Iron ore likely to bust through $80 as Chinese futures surge
Iron ore prices continued to rally on Tuesday, taking the benchmark spot price to within touching distance of the $80 a tonne level.
And it looks like it may get there on Wednesday if Chinese futures are anything to go by.
According to Metal Bulletin, the spot price for 62% fines rose by a further 1.4% to $79.73 a tonne, extending its gain in 2016 to 83%.
It now sits just 1.4% below the multi-year peak of $80.83 a tonne struck on November 28.
Like the benchmark price, the prices for both lower and higher grade ore rallied on Tuesday.
Analysts at Metal Bulletin said that market activity was quiet, potentially due to a slowdown in the wild swings in Chinese futures.
However, that was then, not now, with iron ore futures traders buying with renewed gusto in the overnight session, potentially laying the foundation for the benchmark spot price to rise above the $80 a tonne level on Wednesday.
The most actively traded May 2017 contract on the Dalian Commodities Exchange jumped by 3.22%, closing the session at 624.5 yuan.
Rebar, coking coal and coke futures also added 2.95%, 1.29% and 2.08% respectively.
Trade in Chinese futures will resume at Midday AEDT.
http://www.businessinsider.com.au/iron-ore-likely-to-bust-through-80-as-chinese-futures-surge-2016-12
Drax moves away from coal to bid on Opus Energy and gas plants
Britain’s largest coal power producer, Drax, is bidding to buy Opus Energy and four gas stations in a move away from its coal legacy that has been welcomed by investors.
Drax said it has made a £340m offer for business energy provider Opus Energy, an acquisition that will create Britain’s fifth-biggest business energy retailer in combination with Drax’s existing Haven Power customers.
Drax’s planned investments were welcomed by the City, with shares closing up 12% at 311p – the biggest riser of the day on the FTSE 250.
The Opus deal is subject to the European commission approving a UK government contract to support the conversion of one of its coal units to running on biomass.
Drax, whose huge power plant in Yorkshire was once Europe’s most polluting coal plant, has been converting its coal-fired station to biomass, but a government decision to cut subsidies for renewable energy has hampered this strategy. This triggered a strategic review last year and Tuesday’s announcements show the power producer will shift focus to supplying energy to end consumers and providing backup electricity to complement growing wind and solar power output.
Britain faces a supply crunch over the coming winters as nuclear reactors age and coal plants are forced to close by 2025. The government is trying to encourage new gas plants to be built to help plug the supply gap.
“These initiatives mark an important step in delivering our strategy ... through greater diversification of the businesses,” said the Drax chief executive, Dorothy Thompson, adding that five of its biggest shareholders supported the Opus acquisition.
Drax said it would also pay £18.5m to buy four open-cycle gas turbine (OCGT) projects with a capacity of about 1.2GW from Watt Power, a unit of Noble Group. The plants, which are yet to be built, will bid to supply backup electricity in 2020-21 in a government-led auction which started on Tuesday.
“We see today’s announcement as a clear positive which goes a long way to addressing some of the concerns that underpin our ‘underperform’ recommendation [on Drax shares],” said John Musk, managing director of European utilities research at RBC Capital Markets.
The company said it still expects full-year Ebitda to be around the bottom of the range of current market forecasts. Market forecasts in July were for £146m to £185m.
China railway bureaus to sign long-term coal contracts: media
China's state-owned railway departments will sign long-term transport contracts with coal suppliers and buyers to help implement annual coal supply deals, in the latest bid to meet winter demand and tame a months-long price surge, the China Securities Journal reported on Wednesday.
For annual supply contracts of more than 200,000 tonnes, railway bureaus will sign transport deals with key miners, the paper cited a senior railway official as saying following a coal trade fair at the largest coal port Qinhuangdao last week.
For larger contracts, with annual supply of over half a million tonnes that have fixed departure and arrival points, railway departments will look at signing deals with both the coal miners and buyers.
Miners and buyers this month started executing term supply agreements, with one of the first contracts priced at 580 yuan (S$120) per tonne for 5,500 kilocalorie/kg thermal coal, Shanghai Securities Journal reported on Wednesday, a level still significantly below spot rates.
China, the world's top coal producer and consumer, has in recent months been putting in place measures to prevent a winter shortage of coal, a concern following earlier government-enforced mine closures.
The government has told key miners to restart production and forced miners and utilities to sign contracts below prevailing spot rates.
Warm Regards
Anurag Singal
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Essel Mining & Industries Ltd
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