Seeking Alpha
  • Friday, September 19, 2014

  • 3:58 PM
    | 12 Comments
  • 11:12 AM
    • It's new contract lows across the board in the grains with Dec. corn -1% to $3.34 per bushel, Dec. wheat -2.2% to $4.77, and Nov. beans -1% to $9.61.
    • Related ETFs: CORN -1.2%, WEAT -2.1%, SOYB -1.5%, JJG -1.5%.
    • For wheat it's a 4-year low following last week's USDA report estimating a record worldwide harvest of 720M metric tons. The USDA also said wheat exports of 314.5 tons in the week ended Sept. 11 were less than half the previous week.
    • The same supply report also predicted record U.S. harvests for both corn and beans.
    | 1 Comment
  • 8:59 AM
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  • 8:58 AM
    • Molycorp (NYSE:MCP) +5.3% premarket after Oaktree Capital Management discloses a 9.1% stake, or nearly 24.5M shares, in the company.
    • Last month, Oaktree agreed to provide MCP up to $400M in financing through credit facilities and the sale and leaseback of equipment at the company's Mountain Pass facility.
    • MCP shares had slumped to a new 52-week low yesterday, and have plunged 76% YTD.
    | 3 Comments
  • Thursday, September 18, 2014

  • 3:21 PM
    • In the doldrums not long ago, steel stocks are now among the hottest in the market; in the last three months, X +81%, STLD +37%, AKS +30%, NUE +12%.
    • Steel Dynamics (STLD +0.6%) was the latest to report a strong summer, guiding for above-consensus Q3 earnings as shipments and metal spreads are forecast to improve in spite of continued elevated import activity; Nucor did so yesterday morning (NUE +0.4%).
    • Still, Credit Suisse is not ready to embrace the steel company revival, at least when it comes to AK Steel (AKS -4.8%), whose self-help story has less scope for upside surprise than US Steel (X +0.2%); one obvious contrast is that X is looking at shutting down blast furnace steelmaking capacity in North America, while AKS is buying more of it.
    • ETF: SLX.
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  • 10:53 AM
    • The USDA late yesterday gave final approval to its Enlist genetically modified corn and soybeans developed by Dow Chemical (NYSE:DOW), meaning the traits could be on the market in time for the 2015 U.S. planting season.
    • While heavily criticized by environmentalists and some farmers, Dow AgroSciences will market the product as an answer to weed resistance problems that limit crop production; heavy use of Monsanto's (NYSE:MON) Roundup has triggered an explosion of herbicide-resistant super weeds, and Enlist would address the problem since weeds have not yet developed resistance to it.
    • Enlist is still awaiting approval from the EPA.
    | 6 Comments
  • 9:50 AM
    • ArcelorMittal (MT +1.5%) is upgraded to Buy from Neutral with a $17.50 price target at BofA/Merrill, which cites margin upside.
    • The firm's positive outlook on MT is based on the belief that Europe steel prices have troughed and will rise into Q4, steel margins are expanding with steel prices having proved more resilient than raw materials, and that iron ore will not prove a headwind for earnings from here.
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  • 8:51 AM
    • Air Products & Chemicals (NYSE:APD) says it will reorganize into seven reporting segments when its new fiscal year begins Oct. 1.
    • The industrial gases businesses will comprise four units organized by geography - Americas; Europe, Middle East and Africa; Asia; and global - while the other three segments are focused on materials technologies, energy from waste and corporate operations.
    • CEO Seifi Ghasemi, appointed in June following pressure from activist investor Bill Ackman, says the move to a decentralized and more efficient structure will create true P&L accountability.
    | Comment!
  • 8:39 AM
    | 9 Comments
  • Wednesday, September 17, 2014

  • 6:45 PM
    • Bayer (OTCPK:BAYZF, OTCPK:BAYRY) plans to separate its plastics business, WSJ reports, a move that would further its shift away from its roots in chemicals and toward life sciences.
    • Bayer could announce as soon as tomorrow a plan to shed the MaterialsScience unit, but the company reportedly has not decided what form the separation would ultimately take - an outright sale, IPO or spin off.
    • The unit, which makes polycarbonate, polyurethane and other polymers had sales last year of €11.2B ($14.4B), down 2.2% Y/Y, and analysts have valued it at ~$10B, but in terms of growth, the business has underperformed Bayer's prescription drug and other life sciences operations.
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  • 5:08 PM
    • Alcoa (NYSE:AA) today felt the impact of its credit downgrade into junk status, selling $1.25B of bonds which paid interest of 5.125%; that's 1.6 points higher than the average rates paid by companies only one notch higher, representing ~$20M more in annual interest payments on the debt.
    • Alcoa fell into junk territory when Fitch cut its rating in April, following Moody’s, although S&P puts it at the bottom of investment grade.
    • The higher debt costs haven’t fazed investors, who have pushed AA stock up 53% YTD as the company is shifting to higher-growth, higher-margin businesses such as manufacturing specialized parts for the aerospace and auto sectors.
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  • 4:40 PM
    • Steel Dynamics (NASDAQ:STLD+2.4% AH after guiding Q3 EPS of $0.42-$0.46, substantially above Q2 results and ahead of analyst consensus estimate of $0.38, as STLD expects shipments and metal spreads to improve across the steel operating platform despite continued elevated import activity.
    • STLD says demand trends for key steel-consuming end markets is expected to remain favorable, as strength in automotive, manufacturing, energy and construction markets continues to improve.
    • The strong guidance follows optimistic outlooks from U.S. Steel (NYSE:X) and Nucor (NYSE:NUE).
    | Comment!
  • 3:41 PM
    • Potash Corp. (POT +0.5%) may boost its production capacity to as much as 11M metric tons of potash next year from ~9.2M tons this year on signs that demand for the crop nutrient may rise, CFO Wayne Brownlee says today in an investor presentation.
    • "Given some of the supply constraints we’ve seen in some of our competitors, there may be room for us to have increased volume," the CFO says.
    • Brownlee estimates global potash sales will total 58M-59M tons this year, with the same range or possibly increasing slightly in 2015.
    | Comment!
  • 10:51 AM
    • U.S. Steel (X +8.8%) is recommended with a Buy rating and a $58 price target, raised from $47, at Goldman Sachs following the announcement of accelerated restructuring measures.
    • Goldman sees the decision to ring-fence its consistently unprofitable Canadian operations as value enhancing, reducing its underfunded pension and OPEB liabilities by 40%; the decision to cancel the expansion of the Keetac iron ore mine makes sense in light of the state of iron ore prices and deteriorating fundamentals.
    • The firm believes the benefits of the positive transformation at the company level are magnified by the structural story in the North American flat rolled steel market, allowing the U.S. producers to maintain a higher premium over global prices.
    | Comment!
  • 9:10 AM
    • DuPont (NYSE:DD) responds to Trian Fund Management's call for a breakup of the company, saying it had engaged in a "constructive dialogue" with the activist investor.
    • DuPont's board says it is intent on executing on a plan that includes cutting costs by $1B, separating its performance chemicals business and buying back $5B worth of shares; cites shareholder returns of 220% vs. 144% for the S&P 500 since year-end 2008.
    • DD +3.3% premarket.
    | 10 Comments
  • 8:52 AM
    • Nucor (NYSE:NUE) +4.4% premarket after raising Q3 earnings guidance substantially, now seeing EPS of $0.70-$0.75 vs. analyst consensus estimate of $0.62; guidance includes a $0.02 charge related to the partial writedown of some assets.
    • NUE expects much improved overall operating performance at its steel mills in Q3, seeing increased profitability in sheet, structural, bar and plate steel.
    • Structural steel had no major outages in Q3, compared to the planned three week outage at Nucor-Yamato Steel in Q2.
    • Says imports remain at high levels, applying downward pressure on pricing.
    • The news follows a strong Q3 outlook from U.S. Steel; X +12.8%, AKS +5.7%, STLD +2.3% premarket.
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  • Tuesday, September 16, 2014

  • 6:39 PM
    • U.S. Steel (NYSE:X) +6.8% AH after updating its Q3 outlook and saying it expects a significant improvement in operating income, and Q3 earnings will come in significantly higher than current consensus estimates.
    • The company announces three key strategic actions: It will not proceed with an expansion at its iron ore pellet operations in Keewatin, will forgo further development and construction of the carbon alloy facilities at Gary Works, and will apply for relief for U. S. Steel Canada from its creditors and will be deconsolidated from U.S. Steel's financial statements.
    • The estimated capital investment that would have been required to complete these projects was more than $800M; the company estimates the strategic actions will result in total charges of $550M-$600M.
    | 4 Comments
  • 6:08 PM
    • Junior gold explorer Probe Mines (OTCPK:PROBF) appoints former Barrick Gold CEO Jamie Sokalsky as a director and its next non-executive chairman, where he is expected to replace Patrick Reid as chairman after the company’s annual meeting Oct. 29.
    • Sokalsky formally stepped down from the top job at Barrick yesterday following a management shakeup there.
    • Probe’s assets include the Borden gold project and Black Creek chromite deposit, both in Ontario.
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  • 5:55 PM
    • The CEO of Russian potash firm Uralkali (OTC:URALL) says it has no plans to return to the sales arrangement it had with Belarus, WSJ reports.
    • Share prices of major potash producers in North America, Germany and Israel have rallied this year, partly on hopes of a reconciliation, but Uralkali CEO Dmitry Osipov says no talks have been held since April and none are planned.
    • However, potash prices have not fallen as much as some analysts had predicted following the breakup, due in part to better than anticipated demand from Brazil and China.
    • On watch: POT, MOS, AGU.
    | 2 Comments
  • 3:41 PM
    • AK Steel (AKS +4.4%) says it sees the recently completed Severstal Dearborn acquisition as accretive to its earnings and credit enhancing; it anticipates annual cost-based synergies of ~$50M, with ~$25M realized in 2015.
    • Cowen raises its price target to $11 from $9 as it becomes more constructive on AKS shares, especially given the recent ~18% pullback; the firm thinks AKS could benefit from upside to production guidance, an improving product mix at the Dearborn facility, and margin expansion on lower raw material inputs (Briefing.com).
    | Comment!
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