Seeking Alpha
  • Friday, May 1, 2015

  • 5:49 PM
    • Wolfe Research analyst Gordon Johnson says he remains negative on Cliffs Natural Resources (NYSE:CLF), underpinned by his views on structural iron ore excesses, but at least he came away from a meeting with CEO Lourenco Goncalves with "a better appreciation for the bull case."
    • Johnson says the CEO admitted the opportunity to sell iron ore pellets to U.S. mini-mills is small now at ~500K tons over the next 12 months, but CLF sees big potential for what would be an entirely new market for the company; CLF pegs the longer-term potential at 5M-10M tons, and says its existing capacity is sufficient to meet an incremental 500K tons.
    • Both the analyst and the company suspect CLF's stock price rise yesterday was a result of misunderstanding Vale's (NYSE:VALE) comments from its earnings conference call; Vale is not likely to consider a cut to its planned ramp to 450M metric tons/year until iron ore prices move statically below $41/ton.
    | 2 Comments
  • 2:58 PM
    • U.S. steelmakers Nucor (NUE +0.3%) and SSAB Enterprises complain that Chinese producers are circumventing import duties on steel plate and are asking the Commerce Department to intervene.
    • The companies say Chinese producers were getting around anti-dumping duties on cut-to-length carbon steel plate by adding elements to class the plate as alloy, and seek a ruling that all steel plate marketed, priced and sold in the U.S. as commodity carbon steel plate is within the scope of anti-dumping duties.
    | Comment!
  • 2:13 PM
    | 25 Comments
  • 12:44 PM
    • Barrick Gold (ABX -1%) has hired Catherine Raw, a BlackRock (NYSE:BLK) executive and co-manager of one of its largest mining funds, as head of business performance.
    • Raw has been highly critical of the performance and strategy of most of the world’s largest gold miners, saying in December that the sector needed “to start seeing some really painful decisions being made."
    • ABX says Raw's experience gives her an intimate knowledge of the global mining investment universe, and she will seek greater rigor in financial analysis, planning and performance management across the company.
    | 1 Comment
  • 12:26 PM
    • Turquoise Hill Resources (TRQ +0.6%) says a deal that would have allowed it to unload its remaining stake in Mongolian coal miner SouthGobi Resources has fallen through.
    • TRQ, a unit of Rio Tinto (NYSE:RIO), says it cannot complete the transaction with Hong Kong-listed National United Resources for 56M SouthGobi shares under the terms of the agreement.
    • The deal's failure marks another setback in TRQ's effort to sever ties with SouthGobi, a company that has been hurt by a slowing Chinese economy, weaker coal prices, accounting problems and funding woes.
    | Comment!
  • 11:49 AM
    • Rio Tinto (RIO +1.3%) is prepared to look for an acquisition - its first since 2012 - if it can secure the right asset at the correct valuation and win investor backing, Morgan Stanley says after an analysts’ meeting this week with CFO Chris Lynch.
    • As asset valuations get pushed lower, larger producers may be changing their attitude toward deals, according to Argo Investments; after Rio has moved to reduce its project budget to the lowest since 2010, cut spending and complete a $2B share buyback, investors may be more likely to accept acquisitions, the firm adds.
    • Still, with lower prices forecast for many key commodities in oversupply and slowing demand in China, asset sales or de-mergers are more likely than acquisitions, Goldman Sachs believes.
    | Comment!
  • 7:59 AM
    • Antitrust issues regarding a potential Monsanto (NYSE:MON) and Syngenta (NYSE:SYT) combination would "not be insurmountable," Deutsche Bank analysts say, following reports late yesterday that MON again has approached SYT about a takeover.
    • Although MON is no. 1 globally in seeds and SYN is no. 3, SYT’s market share is relatively small at 8% vs. MON's 25%, the firm says; SYT's seeds business is perceived as the weak spot after recent problems in its U.S. corn business, the firm says, so the market would not see a problem if some of SYT’s seeds assets had to be divested as a prerequisite for a deal.
    • SYT +16%, MON +3.6% premarket.
    | 2 Comments
  • Thursday, April 30, 2015

  • 4:55 PM
    • Syngenta (NYSE:SYT) +12.6% AH after Bloomberg reports it has been approached by Monsanto (NYSE:MON) about a possible takeover.
    • Combined with SYT, MON would become the largest player in the world for both seeds and crop chemicals and a formidable competitor to Bayer (OTCPK:BAYZF, OTCPK:BAYRY), BASF (OTCQX:BASFY, OTCPK:BFFAF) and Dow Chemical (NYSE:DOW).
    • Reports last year had said the companies held preliminary talks with advisers about a combination before SYT management decided against negotiations.
    | 1 Comment
  • 4:45 PM
    • Vale (NYSE:VALE) says it is delaying the timeline of a possible IPO of its base metals division after an expected rebound in nickel prices failed to materialize.
    • Vale had said in December it was considering selling 30%-40% of the division around August, but CEO Murilo Ferreira now says the new goal is to be ready to present a recommendation to Vale’s board by the end of this year for possible action in 2016.
    • Vale execs had been expecting nickel prices to rise to ~$21K/metric ton but the company instead sold its nickel for an average $14,279 in Q1, citing a slowdown in Chinese housing construction and bearish sentiment regarding Chinese economic growth.
    • Earlier: Vale posts third straight quarterly loss but may cut iron ore output
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  • 3:44 PM
    • DuPont (DD -1.5%) settles a long-running trade secrets case against South Korea-based Kolon Industries involving fiber used to make Kevlar bulletproof vests, with the South Korean company agreeing to pay DuPont $275M in restitution.
    • The amount is far smaller than the $920M in damages that a U.S. District Court awarded DD in 2011 before a federal appeals court overturned the ruling in 2014.
    • DuPont had accused Kolon of the theft of 149 of its trade secrets relating to the Kevlar fiber used to make body armor, fiber-optic cables and tires.
    • Kolon also pleaded guilty to a federal charge of conspiracy to convert trade secrets and will pay an $85M penalty.
    | 1 Comment
  • 1:17 PM
    • Vale (VALE -0.9%) is lower after posting a Q1 loss - its third straight quarterly loss, and a wider loss than in Q3 and Q4 - under pressure from falling iron ore prices.
    • As well as weaker iron ore prices, Vale says the depreciation of the Brazilian real against the dollar had cost it $3B in the quarter.
    • But shares are well off earlier lows after Vale's Head of Ferrous Peter Poppinga told investors during a conference call that the company may cut its iron ore production forecast by up to 30M metric tons over the next two years.
    • Poppinga says Vale could replace some old higher-cost iron ore production as new capacity comes on stream: "If the market demands, we are prepared to reduce production from the south and southeast system," he said, referring to the company's Minas Gerais mines.
    • The exec said Vale's iron ore production forecast for 2015 would remain at 340M metric tones, but he did not specify whether adjustments could be made to the forecast for next year and beyond.
    | Comment!
  • 12:42 PM
    • Goldcorp (GG -6.8%) sinks to lows of the day after Q1 earnings fell far short of analyst expectations, as lower gold prices and higher cash costs outweighed increased gold production.
    • GG says its Q1 average realized gold price fell to $1,217/oz. from $1,297 a year earlier; cash costs also were higher, with all-in sustaining costs rising 5% to $885/oz.
    • Q1 gold production rose to 724.8K oz. from 679.9K oz. in the year-ago quarter, while silver production fell to 8.5M oz. from 9.6M.
    • For the full year, GG reaffirms its guidance for production of 3.3M-3.6M oz., driven primarily by new contributions from Cerro Negro and Éléonore, at costs of $875-$950/oz.; the miner also backed guidance for capital spending of $1.2B-$1.4B for the year.
    • However, the company raises its tax guidance, now expecting an annual effective tax rate of 45% in 2015 on adjusted net earnings, with a 39% effective tax rate for each of the year's final three quarters.
    | 1 Comment
  • 11:18 AM
    • A big move higher in April has the 10-year Treasury yield all the way up to 2.10%, and the FOMC - dismissive of Q1's stall in economic growth - seems undeterred in its move toward rate hikes.
    • Add in fresh selling catalysts today - initial jobless claims falling to a 15-year low and the Chicago PMI rising to its highest level this year - and gold is down 2.4% to $1,180 per ounce, right about where it started the year. 2014's multi-year lows were around $1,140 per ounce.
    • GLD -1.9%
    • ETFs: GLD, IAU, SGOL, UGL, DGP, GLL, UGLD, DZZ, GLDI, OUNZ, DGL, DGZ, DGLD, AGOL, TBAR, GEUR, UBG, GYEN, BAR
    | 15 Comments
  • 10:59 AM
    • DuPont (DD -0.4%) criticizes Glass Lewis for backing Nelson Peltz's demand for a board seat, saying the proxy advisory firm had reached the "wrong conclusion" in failing to recommend a vote for all 12 of the company's nominees.
    • The proxy advisory firm late yesterday said shareholders should elect the head of Trian Fund to DuPont’s board in May, and that the activist investor had "identified legitimate concerns at DuPont, primarily related to operational execution and management accountability."
    • However, it agreed with DuPont's rejection of Trian's break-up plan, and praised DuPont management for creating strong shareholder returns and for the steps it has taken to transform the business.
    • Glass Lewis' statement comes after proxy firm ISS also recommended DuPont board seats for Peltz and and fellow Trian nominee John Myers.
    | 3 Comments
  • 8:58 AM
    • Mosaic (NYSE:MOS) +0.2% premarket after Q1 earnings beat analyst estimates, although potash volumes fell because of issues with the North American spring fertilizer business.
    • Q1 phosphate sales grew to $1.2B from $959M in the year-ago quarter, reflecting higher sales volume and higher finished-product prices, and phosphate sales volumes totaled 2.3M metric tons, on the higher end of the company’s expected range of 2.1M-2.3M.
    • However, Q1 potash sales fell to $653M from $733M a year ago, and sales volume of 2M metric tons was on the low end of the company’s projection of 2M-2.3M metric tons, as "seasonal uncertainty during this time of year has been exacerbated by the delayed and compressed North American spring fertilizer applications."
    • For Q2, MOS projects volumes of phosphate of 2.3M-2.7M metric tons vs. 2.6M last year, and sees potash volumes of 2M-2.4M metric tons vs. 2.5M a year ago.
    | Comment!
  • 8:39 AM
    • Dow Chemical (NYSE:DOW) agrees to sell its AgroFresh unit, which makes chemicals that keep farm produce fresh, in a cash and stock deal valued $810M to Boulevard Acquisition Corp. (NASDAQ:BLVD), which is part of the Avenue Capital investment firm.
    • AgroFresh will become a Nasdaq-traded entity with an initial enterprise value of $879M; Dow will retain a minority stake.
    • Dow says AgroFresh is focused on the post-harvest market, which does not align with the rest of its portfolio, and says the sale is part of its plan to divest less-lucrative units.
    | Comment!
  • 8:29 AM
    • Potash Corp. (NYSE:POT) -2.5% premarket after reporting weaker than expected Q1 earnings and cutting its guidance for the year, warning that 2015 potash prices likely would be lower than expected.
    • POT issues downside guidance for Q2, seeing EPS of $0.45-$0.55 vs. $0.57 analyst consensus estimate, and lowers its FY 2015 EPS outlook to $1.75-$2.05 from its previous view of $1.90-2.20 and $2.02 consensus.
    • POT maintains its estimate for full-year potash gross margin of $1.5B-$1.8B and sales volumes of 9.2M-9.7M metric tons; it expects market conditions to support a stronger pricing environment for phosphate, and forecasts combined nitrogen and phosphate gross margin of $1.0B-$1.2B for the year.
    • Guidance for potash sales volumes for the year was maintained at between 9.2 million and 9.7 million tons, as was its full-year potash gross margin view of between $1.5 billion and $1.8 billion.
    • In Q1, potash gross margins rose 43% Y/Y to $428M, helped by higher realized prices and lower per-ton costs, with the average realized potash price of $284/metric ton up from $250 a year earlier; potash sales volumes were relatively flat at 2.3M tons, while sales volumes for both nitrogen and phosphate fell and prices improved.
    | Comment!
  • Wednesday, April 29, 2015

  • 11:11 PM
    • The recent rally in iron ore prices is built on shaky foundations, as today's 4.6% drop emphasizes, writes Heard on the Street's Liam Denning.
    • Optimism had sprung in part from a 5% jump in Chinese crude steel production in the first 10 days of April, but Denning says structural headwinds - China’s desire to pivot away from fixed-asset investment and its need to deal with bad debt - remain.
    • Bulls also have cited BHP Billiton's (NYSE:BHP) plans to scale back iron ore capacity expansion plans in Australia, but Caroline Bain at Capital Economics says a cut to potential supply of just 20M metric tons does not amount to much; also, BHP and Rio Tinto (NYSE:RIO) are expected to raise output heading into their June fiscal year-ends.
    • Also worth noting is that while Cliffs Natural Resources (NYSE:CLF) reported positive Q1 earnings, free cash flow was negative despite an 85% cut in capital spending; in its earnings conference call, CLF spoke almost wistfully of the need for BHP, Rio and Vale (NYSE:VALE) to curb expansion to rebalance the market.
    | 2 Comments
  • 7:27 PM
    • Yamana Gold (NYSE:AUY) says it will change its executive pay plan to better reflect performance after more than 50% of shareholders voted to reject the initial proposal.
    • CEO Peter Marrone also says he made a personal decision to waive 450K performance share units that he was awarded last June related to the purchase of Osisko Mining.
    • Yesterday, Barrick Gold said it would refine its own controversial pay plan after shareholders voted against it.
    • Say-on-pay shareholder votes are not mandatory in Canada, and companies are not required to take action on the outcomes, but they are seen as important barometers of investor attitudes.
    | 2 Comments
  • 6:48 PM
    • Ferro (NYSE:FOE) +7.9% AH after reporting Q1 earnings that beat expectations, issuing upside guidance, and agreeing to acquire a Spanish-based producer of specialty pigments.
    • FOE cites improved profitability in its performance colors and its pigments, powders and oxides segments; says value-added sales increased 7% Y/Y on a constant currency basis, but foreign currency translation hurt sales by $31M.
    • The company now sees FY 2015 EPS of $0.89-$0.96 vs. prior guidance of $0.85-$0.90 and $0.89 analyst consensus estimate.
    • FOE expects its €146M purchase of inorganic pigments manufacturer Nubiola will be accretive to its adjusted EPS by $0.04-$0.06 in 2015 and by more than $0.15 in 2016.
    | Comment!
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