Oil
UK & France to Ban Diesel and Gasoline Vehicles 27 Jul 2017
Concerns over climate change and the high levels of nitrogen oxide in major cities has led the British government to announce a ban to all new gasoline and diesel vehicles after 2040.
The UK is the latest European country to draw the end of the line for internal combustion vehicles. The programme, which follows a similar pledge in France, will be funded by a new proposed tax on diesel vehicles to be introduced until 2020.
European automakers such as Sweden’s Volvo and Germany's BMW are now racing to build electric vehicles designs. By 2019 all of Volvo's new cars will have an electric motor.
This policy shift, albeit scheduled for full implementation only 23 years from now, has been recognized as the beginning of the end of petroleum's dominance as transportation fuel. A global shift toward EVs and the pace of transition will be decisive for the future gasoline and diesel demand.
Gas
Canada's Pacific Northwest LNG Cancelled 27 Jul 2017
Weak global LNG prices and a challenging business environment has dealt a blow to Canada’s ambitions to become a global LNG player. After years of facing growing opposition and legal challenges in Canada, Petronas of Malaysia decided not to move forward with the proposed US$30 billion, 12Mtpa, Pacific Northwest LNG facility on Lelu Island, British Columbia.
Japan Petroleum Exploration (Japex), a minority partner with 10% stake in the project, has reported to shareholders it will take a loss of approximately US$82 million in the year to end-March due to the scrapping of the project in western Canada.
Higher Domestic Gas Production and Less Imports in India 27 Jul 2017
India's domestic oil and gas companies produced 6% YoY more natural gas in June. The increase in output resulted in less LNG imports during the month. The country imported 4% less natural gas. According to data shared by the Ministry of Petroleum and Natural Gas, the country’s total gas production during the month under review stood at 2.76Bcm. LNG imports stood at 1.77Bcm. Comparably, the country imported 1.96Bcm of LNG during June 2016.
Coal
Bengalla: Bengalla June Quarter Production up 26% qoq to 2.4Mt, NSW 27 Jul 2017
Strong production results have been reported at the thermal coal-producing Bengalla mine in New South Wales, Australia, with production totalling 2.4Mt for the June Quarter, an increase of 22% year on year and 26% on quarter. The increase has been attributed to progressing through a productive area of the mine sequence. For the 12 months to end of June 2017, Bengalla's production totalled 8.6Mt, an increase of 1.6% year on year. The mine is currently a joint venture between Wesfarmers (40%), New Hope (40%), Mitsui and Taiwan Power Company (both 10%). In early 2017, Wesfarmers flagged intentions to sell its stake.
Iron Ore
Christmas Creek: FMG Reports June Quarter Results for Pilbara Operations 27 Jul 2017
Fortescue Metals Group (FMG) reported iron ore shipments were up 12.9% quarter on quarter to 44.7Mt in the June Quarter of 2017. Total iron ore shipments reached 170.4Mt in the financial year ending June 2017 (FY2017). The average strip ratio was 1 for the quarter, with the Chichester Hub at 1.2 and Solomon Hub at 0.7. FMG achieved a FOB cash cost excluding royalties of US$12.2/wmt for its operations during the quarter, 6.9% lower than previous quarter. Average realised price for the June Quarter was US$37.8/dmt. Price realisation was at 73% of the 62% Fe CFR China benchmark price for the quarter, and 77% for FY2017. FMG has provided a shipment guidance of 170Mt in FY2018, and an average strip ratio of 1.4. The company targets a FOB cash cost excluding royalties of US$11-12/wmt, while price realisations is expected at 75-80% of the 62% Fe CFR China benchmark price in FY2018.
Steel
JSW Vijayanagar Works: JSW Orders Two 450ktpa HDG Lines for Vijayanagar 27 Jul 2017
Indian steel producer JSW has placed an order for two 450ktpa continuous Hot Dip Galvanising (HDG) lines for the Vijayanagar works. The new lines will achieve speeds of 180m/min and will apply galvanising and galvalume coatings of 60g/m2 and 40g/m2 respectively. Commissioning is expected to commence in late 2018. In the March Quarter report JSW stated that it will invest INR30bn (US$470m) on improvement projects for Blast Furnace No.3 and Cold Rolling Mill Complex No.1 at the Vijayanagar works. The two new HDG lines will be included in the IDR20bn (US$310m) JSW will invest in downstream projects aimed at expanding the capacity of value added products.
Lorain: Republic Steel and ERP Iron Ore Announce Ironmaking Joint Venture 27 Jul 2017
Republic Steel and ERP Iron Ore have announced the formation of a joint venture which will produce up to 1Mtpa of pig iron from an idled blast furnace located Republic’s steel mill in Lorain, Ohio. ERP will rail iron pellets to Lorain from it’s Reynolds, Indiana plant. No details have been released on how much it will cost to recommission the blast furnace and supporting infrastructure, it’s expected to take up to a year for the stated capacity to be achieved. The JV was formed in order to meet the increasing domestic demand for pig iron used a EAF feed. The Lorain plant is located along the Black River and benefits from access to major barge routes, allowing for cost effective transportation to EAF steel producers in the region. Republic steel, which is part of the Mexican, Grupo Simec specialises in the production of special bar quality steels.
Copper
Centinela: Antofagasta Group Production up 1.5% for the 2017 June Quarter 27 Jul 2017
Antofagasta reports group copper production of 174kt for the June Quarter of 2017, representing a 1.5% rise quarter on quarter. Group gold production increased 10.5% quarter on quarter to 58.9koz. Centinela mine in Chile reported 61.2kt of total copper production—a 10.3% increase quarter on quarter. This is mainly attributable to a 21.3% increase in copper in concentrate production to 47.3kt due to higher throughput and recovery. The scheduled maintenance of the SX/EW reduced the quarterly cathode production by 15.8% to 13.9kt. Los Pelambres mine in Chile reported 81.4kt of copper production, down 1.7% from the March 2017 Quarter. Antucoya production dropped by 5.4% to 19.2kt, while Zaldívar’s production dropped by 5.3% to 12.6kt.Antofagasta’s annual guidance remains unchanged at 685–720kt of copper production.
Zinc
Skorpion (SXEW): Refined Production Falls at Vedanta’s Skorpion 27 Jul 2017
Refined zinc production has fallen at Vedanta’s Skorpion SXEW plant in Nambia. During the June Quarter of 2017, the plant produced 14kt of refined zinc, a decline of 36% quarter on quarter or 42% year on year due to a planned acid plant shutdown and lower zinc recoveries. The decline in recovery is partially the result of falling grades at the mine, which have fallen from 11.5% zinc to approximately 9% in the past four years. The extension of the Skorpion open-pit is now well underway, with the push-back of the highwall having started in April 2017. The extension will extend Skorpion’s mine life until 2019, but grades are likely to stabilise at 9%. AME forecasts Skorpion will produce 83kt of refined zinc in 2017, a decline of 9% on 2016 production.
Gold
Carlin: Production Up 4% QoQ at Newmont’s Carlin in Nevada on Higher Grades 27 Jul 2017
Newmont Mining has reported gold production of 220koz for the June Quarter of 2017 from its Carlin operation in Nevada in the United States. Production was up 3.8% quarter on quarter and 5% year on year contributing 38% to Newmont's Nevada output. A 0.75g/t lift in grade milled to 4.46g/t saw buoyed gold production offsetting a drop in milled tonnes by 6.7% to 1.75Mt. Cost of sales and all-in sustaining costs (AISC) declined 17.5% and 13.9% to US$928/oz and US$1014/oz respectively. Reduced costs were attributed to a drop in stripping ratio to 1.6:1 and higher sold ounces. Newmont expects Carlin to produce 0.9to 1.0Moz in 2017 contributing approximately 19% to group gold output. 2017 AISC is forecast at US$980 to US$1,040/oz placing in the middle of the fourth quartile of AME's global AISC curve.
Economics
UK - Economics: UK GDP Grew at 0.3% Quarter-On-Quarter for June Quarter 2017. 27 Jul 2017
The UK GDP grew by 0.3% quarter-on-quarter for June quarter 2017, with the 0.3% expansion meeting expectations for the quarter. The latest release from the UK Office for National Statistics shows the preliminary estimate is a slight improvement from the sluggish March quarter, which saw the UK economy grow at a decelerated pace of 0.2% quarter-on-quarter. The largest driver for the increase in growth was services, which grew by 0.5% in June quarter and had previously expanded by 0.1% in March quarter. Construction output experienced a decline of 0.9% in June quarter after a 1.1% growth in March quarter. The current estimated GDP growth is a good sign for the UK economy, which can see stronger results for the remainder of 2017.