MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Friday, May 24, 2013
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4:47 PM Problems at the Pascua-Lama mine were already factored into Barrick Gold’s (ABX -2%) share price, and the slide after today's construction halt should be considered short-term, Gold Newsletter's Brien Lundin says. The $16M fine imposed by Chile is "immaterial" when contrasted to the $8.5B currently allocated to the project, Cowen analysts say. 2 Comments
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2:57 PM Recent price increases announced by AK Steel (AKS -1.4%), US Steel (X -0.3%) and ArcelorMittal (MT -0.9%) are unlikely to stick, Credit Suisse believes, as the sector's fundamentals suggest steel stocks are likely to remain range bound this summer. However, the firm predicts stronger demand trends are likely to drive steel stocks higher by fall. Comment!
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12:52 PM The slide in Fluor (FLR -3.1%) shares is attributed to Chile's halt on the Pascua-Lama mining project. On Feb. 18, Barrick Gold (ABX) awarded contracts to FLR involving construction management for the project; FLR booked the undisclosed value into its Q4 2012 backlog. Comment!
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12:42 PM Silver Wheaton (SLW +0.9%) also is halted on news that Chile fined Barrick Gold (ABX) and stopped construction on the Pascua-Lama mine. In addition to being a key growth asset for ABX, Pascua-Lama significantly increases SLW's long-term growth profile, Briefing.com says; SLW's 25% share of the estimated average annual silver production for the project's first full five years is 9M oz. 1 Comment
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12:28 PM Barrick Gold (ABX -0.5%) is halted on news Chile's environmental regulator has imposed a $16M fine - the maximum allowed under Chilean law - and stopped construction on its $8.5B Pascua-Lama project, citing "serious violations" of its environmental permit. 8 Comments
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9:57 AM Dow Chemical (DOW -0.3%) announces plans to deploy part of its recent payment from Kuwait's chemicals company to reduce up to $2B in debt in 2013. Dow says its current and planned actions should deliver more than $100M in annual interest expense savings, and are expected to bring its net debt to total capital ratio to well below 40%. Comment!
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9:06 AM After spending years and billions eliminating their hedge books, gold producers (GDX) may need to return to their old habit - selling production forward - thanks to the metal's (GLD) sharp decline. "We think producers are under pressure to put on hedging," says SocGen's Robin Bhar. "The problem is it needs a cultural change ... Guys who used to hedge have lost their jobs." Renewed producer selling could put even more pressure on prices. 9 Comments
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8:10 AM Rio Tinto (RIO) cuts ~100 jobs at its Kennecott copper operation in Utah and warns more positions will be cut to reduce operating costs after April's pit-wall collapse. Rio estimates more than 165M tons of earth slid into its open-pit Bingham Canyon mine, and will reduce planned copper production there by about 50% this year. RIO -1.2% premarket. Comment!
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8:07 AM Oil traders might have an opportunity in the recently-narrowed spread between WTI crude (USO) and Brent (BNO), says Goldman. Though expecting further narrowing in the near-term, the team recommends selling WTI Dec. 2014 contracts and buying equivalent Brent as rising Gulf Coast supplies later this year and in 2014 should pressure WTI prices. Comment!
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Thursday, May 23, 2013
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5:55 PM Serious overcapacity in China's steel industry is unlikely to ease in 2013, which could continue to hamper steel prices (SLX), analysts say at Platts Steel Market Europe conference. China is set to produce ~750M metric tons of crude steel in 2013 while capacity will rise to 950M, putting heavy pressure on steel prices in Europe and in the world steel industry as a whole. 7 Comments
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3:25 PM China's exports of rare earth metals have rallied in recent months, a trend attributed to low rare earth prices and Japanese demand. But Molycorp (MCP -2.9%), whose shares have jumped 30% in the past two weeks, says it might be premature to assume a firm turnaround in global demand: "Inventories have been built up over the past several years, and they are returning to more normal levels now." 5 Comments
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2:46 PM Gold's sharp rise today can be attributed to the dollar's drop vs. the yen; when the dollar drops, gold should rise, as their correlation during the past 24 days has hit -86%. A stock sector that's standing out is emerging market gold miners: South Africa’s Sibanye (SBGL), Harmony (HMY) and AngloGold (AU), plus Peru's Buenaventura (BVN) are stronger, even as their corresponding country ETFs (EZA; EPU) are in the red. 5 Comments
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1:13 PM Revett Minerals (RVM -20.3%) plunges after providing an update on the Troy Mine. RVM says the "unexpected discovery of ground fall" in the "A Drive" and the projected time frame for establishing alternative development have necessitated an "immediate and significant reduction" in the Troy Mine workforce."The realization that the recommencement of underground mining operations will not resume by the end of the second quarter as planned has forced us to take difficult cost reduction measures," CEO John Shanahan says. (PR) Comment!
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12:27 PM New Gold (NGD +1.8%) is initiated with a Buy rating and $9.50 price target at Global Hunter. NGD is a mid-cap gold producer with four operating mines which also gets a significant portion of its revenue and earnings power from copper and silver exposure, which the firm believes gives it an advantage over peers in a declining gold price environment. 1 Comment
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11:55 AM "The Real Bubble is Gold: and It's Deflating," writes MKM's Mike Darda, who says the key turning point was the metal's (GLD. IAU) failure to rally in wake of last fall's QE∞ inception. "Investors simply took it at face value that gold was soaring and would continue to rise because of (the Fed)." Inflation picking up will be even worse for gold, he says, as this would make the Fed an aggressive tightener of policy. 21 Comments
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8:11 AM BASF (BASFY.PK) and Monsanto (MON) plan to commercially launch a drought-tolerant variety of genetically modified corn in the U.S. next year, a senior BASF official says. The two companies have a revenue sharing arrangement, with 60% of revenue going to MON and the rest to BASF. Comment!
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Wednesday, May 22, 2013
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5:18 PM Barrick Gold (ABX) is considering shrinking in size as it focuses on returns over production volumes, CEO Jamie Sokalsky says. Shrinkage makes sense for ABX, Stifel Nicolaus says, adding selling the company’s Australian assets would be a good place to start: "In order to have better managerial control, you’re better off with fewer but much larger assets, preferably in the same north-south time zones.” 3 Comments
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3:59 PM Prospects for gold mining stocks (GDX +1.2%) could be turning around at least in the short term, MKM Partners' Katie Stockton says. She would consider adding some exposure to take advantage of a short-term relief rally within the downtrend, adding "the trade is likely to play out in the near term or not at all, so we expect to know if it is working in the next week or two." 8 Comments
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3:27 PM Terex (TEX -2.3%) gives back all the love plus more from an earlier Barclays upgrade to Overweight. The bank says that despite the stock recent 20% runup this month, it sees more upside from its consistent execution, leverage to an improving crane cycle and still-positive trends in the aerial-work-platform space. Comment!
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