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Jul. 23, 2015, 11:27 AM
- Vale (VALE -1.7%) says it produced 85.3M metric tons of iron ore in Q2, up 7.4% Y/Y in a record for the quarter and second highest ever for the world's largest iron ore producer; analysts had estimated Vale would produce ~82.5M metric tons.
- Vale says H1 output reached a record 159.8M tons, 6.2% higher than last year's first half, attributed to better than expected weather and expanded operations at the N4WS mine and Plant 2 unit in the Carajas complex.
- Vale, also the world’s largest nickel producer, says Q2 nickel output rose more than 8% to 67.1K tons vs. a 73.9K ton consensus forecast; copper output added 30% to 104.9K tons, coal production fell nearly 9% to 2M tons, and potash production rose 16% to 111K tons.
- Also reiterates plans to cut 25M-30M metric tons/year of low-quality iron ore on which it no longer makes enough money; it does not offer a time frame for the reduction in low-quality ore volumes but says they would be replaced by new, higher-quality production.
Jul. 22, 2015, 10:22 AM
- Citigroup analysts say BHP Billiton's (BHP -3.4%) FY 2016 guidance for declines in production of oil, coking coal and copper were larger than expected, and the guidance for increased iron ore production was also below expectations.
- While declines were expected due to field decline in oil and lower grades in copper, "it highlights the capital intensive nature of mining and that even $9B of capex does not drive production growth every year," CIti says, as it forecasts copper equivalent production growth of 2% in FY 2017.
- "The beauty of diversification is that when one commodity is down, one of the others picks up the slack. That's not happening right now for BHP," says a mining analyst for Morgans Financial.
- Miners and related companies are hammered in early trading: CLF -13%, RIO -1.9%, VALE -2.5%, FCX -3.1%, OTCPK:AAUKY -3.9%, CAT -2.7%, JOY -1.2%.
Jul. 21, 2015, 3:14 PM
- Alarm bells are ringing for Joy Global (JOY -2.2%) and its ability to weather a capital spending slump among miners that include some of the company's biggest customers, J.P. Morgan analysts say.
- A combined 60% of JOY’s trailing 12-month sales were to North American and Latin American customers, many of which are coming under increasing financial pressure, which prompts the analysts to expect JOY’s earnings and balance sheet to come under pressure into FY 2016.
- JPM sees some of JOY's five biggest customers - ANR, SID, CLF, CMP and VALE - needing to further reduce capex, as well as push out receivables, off-load inventories to suppliers and in-source maintenance labor (~20% of JOY’s service business).
Jul. 17, 2015, 3:59 PM
- Brazil's political crisis deepens as Eduardo Cunha, the head of Brazil’s lower house, said today he is breaking with the ruling coalition.
- Cunha accused Pres. Rousseff's administration of pressuring prosecutors to implicate him in the widening corruption scandal at Petrobras scheme; late yesterday, the federal judge leading the investigation broadcast testimony from a defendant who turned state’s evidence alleging that Cunha took bribes.
- The move comes after a series of recent defeats in congress for Rousseff as lawmakers turned aside efforts to contain spending and raise taxes as she seeks to preserve Brazil’s investment-grade credit rating.
- PBR -5.5%, VALE -2.2%, EBR -2.1%, ELP -2.9%, CIG -5.8%, CPL -2.1%, SBS -2.9%, BSBR -1.1%, BBD -2.2%, ITUB -1.5%.
- ETFs: EWZ, BRF, BRZU, EWZS, BRXX, BRAQ, BZQ, BRAZ, BRAF, UBR, DBBR, FBZ
Jul. 14, 2015, 10:57 AM
- ArcelorMittal (MT -1.7%) says it likely will idle the long steel mills it recently installed in its João Monlevade plant in Brazil, citing excess capacity in the sector and stagnating demand.
- The comments from MT's South American head of long steel echo those of the company's chief executive in Brazil, who warned yesterday that the outlook for demand in Brazil's domestic steel market remains gloomy.
- Also: GGB -5.7%, VALE -3.3%, TX -0.7%.
Jul. 14, 2015, 10:31 AM
- Vale (VALE -3.5%) gives back part of yesterday's big gains sparked by news that it would withdraw 25M metric tons of annual production starting this month.
- Vale’s "cut" was not really a cut, as it is merely adjusting its operations to shift production from higher-cost tons to more profitable output; it maintained its 2015 production guidance at 340M tons as well as its longer-term target of producing 450M tons by 2018.
- Morgan Stanley says Vale's move will not reduce supply and will not lead to higher iron ore prices in the short term, and could even have the opposite effect.
- Citigroup says any move would need to result in reduced supply to have a prolonged influence on physical markets and prices, adding that BHP Billiton (BHP -1%) and Rio Tinto (RIO -0.8%) are unlikely to follow Vale’s move.
Jul. 13, 2015, 2:15 PM
- Vale (VALE +6.9%) and other iron ore peers are rallying after reports that Vale plans to cut iron ore production in an attempt to boost profit.
- Peter Poppinga, Vale's executive director for ferrous and strategy, told an industry conference in Sao Paulo today the company would lower iron ore output by 25M metric tons starting this month, with the cuts coming from lower quality products at its mines in south and southeast Brazil and from third-party purchases.
- “Our mantra is not volume at any cost anymore, it’s to maximize margins,” Poppinga said. “It doesn’t mean shutting mines, it means optimizing some production flows at plants.”
- Poppinga also said prices for iron ore, which have been cut almost in half in the past year, are poised to rebound as China shuts mines and replenishes inventories.
- Also: RIO +3.9%, BHP +2.9%, SID +8.4%, CLF +7.2%, X +4.7%, AKS +7.4%, MT +2.4%, NUE +2%, STLD +2.3%.
Jul. 8, 2015, 8:42 AM
- Iron ore prices plunge to their lowest levels in at least six years, sparked by fears that the rout in China’s stock market could hurt demand while the biggest producers continue to raise output.
- Ore delivered to Qingdao sank 10% to $44.59/metric ton overnight, the lowest price dating back to May 2009.
- Iron ore’s 10-day drop started with figures that showed holdings at ports in China rebounded last week while exports from Australia’s Port Hedland climbed to an all-time high., and the slump deepened as China’s stock rout worsened.
- BHP -3%, RIO -4.2%, VALE -3.2%, CLF -4.8% premarket.
Jul. 7, 2015, 11:59 AM
- Vale (VALE -4.2%) shares extend their three-day slide and touches their lowest levels in 10 years, as iron ore drops below $50/metric ton for the first time since April on concern low-cost supplies from producers including Brazil will expand further while demand falls in China.
- Iron ore prices are lower by 5.1% to $49.60, according to a price index compiled by Metal Bulletin, down more than 20% from a June high and capping a nine-day losing streak, the longest losing streak since last August.
- Bloomberg reports that inventories at Chinese ports rose 2.8% last week to 81.55M tons; as trade seems to pick up, analysts say iron ore prices could slump to $40.
- Earlier: China's stock turmoil whacks Freeport McMoRan, copper producers
Jul. 7, 2015, 10:23 AM
- Freeport McMoRan (FCX -7.3%) is the S&P 500's worst performer in early trading as copper prices retreat to five-month lows.
- Other global miners of copper, iron ore and other metals also are posting sharp losses: VALE -6.1%, BHP -3.8%, RIO -3.9%, SCCO -4.4%, TCK -6.4%.
- China’s stock market swoon is magnifying investor fears about weaker demand from one of the world’s largest consumers of raw materials.
- Overnight, the S&P, Goldman Sachs and the Bloomberg commodity indexes fell the most since November, and analysts say the worst is yet to come.
- "China's demand stumble comes at an awkward time, just when more and more supply of raw materials is coming on stream in many sectors. No quick fix in sight," says HSBC co-head of Asian economic research Frederic Neumann.
- ETFs: JJC, CPER, CUPM
Jul. 3, 2015, 2:11 PM
- China says it will allow 400K deadweight ton ships to dock at its ports, officially ending a three-year ban that had effectively shut out Vale's (NYSE:VALE) giant vessels.
- The Valexmax mega-ships, which were designed to cut the costs of transporting iron ore to China, were banned by the government in early 2012 on safety concerns.
- The ability of Valemaxes to take cargoes directly to China and cut costs by $4-$6/metric ton, comes as iron ore prices struggle near their lowest level since 2009 due to a global supply glut.
Jul. 2, 2015, 3:49 PM
- Iron ore prices fell more than 5%, suffering the largest one-day percentage loss since March and falling ~15% since hitting a multi-month high of $65.61/metric ton on June 11.
- Analysts believe a prolonged wet season in the Pilbara region of Western Australia affected output, in particular at mines owned by Rio Tinto (RIO +0.6%), the world’s no. 2 producer of iron ore.
- Traders also noted shipments from Australia and Brazil, another major supplier, have started to increase as the weather improved, and a further decline in Shanghai Rebar futures.
- ANZ says iron ore is likely to fetch $53/metric ton in coming months, while Goldman Sachs is even more bearish, believing iron ore will average $49 in Q3.
- Also: BHP +2%, VALE +1.3%.
Jul. 1, 2015, 6:44 PM
- It’s time to add to short positions in high-cost iron ore producers Cliffs Natural Resources (NYSE:CLF) and Fortescue Metals (OTCPK:FSUMF), Wolfe Research’s Gordon Johnson says.
- Iron ore prices are "extremely likely" to go below $47, Johnson believes, noting that when prices touched $47 earlier this year, "no one flinched - no capacity was taken permanently offline, while virtually all planned capacity ramps moved forward."
- With ~52M metric tons of oversupply in 2014, an estimated 107.7M metric tons of incremental supply expected from the big four iron ore producers - RIO, BHP, VALE and Fortescue - and the likelihood that Chinese crude steel production will fall for the first time this year since the 1980s, Johnson estimates that 52M metric tons of excess will grow to ~183M in 2015.
Jun. 30, 2015, 9:48 AM
- Australia's government cuts its price forecast for iron ore in 2015 by 10% to US$54.40/metric ton, a steep drop from the US$60.40 predicted three months ago and $94 forecast in January; for 2016, expectations call for iron ore at US$52.10 from a previous outlook for US$56.80.
- The government estimates the country's YTD earnings from exports of iron ore and other raw materials to China, Japan and elsewhere fell 11% to A$174B; three months ago, it predicted an 8% drop in exports to A$179B.
- The downside guidance is based on a weak outlook for China's steel sector, as production is expected to contract this year and next, while China's residential construction would remain stagnant;
- Outside analysts also blame over-estimates of China's appetite for imported ore by Rio Tinto (RIO -0.4%) and BHP Billiton (BHP -1.1%), as well as Brazil's Vale (VALE -2.1%), which continue to expand production.
Jun. 25, 2015, 3:57 PM
- Brazil's financial markets were routed today after a news report that former President Luiz Inacio Lula da Silva could be arrested as part of the sweeping corruption scandal involving Petrobras (PBR -4.7%).
- Investors were spooked by a report that a habeas corpus legal filing had been made on behalf of Lula to protect him from unlawful arrest in the corruption investigation; spokespersons later said the proceeding had not been filed by the ex-president or his representatives and that they had no prior knowledge of it.
- Also, Brazil's non-seasonally adjusted jobless rate rose in May to 6.7%, the highest since 2010, from 6.4% in April, reinforcing worries that the country is on the verge of a recession.
- Also: PBR.A -5%, VALE -3.6%, EBR -4.5%, ELP -2.5%, CIG -4.6%, CPL -2.6%, SBS -2%, BSBR -2.5%, BBD -1.1%, ITUB -2.7%.
- ETFs: EWZ, BRF, BRZU, EWZS, BRXX, BRAQ, BZQ, BRAZ, BRAF, UBR, DBBR, FBZ
Jun. 24, 2015, 11:48 AM
- Vale (VALE +0.2%) says it is considering selling 25%-30% of its base metals business in an IPO but will proceed only if nickel and copper prices are at "appropriate” levels.
- Vale, whose iron ore business has been hurt by a 50% price collapse since late 2013, forecasts increased profit and output from the base metals business, which is based on a 2006 takeover of Inco, after years of setbacks.
- Vale also says it expects to invest $8B-$9B in 2015, an apparent reduction from a presentation published earlier this month when it said it expected to invest $9B as well as a $10.2B forecast given in December.
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