COPPER forecasts in 2017

Cochilco, Chile’s copper commission, has raised its forecast for the price of the copper in 2017. Wanting to reflect the impact of global supply breaks. The commission anticipates copper price to average $2.60 per lb this year. Which is up from its previous estimate of $2.40 per lb.

 

A worker monitors a process inside the plant at the copper refinery of Codelco Ventanas in Ventanas city, northwest of Santiago, Chile

Meanwhile, according to Cochilco’s vp, Sergio Hernández, the move reflects the decline in global production. Mostly due to issues at Grasberg, Cerro Verde and Escondida mines. Amid such disruptions, Cochilco reduced its forecast for global copper production increase to 0.7% in 2017.

In the same time, Chile’s production should come in slightly below the 5.6 million tonnes of copper, which would represent a 0.8% year-on-year growth from 2016.

Earlier in January, the commission expected the global output to grow 2.9% this year.

Cochilco also said that it expects the copper price to remain at the average of $2.60 per lb in 2018.

“We believe that the construction market and the infrastructure and power projects in China will be reactivated until the third quarter of this year [2017].” Said Hernández, which should sustain the country’s demand for copper.

Cesco Copper week

There was a defnite improvement in sentiment at this year’s Cesco copper week in Chile. With more market participants seeing upside price potential amid tightening supply but many still erred on the side of caution.

Cesco Week 2017, the picture is bright if not overly bullish. The three-month price was above $5,900 per tonne last week. It was driven by a host of supply disruptions in Indonesia, Chile and Peru, which have removed some 200,000 tonnes of anticipated production from the market this year. The price has since eased back to $5,780 per tonne. It happened mainly due to rising inventories and the resolution of the strikes at Escondida and Cerro Verde and the temporary export agreement for Freeport’s Indonesian subsidiary. The next World Copper Conference will be in Santiago, Chile. It will happen 9-11 April 2018.

Shanghai Future Exchange copper inventories drop 14%

Deliverable copper stocks at Shanghai Futures Exchange-approved warehouses declined by 43,543 tonnes. In percentage: 13.8% – to 271,267 tonnes as of Friday April 14 from a week earlier.

This week, R&S Logistics MHC in Shanghai saw the biggest decrease in stocks. Exactly 26,073 tonnes of the red metal exited its sheds.

Market stockpiles dropped due to active spot trading this week. With spot premiums staying in positive territory.

Copper in the physical market was traded with a premium of 25-40 yuan per tonne. As a result of which producers intend to achieve sales in the spot market rather than deliver to SHFE sheds.The Shanghai-London arbitrage window was closed today. The SHFE copper price dropped since the start of this week, although with a brief pause on Thursday, influenced by the LME complex amid concerns over geopolitical tensions.

“The decline of SHFE copper inventory indicated that consumers are dip-buying,” noted Guotai Junan. China imported 430,000 tonnes of unwrought copper and copper-fabricated products in March, 25% lower compared with 570,000 tonnes in March 2016. Info according to preliminary Chinese customs data released on April 13.

 

Zinc and nickel stocks down

 

  • Shangai Futures Exchange zinc stocks declined 16,846 tonnes to 165,398 tonnes. Furthermore, SHFE nickel stocks was slightly down 146 tonnes to 84,043 tonnes.

 

All other base metals stocks increase

  • In conclusion, Aluminium stocks climbed 5,981 tonnes over the past week to 345,942 tonnes. Lead stocks in SHFE was up 212 tonnes to 72,662 tonnes. As a result, tin stocks rose from 100 tonnes to 2,119 tonnes.
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Dakota Pipeline definitely starts working May the 14th

The decision is made

Firstly, there is an interesting notice, that access pipeline in Dakota is about to start servicing the country. It will happen on interstate level by May the 14th. “It will begin interstate crude oil delivery. In a deal made with the U.S. Federal Energy Regulatory Commission.”

Yesterday, Thursday the 13th of april, energy transfer partners LP filled a tariff. In mentioned tariff it is clearly seen what the story is about. The Pipeline and the oil are going to be delivered, and prices are going with the current conditions.

https://www.enbridge.com/Projects-and-Infrastructure/For-Shippers/Tariffs/North-Dakota-Pipeline-Company-Tariffs.aspx

 

 

Location

The 1,172-mile (1,885-km) Dakota Access line runs from western North Dakota to Patoka, Illinois.

Following, this project is worth 3.8 billion dollars, and it gained world’s attention. Yet, it happened because the Native American tribes consider this oil will damage their soil. So they sued to block completion of the final link for the pipeline through a remote part of Norh Dakota.

While The Rock Sioux tribe is claming the pipeline would desecrate a sacred burial ground, it is also stating any oil leak would poison the tribe’s water supply.

Following, thousands of protestors were demonstrating on the streets of North Dakota and Washington D.C. Many of them were stating the support for the tribe considering it is very important. Considering this soil pollution is a real problem for Native’s everyday life & also questioning this projects + and – parts. For example many opponents were saying assertiveness on the pipeline, and the petroleum it was intended to carry would lead to a serious climate change.

Obama/Trump Solutions

The administration of Democratic President Barack Obama said in 2016: ” We would reconsider the permits issued for the pipeline’s route near tribal lands”, delaying the project by several months. The question is, what is beeing achieved whit the delayed project? We have the awareness that every big investment contains god and bad sides. It will make money, but it will also soil the ground. True story, it just needs to be counted: Which of these is worth more?

But Obama’s move was quickly beeing reversed after the inauguration of Republican President Donald Trump in January.

Among Trump’s first acts in office was to sign an executive order that reversed a decision by the Obama administration to delay approval of the pipeline.

 

 

 

The tribe also lost several lawsuits aimed at stopping the pipeline.

Specifications about North Dakota Pipeline

It begins in the Bakken oil fields in Northwest North Dakota. It is set to travel in a more or less straight line southeast. Through South Dakota and Iowa. And end at the oil tank farm near Patoka, Illinois. Routing the pipeline across the Missouri River near Bismarck was rejected. It happened because of the route’s proximity to municipal water sources. Residential areas; and road, wetland, and waterway crossings. The Bismarck route would also have been 11 miles longer.

MAY the 14th, 2017 is the date when Pipeline will definitely start its interstate delivery. As mentioned earlier it will prove itself as a profit gaining investment.

 

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Global OIL market nears balance even as stocks go up

 

 

Global OIL Demand

In the beginning, after nearly three years of surplus production, global demand for oil is finaly close to run out. Non counting the growth in the overhang of unused crude oil.

International Energy Agency said that in March, oil stocks in OPEC fell by 17.2 million barrels per day. “Over the first three months of the year, stocks were up by 38.5 million barrels, or 425,000 barrels per day (bpd), after a large increase in January.”

Yet, OECD stocks fell by 8.1 million barrels in February. To 3.055 billion barrels as demand outpaced supply to the tune of around 200,000 bpd between January and March.

Stocks are still 330 million barrels above the five-year average.

Inconsistency Reasons

 

There are several possible explantions for the inconsistency. For example, demand is overstated or the supply is understated in the estimates. On the other hand, explanation lies with “less visible” stocks, inclouding stocks held at sea. That stocks held at the sea can be either in transit or for speculative reasons. And they can also be on land, but outside the OPEC countries.

“Indeed, a look at data from various sources shows stocks drawing in some non-OECD countries over (the first quarter of 2017). Non-OECD stocks are thought to be roughly equal in size to OECD volumes, but there is far less data available about them.” As the IEA info shows.

“The net result is that global stocks might have marginally increased in the first quarter, versus an implied draw of about 0.2 million barrels per day”

We have an interesting second half to come…

 

Global Level

 

Looking at the global level, oil held offshore fell to 58.4 million barrels in March. It started from 82.6 million barrels at the end of 2016. Iranian offshore stocks also fell to 4 million barrels in March. It has started from 28 million barrels when sanctions were lifted in early 2016.

“In other words, the full extent of the production cuts has not hit yet,” Bernstein said.

The price of oil LCOc1 has increased to around $56 a barrel. It went from a 13-year low of $27 hit in January last year, which has encouraged a raft of new supply.

For the second half of 2017, the IEA expects non-OPEC supply to rise by 485,000 bpd, above its previous estimate of 400,000 bpd. The one of main reasons would be led by increases in U.S. production growth.

Indeed, although the oil market will likely tighten throughout the year, overall non-OPEC production, not just in the U.S., will soon be on the rise again.

Oil market is a volatile, very interesting market to work on. Especially when it comes to predicting possible trends based on the geopolitical activities around the world.

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RUSSIA BETS ON INTENSIFYING GOLD OUTPUT IN 2018 (Oymyakon)

 

The coldest place in Russia

In one of the coldest spots on earth, Oymyakon district of the Republic of Sakha in Russia, it is believed that gold outputs will very soon rise.

Yakutia (Oymyakon) in winter gets so cold that metal actually snaps. In the beginning, it gives an opportunity to examine the field and extract as much as gold as possible. When the weather is warmer people make a living by dredging the soil. Where they are finding slight amounts of gold.

Yakutia region is unusually rich with gold , but the surface is alluvial. That makes the process of digging gold really expensive. The extraction is done by alluvial mining. The process with digging mines which extract the gold ore from the surface will be the primar way to extract gold in 2018.This process is called HardRock mining.

First Two Ore Mining Capacities

 

Production at the first two mines is to be opened in a few months. That would be the first production there since the fall of the Soviet Union. One is being launched by GV Gold. With U.S. fund BlackRock and the European Bank for R& D among its shareholders, and another by the locally-owned Yantar group.

These non-native producers are opening mines in Yakutia, to help Russia keep its place. Russia is the worlds 3rd biggest gold producer. After China and Australia, and ahed of the U.S, who are in 4th place.

“It is always hard to move away from old traditions but all regions nearby… have already gone through it,” said Elena Andreyeva, who is a chief ore mining geologist at Yantar.

Market global gold prices are now $1,285 per ounce in London, down by around a third from their peak in 2011.

As Russian currency has also fallen, it makes the foreign investments way more attractive . Especially in the area dependent on gold. Also for the bulk of local revenues and the fact that it will be a challenging place to work.

Direct flights from Moscow to the main village of Oymyakon district do not exist. Yet it is possible that will soon change. Oymyakon is located 9300km east of Moscow. Temperatures there often fall below 50 Celsius.

The area Is so cold, that some locals have heated garages in order to keep their vehicles alive. If they go out in winter, they keep their engines running at all times so they don’t seize up.

Locals call it “the Pole of Cold.” The district claims the title of the coldest continually-inhabited settlement in the northern hemisphere.

The area was home to Soviet Union prisoners. They were made to pan the gold from local rivers with bare hands.

 

RETURNS

As a proportion of national gold production, alluvial gold has fallen to around 30 percent from 83 percent twenty years ago, according to the Russian Gold Industrialists’ Union.

In Oymyakon it is also declining. Still it accounts for the bulk of 9 tonnes of gold the district produced in 2016 when Russia produced a total 297 tonnes.

GV Gold’s new plant will start production in May. It is expected to produce up to 3 tonnes of gold a year. Including gold-bearing concentrate. GV Gold has put in $113 million for the first stage of investment in the mine, which will become the third of its type in the area.

 

“This would be the biggest gold mining and processing plant in the Oymyakon district,” said Alexander Tuluptsov, chief executive of the Tarynsky plant, told Reuters.

He expects GV Gold to see a return on its investment within five to six years.

Yantar’s Khangalas plant, located few kilometers away from the area of Oymyakon, will start operating in 2018. It should produce up to 1 ton of gold a year, including concentrate.

Nowadays, Yantar’s other alluvial gold production Producers first offer the gold to the Russian central bank and some of the surplus is exported. Russia exported around 30 t of gold last year, mainly to Europe, China and India, according to Russia’s Gold Industrialists’ Union. Which was 2.3 t in 2016, and this year it plans to produce around 1.8 t.

 

BLOOMING OUTPUT

 

“Hardrock mining is more stable and profitable and less dependent on weather and logistic issues than alluvial mining,” said Mikhail Leskov, director for mining practice at American Appraisal Russia.

Some other gold-ore mining projects will come on tap soon. Amongst them, Polyus, Russia’s largest gold producer has inspiring plans. It will commission its largest eastern Natalka gold deposit by the end of 2017. Ore mining has advantages over the seasonal alluvial mining. It is less related to weather, climate changes, and all the factors of nature.

Despite still beeing some way behind China’s 453.9 and Australia’s 298 tonnes of gold production last year, the new mines should help Russia meet forecasts by the Gold Industrialists’ Union for an increase in output by 8 tonnes this year.

That will lead Russia to way better position in 2017, and surely prepare it for 2018. The year when the capacities of Oymyakon will rise world’s Gold supply, coming straight from successful Russian projects.

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