Nickel deficit of 100,000t expected for 2H17; Norilsk Nickel forecasts

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MMC Norilsk Nickel

MMC Norilsk Nickel is a Russian nickel and palladium mining and smelting company. Its largest operations are located in the area near the Yenisei River in northern Russia. It also has holdings near the Kola Peninsula, area of Norilsk-Talnakh and in western Finland at Harjavalta. It operates in Southern Africa in Botswana, South Africa, and western Australia.

 

Firstly, company’s headquarters are in Moscow. Also it is the world’s leading producer of nickel and palladium. International ranking agencies ranked it among the top ten copper producers.

Secondly, the nickel deposits of Norilsk-Talnakh are without doubt the largest nickel-copper-palladium deposits in the world.

 

Production divisions

Following, the company currently has five main operational divisions. Beginning with The Polar Division of MMC Norilsk Nickel and ancillary activities, located in the Taimyr Peninsula. After comes Kola MMC, and ancillary activities, located in the Kola Peninsula. In Finland there is Norilsk Nickel Harjavalta, Finland’s only nickel refining plant, purchased from OM Group in 2007. Later N.N. in Africa, which includes stakes in mines in Botswana (85% of Tati Nickel) and in South Africa (50% of Nkomati), both formerly owned by Lion Ore. Finally there is Norilsk Nickel Australia, which owns several mines and facilities in the western part of the country.

 

Nickel forecasts

MMC Norilsk Nickel, as one of the world’s largest Nickel producers, expects the market deficit to widen to 100,000 tons by the end of 2017. These news were carried out at the International Nickel Conference in Lisbon. The company’s head of market research explained to delegates their possible expectations.

“We are cautiously positive for 2017. We expect the deficit to widen to 100,000 tons in a base case scenario, but this situation remains unstable due to a number of material uncertainties.” Denis Sharypin said. (Fast Markets)

According to data from the International Nickel Study Group (INSG), the nickel market moved into a deficit of 49,700 tons in 2016 from a surplus of 91,400 tons in 2015.

“Indonesia could change this drastically, however,” he said.

 

Indonesian Nickel Ore

 

The Indonesian government surprised markets in January when it relaxed the country’s three-year ban on unprocessed ore.

In terms of demand, there are a few factors that might affect that forecast. For example stainless steel production growth in China and Indonesia and the high off take by alloys and strong increase in batteries.

In terms of supply, the political situation in the Philippines with its potential to shut down 20 or more mines is just one variable that could affect forecasts.

In Indonesia, around 5 to 6 million tons of low grade ore are available and ready for export. It has also the potential to impact the forecast.

“The worst case scenario is that a substantial surplus is also possible,” said Denis Sharypin.

Indonesia produces 17 million tons of nickel ore per year. 10 million tons of this quantity is low-grade ore. The country’s nickel smelting capacity is currently 16 million tons and may reach 18 million this year.

Low-grade ore is harder to process and smelters have been unwilling to take it at first. But in order for miners to get high-grade ore, they have to dig through low-grade ore first, which then gets thrown out.

 

These predictions about Nickel Ore deficit will likely come true in 2H17.

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Oil market Pressure remains Inevitable, but prices Went UP a bit this morning

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A short revision & Today’s prices

Followed by last week’s huge losses, Oil prices recovered today. Inspired by OPEC’s ideas to extend a supply cuts in next 6 months, it made a market prices rise.

While the relentless rise in U.S. oil outputs is making a fuss on supply’s side.

“U.S. West Texas Intermediate (WTI) crude oil futures CLc1 added 26 cents, or 0.5 percent, by 0401 GMT (12:01 a.m. ET), but were still below the $50 mark pierced on Friday at $49.88 a barrel.
Brent crude futures LCOc1 rose 30 cents, or 0.6 percent, to $52.26 per barrel. “ (Reuters)

Last week’s oil prices seemingly fell, backed up by ornery high crude supplies coming from the U.S. Despite OPEC’s possible production cuts extensions by 1.8 million bpd in next 6 months, the end of last week represented markets impossibility to handle artificially caused production surplus from U.S.

There are also some non-OPEC countries who accept the decision about cutting the production in following 2H17.

U.S. drillers

U.S. drillers are constantly adding some new oil rigs. It is now 14th week in a row, and the production has extended to 688 rigs. Extending also the 11- month recovery that will boost U.S. shale production in May.

It will be the largest monthly supply increase in more than last 2 years. It will have a huge impact on OPEC’s decision.

“Since its trough on May 27, 2016, producers have added 372 oil rigs (+118 percent) in the U.S.,” Goldman Sach said

U.S. crude production is at 9.25 million barrels per day (bpd) C-OUT-T-EIA, up almost 10 percent since mid-2016 and approaching that of OPEC’s top exporter Saudi Arabia.

– “WTI oil slipped back below the $50 per barrel level, amid concerns that the lack of inventory draw down since the OPEC production cuts is a sign that the cuts are not enough to rebalance supply and demand and put a floor under prices,” said William O’Loughlin, investment analyst at Rivkin Securities in a note on Monday. (Reuters)

WTI and both the Brent Crude Oil benchmarks are now down for more than 7.5 % since the end of the last year. Rather it makes a serious difference compared to 2016 period.

OPEC is planning to extend the output cuts. But there comes a very tricky question itself. If a Panel really decides to cut the outputs, will anything change?

 

 

Persistence in Goals as a key to success ?

U.S. drillers and U.S. policy Is persistent, although they are aware that market imbalance comes straight out their extra engaged oil rigs. Oil market is suffering.
Steel market is suffering too. Is U.S. market really that liberal? And ready to accept some natural changes, and prices coming from other sources even if lower than theirs (China’s steel for example). Competitive prices which have all the rights in this world to stay and fight the markets without being questioned as dumping prices?

Not every economy in this world has the power to affect trade and prices when they feel to. Speaking about Oil, OPEC’s agreements are destroyed and will again be if they do not find a solution for bordering their Oil from U.S. Oil. Which Will not easily happen.

OPEC’s possible extensions and an expected fall in Iranian production lent markets some support on Monday, traders said.

“Iran’s crude oil exports are set to hit a 14-month low in May, suggesting the country is struggling to raise exports after clearing out stocks stored on tankers.
Iranian oil exports, especially to its core markets in Asia, had soared since the ending of most sanctions against it in January 2016. (R.)”

This will again be an Agitated week on world’s OIL MARKET.

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Established Saudi state perks may prevent a recession and help their economy

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Public Sector Wage Cuts

Last September, the government roughly diminished financial perks for employees in the public sector. It is the main source of incomes for Saudi people, because most of them work there. The goal was to curb a huge budget deficit caused by low oil prices.

Low Oil prices caused country to gain large budget deficit. Big supply all over the world caused low prices, which cropped Saudi Budget.

King Salman’s decided to retrieve cuts to financial allowances for civil servants and military workers. It is seen as his way to help country. As a way to avoid recession this year, and lead economy towards reforming paths.

On Saturday (22.04.), Riyadh has reversed a major severity policy since its budget crisis erupted two years ago. This followed widespread grumbling about musty living standards among ordinary Saudis.

Country budget is supposed to grow with this perks, and gain positive trends in following years. Such perks include housing, vacation, and sickness allowances plus monthly bonuses for some state and military workers.

 

Analyses of the step

 

  • Analysts say the decision does not necessarily signal change in Riyadh’s determination to eliminate its deficit. Instead, it may be a tactical move designed to help authorities implement a controversial economic reform program announced last year by Deputy Crown Prince Mohammed bin Salman. (Reuters)

Program includes moves such as new taxes, domestic fuel price hikes. It implies transfer of big country’s projects to the private sector. And the smart sale of a stake in Saudi Aramco, which represents the Crown Jewel of Saudis economy.

“By showing it is sensitive to the public welfare and is looking for ways to share the financial benefits of reforms with society, the government may now be able to push ahead with its program.” (Reuters)

“The government was forced to take extreme measures last year. Now they are more at ease with the fiscal situation so they are able to give something back to society.”(R)

“They aim to continue the reforms, and they want to do it with society’s support.”(R)

 

Eliminating the Gap Caused by Low Oil Prices

 

Riyadh had made fast progress in cutting the deficit. It was much faster than expected. So, deputy Economy Minister Mohammed al-Tuwaijri said it would be possible to restore the allowances.

“The gap was 26 billion riyals in the first quarter of 2017, well below the government’s projection of 54 billion riyals.” Riyadh has forecast a deficit of 198 billion riyals in 2017 and aims to eliminate the gap by 2020. (Reuters)

Officials also have a goal to raise domestic fuel. Also the water prices in coming months, raising an additional 29 billion riyals. They plan a 5% tax on some products by the end of 2018.

That could be adequate for Saudi Arabia to avoid recession.

“A 1.4 percent rise in the Saudi stock index on Sunday, led by retailing companies, showed investors expect a boost to consumer spending.“ (Reuters)

Authorities said on Saturday that they intended to move forward with a part of the reform program that is popular among many ordinary Saudis: reducing corruption and making the government more transparent.

The officials said they also plan to conduct projects among ordinary Saudis. Which include reducing corruption, and making the government businesses more plainly to the ordinary people.

 

Changing Oil Prices

Oil sector represents a main income-area of the Saudi Arabia economy. Descending oil prices made a fiasco in their finances. There is a way to get over the county’s budget deficit, but the projects must be very precisely done. Transforming the government projects into private businesses and selling them is a good idea only if smartly led to an end. By the end of 2020 Riyadh is expected to get over the existing deficit, which means the oil market prices and the oil supply will have a serious issue in this matter. May the 25th will define most important following movements for Saudis. As well as for all the OPEC countries, and the worlds Oil Supply-Demand Issues.

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Oil market re-balance happening? OPEC planning next six-month extension of oil output CUTS ?

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Chronology of decisions:

 

Firstly, On February 7, 2017, Iran’s oil minister announced that major oil producers should prolong the oil production cut deal in second half of 2017. The production cut would restrain oversupply in the oil market and support crude oil prices. Higher crude oil prices have a positive impact on oil and gas producers. It affects their earnings: like Marathon Oil (MRO), Warren Resources (WRES), Hess (HES), and PDC Energy (PDCE).

 

Saudi Arabia and major oil producers output cut plans

In January 2017, Saudi Arabia’s energy minister said that OPEC might not extend the production cut deal beyond six months. He thinks that the oil market’s re-balance will end by first half of 2017.

If there’s a delay in the re-balance, we might see production cuts continue for another six months. Changes in supply and demand impact crude oil prices.

 

The U.S.: Bank of America Merrill Lynch thinks that President Trump’s energy policies would increase supplies in the US. Following, the supply would increase in the global oil market too, which would lead to oversupply in 2018. Resulting with pressured crude oil prices in 2018.

NEW Info on extended oil output cuts

 

An OPEC and non-OPEC technical committee recommended that producers extend a global deal to cut oil supplies for another six months from June in an effort to clear a glut of crude that has weighed on prices.

For example, OPEC, Russia, and other producers primarily agreed to cut oil production by 1.8 million barrels per day (bpd) for six months from Jan. 1 to back up the market.

Accordance on this matter also came at the meeting in Vienna, on Friday. Officials from important monitoring countries showed devotion to agree on output levels. Those were Kuwait, Algeria, Venezuela. And non-OPEC countries like Oman and Russia.

 

Reuters sources said the rate in March represented an increase from February’s level. Overall compliance with pledged cutbacks stood at 98 percent in March.

Oil prices still declined on Friday, with Brent crude trading below $52 a barrel. (Reuters)

The problem here is increasing U.S. production. It is causing big supplies, which seriously are affecting the efforts by OPEC and other non-OPEC allies to curb outputs.

Kuwait and Saudi Arabia Oil ministers, gave a clear signal on Thursday (March the 20th) that their producers plan to prolong the accord. Being aware of this, board’s recommendation that the supply cuts be prolonged, didn’t come as a surprise.

OPEC ministers plus their non-OPEC counterparts are scheduled to meet on May 25.

 

Meeting in Vienna

Russian Energy Minister Alexander Novak said after Friday’s meeting in Vienna: “The decision on extending the pact has not yet been taken, but it would be discussed with OPEC on MAY 24.th”

The panel, which met at OPEC’s Vienna headquarters, is the Joint Technical Committee (JTC) established in January to monitor adherence to supply cuts. Top OPEC producer Saudi Arabia is also a member of the JTC in its capacity as 2017 OPEC president. (Reuters)

As we announced many times before, OPEC ministers and their non-OPEC allies are to meet on May 25th, to discuss all the important opinions and ideas on this matter.

The Friday’s meeting also discussed OPEC’s own permissiveness, which it put at 103 percent. Much in line with ratings published in OPEC’s most recent monthly report.

In conclusion, there is about one month left till the May 25th. It will be a very important meeting, when some of the speculations about cutting oil outputs will come true. Whether glut would recover itself or it would be gone, we will witness it really soon. And the global oil market will certainly take a bit different dimensions after this date.

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Sunday 22.04. weekly report: All base metals prices closed lower in Friday

LME base metals prices closed lower after disappointing week

 

All base metals trading on the London Metal Exchange fell at the end of trading on Friday April 21 after a week in which some metals prices hit three-month lows.

 

Regardless of being the only base metal to see a price upsurge at Friday’s morning, up $28.50 per ton, copper prices dropped at the LME kerb.

 

Firstly, nickel and tin fell by over $100 per ton, while zinc dropped back below the $2,600 per ton barrier.

LME announced Matthew Chamberlain as its new CEO.

 

Secondly, steel prices could be in for a boost after positive macroeconomic news came from the USA.

“Yesterday (ref. to Thursday) President Trump ordered a trade probe against China and other exporters of cheap steel into the US. Trump also indicated plans to spend $200bn on an infrastructure development although the timing of this is still unclear,” Alastair Munro of Marex Spectron said.

Copper falls nevertheless earlier increase

Following, the three-month copper price rose by $1 from Thursday’s close to finish trading at $5,622 per ton in Friday. Copper stocks fell by 50 tons to 268,400 tons, with 11,025 tons freshly re-warranted. Indonesian workers at Freeport-McMoRan are said to be planning a month-long protest starting on May 1. The global refined copper market posted a surplus of 51,000 tons in January, the International Copper Study Group (ICSG) said in a monthly report on April 20. Chile’s Codelco suspended operations at a concentrator plant at its Salvador copper mine after a supervisor died in an accident. The facility produced 60,000 tons of copper in 2016, according to Reuters.

 

Declines across the board

The nickel price was starting to recover over the last days but fell $135 per ton at the kerb to $9,345 per ton. The three-month aluminium price fell by $10.50 to finish trading at $1,932.50 per ton. Inventories were down 14,925 tons to 1,687,875 tons. Nickel stocks increased by 5,208 tons to 380,946 tons.

The three-month zinc fell by $48, after a $10.50 decline during morning trading, to close trading for the week on $2,584 per ton. Zinc inventories fell 1,300 tons to 355,150 tons. “Data released by China’s NBS showed its domestic zinc production fell to 504,000 tons in March, the lowest level in a year as smelters conducted maintenance during the recent ore shortage,” ANZ Research said on Friday.

Lead prices were down $17 to $2,142 per ton. Stocks were down 500 tons to 167,175 tons. The three month tin price was indicated at $19,750/$19,795 per ton – an approximate $125 per ton decline on Thursday’s close price. Inventories for tin were unchanged at 3,195 ton for the second day in a row.

 

Currency moves and data releases

  • The dollar index was down 9.14 to 99.98.
  • The Brent crude oil spot price was down 1.85% to $52.02 per barrel.
  • The UK FTSE 100 was down 3.99 to 7114.55.
  • EU consumer confidence was -4 for April after being forecast at -5, while the CB leading index was 0.4% for March.
  • Meanwhile in the USA, existing home sales in March hit 5.71 million, topping the forecast of 5.61 million. But the flash manufacturing PMI and flash services PMI for April both disappointed at 52.8 and 52.5, respectively.
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LME: copper price up; all other base metals slightly lower this morning

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Friday April the 21st LME:

 

Copper was the only base metal which went slightly up in this mornings trade. All other base metals prices fell.

 

With the three-month aluminium price falling $2 per t and zinc dropping $10.50 per t.

“The market is looking volatile at the moment; we have had a few quiet days but have recovered from earlier week weakness.” (FastMarkets)

LME copper prices hit three-month lows at the start of the week but have rallied in the past few days. Instantly, it is trading at 0.5% higher than Thursday’s kerb price.

“Dip-buying appears to have emerged into the recent weakness in base metals prices, this fits in with our overall view to remain mildly bullish for the complex,” Metal Bulletin analyst William Adams noted. (FM)

 

Copper prices edging up

 

The three-month copper price rose by $28.50 to $5,651.50 per ton. While copper stocks fell by 50 ton to 268,400ton, with 11,025 of freshly re-warranted copper. Global refined copper market posted a surplus of 51,000t in January, the International Copper Study Group (ICSG) said in a monthly report on April 20.

 

Chile’s Codelco suspended operations at a concentrator plant at its Salvador copper mine after a supervisor died in an accident. The facility produced 60,000 tons of copper in 2016. (Reuters)

 

All other base metals see decline

Aluminium price in three-month report fell by $2 to $1,941 per ton as it restored above $1,900. Inventories were down 14,925t to 1,687,875t. Nickel’s three-month price fell by $35 to $9,445 per ton – nevertheless bouncing back from dips over the last few days.

Stocks for nickel increased by 5,208 t to 380, 946 t. Zinc price (3months) started trading at $2,621.50 per ton, down $10.50 on yesterday’s kerb. Inventories fell 1,300 tons to 355,150 tons.

“Data released by China’s NBS showed its domestic zinc production fell to 504,000 tons in March, the lowest level in a year as smelters conducted maintenance during the recent ore shortage,” ANZ Research said on Friday.

Lead was trading $6 lower this morning at $2,153.50 per ton. Stocks were down 500 tons to 167,175 tons.

Tin price in three-months fell $15 to $19,860 per ton as it failed to rally back above the $20,000 per ton mark. Inventories for tin were unchanged at 3,195 tons for the second day in a row.

 

Currency moves and data releases

  • Dollar index was down to 99.76, a 0.08% decrease.
  • The Brent crude oil spot price fell by 0.02% to $52.97 per barrel.
  • The UK FSTE 100 was up 2.58 to 7121.12.
  • In data, EU consumer confidence was -4 for April after being forecast at -5, while the CB leading index was 0.4% for March.
  • EU and US flash manufacturing and services PMI, EU current account, US existing home sales and UK retail sales are due.

 

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Chinese steel exports to U.S. causing national security issues?

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Steel

 

U.S. President is launching an investigation about whether the steel imports from foreign countries affects U.S. national interests.

“Steel is critical to both our economy and our military. This is not an area where we can afford to become dependent on foreign countries.”

Firstly, China is the largest national producer. It makes far more steel than it consumes. Secondly, it is exporting the excess output overseas. ” This often leads undercutting domestic producers.”

Trump is pressuring China to do more to rein in an increasingly belligerent North Korea. Which is the unusual step of setting to steel investigation. Two presidents discussed this subjects earlier in Florida. Trump said that he would consider possibility of using trade as a lever to coax China to do more.

 

Opinions on matter

 

“Everything they export is dumping.” (Derek Scissors, Asian economist.)

 

Following, Chinese exports have risen. “Despite repeated Chinese claims that they were going to reduce their steel capacity.” said Ross. Ross was labeled “Mr. Protectionism” for his history of owning businesses protected from foreign competition. “If the Commerce inquiry finds the U.S. steel industry is suffering from too much steel imports, I will recommend retaliatory steps.” That could also include tariffs.

 

Trump ordered a probe under Section 232 of the Trade Expansion Act of 1962. This lets the president impose restrictions on imports for reasons of national security.

 

In October 2001, a Commerce Department investigation found “non probative evidence.” Saying that imports of iron ore and semi-finished steel threaten to impair U.S. national security.

The amounts of steel imported, even though big, cannot represent

the national security problem. It is simply called trading” said an analyst.

Steel shares had raised after Trump won the November election amid promises for increased infrastructure spending.

On Thursday shares of steel makers closed between 4 and 8.5 % higher. Steel Dynamics Inc (STLD.O), AK Steel Holding Corp (AKS.N), Cliffs Natural Resources Inc (CLF.N), Allegheny Technologies Inc (ATI.N) and other.

 

Steel Profits in US

 

The United States has nearly 100 plants that make millions of tons of steel annually. Government tried to protect them with WTO regulations. Then came Trump and said this has to be put on another level.

“The artificially low prices caused by excess capacity and unfairly traded imports suppress profits in the American steel industry.”

Also, Nucor Chairman John Ferriola said that the steelmakers welcomed the president’s move.

“We look forward to continuing to work with the president and Secretary Ross. To ensure our trade laws are enforced so that U.S. manufacturers can compete on a level-playing field.”

“There is no doubt that steel plays a role in our national security and the manufacturing of U.S. weapons systems.” (Jeff Bialos, who has worked on steel trade cases in the past.)

 

“But the Department of Defense only consumes a small portion of domestic steel output. And this has decreased over the past decade as composites technology has advanced,” Bialos said.

 

Scissors said the United States has other ways to take on China over steel trade issues, other than invoking national security.

 

“Talking about it as a national security issue – I don’t think it’s necessary and I don’t think it’s justified,” he said.

 

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Vale’s Q1 nickel output falls on operational issues

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About Vale

 

Vale SA is a Brazilian multinational corporation. Engaged in metals and mining. It is one of the largest logistics operators in Brazil. Vale is the largest producer of iron ore and nickel in the world.

Vale’s nickel production declined in the first quarter of 2017. It was affected by planned maintenance shutdowns and operational challenges. Output of finished nickel came to 71,400 tonnes in the first three months of the year. It went down by 2.9% from the corresponding period of 2016.

In the fourth quarter of 2016, the miner produced 83,000 tonnes of nickel. This also represented a 14% decline.

Decline happened “mainly due to planned maintenance shutdowns in Indonesia and Japan. And someoperational challenges”.

Nickel & iron ore production

 

Production at Vale’s Thompson operations came to 4,800 tonnes of nickel in the first quarter of 2017. Down by 22.6% y-o-y and down 33.3% against the fourth quarter of 2016.

This reflects “the scheduled Q1 2017 transition to a single-furnace operation and certain operational issues. Including damaging elements in the founder feed and a hot metal leak in the smelter that resulted in approximately 10 days of production loss”.

Meanwhile, production from the Sudbury mines, in Canada, reached 17,900 tonnes in the first quarter of 2017. 8.2% lower than in the first quarter of 2016 and down by 10.1% from the fourth quarter of 2016.

According to Vale, “Sudbury source production was adversely affected, mainly due to inventory drawdown during the Q4 2016 and Q1 2016 periods”. (Fastmarkets)

Sudbury is expected to transition to a single furnace in the fourth quarter of 2017. It took its furnace number 2 offline in March. For a three-month rebuild and expansion

of its capacity.

“This will be the stove in operation when Sudbury officially transitions to a single furnace. Sudbury will have a three-week surface plant-wide scheduled maintenance shutdown in the second quarter of 2017.”

Nickel production decline

 

Vale’s total nickel production from all its Canadian operations came to 36,100 t in the first quarter of 2017, down by 1.4% from a year earlier and 16.8% lower than in the fourth quarter of 2016.

Meanwhile, Vale’s Indonesian operation saw its nickel in matte production reach 17,200 t in the first quarter of 2017. 2.0% higher than in the same period of 2016. But 12% lower than in the fourth quarter of 2016.

“The weaker nickel in matte production was due to the adverse impact of a planned maintenance works in its kilns and furnaces, if compared with Q4 2016.” (Vale)

Meanwhile, production of finished nickel from PTVI totaled 16,300 t in the first quarter of 2017, down by 8.4% on an annual basis and 25.2% lower than in the fourth quarter of 2016.

The output was negatively affected by a scheduled annual maintenance shutdown at the Matsusaka refinery in Japan.

By contrast, production of finished products from Vale’s New Caledonia operation (VNC) reached a record of 10,200 t in the first three months of 2017.

 

This represents an increase of 5.2% from the first quarter of 2016 and is 14.6% higher than in the fourth quarter of 2016.

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China is creating a state-owned consortium to discuss about Saudi’s Crown Jewel Aramco

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Saudi Aramco

Most popularly known as Aramco, is a Saudi Arabian national petroleum and gas company. Firstly, it is based in Dhahran. Its value has been estimated between US$1.25 trillion and US$10 trillion. Which makes it the world’s most valuable company.

Secondly, Saudi Aramco has the world’s largest proven crude oil reserves. Estimated at more than 260 billion barrels. It also has the largest daily oil production. It owns, operates and develops all energy resources based in Saudi Arabia.

 

Vision 2030

Saudi Arabia’s Deputy Crown Prince, Mohammad bin Salman, has accepted a report from the consulting firm of Mc Kinsey & Co. Named entitled Vision 2030. Seems as his blueprint for turning the Saudi economy from oil. Laying the foundations for advanced private sector. Following, he has also decided to sell a 5-10 percent stake in the country’s national oil company.

Through an initial public offering. A number of international investment banks think the IPO and Aramco’s market capitalization will be in the vicinity of two trillion dollars. Therefore, newly listed company with the largest market capitalization on the planet.

Financial and industry experts do IPOs determination and the pricing of shares. On the basis of the company’s economic and financial data. And prevailing market conditions.

In the case of a ‘standard’ oil company, this would be based on extensive geological findings of retrievable reserves. And ultimately on discounted annual earnings of the company after all applicable taxes. Would these requirements and projections be followed in the same format for an Aramco IPO? Probably not. Because the calculations would require extensive intrusion into Saudi Arabia’s perception of a number of highly queasy covenants.

 

China State-Owned Consortium

China is gathering a consortium that will act as a headstone financier in the initial public offering of Aramco. People present at this meeting will possess high prudence of the discussions. This consortium includes state-owned oil giants and banks and its sovereign wealth funds.

Saudi Aramco is a key exporter to China together with Russia’s Rosneft. With potential $100 billion equity sale that would be the world’s largest to date.

Chinese possible investment, makes it more probably that the national energy giant would search for a listing in Asia. With Hong Kong instantly the favorite among stock markets in the region.

“The IPO will help decide which country can secure the crude supplies from the company and Saudi Arabia going forward.

 

“The company would consider participating in the IPO depending on market conditions.” (Wang Dongjin’s words.) Sinopec says the oil giant would discuss the IPO with Aramco.

 

Asia Register

In conclusion, Saudi authorities plan to list up to 5 percent of Aramco. On the Saudi stock exchange in Riyadh, and also one or more international markets.

Also, the $100 billion IPO price tag is based on Aramco being valued at $2 trillion. There are different versions about valuation of this giant.

“The Saudis are serious about Asia. They can maintain market share there. At the end of the day, Aramco needs to sell its oil. This is just another way of guaranteeing a long-term market.” (Reuters)

 

 

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Rio Tinto’s iron ore output cut by weather conditions

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About the company

 

Rio Tinto is a British-Australian multinational, and one of world’s largest metal and mining corporations. Rio Tinto(RIO.AX) (RIO.L) on Thursday said first-quarter iron production from Australia fell 3 percent. In comparison with the same period a year ago. Mostly due to wet weather at its mines. Heavy rain ruined Rio’s outputs. Despite weakening ore prices it kept its full-year guidance intact.

 

Pilbara

The Pilbara is a large, dry, thinly populated region in the north of Western Australia. Also It is known for its Aboriginal peoples. Furthermore, having ancient landscapes, the red earth, its vast mineral deposits, in particular iron ore. Pilbara mines output totaled 77.2 million tonnes, the company said. Full-year shipping guidance was kept at 330 million-340 million tonnes.

Shipments from Australia

 

Shipments from the Australian mines in the first quarter were flat at 76.7 million tonnes against the year-ago period, but down 13 percent from the previous quarter.

Ship loading was impacted by a cyclone, with parts of its rail line hit by heavy rainfall.

“Despite these disruptions, shipments were in line with the first quarter of 2016 and guidance for 2017 remains at 330 to 340 million tonnes,” the company said.

 

Iron ore producers are facing a promptly cut down of the iron ore prices. Rio Tinto and rivals Vale (VALE5.SA), BHP Billiton (BHP.AX) (BLT.L) and Fortescue Metals Group (FMG.AX) . It is happening amid waning demand from China, the biggest market for ore.

China imported 90.3 million tonnes of iron ore in March this year. China has the biggest appetite for iron ore and also the biggest market.

The worldwide iron ore surplus reached 70 million tonnes last year – more than total U.S. consumption last year – and could balloon to 90 million tonnes in 2017, according to Citigroup.

Iron ore prices are down more than 33 percent since a mid-February peak of $94.86 a tonne and forecasters are warning of a further pullback. (Reuters)

 

Iron ore prices would backtrack to U$55 a tonne in the fourth quarter. Australia’s Department of Industry, Innovation and Science predicted. Next year’s forecast calls for iron ore prices to reach $51.60 a tonne at the end of the year.

 

Other minerals

In other minerals, Rio Tinto stuck to a full-year target of producing between 3.5 million 3.7 million tonnes of aluminum following a 2 percent rise in first-quarter production.

 

Mined copper guidance was subdued to 500,000-550,000 tonnes from as much as 665,000 tonnes as a result of a strike at the Escondida mine in Chile. And the curtailment of production at the Grasberg mine in Indonesia. While Chile is the world’s biggest copper producer, and sales of the metal make up for about 60% its export earnings. In Escondida mine strike, workers gave up because they asked for different conditions.

In conclusion, refined copper production guidance remains unchanged at 185,000 to 225,000 Rio said.

 

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