Tue, Feb. 24, 12:28 PM
- BHP Billiton (BHP +5.5%) is rallying after H1 results turned out better than expected even as profits plunged against a backdrop of plummeting commodity prices.
- Despite the 47% fall in H1 profit, BHP still will raise its interim dividend by 5% to $0.62/share and pledges to maintain or increase its dividend even after a proposed de-merger later this year which will see BHP hive off some unwanted assets into the separate South32 company that analysts estimate will be worth ~$15B.
- BHP's costs have fallen faster than expected: Capital spending dropped 23% in H1, and BHP now will spend less this fiscal year and next than it had expected, cutting its original spending plans by 15% to $12.6B (£8.2B) for FY 2015 and to $10.8B in 2016.
- BHP’s aluminum, manganese and nickel business - mostly part of South32 - was the only division to improve its Y/Y operating profit, while prices for iron ore, oil and copper - the flagship commodities of the streamlined BHP - have slumped, so BHP's next task is to convince investors that it makes sense to be less diversified.
Tue, Feb. 3, 10:24 AM
- Copper prices are on track for their biggest gains since September on speculation that China would use stimulus measures to jump-start its economy and boost demand for the metal.
- Rising oil prices and Chinese stimulus speculation “have changed the focus to the upside and the short-covering has done the rest,” says Saxo Bank's Ole Hansen, adding that “energy is such a big and important part of the commodity sector, and the somewhat improved sentiment there also helps other” raw materials; aluminum and nickel also are rising to multi-week highs.
- "We’re in this perverse world where bad news is good news,” says BNP Paribas analyst Stephen Briggs, and "a lot of people are thinking China’s going to join the rest of the world and lower interest rates or [offer] some kind of monetary response."
- Raw materials companies are off to a strong start today: FCX +5.8%, BHP +3.9%, RIO +2.4%, VALE +3.9%, SCCO +3.4%.
- ETFs: JJC, DBB, JJN, JJU, JJT, CPER, BOM, RJZ, BOS, LD, BDD, JJM, FOIL, NINI, CUPM
Fri, Jan. 23, 11:18 AM
- Iron ore miners are broadly lower after Goldman Sachs becomes the latest global bank to deliver a dismal outlook for the steel-making ingredient, forecasting an average price of $66/metric ton this year from an earlier estimate of $80.
- Goldman is at least the fifth bank this month to lower estimates, citing rising seaborne supplies and weaker demand growth from China; just last week, Citigroup cut its iron ore forecast to $58 in 2015, down from its earlier $65, and UBS lowered its target to $66 from $85.
- Low-cost expansions likely will continue as major producers are still mining iron ore at a profit, which would expand the global seaborne surplus from 47M tons this year to 260M tons by 2018, Goldman says.
- Iron ore miners: VALE -8%, BHP -3%, RIO -3.6%, CLF -7.6%.
- Copper miners: FCX -2.6%, SCCO -2.4%, TCK -2.6%.
- Steel companies: X -6.3%, MT -7.1%, AKS -3.2%, NUE -1.2%, STLD -3%, CMC -3.8%, TMST -2.4%.
- Earlier: Goldman gives in on mined commodities
Tue, Jan. 20, 7:23 PM
- BHP Billiton (NYSE:BHP) says it will shut down 40% of its U.S. shale oil rigs by the end of its fiscal year.
- BHP plans to pare the number of rigs it is using in the U.S. to 16 from 26, focusing on drilling in the liquids-rich Black Hawk basin while cutting back in the Permian and Hawkville acreage; it says it will provide more details on its revised shale drilling budget, originally set at $4B for this financial year, next month.
- Also, BHP says its iron ore output climbed 16% to 56.35M metric tons in the December quarter, and reaffirmed it would boost annual output by 11% in the fiscal year to June 2015 to 225M metric tons; petroleum production for the quarter rose 10% Y/Y to 63.6M boe.
- Earlier: BHP seen slashing U.S. shale spending to shore up dividend promise
Wed, Jan. 14, 12:39 PM
- Citi cuts price targets for iron ore to $58 for 2015 and $62 for 2016, down from its prior estimates of $65 for both years, and lowers its outlook for thermal and met coal.
- Citi warns its downwardly revised forecast means it now expects earnings for major mining companies will fall by 9%-21% for 2015 and by 3%-16% in 2016.
- Rio Tinto (RIO -2.5%) is the exception, as Citi sees earnings rising 7.1% this year and 10.6% next year due to the company’s greater exposure to the weaker Australian dollar.
- The firm cuts its price target for Glencore (OTCPK:GLCNF -7.2%) by 8% to £3.60 from £3.90 and sees earnings falling 21% and 16% respectively in 2015 and 2016.
- Citi says it is still bullish on the sector, but warns that metals and mining companies will only slowly grind higher over the next few years.
- Also: BHP -4.5%, VALE -5%, FCX -12%, SCCO -4.9%, TCK -9.7%, CLF -4.4%, CENX -9.1%, MT -4.2%, X -4.9%, NUE -3.4%, STLD -2.6%, BTU -9.8%, ANR -8.8%, ACI -8.9%.
Wed, Jan. 14, 10:28 AM
- Freeport McMoRan (FCX -10.8%) sinks to a 52-week low as copper prices fall 4.5% to collapse to 2009 levels, though it is off overnight lows after prices were down nearly 9% at one point in London.
- Other big global miners also are sharply lower: SCCO -7.3%, RIO -2.5%, BHP -4.4%, VALE -3.8%, CLF -5.8%.
- Concerns over a supply glut and slowing consumption in China have weighed on copper prices in recent months; copper is often seen as an omen for the global economy because it is used in a wide array of construction and manufacturing activities, so today's precipitous drop explains much of the weakness in global equity markets.
- The iPath Dow Jones UBS Copper Subindex Total Return ETN (NYSEARCA:JJC) is trading so heavily that nearly 60% of the average full-day volume traded in the first 10 minutes this morning.
- ETFs: CPER, CUPM, DBB, BOM, RJZ, BOS, BDD, JJM, RGRI, UBM, BDG, USMI, HEVY
Wed, Jan. 14, 7:57 AM
- Mining stocks look headed for sizable losses, as copper prices sink to five-and-a-half year lows and the World Bank lowers its forecast for global economic growth.
- Glencore (OTCPK:GLCNF, OTCPK:GLNCY) -11.5% in London trading, Antofagasta (OTC:ANFGF) -7% in London, Anglo American (OTCPK:AAUKF, OTCPK:AAUKY) -9.5% in London, Vedanta (OTCPK:VDNRF) -18% in London, Rio Tinto (NYSE:RIO) -4.3% premarket in the U.S., VALE -2.9%, FCX -5.1%, CLF -2.6%.
- BHP Billiton (NYSE:BHP) -7.5% in London and -5.5% U.S. premarket after S&P Capital IQ downgraded shares to Hold from Buy, expecting "weaker commodity prices to increasingly impact on group profits as hedges expire and see currency headwinds from a stronger [U.S. dollar]."
- ETFs: XLB, XME, SLX, COPX, VAW, UYM, CU, IYM, HAP, IRV, MXI, SMN, GNR, GUNR, PICK, MATL, FXZ, PYZ, CRBQ, RTM, CCXE, FMAT, GRES, SBM
Dec. 22, 2014, 10:45 AM
- Natural gas prices fall 9.5% to near two-year lows at $3.133/mmBtu, in the biggest one-day percentage loss since February and the lowest intraday price since January 2013, on mild weather forecasts and inventory that is above year-ago levels.
- Prices are now down more than 15% in three straight losing sessions and are 30% lower than the six-month high closing price of $4.489/mmBtu it hit just a month ago.
- Weather has been unseasonably warm for December, limiting demand for home heating and allowing relatively low stockpiles to catch up to where they were a year ago and encouraging traders to sell based on the belief that supply is relatively healthy.
- Gas producers are among the biggest early decliners: XOM -1.1%, CHK -7.3%, APC -2.6%, SWN -6%, DVN -2.2%, COP -2.3%, BP -1.5%, COG -4%, BHP -1.9%, CVX -1.3%, ECA -5.1%, EQT -4.3%, RDS.A -1.7%, UPL -12%, WPX -6.9%, EOG -1%, OXY -1.1%, RRC -6.1%, APA -2.3%, AR -3.2%, CNX -3%, QEP -4.8%, LINE -4.9%, NBL -1.6%, SM -2.6%, XEC -4.2%, PXD -2.9%, NFX -5.1%.
- ETFs: UNG, DGAZ, UGAZ, BOIL, GAZ, FCG, GASL, KOLD, UNL, NAGS, DCNG
Dec. 15, 2014, 2:58 PM
- BHP Billiton (BHP -2.6%) is downgraded to Underperform from Sector Perform at RBC Capital, which says BHP's cash flow metrics look weaker than its peers over the next two years.
- The firm questions the timing of BHP's South32 spinoff of its aluminum, nickel, silver and coal divisions amidst potential structural change in oil and iron ore, seeing it as a case of "good idea, bad timing."
- BHP needs $16B-$20B in operating cash flow just to cover its capex and dividend requirements, which would be problematic if commodity prices continue to slide, RBC says.
Dec. 1, 2014, 11:38 AM
- BHP Billiton (BHP -1.5%) iron ore president Jimmy Wilson said this weekend that plunging iron ore prices had been anticipated given their forecasts that supply growth would exceed the growth in demand, and signals there will be no slowdown in the drive to boost production by global iron ore producers.
- “Even the iron ore price where it is today can induce more volume,” Wilson told Australia’s Nine Network, and "if that volume doesn’t come from our business, it’s going to come from other businesses around the world and other countries around the world.”
- Bernstein analyst Paul Gait recently said: "If BHP do not value the products that they mine but are quite happy to dump them on the market whatever the price, then it is hard to see why anyone should value the company associated with such activity."
- Also: RIO -0.2%, VALE -3.4%, CLF -7.6%.
Nov. 24, 2014, 2:58 PM
- BHP Billiton's (BHP -2.2%) commitment to target $4B/year in cost cuts and other productivity gains in its core portfolio is a clarion call to the big mining contractors that times are about to get tougher.
- Despite the spending cuts and productivity gains, analysts think it will not be enough to deliver a round of share buybacks or special dividends in February.
- "If you look at the iron ore price, no one would reasonably be expecting any of the majors would be in a strong position to return capital above the base dividends. In this market people are questioning the ability to in some cases even pay that base dividend," says CLSA's David Radclyffe.
- Iron ore prices currently are ~$70/metric ton, while prices hit a high of $180 less than three years ago; coal, oil and other commodities are also taking a bath, crunching the profit margins of the miners.
Nov. 18, 2014, 12:49 PM
- Iron ore extends its tumble deeper into five-year lows as declining home prices in China add to worries that an economic slowdown in iron ore's biggest buyer will deepen and exacerbate an oversupply.
- Ore with 62% content delivered to Qingdao, China, has retreated 47% YTD to $71.80 a dry ton, and Citigroup thinks prices may drop to less than $60/ton next year as output rises further and demand remains weak; China’s bad loans climbed in Q3 by the most since 2005, while new-home prices declined, adding to speculation the cooling economy will weaken further.
- VALE -2.9%, RIO -1.9%, BHP -1.1%, CLF -6%, X -1.4%, AKS -1.9%.
Nov. 7, 2014, 10:58 AM
- Iron ore prices cap their biggest weekly decline in more than five months and its third straight week of losses amid an expanding global surplus.
- Ore with 62% content delivered to Qingdao lost 4.7% this week to $75.84/dry metric ton, data from Australia's Port Hedland showed record iron ore exports last month, and steel mill closures ordered by China this week to curb air pollution for a global summit also was seen hurting demand.
- Iron ore has lost 44% YTD as producers including Vale (VALE +3.2%), BHP Billiton (BHP +3.7%) and Rio Tinto (RIO +2.6%) expanded supplies, and ABN Amro's Ben Cheung does not expect the oversupply situation to be alleviated next year.
- Vale, which is seeking to boost output by 50%, this week opened its $1.4B port in Malaysia where its Valemax vessels can unload cargoes for onward shipping to clients in Asia in smaller vessels.
Oct. 16, 2014, 7:32 AM
- BHP Billiton (NYSE:BHP) confirms it will pursue a secondary listing in London for a new spinoff company it plans to create from its less-favored assets.
- BHP had been under pressure from shareholders unhappy with its original plan to have the spun-off company’s primary listing in Australia and a secondary listing in South Africa only.
- But because the new company's primary listing would still be in Australia, it would not be eligible for inclusion in the benchmark FTSE 100 index, meaning funds that track the index would not own the stock.
- BHP -2.2% premarket.
Oct. 13, 2014, 2:18 PM
- Cliffs Natural Resources (CLF +14.1%) shares are surging as iron ore prices posted their biggest intraday gain since May after falling steadily in recent weeks.
- Investors covered short positions on expectations prices may have hit bottom; sentiment also was boosted by data showing China's overall exports rose more than forecast and imports unexpectedly gained in September.
- The big gain occurs despite a J.P. Morgan downgrade to Neutral from Overweight with a reduced price target of $5 from $13, as the firm cites CLF's lower iron ore price deck and sum-of-the-parts valuation.
- Other iron ore producers also are up: VALE +8%, RIO +5.3%, BHP +4.2%.
Oct. 13, 2014, 8:47 AM
- BHP Billiton (NYSE:BHP) and Mitsubishi say they expect their newest coal mining operation in eastern Australia to be able to ride out a prolonged market slump, even amid concerns raised by new Chinese import tariffs.
- The companies today officially open their $3.4B Caval Ridge joint venture coking coal mine in Queensland state; the operation, designed to produce 5.5M metric tons/year, first started began coal earlier this year.
- The price of Australia’s premium coking coal has fallen more than 15% YTD to ~US$112/ton, prompting widespread cost-cutting and workforce cuts, including the BHP Billiton Mitsubishi Alliance joint venture, which is the world’s biggest exporter of coking coal.
- BHP +3.1% 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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