Mon, Sep. 28, 2:48 PM
- It isn't just Glencore (OTCPK:GLCNF, OTCPK:GLNCY) who is tanking, as at least one measure of raw materials producers plunges to seven-year lows following the company's woes and data that showed weakening Chinese industrial profits.
- Shares of Glencore plunged 29% to close at just 69 pence, an all-time low, exaggerated by a damning report that said future earnings are so uncertain that the company may need to direct all of its efforts to repay debt.
- Freeport McMoRan (FCX -10.2%) is hit hard after breaking below support at $10/share, and global mining peers Rio Tinto (RIO -4.1%), BHP Billiton (BHP -4.5%) and Vale (VALE -9.4%) also are smacked down.
- A number of other firms also are in situations not that much different from Glencore, says DTN analyst Darin Newsom, noting that Caterpillar (CAT -2.2%) and Deere (DE -1.6%) have been struggling and adding that pressure on Glencore may “create a vacuum those other struggling companies could get sucked into."
- Along with oil and gas producers and precious metals miners, even financial stocks are affected, with Morgan Stanley (MS -3.6%) and Goldman Sachs (GS -3.4%) underperforming their banking peers, perhaps as investors grow nervous about the potential for any of Glencore's problems possibly blowing back on other commodity trading operations.
Wed, Sep. 23, 12:57 PM
- BHP Billiton (BHP -1.6%) reveals a plan to alter its dividend funding policy to ensure a promise on payouts to its British shareholders, but the move could come at a cost to its Australian shareholders.
- Under the proposal, BHP's Australian company would effectively make payments to the British company to enable dividends to be paid, but the payment would mean BHP's Australian shareholders lose out on getting tax benefits, or franking credits, on the amount.
- BHP says it does not expect any impact on its ability to pay fully-franked dividends in future, given the $25.4B franking credits available on its books.
- The British and Australian sets of shareholders will vote on the proposal in October and November, respectively.
Wed, Sep. 23, 11:49 AM
- BHP Billiton (BHP -1.5%) CEO Andrew Mackenzie saw his total compensation fall 43% in the past fiscal year to June 30, feeling the pain from sharply lower commodity prices that sent the stock ~20% lower and underlying profits cut by 52% during the period.
- BHP says Mackenzie earned US$4.6M in cash and stock options, in addition to other benefits such as pension contributions, for the fiscal year, vs. the $8M pay package he received a year earlier, which was his first as the head of the company.
- BHP also will cut pay to its chairman by 13% and reduce fees for non-executive directors in response to the weak outlook for commodities.
Tue, Sep. 22, 11:17 AM
- As part of Macquarie's pessimistic outlook for the potash market, the firm says its base-case scenario for BHP Billiton (BHP -4.2%) assumes the indefinite deferral of the Jansen project in Canada, which already has consumed ~$3.8B in capital.
- For Jansen to proceed, prices would need to rise to at least $400/metric ton to achieve an acceptable rate of return and probably to $500 to compete for capital with the company’s other projects, Macquarie says, amid its forecast for potash prices to average just $254/metric ton next year.
- BHP, which has considered potash a potential key division for future growth, says in response to Macquarie's report that Jansen remains the world’s “best undeveloped potash resource.”
Tue, Sep. 22, 9:07 AM
- Mining shares are leading a big slide in European equities as metals prices tumble on fears that an economic slowdown in China, the world’s biggest consumer of raw materials, is deepening.
- Glencore (OTCPK:GLCNF, OTCPK:GLNCY) fell to a new intraday low of 107 pence/share, down more than 9% for the worst performance on the U.K.’s FTSE 100 index; Anglo American (OTCPK:AAUKF, OTCPK:AAUKY), ArcelorMittal (NYSE:MT) and Antofagasta (OTC:ANFGF) each fall more than 6%, while BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RIO) rank among the 10 biggest decliners, down ~4.3% each.
- Credit Suisse cuts its earnings estimates across the mining sector, saying “Until China demand and emerging market currencies find a floor, it will remain challenging to put an absolute floor on commodity prices."
- The firm cuts its stock price targets for diversified miners including BHP, which also says it is planning to sell hybrid securities to help refinance near-term liabilities.
- Moody's says miners likely will be the hardest hit of any sector in Europe, the Middle East and Africa as a result of China’s economic slowdown.
- Also: FCX -4.5%, VALE -4.1%, X -2.8%, AA -1.7% premarket.
Fri, Sep. 11, 12:59 PM
- Rio Tinto (RIO +2.2%) is upgraded to Buy from Neutral at UBS, which sees improving risk/reward potential as RIO begins to show some discipline in iron ore and prices holding up surprisingly well, given demand is seasonally weaker.
- The firm says RIO offers the most attractive valuation of the Australian diversified miners, trading at 11x PE, with a forecast dividend yield of 6%; RIO also has the highest near-term growth profile, a strong management team and further restructuring potential.
- UBS maintains its Buy rating on BHP Billiton (BHP +0.3%) but switches its preference to RIO over BHP, as RIO offers a better valuation, stronger near-term volume growth, and more restructuring potential; the firm expects both stocks to maintain their dividends through the down cycle.
Tue, Sep. 1, 12:19 PM
- Freeport McMoRan (FCX -7.4%) is downgraded to Neutral from Buy with an $12 price target, lowered from $20, at Citigroup, which says the copper sector has not reduced production enough to account for falling prices.
- FCX has guided to strong cash flow of $6.3B for 2016, at $2.25/lb. copper and $54/bbl oil, but the guidance included considerable working capital drawdown, which Citi estimates at $1.8B while saying there is "very little incremental deleveraging opportunity."
- According to the Citi report, the best opportunity for FCX to improve its free cash flow is to eliminate or at least reduce its exposure to oil and gas.
- Global miners are having a rough time as weak China data batters stocks: BHP -6.7%, RIO -5.3%, VALE -3.5%, TCK -7.6%.
Tue, Sep. 1, 9:13 AM
Wed, Aug. 26, 9:57 AM
- BHP Billiton (BHP +2.1%) is upgraded to Sector Perform from Underperform with a A$27 price target, up from A$25, at RBC, which says lower costs leave the world's largest miner well positioned to withstand weak commodity prices.
- RBC analyst Timothy Huff says BHP has shifted its focus from growth capex to paying dividends, which "is not only a strong commitment to cover the dividend, but also shows a new flexibility with which management now views growth capex.”
- Huff believes BHP is a “high single-digit free cash flow-yielding stock” that does not fully reflect the potential cost gains from capex, working cap and iron ore in the next two years.
Tue, Aug. 25, 7:40 AM
- BHP Billiton (NYSE:BHP) +7.4% premarket after reporting its weakest annual earnings since 2003 and cutting its long-term forecast for Chinese steel demand, but reiterating its pledge to fully maintains its dividend.
- BHP, the last of the big five global miners to report results, said its underlying attributable profit fell to $6.42B for the year to June, below analyst consensus of $7.73B and $13.26B a year earlier; net profit plunged 86%, with BHP taking $2.9B in post-tax charges, mainly on its U.S. shale and Nickel West businesses.
- BHP forecasts crude steel production in China to fall to 935M-985M metric tons in the mid 2020’s, after saying in May it expected China’s steel output to reach as much as 1.1B tons by the middle of the next decade, but it expects China’s broader economy to lift in the second half of this year, meeting its 7% growth target for 2015.
- The miner raises its full-year dividend to $1.24/share from $1.21, and reiterates its policy of maintaining or increasing its dividend, which costs at least $US6.5B/year; BHP has not cut its dividend since 1988, and did not rebase its dividend when it spun out South32 earlier this year.
- To help protect its dividend, BHP says it is cutting capital spending for the 2016 for the third time since February, to $8B.
Tue, Aug. 25, 4:18 AM
- Mining giant BHP Billiton (NYSE:BHP) posted its worst underlying profit in 10 years amid a commodities slide directly tied to Chinese market turbulence.
- Underlying profit for the full year of $6.4B was down 52% from the prior year and missed an expected $7.73B. Net profit was $1.91B.
- BHP is lowering its forecasts for peak steel demand from China, but said "Our margins at 50% remain unquestionably the best in the sector," and pointed to strong operating cash flow protecting the balance sheet.
- The company is boosting its dividend by 2.5%, to $1.24/share.
- "Our forecast for Chinese steel production is to peak in the mid 2020s at between 935 and 985 million tonnes per annum," said CEO Andrew MacKenzie.
- Shares are up 5.5% in a quite green London stock market. In U.S. trading, the company's ADRs are up 5.7% premarket. They're down 32% YTD.
Tue, Aug. 11, 11:35 AM
- Commodity metals are getting hammered by China's devaluation, with aluminum trading down nearly 2%, copper prices lower by 2.5% and nickel plunging more than 3.5%.
- Hardest hit of the mining stocks is Freeport McMoRan (FCX -14.1%), which has completely surrendered yesterday's 10.8% surge; shares now are down 72% over the past year and 57% YTD.
- Iron ore miners are sharply lower: BHP -5.5%, RIO -4.2%, VALE -7.8%, CLF -7.3%.
- Steel companies: X -9.7%, MT -5.1%, AKS -5.7%, NUE -2.9%, STLD -3.5%, CMC -4%.
- Also: AA -6%, CENX -4.9%, TCK -8.2%, SCCO -4.9%.
- ETFs: XLB, JJC, XME, SLX, PEO, VAW, COPX, DBB, UYM, CU, IYM, JJN, SMN, JJU, PICK, MATL, CPER, JJT, BOM, RJZ, FXZ, PYZ, BOS, FOIL, JJM, LD, BDD
Wed, Jul. 22, 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%.
Tue, Jul. 14, 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.
Mon, Jul. 13, 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%.
Wed, Jul. 8, 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.
BHP vs. ETF Alternatives
BHP Billiton Ltd is a natural resources company. The Company is engaged in the producing commodities, including iron ore, metallurgical and energy coal, conventional and unconventional oil and gas, copper, aluminium, manganese, uranium, nickel and silver.
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