MasterMetals on Twitter

December 4, 2014

#MasterEnergy: US proved #oil reserves increase 5th year in a row; U.S. #natgas proved reserves now at all-time high

#NorthDakota leads with 2bn barrel increase, now has more reserves than Gulf of Mexico 

U.S. proved reserves of oil increase for the fifth year in a row in 2013; U.S. natural gas proved reserves increase 10% and are now at an all-time high

*****
Energy Information Administration (EIA) Logo - Need Help? 202-586-8800
FOR IMMEDIATE RELEASE
December 4, 2014

U.S. proved reserves of oil increase for the fifth year in a row in 2013; U.S. natural gas proved reserves increase 10% and are now at an all-time high

  • North Dakota proved oil reserves surpass the Gulf of Mexico
  • Pennsylvania and West Virginia account for 70% of increase in natural gas reserves

U.S. crude oil proved reserves increased for the fifth year in a row in 2013, a net addition of 3.1 billion barrels of proved oil reserves (a 9% increase) according to U.S. Crude Oil and Natural Gas Proved Reserves, 2013, released today by the U.S. Energy Information Administration (EIA).

U.S. natural gas proved reserves increased 10% in 2013, more than replacing the 7% decline in proved reserves seen in 2012, and raising the U.S. total to a record level of 354 trillion cubic feet (Tcf).

  Crude oil and lease condensate
billion barrels
Wet natural gas
trillion cubic feet
2012 U.S. proved reserves 33.4 322.7
Net additions to U.S. proved reserves +3.1 +31.3
2013 U.S. proved reserves 36.5 354.0
Percentage change 9% 10%

At the state level, North Dakota led in additions of oil reserves (adding almost 2 billion barrels of proved oil reserves in 2013, a 51% increase from 2012) because of development of the Bakken and Three Forks formations in the Williston Basin. North Dakota's proved oil reserves surpassed those of the federal offshore Gulf of Mexico for the first time in 2013. Texas (still the state with the largest proved reserves of oil) had the second largest increase, adding 903 million barrels of proved oil reserves in 2013.

Pennsylvania and West Virginia reported the largest net increases in natural gas proved reserves in 2013, driven by continued development of the Marcellus Shale play, the largest U.S. shale gas play based on proved reserves. Combined, these two states added 21.8 Tcf of natural gas proved reserves in 2013 (13.5 Tcf in Pennsylvania and 8.3 Tcf in West Virginia) and were 70% of the net increase in proved natural gas reserves in 2013. U.S. production of both oil and natural gas increased in 2013: Production of crude oil and lease condensate increased 15% (rising from 6.5 to 7.4 million barrels per day), while U.S. production of natural gas increased 2% (rising from 71 to 73 billion cubic feet per day).

Proved reserves are those volumes of oil and natural gas that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. An increase in natural gas prices used to characterize existing economic conditions contributed to the reported increase in proved natural gas reserves. For example, the 12-month first-of-the-month average natural spot price at Henry Hub increased from $2.75 per million Btu (MMBtu) in 2012 to $3.66 per MMBtu in 2013.

EIA's estimates of proved reserves are based on an annual survey of domestic oil and gas well operators.

U.S. Crude Oil and Natural Gas Proved Reserves, 2013 is available at: http://www.eia.gov/naturalgas/crudeoilnaturalgasreserves.

The product described in this press release was prepared by the U.S. Energy Information Administration (EIA), the statistical and analytical agency within the U.S. Department of Energy. By law, EIA's data, analysis, and forecasts are independent of approval by any other officer or employee of the United States Government. The views in the product and press release therefore should not be construed as representing those of the Department of Energy or other federal agencies.

EIA Program Contact: Steven G. Grape, 202-586-1868, Steven.Grape@eia.gov
EIA Press Contact: Jonathan Cogan, 202-586-8719, Jonathan.Cogan@eia.gov

EIA-2014-11

U.S. Energy Information Administration

November 21, 2014

#EIA launches new tool for crude #oil import analysis #MasterEnergy


EIA launches new tool for crude oil import analysis

Today EIA released a new U.S. Crude Oil Import Tracking Tool that allows policymakers, analysts, and the public to more easily track trends in crude oil imports. Users can sort and display crude oil imports by month or year, by crude type (i.e., light, medium, heavy), country source, port of entry, processing company, processing refinery, and more. The tool features graphing and mapping capabilities and a built-in help function.

Recent and forecast increases in domestic crude production have sparked discussion about how rising crude oil volumes will be absorbed. To date, a primary mechanism for absorbing increased production has been the displacement of imported crude oil, which has fallen from 8.9 million barrels per day (bbl/d) in 2011 to 7.5 million bbl/d in August 2014.

This tool sheds light on the adjustments to imports being made in response to growing production of crude oil within the United States. It is one part of EIA's ongoing effort to assess the effects of a possible relaxation of current limitations on U.S. crude oil exports, which is another avenue to accommodate domestic production growth. EIA is undertaking further work on this larger question, and expects to issue more analysis reports over the coming months.

Launched on EIA's beta site to solicit customer feedback, and incorporate that feedback into the final release, the new tool represents EIA's latest step in making energy data more accessible, understandable, relevant, and responsive to users' needs. The U.S. Crude Oil Import Tracking Tool can be found at: http://www.eia.gov/beta/petroleum/imports/browser/

Also released today is a report, EIA's U.S. Crude Oil Import Tracking Tool: Selected Sample Applications, that provides examples of the application of the new tool. The examples were selected to illustrate the tool's capabilities to access information from EIA's monthly Company Level Import database for different time periods, regions, companies, and crude oil qualities. Using the tool yielded the following insights regarding recent trends in U.S. crude oil imports:

  • Volume and quality of U.S. crude oil imports: U.S. crude oil imports have declined since 2010, with nearly all of the decline occurring in light sweet grades. In particular, U.S. light crude imports fell 71% between 2010 and the period January through August 2014.
  • Source of U.S. crude oil imports: Imports of light crude from Africa, particularly from Nigeria and Algeria, have declined by 93%.
  • Light crude oil imports by region: The largest decline in crude oil imports occurred on the Gulf Coast (PADD 3), down 94%. Light crude oil imports by East Coast (PADD 1) refiners were down 69%, reflecting both their increased use of domestic crudes and modestly lower refinery runs.
  • Refinery-level trends in light crude imports: Imports by the 10 largest refineries using imported light crude in 2013 accounted for 55% of total U.S. light crude imports, with the remaining 45% scattered among more than 100 other refineries. The largest source for light crude imports among this group of 10 refineries was Canada, followed by Nigeria and Mexico. Of these 10 refineries, 3 are located on the East Coast, 2 in the Midwest, 3 on the Gulf Coast, and 2 on the West Coast.
  • Refinery-level trends in imports other than light sweet crude: There is evidence that some refineries have recently reduced imports of medium and heavy grades of crude oil in order to accommodate increasing light domestic production. Other refiners, which have made changes in processing equipment to accommodate heavier crudes, have increased their imports of such crudes.
The product described in this press release was prepared by the U.S. Energy Information Administration (EIA), the statistical and analytical agency within the U.S. Department of Energy. By law, EIA's data, analysis, and forecasts are independent of approval by any other officer or employee of the United States Government. The views in the product and press release therefore should not be construed as representing those of the Department of Energy or other federal agencies.

EIA Press Contact: Jonathan Cogan, 202-586-8719, jonathan.cogan@eia.gov

EIA-2014-10

November 20, 2014

A Chronology of #Canada's #Energy Export Plans @Stratfor

The defeat of TransCanada's Keystone XL project in the U.S. Senate on Nov. 18 is unlikely to be the final word on the controversial pipeline.



A Chronology of Canada's Energy Export Plans

Analysis

Editor's Note: In light of the defeat of the Keystone XL bill in congress Nov. 18, 59 - 41 votes in favor, we have assembled a chronology of Stratfor's recent analyses on the matter of Canada's fast-evolving energy transportation plans with the rest of North America.
The defeat of TransCanada's Keystone XL project in the U.S. Senate on Nov. 18 is unlikely to be the final word on the controversial pipeline. Lack of Senate endorsement is anticipated to be only a temporary delay to the Keystone XL approval bill working its way through Congress. The proposed bill will be one of the first things on the agenda in 2015. The Republican win in November's general elections appears to have given the bill a filibuster-proof number of supporters, meaning it will likely appear on the president's desk next year.
It is important to remember, however, that Keystone XL is far from the only option available to Canada. Ottawa currently has three outstanding proposals with potential backing. The Pacific Ocean-based TransMountain Expansion and the Northern Gateway pipelines face significant hurdles in British Colombia, but going east, Canada also has the potential Energy East pipeline, which faces less domestic opposition yet is large scale and expensive.
Even in the United States, Keystone XL is only one of many options. Enbridge's Alberta Clipper pipeline from Alberta to Superior, Wisconsin, is being expanded to 570,000 barrels per day with a further application in process to increase its capacity to 800,000 bpd. Unfortunately for Enbridge, like Keystone XL, the second expansion has been frozen at the State Department level. In another effort to get oil downstream to Texas, Enbridge has built pipelines running to Cushing, Oklahoma — the most recent conduit to come online being the Flanagan South pipeline from Pontiac, Illinois, to Cushing, Oklahoma.
For Canada, pipelines are important, but right now, even with low oil prices, many Canadian producers are getting higher returns than they did earlier. Other pipeline alternatives and increased rail capacity has reduced the differential between Canadian oil prices and global oil prices, meaning, in some respects, that the Canadian price hasn't really dropped despite lower global prices. At the same time, however, the Canadian dollar has weakened against the U.S. dollar, meaning that the incentives for Ottawa to improve energy flows to the United States remain heightened. Pipeline and energy sector concerns will be the heart of Canada's next national elections in October 2015.

Read the rest of the article online on Stratfor here:  A Chronology of Canada's Energy Export Plans | Stratfor
The MasterMetals Blog

@MasterMetals

November 14, 2014

#Mexico: #Pemex Signs MOU With #Chinese Firms #MasterEnergy @Stratfor


The race is on in Mexico's oil sector opening.

From Stratfor 

Mexico: Pemex Signs Memorandums Of Understanding With Chinese Firms

November 13, 2014 | 2242 GMT

Mexican state-owned energy firm Petroleos Mexicanos, commonly referred to as Pemex, has signed three memorandums of understanding with Chinese firms, according to a Nov. 13 company press release. Pemex and Chinese state energy firm China National Offshore Oil Corp. signed an agreement on exploration and production of heavy crude and mature oil fields. It also signed an accord with the Industrial and Commercial Bank of China for a $10 billion line of credit to fund upstream projects and acquisition of equipment for offshore areas. A second line of credit with the China Development Bank to fund upstream projects was also agreed upon

November 5, 2014

Because Nothing Says 'Best Execution' Like Dumping $1.5 Billion In #Gold Futures At 0030ET | Zero Hedge



Because Nothing Says "Best Execution" Like Dumping $1.5 Billion In Gold Futures At 0030ET
For the 5th day in a row, "someone" has decided that 0030ET would be an appropriate time (assuming the 'seller' is an investor who prefers best execution rather than the standard non-economically-rational share-repurchaser in America) to be dumping large amounts of precious metals positions via the futures market. Tonight, with over 13,000 contracts being flushed through Gold - amounting to over $1.5 billion notional, gold prices tumbled $20 to $1151 (its lowest level since April 2010). Silver is well through $16 and back at Feb 2010 lows. The USDollar is also surging.

The timing of the dump is right as Japanese trading breaks for lunch

Gold dumped...



and silver too..



As The USD pushes higher.



*  *  *

One more random thing... the oddly spurious correlation between gold prices and Japanese bank VaR proxies is back again





Your rating: None Average: 5 (5 votes)






Because Nothing Says 'Best Execution' Like Dumping $1.5 Billion In Gold Futures At 0030ET | Zero Hedge

 

The Pangea Advisors Blog

November 4, 2014

November 3, 2014

BNP: #Petrodollars Leave World Markets For First Time In 18 Yrs #MasterEnergy

http://pdf.reuters.com/pdfnews/pdfnews.asp?i=43059c3bf0e37541&u=2014_11_03_02_53_544e4241ae304e34a40ebefebea00985_PRIMARY.png



BNP: Petrodollars Leave World Markets For First Time In 18 Years

Petrodollar recycling peaked at $511 billion in 2006 - was $60 billion in 2013 and $248 billion in 2012


LONDON,
Nov 3 (Reuters) - Energy-exporting countries are set to pull their
"petrodollars" out of world markets this year for the first time in
almost two decades, according to a study by BNP Paribas.

Driven by this year's drop in oil prices, the shift is likely to cause global market liquidity to fall, the study showed.

Brent
crude futures have fallen 23 percent this year, with 2014 promising to
be only the second year since 2002 that crude prices will end the year
lower than they began it.

This decline follows years of windfalls
for oil exporters such as Russia, Angola, Saudi Arabia and Nigeria. Much
of that money found its way into financial markets, helping to boost
asset prices and keep the cost of borrowing down, through so-called
petrodollar recycling.

This year, however, the oil producers will
effectively import capital amounting to $7.6 billion. By comparison,
they exported $60 billion in 2013 and $248 billion in 2012, according to
the following graphic based on BNP Paribas calculations: http://link.reuters.com/few33w.

Petrodollar recycling peaked at $511 billion in 2006, BNP said.

"At
its peak, about $500 billion a year was being recycled back into
financial markets. This will be the first year in a long time that
energy exporters will be sucking capital out," said David Spegel, global
head of emerging market sovereign and corporate Research at BNP.

In
other words, oil exporters are now pulling liquidity out of financial
markets rather than putting money in. That could result in higher
borrowing costs for governments, companies, and ultimately, consumers as
money becomes scarcer.

Spegel acknowledged that the net
withdrawal was small. But he added: "What is interesting is they are
draining rather than providing capital that is moving global liquidity.
If oil prices fall further in coming years, energy producers will need
more capital even if just to repay bonds."

The reversal is largely
down to Russia and the rest of the ex-Soviet Union, which BNP estimates
have withdrawn $57 billion from world markets.

Russian companies
have been shut out of global markets since Western countries imposed
sanctions because of the conflict in Ukraine. Those companies are
increasingly forced to rely on their own cash reserves or central bank
funding to meet external debt repayments.

(Reporting by Chris Vellacott; Editing by Larry King)

Copyright 2014 Thomson Reuters.

Read the article online on Rigzone here: http://www.rigzone.com/news/oil_gas/a/135722/BNP_Petrodollars_Leave_World_Markets_For_First_Time_In_18_Years?rss=true



pdfnews.asp (PNG Image, 919 × 607 pixels)

October 28, 2014

Warburg Pincus Raises $4 Billion for First #Energy #Fund #MasterEnergy @NYTimes

More private equity players getting into the energy game.



Warburg Pincus Raises $4 Billion for First Energy Fund

The private equity firm Warburg Pincus has raised $4 billion for a new fund, its first dedicated to investments in the energy sector.

Warburg Pincus said on Monday that the final amount of capital raised for the fund was $1 billion higher than the initial goal, indicating robust demand among investors. The fund began soliciting capital in November 2013 and held an initial close in May.

The fund is intended to help Warburg Pincus take advantage of the North American energy boom, though it can also invest elsewhere. The private equity firm, which has invested in several energy companies over the years, decided to open a dedicated energy fund after its limited partner investors wanted more exposure to the sector, a person briefed on the strategy said.

The biggest private equity firms have plunged into this arena. This year, Kohlberg Kravis Roberts finished raising a $2 billion fund to invest in oil and gas assets. The Blackstone Group is raising an energy fund that is expected to exceed its $4 billion target when it finishes raising capital this year.

Warburg Pincus said its new fund would invest in energy companies focused on exploration and production, in addition to oil field services, mining and other sectors. Since it was founded in 1966, Warburg Pincus has invested and committed more than $9.5 billion in more than 50 companies related to energy, including the oil and natural gas company Antero Resources and the Canadian oil sands company MEG Energy.

The energy fund is a so-called companion to Warburg Pincus’s current $11.2 billion private equity fund, meaning it may invest alongside that fund.

“This successful fund-raise reflects our strong track record and experience in energy investing globally as well as significant investor demand for the energy sector,” Joseph P. Landy, a co-chief executive of the firm, said in a statement.
Read the article online here: 

http://mobile.nytimes.com/blogs/dealbook/2014/10/27/warburg-pincus-raises-4-billion-for-first-energy-fund/?emc=edit_dlbkpm_20141027&nl=business&nlid=10378144





Wparburg Pincus Raises $4 Billion for First Energy Fund - NYTimes.com



The MasterMetals Blog

@MasterMetals

#Copper - Hedge fund (#RedKite?) buying large copper position; strikes looming in Peru & Indonesia

FROM SCOTIABANK:

 

- Copper Shorters Beware!  A WSJ Article Saying One Hedge Fund That Owns over Half the LME Inventory & A Couple of Very Notable Upcoming Strikes:   Over the weekend we see headlines for a few looming mine strikes that could materially affect copper supply for the balance of this year (see below BHP/Glencore/Teck's Antamina, and FCX's Grasberg).  That coupled with an interesting WSJ Article revealing a hedge fund is making a sizeable bullish bet is adding some tailwinds to the copper price this morning.  The supply side risk (the strikes) comes at a time where global copper inventories are very low and trending lower.  The global copper market is 20Mt+/year by comparison.

 

 

 

- WSJ Article Raising Some Eyebrows Writing that a "Single Firm Holds More Than 50% of Copper in LME Warehouses".  We note that at ~160kt versus the total Global Inventories of ~800kt …LME inventories represent roughly 20% of the visible total (we include Shanghai Bonded Warehouse Inventories which as you can see above is just over 500kt of the total).  Here's the WSJ article this morning… "A single buyer has snapped up more than half the copper held in London Metal Exchange warehouses, giving it control over a crucial source of supply and raising concerns among traders about the potential for higher prices.  On several occasions in the last month, this buyer held as much as 90% of the world's copper stored in LME-licensed warehouses, equal to about 140,000 tons, or enough to make the copper parts of the Statue of Liberty more than 1,700 times. As of Wednesday, the buyer owned between 50% and 80% of copper held in warehouses, according to the most recent exchange data.  At today's prices, a 50% to 80% share of LME copper inventories would be worth anywhere from roughly $535 million to about $850 million.  Although the exchange doesn't identify the owners of metals, eight traders and brokers working for different firms active on the LME said they believe Red Kite Group, a London hedge-fund manager that focuses on metals trading, was the one buying. One of the brokers said that when he needs to buy copper for clients, contacts in the market refer him to Red Kite, indicating the fund is sitting on a large pile of metal.  Red Kite declined to comment.  Banks often hold large portions of the metal in LME-licensed warehouses on behalf of clients, but a hedge fund holding that much copper is less common, traders and brokers say. The London Metal Exchange, owned by Hong Kong Exchanges & Clearing Ltd. , doesn't limit how much metal a single trader may hold in its warehouses, and says that it has mechanisms in place to prevent market squeezes—a situation in which holders of a large share of the supplies use their position to jack up prices. For example, it requires a company with a dominant position to lend metal for short periods and it caps the amount of money that can be charged for that service.  "The LME constantly monitors its markets to ensure that trading is orderly," a spokeswoman for the LME said. The LME's "lending guidance" system "is the most effective way to manage pressure arising from dominant positions in our market."  Prices ticked higher last week in response to positive economic news from China, the world's biggest consumer of the metal. They remain below their levels at the start of the year because demand has been sluggish and production capacity is expected to increase. The official price of copper for delivery in three months on the LME was $6,696 on Friday.  The metal's owner could be wagering that global copper supplies will tighten, causing prices to shoot up, analysts say. The price of copper traded on the LME is used as a global benchmark, and metal users rely on the exchange's warehouses for emergency supplies. If one firm owns most of that spare supply, it can charge higher prices to buyers, analysts say.  "There's no reason for anyone to be holding 70% of the stocks of the commodity," said Jessica Fung, head of Commodities Metals at BMO Capital Markets.  Established in 2004, Red Kite is now run by two of its founding partners, Michael Farmer and David Lilley, both alumni of the German industrial conglomerate Metallgesellschaft AG, which collapsed in 1993. The fund is known for its bold and extremely profitable trades involving copper, as well as other metals. Red Kite Group manages $2.3 billion, according to its website.  A single firm has owned at least 50% of the copper in LME-licensed warehouses for much of the last four months. Accumulating such a dominant position became easier in June because the amount of metal under the exchange's watch had plummeted, as had prices. The warehouses have held less than 160,000 tons of copper since mid-June, compared with more than 360,000 tons at the start of the year. Some analysts say copper production is running behind demand, forcing some users to draw on stockpiles in LME-licensed warehouses.  Some traders say the concentration of so much copper under one firm's control is already driving up prices. It costs about $72 more per ton to buy copper for delivery today than for delivery in three months. Others say copper is more expensive because miners aren't meeting global demand.  The LME's regulatory function has come under intense criticism from aluminum buyers, who have complained of long waits and high costs to get supplies out of certain warehouses.  The exchange has responded by changing its rules."

 

- Exclusiva Latam:  A few things below that our Latam Mining Desk are watching from overnight…..

 

1.     Antamina Union prepares for strike on November 10.  Workers at Antamina mine prepare for an indefinite strike on November 10, as talks with company officials to renegotiate a labor contract that expired on July 24 have been unsuccessful. A strike at Antamina mine would be unprecedented. Union leaders demand better labor conditions and a special bonus to offset a decline in workers' earnings participation, which came as a result of lower production volumes driven by a decline in ore grades. Antamina said in a statement that it hasn't been formally notified about the strike. According to union Secretary Jorge Juárez, the decision will be officially presented to the company and the Peruvian Labor Ministry on Monday 27 or Tuesday 28 of October.  The union represents 1,630 from a total of 2,860 workers. Mr Juárez noted that copper grades at Antamina have declined to 0.8% from 1.6% last year. Antamina is controlled by BHP Billiton (33.75%) and Glencore Xstrata (33.75%). Teck holds a 22.5% stake on the mine while Mitsubishi Corp. has a 10% participation.  Copper production in Perú has been unable to continue increasing since last June, when it reached a LTM record of 1,424k tonnes, in part due to the production decline at Antamina and ramp-up delays at Toromocho, which has produced 26.7kt in 2014 through August. Antamina produced 30.4kt of copper in August, down from 47.5kt YOY but up from 28kt in July.  Antamina officers expect copper production to recover in the medium term. (Source: Reuters, El Comercio, Gestión)

 

2. Implications to the Copper Market:  We model Antamina to produce 80,500 tonnes of copper and 55,800 tonnes of zinc in Q4 (100% basis). So every strike day takes out 884 tonnes of copper and 613 tonnes of zinc from the market

Source: Ministerio de Energía y Minas, Perú

 

2.     Minera Escondida union no.1 awaits ruling from the Appeals Court in Antofagasta, as the company presented a recourse looking for legal protection following  the union's decision to promote two days of labor stoppages on September 22 and 24.  The union claimed that the stoppages were used as warnings to the company, considering that it has failed to comply with Chilean law and violated workers' rights. The Court of Appeals in Antofagasta has 5 to 15 days (from October 30 through November 14) to determine if the stoppages should be considered illegal –as the company seeks – or not. (Source: Minera Escondida News Blog, Minería Chilena).  Interesting to see that the two largest copper mines in Chile (Escondida) and Peru (Antamina), both owned partially and operated by BHP Billiton, have been facing labor problems lately.

 

3.     Chilean government initiatives to unblock mining investments to focus on mid-to-small sized projects. According to Diario Financiero, the list of mining projects that the Chilean government plans to prioritize by helping them solve pending licenses includes mainly medium and small mining projects. The government plan is to accelerate approval for projects which have been delayed due to slow and complex bureaucracy. In Chile it is estimated that a mining project requires over 210 permits, each of them taking on average more than 100 days to be granted. Diario Financiero notes that the list of mining investments to be prioritized by the government have a total amount of US$2.7B, an amount that could increase by including Codelco's structural projects. Yet, it seems to consider only a relatively small fraction of Cochilco's list of up to $105B in potential mining investments in the country. The list includes Capstone's Santo Domingo –which is still looking for permits for the Chañaral port – and BHP's  Cerro Colorado.  Some local industry experts consider that expediting  bureaucracy will do little to make new mining investments in Chile more attractive for mining companies, as they still have to consider the increase in taxes, high energy costs and increasing labor uncertainty due to the pending labor reform.  (Source: Minería Chilena, Diario Financiero). 

 

 

- Copper Supply-Related:  Freeport's Grasberg to Strike for a Month?  In addition to the potential for an Antamina Strike on November 10th (see above)… a Reuters article this morning saying that workers at Freeport's Grasberg Mine are threatening to go on strike for a month starting on November 6th because the company has failed to make changes to local management following a fatal accident.  Earlier this month, hundreds of angry protesters blocked access for two days to the open-pit area of the Grasberg complex, where production was temporarily suspended following the death of four workers on Sept. 27. 

 

Impact to FCX?  Orest Wowkodaw (Sr. Base Metals Analyst – Scotiabank) saying this morning that should this actually take place… a one-month strike in Q4 for FCX represents ~38kt of copper on a 100% basis, and represents about 8% of FCX's consolidated production.  The impact to our Q4/14 EBITDA estimate for FCX is $144 million, or ~6%, while the impact to our EPS estimate is $0.06, or ~8%.  Orest adds that he thinks the strike is a 50/50 scenario due to the contentious issue of worker safety and the recent poor track record of accidents at Grasberg. 

 

…Freeport, BHP Pushed to Give Water to Chile Residents in Drought…: Chile's government has introduced legislation that would redistribute water rights to consumers and awayfrom mines, without compensation, during water shortages. As Chile's copper industry has expanded, mining companies such as BHP Billiton and Freeport-McMoRan have had to compete with residential demand for scarce water resources. This is the fourth such water oversight legislation introduced in the past year by President Michelle Bachelet's government.

 

 

…and Copper Strikes May Go Viral After Proposed Change in Chile's Labor Law…: Chilean workers have been granted the right to join forces with counterparts at other subsidiaries to renegotiate labor conditions with their parent company. Because of the change in the law, labor disputes that in the past would have involved a single mine now have the potential to spread to all of a company's mines. This could affect Anglo American, Antofagasta and Freeport-McMoRan, as well as other operators of multiple copper mines in Chile. After doing some of his own digging, Scotiabank LatAm Materials Analyst Alfonso Salazar notes that the proposed labor reform is still under analysis and could be proposed to the Chilean Congress in late November; as such Alfonso notes that there could be some changes before it gets to the Congress for review and approval, and the timing is uncertain.

 


______________________________
MasterMetals

October 27, 2014

World Has Less Than 5 Days Worth Of #Copper Inventories @SRSroccoReport






The World Has Less Than 5 Days Worth Of Copper Inventories

According to the financial media, the global economy is supposedly rolling over causing a glut of inventories producing a deflation in the prices of many commodities.  If this is the case… someone should tell that to King of base metals… Copper.

Something doesn’t seem to be making sense in the copper market as the price continues to decline, so are the level of global copper inventories.  You would think the opposite would be the case, but we must remember in the new Financial Paradigm — Paper assets such as Derivatives, Stocks and Bonds are KING, while Gold-Silver and commodities are GARBAGE.  Which is why (according to their mentality), financial assets are what we should EAT, while gold-silver and commodities are what we flush down the toilet once we are done digesting and consuming them (put another way–CRAP).

If we look at the chart below, we can see a very interesting trend taking place in global copper inventories.  Not only are we are near record lows, we are down to less than five days worth of copper inventories:

Global Copper Inventories & Days of Consumption

(Data from the Chilean Copper Commission website Weekly Updates)

In August 2013, the world held 777,697 metric tons (mt) of total global copper inventories–a 13.5 day supply.  During that time, the price of copper was trading in the $3.30-$3.40 range.  If we move over toward the middle of the chart, by March 2014, the global copper stocks declined to 477,014 mt (8.3 day supply), while the price of copper traded in the $3.00 range.

So, after a near 40% decline in world copper inventories, the price of copper fell 10%.  Interestingly, this is the same the price of silver fell from $25 (Aug 2013) to $20 in March 2014.

Now, if we look at the current data, shown on the right side of the chart, total global copper inventories are now at 263,027 mt at an impressive 4.6 day supply (sarcasm).  And of course, the price of copper fell from a high of nearly $3.30 in June, to around 3 bucks today.

Let’s compare copper inventories at the end of September, going back to 2009.

Global Copper Inventories

SEP 2009 = 490,773 mt

SEP 2010 = 553,737 mt

SEP 2011 = 658,851 mt

SEP 2012 = 427,733 mt

SEP 2013 = 717,232 mt

SEP 2014 = 263,027 mt

Here we can see that end of September copper inventories in 2014 are the lowest in six years…. and at a 4.6 day supply.

Just maybe the copper traders know that inventories are going to header higher by the end of the year if the global economy continues to shrink.  However, a 4.6 day supply of copper doesn’t seem like the demand for the king base metal is really falling all that much… or am I missing something here.

Lastly, there is speculation that the Chinese may be buying and hoarding copper that isn’t recorded in the “Official Inventories.”  I say… so what.

If I were Asian or Chinese, I would rather spend $1.8 billion to purchase the rest of the 263,000 mt of global copper inventories than spend another lousy RED CENT on U.S. Treasuries that will become worthless at some point in the future.

NEW UPDATE 10/18/14:

After reading some of the comments below the article, I did additional research that might help answer some of the questions raised.  However, the more I looked into to the global copper market, the more bizarre it became.

While it’s true that China recently had a probe into its Copper Financial Deals (now gone bad), this became public in 2013 and was addressed early this year.  If it is true that China has all this extra copper in inventory… then why did Chinese Copper imports increase 18.7% year-over-year in the first seven months of 2014???  (source of data from this Reuters article).

Again, if we knew that the Copper Financing Deals were coming apart back in May of last year (Zerohedge: The Bronze Swan Arrives:  The End of China’s Copper Financing), wouldn’t this copper market imbalance be worked through by now?  I mean, its been nearly a year and a half.  By the way, thanks reader houstskool for posting that link in the comment section.

I went back and looked at the data from the Chilean Copper Commission and found some interesting trends.  From Jan-May 2014, global copper production increased 5.6% y-o-y, from 7.28 million metric tons in 2013, to 7.7 million metric tons in 2014.  So, we have an INCREASE IN COPPER PRODUCTION.

Now, from Jan-Apr 2014, the world consumed -2.3% less copper, from 5.4 million metric tons in 2013, to 5.3 million metric tons in 2014… a DECREASE IN COPPER CONSUMPTION.  This isn’t much of a decline, but you would think for the first four months of the year, we would have seen a build in global copper inventories… due to an increase in production and a decline in consumption.  However, if we look at the chart above, global copper inventories actually DECLINED IN A BIG WAY in April, 2014.

Global copper inventories fell from 477,014 mt in March, to 355,075 mt in April.  This was a drop of 25% from a 8.3 day supply, down to a 6.2 day supply.

So, here’s the question.  Why would global copper inventories be falling if global production is increasing, demand falling and China with a supposed GLUT of copper inventories to work through?  Does that make any sense whatsoever?

In one of the comments below, a reader put a link to a BNN interview with a copper analyst about the global copper market, which you can watch at the link HERE.  Basically, he goes on to say that they look at all the different Chinese warehouses and state there is a 250,000 mt global surplus of copper.  If that is the case… then WHY IN THE HELL aren’t global copper inventories RISING instead of FALLING over the past year???

You see, something just doesn’t make sense when we look at all the data.  Again, why did Chinese copper imports increase 18.7% Jan-Jul if they had all this surplus copper they could work through???

In conclusion… all I can say is SOMETHING FISHY THIS WAY BLOWS in the Global Copper Market.


MUST READ: The World Has Less Than 5 Days Worth Of Copper Inventories : SRSrocco Report

October 23, 2014

#Exploration for nonferrous #metals down 25% SNL.com @Mineweb

Spending drops to $11bn, close to 10 year low. 
As usual, companies "are sacrificing long-term project pipelines in favour of consolidation and maximising returns.” 

Exploration for nonferrous metals down 25% - SNL

BASE METALS

Global exploration for nonferrous metals has fallen sharply again this year – by 25%, according to data collected by SNL.
Author: Lawrence Williams
Posted: Wednesday , 22 Oct 2014 
LONDON (Mineweb) -

The mining cycle downturn is in full swing now, just preparing the ground for big price increases when the cycle turns given that current fall-offs in capital spending and exploration are bound to result in serious metals supply shortages, and correspondingly much higher prices when these shortages develop. Sure, there may be a global recession but this tends to mean slower, not negative, growth rates for the most part. Given that mining is an industry dependent on replacing ever-depleting assets as orebodies are worked out and grades decline then these fall-offs in asset replacement expenditures mean serious supply problems down the road.

The graph below from acquisitive research giant SNL whose Metals & Mining division has, in recent years, absorbed both Canada’s Metals Economics Group and Australia’s Intierra (and with the latter Sweden’s Raw Materials Group) gives a pretty clear picture as to what has been happening in the key nonferrous metals exploration sector. After peaking in 2012, exploration expenditures have been declining rapidly and look to be heading down possibly to a ten year low point should the trend continue - and with no succour seen ahead for the junior exploration sector which, in the past, has provided up to 50% or more of the global exploration spend, then the sharp fall seems likely to continue.



In data compiled for SNL’s forthcoming "Corporate Exploration Strategies" study, the group estimates the worldwide total budget for nonferrous metals exploration as having dropped to US$11.36 billion in the current year from $15.19 billion in 2013 — a 25% decrease.  And 2013 had seen an even bigger percentage fall from the record 2012 level. The SNL nonferrous exploration category refers to expenditures related to precious and base metals, diamonds, uranium and some industrial minerals; it specifically excludes iron ore, aluminium and coal.

SNL notes that calls for mining companies to improve profit margins in the face of rising costs and falling grades has led to the industry’s major miners divesting noncore assets and cutting back on capital project and exploration spending.  This has led to a 25% drop in the majors' exploration budget total alone this year. Meanwhile the junior sector has been faring even worse as exploration focused companies battle to stay afloat in the light of rock bottom share prices and, as a group, have been reining in spending in order to conserve funds. SNL puts the fall-off in junior total exploration spending as being 29% year over year in 2014 after falling 39% in 2013, dropping their share of the overall budget total to 32% from a high of 55% in 2007.

And for operating miners in particular it is noticeable that the pattern of exploration has been altering with a concentration on ‘mine site’ exploration following the old adage that the best place to look for new mineral deposits is adjacent to existing ones. Thus brownfield expenditure has been far more prevalent in the exploration mix as this is seen as a less costly way of replacing and adding reserves.  But it does tend to preclude the finding of additional mega deposits which the industry needs to maintain output into the future.

Gold has always tended to be the most significant nonferrous metal as far as exploration is concerned and there are always far more gold exploration juniors than base metals ones. But three years of declining gold prices have taken their toll and the proportion of gold exploration expenditure, while still the largest sector, has declined by 31% year on year to 43% while the collective share of base metals in the mix has actually seen a 2% increase although total base metals expenditure has fallen overall by around  $1 billion.

SNL concludes a release on the latest findings with the comment, “This reduced focus on early stage and generative work has led to concern that many companies, and perhaps the industry in general, are sacrificing long-term project pipelines in favour of consolidation and maximising returns.” But this has always been the case with mining accounting for the industry’s ever repeating cyclical profit pattern.

To contact SNL for more information click on www.snl.com 



Exploration for nonferrous metals down 25% - SNL - BASE METALS - Mineweb.com Mineweb



The MasterMetals Blog

@MasterMetals

October 22, 2014

#GOLD - Investors liquidation responsible for decline in gold price below US$ 1,200 per ounce in September

Swiss trade data show gold exports hit a seven-month high in September and that the flow to Eastern from Western nations continues, says UBS. Swiss exports were 172.6 metric tons last month, the most since February.  Gold shipments to China jumped to 12 tons after averaging around three tons during the previous four months. Shipments to Hong Kong increased to 24.7 tons, the most since April. Switzerland exported 58.5 tons to India last month, the largest shipment year-to-date and nearly twice the average monthly volume, UBS says. Meanwhile, September gold imports into Switzerland were also high at 194.6 tons. Inflows from the U.K. jumped to 63.3 tons from 8.6 in August. "This suggests that a good portion of investor liquidations in September, that pushed the prices through the $1,200 psychological level, were absorbed by physical demand, with metal making its way from London vaults into Swiss refineries for refining/recasting and ultimately shipped to physical buyers in Asia," UBS says. "This scenario is reminiscent of what happened in 2013 when gold prices collapsed, albeit the volumes this time around are much more contained. Nevertheless, it does highlight the importance of physical markets in providing support during times when gold needs it most."

October 21, 2014

#Gold Bulls Run Into Sticky #Fibonacci Resistance @KiraBrecht

From Kitco News

Technical Trading: Gold Bulls Run Into Sticky Fibonacci Resistance

(Kitco News) - December Comex gold futures charged into early morning action Monday with a firm bid. Action over the last two weeks has shown the bulls are in charge of the near term trend. A "V" type of bottom has formed on the daily chart in the wake of the strong October 6 "bullish reversal" day. Also, the gold market is trading above its 20-day and 40-day moving averages, which is a positive technical signal. See Figure 1 below.



But now, gold bulls are testing initial 38.2% Fibonacci retracement resistance, shown in Figure 2 below. This Fibonacci retracement is drawn off the July 10 high to the October 6 low. The first retracement point —or 38.2% comes in at $1,246 per ounce. Currently, the bulls are "testing" that resistance zone. A solid push through the 38.2% retracement point would open the door to additional retracement targets at 50% ($1,265.40) and then 61.8% ($1,284.80).



On the downside, important chart support points are seen at $1,232 and then $1,222. The bulls need to defend those support floors to keep the near term technical bias bullish.

Bottom line? Gold tested and found strong buying interest at long-term support in the $1,180 area in early October. A near term bottom has formed on the daily chart. Daily momentum studies are generally rising and positive, but the market has run into initial Fibonacci retracement resistance. This zone could act as a "sticky" ceiling in the very short-term. But, if gold bulls are able to post a convincing close above the first retracement point, near term trend followers will become emboldened. Monitor chart supports at $1,232 and $1,222. As long as those support floors hold firm, the bulls have the edge.

By Kira Brecht, Kitco.comFollow her on Twitter @KiraBrecht


Gold Bulls Run Into Sticky Fibonacci Resistance | Kitco News



The MasterMetals Blog

@MasterMetals

October 20, 2014

$GDXJ #gold December adds still outperforming

From BMO: Quantitative Execution Services
Monday, October 20th  

GDXJ gold December adds still outperforming

 

Since last week's announcement the GDXJ junior gold additions have outperformed by ~5%.   The index change will cause the addition of larger gold companies into the GDXJ ETF in December.  

 

See up to 15 new additions to GDXJ

We currently see 13 eligible additions and 2 close to the threshold.   The actual event is far-off but considering the sheer size it is not surprising there is already impact.  The GDXJ will need to buy ~10% addition floats in December or approximately U$800M.  

 

Will like behave like the GDX rebalance in 2013?

This index change reminds us when the GDX Gold ETF allowed for non-US listed companies to be added in September 2013.  It was also a significant index change and we saw the adds outperform from announcement (August 2013) until several weeks past the rebalance.  

 

See below for chart of GDXJ adds vs GDXJ and table with company specific performance.

 

 

 

#Tamar: Another deal signed to bring #Israeli #NaturalGas to #Egypt - #MasterEnergy



How times change: Pipeline carried gas from Egypt to Israel for several years until
saboteurs began thwarting the flow through Sinai pipeline explosions.

By SHARON UDASIN 

10/19/2014 13:48


A man points as he stands on a tanker carrying liquified natural gas,
ten miles off the coast from Hadera. (photo credit:REUTERS) 





Turning the tables on the region’s natural resource flow, Israeli gas
may soon surge southward through the Egyptian pipeline that for several
years provided gas to Israel – but fell victim to saboteurs in Sinai.

The
developers of the 282-billion cubic meter Tamar reservoir, which has
been supplying gas to Israelis since March 2013, have signed a letter of
intent to sell 2.5 b.cu.m. annually to the Egyptian firm Dolphinus
Holdings Limited, the Delek Group reported to the Tel Aviv Stock
Exchange on Sunday morning. This gas surplus sold to the Egyptian firm
from Israel’s local supply will begin serving private industrial
consumers already in 2015, according to the partners.

The move
looks to revitalize Egypt’s East Mediterranean Gas Company pipeline that
for several years carried gas from Egypt to Israel. In 2008, EMG began
supplying Israel with about 40 percent of its natural gas provisions,
until saboteurs began thwarting the flow through Sinai pipeline
explosions. Following 14 months of such attacks, the Egyptian government
formally terminated the agreement between EMG and Israel in April 2012.

At
Tamar, located about 80 km. west of Haifa, Noble Energy holds 36% of
the basin. Delek Drilling and Avner Oil Exploration each own 15.625%,
while Isramco owns 28.75% and Dor Gas owns 4%.

The neighboring
621-b.cu.m. Leviathan gas reservoir, about 130 km. west of Haifa, is
expected to begin flowing in 2017. Noble Energy owns 39.66% of
Leviathan, while Delek Drilling and Avner Oil – both subsidiaries of the
Delek Group – each own 22.67% and Ratio Oil Exploration holds 15%.

The
realization of the project will help maximize the production
capabilities from the Tamar reservoir, and will strengthen the Israeli
economy by increasing tax and royalty revenues, said Delek Drilling CEO
Yossi Abu.

Sunday’s announcement joins a number of other regional
agreements and understandings that the Tamar and Leviathan partners have
signed with Israel’s neighbors.

In September, the Leviathan
reservoir partners signed a letter of intent to sell 45 b.cu.m. of
natural gas to Jordan’s National Electric Power Company over a 15-year
period.

Empty liquefaction plants in Egypt have become an
attractive option for Israeli gas. The British Gas Group signed a letter
of intent with the Leviathan partners for the 15-year supply of 105
b.cu.m. of natural gas to its Idku plant.

Meanwhile, in early May,
the Tamar reservoir partners signed a letter of intent with Spanish
firm Unión Fenosa, for the provision of 71 b.cu.m. to that firm’s
liquefaction facility in Damietta.

In January, the Leviathan
partners signed their first export deal – a $1.2b. sales agreement with
the Palestine Power Generation Company.

According to the
agreement, PPGC is set to buy around 4.75 b.cu.m. of gas over 20 years,
to fuel a future 200-megawatt power plant in Jenin.

A month later,
the Tamar reservoir partners signed a $500 million deal to provide 1.8
b.cu.m. of gas to the Jordanian firms Arab Potash and Jordan Bromine, to
power their Dead Sea facilities for the next 15 years, beginning in
2016.

As far as Sunday’s letter of intent signed with Dolphinus is
concerned, this latest deal is “another important link in a sequence of
agreements that will enable the supply of natural gas to the domestic
market in Egypt,” said chairman of Delek Drilling and CEO of Avner Oil
Exploration Gideon Tadmor.

“I have no doubt that these are agreements that will strengthen the relations between Israel and its neighbors,” Tadmor said.



Read the article online on the Jerusalem Post website here: Israeli partners sign bid to sell natural gas to Egyptian firm





October 15, 2014

#Orbis Gold - Updated scoping study sees step change at Natougou; $OBS : ASX #Canaccord reiterates SPECULATIVE BUY and raises target to A$0.87 from A$0.54

This is the latest note out from canaccord on Orbis Gold which received a takeover offer from Semafo (SMF CN)

Orbis Gold Limited
OBS : ASX : A$0.62 | A$188.0M | Speculative Buy, A$0.87 

Reg Spencer, +61 2 9263 2701

Investment Perspective 
An updated scoping study for Natougou has revealed a far more valuable project than we had previously estimated, highlighting what was clearly an opportunistic approach from SEMAFO earlier this week. OBS is now likely in play, and a vastly improved Natougou could bring other suitors to the table, but at the same time potentially lead to improved financing options should OBS opt to develop the project on its own. Short-term financing risks, should the Greenstone financing not proceed, are temporary in our view, and with OBS now the peer group leader with obvious M&A appeal, we reiterate our SPECULATIVE BUY rating. 

Investment Highlights 

  • OBS has released the outcomes of its updated Scoping Study for Natougou, revealing a significantly optimised project capable of producing up to ~700koz in the first 2 years of production. The key changes to project parameters versus the 2013 scoping study include 1) increased resource inventory of 13 Mt at 3.5 g/t, 2) 10% lower LOM strip ratio of 11.7:1, and 3) optimised mine design and grade profile which sees an average grade of +6 g/t in the first 2 years.
  • Establishment capital estimates are mostly unchanged at US$234m with increased infrastructure costs offset by a 60% reduction in waste pre-strip costs resulting from an optimised mine design. Our slightly more conservative LOM AISC estimates fall ~2% to US$699/oz versus OBS' scoping study estimates of US$619/oz.
  • The revised project parameters deliver a vastly improved project, with increased FCF (up to US$290m in year 1 alone) and rapid payback (CGAu est ~10 months) among the key highlights. Upcoming project milestones include resource upgrades (1H'15) and completion of the DFS and project permitting in mid'2015.

Reiterate SPECULATIVE BUY rating; Target revised to A$0.87/share 
Following the release of the updated scoping study, we have revised our modelled production assumptions for Natougou to be in line with the study results. We have also revised our development financing assumptions for an increased price at which we assume OBS raise equity (JunQ'15, A$85m, $0.50), and left unchanged our assumption that the Greenstone Resources financing (US$20m, A$0.42/share, DecQ'14) proceeds to completion, but note the high risk to this following recent share price performance. The net impact is a significant upgrade to our target price (fully diluted NAV) to A$0.87/share from A$0.54/share.


For more research and our coverage universe online, visit
 
Canaccord Genuity's Research Portal.

For current disclosures, please visit our Online Disclosure Database at http://disclosures.canaccordgenuity.com/EN/Pages/default.aspx. For more information, please contactdisclosures@canaccordgenuity.com.

 

Copyright (C) 2014 Canaccord Genuity. All rights reserved. All material presented in this document, 
unless specifically indicated otherwise, is under copyright to Canaccord Genuity. None of the material, 
nor its content, nor any copy of it, may be altered in any way, or transmitted to or distributed to any 
other party, without the prior express written permission of Canaccord Genuity.

 

The information contained in this report is drawn from sources believed to be reliable, but the accuracy 
and 
completeness of the information is not guaranteed, nor in providing it does Canaccord Genuity assume 
any liability. 
This information is given as of the date appearing on the report and Canaccord Genuity
assumes no obligation to 
update the information or advise on further developments relating to these 
securities. This report is intended for 
distribution only in those jurisdictions where Canaccord Genuity is 
registered as an advisor or a dealer in securities. 
Any distribution or dissemination of this report in any 
other jurisdiction is strictly prohibited. Canaccord Genuity, its 
affiliated companies and holdings of their 
respective directors, officers and employees and companies with which they 
are associated may, from 
time to time, include the securities mentioned in this report.

 
 

*Certain research on the Canaccord Genuity Research Portal is produced by Canaccord Genuity Limited, which is authorized and regulated by the Financial Conduct Authority (FCA). Where identified, this is non-independent research and a marketing communication under the FCA Conduct of Business rules. Such research constitutes third-party research in North America for purposes of FINRA and IIROC rules. 

 

*Certain research on the Canaccord Genuity Research Portal is produced by Canaccord Genuity (Australia) Limited, which is authorized and regulated by ASIC. Such research constitutes third-party research in North America for purposes of FINRA and IIROC rules.

This email is sent by one of the companies of the Canaccord Genuity group of companies which includes Canaccord Genuity Group Inc., Canaccord Genuity Corp., Canaccord Estate Planning Services Ltd., Canaccord Genuity Wealth Management (USA) Inc., Canaccord Genuity Inc. (with offices in the United States) and Canaccord Genuity Limited (with offices in the United Kingdom). See http://www.canaccordgenuitygroup.com/en/companies for more information on the companies of the group. Any of these companies can be contacted through the group head office at 2200 – 609 Granville Street, Vancouver, B.C. V7Y 1H2. 

______________________________
MasterMetals