Today - Tuesday, July 28, 2015
- Century Aluminum (NASDAQ:CENX) says it will permanently close its Ravenswood, W.Va., aluminum smelter, effective immediately.
- CENX says its decision is based on the inability to secure a competitive power contract for the smelter, compounded by challenging aluminum market conditions largely driven by increased exports of aluminum from China, thus the economics of restarting and operating the facility are unfavorable.
- Cliffs Natural Resources (CLF +20.4%) has popped as much as 27% today a day ahead of its Q2 earnings report, with investors bidding up the stock hoping the company beats earnings.
- The apparent market rumor is that CLF will report a loss of $0.09/share instead of the consensus $0.11 loss predicted by Wall Street analysts; Zacks says its "most accurate estimate" for the quarter is a $0.09 loss.
- Even with today's pre-earnings bounce, CLF has lost 59% YTD and 36% in the past month alone.
- Freeport McMoRan (FCX +9.4%) may cut output at its small North American copper and molybdenum mines to help it reduce costs, analysts say after it announced a cost and spending review.
- FCX may reduce production at some of its North American operations as it did in 2008-09 to cut costs, Morningstar analyst Daniel Rohr says.
- FCX does not provide cost data for individual mines, but the Q2 net cash cost for producing a pound of copper was $1.74 at its suite of North American mines vs. $0.81 at its Indonesian operations, $1.07 at its Tenke mine in Africa and $1.90 at its South American operations.
- AK Steel (AKS +13.5%) soars despite a mixed Q2 earnings report, after joining domestic steel producers U.S. Steel (X +5%), Nucor (NUE +2.2%), Steel Dynamics (STLD +6.9%) and Arcelor Mittal (MT +5.4%) in filing a trade case against steel dumping by eight countries related to cold-rolled steel products.
- The news apparently made investors optimistic that AKS can overcome low steel prices, which caused the company to miss Wall Street’s EBITDA forecasts.
- KeyBanc analyst Philip Gibbs notes that based on comments on the AKS earnings conference call, hot-rolled and stainless steel trade cases look likely.
- AKS says Q2 shipments totaled 1.811M tons vs. 1.75M in Q1 and 1.39M in Q2 2014, and expects to generate improved results for Q3 and H2 relative to their comparable periods a year ago, citing anticipated higher shipments, improving carbon steel spot market prices, increased production levels resulting in lower per ton operating costs, and the continuing benefit of lower raw materials costs, particularly iron ore.
- Citi analysts believe AKS likely will continue to struggle to post positive free cash flow absent a sharp price recovery.
- Vale (VALE +5.9%) is rallying today as iron ore prices and the Brazilian real strengthen, but Morgan Stanley analysts think the shares are overvalued even after the price recently moved below $5 for the first time in a decade.
- The firm speculates that if Vale did not pay the second tranche of this years’ dividends ($1B) and failed to close the project financing for Nacala by year-end (~$2.4B), the company would end the year with a negative free cash flow post-dividends of ~$3.8B.
- Vale currently trades at ~16.7x average estimated 2016-18 EPS derived at current spot prices, significantly above its historical average multiple of 8x, according to Stanley's calculations.
- Freeport McMoRan (FCX +9.9%) shoots higher after saying it is reviewing operating plans for its mining and oil and gas businesses to target significant additional cuts in capital spending and operating costs because of weak prices for copper, molybdenum and gold.
- FCX said the plans could result in adjustments to mine plans and future copper and molybdenum production volumes.
- FCX says it has a broad set of natural resource assets that provide "many alternatives for future actions to enhance its financial flexibility," but did not mention asset sales in the statement.
- DuPont (DD -0.2%) bounces off sharp early lows after a NY Post report indicates Nelson Peltz's Trian Fund may resume its proxy fight.
- In May, Peltz was thwarted in his push to streamline DuPont's operations and potentially break up the company as he campaigned to gain four board seats; DuPont CEO Ellen Kullman won over shareholders thanks largely to the July 1 spin off the Chemours chemicals unit and the expectation of a $100M quarterly dividend.
- But analysts quoted in the report say Chemours’ disappointing results signal that DuPont can no longer afford such a big dividend; DuPont gave Peltz more ammunition today when it reported Q2 results that fell well short of estimates.
Visit Seeking Alpha’s new Earnings Center
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs