Oil

Indian steel companies are asking for safeguards and some US hedge funds are placing big bear bets on domestic oil prices.

Tata, SAIL Want Safeguard Duties

Indian steel companies reeling under mounting imports from China, South Korea and Japan have urged the government to impose safeguard duties, to protect the domestic industry from the onslaught of cheaper imports, the Economic Times reports. Safeguards are measures designed specifically to protect local industry that go beyond anti-dumping or countervailing duties as outlined by the World Trade Organization.

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Safeguard duties are levied on imports as a temporary measure by the government to protect the local industry when they perceive a threat from a sudden surge in imports. State-owned Steel Authority of India (SAIL) and private steel makers such as Tata Steel have jointly filed a petition with the Director General of Safeguards (DGS) seeking the duties.

Hedge Funds Betting Against Oil

A relatively small group of hedge fund managers has placed a record bet on US oil prices declining further in the months ahead.

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Hedge funds and other money managers had accumulated gross short futures and options positions totaling 163 million barrels in the main NYMEX light sweet crude contract by Aug. 11, according to data released by the Commodity Futures Trading Commission.

Welcome to crazy MetalMiner’s low, low price week of falling metal prices, oil prices and devalued currency.

EVERYTHING MUST GO! Or Not…

…maybe prices will be lower next week? Who can tell in this crazy market? Check out our Metal Price Outlook for MetalMiner’s expert opinion. Free sample in the link.

Bears Everywhere

Our August MMI Report shows that nine of the 10 metals we track have hit an all-time low since we started tracking them in January 2012. It’s been a gradual fall for sub-indexes such as raw steels and renewables, whereas aluminum and copper suffered big drops this month that coincided with historic London Metal Exchange lows.

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The strong dollar continues to drag down all commodities, shunting investment dollars elsewhere and depressing prices of investment metals such as gold, which hit a six-year low last quarter, according to the World Gold Council. Guess what else hit a six-year low? Oil, of course! Read more

Two massive explosions damaged a major port in China and with oil prices falling again, US shale producers are looking to make a deal.

Tianjin Explosions Damage Port Terminal

Two massive explosions at the Chinese port of Tianjin that ripped through parts of the terminal have disrupted iron ore import operations, as well as disrupting oil tanker arrivals and departures at this gateway to northeast China.

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The blasts killed at least 44 people and injured more than 500, officials and state-run media said on Thursday.

Crude Oil Prices Bring Shale Extractors Back to the Table

A renewed slide in crude oil prices is having the effect US energy sector dealmakers and private equity managers have been looking for: oil companies are now returning calls from potential buyers. Throughout much of the crude market rout that started in mid-2014 oil firms could rely on generous capital markets investors betting on a quick recovery in prices, which made any asset sales look unattractive.

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Oil prices are again at the cheapest point in six years. Oil fell sharply right after prices broke key support levels last month. The rebound in prices during the first half has already vanished, proving again that trying to fish out price bottoms in a falling market is not a good idea.

Crude Oil CME price 1 year out

CME crude oil price, one year out. Graph: MetalMiner analysis of stockcharts.com data.

Pessimism is spreading among investors about China’s economy.

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The Chinese stock market crash just two months ago already signaled that something was rotten in China. If that wasn’t enough, China devaluating its currency on Tuesday is only boosting many parties’ conviction that global demand can’t catch up with a continuous oversupply of crude.

The yuan’s plunge is also bearish for oil because it makes China’s oil imports more expensive, which means that, most likely, China is not going to come rescue the oversupplied global oil market anytime soon.

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The latest data show that production is at historic highs in the US and OPEC lifted its total output in July to the highest level in three years. The cartel is responsible for more than a third of global oil production. Besides, the end of Iran’s oil export ban will likely only add volume to the already oversupplied market.

What This Means For Metal Buyers

Falling energy prices lower the cost of producing other commodities, adding more pessimism to the already bearish commodity market. Metal prices remain under pressure.

There is growing speculation that a hot-rolled trade case will be filed by US producers next week. US oil refiners, however, has found a sweet spot.

Hot-Rolled Dumping Case Next Week?

The anticipated filing next week of a hot-rolled trade case may yet perk up US flat-rolled pricing, Platts reported, though conditions are steadily deteriorating, market sources said Thursday.

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One buyer told Platts “All this stuff is adding up, but the buyer is yawning because it’s not affecting the market,” he said. “But it will, and they’re going to get caught. It’s almost like the fuse has been lit, but it’s a long fuse.”

Perfect Conditions for US Oil Refiners

Low crude prices and strong demand for gasoline are creating near-perfect conditions for oil refineries across the United States, especially those geared towards maximizing gasoline production.Valero, the country’s largest independent refiner, made a gross margin of more than $13 on every barrel of oil processed in the second quarter, and a net margin of almost $8.50, both the highest since 2007.

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Domestic steel producers have filed new anti-dumping petitions against eight countries, charging them with unfairly subsidizing steel exports into the US. Also, the Senate Energy Committee has advanced a bill that would lift the 40-year US oil export ban but it faces a tough road with the full Senate.

Domestic Producers File New Steel Anti-Dumping Cases

AK Steel Corp., ArcelorMittal USA LLC, Nucor Corp., Steel Dynamics, Inc., and U.S. Steel Corpfiled petitions recently with the Department of Commerce  and the US International Trade Commission charging that unfairly-traded imports of cold-rolled steel flat products from Brazil, China, India, Japan, South Korea, Netherlands, Russia and the United Kingdom are causing material injury to the domestic industry.

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The petitions allege that producers in each of the eight countries are dumping cold-rolled steel in the US market at substantial margins, all above 42% government subsidy.

Bill to Lift US Oil Export Ban Advances

The US Senate Energy Committee on Thursday narrowly passed a bill to lift a 40-year-old ban on the export of crude oil, but the measure faces an uphill battle in getting passed by the full Senate, Reuters reported. The bill would allow the US to export oil and boost state revenue-sharing for offshore oil and gas drilling. It passed along party lines by a vote of 12-10.

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A historic deal on nuclear and atomic energy between Iran and several nations is causing havoc with oil markets this morning. Alcoa’s CEO claims China will crack down on the semi-finished aluminum trade.

Iran Deal Reached

Crude oil prices initially fell by as much as 2.3% to $50.98 a barrel as investors reacted to the freshly-inked deal between Iran and six world powers which would open Iranian oil up to new markets. However, oil bounced off those levels as investors weigh the details of the agreement and whether or not it will overcome deep skepticism in Congress. Oil was recently trading unchanged at $52.20 a barrel.

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Experts have warned that the deal could lead to a flood of new oil supply from Iran – the Islamic Republic has 30 million of barrels of crude in storage and ready for sale, according to FACTS Global Energy, an industry consultancy.

End of China’s Untaxed Aluminum Semi Industry?

Alcoa CEO Klaus Kleinfeld said it was his “strong assumption” that the Chinese authorities will soon try to shut down China’s untaxed semi-finished aluminum exporting industry.

“I’ve last been in China four weeks ago or so, and had a lot of conversations also with high level folks. They are very clear that this is not in line with their policy, and that they are deeply looking into this,” Keinfeld told Reuters’ Andy Home.

This would make sense because not only do semis skirt China’s aluminum 15% primary metal export tax but they also qualify for a rebate of China’s value-added tax.

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Silver came close to breaking a key low on Friday and an Iran deal could exacerbate the oil surplus.

Silver Close to $15/Ounce

US silver finished the day at $15.39 per ounce on Friday and it flirted with numbers close to $15 several times in the trading day.

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It is currently trading at $15.62/ounce.

Iran Deal Could Add to Oil Surplus

Any nuclear deal between Iran and six world powers loosening sanctions against Tehran has the potential to  flood an oversupplied oil market with more fuel. Other commodity sectors such as cement and steel would see a rise in demand as Iran works to revitalize its economy. Officials said on Sunday they were close to a deal that would bring sanctions relief in exchange for curbs to Tehran’s nuclear program.

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Oil and gas take center stage today in MetalCrawler as the US makes gains in total production and refinery capacity.

US Beats Russia as Top Oil and Gas Producer

The US has topped Russia as the biggest oil and natural-gas producer in a demonstration of the seismic shifts in the world energy landscape emanating from America’s shale fields.

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US oil production rose to a record last year, gaining 1.6 million barrels a day, according to BP’s Statistical Review of World Energy released recently. Gas output also climbed, putting America ahead of Russia as a producer of the hydrocarbons combined.

The data showing the U.S.’s emergence as the top driller confirms a trend that’s helped the world’s largest economy reduce imports, caused a slump in global energy prices and shifted the country’s foreign policy priorities.

US Refinery Capacity Up, Too

US operable atmospheric crude distillation (CDU) capacity increased by 0.2% in 2014, reaching 18 million barrels per  day (b/d) according to the Energy Information Administration‘s recently released annual Refinery Capacity Report. This was the second consecutive year of modest capacity growth following the 2.9% increase in 2012 that resulted from the restart of East Coast refineries that had closed in 2011.

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After a flurry of interest in the price of oil as levels bounced back up to $65/barrel from below $50 at the turn of the year, most of us have been quietly content to fill up for less at the gas pumps and patiently wait for the heralded but still unseen benefit to the economy of lower oil and natural gas prices.

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Political events may be about to change that cozy situation as Iran nears its crucial end of June deadline to reach a binding agreement on its nuclear program, the Telegraph reports.

Removal of the US- and EU-led sanctions against Iran could pave the way for an immediate relaxation of sales restrictions and opening of the country’s massive oil and gas reserves to development by International Oil and Gas Companies (IOCs). Iran is reported to be scoping a new contract termed the Iranian Petroleum Contract designed to allow major international oil companies a revenue-sharing deal in return for financial and technological investment in the country’s oil and gas sector. Iran holds the world’s fourth-largest oil reserves and the second-largest natural gas reserves. Production of both has fallen sharply since sanctions as this graph shows.

Source: Telegraph.com

Source: Telegraph.com

But this could be reversed over time with western expertise and technology. According to Energy Information Administration data quoted by the Telegraph, Iran could achieve an additional 1 million barrels per day of production in short order, rising over time as investment re-opened old fields and increased flow rates from existing fields. Read more