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Coal’s comeback proves a winner for Wesfarmers

Wesfarmers’ coal mining business is doing better than originally expected thanks to higher coal prices and improved output. The Perth conglomerate, which owns a string of retailers including core business Coles supermarkets, lifted its first-half earnings forecast for its coal mining business. The company expects the business to bring in $135 million to $140 million in earnings in the first half of 2017, compared to its “broadly breakeven” earnings forecast in October. Wesfarmers said the better-than-expected earnings outlook reflects strong production in the second quarter. “This increase in production supported ...

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China to cap coal consumption at 4.1 bln tonnes by 2020

By 2020, the share of coal in the country’s energy mix should fall below 58 percent, said the energy sector’s five-year plan for 2016-2020, released by the National Development and Reform Commission and the National Energy Administration. Coal accounted for 64 percent of primary energy in 2015. By 2020, China’s total energy consumption will be capped at 5 billion tonnes of coal equivalent, representing an annual rise of about 2.5 percent between 2016 and 2020. The share of non-fossil fuels will rise to more than 15 percent and the share ...

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China steel, iron ore: A new year, a new bubble: Russell

The new year has started with something familiar from the last – a bubble in Chinese iron ore and steel prices. The most-traded iron ore contract on the Dalian Commodity Exchange leapt by as much as 8 percent on Monday, in the process reaching a three-year high of 657.5 yuan ($95.29) a tonne. Its gain so far this year is about 18 percent and the contract is around four times higher than the low reached in July 2015. It’s much the same story with Shanghai steel rebar, the benchmark construction ...

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Coal contract prices hit their highest level in almost six years

Contract prices for coking coal have surged to their highest levels since 2011. Coking coal is a crucial ingredient in the steel making process but prices for the December 2016 quarter were relatively low at $US200 per tonne. Yet figures for this year’s March quarter have been locked in at $US285, a jump research analyst Gavin Wendt said, was still being driven by Chinese buyers. “We have seen tremendous demand strength out of China, much more significant really than the market had anticipated, certainly through the later price of 2016,” ...

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In latest move, China halts over 100 coal power projects

China’s energy regulator has ordered 11 provinces to stop more than 100 coal-fired power projects, with a combined installed capacity of more than 100 gigawatts, its latest dramatic step to curb the use of fossil fuels in the world’s top energy market. In a document issued on Jan. 14, financial media group Caixin reported, the National Energy Administration (NEA) suspended the coal projects, some of which were already under construction. The projects worth some 430 billion yuan ($62 billion) were to have been spread across provinces and autonomous regions including ...

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China Iron Ore Prices to Hold Firm on Stockpiling Demand, SMM Predicts

Iron ore prices in China’s domestic market are expected to hold firm this week, Shanghai Metals Market predicts. “Pre-holiday stockpiling demand by domestic steel mills and falling supply will allow domestic concentrates prices to hold firm,” SMM iron ore analyst says. With the nearing of 2017 Chinese New Year holiday, domestic steel mills have started replenishing goods, which sending up prices in some regions, and this week, downstream purchases are expected to grow, and this will support domestic ores. Moreover, supply of domestic concentrates is falling as utilization rates at ...

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Don’t Get Too Excited About China’s Commodity Reflation, With Supply Set to Rise

The surge in prices of a raft of commodities in the past several months, propelled by China, will probably wane this year thanks to expanded production, according to Bank of America Merrill Lynch. A sharp rally seen in products from thermal and coking-coal futures to glass and even garlic since mid-2016 carried signs that China’s great ball of excess liquidity had found its way into commodities. Rather than speculative investors, it’s good old fashioned laws of supply and demand that have propelled prices, Helen Qiao and fellow economists at Bank ...

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Dalian iron ore pulls back from 3-yr high as steel steadies

Chinese iron ore futures pulled back from a three-year high on Tuesday as steel prices steadied after gaining more than 14 percent so far this month on Beijing’s renewal of its push to slim down a bloated industry. Expectations that China will continue to reduce excess steel capacity could keep prices of the metal elevated, spurring mills to replenish stocks of raw materials including iron ore. The most-traded iron ore on the Dalian Commodity Exchange jumped more than 4 percent to hit an intraday peak of 664.50 yuan ($96) a ...

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Iron Ore Earns ‘Big Puzzle’ Tag as Rally Flummoxes Bears

Iron ore’s rally is foxing even the experts. The commodity’s surge to the highest level in more than two years at a time of ample supplies is an enigma for steelmakers globally and prices aren’t sustainable at these levels, according to India’s second-biggest mill. “Iron pricing is a big puzzle to all of us, as to why it is going up to $81 when there is a robust supply” and port inventories in China are at a record, JSW Steel Ltd. Joint Managing Director Seshagiri Rao said in an interview. ...

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Soybeans at 7-wk high as heavy rains hit Argentina’s crop

Chicago soybean futures rose for a third consecutive session on Tuesday, climbing to a seven-week top as heavy rains across Argentina’s central crop belt raised concerns over yield losses. Corn and wheat also ticked higher. The Chicago Board of Trade most-active soybean contract gained 1.2 percent to $10.58-1/2 a bushel by 0338 GMT, after earlier touching its highest since Nov. 28 at $10.62-1/4. The oilseed had firmed 0.6 percent on Friday, with markets closed on Monday for a U.S. public holiday. Corn rose 0.7 percent to $3.61 a bushel, strongest ...

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Brazil to boost new crop financing by about 20 percent: Temer

Brazil will increase a subsidized credit line available to farmers to prepare for the 2017-2018 crop by about one-fifth to 12 billion reais ($3.72 billion), President Michel Temer told Reuters. The new crop financing will allow Brazilian producers to purchase agricultural inputs such as seeds, fertilizers and pesticides at reduced interest rates to better plan future production. Last year, the government made 10 billion reais available to prepare for the 2016-2017 crop, which is on track to break records. The agricultural sector has provided a rare glimmer of hope amid ...

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Commodities expected to fetch higher prices this year

The country’s commodities, particularly palm oil, are expected to enjoy higher prices in 2017, with the increase in export revenue set to reach up to 8%. Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong said the average price of crude palm oil (CPO) for this year would range between RM2,700 and RM2,800 per tonne, slightly higher than the average RM2,653 per tonne last year. Rubber prices for the first three months of the year are expected to be around RM8 per kilo, double the price recorded during the ...

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Spurt in economic activity will give boost to base metals market

Metals have their own fundamental to consider including the wider geo-political issues and many other con-currents impacting the markets. These include the uncertainty about the Chinese economy, fallout from the Brexit, banks strategies if negative interest rates do not provide the required boost and how markets will react as the new US president takes over. In spite of all these uncertainties metals are choosing to ignore a great deal of it. As metal prices have started to rally, having fallen a long way in recent years, there is still a ...

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Brazil’s Dec crude steel production down 12.7% from year ago

Brazil’s crude steel production in December was down 12.7% at 2.14 million mt from 2.46 million mt a year earlier, steel institute Aco Brasil said. In full-year 2016, crude steel production totaled 30.21 million mt, compared to 33.24 million mt in 2015. Production of finished steel products in December totaled 1.39 million mt, down 7.6% from 1.51 million mt a year earlier, Aco Brasil said. In all 2016, production of finished steel products was 20.89 million mt, compared with 22.62 million mt in 2015. Finished steel shipments to the domestic ...

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Rio Tinto payout hopes brighten on solid outlook for 2017

Global miner Rio Tinto could be in a position to reward shareholders with a strong dividend hike or even a share buyback next year as it benefits from a sharp rise in metals prices, fund managers and analysts said on Tuesday. Rio Tinto’s decision last year to pursue “value over volume” at its mines to ensure maximum shareholder returns has put the world’s second biggest mining company at the forefront of the commodities price revival. It reported output and shipments for 2016 in line with its guidance on Tuesday and ...

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