Seeking Alpha
  • Today - Friday, March 6, 2015

  • 2:58 PM
    • Domtar (UFS +3.6%) shoots higher following headlines that the company received a favorable ruling from the International Trade Commission in the preliminary phase of anti-dumping and countervailing duty investigations concerning certain uncoated paper from Australia, Brazil, China, Indonesia and Portugal.
    • Other paper packaging stocks are lower: IP -0.9%, PKG -1.9%, RKT -1.7%, MWV -1.8%, KS -1.5%.
    | Comment!
  • 2:42 PM
  • 9:15 AM
  • 8:53 AM
    • Alcoa (NYSE:AA) +1.1% premarket after saying it will review 500K metric tons of smelting capacity and 2.8M metric tons of refining capacity for possible reduced activity or outright sale, as it looks to cut costs and improve its competitive position.
    • AA says the potential actions could affect 14% of its global smelting capacity and 16% of its global refining capacity.
    • AA has curtailed, closed or sold 1.3M metric tons, or 31%, of its highest-cost smelting capacity in its primary metals business since 2007.
    | Comment!
  • 8:25 AM
    • Iron ore tumbles to a six-year low after China lowered its economic forecast, renewing concerns about its appetite for the steel-making material at a time when supplies are already outpacing demand.
    • Steel demand growth in China - which buys three in every five tons of iron ore traded by sea - last year already was at its slowest in more than a decade.
    • Australian iron ore miners have been laying off workers and cutting costs as they cope with lower prices, but they are not expected to curb production, particularly as a weaker Australian dollar helps cushion them from the impact of falling prices.
    • RIO -1.4%, BHP -0.6% premarket; also VALE -0.8%.
    | Comment!
  • Thursday, March 5, 2015

  • 7:23 PM
    • U.S. inventories are at their highest levels in at least 80 years, and the U.S. is running out of places to store it, prompting some analysts to predict already depressed prices could spiral even lower.
    • When storage is full, there is pressure on those holding oil in storage to "dump that inventory,” says the CEO of energy consulting firm Perry Management, who believes the space shortage could cause prices to drop to as low as $30/bbl.
    • U.S. oil production rose for the fourth consecutive week to a rate of 9.3M bbl/day, even as drilling rigs are being idled at a rapid clip; U.S. inventories also rose, for the eighth straight week, jumping 2.4% to 444M barrels, the U.S. Energy Information Administration reports.
    • Producers are pumping nearly 1.5M bbl/day more crude than the world needs, due to a combination of slowing demand and rising production in the U.S., meaning oil put in storage today could be there for years; should the glut worsen, more producers could be forced to shut their wells, effectively storing the oil in the ground.
    • Storage operators at Cushing, Okla., including Plains All American (NYSE:PAA) and Phillips 66 (NYSE:PSX), said recently they expect the tanks there to hit capacity - currently they are about two-thirds full.
  • 6:45 PM
    • DuPont (NYSE:DD) says an unplanned outage at its Chambers Works chemical plant in New Jersey will challenge Q1 productivity and earnings in its safety and protection segment.
    • In discussing its presentation at today's JP Morgan Aviation, Transportation and Industrials Conference detailing its efforts in advanced materials, the company says it is focused on "a $50B portion of a $500B potential market.”
    • Shares -0.4% AH.
    | 1 Comment
  • 12:14 PM
    • Noble Group (OTCPK:NOBGF) issues a defense against accusations of accounting irregularities made by Iceberg Research, and claims a former employee who was fired for misconduct is behind the claims.
    • Noble says its fair values on the assets were not overstated and the methodology was based on International Financial Reporting Standards.
    • Iceberg has likened Noble to Enron, and claimed the commodities trader overstates the value of its holdings in associated companies and that the unrealized gains it records on its contracts are not matched by its actual cash flow.
    | Comment!
  • Wednesday, March 4, 2015

  • 4:50 PM
    • Huntsman (NYSE:HUN) unveils a plan to restructure its color pigments business, which will include site closures, cost reduction initiatives and a cut of 120 positions.
    • Manufacturing sites to be closed by year-end 2015 include Cartersville, Ga., East St. Louis, Ill., and King of Prussia, Pa. in the U.S., as well as a plant in Germany.
    • HUN says the move will contribute $20M by the middle of 2016 to its plan to deliver more than $140M in synergies.
    • HUN +0.3% AH.
    | Comment!
  • 12:38 PM
    • Alcoa (AA -4.9%) tumbles to five-month lows following BofA's downgrade, which cited worsening aluminum fundamentals and the expectation that falling premiums can no longer offset price strength on the London Metal Exchange in the near term.
    • The downgrade coincides with BofA's lowering of its average 2015 aluminum price forecast by 7.8%, and its global average premium forecast to $300/ton.
    • A lower price is not the only impact from the downgrade, as implied volatility in the shares has jumped by 8.7% to 31.6% and stands just above the historic reading of movement on the underlying share price.
  • 10:26 AM
    • Canadian banks are getting nervous as they struggle to find buyers for Silver Wheaton's (SLW -1.2%) $800M bought deal financing, Financial Post reports, as the company's stock continues to trade below the offer price.
    • Sources say a very large portion remains unsold, with one describing the deal as a "train wreck.”
    • The bought deal, announced Monday after the close, was priced at US$20.55/share, representing a 3% discount to SLW’s closing price that day.
    • This is the third time in recent months where banks had trouble selling a very large mining stock offering, following Barrick Gold and Franco Nevada offerings that proved to be tough sells; FP says it shows that investor appetite for these stocks is not endless amid rough market conditions.
  • 8:13 AM
    • Alcoa (NYSE:AA) -2.5% and Century Aluminum (NASDAQ:CENX) -1.6% premarket after BofA Merrill downgrades each to Neutral from Buy, as the firm lowers its aluminum forecasts to reflect worsening aluminum fundamentals from increased Chinese exports and pressure from LME warehouse rule changes.
    • BofA says it still believes aluminum can be more defensive vs. other commodities, but it no longer expects falling premiums can be offset by LME price strength near term.
  • 7:47 AM
    • The open bars, oysters, prime rib, rowdy parties, and luxury hotel suites are a thing of the past at the annual Toronto gathering of the Prospectors and Developers Association of Canada, having instead given way to chips and dip and Airbnb rentals thanks to the years-long slump in the sector.
    • "I’m really depressed that I have to drink bourbon versus single malt scotch, it just doesn’t do it for me," says Ben Cox, CEO of Aston Bay Holdings (check out a price chart; it's a bet his shareholders feel even worse). "Everyone is panicked in the industry. If you are not humbled this year, whether you work for a major or a junior or anyone in-between, you are insane."
    • "Flat is the new up," says another attendee. The gathering is "a little bit depressing," but a sign of the times.
  • Tuesday, March 3, 2015

  • 6:56 PM
    • DuPont (NYSE:DD) nixes a request from Trian Fund Management to use a universal ballot in a coming vote on directors, just weeks after the company rejected the hedge fund’s board nominees and proposed two of its own.
    • DuPont says it will continue to rely on proxy cards, which will force shareholders to either vote for or against its slate of directors; a universal ballot would put both Trian’s four nominees and DuPont’s full 13-member board on the same paper document sent to shareholders.
    • While the issue seems technical, the decision can affect the ability of smaller investors to pick and choose directors from each side’s slate, which is particularly important at DuPont since it has a base of nearly 600K individual shareholders.
    • DuPont and Trian are engaged in a bitter fight over the performance and future of the company, with the hedge fund believing the company's agriculture and industrial chemicals businesses should be separated.
  • 12:08 PM
    • "This is a bad deal. It's a very bad deal. We're better off without it," says Israeli PM Benjamin Netanyahu, speaking before Congress about U.S. negotiations with Iran over its nuclear ambitions. "The alternative to this deal is a much better deal."
    • For now, the clarity of his speech looks to have set back the chance of sanctions being lifted on Iran, and crude oil is more than $1 per barrel higher to $50.25 since the address' 11 ET start.
    • USO +0.95%
  • 9:09 AM
    • U.S. Steel (NYSE:X) -2% and AK Steel (NYSE:AKS) -3.7% premarket after Nomura downgrades each stock to Neutral from Buy, with respective price targets of $21 (lowered from $37) and $4 (cut from $10).
    • The firm sees two major structural changes underway that should significantly alter the global steel landscape in the coming years: dollar strength and cost curve deflation driven by lower raw material prices and freight rates.
    • Flat-rolled and long product import pressure have been significant headwinds for the industry over the past year, and Nomura expects further dollar appreciation into 2016 will keep import pressure high.
    | 1 Comment
  • 8:45 AM
    • The biggest takeaway from Glencore's (OTCPK:GLCNF, OTCPK:GLNCY) latest earnings report was that the miner is continuing to surprise with returns to shareholders despite a challenging commodity price environment.
    • Glencore's 9% increase in annual dividend to $0.18/share follows a $1B share buyback program announced last year, of which $930M has been completed; CEO Ivan Glasenberg has said the company will return any excess cash to shareholders if it can’t find a way to generate a better return by reinvesting in the business.
    • In the meantime, Glencore’s saving grace is its commodities trading division, where EBIT rose 18% Y/Y to $2.8B, helping offset a 23% drop in EBIT from its industrial activities to $3.9B; the slump in oil prices helped raise trading volumes and profit because future prices became higher than current prices, which led some energy companies to buy oil at current prices.
    | Comment!
  • Monday, March 2, 2015

  • 5:19 PM
    • Silver Wheaton (NYSE:SLW) -3% AH after agreeing to sell ~$800M of stock to fund its purchase of an additional supply of gold from a Vale's (NYSE:VALE) Salobo mine in Brazil.
    • SLW says it will use the proceeds of the offering to fund its acquisition of an additional 25% gold stream from the mine, which is in addition to the 25% of the mine's gold production SLW acquired in 2013.
    • The deal raises SLW’s production and cash flow profile by adding expected average gold production of 70K oz./year for the first 10 years and 60K oz./year over the first 30 years.
  • 3:43 PM
    • Star Bulk Carriers (SBLK -8%) is downgraded to Sell from Hold with a $2 price target, cut from $5, at Deutsche Bank, "based on simple math": current rates are significantly below breakeven, resulting in a reduction in the firm's earnings forecasts to well below consensus, and potentially requiring further dilutive financing.
    • While Deutsche Bank says SBLK has enough cushion to withstand increased cash burn, it believes prolonged weakness in spot rates will have significant negative implications on earnings - the best case - and may necessitate further equity financing at low valuations - the worst case, but not a stretch.
    | Comment!
  • 2:34 PM
    • Coffee prices are in retreat as extended rain in Brazil and increased production capacity has helped to soothe the market and push up forecasts on output.
    • Data from the U.S. Commodity Futures Trading Commission indicates a sharp drop in bullish bets on coffee as experts now ease off some previous concerns on supply vs. demand.
    • Arabica prices are still higher than where they were a year ago.
    • There could be a lag factor for many companies to see a benefit from lower coffee commodity costs. Starbucks tipped off during its FQ1 earnings call (transcript) it has 94% of its 2015 coffee needs already priced.
    • Arabica coffee price chart
    • Related stocks: GMCR, SBUX, JVA, SJM, KRFT, DNKN
    • Related ETFs: JO
    | 1 Comment
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