Seeking Alpha
  • Friday, February 27, 2015

  • 3:49 PM
    • Buenaventura (BVN +6.5%) is surging after reporting Q4 adjusted EBITDA of $167M and saying strong gold production at its Yanacocha mine helped results reach the high end of its production guidance.
    • The Peruvian gold miner says it produced 245K gold oz. and 5.5M silver oz. during Q4, vs. 184K gold oz. and 4.8M silver oz. in the year-ago quarter; but full-year output was mixed, with gold production of 846K oz. coming in below the prior year's 895K oz., and silver up at 19.7M oz. vs. 18.9M oz. in 2013.
    • Q4 net sales of $254M were 12% lower than the prior year's $287M, as the average realized prices for gold, silver and copper fell a respective 6%, 24% and 8% Y/Y; Q4 sales volumes rose 33%, 28% and 25% for gold, silver and copper.
    | Comment!
  • 2:25 PM
    • Banro (BAA +37.3%) spikes higher after saying it signed agreements for two gold forward sale transactions relating to the Twangiza mine and a gold streaming transaction relating to the Namoya mine, providing total gross proceeds of $100M.
    • BAA says the purchasers are funded in part by investment funds managed by Gramercy Funds which have committed to fund the $40M in gold forward sales and $50M of the gold stream, for $90M in total committed funding; BAA will seek to obtain commitments for the remainder of the gold stream transaction prior to the expected close in April.
    | Comment!
  • 1:21 PM
    • Just 33 U.S. oil rigs were taken out of service this week, bringing the total down to 986, the lowest since summer 2011. The number of oil and gas rigs fell 43 to 1,267 - the lowest since early 2010.
    • For oil traders, that's still too many rigs pumping, and WTI crude slides nearly $1 per barrel on the report, to $48.55 per barrel (it's still up by 0.85% on the session).
    • ETFs: USO, OIL, UCO, SCO, BNO, UGA, DTO, DBO, UWTI, USL, DWTI, UHN, DNO, SZO, OLO, TWTI, OLEM
    | 24 Comments
  • 8:14 AM
    • Rio Tinto (NYSE:RIO) says it is restructuring its main product groups into four units, part of its strategy of cutting costs as commodity prices slump.
    • Rio is folding its coal and uranium units into existing business divisions, eliminating the job of its energy chief and other corporate roles; it also plans to cut hundreds of jobs in its iron ore unit in the Pilbara region, which it will announce in the weeks ahead.
    • Rio's two other divisions, aluminum and iron ore, will not be restructured.
    | 1 Comment
  • 7:53 AM
    • Glencore (OTCPK:GLCNF, OTCPK:GLNCY) says it will cut production at its Australian coal mines by 15M metric tons and defer some expansion projects this year to tackle a global supply glut and weak prices.
    • Glencore produced 60M tons of thermal coal in Australia and 9.5M tons of coking coal during 2014.
    • Australia is the world's second largest exporter of thermal coal burned to generate electricity, behind Indonesia, and it is the biggest shipper of coking coal used to make steel.
    • The decision by CEO Ivan Glasenberg to scale back coal production contrasts with decisions by BHP and Rio Tinto to push ahead with iron ore production.
    | Comment!
  • Thursday, February 26, 2015

  • 5:27 PM
    • U.S. steelmakers are slashing prices to cope with a flood of imports juiced by the strong dollar, a move that will pressure their profit margins and reduce costs for buyers of steel, WSJ reports.
    • Imports rose 33% Y/Y in January, according to new figures from the American Iron and Steel Institute, reaching 3.85M tons vs. 2.9M a year earlier; to stem the tide, steelmakers with major U.S. operations such as ArcelorMittal (NYSE:MT), U.S. Steel (NYSE:X) and Nucor (NYSE:NUE) have cut prices in recent weeks, according to steel distributors who buy from them.
    • The benchmark hot-rolled coil index is down 17% YTD to ~$500/ton, its lowest level since August 2009.
    • The lower steel prices are good news for makers of cars and car parts, construction companies and other major buyers of steel (NYSEARCA:SLX).
    | Comment!
  • 2:48 PM
    | 15 Comments
  • 1:51 PM
    • PowerShares (NYSE:IVZ) temporarily suspended creations yesterday while taking over full management of the funds from partner Deutsche Asset & Wealth Management.
    • With creations allowed again, the funds are no longer susceptible to big premiums such as those seen in closed-end funds, writes Chris Dietrich. Still watch closely, at least for today. PowerShares: "It is possible that the market value of the funds’ shares may be affected by the resumption of issuances of shares of the funds, and the market value may be higher or lower than the intraday indicative value of the shares.":
    • The funds: DBC, DBV, DBE, DBO, DBP, DGL, DBS, DBB, DBA, UUP, UDN.
    • Previously: PowerShares temporarily suspends creations on 11 ETFs (Feb. 25)
    | Comment!
  • 8:59 AM
    • Vale (NYSE:VALE) -2.6% premarket after posting below consensus Q4 earnings, as iron ore prices fell by nearly half and the Brazilian currency weakened vs. the dollar.
    • Vale reported a Q4 loss of $1.85B, far worse than analyst expectations for a $740M loss, which impacted lower than expected FY 2014 net income of $657M; Vale wrote off almost $2B in fertilizer, iron ore, coal and nickel assets during the quarter, including a $1.05B charge on the fertilizer business in Brazil.
    • Q4 EBITDA tumbled by two-thirds to $2.19B and fell 41% for the full year to $13.35B, the lowest figure since the 2009 global recession.
    • Strength in Vale's base metals division helped to cushion the fall in iron ore prices, with EBITDA up 54% to $2.52B; Vale became the world's largest producer of nickel in 2014.
    • Because cash generation has not been enough to cover Vale's $4.2B in dividend payments and $11.98B in capital spending, the company has been seeking to cut costs, find partners and sell assets, which CFO Luciano Siani says will intensify moving forward.
    | Comment!
  • Wednesday, February 25, 2015

  • 12:39 PM
    • The move comes as PowerShares (a unit of IVZ) takes over management of the funds from what had been a joint arrangement with Deutsche Asset & Wealth Management.
    • PowerShares: "There may be increases in the spread they quote between offers to buy and sell shares ... In addition, there could be a significant variation between the market price at which shares are traded and the shares’ net asset value ... Invesco believes that any potential impact to the market in shares of the funds will not extend beyond the time of the suspension.”
    • Those affected: DBC, DBV, DBE, DBO, DBP, DGL, DBS, DBB, DBA, UUP, UDN.
    | 2 Comments
  • 11:04 AM
    • WTI crude (NYSEARCA:USO) knee-jerked down to about $48.50 per barrel after the EIA reported a crude oil inventory build of 8.4M barrels vs. 4M consensus (and 7.7M last week), but the price has since recovered to where it stood prior to the print, -0.3% at $49.13.
    • Gasoline (NYSEARCA:UGA) stocks fell 3.1M barrels  vs. a 1.5M consensus drop and a 500K gain last week. Distillates (NYSEARCA:UHN) fell 2.7M barrels vs. a 3M barrel consensus drop, and a decline of 3.8M last week.
    • ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, UWTI, USL, DWTI, DNO, SZO, OLO, TWTI, OLEM
    | 44 Comments
  • 2:45 AM
    | 2 Comments
  • Tuesday, February 24, 2015

  • 4:58 PM
    • BHP Billiton (NYSE:BHP) racked up several positives in its H1 results, but the company’s valuations and challenges stemming from its U.S. onshore petroleum and potash operations, as well as the South32 de-merger mean Rio Tinto (NYSE:RIO) may be the better stock to play a possible recovery in commodities prices, according to a Barron's profile.
    • From a valuation standpoint, BHP trades at 15.4x projected earnings and 2.1x book value, while Rio trades at 13.3x projected earnings and 2.1x book, Barron's Isabella Zhong writes.
    • Rio's iron ore cash cost of $19.50/metric ton is even leaner than BHP’s $20.35, and Rio has a more focused business, with a concentration on iron ore, aluminum and copper., and - unlike BHP - no exposure to oil.
    | 3 Comments
  • 12:28 PM
    • BHP Billiton (BHP +5.5%) is rallying after H1 results turned out better than expected even as profits plunged against a backdrop of plummeting commodity prices.
    • Despite the 47% fall in H1 profit, BHP still will raise its interim dividend by 5% to $0.62/share and pledges to maintain or increase its dividend even after a proposed de-merger later this year which will see BHP hive off some unwanted assets into the separate South32 company that analysts estimate will be worth ~$15B.
    • BHP's costs have fallen faster than expected: Capital spending dropped 23% in H1, and BHP now will spend less this fiscal year and next than it had expected, cutting its original spending plans by 15% to $12.6B (£8.2B) for FY 2015 and to $10.8B in 2016.
    • BHP’s aluminum, manganese and nickel business - mostly part of South32 - was the only division to improve its Y/Y operating profit, while prices for iron ore, oil and copper - the flagship commodities of the streamlined BHP - have slumped, so BHP's next task is to convince investors that it makes sense to be less diversified.
    | 1 Comment
  • 11:47 AM
    • Agrium (AGU +3.3%) is higher after Q4 earnings easily beat analyst expectations, and the company guided for 2015 EPS of $7-$8.50 compared with the $7.55 analyst consensus estimate.
    • The beat was in light of negative potash results as the expansion project at its Vanscoy potash mine in Saskatchewan limited sales; Q4 domestic potash sales volumes fell 94% to 19K metric tons.
    • AGU expects to produce 1.9M-2.2M metric tons of potash in 2015, which will include incremental production from Vanscoy.
    • AGU sold 879K metric tons of wholesale nitrogen products in Q4, down 3% Y/Y; anticipates nitrogen production to total 3.6M-3.8M metric tons in 2015.
    | Comment!
  • 1:56 AM
    • U.S. officials are probing at least 10 major banks for the possible rigging of precious-metals markets, even though European regulators shelved a similar investigation after finding no evidence of wrongdoing, WSJ reports.
    • The DOJ is scrutinizing the price-setting process for gold, silver, platinum and palladium in London, while the Commodity Futures Trading Commission has opened a civil investigation.
    • Banks under scrutiny: HSBC, BNS, BCS, CS, DB, GS, JPM, OTCPK:SCGLY, OTCPK:SGBLY, UBS
    | 5 Comments
  • Monday, February 23, 2015

  • 5:22 PM
    • BHP Billiton (NYSE:BHP) reports a 47% Y/Y drop in net profit to US$4.27B for the six months through December, down from a $8.11B profit a year earlier but ahead of analyst consensus for $3.59B.
    • BHP's underlying profit for the six months, which excludes non-cash charges against assets including some oil fields in North Louisiana, was down 31% Y/Y at $5.35B; however, BHP is raising its interim dividend 5% to US$0.62/share.
    • BHP says it spent $6.4B on finding and developing new deposits and in expanding existing ones, but that was 23% lower than the $8.3B it spent in the same six-month period a year earlier.
    • Also says it is focusing its cap spending more on improving efficiency and reducing costs at its existing projects rather than developing new ones.
    | 6 Comments
  • 4:59 PM
    • Worthington Industries (NYSE:WOR) -2% AH after warning that it expects weaker Q3 and Q4 results.
    • WOR says falling steel prices combined with softening demand in some key end-markets, including oil and gas and agriculture, will mean Q3 earnings will come in "significantly below" last year's Q3 and Q4 also will be hurt.
    • WOR says it did not anticipate the amount and speed of the decline in steel prices, which have fallen by over $100 a ton since mid December.
    | Comment!
  • 3:59 PM
    • Freeport McMoRan (FCX -3.4%) is unlikely to sell oil, gas and copper assets in the current market, as buyers are unwilling to pay good prices for quality assets due to weak commodities prices, CEO Richard Adkerson says.
    • FCX has been trying to reduce its debt, which ballooned in 2013 after it acquired two oil and gas companies, but any help from asset sales appears to be off the table for now.
    | 12 Comments
  • 2:19 PM
    • Crude oil briefly turned positive following an FT report that OPEC could hold an emergency meeting if prices continue to slide, which would be a sign of the group's growing alarm over the impact of cheaper oil on their economies.
    • The oil minister of OPEC member Nigeria said the group had discussed the prospect of holding a meeting, according to the report.
    • After the brief spike, crude prices have resumed their descent: Brent crude -2% at ~$59 after spiking as high as $60.67, while WTI -2.8% at $49.35 after briefly touched a session high of $50.99.
    • ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, UWTI, USL, DWTI, DNO, SZO, OLO, TWTI, OLEM
    | 31 Comments
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