Friday, September 11, 2015

Copper slips, still set for biggest weekly rise since May

Copper slips, still set for biggest weekly rise since May

[LONDON] Copper fell on Friday on persistent fears about a hard landing in top consumer China and on a possible US interest rate rise next week, although the metal was still set for its biggest weekly gain since May thanks to output cut announcements.
Copper hit a seven-week high this week, mostly due to an announcement by commodities giant Glencore that it plans to cut 400,000 tonnes of output over the next 18 months.
US-listed Freeport became the first big miner to cut output last month. On Friday it revised down its 2015 forecast for copper concentrate sales from its Indonesian unit by 3 per cent.
But weighing on investor nerves again was China, where traders said premiums for term shipments of refined copper cathode to the country were likely to drop further in 2016 after falling this year. "The China worry hasn't gone away. Glencore was positive but it's not enough to solve copper's problem which is a combination of slowing demand growth and quite a lot of new supply coming on stream," said BNP Paribas strategist Stephen Briggs.
Three-month copper on the London Metal Exchange traded down 1.2 per cent in rings at $5,335 a tonne, but was set to close the week up some 4 per cent. The metal has risen about 10 per cent since hitting a six-year low of US$4,855 on Aug. 24.
Making dollar-priced copper more costly for non-US investors, the dollar rose versus a currency basket ahead of Thursday's rate decision from the U.S. Federal Reserve.
The US labour market appeared to gain momentum in early September, but weak inflation pressures may complicate the Fed's decision whether to increase rates.
Investors are also awaiting Chinese industrial output, retail sales and investment data on Sunday for clues on whether the world's second-largest economy is still losing momentum.
In a bid to boost flagging growth, China's economic planner approved on Friday 143 billion yuan (US$22.4 billion) worth of new railway projects.
Aluminium traded down 0.2 per cent at US$1,634 a tonne but was on course for gains of around 1.5 per cent this week.
Struggling aluminium producers are pinning their hopes on the United States winning a trade dispute lodged at the World Trade Organisation against Chinese export subsidies.
Lead was last bid down 1 per cent at US$1,713 a tonne, but was on course for gains of 3 per cent this week. Daily LME data showed lead stocks fell to 168,600 - down some 24 percent since July.
Tin was last bid down 0.5 per cent at US$15,450 a tonne, nickel was last bid down 2.3 percent at US$10,230 a tonne and zinc was last bid down 1 percent at US$1,796 a tonne.
REUTER
S

Indonesia increases investor share for oil, gas blocks amid low oil prices

Indonesia increases investor share for oil, gas blocks amid low oil prices

[JAKARTA] Indonesia is raising the share of production on offer to oil and gas investors in its latest auction of exploration assets, after a string of companies relinquished assets following a more than 50 per cent drop in oil prices since June last year.
Typically the production split is set at 15-85 for oil, where 15 per cent of output goes to the contractor and the rest to the government. In the latest bidding round, companies are being offered shares of up to more than double at 35 per cent for oil, upstream oil and gas director Djoko Siswanto said on Friday. For gas, the share for the oil companies has been hiked to 35-40 per cent from 30 per cent normally.
"It's intended to attract investors (and) to make these blocks attractive to develop and economically viable for investment return," Mr Siswanto told Reuters, referring to the current drop in oil prices.
Mr Siswanto added that tax holidays were also being offered to sweeten deals. The government is easing its taxes on land and buildings during the exploration period, and has simplified its permits, he said.
Higher shares in oil and gas production are normally given for exploration blocks in deepwater or that are judged to be less prospective or high risk, but the latest offers exceed this, Mr Siswanto said, adding that the government would also be"more flexible" in negotiating the equity split.
This year majors ExxonMobil and BP have both handed back exploration blocks to Indonesia, and Swedish independent Lundin Petroleum has said it is exiting the country.
ConocoPhillips said last month it is reviewing its portfolio in Indonesia and was expected to soon seek buyers for a stake its South Natuna Sea Block B operation.
Earlier this month Indonesia said it would offer 21 oil and gas blocks, including 13 conventional ones, in 2016, up from 11 this year.
Indonesia's crude oil output peaked around 1.7 million barrels per day in the mid-1990s and has fallen to nearly half that as old fields have matured and died. The government has been trying to revive the flagging production for years but has had difficulty in attracting oil and gas investors, at least partly because of regulatory uncertainty.
Oil prices have fallen to less than US$50 a barrel since June last year, from a 2014 peak above US$115, because of a global crude glut and a shaky Chinese economy.
REUTERS

HK regulator blasts Moody's for "shoddy" report on China firms

HK regulator blasts Moody's for "shoddy" report on China firms

[HONG KONG] Hong Kong's securities regulator said on Friday a Moody's Corp report questioning corporate governance at 49 Chinese firms was"shoddy" and "unprofessional" - a report the ratings agency said it stood by even though it contained errors.
The Securities and Futures Commission (SFC), citing internal Moody's emails, said articles critical of Chinese companies by international newspapers and research firms had prompted Moody's to "scrub" the list of Chinese companies whose credit it rated.
Credit ratings help determine a company's cost of borrowing and are used by fund managers to guide investment decisions.
"The work was shoddy, unprofessional and done in the manner that really doesn't befit a reputable rating agency that is being regulated," SFC counsel Ben Yu said at a hearing in the securities and futures appeals tribunal for Moody's appeal of a US$3 million penalty.
Moody's said there were some errors in its so-called red flags report in July 2011 and that they were not serious enough to warrant a HK$6 million (US$774,213) fine - part of the penalty by the SFC, which said the mistakes were a serious breach of due diligence standards.
Moody's said the methodology of the report contained 12 input and mathematical errors. Its counsel, Adrian Huggins, told the tribunal "those errors did not render the whole red flags framework fundamentally flawed."
"Errors did not have a material impact on overall accuracy of the report," Mr Huggins said.
The SFC fine is the first disciplinary action taken against a credit rating agency since their activities became directly regulated by the SFC in June 2011. It could have major implications for the types of services credit rating firms are able to offer in the financial centre, analysts said.
REUTERS

Taiwan's Evergreen orders 20 containerships in a month

Taiwan's Evergreen orders 20 containerships in a month

[TAIPEI] Taiwan's Evergreen Group on Friday ordered 10 containerships from Japan's largest shipbuilder, the second similar deal in a month, as it eyes trade growth potential from a planned regional trade bloc.
The order with Japan's Imabari Shipbuilding brought to 20 the number of 2,800-TEU (twenty-foot equivalent) B-type container vessels Evergreen has ordered in a month.
The world's fourth largest shipping firm signed a similar contract with Taiwan's CSBC Corp last month.
No exact value of the two deals were revealed, but according to a stock filing to the Taiwan Stock Exchange by Evergreen, each vessel is to cost at least $36 million, the combined value of the two deals estimated at least US$720 million.
The fleet of 20 ships, all due to be delivered by the first half of 2019, will be deployed in intra-Asia trade, according to Evergreen.
"With the RCEP expecting to take effect, the trade barriers between ASEAN members and China, Japan, South Korea, New Zealand, Australia and India will fall off," said Evergreen group's vice chairman Bronson Hsieh while clinching the deal last month.
Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement between the 10 member countries of the Association of Southeast Asian Nations and the six countries with which ASEAN has existing free trade pacts.
"Evergreen's decision to build the new fleet of ships are eyeing the growth opportunities of the anticipated free trade pact," he added.
The ships, to be equipped with an electronic-controlled fuel injection engine, can reduce emissions by around 20 per cent in comparison with vessels of traditional designs, Evergreen said.
AFP

GE2015: PAP scores stunning victory; opposition sees support erode

GE2015: PAP scores stunning victory; opposition sees support erode


[SINGAPORE] The People's Action Party (PAP) powered to a stunning win in the 2015 general election, lifting its overall vote share by 9.72 percentage points to 69.86 per cent - and reversing a two-election slide in their popular vote.
Meanwhile, the main opposition party, the Workers' Party (WP), saw its support erode with narrower margins than before, and the loss of one single-member constituency (SMC).
The final results showed a nation-wide resurgence in support for the ruling party - a surprising outcome to many, given its 2011 vote share of 60.14 per cent, which was its weakest showing since independence.
Of the 89 seats in Parliament, 83 will be held by PAP, and six by WP.



In a press conference after the final results came in, Prime Minister Lee Hsien Loong said that the results "exceeded (PAP's) expectations". And while the party failed to win over Aljunied GRC and Hougang SMC, Mr Lee said that one day, it will claim them back.
In his victory speech in Marine Parade group representation constituency (GRC), Emeritus Senior Minister Goh Chok Tong said: "The people have spoken ... They have given a very strong mandate to (Mr Lee) and his team."
The ruling party's gain of an additional seat is thanks to its wresting back of Punggol East SMC from WP. PAP's Charles Chong won 51.76 per cent of the vote there - 1,156 votes more than the 48.24 per cent received by the incumbent WP's Lee Li Lian.
Still, WP retained its stronghold in the five-member Aljunied group representation constituency (GRC) and Hougang SMC - albeit with lesser margins than in 2011. In Aljunied GRC, WP won with 50.95 per cent of the votes, with PAP receiving 49.05 per cent.
Aljunied GRC was such a close call that it saw a recount, and was the last constituency to have its results confirmed at 3.10am on Saturday (Sept 12). The five-member WP slate, comprising Sylvia Lim, Low Thia Khiang, Chen Show Mao, Pritam Singh, and Muhamad Faisal Abdul Manap, retain their seats in Parliament.
As for Hougang SMC, WP's Png Eng Huat won 57.69 per cent of the vote, beating PAP's Lee Hong Chuang who took 42.31 per cent - the ruling party's worst showing.
Despite the loss of Punggol East SMC, Low Thia Khiang told reporters that he is “satisfied with the performance of WP,” and noted the “massive swing” in favour of the ruling party.
Still, even as he congratulated PAP for gaining a “strong mandate to configure the fourth generation of leaders”, he stressed the need for the government to build trust between citizens and national institutions – including the civil service, the judiciary, and the mainstream media.
Apart from Aljunied GRC and Hougang SMC, the PAP swept up decisive victories island-wide. It captured over 70 per cent of the vote share in 15 constituencies - a massive improvement from its 2011 showing, which saw only Hong Kah North SMC breaching the 70 per cent mark (and even then, only marginally at 70.61 per cent).
In fact, against the 2011 elections alone, PAP gained in every constituency except Punggol East. There, its vote share was 2.78 percentage points lower at 51.76 per cent; but against the 2013 by-election - which it had lost to WP's Ms Lee - PAP gained 8.03 percentage points.
Among PAP's surprise wins was its victory in Fengshan SMC. Most analysts had earlier agreed that the new SMC - carved out from East Coast GRC - was most within WP's reach. Instead, long-time grassroots volunteer Cheryl Chan won the seat by garnering 57.52 per cent of the vote share, ahead of WP candidate Dennis Tan's 42.48 per cent.
In addition, East Coast GRC saw PAP take 60.73 per cent of the vote, leaving WP with 39.27 per cent. The four-seat constituency was the PAP's worst-performing GRC that won in GE2011, and was predicted to be one of the most hotly-contested areas in this election.
The PAP's East Coast GRC team - comprising Manpower Minister Lim Swee Say, Senior Minister of State for Trade and Industry and National Development Lee Yi Shyan, Minister of State for National Development and Defence Mohamad Maliki Osman, and two-term backbencher Jessica Tan - beat WP's Gerald Giam, Daniel Goh, Leon Perera and Mohamed Fairoz Shariff.
PAP's best-performing constituency was Jurong GRC, which was led by Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam. It garnered 79.28 per cent of votes, compared to Singaporeans First's (SingFirst's) 20.72 per cent.
The second- and third-best PAP areas were Ang Mo Kio GRC and West Coast GRC respectively. The former, led by Mr Lee, saw the PAP receive a 78.63 per cent vote share, while the ruling party captured 78.57 per cent in the latter.
Noting how the PAP has reclaimed a significant swathe of the ground it had lost before, DBS economist Irvin Seah told The Business Times: "This is not just a vote of confidence but more so an endorsement of the policy direction over the past few years, where policies have become more inclusive and people-focused."
Mr Lee also told reporters at the post-results press conference that one of the first orders of business is to assemble his new cabinet - something he hopes to do in two weeks' time. He said he will ensure that younger members are put into positions of greater responsibility quickly, since he wants to prepare Singapore's fourth generation of leaders in this term of government.
Meanwhile, three SMC candidates will lose their S$14,500 election deposits, after receiving less than 12.5 per cent of the votes in their constituencies. Independent candidates Han Hui Hui (Radin Mas SMC) and Samir Salim Neji (Bukit Batok SMC), as well as the National Solidarity Party's Cheo Chai Chen (MacPherson SMC) garnered only 10.04 per cent, 0.6 per cent, and 0.82 per cent of the votes respectively
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US$20 oil possible for Goldman as forecasts cut on growing glut

US$20 oil possible for Goldman as forecasts cut on growing glut

[NEW YORK] Goldman Sachs Group Inc cut its oil price forecasts as it sees a global glut persisting into 2016 on further Opec production growth that may force prices to drop as low as US$20 a barrel.
The bank trimmed its 2016 estimate for West Texas Intermediate to US$45 a barrel, from a May projection of US$57, according to an e-mailed research note Friday. Goldman also reduced its 2016 Brent crude prediction to US$49.50 a barrel, from US$62.
"The oil market is even more oversupplied than we had expected and we now forecast this surplus to persist in 2016," Goldman analysts including Damien Courvalin wrote in the report. "Given our updated forecast for a more oversupplied oil market in 2016, we are lowering our oil price forecast once again." If production doesn't slow, the bank sees the potential for prices to fall to as low as US$20 a barrel once the surplus overwhelms logistical and storage capacity.
"Such a drop would prove transient and help to immediately rebalance the supply and demand for barrels," the analysts wrote.
Oil in New York has slumped more than 25 per cent from its June closing peak amid signs the oversupply will be prolonged. Leading members of the Organization of Petroleum Exporting Countries are sustaining output, while Iran seeks to boost supply once international sanctions are lifted. US stockpiles remain about 100 million barrels above the five-year seasonal average.
WTI for October delivery fell as much as 45 cents, or 1 per cent, to US$45.47 a barrel on the New York Mercantile Exchange and is heading for a weekly decline. Brent for October settlement was 6 cents lower at US$48.83.
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