'Iron lady' will define future of world’s top copper producer

The future of Chile’s owned Codelco, the world’s No.1 copper producer, is said to be now in the hands of Laura Albornoz, the first woman appointed director, who played an important role in last week dismissal of CEO Thomas Keller.

“Codelco has had management issues that isn’t just down to the international price of copper,” Albornoz was quoted as saying by Bloomberg Monday. “We can take the company a lot further than where we have got it to now.”

The executive, a lawyer and former minister of the National Service for Women (Sernam), voiced her concerns on the management style at Codelco as soon as she was appointed in May.

The executive, a lawyer and former minister of the National Service for Women (Sernam), voiced her concerns on the management style at Codelco as soon as she was appointed in May.

"I have serious reservations regarding the management of Codelco, the entire administration should and will be scrutinized," she said in an interview with El Diario Financiero (in Spanish) last month.

She has said that Codelco can’t be treated like a privately held company because of the role it has in generating wealth in Chile, and how much workers feel part of the company.

“There is a very emotional bond. The perspective of a woman could bring something to the debate,” she said according to Bloomberg.

Budget decisions

As one of the newest members of Codelco’s board, Albornoz is gearing up to vote in the upcoming yearly budget, which is considered by the finance ministry every June. The copper giant invested more than $8 billion since 2012 and is expected to spend $5 billion this year. Without that investment, Keller said in January, output would drop by more than half.

Albornoz is scheduled to visit the old Chuquicamata mine next week, where relations between Keller and the workers have been at their worst.

As a state-owned company, Codelco has often been in a tug-of-war with the government over its investment budget. Of about $100bn in profits that Codelco has transferred to the state since it was nationalized in 1971, only $4bn has been returned back to the miner.

The mining company is undergoing a massive transformation, trying to maintain profits from the world's largest open-pit copper mine, Chuquicamata, by extending operations underground. At the same time, plans call for turning the world's largest underground mine, El Teniente, into an open pit operation.

But Albornoz, who implemented a program to incorporate more women into the copper industry between 2006 and 2009, seems to be more focused on resolving labour issues first.

She is scheduled to visit the old Chuquicamata mine next week, where relations between Keller and the workers have been at their worst.

And while she hasn’t given away any clues regarding who Keller’s successor will be, she told El Diario Financiero (in Spanish) it was only reasonable to think  the head of Codelco will not only have to be someone who does the job best, but also an individual “able to reflect the government program and values.

Russian producer Rusal see more gains for aluminium

Russia's Rusal believes a combination of bullish physical and technical factors that emerged in recent weeks will send the benchmark aluminium price to challenge the April peak of $1,900 a tonne this week and possibly $2,000 in the coming months.

The three-month aluminium price on the London Metal Exchange has shed a third since touching a peak of $2,803 a tonne in May 2011, weighed down by overproduction and surpluses.

But it has recovered 14 percent since touching a 4/1-2 year low in February.

United Company Rusal Plc , one of the world's biggest aluminium producers, pointed out in a statement that LME aluminium stocks have dropped to the lowest levels in 13 months.

LME stocks fell another 7,600 tonnes on Monday and have declined 5.5 percent so far this year, but are still at 5.15 million tonnes.

"The stock trends through 2014 clearly support the view that the market is in significant deficit," Rusal said.

Rusal has previously forecast that the market is expected to have a market deficit of about 1.2 million tonnes this year and a further deficit of 985,000 tonnes in 2015 due to strong demand and capacity cutbacks by producers.

Rusal also sees the declining LME cash-three month spread as indicating tighter conditions that are supporting the market. The contango - when nearby prices are weaker than forward ones - has declined to $24 a tonne from $45.50 a month ago.

"The contango represents the carrying cost for long only investors (index funds and macro hedge funds) who may be encouraged to return to the market, as well as a disincentive to market 'short' players," it said.

Copper Drops for Fifth Day Amid Metal-Warehousing Probe

Copper dropped for a fifth day on concern that a probe into inventories at Qingdao Port will reduce demand for the metal as collateral for credit in China, the world’s biggest user of the commodity.

The contract for delivery in three months on the London Metal Exchange retreated as much as 0.7 percent to $6,642 a metric ton and was at $6,662 at 4:14 p.m. in Tokyo. The metal fell 2.3 percent last week, touching $6,640 on June 6, the lowest intra-day level since May 8.

Qingdao Port is looking at whether there was multiple counting of some batches of copper used as collateral for loans, three people with direct knowledge of the investigation said last week. Chinese traders are selling copper holdings in the physical market amid the probe, and more metal will be released next week, Shanghai-based consultancy SMM Information & Technology Co. said June 6.

“Investors were very nervous to buy copper because of the Qingdao investigation,” said Kazuhiko Saito, an analyst at Fujitomi Co., a commodities broker in Tokyo. Dwindling stockpiles and indications of improvement in the Chinese and U.S. economies may limit further declines today, he said.

China’s exports rose more-than-estimated 7 percent last month, while imports fell, data showed yesterday. U.S. non-farm payrolls rose by 217,000 in May, exceeding the pre-recession peak.

Copper stockpiles tracked by exchanges in Shanghai, London and New York have dropped 47 percent this year to the lowest level since 2008.

In New York, futures for delivery in July slid 0.6 percent to $3.0315 a pound. The metal for delivery in August fell 1.8 percent to close at 47,370 yuan ($7,594) a ton on the Shanghai Futures Exchange.

On the LME, nickel and tin also dropped, while aluminum, zinc and lead advanced.

PBOC Hits Panic Button: Strengthens Currency By Most In 20 Months

On the heels of growing contagion concerns regarding shadow banking collateral and the "rehypothecation evaporation" and this weekend's 'odd' Chinese trade data (big drop in imports, no doubt impacted by dramatic commodity invoicing swings), the PBOC has fixed the Chinese currency 0.36% in the last 2 days... the biggest strengthening in the currency since October 2012. It is unclear for now exactly what is going on but we suspect the panic button outflows as banks pull credit and unwind CCFDs are forcing China's hand to offset CNY selling pressure... and of course China does it in grand style. 

China's biggest trade surplus since Jan 09... as imports tumbled 1.6% (against expectations of a 6% rise)

After weeks of weakening and comments on rising volatility and flexibity to tamp down the carry trade fervor, China has gone to the other extreme...

Whether this is to kill off the last of the momentum-chasing muppers now following the CNY weakenin trend is unclear but one thing is certain, the coincidence of such a violent move with the rising credit contagion concerns in the warehouse probes is extremely interesting.

Barclays provides some more color:

Barclays expects depreciating CNY and recent govt probe into commodity financing to continue to discourage commodity imports for arbitrage purposes, according to note yesterday; despite sizable trade surplus and FDI, PBOC’s FX purchase slowed markedly in recent mos., suggesting reduced capital inflows from other channels and signs of capital outflows

First we are told this...

• *CHINA CASH CRUNCH IN JUNE LAST YR UNLIKELY TO REPEAT: LIAN PING
• *CHINA'S OVERSUPPLY OF PROPERTY MAY LAST FOR 1 YEAR: LIAN PING

Which likely means that is exactly what they are worried about... and then Premier Li is starting to worry...

• *PREMIER LI SAYS DOWNWARD ECONOMIC PRESSURE RELATIVELY LARGE
• *LI URGES GOVT TO RESOLVE PROBLEMS OF FINANCING, EXPORTS
• *LI KEQIANG URGES GOVTS TO ENSURE CHINA TO MEET ECONOMIC GOALS
• *LI KEQIANG SAYS HE WORRIES ABOUT IMPLEMENTATION OF POLICIES

And then there's this...

• *CHINA MAY LAND SALES FALL 49% TO 62.2M SQUARE METERS: SOUFUN

So - not good then!?

And then copper crashes to Friday's lows...

FMC pressurising MCX on FTIL stake sale

Business at the Multi Commodity Exchange of India (MCX) would be "seriously hurt" if no new contracts are launched beyond August, said Ramesh Abhishek, Chairman of the Forward Markets Commission.

Commodity markets regulator FMC today said it has not approved a proposal by MCX to launch new contracts beyond August as part of a strategy to put pressure on the exchange to comply with its order on reduction of the stake held by the former promoter. Business at the Multi Commodity Exchange of India (MCX) would be "seriously hurt" if no new contracts are launched beyond August, said Ramesh Abhishek, Chairman of the Forward Markets Commission. 

Also Read: Finmin issues show-cause notice to NSEL on exemptions In December, the FMC had declared MCX's erstwhile promoter Financial Technologies India Ltd (FTIL) as unfit to run any exchange after a Rs 5,600 crore payment crisis at group company National Spot Exchange Ltd (NSEL). The regulator asked FTIL to reduce its stake in MCX to 2 percent from 26 percent. The FMC had directed MCX to take concrete steps to comply with this order.

"We have not given any deadline but we are putting all kind of pressure on MCX to comply with the order. We have not approved new contracts beyond August and not approved new contracts to be launched in the 2015 calendar year as well," Abhishek told PTI. "MCX has to comply with the order by August. Otherwise, no new contracts will be approved. This will seriously hurt MCX's business," he said. FTIL is in the process of selling a 24 per cent stake in including  Reliance Capital  and Kotak Group. Bidders have sought more time to submit final bids in view of "adverse findings" in a special audit report by Pricewaterhouse Coopers on corporate governance issues at MCX. MCX is the country's leading commodity exchange. Its trading volumes have fallen significantly since the NSEL payment crisis came to the fore in July. Turnover on MCX declined 72 per cent to Rs 3,77,324 crore in April from Rs 13,26,155 crore a year earlier, according to FMC data.

Weekly Economic Data for the week 07-Jun-14 to 13-Jun-14

Avg. change of last 1 year:	Average Change in Actual data calculated for last 1 year.
Expected impact on price:	This indicator shows the effect of the anticipation of data on the prices of related country’s major indices. We have categorized it as below: Very Good Good Neutral Bad Very Bad
Actual:	Refers to the actual/latest figures after its release.

Data for the week 07-Jun-14 to 13-Jun-14

Date	Time (IST)	Country	Data	Exp.	Prior	Exp. chg today	Avg. chg of last 1 year	Exp. Impact on Price
08-Jun-2014	--	China	Imports (YoY)	6%	0.8%	5.20%	6.92	Neutral
08-Jun-2014	--	China	Exports (YoY)	6.7%	0.9%	5.80%	5.65	Neutral
08-Jun-2014	--	China	Trade Balance	22.6B	18.46B	4.14	13.34	Neutral
9-10 Jun-2014	--	Germany	Merkel, Cameron, Rutte, Reinfeldt Meet at Swedish Summit					Neutral
10-15 Jun-2014	--	China	Money Supply M2 YoY	13.1%	13.2%	-0.10	0.71	Neutral
10-16 Jun-2014	--	India	Exports YoY		-5.3%		4.06	Neutral
10-Jun-2014	07-00 AM	China	Consumer Price Index (YoY)	2.4%	1.8%	0.60%	0.43	Neutral
10-Jun-2014	07-00 AM	China	Producer Price Index (YoY)	-1.5%	-2.0%	0.50%	0.61	Neutral
10-Jun-2014	02-00 PM	United Kingdom	Industrial Production (MoM)	0.4%	-0.1%	0.50%	1.75	Neutral
11-Jun-2014	04-30 AM	United States	World Bank Releases New Global Growth Forecasts					Neutral
11-Jun-2014	02-00 PM	United Kingdom	ILO Unemployment Rate (3M)	6.7%	6.8%	-0.10%	0.07	Neutral
11-Jun-2014	02-30 PM	Germany	Merkel, Draghi Meet for Talks at Chancellery in Berlin					Neutral
11-Jun-2014	08-00 PM	United States	EIA Crude Oil Stocks change	--	-3.4		3.45	Neutral
12-Jun-2014	02-30 PM	European Monetary Union	Industrial Production w.d.a. (YoY)	0.9%	-0.1%	1.00%	0.59	Neutral
12-Jun-2014	05-30 PM	India	Industrial Production YoY	--	-0.5%		2.08	Neutral
12-Jun-2014	06-00 PM	United States	Retail Sales (MoM)	0.6%	0.1%	0.50%	0.63	Neutral
12-Jun-2014	08-00 PM	European Monetary Union	Merkel Briefs Reporters After Meeting German State Premiers					Neutral
12-Jun-2014	08-00 PM	United States	EIA Natural Gas Storage change	--	119	-119.00	33.60	Neutral
13-Jun-2014	--	Japan	BOJ 2014 Monetary Base Target		¥270T		0.00	Neutral
13-Jun-2014	--	Japan	Bank of Japan Monetary Policy Statement					Neutral
13-Jun-2014	11-00 AM	China	Industrial Production (YoY)	8.8%	8.7%	0.10%	0.67	Neutral
13-Jun-2014	11-00 AM	China	Retail Sales (YoY)	12.2%	11.9%	0.30%	0.78	Neutral
13-Jun-2014	11-30 PM	Japan	BOJ Governor Kuroda Press Conference After Rate Decision					Neutral
13-Jun-2014	02-30 PM	European Monetary Union	Trade Balance s.a.	--	€15.2B	-15.20€	2.05	Neutral
13-Jun-2014	07-25 PM	United States	Reuters/Michigan Consumer Sentiment Index	83	81.9	1.10	2.48	Neutral

The World’s Five Most Important Oil Fields

Here Are The World’s Five Most Important Oil Fields

Much has been made about the role that hydraulic fracturing – or fracking -- has played in revolutionizing the energy landscape, unlocking vast new reserves of oil trapped in shale rock. This “tight oil” is pouring into the global pool of oil supplies at a crucial time, preventing oil prices from spiking in an age of high demand and geopolitical turmoil.

But the world still relies overwhelmingly on conventional oil production from existing fields, many of which are in decline. The Middle East has dominated the world of oil for half a century and as the list below shows, it remains king. Here are the top five most important oil fields in the world.

1.  Ghawar (Saudi Arabia) The legendary Ghawar field has been churning out oil since the early 1950s, allowing Saudi Arabia to claim the mantle as the world’s largest oil producer and the only country with sufficient spare capacity to act as a swing producer. Holding an estimated 70 billion barrels of remaining reserves, Ghawar alone has more oil reserves than all but seven other countries, according to the Energy Information Administration. Some oil analysts believe that Ghawar passed its peak perhaps a decade ago, but Saudi Arabia’s infamous lack of transparency keeps everyone guessing. Nevertheless, it remains the world’s largest oil field, both in terms of reserves and production. It continues to produce 5 million barrels per day (bpd). 

2.  Burgan (Kuwait) Just behind Ghawar is another massive oil field located in the Middle East. The Burgan field was originally discovered in 1938, but production didn’t begin until a decade later. The field holds an estimated 66 to 72 billion barrels of reserves, which accounts for more than half of Kuwait’s total, and it produces between 1.1 and 1.3 million bpd. 

3.  Safaniya (Saudi Arabia) The Safaniya field is the world’s largest offshore oil field. Located in the Persian Gulf, the Safaniya field is thought to hold more than 50 billion barrels of oil. It is Saudi Arabia’s second largest producing field behind Ghawar, churning out 1.5 million bpd. Like Saudi Arabia’s other fields, Safaniya is very mature as it has been producing for nearly 60 years, but Saudi Aramco is working hard to extend its operating life. 

4.  Rumaila (Iraq) Iraq’s largest oil field is the Rumaila, which holds an estimated 17.8 billion barrels of oil. Located in southern Iraq, Rumaila was highly sought after when the Iraqi government put blocks up for bid in 2009. BP and the China National Petroleum Corporation (CNPC) are working together to develop the giant field along with Iraq’s state-owned South Oil Company. The field now produces around 1.5 million bpd, but its operators have plans to boost that production to 2.85 million bpd over the next couple of years. 

5.  West Qurna-2 (Iraq) Also located in southern Iraq, the West Qurna-2 field is Iraq’s second largest, holding nearly 13 billion barrels of oil reserves. The West Qurna field was divided in two and auctioned off to international oil companies. Russia’s Lukoil took control of West Qurna-2 and successfully began production earlier this year at an initial 120,000 bpd. Lukoil plans on lifting production to 1.2 million bpd by the end of 2017. The neighboring West Qurna-1 field – operated by a partnership of ExxonMobil, BP, Eni SpA, and PetroChina – holds 8.6 billion barrels of oil reserves. They hope to increase production from 300,000 bpd to more than 2.3 million bpd over the next half-decade.

It’s clear that the Middle East is still the center of the universe when it comes to oil. Despite their age, these supergiants remain the oil fields of tomorrow. And as the tight oil revolution in the U.S. plays out, these fields will remain, and the world will continue to depend heavily on the fortunes of a few countries in the Middle East

Submitted by Nick Cunningham of OilPrice.com