OIL & GAS June 2017

OPEC members and allies met again on May 24th and decided to extend the production cut agreement until March 2018, this was followed by an unexpected 6% drop in crude prices. The original agreement to cut production has achieved a record 90% compliance. However, bullish market sentiment has eroded rapidly as US shale production continues to surprise and inventories remain high. Futures markets reflect the expectations that long-term oil prices have stabilized at around US$50, probably driven by the costs of US shale producers.

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LNG June 2017

The influence of US exports on Europe and Asia has been mild as deliveries have been focused on Latin America. Australia and the US continued to lead the world in ramping up export capacity. However, Australia’s Ichthys and Prelude facilities have had their start-up dates pushed back once again because of construction delays. Demand growth remains concentrated in new markets in Asia such as China, India, and Pakistan. Indeed, Pakistan awarded Eni a contract to supply 180 LNG cargoes over the next 15 years.

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METALLURGICAL COAL June 2017

The May Premium HCC spot price fell US$86/t in May, averaging US$173/t. Supply lost from Queensland has been offset by production from the US, Mozambique and Mongolia. AME expects spot prices to stabilise with steel production benefiting from strong margins.

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THERMAL COAL June 2017

The May spot price for premium Australian thermal coal averaged US$74.0/t FOB Newcastle, down 12.6% from April as markets corrected lower after rising in April on supply concerns following Cyclone Debbie. With the disruption now all but resolved, prices trended lower over the course of the month, ending May at US$72/t. We expect spot prices to stabilise over the coming months on a balanced outlook.

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IRON ORE June 2017

The Iron ore spot price declined further in May, despite steel prices upward momentum. The impact on iron ore prices resulting from the elimination of induction furnaces in China is not expected to last. In May, the price spread between 62% Fe and 58% Fe is expected to shrink in second half of 2017 as monsoon season will likely affect Indian supply.

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STEEL June 2017

Chinese domestic rebar prices reach a five-year high in May as a result of stronger infrastructure spending. World steel demand is growing strongly, despite facing challenges. Furthermore, India’s imminent GST introduction to benefit steel producers, with a 5% rate on coal and iron ore.

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COPPER June 2017

China's refined copper Imports for January to April 2017 are down 418kt year on year to 1.01Mt. LME copper month-average cash price has eased for the third consecutive month in May. Freeport's 500ktpa Grasberg mine in Indonesia is producing and exporting concentrates but short and long-term unsettled issues remain.

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NICKEL June 2017

The April LME average nickel declined a further 5.13% despite falling stockpiles. Exchange stocks have continued to fall, led by declines on the SHFE. The drawdown of Chinese port stocks of nickel laterite ore stabilised in May, with a rebound expected in coming months.

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ZINC & LEAD June 2017

LME zinc price averaged US$2,587/t (US$1.19/lb) in May, a marginal decline of 1% from April. LME zinc stocks have fallen by 18kt to 331kt, which is the lowest level since 2009 and the LME lead price has declined 4% in May to average US$2,125/t (US$0.96/lb).

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ALUMINIUM June 2017

Total LME stockpiles dropped a further 10% in May to to reach a 9-year-low position of 1.47Mt. LME spot aluminium prices maintained the same range from March-May. Bauxite has seen some domestic price pressure within China as grades have fallen rapidly.

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