One Metal Will Be Transformed by the Electric Car Boom www.bloomberg.com

Glencore Plc and Trafigura Group Pte are often at loggerheads, but one thing they agree on: the nickel market will be transformed by the rise of electric cars.

Nickel sulphate, a key ingredient in lithium-ion batteries, will see demand increase 50 percent to 3 million metric tons by 2030, Saad Rahim, chief economist at Trafigura, said in an interview. While other battery metals like cobalt and lithium have more than doubled since the start of last year, nickel prices have been subdued because of large inventories.

"When you look structurally, we should start to get bullish now,” Rahim said. “Are you going to be able to meet that demand when the time comes, given underinvestment in the supply side?”

His view echoes the outlook from Glencore, which told analysts recently that nickel production would need to increase 1.2 million tons by 2030, equal to more than half of current global output, to keep up with demand from the battery industry. Prices are currently more than double what it costs Glencore to mine the metal.

It’s a surprising mood change for a market with a disastrous reputation. Nickel was long a thorn for Glencore, which was saddled with unprofitable operations following its takeover of Xstrata. It sold an Australian nickel mine, which Xstrata bought in 2007 for $2.4 billion, for just $19 million in 2015.

“The nickel industry’s been a bit of a dog since about 2007,” Oliver Ramsbottom, a partner at McKinsey & Co. in Tokyo, said by phone.

The battery industry could revive the fortunes of miners more than a decade after nickel collapsed from a peak of $51,600 a ton in 2007, when Indonesia and the Philippines started to flood the market with low-grade supply. Nickel currently trades at $11,870, up 18 percent for the year.

Future batteries will likely use more nickel and less cobalt, Rahim said. Cobalt prices have surged and the biggest source of supply is the Democratic Republic of Congo.

Still, some analysts are skeptical that the bullish scenarios will play out. Electric cars are still a niche industry and nickel oversupply remains a threat, with current stockpiles four times bigger than since the start of 2012.

Indonesia has authorized its largest producer to export more nickel ore. The Philippines has also discussed ending a ban on open-pit mining, raising concerns that supply will spike.

“For years, the market has completely dismissed the idea that something positive could happen in nickel,” Ingrid Sternby, senior research analyst at Blenheim Capital Management LLP, said in an interview in London. “With the recent announcements about Indonesia and the Philippines, it’s easy to see why the market is still scary enough for people not to want to be involved.”

About half of global nickel production is in the form of ferronickel or nickel pig iron, which is nickel alloyed with iron, making it suitable for stainless steel. Battery makers, instead, use nickel sulphate, produced by dissolving pure nickel metal in sulphuric acid.

One hope is that the pricing of nickel pig iron and the high-grade nickel sulphate will diverge in the coming years, improving the fortunes of miners that can produce battery-quality material.

The global nickel market is heading for a deficit once above-ground stockpiles of battery-grade metal are consumed, according to Wood Mackenzie. The question for miners is how quickly the premium for top-quality nickel will emerge.

“You can see the tightness ahead in the nickel market, but my concern is that we’re going to see a lot of value destroyed along the way,” said Colin Hamilton, managing director for commodities research at BMO Capital Markets Ltd. “If the miners really believe in the EV growth story, the thing to do would be to keep the nickel in the ground until the deficit arrives.”

Still, politicians and automakers are increasingly counting on a future of electric cars, attracting traders such as Trafigura.

“Will we see a real breakout in next 12 months? That’s hard to see, but beyond that, structurally this looks to be going up,” Rahim said.

Canada oil, gas drilling to pick up in 2018: industry body www.reuters.com

CALGARY, Alberta (Reuters) - Canadian oil and gas drilling activity will climb 5 percent in 2018 as a gradual uptick in crude prices gives rise to cautious optimism among producers, an industry body forecast on Tuesday.

Russia starts building Bushehr 2 nuclear power plant in Iran www.rt.com

Russia's state atomic energy corporation Rosatom announced on Tuesday construction of the Bushehr 2 nuclear power plant (NPP) in Iran has started. The project was agreed between Moscow and Tehran three years ago.
"I am sure this major Russia-Iran investment project will strengthen cooperation and ties between our countries,” said Rosatom’s Director General Aleksey Likhachev at the ground breaking ceremony.

Crude price recovery lifts PetroChina www.chinadaily.com.cn

The mainland's largest oil and gas producer China National Petroleum Corp, or PetroChina, reported a 290 percent rise in third-quarter net profit as the company reaped the rewards of a strong rebound in crude prices and deleveraging.

With the other two mainland oil majors－CNOOC and Sinopec－also reporting higher third-quarter numbers, industry analysts expected the strong rebound to continue in the fourth quarter of the year also.

PetroChina's net profit rose 290 percent from a year ago to 4.69 billion yuan ($707 million) as the company cut debt and interest expenses.

Revenue for the period rose 17 percent from a year ago to 481.8 billion yuan, the Beijing-headquartered company said in a filing to the Hong Kong stock exchange.

With the winter heating season approaching in the northern parts of China, analysts believe PetroChina's earnings could continue rising in the fourth quarter with wholesale natural gas demand set to go up from mid-November.

Li Li, research director for the energy sector at ICIS China, a consultancy focused on the energy industry, said Chinese oil giants have benefited massively from the rebound in international oil prices during the first nine months of this year.

The profit rebound, based on last year's low base, which was also the company's worst first-half profit since its listing in 2000, will continue and the oil and gas industry will also gradually improve with better risk resistance capacity, she said.

"PetroChina's revenue and profitability are expected to continue improving in the fourth quarter, thanks to higher crude prices and generally better cost controls in the oil and gas sector," said Li.

Crude production fell to 660 million barrels in the January to September period this year, down 5 percent year-on-year.

China Petroleum & Chemical Corp, the world's biggest refiner, also known as Sinopec, also disclosed its third-quarter report late Monday, saying its profit advanced by 13 percent as earnings from refining operations offset upstream and impairment losses during the period, while its net income increased to 11.5 billion yuan.

Third-quarter revenue of CNOOC Ltd, the listed arm of China National Offshore Oil Co, also rose because of higher oil and natural gas prices, with revenue from oil and gas sales in the third quarter rising 16.9 percent to about 35.94 billion yuan, the company said.

PetroChina and Sinopec also vowed to complete important internal corporate reforms by November, as part of the plan to help clear the institutional barriers for further reform of State-owned enterprises and improve operational efficiency.

According to the State Council, all central SOEs, except financial and cultural ones, will be registered as limited liability companies or joint-equity corporations in accordance with the Company Law by the end of 2017. It is also an attempt to accelerate the establishment of an effective and balanced corporate governance structure, based on the legal person status, as well as a flexible and efficient marketized management mechanism.

Russia & China to extend currency swap agreement to lessen dollar dependence www.rt.com

Economic cooperation between Russia and China has been actively developing according to Russian Deputy Prime Minister Sergei Prikhodko. He says the sides are working to prolong the bilateral currency swap agreement.

GGGI supports Development of Pilot Energy Efficiency www.gggi.org

Since 2013, GGGI has been supporting the Government of Mongolia in the implementation of the National Green Development Policy and NDCs to the Paris Agreement. These include specific targets on improving the energy efficiency of heat and power generation, transmission and of the built environment which are reflected in Mongolia’s Energy Conservation Law. In March 2017, GGGI and the Energy Regulatory Commission of Mongolia (ERC) signed a Memorandum of Understanding which identifies four major areas of support to be brought by GGGI:

· Formulation of the National Energy Efficiency Action Programme 2018-2022 (NEEAP);
· Development of incentives for renewable energy, energy conservation, and energy efficiency;
· Preparation of bankable green energy projects, beginning with industrial energy efficiency; and
· Sharing and dissemination of institutional knowledge and experience.

On October 25 2017, GGGI and the ERC presented the final outcomes of the energy audits of a selected sample of 15 “Designated Entities”, Mongolian private and publicly owned organizations from various sectors, whom have in common a consumption of heat and, or electricity exceeding the threshold set by the government for conservation potential. PricewaterhouseCoopers (PwC), was missioned by GGGI and the ERC to carry out the following technical advisory services:

· Estimate the market per sector;
· Perform a gap analysis of Mongolia’s policy, regulatory, and financial framework;
· Develop a pipeline of pilot energy efficiency projects (15 projects in different sub-sectors); and
· Capacity development activities of local energy auditors.

The consolidated results of the assignment show that the recommended energy conservation measures will require a total of $58 million of capital investment with an expected project payback period up to 3 years. The energy efficiency improvements alone can help achieve an estimated reduction of 620 thousand tons of CO2 emissions.

Since Mongolia became a GGGI member country, GGGI provided technical assistance to the Government of Mongolia in the areas of energy systems analysis, public green building, green cities and national green development planning. Building upon this work, GGGI and the Government of Mongolia initiated the Transition to Green Development Project (Phase 1: 2015-2016, Phase 2: 2017-2018), supporting the implementation of the country’s green development priorities and contribution to climate action – particularly in the fields of renewable energy, energy efficiency, public building design, and climate finance.

Dr. Tleykhan, Director General of the ERC, highlighted that “The results of this project demonstrate that improved energy efficiency has huge potential of benefits not only in terms of economy, but also socially and environmentally. It will serve as a platform to delivering bankable projects in the energy sector – a next step we are looking forward to”. The development of a pipeline of bankable projects complements GGGI’s ongoing work on the establishment, capitalization, and operationalization of the Mongolian Green Credit Fund (MGCF) – a national financing vehicle dedicated to the channeling of climate/development finance to green projects. Key projects in the MGCF’s project pipeline, being developed by GGGI, include the implementation of energy efficiency improvements measures for these 15 “Designated Entities”.

Asia gains as South Korea hits record high, dollar sags on White House woes www.reuters.com

TOKYO (Reuters) - Asian stocks mostly rose on Tuesday, shaking off downbeat factory readings out of China, while the dollar sagged after investigators probing Russian interference in the 2016 U.S. election charged President Donald Trump’s former campaign manager.

Spreadbetters expected Britain's FTSE .FTSE to open a shade lower and France's CAC .FCHI to open flat. The German markets will be shut for a national holiday.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.4 percent.

Strong gains in South Korea and Taiwan, which make up roughly a quarter of the index’s weighting, helped offset weakness in China and Hong Kong.

The KOSPI .KS11 ended up 1 percent at a record high after Seoul and Beijing agreed to normalize relations that have been strained by a year-long standoff over the deployment of a U.S. anti-missile system in South Korea.

“Shares that have long been pressured by ongoing political disputes between the two countries are reacting positively to the announcement, including Hyundai Motor-related stocks,” said Cho Byung-hyun, a stock analyst at Yuanta Securities.

Tech-heavy Taiwan .TWII added 0.4 percent after Apple (AAPL.O) made big gains overnight.

But Chinese equities wobbled after data showed a sharper-than-expected slowdown in October factory growth.

Beijing’s war on winter air pollution is forcing many northern steel mills, smelters and factories to curtail production, adding to uncertainty amid early signs of a slowdown in the world’s second-largest economy.

China's blue-chip CSI300 index .CSI300 fell 0.2 percent and Hong Kong's Hang Seng .HSI dipped 0.1 percent.

Japan's Nikkei .N225 closed flat, capped by weaker U.S. shares and a stronger yen.

Wall Street pulled back from record-high territory on Monday, weighed down by a drop in drugmaker Merck (MRK.N) and a report that U.S. lawmakers are discussing a gradual phase-in corporate tax cuts rather than reducing it all at once. [.N]

“The report of the gradual corporate tax cut option came when equities were strung high, so it served as a catalyst for markets to adjust,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.

“Expectations were for the corporate tax to be cut in one go. But even if the cut is implemented gradually, it still is a reduction and that won’t be bad news in the long term.”

The dollar hovered near a 10-day low of 113.02 yen JPY= struck overnight.

The greenback lost about 0.4 percent against the yen overnight on investor caution after former Trump campaign manager Paul Manafort and another aide, Rick Gates, were charged with money laundering on Monday by federal investigators.

“It’s weighing on dollar/yen a little bit. I think there’s a little bit of uncertainty,” said Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore, adding the yen drew some support as risk sentiment was looking a bit wobbly.

The yen showed little reaction to the Bank of Japan’s decision to stand pat on monetary policy even as it slightly cut its inflation forecast for the current fiscal year, an outcome that had been widely expected.

The U.S. currency was also pressured as Treasury yields slipped on reports that Trump is likely to appoint Federal Reserve Governor Jerome Powell, who is viewed as more dovish than other contenders, as the next head of the Federal Reserve.

The 30-year Treasury bond yield US30YT=RR fell to its lowest in a week after Bloomberg quoted Treasury Secretary Steven Mnuchin saying the government does not see a lot of demand for ultra-long bonds.

The dollar index against at basket of six major currencies .DXY steadied at 94.547 after slipping overnight from a three-month high of 95.150.

The euro was little changed at $1.1637 EUR=. It had pulled back overnight from a three-month low of $1.1574 on Friday.

European markets got a lift on Monday after an opinion poll showing waning support for independence soothed investors’ concerns over a Catalan secession from Spain.

Crude oil prices steadied below their recent peaks after being boosted by expectations OPEC-led production cuts would be extended beyond March.

Brent crude futures LCOc1 was down 0.2 percent at $60.78 a barrel after rising to $61 overnight, the highest since July 2015.

U.S. crude CLc1 was 0.1 percent lower at $54.09 after touching $54.46, its highest since late February.

October 30 2017 trading report www.mse.mn

On October 30, 2017, 354,930 shares of 22 firms listed as Tier I, II, and III were traded. 7 firms’ shares increased in price, 12 decreased and 3 remained unchanged. Gobi JSC /GOV/ was the top performer, increasing 4.73 percent, whereas Mongol Post JSC /MNP/ was the worst performer, decreasing 13.56 percent.

Glencore raises marketing guidance, lowers output www.mining.com

LONDON, Oct 30 (Reuters) – Glencore on Monday cut its output forecast for core commodities including zinc, but raised its marketing division’s full-year earnings before interest and tax (EBIT) to between $2.6 billion and $2.8 billion, reflecting higher raw materials prices.

Mongolia and Russia to intensify border cooperation www.montsame.mn