Tuesday, December 3, 2013
6:15 PMPotash's problem: poor fertilizer demand, too much supply
- The layoffs and production cuts announced by Potash (POT) illustrate the key problem in the fertilizer sector: There has been no potash demand growth for six years while supply has been growing.
- The job cuts have nothing to do with Uralkali's move to produce at full capacity, POT CEO Bill Doyle says; it's about demand weakness across all nutrients that began well before the chaos caused by Uralkali.
- The two most important emerging markets for fertilizer are China and India, and demand is far lower than anticipated in both.
- Barclays views the planned cuts as "a good and needed move" in response to the ills plaguing the industry.
- Other fertilizer producers: MOS, AGU, IPI, CF, SQM.
- ETFs: MOO, CROP, PAGG, VEGI.
3:46 PMMountain Province Diamonds says permit OKd for Gahcho Kue mine
- De Beers Canada and Mountain Province Diamonds (MDM +8.9%) say the Mackenzie Valley Land and Water Board approved a pioneer land use permit for the Gahcho Kue diamond mine, which will allow land-based site works to begin in preparation for deliveries planned for the 2014 winter road season.
- Gahcho Kue is expected to mine ~31M metric tons of ore containing ~49M carats.
2:24 PMMolycorp turns green as CEO sees positive cash flow by late 2014/early 2015| 9 Comments
2:15 PMAK Steel praises favorable ITC ruling in steel trade case
- The U.S. International Trade Commission ruled in favor of AK Steel (AKS +2.7%) yesterday in an anti-dumping and countervailing trade petition against allegedly cut-priced imports of non-oriented electrical steel from six countries.
- AKS praises the ruling which said the trading practices were causing injury; the preliminary injury determination means that cases against the foreign producers will proceed.
- Earlier, BofA upgraded shares to Neutral from Underperform after adjusting estimated 2013 underfunded legacy liabilities for a better equity return and higher discount rate.
12:57 PMTop ThyssenKrupp shareholder opts out of cash call
- The balance of power shifts at ThyssenKrupp (TYEKY, TYEKF), as the Krupp foundation, which has controlled the company since the 1960s, sat out a capital increase today due to a lack of cash, diluting its stake and losing its veto right.
- Cevian Capital Partners, an activist shareholder already with a 6%-plus stake and which has invested in several other European companies, purchased a "significant" part of the shares on offer but less than half of the entire placement volume, WSJ reports.
- Germany's largest steelmaker has been undergoing a deep restructuring as it grapples with weak demand and overcapacity in the European steel industry.
10:24 AMStillwater Mining names Mick McMullen as CEO
- Stillwater Mining (SWC +1.2%) appoints Director Mick McMullen as permanent CEO, effective immediately and replacing interim CEO Terrell Ackerman, who remains VP of corporate development.
- SWC says McMullen has a proven track record of building and leading successful teams, citing his time as chairman of SWC's technical and ore reserves committee.
8:33 AMMechel reaches agreement extending grace period, maturity in $1B loan
- Mechel (MTL) +8.6% premarket after announcing an agreement to extend the grace period and maturity of its $1B syndicated facility to the end of 2014 and 2016, respectively.
- MTL says the agreement will ensure a more stable financial environment and greatly ease the pressure on cash flow in the next 12 months at the Russian mining company, moving ~$600M of repayments from 2013-2014 to 2015-2016.
7:33 AMUBS cuts precious metals forecast
- The "struggle for gold not only rests with the predominant selling interest among investors currently, but with limited positive catalysts looking forward, gold is unlikely to regain its former appeal," writes UBS, slashing its precious metals forecasts for 2014 - gold to $1,200 from $1,325 and silver to $21 from $24.
- With the downward momentum building, gold could test $1,050 an ounce - a level that might approach a "decent buying level," writes the team, but the path would be "very turbulent."
- Gold is flat in morning action at $1,223 after yesterday's plunge, while silver has given up a bit more ground, -0.5% to $19.93.
- PM ETFs: GLD, SLV, IAU, AGQ, PHYS, SIVR, PPLT, PALL, ZSL, USLV, SGOL, UGL, DGP, GLL, DZZ, UGLD, DBS, DGL, DSLV, GLTR, DGZ, PTM, AGOL, DBP, GLDI, DGLD, WITE, SLVO, PGM, TBAR, USV, JJP, UBG, RGRP, LPLT, BLNG, IPLT
6:59 AMPotash to cut 18% of staff in U.S., Canada and Trinidad
- Potash Corp. (POT) intends to lower its workforce by 18% in the U.S., Canada and Trinidad, due to sluggish fertilizer demand in developing markets.
- In total, Potash will cut 1,045 jobs and expects to take severance charges of $70M.
- The company will suspend output at one of its Lanigan mills and cut production at its Cory facility by the year-end, and halt output at its Penobsquis facility by Q1.
- Potash forecasts 2014 capacity of over 10M tons.
- Expects potash cost savings of $15-20 a ton in 2014 and targets $20-30 by 2016. For phosphate, the firm projects annualized improvements in gross margins of $10-15.
- Shares +0.4% premarket. (PR)