with gas engines, especially with burning greener gases such as biomethane. These six gas engines will provide the district with reliable, efficient and economically friendly power and heating.”

Located in the Marjamäki industrial area in the Lempäälä municipality, the Lemene microgrid project will have a variable renewable energy source as twin 2 MW solar power plants. The six engines, with a total capacity of 8.1 MW, are the key elements providing secure energy as the solar power production varies, Innio said. The microgrid also comprises a fuel cell solution—providing a total of 130 kW—and a battery to even out temporary fluctuations in energy production. Innio’s three Jenbacher J416 and three Jenbacher J420 CHP units will run on natural gas or biomethane as available to make the gas engine a CHP carbon-neutral solution.

The entire system is expected to be commissioned by the summer of 2019.

With the European Union setting targets for a more sustainable energy supply based on renewables, each member country has set its own targets until 2030. CHP and district heating will provide a significant contribution to achieve Finland’s targets of national energy savings until 2030. Furthermore, Finland’s Prime Minister Juha Sipilä mandated the increase of the use of renewable energy to more than 50% during the 2020s and self-sufficiency to more than 55%.

By using the Jenbacher gas engine CHP system, the Lemene project will avoid 235 kg of carbon dioxide (CO 2 ) emissions per megawatt-hour of electricity produced compared to electricity-only operation and heat provided by a natural gas boiler, Innio said. The result is a reduction of 7629 tons annually of CO 2 if all six engines run a total of 4000 operating hours per heating season.

Running the same gas engine CHP system on carbon-neutral biomethane compared to natural gas, the avoidance of CO 2 results in an additional 15 725 tons annually, making the six gas engine CHP system a dispatchable renewable energy source, Innio said.

The six Jenbacher engines will be installed at four different sites located in close proximity to each other, connected together with the solar plants, the fuel cells and the battery storage system to a microgrid system. The energy self-sufficient local grid operates mainly as part of the public electrical grid, but it can also operate as a supporting reserve system for the public electrical grid, or as an independent off-grid, on-demand system. The heat from the gas engines is provided to the local district heating network.

“Our Jenbacher Type 4 gas engines are energy-efficient options to generate electricity and utilize waste heat while reducing CO 2 emissions with high reliability and availability,” said Carlos Lange, president and CEO of INNIO. “The Lemene microgrid project is a unique and independent energy self-supporting plant that is an example of the future of power generation. With the growing biomethane availability, more and more of our gas engines are becoming a source for renewable, dispatchable power generation.”

The Lemene project is one of 11 key energy projects in 2017 that have been granted an investment aid from the Finnish Ministry of Economic Affairs and Employment. The total amount of aid allocated for key energy projects in 2017 was €39.7 million of which the Lemene project was granted €4.97 million. The Finnish government allocated a total of €100 million for renewable energy and new technology investments for 2016 to 2018.

Innio’s Channel Partner for Jenbacher gas engines in Finland is Höyrytys Oy. The Lemene project is operated by Lempäälän Energia Ltd., which is a subsidiary of and wholly owned by Lempäälän Lämpö Ltd. The former operates as a production company for the latter, producing district heating using solid fuels, such as peat, wood chips and sawdust.

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Flanders, Elia reveal offshore connections

Belgian transmission system operator Elia and the Flemish government have jointly proposed plans for a new high-voltage link called Ventilus that would help connect more offshore wind capacity to the Belgium grid.

Ventilus will be a 380kV line across western Flanders with a 6GW capacity comprising several components.

An overhead line would run between the existing Stevin line and the HV subsation at Avelgem, although the exact route has yet to be determined.

A so-called launch notice has been drawn up in close cooperation with stakeholders.

In May and June, residents of the 25 municipalities affected by the project will be invited to information sessions that will be held in 10 locations across West Flanders.

Environmental, agricultural and employers’ organisations will also be involved, together with the local authorities, the developers said.

Interested parties can give their thoughts on the proposal up until the end of June.

Flemish Minister for the Environment, Nature and Agriculture Koen Van den Heuvel said: “Now that we have approval, we are launching this ambitious project. Ventilus will help us to make the transition to sustainable energy.

“If we want to meet our targets, we must invest in renewable energy in the next few years. This goes hand in hand with shoring up and further developing our power grid.

“Only then can we achieve the energy transition and provide consumers with a reliable power supply.

“The Flemish government is making every effort to guarantee a robust and smooth land-use planning procedure so that the offshore wind turbines in the North Sea can be connected in good time.”

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Global wind power capacity to grow 50 pct by 2023 - industry group

Global wind power capacity is expected to increase by 50 percent in the next five years as technology costs fall further and emerging markets drive growth, an industry report showed on Wednesday.

Last year, 51.3 gigwatts of new wind installations were added globally, taking cumulative capacity to 591 GW, the Global Wind Energy Council said in an annual report on the wind industry.

It forecast more than 300 GW of new capacity to be added by 2023, driven by emerging markets in Africa, the Middle East, Latin America and Southeast Asia, as well as the increasing competitiveness of offshore wind.

“In the short term, governmental support, in the form of auction and tender programmes and renewable targets, will continue to be a significant driver for new installations,” the GWEC said.

“In addition, opportunities for wind energy to operate on a commercial basis are increasing as the industry continues to prove its cost-competitiveness and bilateral agreements, such as corporate power purchase agreements, grow,” it added.

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Australia sees lithium production surging in coming years, headwinds for exports in short term

Australia's lithium production is expected to surge in coming years amid growing global demand for electric vehicle batteries, but headwinds remain for exports in the short term, Australia's Department of Industry, Innovation and Science said in its latest report.

The country's lithium production is expected to rise to 272,000 mt lithium carbonate equivalent in the current fiscal year that ends June 30 from 251,000 mt the year before, and is forecast to rise further to 318,000 mt in fiscal 2019-20 (July-June) and to 335,000 mt in fiscal 2020-21, the department said in its latest Resources and Energy Quarterly report.

By fiscal 2023-24, it projects production to have risen to 419,000 mt.

"Export volumes are projected to track with production, since Australia has minimal domestic use of spodumene. However, export values are expected to follow a more mixed trajectory; facing headwinds in the short term as oversupply leads to lower prices, but gaining strength closer to 2024 as lithium hydroxide refineries commence production," the department said in the report.

Australia's export volumes of spodumene concentrate -- the precursor for lithium -- are forecast to rise progressively over the next two years from 1.13 million mt in fiscal 2017-18 to 1.84 million mt in fiscal 2020-21. In the subsequent three fiscal years it is projected to rise to 1.7 million mt, 1.83 million mt and 2.07 million mt, respectively, it added.

A global supply surplus is expected until 2022 due to bottlenecks in refining and conversion and suppliers will need to chose between selling at a loss and curtailing output during that period, the department said.

However, rapid growth in demand is expected outpace supply and result in a deficit by the early 2020s, with a second wave of added supply entering the market in response by 2024, it said.

The surplus in global lithium carbonate equivalent production to consumption is expected to narrow from 403,000 mt versus 264,000 mt in calendar 2019 to 420,000 mt vs 349,000 mt in 2021, the department said.

This is expected to swing to deficit in 2023 when production of 545,000 mt is overtaken by consumption at 594,000 mt, then widen further to 686,000 mt vs 832,000 mt in 2024, it added.

The department forecast spodumene prices falling from $720/mt in 2019 to $517/mt to 2021.

Global stocks are seen as adequate to meet 132.2 weeks of consumption in 2019 before falling to 126.5 weeks in 2021, then to 42.6 weeks by 2024, the department said.

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Is the FCF Score of 4.359852 Puts Cameco Corporation (TSX:CCO) on Radar – Stock Standard

Taking a look at some historical volatility numbers on Cameco Corporation (TSX:CCO), we can see that the twelve month volatility is currently 33.763800. The 6 month volatility is 32.384900, and the three month is noted at 27.145000. Following volatility data can help calculate how much the stock price has fluctuated over the specified time period. Although past volatility action may help project future stock volatility, it may also be vastly different when taking into account other factors that may be driving price movement during the measured timeframe.

The Value Composite One (VC1) is a method that investors use to determine a company’s value. The VC1 of Cameco Corporation (TSX:CCO) is 43. A company with a value of 0 is thought to be an undervalued company, while a company with a value of 100 is considered an overvalued company. The VC1 is calculated using the price to book value, price to sales, EBITDA to EV, price to cash flow, and price to earnings. Similarly, the Value Composite Two (VC2) is calculated with the same ratios, but adds the Shareholder Yield. The Value Composite Two of Cameco Corporation (TSX:CCO) is 41.

Shifting gears, we can see that Cameco Corporation (TSX:CCO) has a Q.i. Value of 44.00000. The Q.i. Value ranks companies using four ratios. These ratios consist of EBITDA Yield, FCF Yield, Liquidity, and Earnings Yield. The purpose of the Q.i. Value is to help identify companies that are the most undervalued. Typically, the lower the value, the more undervalued the company tends to be.

Investors may be interested in viewing the Gross Margin score on shares of Cameco Corporation (TSX:CCO). The name currently has a score of 23.00000. This score is derived from the Gross Margin (Marx) stability and growth over the previous eight years. The Gross Margin score lands on a scale from 1 to 100 where a score of 1 would be considered positive, and a score of 100 would be seen as negative.

At the time of writing, Cameco Corporation (TSX:CCO) has a Piotroski F-Score of 8. The F-Score may help discover companies with strengthening balance sheets. The score may also be used to spot the weak performers. Joseph Piotroski developed the F-Score which employs nine different variables based on the company financial statement. A single point is assigned to each test that a stock passes. Typically, a stock scoring an 8 or 9 would be seen as strong. On the other end, a stock with a score from 0-2 would be viewed as weak.

Return on Invested Capital (ROIC), ROIC Quality, ROIC 5 Year Average

The Return on Invested Capital (aka ROIC) for Cameco Corporation (TSX:CCO) is 0.010753. The Return on Invested Capital is a ratio that determines whether a company is profitable or not. It tells investors how well a company is turning their capital into profits. The ROIC is calculated by dividing the net operating profit (or EBIT) by the employed capital. The employed capital is calculated by subrating current liabilities from total assets. Similarly, the Return on Invested Capital Quality ratio is a tool in evaluating the quality of a company’s ROIC over the course of five years. The ROIC Quality of Cameco Corporation (TSX:CCO) is 4.997390. This is calculated by dividing the five year average ROIC by the Standard Deviation of the 5 year ROIC. The ROIC 5 year average is calculated using the five year average EBIT, five year average (net working capital and net fixed assets). The ROIC 5 year average of Cameco Corporation (TSX:CCO) is 0.045600.

There are many different tools to determine whether a company is profitable or not. One of the most popular ratios is the “Return on Assets” (aka ROA). This score indicates how profitable a company is relative to its total assets. The Return on Assets for Cameco Corporation (TSX:CCO) is 0.021382. This number is calculated by dividing net income after tax by the company’s total assets. A company that manages their assets well will have a higher return, while a company that manages their assets poorly will have a lower return.

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China to build 6-8 reactors a year to meet 2030 goals: exec

China will be able to build six to eight nuclear reactors a year once the approval process gets back to normal in the near future, the chairman of the state-owned China National Nuclear Corporation told Reuters on Monday.

“That should be enough to meet our country’s 2030 development plans,” he said on the sidelines of an industry conference.

China did not approve any new projects for three years until it gave the nod to two new reactor complexes in southeast China earlier this year.

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Organizers hope to pressure caucus hopefuls on ethanol

There are a few rarely challenged observations about Iowa politics. Lyon County is red, Johnson County is blue and corn is king from the Missouri River to the Mississippi.

One national organization, however, hopes to challenge that third assumption in the lead-up to the 2020 caucuses.

Mighty Earth in Washington, D.C., is employing organizers in Iowa City, Des Moines and Davenport to raise skepticism about food-based biofuels such as ethanol.

The group is educating Iowans about environmental issues, with the hope they will pressure visiting presidential hopefuls to be more critical of the status quo in energy policy.

Organizers understand they face a difficult challenge in the nation’s top biofuel-producing state, where both Republicans and Democrats overwhelmingly favor government support for corn-based fuel.

“We realize that here in Iowa, whether it’s big ag or small ag, that’s something that influences a lot of the political establishment here,” Margaret Hansbrough, director of the organization’s national clean energy campaign, told me.

For more than a decade, ethanol has been heralded by farmers and some environmentalists as a cleaner domestic supplement to traditional transportation fuel. The Renewable Fuel Standard, first passed by Congress in 2005 and expanded in 2007, requires fuel to contain certain levels of renewable fuel, and has enjoyed bipartisan support.

A growing group of skeptics, however, say newer research shows the efficiency of ethanol has been overstated. They also worry government-induced demand for ethanol has led to risky land use, gobbling up more acres for corn production than the free market would dictate.

A University of Wisconsin study found a net increase of about 3 million acres of U.S. cropland between 2008 and 2012, the years after the Renewable Fuel Standard 2.0 was imposed, and corn was the most common crop planted on newly converted cropland. Overproduction, in turn, leads to other environmental hazards like the water quality woes Iowa has struggled to address in recent years.

Mighty Earth leaders insist their campaign is not intended to criticize Iowa farmers. Instead, blame lies with the bipartisan coalition that has propped up the biofuels industry.

Farmers “don’t even have a choice. They are really under the thumb of policies that dictate markets. If they don’t play that game, it’s very difficult for them to compete outside of it,” Hansbrough said.

Still, turning renewable fuel mandates away from corn would lead to significant declines in commodity prices, threatening an already fragile farm economy. Criticism of ethanol understandably generates anxiety for farmers and the government figures who rely on farmers’ tax dollars.

The political forces in favor of ethanol in Iowa are strong, but may be wavering. During the 2016 Republican nominating contests, U.S. Sen. Ted Cruz — who coincidentally represents the largest oil-producing state — famously opposed the Renewable Fuel Standard, drawing a fierce and hostile response from ethanol boosters under the banner “Farmers Against Cruz.”

Nevertheless, Cruz went on to win the Iowa Republican caucuses, suggesting allegiance to the biofuels cause is not a make-or-break issue for a significant segment of voters.

So this may be a difficult mission, but not an impossible one.

“We don’t think we’re going to have this wrapped up at the end of all this, but if we’ve been successful, we’ve educated, we’ve engaged, we’ve seen a lot more opinions changed,” said Anya Fetcher, a Mighty Earth organizer in Iowa City.

• Comments: (319) 339-3156;

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DowDupont cuts sales forecast as Midwest floods hit agri division

DowDuPont Inc cut its forecast for first-quarter sales on Thursday, citing the impact of U.S. Midwest floods on its agri business as well as weakness in its packaging and specialty plastics division.

Record floods have devastated a wide swath of the Farm Belt across Iowa, Nebraska, South Dakota and several other states, idling ethanol plants, slowing rail shipments of agricultural products and swamping storage bins holding grain from previous harvests.

The company said the floods have limited its ability to deliver products to customers, while delaying pre-season applications.

Sales from its agri business are expected to be down 4 percent to 6 percent and operating earnings before interest, tax, depreciation and amortization (EBITDA) are expected to be down by $125 million to $150 million, DowDupont said.

Grains trader Archer Daniels Midland Co was also forced to lower its first-quarter profit forecast on Monday due to floods and a severe winter.

For the first quarter, DowDupont now expects net sales to be down in the high single-digit percentage range. It had previously forecast sales to fall in the mid single-digit percentage range.

DowDupont also forecast a $100 million reduction in its materials science division’s operating EBITDA, compared with previous expectations, due to lower margins in packaging and specialty plastics globally.

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The Hog Cycle kicks off.

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Brazil ports linked to Bunge, Cargill seek lower Panama Canal fees

Brazilian port operators including units of global grain traders Cargill Ltd and Bunge Ltd will unveil a proposal this week to lower Panama Canal tariffs and cut their costs in shipping agricultural commodities to their main market China.

They will argue that at current tariffs, shipping grains from Brazil’s northern ports via the Cape of Good Hope is almost $206,000 cheaper on a per-ship basis than using the Canal, despite the shorter distance.

In a study to be presented at a conference in Panama City on Thursday, the private port operators association ATP will propose using the idle capacity of the old Panama Canal instead of the congested large new locks opened in 2016 for Panamax ships.

This could potentially cut shipping costs and shorten journey times by 4-5 days between Brazil, the world’s leading soybean supplier, and the Chinese and other Asian markets, according ATP, of which Cargill, Bunge, Brazil’s grain trader Amaggi and pulp and paper producer Suzano Papel e Celulose SA are members.

The operators hope their proposal will open the way for talks between Brazil and Panama to find a way to slash tariffs.

“It is good for both sides, because today Panama no longer receives a significant number of Brazilian grain ships bound for China due to the inexistence of a tariff agreement,” Luciana Guerise, ATP executive director, said in a statement sent to Reuters.

ATP said the tariff proposal has to be made by the Brazil’s agriculture ministry to the country’s foreign affairs ministry, which would be responsible for negotiating the terms with Panamanian authorities.

Neither of the ministries had an immediate comment.

The initiative marks a new step in the development of new trading routes for Brazil, the world’s largest exporter of agricultural commodities including soybeans, sugar, coffee, tobacco, orange juice, pulp, beef and chicken.

An initial step in that direction was taken in March last year when Aprosoja, an association of grain growers in Mato Grosso state, signed a cooperation agreement with the Panama Canal Authority.

“We believe we can capture part of the grains that leave Mato Grosso and reach the north of Brazil,” Jorge Quijano, the Canal’s chief executive, said then. “The Panama Canal would be an option for the product to reach Asia, especially China.”

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Precious Metals

Franco-Nevada Corporation (FNV) to reach at $81.27 in coming one year period – Analysts Buzz

Franco-Nevada Corporation (FNV) stock managed performance -2.10% over the last week and switched with performance of -0.85% throughout past one month period. The stock price exposed a move of 5.83% so far this year and uncovered flow of 9.37% in recent year. The shares price displayed 5.80% return during the recent quarter while it has presented performance of 18.06% over the past six months. The stock exhibited 27.46% change to a low over the previous 12 months and manifested move of -5.79% to a high over the same period.

Moving toward the technical facts, its current distance from 20-Day Simple Moving Average is -2.13% and standing -1.55% away from 50-Day Simple Moving Average while traded 6.33% away from 200-Day Simple Moving Average.

A moving average is the average price of a contract over the previous n-period closes. For example, a 20-period moving average is the average of the closing prices for the past 20 periods, including the current period. For intra-day data the current price is used in place of the closing price. The moving average is used to observe price changes. The effect of the moving average is to smooth the price movement so that the longer-term trend becomes less volatile and therefore more obvious.

When the price rises above the moving average, it indicates that investors are becoming bullish on the commodity. When the prices fall below, it indicates a bearish commodity. As well, when a moving average crosses below a longer-term moving average, the study indicates a down turn in the market. When a short-term moving average crosses above a longer term moving average, this indicates an upswing in the market. The longer the period of the moving average, the smoother the price movement is. Longer moving averages are used to isolate long-term trends.

Price Target Estimate:

Analysts expected the average price target of $81.27 that is probable to reach in coming one year period. The price target of a stock is the price at which the stock is fairly valued with respect to its historical and projected earnings. Investors can maximize their rates of return by buying and selling stocks when they are trading below and above their price targets, respectively. Research analysts often publish stock price targets along with buy-sell recommendations. However, investors can and should determine their own price targets for entering and exiting stock positions.

Investors could set buy and sell price points around target prices to maximize returns. The ideal time to buy a stock is usually when it is trading at a substantial discount to its target price. This discount could be the result of weak market conditions or overreaction to recent company setbacks. The ideal time to sell a stock is usually when it is trading higher than its target price range or during overheated markets.

Franco-Nevada Corporation (FNV) stock moved -0.09% to 74.26 on Wednesday. It has been trading on front line as seeing to it recent volume. The stock traded recent volume of 447517 shares, this represents a daily trading in volume size. FNV maintained activity of relative volume at 0.8.

When analyzing volume, determine the strength or weakness of a move. As traders, we are more interested to take part in strong moves and don’t join moves that show weakness – or we may even watch for an entry in the opposite direction of a weak move. These guidelines do not hold true in all situations, but they are a good general aid in trading decisions.

Currently, the 14-day Relative Strength Index (RSI) reading is at 42.02. As you can see RSI calculation is fairly simple. The objective of using RSI is to help the trader identify over sold and overbought price areas. Overbought implies that the positive momentum in the stock is so high that it may not be sustainable for long and hence there could be a correction. Likewise, an oversold position indicates that the negative momentum is high leading to a possible reversal.

When the RSI reading is between 30 and 0, the security is supposed to be oversold and ready for an upward correction. When the security reading is between 70 and 100, the security is supposed to be heavily bought and is ready for a downward correction. Institutional owners hold 79.53% stake while Insiders ownership held at 2.02% in the company.

The Average True Range was recorded at 1.55. The volatility in the previous week has experienced by 1.49% and observed of 1.99% in the previous month. The stock price value Change from Open was at -0.40% with a Gap of 0.31%. The stock’s short float is around of 1.72% and short ratio is 5.7.

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Base Metals

After sanctions lifted, Russia's Rusal boosts aluminium smelter capacity

Russian aluminium giant Rusal has launched new production at its Boguchansk aluminium smelter in Siberia on Friday, doubling its capacity to 298,000 tonnes a year.

The new line, part of a larger project, is being started two months after Rusal was removed from a U.S. sanctions list. The world’s largest aluminium producer outside China is now seeking to restore sales contracts to pre-sanctions levels.

“This is a complex big project that has a difficult and very long history,” Deputy Prime Minister Dmitry Kozak told a ceremony in the Siberian city of Krasnoyarsk.

“It is very important that the Boguchansk aluminium smelter - one of the flagships of the aluminium industry - is being launched today,” he said.

The smelter, which first started in 2015, previously had capacity of 150,000 tonnes a year.

Rusal produces about 3.8 million tonnes of aluminium a year and plans to keep its output flat in 2019.

When the smelter project began 13 years ago, Rusal and its partner, Russian power company Rushydro, planned to raise Boguchansk’s capacity to 600,000 tonnes a year, requiring $2.6 billion in investment.

The firms said on Friday they had invested a total of $1.6 billion to achieve capacity of 298,000 tonnes a year.

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China's refined copper imports to fall almost 15 pct in 2019 - Antaike

China’s imports of refined copper are set to fall 14.7 percent this year as the country churns out more metal domestically, a research house said on Friday.

China is the world’s top consumer of copper, widely used in construction and manufacturing, and its imports of all forms of the metal are closely watched by metal markets.

It will import around 3.2 million tonnes of refined copper in 2019, down from 3.753 million tonnes in 2018, Yang Changhua, principal copper analyst at Antaike, the research arm of the China Nonferrous Metals Industry Association, said in a presentation in Beijing.

By 2020, Yang sees refined copper imports slipping another 6.3 percent to 3 million tonnes as Chinese smelting capacity continues to expand this year and next.

In China, “it is estimated that (refined copper) output in 2019 will be 8.85 million tons, an increase of 4.8 percent. Consumption growth will slow down from 4 percent last year to around 3 percent,” Yang said.

Global supply of copper concentrate, the ore mined and then processed into refined copper, is expected to increase by 1.5 percent this year, slowing from 2.5 percent in 2018, with only two mines — Cobre Panama in Panama and Chuquicamata in Chile — set to boost annual output by 100,000 tonnes or more, Yang said.

With China’s copper concentrate consumption projected to rise by 7.2 percent this year, its reliance on overseas supply is set to increase to 5.15 million tonnes on a copper-contained basis, up from 4.74 million tonnes last year.

Growing smelting capacity has increased competition for copper concentrate in China, pushing treatment and refining charges (TC/RCs) lower.

The China Smelters Purchase Team, a group of 10 Chinese copper smelters, on Thursday cut their TC/RC floor by more than 20 percent to $73 a tonne and 7.3 cents a pound, the lowest quarterly floor since at least 2015.

Meanwhile, China’s ban on low-grade scrap copper from the start of this year, which has led to higher refined copper imports, is due to be extended to all scrap by the end of 2020.

Chinese government departments are studying the development of quality standards for scrap copper and aluminium material and attempting to have their designation changed to a “resource” instead of solid waste, Yang said.

“If there is no policy change, there will be no way to import,” he added.

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Codelco copper output drops in 2018, profits plunge

Chilean state miner Codelco produced slightly less copper in 2018 than the year before, the company reported on Friday, as it continued to contend with declining ore grades and rising costs at its aging mines.

Chief Executive Nelson Pizarro said the company produced 1.678 million tonnes of copper at its own mines in 2018, down 3.3 percent from the previous year, and a total of 1.806 million tonnes, including production from its joint ventures at El Abra and Anglo American South.

Codelco, the world’s top copper producer, reported a 2018 pre-tax profit of $2.002 billion, down from $2.885 billion the previous year as production costs rose 2 percent and the price of copper fell from 2017. Codelco said it also took a one-time deduction for deteriorating assets of nearly $400 million, for a total drop in pre-tax profits of 44.3 percent.

Pizarro said at a presentation at Codelco’s Santiago headquarters that 18 labor negotiations at its mines had also affected the bottom line but that productivity increases kept costs in line with industry averages.

Pizarro predicted a copper price of $2.95 per pound for 2019.

Codelco, which produces nearly 10 percent of the world’s copper, is investing billions of dollars to convert its Chuquicamata mine, its second-largest deposit, from an open pit mine into an underground facility.

Pizarro said the Chuquicamata project was approaching 76 percent complete. It is a central part of a 10-year, $39 billion overhaul of the state miner’s key operations as it seeks to maintain production despite rapidly falling ore grades at its deposits.

Codelco Vice President Alejandro Rivera said the company would begin applying in May for the environmental permits it needs to begin exploring for lithium on its Maricunga salt flat holding. Rivera said Codelco hoped to have results from those explorations by the end of 2020.

The company’s lithium projects are off to a slow start. Codelco has yet to find a partner for either its Maricunga or Perdernales project.

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METALS-Nickel leads pack as base metals rise on trade talk progress, China data boost

(Adds Shanghai closing prices, updates London prices) By Mai Nguyen SINGAPORE, April 1 (Reuters) - Nickel prices jumped on Monday, leading gains across the board in base metals markets, after data showed stimulus measures in China, the world's biggest nickel consumer, are boosting the economy and as U.S.-China trade talks progress. Factory activity in China unexpectedly grew for the first time in four months in March, the official Purchasing Managers' Index (PMI) showed on Sunday. U.S. President Donald Trump said last week trade talks with China were going "very well", while Beijing said it would maintain the suspension of additional tariffs on U.S. vehicles and auto parts after April 1 in return for the U.S. delaying tariff hikes on Chinese imports. "The PMI and negotiations between the U.S. and China are going well ...and people are showing optimistic opinion about future demand. Maybe the economy is not so bad as previously expected," said a Guangzhou-based metals analyst, who asked to remain unidentified citing her company's media policies. FUNDAMENTALS * NICKEL: London nickel jumped as much as 2.7 percent to $13,335 a tonne, its highest since March 21, and stood at $13,315 a tonne as of 0726 GMT. The most traded May nickel contract on the Shanghai Futures Exchange rose 3 percent to a one-week high of 103,200 yuan just before the close before ending up 2.9 percent. * STOCKS: Nickel inventories at LME-approved warehouses MNISTX-TOTAL are at 182,574 tonnes, the lowest since June 2013. On-warrant ShFE nickel inventories SNI-TOTAL-D dropped to the lowest since August 2015 at 8,718 tonnes as of Friday. * ALUMINIUM: Shanghai aluminium rose as much as 1.5 percent to 13,900 yuan a tonne, the highest this year, easing the pressure on Chinese smelters. * ZINC: The metal used to galvanise steel, closed up 2.6 percent in Shanghai after touching 23,160 yuan a tonne, its highest since March 2, 2018. LME zinc rose as much as 1.1 percent to $2,955 a tonne, its highest since June. * COPPER: Three-month LME copper added 0.5 percent to $6,515 a tonne, while ShFE copper closed up 1.7 percent on 49,460 yuan a tonne. * CHILE: Top copper miner Codelco produced 3.3 percent less copper in 2018 than the year before as it continued to contend with declining ore grades and rising costs. * PERUS: The leader of an indigenous community that has cut off access to MMG's Las Bambas copper mine said he was open to talks with the government, the first sign of a potential breakthrough in a dispute that has halted exports of the mine, responsible for 2 percent of global copper output. PRICES BASE METALS PRICES 0738 GMT Three month LME copper 6513 Most active ShFE copper 49450 Three month LME aluminium 1928 Most active ShFE aluminium 13865 Three month LME zinc 2950 Most active ShFE zinc 23125 Three month LME lead 2030.5 Most active ShFE lead 16940 Three month LME nickel 13310 Most active ShFE nickel 103130 Three month LME tin 21425 Most active ShFE tin 148530 BASE METALS ARBITRAGE LME/SHFE COPPER LMESHFCUc3 -1135.96 LME/SHFE ALUMINIUM LMESHFALc3 -1105.5 LME/SHFE ZINC LMESHFZNc3 -561.86 LME/SHFE LEAD LMESHFPBc3 670.67 LME/SHFE NICKEL LMESHFNIc3 -2786.22 ($1 = 6.7065 Chinese yuan renminbi) (Reporting by Mai Nguyen; additional reporting by Tom Daly in BEIJING; Editing by Rashmi Aich and Christian Schmollinger)

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Anglo American plc (LON:AAL) Rating Changes as of Apr 1, 2019

During 2018 Q4 the big money sentiment increased to 1.04. That’s change of 0.16, from 2018Q3’s 0.88. 48 investors sold all, 146 reduced holdings as Anglo American plc ratio improved. 128 increased stakes while 74 funds took stakes. Funds hold 355.08 million shares thus 2.01% less from 2018Q3’s 362.38 million shares.

Ameritas Investment Prns Incorporated reported 0.03% stake. Regions Finance Corp accumulated 197 shs or 0% of the stock. Ares Mngmt Ltd Co invested 0.66% of its capital in Anglo American plc (LON:AAL). Hightower Advisors Lc has invested 0.01% in Anglo American plc (LON:AAL). Clearbridge Invests Limited Liability Corp owns 702 shs. Bridgeway Capital Mgmt reported 965,152 shs. Creative Planning stated it has 511,754 shs. Art Advsr Limited Co holds 24,040 shs or 0.05% of its capital. United Kingdom-based Hsbc Plc has invested 0.04% in Anglo American plc (LON:AAL). State Of Wisconsin Inv Board invested 0.02% of its capital in Anglo American plc (LON:AAL). New Mexico Educational Retirement Board has 0.05% invested in Anglo American plc (LON:AAL). 934,747 were reported by D E Shaw &. Masters Capital Mngmt Ltd Llc holds 1.75% of its capital in Anglo American plc (LON:AAL) for 1.00 million shs. Mitsubishi Ufj Tru And Corporation reported 88,479 shs. Nuwave Investment Management Limited Liability Co accumulated 248 shs or 0.01% of the stock.

Anglo American plc registered $1.37 million net activity with 2 insider buys and 0 selling transactions since October 29, 2018. CAHILL JOHN T bought 25,000 shs worth $836,763.

Anglo American plc (LON:AAL) Ratings Coverage

A total of 14 analysts rate Anglo American PLC (LON:AAL) as follows: 7 “Buy”, 5 “Hold” and 2 “Sell”. Тherefore 50% are bullish. (LON:AAL) has 62 ratings reports on Apr 1, 2019 according to StockzIntelligence. On Wednesday, December 19 the firm has “Neutral” rating by UBS given. On Friday, February 22 the firm has “Hold” rating by Deutsche Bank given. The stock rating was maintained by DZ Bank with “Sell” on Monday, February 25. On Wednesday, December 12 the company was maintained by Deutsche Bank. In Thursday, January 31 report JP Morgan maintained it with “Overweight” rating and GBX 2210 target. On Friday, January 25 the firm has “Neutral” rating given by UBS. On Thursday, January 24 the firm earned “Outperform” rating by RBC Capital Markets. The company rating was maintained by HSBC on Thursday, March 7. On Wednesday, January 16 Societe Generale downgraded Anglo American plc (LON:AAL) to “Hold” rating. In Friday, February 8 report UBS downgraded the stock to “Sell” rating. Listed here are Anglo American plc (LON:AAL) PTs and latest ratings.

27/03/2019 Broker: Morgan Stanley Rating: Overweight Old Target: GBX 2250.00 New Target: GBX 2280.00 Maintain

21/03/2019 Broker: BNP Paribas Rating: Neutral Old Target: GBX 1800.00 Maintain

20/03/2019 Broker: Liberum Capital Rating: Sell Old Target: GBX 1200.00 Maintain

12/03/2019 Broker: Credit Suisse Rating: Neutral Old Target: GBX 1630.00 New Target: GBX 1610.00 Maintain

07/03/2019 Broker: HSBC Rating: Buy Old Target: GBX 2160.00 New Target: GBX 2200.00 Maintain

05/03/2019 Broker: RBC Capital Markets Rating: Outperform Old Target: GBX 2150.00 New Target: GBX 2300.00 Maintain

05/03/2019 Broker: Liberum Capital Rating: Sell Old Target: GBX 1200.00 Maintain

04/03/2019 Broker: JP Morgan Rating: Overweight Old Target: GBX 2290.00 New Target: GBX 2250.00 Maintain

27/02/2019 Broker: Goldman Sachs Rating: Conviction Buy Old Target: GBX 2300.00 New Target: GBX 2250.00 Maintain

25/02/2019 Broker: DZ Bank Rating: Sell Old Target: GBX 1480.00 New Target: GBX 1570.00 Maintain

AAL reached GBX 2093 during the last trading session after GBX 39.5 change.Anglo American plc has volume of 2.39 million shares. Since April 1, 2018 AAL has 0.00% and is . AAL underperformed the S&P500 by 4.37%.

Anglo American plc, together with its subsidiaries, engages in exploring, mining, processing, and smelting bulk commodities, base metals and minerals, and precious metals and minerals worldwide.The firm is valued at 26.50 billion GBP. The firm explores for iron ore, manganese ore, and alloys; metallurgical and thermal coal; copper; nickel; niobium; phosphates; platinum group metals; and rough and polished diamonds.The P/E ratio is 7.64.

For more Anglo American plc (LON:AAL) news announced briefly go to:,,, or The titles are as follows: “Never a bad day at the office for Anglo American execs –” announced on March 05, 2019, “SolGold begins 2019 strong on new mineralization at Ecuador project –” on January 02, 2019, “Australia’s top gold miner boosts bet on Ecuador copper project –” with a publish date: December 20, 2018, “Newcrest ups stake in Ecuador with Cornerstone deal –” and the last “SolGold wants to tighten grip on Ecuador project, buy out minority shareholder –” with publication date: January 31, 2019.

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Imports of aluminium scrap in Jan-Feb decline 33% from year ago

China imported 206,200 mt of aluminium scrap in the first two months of 2019, down 33.41%, or 103,500 mt from the same period of 2018, data from China Customs showed.

The data combined figures for January and February to smooth out distortions caused by the week-long Lunar New Year holiday.

China’s exports of unwrought aluminium alloy, however, rose 15,300 mt, or 21.62% in January-February.

Chinese aluminium alloy producers usually use imported aluminium scrap as raw materials to avoid duties of 15% on exports of unwrought aluminium alloy. Such exports of unwrought aluminium alloy accounted for 95.93% of the total in 2018.

SMM learned that secondary aluminium producers did not significantly lower exports. The decline of aluminium scrap imports via general trade accounted for the drop in overall imports of aluminium scrap.

SMM believed that exports of aluminium alloy that is produced from primary aluminium accounted for the greater exports of unwrought aluminium alloy in January-February.

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Codelco looks to Chuqui underground to sustain copper output in 2019

Chile's Codelco is racing to complete the new underground operation at its giant Chuquicamata mine to sustain copper production this year in the face of falling ore grades, bad weather and maintenance shutdowns, the company's CEO said Friday.

State-owned Codelco is targeting production of 1.7 million mt in 2019 to maintain its position as the world's largest producer of copper. But it could struggle in the face of worsening geological conditions at its aging mines. Last year, production fell 56,000 mt to 1.678 million mt, which CEO Nelson Pizarro attributed to a 5.5% drop in ore grades at its mines.

This year could be even tougher.

In January, production fell 12.9% to 127,300 mt as the company carried out shutdowns at its Ministro Hales and Radomiro Tomic mines. Then in February, torrential rain and flooding halted its operations in northern Chile for several days.

"We must make an enormous effort in the remaining nine months of the year to compensate part of production lost to our difficulties in February and some maintenance work in January," Pizarro said at a press conference.

Key to meeting the target will be higher-grade ore extracted from the underground project in which Codelco is investing $5.5 billion. The investment will extend the life of the mine by 40 years as the century-old pit becomes too deep to operate profitably.

"This means ... completing ore-handling works in the Chuquicamata underground project by October or November and continue increasing the proportion of underground production," Pizarro said.

Block-caving is scheduled to begin in May with ore initially extracted by truck before the definitive lunch in October with the completion of underground crushers and a conveyor belt to carry rock to the concentrator plant 14 km away.

Codelco in April aims to restart its Chuquicamata and Potrerrillos smelters following lengthy shutdowns for environmental upgrades. Pizarro said that a sudden takeover of work to install two acid plants at the Chuquicamata smelter amidst a dispute with Canadian engineering firm SNC Lavalin had been fluid.

The drop in copper production, together with a lower copper price and higher input prices, saw Codelco's annual profits by a third last year to $2 billion, not counting paper losses worth almost $400 million as it wrote down the value of assets including its Ventanas smelter and the open pit at its Salvador division.

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Fitch Ratings: Global Copper Deficit Disappears as Project Pipeline Grows

The increased copper supply pipeline of brownfield expansions and greenfield projects will eliminate any material market deficit in the medium term, Fitch Ratings and CRU say. China will remain a key driver for demand growth, while electric vehicles will become a significant factor in the long term. In the absence of additional investments, CRU expects a deficit to re-emerge in the long term.

The medium-term copper supply outlook has increased and CRU expects an increase of more than 1 million tonnes in committed mine supply by the early 2020s from last year’s expectations. Higher copper prices of about USD7,000 a tonne in the second half of 2017 and the first half 2018 led to advancement of existing mine projects and increased exploration of new ones. This resulted in a growing committed mine production and an increased project pipeline.

Several high-profile brownfield expansions and greenfield projects that were given board approvals in 2018 are now due to come on stream in the next five years. These include the Quebrada Blanca Sulphides and Quellaveco projects, two on the world’s largest copper projects.

There is also an increased pipeline of probable and possible projects running up until the end of the next decade. Supply from these two categories could meet primary copper demand until 2034. However, not all these will be developed and the copper industry will still need to invest in projects that are at the pre-feasibility – prospect – or exploration stages, where spending levels have picked up but remain close to cycle lows. Therefore, without additional investments a deficit in the long term is still likely.

Electric vehicles (EVs) and China continue to determine demand growth. The most important of emerging copper consumption trends will be a slowdown, and ultimate decline, in Chinese refined copper uptake from its construction and utility sectors. However, a transition towards a greener economy will mean that Chinese demand does not see absolute declines, as copper-intensive EVs and renewable power applications will see widespread adoption. CRU expects that China will be a dominant EV producer accounting for 50%-60% of global output in any given year.

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Peru govt offers to end emergency measures in copper mine dispute

 The Peruvian government has offered to end emergency measures authorizing the use of force in a remote Andean region if indigenous protesters lift their blockades of roads to Chinese miner MMG Ltd’s Las Bambas copper mine, the prime minister said on Monday.

Prime Minister Salvador del Solar pitched the idea to Gregorio Rojas, the leader of indigenous community Fuerabamba, during negotiations on Sunday aimed at restoring road access to Las Bambas, one of Peru’s biggest copper mines, his office said in a statement.

“What we agreed was that first he would see if his community is in agreement. He can’t make decisions today without consulting members of his community,” Solar was quoted saying.

Rojas could not immediately be reached on Monday. His attorney said he was traveling to southern Peru, where Fuerabamba villagers have blocked two roads that Las Bambas needs to transport copper and receive supplies, halting exports from the mine and nearly forcing it to suspend production.

Las Bambas produces about 400,000 tonnes of copper per year, equivalent to about 2 percent of global output and 1 percent of Peru’s gross domestic product.

The government has declared two states of emergencies in response to the road blockades, suspending the right to hold public gatherings and authorizing police and the military to restore order. But authorities have not yet tried to clear protesters from the roads with force, fearful of the kind of deadly clashes that have halted mining projects in the past.

Rojas was arrested and jailed for a week on accusations he and three attorneys for the community tried to extort MMG. But he was released without charges on Friday and told Reuters he was open to talking with the government about ending the road blockades “soon,” potentially within a week.

Fuerabamba started the first road blockade in early February to demand compensation from MMG for using a stretch of road on its farmland to transport its copper concentrates to market.

Del Solar said the government was willing to discuss the community’s demands in detail with MMG and outside mediators once the blockades were lifted.

MMG has said it is open to dialogue.

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Rusal resumes aluminium supplies to U.S. market

Russian aluminium giant Rusal has resumed supplies to the U.S. market and aims to win back customers it lost due to sanctions by about September when the industry seals supply contracts for 2020, its chief executive said.

Last autumn, Rusal, the world’s largest aluminium producer outside China, missed the traditional window for contracting sales for this year as it was still negotiating with the U.S. Treasury Department to be removed from a sanctions list.

“We fulfilled all our obligations even during the period of sanctions, we did not allow ourselves a single failure. Therefore, some of our former partners are already coming back, new partners are coming,” CEO Evgenii Nikitin said.

“We hope that we will be able to bring back our clients toward September, the contracting period for 2020,” he added in an interview with Reuters.

Rusal’s nine months of talks with Washington ended successfully in late 2018. In January, Washington excluded Rusal from the sanctions list but kept founder Oleg Deripaska, who had to give up his control of the firm as part of the deal.

During sanctions, Rusal lost some of its customers, including Novelis Corp, the world’s biggest producer of rolled aluminium products.

The company is partially resuming deliveries to them but admits that it will have a chance to regain all its clients only when contracts for 2020 are signed.

“We expect to restore lost positions in all the traditional markets for the company, including Asia and America, with which difficulties arose last year. To date, we have already resumed deliveries to the American market,” Nikitin said.

    “Volumes for 2019 for most customers, including Novelis, are already contracted, but if there is a need for an increase, our partners will contact us. The same applies to customers in Japan.”

Asked if a new contract with Glencore was coming after the expiry of their long-term contract in late 2018, Nikitin said: “Glencore is one of our big customers. We are in negotiating positions with all clients.”


Rusal planned to keep its 2019 production and investments stable at 3.8 million tonnes and $900 million, respectively, Nikitin said.

Last week, the company launched new production at its Boguchansk aluminium smelter in Siberia, doubling its annual capacity to 298,000 tonnes a year. The company is currently considering a further increase in Boguchansk’s capacity, Nikitin said.

Rusal is also constructing the Taishet aluminium smelter, which it expects to launch in late 2020 and is discussing attracting financing for it from Russian and foreign banks.

Rusal is confident both Taishet and Boguchansk will find demand for their product. It expects global demand for aluminium to grow by 3.7 percent to 68 million tonnes in 2019 and maintain the same pace of growth in 2020.

Nikitin also said that there were no issues with Russia’s alumina supplies from the Mykolaiv (Nikolayev) plant in Ukraine.

He, however, said he did not know whether negotiations to sell the plant to Glencore, which were halted due to U.S. sanctions, would resume.

Rusal also plans to keep its 20 percent stake in Australia’s QAL and is in talks with Kazakh firm ERG on a new alumina supply contract, Nikitin said, adding that in general, Rusal does not consider selling any of its assets in the near future.

Nikitin has been with Rusal for more than 25 years and was offered the CEO job in May by the board, a month after the U.S. sanctions against Rusal.

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Wilder Moving Average Spotted Above the Simple Moving Average for OZ Minerals (OZL.AX)

Watching the trading indicators on shares of OZ Minerals (OZL.AX), we can see that the twenty one day Wilder Moving Average is presently above the 50 day Simple Moving Average. Traders following the signals may be on the lookout for the formation of a strong near-term trend.

As the markets continue to charge to new heights, investors may be trying to calculate where the markets will be moving in the next few months. Many market enthusiasts will be monitoring the current round of company earnings reports. A better than expected earnings period may help give the stock market another boost to even greater levels. At this point in time, investors may be a bit more cautious with stock selection. With so many names near all-time highs, investors may need to crunch the numbers to evaluate which stocks are still a good buy even at current price levels. Investors may also want to zoom out to the sector level and see if they can determine which sectors may be poised to outperform the overall market coming in to the second part of the year. Investors may also be looking at the overall economic conditions and striving to gain a sense of whether everything will align to keeping the bull run going.

Tracking other technical indicators, the 14-day RSI is presently standing at 66.62, the 7-day sits at 77.35, and the 3-day is resting at 93.13 for OZ Minerals (OZL.AX). The Relative Strength Index (RSI) is a highly popular technical indicator. The RSI is computed base on the speed and direction of a stock’s price movement. The RSI is considered to be an internal strength indicator, not to be confused with relative strength which is compared to other stocks and indices. The RSI value will always move between 0 and 100. One of the most popular time frames using RSI is the 14-day.

One technical indicator that may help gauge the strength of market momentum is the Average Directional Index or ADX. At the time of writing, the 14-day ADX for OZ Minerals (OZL.AX) is standing at 26.56. The ADX was created by J. Welles Wilder to help determine how strong a trend is. In general, a rising ADX line means that an existing trend is gaining strength. The opposite would be the case for a falling ADX line. Many chart analysts believe that an ADX reading over 25 would suggest a strong trend. A reading under 20 would suggest no trend, and a reading from 20-25 would suggest that there is no clear trend signal.

Looking further at additional technical indicators we can see that the 14-day Commodity Channel Index (CCI) for OZ Minerals (OZL.AX) is sitting at 193.90. CCI is an indicator used in technical analysis that was designed by Donald Lambert. Although it was originally intended for commodity traders to help identify the start and finish of market trends, it is frequently used to analyze stocks as well. A CCI reading closer to +100 may indicate more buying (possibly overbought) and a reading closer to -100 may indicate more selling (possibly oversold).

Active traders have a wide variety of technical indicators at their disposal for completing technical stock analysis. Presently, the 14-day ATR for OZ Minerals (OZL.AX) is spotted at 0.26. First developed by J. Welles Wilder, the ATR may assist traders in determining if there is heightened interest in a trend, or if extreme levels may be signaling a reversal. Simply put, the ATR determines the volatility of a security over a given period of time, or the tendency of the security to move one direction or another.

Shares of OZ Minerals (OZL.AX) have a 7-day moving average of 10.42. Moving averages can help spot trends and price reversals. They may also be used to help find support or resistance levels. Moving averages are considered to be lagging indicators meaning that they confirm trends.

There are many factors that can affect the health of a certain company. Because of this, it can be extremely difficult to find one single strategy that will prove successful in the stock market. Investors are able to study all the different data, but figuring out the relevant information can be a struggle. There is plenty of company information that can easily be measured such as revenue and profits. There are also elements that aren’t as easily computed such as reputation and competitive advantage. Finding a way to gather all the information and craft a strategy that incorporates all aspects of a company may be a challenge for investors. Because there is a highly inherent human element to picking stocks, price action may not follow expectations. Human emotion can reverse course rapidly over a short period of time. Investors need to always be prepared for market uncertainty while attempting to keep emotions in check.

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LME sets out potential changes to warehousing rules to boost stocks

Proposals to modify London Metal Exchange rules to attract more metal into its system would help boost stocks and revenues for warehousing firms and improve transparency, LME chief executive Matt Chamberlain said.

Sweeping reforms since 2013 aimed at shrinking queues in LME approved warehouses are one reason behind stocks of metal such as aluminium sliding to near one million tonnes, the lowest in more than a decade, from a record high above 5.49 million tonnes in January 2014.

Historically, some of the surplus in the aluminium market in recent years would have been deposited under LME warrant.

“The argument is that there is more metal out there, people would make more use of LME warranting if circumstances were different. That would be good for warehouses and good for the market,” said Chamberlain said.

“We want to be sure (warehouses’) business models remain financially viable. Rolling back all the rules wouldn’t be acceptable to the broader market, but we would support changes that make it easier for warehouses to do business.”

The proposals made by warehousing firms and published by the LME in a discussion paper on Friday include extending to 80 days the length of time that full storage fees are payable on metal waiting to be loaded out. That compares with the current 30 days of full rent and 20 days half rent.

“Some warehouse operators believe this may enable them to attract and incentivize larger quantities of stock into LME storage, while still providing protection for metal owners against structural queues,” the LME said.

“The possible consequences of such an amendment...would be the ability of warehouses to exhibit queues of 80 days before being affected by financial penalties.”

The exchange added: “LME warranting is used more broadly by metals market participants seeking to store and finance metal, many of who believe that liquidity and transparency would be enhanced by higher stock levels.”

One proposal is cutting warehouse rents for metal on LME warrant, which for aluminium is mostly around 55 U.S. cents a tonne, many times more than storage costs for off-warrant metal, typically below 10 U.S. cents.

But metal industry sources say any reductions would be resisted by warehouse firms that offer only storage facilities.

Short queues are not a problem for firms that provide storage and logistical services such as handling and chartering, as their revenue streams are diversified.

Limitations on “evergreen” rent deals - agreements between warehouses and metal owners to share rental income - are also suggested. These deals allow owners to keep receiving rent on metal they have sold.

“Some warehouse operators believe that this may reduce the practice of metal being withdrawn from warehouses purely to end these evergreen payments,” the exchange said.

“There is a substantial section of the market which believes that it is not the LME’s role to intervene in commercial arrangements between warehouse companies and metal owners.”

The deadline for responses to the discussion paper is the end of May. Results will be published in the third quarter and if appropriate the process will move to the consultation stage.

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Major players Korea Zinc, Teck agree 67 percent jump in processing charge: sources

Korea Zinc Inc and Teck Resources Ltd have agreed annual concentrate treatment charges of about $245 a ton, 67 percent higher than last year, as mine supply ramps up, two industry sources said.

The two companies are major players in the metals sector, and their agreement on yearly processing charges often establishes a benchmark widely used throughout the industry.

The deal was largely in line with current spot treatment charges in China, which have soared to $240 a ton from a low of $12.50 at the start of 2018.

The prices charged by smelters for turning concentrates - partially processed ore - into refined metal rise as mine supply increases as there is more competition among miners to find smelters to process their material.

World mine production of zinc - mainly used for galvanizing steel - is expected to rise 6.4 percent this year to 13.87 million tonnes, according to industry group the International Lead and Zinc Study Group.

“We knew it was going to go up. My view was anything over $225 is a win for the smelters,” said Colin Hamilton, director of commodities research at BMO Capital. “Net-net it’s clearly positive for smelters.”

A surprising aspect of the deal was that price participation was included in the contract for the first time in two years, he added. That means that processing charges are adjusted depending on the rise or fall in the zinc price during the year.

Benchmark zinc on the London Metal Exchange has climbed 16 percent this year, touching a nine-month peak of $2,958 a ton on Monday due to low inventories and tight supplies of refined metal.

Last year the zinc industry agreed to a 15 percent drop in annual zinc processing fees to $147 a ton due to low availability of concentrates.

In addition to greater supply of zinc from mines, processing charges have been rising because refining capacity has been depressed, with many operations in China affected by an environmental clampdown.

“There is a wide availability of concentrates but it’s not feeding though to the refined market, so there is a bottleneck where there is not a lot of refined zinc,” a trader said.

Last month, Glencore struck a deal with its Canadian subsidiary Noranda Income Fund on zinc treatment charges for the coming year, but did not disclose the fees.

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Peru community rejects talks over copper mine blockade: indigenous leader

An indigenous community in Peru that has blocked roads to Chinese miner MMG Ltd’s Las Bambas copper mine has decided not to negotiate with the government further until the group’s lawyers are freed from jail, the head of the community, said on Tuesday.

The government had held a meeting with community leader Gregorio Rojas, in the capital Lima on Sunday and offered to terminate emergency measures authorizing the use of military force in the region in exchange for an end to the blockades.

Rojas traveled to southern Peru to discuss the proposal with members of his Fuerabamba community, which has blocked MMG from using a stretch of road on its farmlands since early February in a dispute over compensation.

But the community was opposed to the latest offer, Rojas said.

“They told me that there cannot be any agreement ... because our lawyers are not free. When they are free there will be dialogue,” Rojas told Canal N after the group’s meeting. “That’s what they’ve told me. The people decide, not me.”

The community’s attorneys, the brothers Jorge and Frank Chavez, were jailed along with Rojas and another attorney earlier this month on allegations they organized the road blockade to extort MMG.

Rojas was released without charges on Friday, and told Reuters he was open to talking with the government about how to end the dispute.

But the Chavez brothers remained in jail, and prosecutors have asked a judge to hold them in pre-trial detention for up to three years while they are under investigation.

Rojas said the men were innocent. “We need them, like you need an eye or a foot,” he said.

The blockade has halted exports from Las Bambas, which produces about 400,000 tonnes of copper per year, accounting for about 2 percent of global copper production and 1 percent of Peru’s gross domestic product.

Copper prices slipped on Tuesday in part on expectations the Peruvian government would be able to end the impasse.

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Feb copper scrap consumption posts biggest decline in 7 months

China's consumption of copper scrap in February registered nearly the biggest drop in seven months as downstream smelters and processors closed for CNY, an SMM research found.

Overall consumption of copper scrap shrank 14.4%, or 25,700 mt, from January, and stood at 152,000 mt in February, SMM data showed. Consumption from both processors and smelters declined on the month.

CNY closure lowered February’s copper scrap consumption across processors by 15,700 mt on the month, to 65,600 mt. After the holidays, however, the scrap material attracted brisk purchases from processors of copper rod as soaring prices of refined copper widened its prices spread with scrap.

The monthly average price spread between refined and scrap copper climbed to 1,304 yuan/mt in February, with a high of 1,500 yuan/mt.

SMM data showed that domestic smelters consumed some 56.8% of the overall copper scrap, or 86,400 mt, in February, down around 10,000 mt from January. Compared with downstream processors, shorter CNY breaks across smelters accounted for the slower drop in consumption. Environmental issues and cash flow problems kept those smelters operating at lows in February.

SMM learned that domestic additions of smelting capacity currently focus on primary copper instead of copper scrap. This was reflected by a 2% increase in copper concentrate imports in February, compared with February 2018.

On a yearly basis, February’s imports of copper scrap and blister copper decreased by 50% and 34%, respectively, in physical content, customs data showed.

SMM data showed that seaborne copper scrap accounted for 56.1%, or 85,300 mt, of overall copper scrap consumption in February.

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Peruvian judge jails lawyers for three years over copper mine blockade

Peruvian judge on Wednesday ordered three years of jail time for three lawyers representing indigenous villagers who have blockaded shipments from a massive copper mine operated by Chinese miner MMG Ltd.

The ruling, which a lead prosecutor confirmed on television news channels, promises to further polarize a dispute between MMG and the Quechua-speaking village of Fuerabamba, in Peru’s southern copper belt.

Villagers have demanded that their lawyers be freed before talking with the government about lifting their blockades of two roads that have cut off access to the Las Bambas mine, halting its exports.

“I hope that the community understands we’re not against them. We’re against crime,” prosecutor Jorge Chavez Cotrina said in comments broadcast on local TV channel RPP. “They can ask for whatever they want. But we have to act according to the law.”

The prosecution argued the lawyers - the brothers Jorge and Frank Chavez, and Carlos Vargas - had manipulated Fuerabamba villagers into blocking a road used by Las Bambas to extort MMG, and must be held in jail because they are a flight risk.

Kevin Pena, the attorney for the three men, denied the accusations and said their due process was being violated.

Fuerabamba villagers have repeatedly denied that they were manipulated by the lawyers, saying they fairly represented them in their claim for compensation from MMG for transporting its copper concentrates on a road that passes through the community’s farmland.

At the end of a three-day hearing in the regional capital of Cusco, Judge Patricia Valencia granted the prosecution’s request to order the lawyers to 36 months in pre-trial detention while prosecutors prepare charges against them.

Fuerabamba villager Edison Vargas said the community would continue the blockades while they remained in jail. “We’ll keep up the struggle 36 months. The mine will be shuttered 36 months,” Vargas said in a phone message.

Fuerabamba’s president, Gregorio Rojas, could not immediately be reached for comment.

MMG has said it is open to dialogue.

Las Bambas, MMG’s flagship mine, is one of Peru’s biggest copper producers, churning out about 400,000 tonnes in copper per year, or about 2 percent of global supply.

Only some 900 workers out of 1,900 remained at the mine on Wednesday, and more will be evacuated by helicopter in coming days, a company source told Reuters.

Production at Las Bambas “continues at progressively reduced rates,” the company said in an emailed statement from its headquarters in Australia. “The situation at the site remains unchanged, inbound and outbound logistics are suspended.”

MMG is controlled by state-owned China Minmetals.

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Ivanhoe Mines Ltd (IVPAF) is a Volume Leader

Volume is the number of shares traded over a specific period of time. Every buyer has a seller, and each transaction adds to the total count of the volume. When a buyer and a seller agree on a transaction at a certain price, it is considered to be one transaction. For example, if only ten transactions occur in a trading day, the volume for the day is ten. Volume is used to measure the relative worth of a market move. When the markets make a strong price movement, the strength of that movement depends on the volume over that period. The higher the volume means the more significant the move. Volume levels give clues about where to find the best entry and exit points. Ivanhoe Mines Ltd (IVPAF) experienced a volume of 88200.

Volume is an important measure of strength for traders and technical analysts because volume is the number of contracts traded. The market needs to produce a buyer and a seller for any trade to occur. The market price is when buyers and sellers meet. When buyers and sellers become very active at a certain price, this means that there is high volume. Bar charts are used to quickly determine the level of volume and identify trends in volume.

A 52-week high/low is the highest and lowest share price that a stock has traded at during the previous year. Investors and traders consider the 52-week high or low as a crucial factor in determining a given stock’s current value while also predicting future price movements.

When a commodity trades within its 52-week price range (the range that exists between the 52-week low and the 52-week high), investors usually show more interest as the price nears either the high or the low. One of the more popular strategies used by traders is to buy when the price eclipses its 52-week high or to sell when the price drops below its 52-week low. The rationale involved with this strategy says that if the price breaks out either above or below the 52-week range, there is momentum enough to continue the price fluctuation in a positive direction.

Ivanhoe Mines Ltd (IVPAF)’s high over the last year was $2.77 while its low was $1.5.

Ivanhoe Mines Ltd (IVPAF)’s 52-Week Percent Change, the difference between the current price and the settlement price from 1 year ago, is +23.47%. Standard Deviation is a measure of the current average variability of return. A move of (plus or minus) 1 std deviation means a 33% odds for a major price move, whereas a move of (plus or minus) 3 std deviations means a 1% odds for a major price move. Ivanhoe Mines Ltd (IVPAF)’s Standard Deviation is -0.04.

Weighted Alpha is a measure of how much a stock has risen or fallen over a one-year period with a higher weighting for recent price activity. Ivanhoe Mines Ltd (IVPAF)’s Weighted Alpha is +25.56. A “pivot point” is a technical analysis indicator used to glean the overall trend of the market over differing time periods. The pivot point itself is simply the average of the high, low and closing prices from the previous day’s trading. On the following day, any trading above the pivot point indicates ongoing bullish trends, while trading below the pivot point indicates a bearish trend.

Ivanhoe Mines Ltd (IVPAF)’s TrendSpotter Opinion, the signal from Trendspotter, a Barchart trend analysis system that uses wave theory, market momentum & volatility in an attempt to find a general trend, is Sell. Barchart Opinions show investors what a variety of popular trading systems are suggesting.

These Opinions take up to 2 years’ worth of historical data and runs the prices through thirteen technical indicators. After each calculation, a buy, sell or hold value for each study is assigned, depending on where the price is in reference to the interpretation of the study. Today’s opinion, the overall signal based on where the price lies in reference to the common interpretation of all 13 studies, for Ivanhoe Mines Ltd (IVPAF) is 40% Buy.

Pivot point analysis is used in alongside calculating support and resistance levels, much like trend line analysis. In pivot point analysis, the first support and resistance levels are found by utilizing the width of the trading range between the pivot point and either the high or low prices of the previous trading day. Secondary support and resistance levels are found using the full width between the high and low prices of the previous trading day.

Pivot points are oft-used indicators for trading futures, commodities, and stocks. They are static, remaining at the same price level throughout the day. Five pivot point levels are generated by using data from the previous day’s trading range. These are composed of a pivot point and two higher pivot point resistances called R1 and R2 and also two lower pivot point supports called as S1 and S2. Ivanhoe Mines Ltd (IVPAF)’s Pivot Point is 2.4545. Its 1st Resistance Point is 2.519 and its 2nd Resistance Point is 2.5648. The 1st Support Point is 2.4087 while its 2nd Support Point is 2.3442.

Disclaimer: The information contained on this website and from any communication related to this website is for information purposes only. The material on this website does not constitute advice and you should not rely on any material in this website to make (or refrain from making) any decision or take (or refrain from making) any action.

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Mongolia lawmakers seek to rewrite Oyu Tolgoi deal

A group of Mongolian legislators has recommended one of the agreements underpinning Rio Tinto’s Oyu Tolgoi copper mine should be scrapped and another changed, adding to the giant project’s political problems.

The Gobi desert copper deposit promises to become one of Rio Tinto’s most lucrative properties, but it has been subject to repeated challenges from politicians who argue the spoils of the country’s mining boom are not being evenly shared.

It has also been at the centre of an anti-corruption investigation that has seen the arrest of two former prime ministers and a former finance minister.

The original 2009 Oyu Tolgoi Investment Agreement granted 34 percent of the project to the Mongolian government and 66 percent to Canada’s Ivanhoe Mines, now known as Turquoise Hill Resources and majority-owned by Rio Tinto.

Nationalist politicians have repeatedly called for the deal to be adjusted in Mongolia’s favour.

Terbishdagva Dendev, head of a parliamentary working group set up last year to review the implementation of the Oyu Tolgoi agreements, told reporters this week the group had concluded the original 2009 deal should be revised.

A 2015 deal known as the Dubai Agreement, which kickstarted the underground extension of the project after a two-year delay, should also be scrapped entirely, he said.

“Of course there will be international and local pressure, though if we do have rule of law ... the agreements should be amended for good,” he said in a separate television interview.

Rio Tinto did not immediately comment on the issue when contacted by Reuters.

A lawyer involved in Mongolian mining deals speaking on condition of anonymity said opponents of the original agreement argue the Dubai Agreement made changes to the 2009 deal and should therefore have been subject to full parliamentary approval. Instead it was just approved by the prime minister.

The 200-page review has been submitted to Mongolia’s National Security Council as well as a parliamentary standing committee on economic matters. It is unclear when or if its recommendations will be implemented.

“It will be very hard to terminate the underground mine plan, since it must be done by mutual agreement,” said Otgochuluu Chuluuntseren, advisor at Mongolia’s Economic Policy and Competitive Research Center and a former government official.

“Also foreign investors who were participating in the project finance might intervene in the process to protect their interests,” he told Reuters, adding that it could also damage investor sentiment for years.

The flagship Oyu Tolgoi project helped spur a mining boom that drove economic growth up to double digits from 2011-2013, but a rapid collapse in foreign investment and falling commodity prices saw Mongolia plunge into an economic crisis in 2016.

Mongolia was also embroiled in a row with Rio Tinto over tax and project budget issues that saw Oyu Tolgoi’s expansion put on hold. A series of other disputes with foreign miners also weakened investor sentiment.

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Posco (NYSE:PKX) Sellers Rose Their Shorts By 59.42% As Of Apr 3, 2019

Posco (NYSE:PKX) had an increase of its shorted shares by 59.42%. It was published in April by FINRA the 223,500 shorted shares on PKX. The 140,200 previous shares are up with 59.42%. Former PKX’s position will need 1 days to recover. It has 161,800 average volume. Posco’s shorted shares float is 0.07%.

Ticker’s shares touched $60.31 during the last trading session after 2.09% change.POSCO has volume of 32,368 shares. Since April 3, 2018 PKX has declined 29.50% and is downtrending. PKX underperformed by 33.87% the S&P500.

POSCO manufactures and sells steel rolled products and plates in South Korea and internationally.The company has $19.35 billion market cap. It operates through four divisions: Steel, Construction, Trading, and Others.The P/E ratio is 6.99. The firm offers hot and cold rolled steel, steel plates, wire rods, galvanized and electrical galvanized steel, electrical and stainless steel, automotive materials, titanium, magnesium, and aluminum-plated products.

For more POSCO (NYSE:PKX) news announced briefly go to:,,, or The titles are as follows: “POSCO: Price Increases Bolster 3Q18 Earnings – Seeking Alpha” announced on October 10, 2018, “Is It Too Late To Make Money With POSCO? – Seeking Alpha” on June 19, 2018, “VIDEO — Battery Metals Update March 2019 – Investing News Network” with a publish date: April 03, 2019, “POSCO’s Share Price Seems To Be Predicting A Lot Of Doom And Gloom – Seeking Alpha” and the last “POSCO: Good Time To Add To Positions As Q1 Bottoms – Seeking Alpha” with publication date: February 01, 2019.

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Iron Ore

Iron Ore Thunders Higher.

By Krystal Chia

(Bloomberg) -- Iron ore’s supply-driven rally picked up

pace on Wednesday, with futures topping $90 a ton, amid

increasing concern the crisis at Brazil’s Vale SA will be drawn

out as regulators ordered dozens of dams to be shut.

Futures for benchmark material rallied as much as 4.1

percent to $91.30 a ton in Singapore, gaining for a fourth day,

while the contract for high-grade ore extended gains above $100.

In Dalian, most-active prices hit a two-year high, with Barclays

Plc raising price forecasts on expectations for a global


The seaborne market has been roiled this year after top

producer Vale suffered a dam breach in January, spurring mine

suspensions and concerns there’ll be a shortage. The catastrophe

drew increased scrutiny on mining practices from the

authorities, with the nation’s regulator now ordering 56

tailings dams to be closed by April 2. Iron ore’s rally has been

given an additional boost as a cyclone in Australia disrupted

flows from Rio Tinto Group and BHP Group.

“There’s no doubt that events in Australia have a short-

term impact as, after all, supply has dropped,” CRU Group

analyst Richard Lu said via WeChat. “However, in the long term,

the market is still preoccupied with whether Vale can restart

operations,” said Lu, adding that mills in China aren’t yet

worried about supply and are unlikely to buy cargoes at elevated


Still, the dislocation is showing up in export figures and

pummeling freight rates. Shipments from Brazil sank to 22.18

million tons in March, the lowest for that month in more than a

decade. The Baltic Exchange Capesize Index has lost 95 percent

since Jan. 24, the day before the dam disaster.

In Brazil, 39 of the 56 dams ordered to close lacked

documentation attesting to their stability, while 17 were judged

to be unstable, according to Eduardo Leao, director at country’s

National Mining Agency. Twenty are owned by Vale.

In Australia, both Rio and rival BHP have said the cyclone

will crimp output, with Macquarie Group Ltd. estimating the

latter is likely to miss production guidance. Shipments from

Australia sank more than 70 percent in the week to March 29 as

the cyclone struck, Global Ports data in AHOY show.

The benchmark price traded 3.5 percent higher at $90.83 at

2:35 p.m. in Singapore, following a three-day, 7.3 percent

advance. Miners’ shares rallied again in Sydney, with BHP, Rio

and Fortescue Metals Group Ltd. all gaining.

Barclays sees iron ore averaging $75 this year, up from its

previous outlook of $69, as the market flips to a 31 million ton

deficit, analyst Ian Littlewood wrote in a note. “Iron ore has

enjoyed a stellar start to the year, buoyed by supply

disruptions,” Littlewood said. “Higher prices are now


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Macedonia issues tender for first large-scale PV plant

Macedonia’s state-owned electric company, Elektrani na Makedonija (ELEM), has issued a tender for the construction of the country’s first large-scale PV power plant. According to the tender announcement, published on the MSME Global Art portal, the closing date of the procurement exercise is April 10.

ELEM is financing 33% of the €10 million project with its own funds, while 67% will be backed by long-term debt from the European Bank for Reconstruction and Development (EBRD). It will be adjacent to ELEM’s TPP Oslomej thermal power plant, approximately 110 km southwest of Skopje in the vicinity of Oslomej, a village in western Macedonia.

The selected developer is expected to start construction in July, and will complete the project within 10 months. The contract includes 36 months of O&M services and the tender will be conducted by e-procurement, using the EBRD Client E-Procurement Portal (ECEPP).

The EBRD agreed to finance part of the project with €5.9 million in January.

“The project is part of the strategy of ELEM to diversify its production mix away from coal, and increase the production share from renewable energy sources which will provide clean energy in a country and a region with serious capacity shortages and high levels of carbon intensity,” the utility stated in September, when it launched the project.

Macedonia covers its power demand with thermal power plants. It currently has an installed PV capacity of just 18 MW, most of which consists of distributed generation. Thermal power plants account for 842 MW of its total power generation capacity of 1.41 GW, with hydroelectricity and wind accounting for 553.6 MW and 36.8 MW, respectively. The country aims to produce around 28% of its power from renewable energy by 2020.

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Steel, Iron Ore and Coal

Today Mar 31 iShares Core MSCI Emerging Markets ETF (IEMG) Rises 0.98%

Today, on Mar 31, iShares Core MSCI Emerging Markets ETF (NYSEARCA:IEMG) looks positive with 0.98% gain so far, reaching $51.71 per share. With net assets of 58.65 billion and 0.89% volatility for this month.

During the day 12.17M shares traded hands, in comparison to iShares Core MSCI Emerging Markets ETF’s (NYSEARCA:IEMG) average volume of 23.13M for the past month.

The ATR of ETF is 0.6, that’s -15.28% of its 52-Week High and 12.87% of its 52-Week Low. The current year and quarter efficiency are: 8.55% and 2.30%.

iShares Core MSCI Emerging Markets ETF had performance of 8.42% YTD, 1 year of -9.4% and 3 years of 14.19%.

The following iShares Core MSCI Emerging Markets ETF’s ratios are: PS ratio is 1.04; price to book ratio: 1.38; P/CF ratio is 4.47 and avg P/E ratio is 11.04. Tencent Holdings Ltd is the fund’s top investment for 4.12% of assets, Alibaba Group Holding Ltd ADR for 4.00%, Samsung Electronics Co Ltd for 3.22%, Taiwan Semiconductor Manufacturing Co Ltd for 3.22%, Naspers Ltd Class N for 1.60%, China Construction Bank Corp H for 1.44%, China Mobile Ltd for 1.09%, Ping An Insurance (Group) Co. of China Ltd H for 0.92%, Industrial And Commercial Bank Of China Ltd H for 0.90%, Reliance Industries Ltd for 0.83%. The current iShares Core MSCI Emerging Markets ETF’s yield is 2.54%. With Basic Materials 8.03%, CONSUMER_CYCLICAL 12.05%, Financial Services 23.05%, Realestate 3.63%, Consumer Defensive 6.70%, Healthcare 3.21%, Utilities 2.80%, Communication Services 4.28%, Energy 7.08%, Industrials 5.90%, Technology 23.29% sector weights.

For more iShares Core MSCI Emerging Markets ETF (NYSEARCA:IEMG) news posted recently go to:,,, or The titles are as follows: “Tom Lydon on CNBC: Getting Tactical with Emerging Markets – ETF Trends” posted on March 18, 2019, “$86B Poured Into Emerging Markets Stocks, Bonds So Far in 2019 – ETF Trends” on March 05, 2019, “Tom Lydon on Fox: The Cure for Volatility Sickness via Emerging Markets ETFs – ETF Trends” with a publish date: March 04, 2019, “What Is Good for U.S. Companies Is Also Good for Emerging Markets: Strategist – ETF Trends” and the last “Best ETFs for 2019: Bet on Emerging Markets with the iShares Emerging Markets ETF (IEMG) –” with publication date: December 19, 2018.

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Bhp Billiton Plc (BBL): What are the Medium Range Signals Telling Us?

Interested investors might be taking a look at the medium range signals for Bhp Billiton Plc (BBL). The reading from the 40-day commodity channel index is currently Buy. The CCI indicator is mainly used to identify oversold and overbought levels. The signal direction is Strongest.

Figuring out when to exit a certain position can be just as important as deciding which stocks to buy in the first place. Many investors will end up holding onto a loser for far too long. The emotional attachment to a particular stock may keep the investor from making the decision to sell when necessary. On the other side of the coin, investors may hold onto a winner for way too long hoping for further gains. Investors may have to come up with a specific plan for what to do in these situations. Planning ahead may help ease the burden of making the tough portfolio decisions.

Shifting to the 50-day moving average vs price signal, the reading is measured at Buy for Bhp Billiton Plc (BBL). This indicator is used to watch price changes. After a recent look, the signal strength is Average, and the signal direction is Strongest. Investors may also be interested in following other technical signals. Checking on the 50-day parabolic time/price signal, we can see the signal is presently Buy. The parabolic strength is Strong, and the direction is Strongest.

Many investors will often want to widen the focus when studying equities. Let us now take a look at some longer term technical indicators. Bhp Billiton Plc (BBL) currently has a 60-day commodity channel index of Buy. The CCI indicator is typically used to scope out overbought and oversold levels. The direction is presently Strongest.

Changing lanes, the 100-day moving average verse price signal is Buy for Bhp Billiton Plc (BBL). The 100-day MA verse price strength is Maximum, and the direction of the signal is Strongest.

Market slides can be troublesome for investors. When markets are moving lower, investors may become extra nervous about certain holdings. With the stock market reaching heightened levels, investors may not be putting too much though into the specific portfolio holdings. This can all change if there is a sudden downturn. Investors who have spent the hours researching their stock picks may be more confident when the tides inevitably turn. Putting in the time to regularly review stock holdings may assist the investor when certain adjustments need to be made. Focusing on developing and maintaining a solid plan may end up being a useful tool when obstacles eventually pop up down the line.

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Rio Tinto cuts 2019 iron ore shipment outlook after cyclone

Rio Tinto on Monday cut its 2019 outlook for iron ore shipments from Australia’s Pilbara region due to production disruption and damage caused by tropical cyclone Veronica, which hit Western Australia last week.

The world’s No. 2 miner of the steelmaking material said annual Pilbara shipments are now expected to be at the lower end of its previous guidance of between 338 and 350 million tonnes.

Rio’s 2018 iron ore shipments from the region totaled 338.2 million tonnes.

The damage from the cyclone coupled with a fire at a port facility in January will lead to a loss of about 14 million tonnes of production in 2019, the miner said in a statement.

On Friday, Rio issued force majeure notices to some iron ore customers due to damage from the cyclone.

Force majeure is invoked when a company tells a counterparty it cannot perform a contractual obligation due to circumstances outside its control.

Rio in January had declared force majeure on iron ore shipments to some customers following a fire at its Cape Lambert export terminal in Australia.

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China's 90 large coal miners Jan-Feb output down 2.4% on year

China's large coal miners produced a total 390 million tonnes of raw coal over January-February, decreasing 9.57 million ntonnes or 2.4% said CNCA.

Among the 10 largest producers 6 increased and 4 decreased production

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Company Review: Narrowing in on Shares of Cnooc Ltd (CEO) as ADX Signals Buy

Investors may be studying some short-term indicators on shares of Cnooc Ltd (CEO). The current 7-day average directional indicator is Buy. This signal may be used to determine the market trend. The 7-day directional strength is Maximum. This trend strength indicator measures the signal based on historical performance where minimum would represent the weakest, and maximum would indicate the strongest. The 7-day average directional direction is currently Strongest . This signal indicates whether the Buy or Sell signal is getting stronger or weakening, or whether the Hold is heading towards a Buy or Sell. Taking a quick look at another popular indicator, we can see that the 10-day moving average Hilo channel is currently Buy. This indicator calculates the moving average based on highs/lows rather than the closing price.

Stock market investing can sometimes cause investors heads to spin. Following stocks on a daily basis, it is plain to see the amount of coverage that follows certain companies. This non-stop barrage of information may eventually become overwhelming for the novice investor. Filtering through all the data may involve taking a look at a company or stock from multiple angles. There are many investors out there that preach strictly following fundamental data. There are others that swear by the technical analysis. Many investors will opt to employ a research strategy that involves pieces of the two approaches. Knowing every little detail about a company may not be overly necessary, but it may help provide a bit more direction when navigating the stock market maze. Investors who put in the time to study all the fundamentals may want to also start watching the charts on stock that they are thinking about adding to the portfolio. Making sure that no stone is left unturned when examining a stock may end up being the difference between a big winner and a big loser.

The stock currently has a standard deviation of +1.40. Standard deviation is defined as a measure of the dispersion from the mean in regards to a data set. When dealing with financial instruments, the standard deviation is applied to the annual rate of return to help measure the volatility of a particular investment. Watching the standard deviation may assist investors with trying to figure out if a stock is primed for a major move. Cnooc Ltd’s current pivot is 185.93. The pivot point is commonly used as a trend indicator. The pivot is the average of the close, low, and high of the prior trading period.

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Tracking current trading session activity on shares of Cnooc Ltd (CEO), we can see that the stock price recently hit 185.76. At the open, shares were trading at 186.71. Since the start of the session, the stock has topped out with a high of 187.22 and bottomed with a low of 184.79. After noting current price levels, we can see that the change from the open is presently 3.58. Of course, there is no simple answer to solving the question of how to best tackle the stock market, especially when dealing with an uncertain investing climate. There are many different schools of thought when it comes to trading equities. Investors may have to first gauge their appetite for risk in order to form a solid platform on which to build a legitimate strategy.

At this time of year, investors may be reviewing their portfolios to see what changes can be made moving forward. As we head into the second half of the calendar year, all eyes will be on the next few earnings periods. Many investors may be looking to find some under the radar stocks that have a chance to take off. Successful traders are typically extremely adept at combining technical and fundamental analysis in order to find these stocks. Some investors may be better at sifting through the market noise than others. Active investors may be interested in tracking historical stock price information on shares of Cnooc Ltd (CEO). Over the past full year, the high point for the stock was seen at 202.38. During that same period, the low price touched 138.99. Investors will be watching to see if the stock can gain some momentum heading into the second half.

Traders may be using technical analysis to help spot ideal entry and exit points. One idea behind technical analysis is that historical price movement trends have the ability to repeat themselves. Technical analysis involves the use of chart patterns to examine market movements and to help define trends. Trends in the stock market are not always easy to spot. Many chartists will strive to determine whether the trend is up, down, or sideways. After defining a trend, the technical analyst may look to see what type of timeframe the trend encompasses. Some traders will look to identify whether the trend is major or long-term, short-term, or intermediate. Being able to decipher what the data is saying may assist the trader with finding potential entry and exit points on a particular trade. There are many different indicators that can be employed when undertaking technical analysis. Many traders will do numerous chart studies to find out which indicator or indicators tend to project the most relevant trading assistance. Learning how to spot these trends might help the trader develop specific charting skills that will hopefully lead to future market success.

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Nippon Steel to bolster overseas business, focus on India

Japan’s Nippon Steel Corp, is set to bolster overseas operations, especially in fast-growing India, to bypass growing nationalism and capitalize on growth abroad as it faces shrinking demand at home.

“India is the fastest-growing market in the world and our investment on Essar’s operations will be our key project for this year,” said Nippon Steel’s new president, Eiji Hashimoto.

Creditors of Essar Steel India approved a joint offer by ArcelorMittal and Nippon Steel for the debt-laden asset in October, and the two have drawn up plans to double output of the unit in coming years.

“It’s a big investment, but this deal was a bargain,” Hashimoto told reporters in March. The deal also gives Nippon Steel access to a country that is difficult for foreign companies to enter amid a “Make in India” policy and that has often implemented safeguard duties on steel imports.

From April 1 this year, the 63-year-old Hashimoto - with extensive overseas experience - took the helm of the world’s third-biggest steelmaker, which changed its name from Nippon Steel & Sumitomo Metal Corp.

“The change reflects our commitment to growing globally and winning global competition as a Japan-born company,” he said, adding that it wants to regain and maintain it previous No.1 status by market capitalization.

Nippon Steel was intermittently the world’s No.1 by market cap between 2013 and 2016, but its market cap now stand at $16.8 billion, behind peers Baoshan Iron & Steel at $23.4 billion, ArcelorMittal at $20.3 billion, Posco at $19.4 billion and Nucor at $17.5 billion, according to data on Refinitiv Eikon.

The 69-year-old steel company is also feeling threatened by Chinese rivals as they improve and upgrade their technology.

“China, which makes half of global steel, is a big threat. We need to keep improving our products and cost competitiveness,” he said.

Nippon Steel has aggressively invested overseas in the past several years, including its 2018 acquisition of Sweden’s Ovako, which makes speciality steel used in industries.

Some analysts say, though, the more urgent challenge for Nippon Steel is to fix problems at its domestic plants.

“Production overhaul is more pressing issue,” said Yuji Matsumoto, an analyst at Nomura Securities.

In February, the steelmaker cut its annual profit forecast for the year ending on March 31 by 6 percent, as technical troubles at its mills reduced its crude steel output.

Hashimoto said aging facilities and a lack of skilled labor were behind the problems and one of his priorities is to tackle these issues.

“We need to raise our production capability as stable output is our base for global competition and higher profits.”

Japanese steelmakers are enjoying solid domestic demand from automakers and the construction sector, which is busy with projects for the 2020 Tokyo Olympics, but natural disasters and a series of glitches have prevented them from producing as much steel as they had planned.

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China's top two steel producing cities to extend output curbs -sources

Steel mills in the two biggest steelmaking cities in China - Tangshan and Handan - will be required to continue production restrictions in the second quarter as part of local governments’ efforts to improve air quality, multiple industry sources said.

Mills in the two cities will have to cut back the operations at about 20 percent of their blast furnaces under the restrictions for the April to June period, down from 30 percent for the restrictions during the November to March period, according to the five sources who spoke to Reuters on Friday and Saturday.

Industrial emissions are a major source of air pollution. Local governments in smog-prone northern China have ordered factories during the past two years to cut output during the Northern Hemisphere winter to meet air quality targets set by Beijing.

“We received oral notices from the local government to carry on production restrictions in the second quarter, but the enforcement will be more sophisticated,” said one of the sources, an executive at a steel mill in Tangshan with output of 11 million tonnes per year.

Steel mills in Tangshan will be divided into three regions and each region will take turns curbing output, the executive said. A manager at another steel company in the city and an official from the Tangshan Iron & Steel Association confirmed the plan.

“Based on our calculation, the average production cuts would be around 20 percent throughout April to June,” the executive said.

Two managers at steel companies in Handan also said they were told to continue to trim operations in the second quarter by at least 20 percent, but the restrictions will be removed after June.

The governments of Tangshan and Handan did not immediately respond to requests for comments.

Beijing has reiterated its determination to tackle air pollution despite increasing economic downturn pressure.

However, a Reuters study of official data found a majority of 39 northern Chinese cities, including Tangshan and Handan, have failed to meet anti-pollution targets during the winter cuts.

“Local officials often show up at our mills to check if we are complying with the curbs...We can tell they are under huge pressure,” said a manager in charge of emission monitoring at a steel company in Tangshan.

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Brazil court freezes $255 million in Vale assets over dam evacuation: filing

A Brazilian court has frozen an additional 1 billion reais ($255 million) in assets of miner Vale SA to be held as possible compensation for damages related to its evacuation of the area around its Vargem Grande dam in Minas Gerais state, the company said in an exchange filing on Monday.

That evacuation and the resulting asset freeze came after a tailings dam burst on Jan. 25 at a Vale iron ore facility in the town of Brumadinho, in southeastern Minas Gerais state, burying hundreds of people in mining waste and causing widespread damage to the environment.

Brazilian miner Vale SA said on Monday it failed to obtain stability certificates for at least 17 dams and dikes, as the structures are reviewed following a rupture at a tailings dam at one of its facilities that killed hundreds.

The loss of certificates will not require additional evacuations around structures that have not already been evacuated, nor will it alter the company’s previously disclosed sales projection for iron ore and pellets, Vale said in a securities filing.

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Dalian iron ore hits seven-week peak on firm industrial data, supply concerns

China’s iron ore futures hit a 7-week-high on Monday after recording its best quarter in nine, buoyed by strong economic data and tight supply concerns after Rio Tinto cuts its 2019 output for iron ore shipments.

The most-active iron ore contract for May delivery on the Dalian Commodity Exchange soared as much as 5.2 percent to 653.5 yuan ($97.40) a tonne, its highest since mid-February, before closing at 650 yuan.

An official survey showed on Sunday factory activity in China unexpectedly grew for the first time in four months in March, suggesting government stimulus measures may be starting to take hold in the country.

The improvement in business conditions was partly driven by increasing factory output, which posted its fastest pace in six months, and growing new orders.

Firm iron ore prices also came as the world’s No.2 iron ore miner, Rio Tinto, cut its 2019 outlook for iron ore shipments from Australia’s Pilbara region due to tropical cyclone.

That has further fueled supply concerns after it issued force majeure notices to some iron ore customers last week.

“We expect iron ore arrivals to fall sharply in early April due to bad weather…Iron ore prices are expected to stay firm as steel mills start to replenish their inventory alongside the resuming operations,” said analysts from CITIC Futures in a note in Mandarin.

Industrial plants in northern China have restarted some production after six months of environmental restrictions.

Utilization rates at steel mills across China climbed for a second week last week as of March 29 to 63.64 percent, according to data tracked by Mysteel consultancy.

However, government officials and industrial experts in China are calling on mills to restrain output, as the flooding of products in the market severely dents profit margins in the sector.

An official from industrial ministry said on Saturday there will inspections across China in 2019 to ensure that factories aren’t re-starting closed capacity and no new capacity is being launched without approvals.

Benchmark construction steel rebar prices on the Shanghai Futures Exchange gained 2.1 percent to 3,806 yuan a tonne.

China's iron ore futures jumped to a fresh record on April 2 following more news that supported a tight supply outlook, BHP saying it expects lower output of the steel making ingredient dueto the cyclone in Australia cuting production by 6-8 mln tonnes

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Glencore, Tohoku Electric set coal contract price at $94.75 per tonne: source

Glencore, Tohoku Electric set coal contract price at $94.75 per tonne: source

Global miner Glencore and Japan’s Tohoku Electric Power agreed on a price of $94.75 per tonne for supplies of thermal coal from Australia for the year through March 2020, a source with direct knowledge of the matter said.

The price, which serves as an industry benchmark for supplies of seaborne thermal coal in Asia, was 14 percent lower than a price agreed for supplies for the year through September this year.

The agreement helps restore clarity to an opaque market after Glencore and Tohoku Electric abandoned the annual talks for April-March supplies last year.

The Australian miner later agreed on a price of $110 per tonne in August for some contracts with other Japanese thermal coal buyers for the April to March period.

Glencore has two annual benchmark supply contracts with Japanese utilities, typically negotiated by Tohoku Electric, one for April through March and the other for October through September that takes account for later market conditions.

With annual imports last year of slightly less than 114 million tonnes, Japan is one of the world’s biggest importers of thermal coal. Australia supplied a little over 70 percent of those imports in 2018.

A Tohoku spokesman declined to comment. Glencore could not immediately be contacted for comment.

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Fortescue OKs $2.6B expansion of Iron Bridge magnetite project

Australian iron ore producer Fortescue Metals Group has given the green light to the $2.6 billion expansion of its Iron Bridge magnetite project in the Pilbara, Western Australia. This is the second major mine development that Fortescue is carrying out in less than a year.

The world’s No. 4 iron ore miner said the mine, in which Taiwan’s Formosa and China’s Baosteel Resources also hold a stake, is expected to produce 22 million tonnes a year of 67% iron magnetite concentrate by mid-2022 — at a fraction of the relative capital cost of other high-profile magnetite projects in Western Australia.

The mine is expected to produce 22 million tonnes a year of 67% iron magnetite concentrate by mid-2022 — at a fraction of the relative capital cost of other high-profile magnetite projects in WA.

The announcement follows Fortescue’s commitment to build the $1.3 billion Eliwana mine last year — taking the total expansion investment to more than A$5 billion (about $3.5 billion).

“The project is well progressed and ready for detailed design and execution with the majority of key approvals already in place. The innovative design, including the use of a dry crushing and grinding circuit, will deliver an industry-leading energy efficient operation with globally competitive capital intensity and operating costs,” chief executive Elizabeth Gaines said in a statement.

“Our focus has been to create the most energy and cost-efficient ore processing facility, tailored to the specific ore we will mine,” she added.

Iron Bridge is expected to provide jobs for about 3,000 people during construction, and 900 full-time positions once operations start.

This stage of development will include an ore processing facility, an airstrip and expanded village, a 195km Canning Basin water pipeline and a 135km concentrate pipeline to Fortescue’s Herb Elliot port facility in Port Hedland.

In a separate statement, the company updated Iron Bridge’s magnetite mineral resource estimate, with ore reserves climbing up to 716 million tonnes on June 2018’s 705 million tonnes.

“This update supports the development of stage two of our Iron Bridge magnetite project announced today, which holds Australia’s largest JORC compliant magnetite resource,” Gaines said.

Fortescue, which will operate Iron Bridge, has already secured binding off-take agreement for 5.3 million tonnes a year with five different steel makers.

When combined with ore from the company’s Eliwana mine, currently under construction, Iron Bridge is expected to increase Fortescue’s product grade and give it the option of delivering the majority of its products at greater than 60% iron.

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Demand in Asian region driving global steel growth

Recently, the World Steel Association (WSA) has revised the October 2018 forecasts of country-wise steel consumption and these figures are being formally announced in April 2019 meeting. The global demand for finished steel at 1,711.6 MT in 2018 is slated to reach 1,734 MT (+1.3%) and 1,750 MT in 2020.

The volume growth in steel consumption during 2018 was 54 MT and the anticipated growth in consumption for the current year is around 53 MT. This growth in global demand would originate largely from the Asian region in such a manner that the demand in Asia forms 69% of the total global steel consumption in 2019.

In Asia, the revision in China’s demand growth has made all the difference. It is felt that falling GDP growth in China, resulting from consumption-led growth as opposed to the investment-led one, would not decrease steel consumption. Thus, it has been estimated that Chinese demand for steel in 2018 has increased by 54 MT from the substantial investment in real estate that has boosted steel demand.

India has been projected to consume 96 MT of steel in 2018 which would rise up to 102.8 MT in the current year and would grow up to 110.2 MT in 2020.

The latest steel demand estimates for India are not much of a revision of the earlier ones made in October 2018.

Infrastructure growth would continue to remain India’s primary driver of demand for the commodity in the next few years. Slowdown in the pace of construction in roads, rail and Metro rail connectivity, dedicated freight corridors, industrial corridors, upgradation of existing major airports and the construction of minor ones, ports upgradation and mechanisation, shipbuilding, rural and urban infrastructure, real estate, etc, in the next few months would imply a hindrance to the projected demand volume of steel for a short period and then picking up the pace again.

This feature has been a regular phenomenon in the economic growth of many countries. This only implies that the incremental consumption growth of 14MT of finished steel in the next two years may not follow a uniform pattern of growth. This may overshoot if the pace of construction is speeded up after the election process completes.

Indian economy is exhibiting a substantial growth and it is heartening that gross fixed capital formation as a percentage of GDP (current prices) has moved up to 29% in April-December 2018 from 28.7% in the corresponding period of last year. India is, however, facing a wider current account deficit at $16.9 billion at the end of the third quarter of FY19 that stands at 2.6% of GDP.

Though the net foreign direct investment rose to $7.5 billion in Q3, the portfolio investment recorded a net outflow of $2.1 billion along with the depletion of foreign exchange reserve in Q3. The global financial scenario is uncertain with renewed efforts by the US to cut down its trade deficit with China. The stimulus measures in China, USA and Japan are providing more capital investment for capacity-building. This is also pushing up exports. India needs to monitor its steady import growth. Steel imports during the first 11 months at 8.03 MT is 2.5% more than the previous year, while steel exports during the period at 7.77 MT is much lower at 27.2% compared to the previous year.

WSA report summarises a country-wise assessment of steel intensity of GDP arrived at by dividing the apparent steel usage volume by millions of real GDP in US dollar. According to this, at an average 59.6, China continues to have the highest steel intensity in GDP (other than Vietnam, a country with poor GDP level) and is much above the global average of 20.7; South Korea has 34.9, Turkey has 31.2 and Russia has 29.0.

India, with average 36.5 steel intensity, has to enhance consumption to reap the benefits of higher GDP growth in the coming years. Based on the estimated demand figures for 2019 and 2020, it has been estimated that per capita steel consumption in India is likely to exceed 75 kg by 2019. This is against the global average of 225 kg and Chinese figure of 594 kg.

The current steel-making capacity in the world has been assessed by the Organization for Economic Cooperation and Development (OECD) at 2.234 billion tonnes by December 2018, a marginal reduction from the previous year. With global crude steel production at 1,818 tonne in 2018, the current capacity utilisation stands at 81.4%, which is quite respectable and minimises the adverse implications of excess capacity.

The OECD estimates also indicate about 88 MT of fresh capacities, involving 107 proposals, are planned to be activated.

Asian region holds the maximum (61% of the total) of these, followed by West Asia — a region in the midst of geo-political uncertainty.

The global steel market is seized with trade uncertainty fuelled by the US-China conflict. Europe is not immune to steel imports diverted from the US market with internal demand showing little signs of upward movement. While India needs to enhance its steel exports, meeting the domestic demand should be the basic determinant of capacity augmentation efforts.

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Odisha iron ore output rises 13% to 118.5 million tonne in FY19

Iron ore production in Odisha which accounts for half of the iron ore output of the whole country rose by 12.8 per cent to 118.5 million tonne in FY 19 riding on healthy domestic demand. In the previous fiscal, the state had clocked 104.98 million tonnes of ore.

The higher growth in iron ore production has boosted the overall mineral output in the state which reached 289.55 million tonne in FY 19 from 270.84 million tonne in the previous year.

Similarly, mining revenue collection of Odisha reached a new peak of Rs 10294.39 crore (provisional) in 2018-19, which represented an increase of about 68 per cent over the preceding year’s collection of Rs 6130 crore.

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China to cap crude steel production capacity in Hebei, Tianjin: paper

Crude steel production capacity in Hebei province and Tianjin will be capped at 200 million metric tons and 15 million tons by 2020, as China strives to optimize the iron and steel industry, China Daily reported.

The Beijing-Tianjin-Hebei region takes up only 2.2 percent of China’s territory, but accounts for one fourth of the nation’s crude steel output, Lyu Guixin, an inspector with the raw material department of the Ministry of Industry and Information Technology, was quoted as saying by the paper.

The iron and steel capacity of the Beijing-Tianjin-Hebei region was estimated at 280 million tons, although official figures are not available, according to Zeng Jiesheng, chief analyst with steel e-commerce platform

Besides, most of the steel firms in the region still use blast furnaces that are more polluting than electric furnaces, which results in huge energy consumption and pollution discharge burdens, according to Lyu.

To better protect the environment, it is not enough to relocate the production capacity from one place to another within a province as some local governments have done, Lyu was quoted as saying by the paper.

Since 2016, China has made remarkable progress in reducing overcapacity in the sector. The utilization rate of crude steel capacity has risen from 70 percent in 2015 to more than 80 percent now, according to Lyu.

The high profits in the sector last year, which were a result of slashed capacity in the previous years, have prompted the attempts to expand steel capacity illegally, according to Lyu.

Lyu revealed that the authorities will carry out a random inspection on illegal steel production activities this year, through means such as satellite remote sensing, electricity consumption monitoring, and illegal production activity reporting platforms.

China’s iron and steel industry reported profits of 470.4 billion yuan (about 70 billion U.S. dollars) in 2018, surging 39.3 percent year on year, while crude steel output grew 6.6 percent to 928.26 million tons, according to the National Development and Reform Commission.

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Australia coal posts biggest weekly drop in a decade amid weak demand

Australian thermal coal prices this week registered their biggest weekly fall since the financial market turmoil of a decade ago as demand plunged with the end of winter and amid worries over the strength of the global economy.

Coal prices for prompt loading at Australia’s Newcastle terminal have lost almost 20 percent since last Friday, dropping to $72 per tonne, their lowest since May 2017, and marking the steepest weekly decline since the global financial crisis of 2008/2009.

Coal has slumped by 40 percent from a mid-2018 peak of more than $120 per tonne.

This week’s plunge comes just days after Australian miners and Japanese power utilities settled a fixed delivery price for April 2019 to March 2020 of $94.75 per tonne.

“Many times in the past, we’ve seen Newcastle soften after the April-March negotiations have been finalised,” said Pat Markey, managing director of Singapore-based commodity consultancy Sierra Vista Resources.

Japan is the biggest buyer of Australian thermal coal. The contract to March 2020 was 14 percent lower than the price for a year-long deal for supplies through September this year.

Traders said the slump comes amid a slowdown in industry activity in Asia, Europe and North America that has triggered fears of a global recession.

The coal slump also follows a 60 percent crash in Asian prices for liquefied natural gas (LNG), coal’s most direct competitor as a power generation fuel.


Trade data on Refinitiv Eikon showed a sharp weekly fall in thermal coal imports from Australia’s biggest buyers of China, India, Japan, South Korea and Taiwan.

These countries’ overall imports fell to 11.8 million tonnes from 16.1 million tonnes between weeks 12 and 13 of this year.

In India, coal imports have slowed despite strong demand as domestic output rose from Coal India, the world’s biggest coal miner.

Coal India’s fourth-quarter coal production last year rose 2.6 percent from a year earlier to 155.97 million tonnes, and output rose further in the first quarter of 2019 as the company re-opened previously closed mines.

European coal demand has fallen with the end of the heating season but also as its biggest economy and coal user, Germany, teeters on the edge of a recession.

European benchmark API2 2020 coal futures have lost almost a third in value since their 2018 peak, to a close of $72 per tonne on Thursday.

Adding to the woes of Australian coal miners has been a sharp decline in Chinese imports as customs have been slow to clear Australian cargoes.

Chinese imports of Australian thermal coal have fallen from 2 million tonnes in January, to around 1.3 million tonnes in March, according to Refinitiv Eikon shipping data.

The slump comes partly because of high coal inventories in China, the world’s biggest coal importer.

Refinitiv coal analyst Vishal Thiruvedula estimated that stocks at the main Bohai seaports of Caofeidian, Qinhuangdao and Jingtang in Northern China have risen by over 2 million tonnes since this time last year, to 16.2 million tonnes in March.

Given the end of the peak demand winter season and the onset of wet spring weather, these high stocks are unlikely to be drawn down soon, he said.

Thiruvedula said an increase in Chinese hydro power production due to higher rainfall in the coming weeks would also result in “reduced coal burn for April to June”.

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