Energy and Natural Resources Market Radar (September 30, 2013)

Energy and Natural Resources Market Radar (September 30, 2013)

Energy Materials Fund Holdings Europe Six Year Lows
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  • China’s thermal coal imports rose for the second consecutive month in August, with the country buying 14.14 million tons of imported steam coal, climbing 5.9 percent from July to a new seven-month high, Platts reported, citing data from China’s General Administration of Customs. The August volume was also 11 percent higher than the same month in 2012. Total thermal imports over the first eight months of the year were 99.5 million tons, up 6.7 percent from the January to August 2012 period.
  • China steel output keeps rising, with daily crude steel output for the mid-10 days of September rising (+0.7 percent) to 2.14 million metric tons per day (mmtpd) versus 2.129 mmtpd in the first 10 days of September. The latest figure annualizes to 783 million ton per year versus output of 709 million tons in 2012, according to CLSA.
  • After a sharp correction in the second quarter, China’s domestic coking coal prices and Australia’s prime coking coal prices have recovered since August to Rmb 1,050 per ton and $150 per ton, respectively.


  • Natural gas futures fell 2.7 percent this week to $3.59 per million British thermal units (mmbtu) on rising inventories and weak seasonal demand.
  • West Texas crude oil futures fell $1.86 per barrel this week to finish at $102.81 as heightened political risk in the Mideast has eased recently.
  • On Friday, Shanghai steel futures slid to their lowest level since July and are set to stretch losses to a sixth straight week as Chinese supply rose faster than demand. Slack steel demand and an approaching week-long holiday are curbing appetite for iron ore and limiting activity in the spot market, traders said, putting the raw material's price on course to end weaker in September after a three-month gain.


  • Royal Dutch Shell has picked a site in Louisiana for a plant costing at least $12.5 billion that would turn natural gas into diesel, jet fuel and other liquids, the Louisiana governor’s office announced Tuesday. Shell said the project could help to harness more domestic natural gas to make transportation fuels.
  • Makers of renewable fuels are set to meet with congressional negotiators today, as lawmakers try to pull together compromise legislation that would freeze the U.S. mandate for corn-based ethanol. Representative Fred Upton, chairman of the House Energy and Commerce Committee, and Representative Henry Waxman, the panel’s top Democrat, are negotiating changes to the Renewable Fuels Standard that would keep the ethanol requirement at this year’s level for the next two years and add incentives to boost low-carbon biofuels, according to people familiar with the moves who asked not to be identified discussing sensitive talks. Corn producers and ethanol makers have resisted legislative changes to the current requirements, which escalate each year through 2022. Officials from their Washington-based trade groups are set to meet with Upton’s staff members today to discuss a possible freeze in the share of ethanol required, two of the people said.
  • China National Offshore Oil Corporation (CNOOC) expects to add five liquefied natural gas receiving terminals by 2015, doubling its total capacity to 35-40 million tons per year. The expansion from four terminals, with a current receiving capacity of 18.7 million tons per year, will enable China's top offshore oil explorer to import more LNG to meet strong demand growth in the country, Reuters reported. China, the world's top energy consumer, aims to raise the share of natural gas in its energy mix to 8 percent by 2015 from 5 percent now to cut emissions from coal and lessen dependence on oil imports. CNOOC will commission a floating storage regasification unit in the city of Tianjin and a conventional terminal in Zhuhai by year-end, Reuters cited a CNOOC official as saying at an LNG industry conference.


  • The large volume of U.S. liquefied natural gas exports projected to enter the market from the end of this decade could exert downward pressure on Australian LNG cargoes prices, a senior WorleyParsons executive has said. This price pressure would, however, be mitigated by the buyer nations’ interest in diversifying their supply sources, vice president of global hydrocarbons Dorel Iosif said at the CWC Asia Pacific LNG Summit in Singapore. Analysts have pointed to potentially between 45 million tons and 50 million tons of LNG exports a year from the U.S. entering the market before 2020. These could represent a diversion from as much as 20 percent of Australia’s exports to Asia annually from 2020 and beyond, if the U.S. cargoes were to be exported to the region, Iosif said, citing data from Deloitte & Touche.
  • China's annual steel consumption is expected to peak at 825 million tons in 2018, Baoshan Iron and Steel said, as demand growth runs out of steam. Big iron ore suppliers have used growth in appetite from Chinese steelmakers to justify their rapid expansion plans. But representatives from the Chinese steel industry have repeatedly stressed that domestic demand is slowing and that an iron ore supply glut will drive down prices. Dai Zhihao, general manager of the company, also known as Baosteel, was speaking Wednesday at an annual industry conference in Qingdao, Shandong Province. Zhong Ziran, chief engineer with China's Ministry of Land and Resources, told a conference earlier this year that domestic steel consumption was likely to peak before 2015, with annual iron ore demand expected to stabilize at around 900 million to 1 billion tons.
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