OIL & GAS August 2018

Gas supply is increasing, particularly in 2018, and the forecast price correction for 2019 is due to recognition of these robust supplies. By 2021, term markets are predicted to respond to demand pressure from US LNG export terminals starting up, resulting in an anticipated tightening of gas stocks.

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LNG August 2018

The short term will be characterised by upwardly trending gas prices, which could see Henry Hub based prices increase in the next 18 months. The rise is in response to new liquefaction capacity that will be coming online in the US, drawing on domestic stocks.

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METALLURGICAL COAL August 2018

Abundant supply from Australia, combined with significant import demand declines in China, finally saw spot prices recede below US$200/t in July. India’s buying activity helped prolong high prices for premium HCC throughout June. However, the drop of China’s import volumes, down 19% year on year for the first half of 2018, eventually weighed on prices.

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OIL REFINERIES August 2018

The short-term refined products market will be characterised by a shift towards complexity, as refiners reconfigure units downstream of distillation to provide greater depth of conversion to achieve higher light-fuel yields. The tightening of fuel oil specifications has forced refiners to uplift product quality to comply with stringent environmental regulations around the world. The effect of high crude prices and slower gasoline demand is expected to reflect negatively on crack-spreads, suppressing the refinery margins.

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THERMAL COAL August 2018

The spot price for premium Newcastle 6300 thermal coal remained strong in July, persisting above US$120/t for the majority of the month as market tightness endured. By contrast, the spot price for high-ash Newcastle 5500 products dropped 8.5% month on month to average US$73/t.

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IRON ORE August 2018

Structural changes in the Chinese steel industry, including a higher proportion of EAF steelmaking and increased scrap utilisation in BOF steelmaking have started to impact iron ore demand. As a result, AME expects slower global iron ore demand growth of 1.1% and 1.6% for 2018 and 2019 respectively.

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STEEL August 2018

AME expects average 2018 global steel prices to be higher than 2017 from sustained demand and improving utilisation rates. Demand growth in China is expected to continue, albeit at a slower pace of 0.9% due to a push for financial consolidation and tighter regulation in the real estate sector, however recent stimulus could provide an upside for the near term outlook.

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COPPER August 2018

very small refined copper market surplus of 33kt is forecast in 2018 on demand growth of 2.1% to 24.24Mt and production growth of 3.1% as output returns to more normal levels after supply disruptions in 2017.

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NICKEL July 2018

Finished nickel demand is forecast to continue growing strongly to be up 7.8% to 2.33Mt in 2018, following a 6.3% increase in 2017. Demand is forecast to lift another 4.2% in 2019. A supply deficit of 80kt of finished nickel is forecast in 2018, compared to a 140kt deficit in 2017.

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ZINC & LEAD August 2018

The trade dispute between the US and its trading partners, particularly China, are expected to dampen prices over the September Quarter period. Potential upsides in the market balances—and, in turn, zinc prices—could stem from a relaxation in galvanised steel tariffs, a delay in the commissioning of Vedanta’s 250ktpa Gamsberg, or an easing in Chinese environmental protection policies.

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ALUMINIUM August 2018

In July, the aluminium price outside China averaged US$2,128/t (US96.5¢/lb), a decrease of 5.5% month on month. Aluminium prices have been on a steady decline since the initial price jump driven by the tariffs and Rusal sanctions put in place by the US in April. Prices steadily declined over July, starting the month at US$2,192/t and ending at US$2,067/t.

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