Analyzing Why BHP Billiton's American Depositary Receipts Trade At Different Prices
Caiman Valores • 25 Comments
Caiman Valores • 25 Comments
Wed, Mar. 16, 8:09 AM
- BHP Billiton (NYSE:BHP) is considering possible acquisitions of copper and petroleum assets as it seeks ways to revive profits besides additional cost cuts, CEO Andrew Mackenzie tells Dow Jones.
- Mackenzie signals that BHP likely would pursue single copper mines or oil fields - ideally, large, low-cost mine or oil field that is already in production - rather than takeovers of entire companies.
- While debt repayments also are an option, cost-cutting and savings from a recent change to the dividend strategy means BHP has the firepower to make a large purchase, the CEO says.
- Mackenzie also says the prevailing weakness in commodity prices represents a return to reality, suggesting BHP does not anticipate a meaningful recovery in resources markets any time soon.
Tue, Mar. 15, 3:56 PM
- The axed dividend at Antofagasta “acted as a sharp reminder of the industry’s suffering after the hefty drop in metals prices,” according to CMC Markets analyst Jasper Lawler, prompting a big drop in shares of base metals miners today.
- Also, BHP Billiton (BHP -7%) was downgraded by Macquarie to an Underperform rating from Neutral, and Rio Tinto (RIO -5.1%) was cut to Equal Weight from Overweight at Morgan Stanley, which expects all the top names to remain under pressure from low prices through 2017.
- Also: VALE -4.9%, FCX -7.1%, TCK -6.8%, CLF -11.8%.
Tue, Mar. 15, 9:17 AM| Tue, Mar. 15, 9:17 AM | 4 Comments
Tue, Mar. 15, 4:49 AM
- Antofagasta (OTCPK:ANFGY) -8.8% in London after the Chilean miner's full year pretax profit fell 83% to $259M and cancelled its final dividend.
- Anglo American (OTCPK:AAUKY) is also down well over 8% in the wake of news that CEO Mark Cutifani took a cut on his bonus due to a tough year for the company.
- Meanwhile, BHP Billiton (NYSE:BHP) was downgraded by Macquarie overnight to Underperform from Neutral. BHP -5.6% premarket.
Thu, Mar. 10, 7:18 PM
- The Samarco joint venture between Vale (NYSE:VALE) and BHP Billiton (NYSE:BHP) expects to restart production at its iron ore mine in Minas Gerais near last November's tailings dam spill by the start of Q4, its chief executive tells Reuters.
- CEO Roberto Carvalho expects iron ore pellet production for the initial 2-3 years likely would be at a reduced 19M metric tons/year as the company develops a long-term plan to store the mining waste.
- Before the dam disaster, Samarco was producing ~30M tons/year in iron ore pellets and accounted for ~20% of the global market for the high-grade steelmaking raw material that attracts a premium from mills.
- While the mine restart depends on authorization from the Minas Gerais state environmental body and mining regulator, the CEO says the settlement with the government of the 20B real ($5.53B) lawsuit for damages caused by the spill has provided positive momentum.
Thu, Mar. 10, 11:35 AM
- BHP Billiton (BHP -3.7%) says it will cut capital spending on its Jansen potash project in Canada by about one-third amid the decline in global commodity prices.
- BHP will allocate less than $200M in capital spending during FY 2016 to develop and study the feasibility of the project, down from $330M in the previous year, BHP's Canadian president Giles Hellyer tells Bloomberg.
- BHP thus far has approved $3.75B for a feasibility study and initial construction work but has not yet provided final approval on the project.
Wed, Mar. 9, 10:29 AM
- BHP Billiton (BHP -2.3%) is downgraded to Hold from Buy at Jefferies, which says BHP continues to trade above the firm's $24 price target following the huge six-week rally in mining stocks.
- Jefferies thinks that while the Chinese demand outlook is slightly better than two months ago and more metals-intensive stimulus may be coming, most commodity prices will go lower in the near term.
- The firm also is concerned about BHP’s recently announced strategic overhaul, which includes major changes to divisional management and a regrouping of segments, and says BHP should use its cash flows to pay down debt rather than acquire assets in copper and oil segments.
Wed, Mar. 9, 9:47 AM
- Fortescue Metals (OTCQX:FSUMF) Chairman Andrew Forrest lends his weight to a renewed call for an inquiry into iron ore exports from Australia, arguing oversupply is hurting competition.
- His comments follow remarks from Cliffs Natural Resources (CLF -2.5%) that it too wants a government inquiry, as its biggest rivals in Australia have a strategy to crush the competition.
- Australia’s government last May rejected calls by Fortescue and an independent lawmaker to investigate the iron ore market.
- BHP Billiton (BHP +0.3%) and Rio Tinto (RIO -0.9%) have defended their strategy of expanding low-cost output and reject the idea of an inquiry, warning that it risked undermining Australia’s commitment to free trade and open markets.
- Meanwhile, ore with 62% content fell 8.8% to $58.02/metric ton today, eroding some of Monday’s record surge.
Tue, Mar. 8, 10:26 AM
- Iron ore miners fall sharply as the spectacular rally stalls and analysts pile in with mostly bearish assessments.
- Iron ore’s rally likely will prove "short-lived," Goldman Sachs said yesterday as it maintained an end-of-year target of $35/ton, while Citigroup says it is still bearish and Axiom Capital Management says the jump probably is just a blip.
- "The rally is there to be sold because the fundamentals of the market, being supply and demand, do not stack up," says Wayne Gordon at UBS Wealth Management.
- Monday’s 20% spike largely was a response to weekend comments from the Chinese government that implied more infrastructure investment, and does not change the mid-to-long-term outlook, says BHP (BHP -8.8%) Minerals Australia President of Operations Mike Henry.
- Roy Hill CEO Barry Fitzgerald says the price spike was an "aberration... the consensus, if you look at the forward estimates is down, $30s, $40s."
- Citigroup adds that the joint venture between Vale (VALE -10.7%) and Fortescue (OTCQX:FSUMF -12.4%) might have implications for iron ore price support longer term, but it sees an oversupplied market near term.
- Also: RIO -9.1%, CLF -11.3%, X -8.6%, MT -8.3%, AKS -6.9%.
Tue, Mar. 8, 9:17 AM
- Gainers: SUNE +29%. LEU +24%. OMER +14%. BNTC +12%. TERP +11%. URBN +8%. ORIG +7%. SOL +6%. BCRX +5%.
- Losers: PSG -35%. EMITF -18%. OCLR -15%. REXX -14%. EPE -11%. FBR -11%. CRK -10%. LINE -10%. SHAK -9%. VNR -8%. SDRL -8%. BCEI -7%. LNCO -7%. RIO -7%. CRC -7%. BHP -6%. VSLR -6%. BTU -6%. JBLU -6%. ARP -6%. TSEM -6%. DNR -6%. BBL -6%. MT -5%. VALE -5%.
Mon, Mar. 7, 6:58 PM
- Even before today's 20% jump in iron ore prices, capping a 48% rise since the beginning of February, Goldman Sachs warned that the current rally would prove "short-lived" in the absence of a material increase in Chinese steel demand.
- Goldman says it is keeping its iron ore price forecast for 2016 at $38/metric ton and $35 for the next two years; the price of ore with 62% content crested today at $64.20/dry metric ton.
- Goldman says disruptions in top exporters Australia and Brazil impacted iron ore supply in January and helped stoke the price rally, but that its analysis of freight activity indicates that export volumes recovered in February and expects further supply growth in the quarters ahead to pressure inventory levels and prices.
- Bullish sentiment in China's steel market is not supported by hard data, Goldman adds, saying the seasonal increase in demand appears only marginally stronger than last year.
- In today's trade: VALE +6.1%, RIO +5.4%, BHP +5.4%, CLF +18.7%, X +4.4%, MT +5.9%, AKS +8%, WOR +3.3%, STLD +4.5%.
Mon, Mar. 7, 8:39 AM
- Iron ore soars to its biggest one-day gain since at least 2009, as investors anticipate further monetary easing by the Chinese government to boost steel demand.
- Ore with 62% content delivered to Qingdao jumped 19% to $63.74/metric ton, the highest price since June, Bloomberg reports.
- "The iron ore and steel markets have gone berserk - they’ve departed from fundamentals and are heavily driven by sentiment,” says an analyst at China Merchants Futures Co. in Shenzhen.
- Australia's Fortescue Metals (OTCQX:FSUMF) +24% in Sydney trading, and Cliffs Natural Resources (NYSE:CLF) is +19.3% in U.S. premarket; also, VALE +8.4%, RIO +1.2%, BHP +0.8% premarket.
- Earlier: Vale leads biggest rally in metals stocks in seven years (Mar. 4)
- Earlier: Iron ore prices have rallied, but analyst warns gains likely temporary (Mar. 3)
Thu, Mar. 3, 11:36 AM
- Iron ore was supposed to be weighed down again this year by rising low-cost supply and poor demand, but instead prices have soared 18% and established a foothold above $50/metric ton.
- Iron ore’s resurgence has been a boon for miners’ shares: BHP Billiton (BHP +0.8%) touched a three-month high in London today, with gains supported by a legal settlement related to a dam spill, Rio Tinto (RIO -0.1%) rose as much as 3.5%, and Fortescue Metals (OTCQX:FSUMF +7.8%) surged 6.7% in Sydney to close at its highest since October.
- The gains probably have been powered by restocking by Chinese mills and some weather-related disruption to shipments from Australia, according to Capital Economics, which warns that gains may prove temporary.
- Iron ore prices will fall back, perhaps before the end of Q2, the firm's Caroline Bain tells Bloomberg, as Chinese steel production could fall sharply this year while Australian iron output will continue to rise.
- Also, Moody's forecasts Chinese steel demand, which accounts for half of global supply, is expected to shrink by another 5% this year after a 5% drop in 2015.
Thu, Mar. 3, 7:59 AM
- BHP Billiton’s (NYSE:BHP) credit rating is cut two notches to A3 from A1 with a negative outlook by Moody’s, which sees the company's credit metrics to remain “substantially weaker” in the next year or two.
- Moody’s says it "views current weak commodity prices and softer demand as representing a fundamental shift in the operating environment beyond a normal cyclical downturn."
- S&P cut BHP’s rating last month on reduced estimates for commodity prices and “very challenging market conditions.”
Wed, Mar. 2, 4:53 PM
- Samarco and its two shareholders, Vale (NYSE:VALE) and BHP Billiton (NYSE:BHP) confirm an agreement with Brazil's attorney general of Brazil, the states of Espirito Santo and Minas Gerais, and other authorities for the restoration of the environment and communities affected by the November dam failure.
- Samarco will pay 4.4B reais (~$1.1B) through 2018 - 2B reais ($500M) in 2016, and 1.2B reais ($300M) in each of 2017 and 2018 - into a fund to cover the cleanup of the spill, plus between 800M-1.6B reais/year during 2019-21.
- In the event Samarco is unable to pay its obligations, Vale and BHP would be responsible for covering the costs.
- The accord does not cover private civil suits, other public civil suits or criminal investigations.
- Vale and BHP closed regular trading with respective gains of +12.6% and +8.1%, as the parameters of the deal were reported late yesterday.
Tue, Mar. 1, 6:32 PM
- The Samarco joint venture between Vale (NYSE:VALE) and BHP Billiton (NYSE:BHP) will pay at least 20B reais ($5B) over 15 years as part of a deal with the Brazilian government to settle a lawsuit for damages caused by November's deadly dam spill, Reuters reports.
- Samarco will pay 4.4B reais ($1.09B) in the first three years following the agreement that will be signed tomorrow, according to the report.
- Meanwhile, Samarco reportedly has requested a license to store mining tailings in the Minas Gerais state, the group's first attempt to resume operations there.
BHP Billiton Ltd. engages in the exploration, development, production and processing of minerals, gas and oil. It operates through the following segments: Petroleum and Potash, Copper, Iron Ore, and Coal. The Petroleum and Potash segment explores, develops and produces oil and gas; plus the... More
Sector: Basic Materials
Industry: Industrial Metals & Minerals
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