Mon, Aug. 31, 1:04 PM
- The latest from the high-level corruption scandal has the U.K Rolls-Royce being dragged in, with the company saying it's cooperating with investigators over bribery in Brazil's state oil business.
- The Bovespa's 1.9% decline today is being led by banks Itau Unibanco (ITUB -5.2%), Banco Bradesco (BBD -5.9%), and Banco Santander Brasil (BSBR -3.2%).
- Petrobas (PBR +1%) and Vale (VALE +1.2%) are actually hanging in there this session.
- The iShares MSCI Brazil Index ETF (EWZ -3.3%)
- ETFs: EWZ, BRF, BRZU, EWZS, BRXX, BRAQ, BZQ, BRAZ, BRAF, UBR, DBBR, FBZ
Thu, Aug. 27, 12:11 PM
- Petrobras (PBR +11.2%) management has recommended to the company's board that it delay a planned IPO of its fuel distribution unit because of deteriorating market conditions, Reuters reports.
- The company has said an IPO of the BR Distribuidora fuel distribution business, which includes Brazil’s largest gas station chain with ~7,500 stations across the country, would depend on global and domestic market conditions.
- Brazil equities are rising broadly today as China, the country’s top trading partner, makes efforts to bolster the market and the economy; VALE +7.9%, EBR +7.7%, ITUB +5.7%, BBD +5.1%, BSBR +3.4%, ERJ +1.9%.
Tue, Aug. 18, 5:40 PM
Fri, Aug. 14, 3:10 PM
- A Brazilian federal court orders Vale (VALE -0.2%) to halt activity at its Onça Puma nickel mine until it can demonstrate what actions it has taken to compensate indigenous communities in the region.
- The court also orders the company to deposit 1M reais ($287K) for each indigenous village in the area until it establishes a compensation program for the communities.
- Onça Puma produced 5.9K metric tons of finished nickel in Q2, or 8.8% of Vale's finished nickel output.
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, Aug. 5, 7:57 PM
- Vale (NYSE:VALE) approves plans to raise 1B reais ($287M) from the sale of debt notes to expand the railway system at the Carajas ore mine.
- Vale plans to file tomorrow a request before Brazil's securities industry watchdog to approve the sale of the infrastructure notes in two portions; the notes will have maturities of five and seven years and could be increased by 350M reais pending certain conditions.
- Vale's railway investment is part of its expansion of production at its Carajas iron ore mine in Para state in the Amazon Basin.
Tue, Aug. 4, 5:38 PM
Thu, Jul. 30, 11:45 AM
- Vale (VALE -3.2%) moves into the black for the first time in a year, overcoming a slump in iron ore prices to report a Q2 net profit of $1.68B, a 17.3% Y/Y increase and more than 4x the average forecast of $408M.
- A major factor behind the improved result was a reduction in cash costs, with Vale lowering its cost of iron ore production to $15.8/metric ton from $18.3/metric ton in Q1; total Q2 expenses were $4.93B vs. $6B in the year-ago quarter.
- Vale says its realized price on ore sales rose to $50.6/metric ton from $46 in Q1.
- Vale's Q2 debt service costs totaled $215M, down from $983M a year ago.
- However, Q2 net revenue dropped 29.7% Y/Y to $6.96B, and EBITDA fell 46.1% to $2.2B.
- In this morning's earnings conference call, Vale said last week's collapse of a coal stacker at its port in Mozambique will not affect its coal production forecast for next year.
- Separately, Vale says it agrees to sell a 36.4% stake in its MBR unit to an investment fund for 4B reais ($1.19B); the company also concludes a previously announced sale of four Valemax ships to China Merchants Energy Shipping Co. for $448M.
Wed, Jul. 29, 12:25 PM
- Cliffs Natural Resources (CLF -0.8%) shares have fluctuated above and below the flatline even after reporting a bigger than expected Q2 loss, driven by lower U.S. iron ore pricing and shipments.
- CLF says it expects to see improved industry operating conditions and profitability in H2, but it nevertheless cuts its 2015 sales volume forecast for U.S. iron ore operations by 1.5M tons to 19M tons of iron ore pellets, blaming a supply glut created by heavy steel imports.
- Ben Levisohn of Barron's speculates CLF shares may be helped today by investors betting that steel prices will head higher after steel producers filed a trade case, or it could be a short squeeze as short-interest remains high despite being well off its peaks.
- Other iron ore producers are higher: BHP +1.5%, RIO +1.2%, VALE +3.1%.
Tue, Jul. 28, 12:35 PM
- 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.
Fri, Jul. 24, 11:48 AM
- Vale (VALE -3.4%) dropped below $5/share to its lowest level in a decade and remains sharply lower as Brazil's real reaches its weakest level in 12 years against the dollar, extending a slide that began Wednesday on rising concerns about the government’s inability to get its budget and debt problems under control.
- Morgan Stanley cut its recommendation for Brazilian equities to the equivalent of Sell, citing this week’s cut in the country's target for the budget surplus before interest payments, which the firm says should restrict the pace of economic growth.
- Vale this week reported record Q2 iron ore production, but that hardly seems like good news with decimated ore prices; Citigroup says the best current trade in the stock would be to bet on further losses in iron ore.
- Also: PBR -3.6%, EBR -4.2%, ELP -3.7%, CIG -6.2%, CPL -4.7%, SBS -2.9%, BSBR -3.5%, BBD -3.6%, ITUB -3.2%.
- ETFs: EWZ, BRF, BRZU, EWZS, BRXX, BRAQ, BZQ, BRAZ, BRAF, UBR, DBBR, FBZ
Thu, Jul. 23, 6:57 PM
- Vale (NYSE:VALE) missed production estimates for nickel for a second consecutive quarter, coming as a plunge in metal prices makes the company’s plan to sell as much as 30% of the nickel unit in an IPO less likely.
- Vale's Q2 nickel output rose less than 9% to 67.1K metric tons, missing consensus expectations for 73.9K tons, which analysts at BMO call “poor” and puts H1 production at 136K tons, or less than 45% of the company’s annual target of 303K tons.
- Q2 operations were affected by a fire at its operations in Sudbury, Ontario, which cut nickel production by 5K tons, furnace maintenance in Indonesia and a brief shutdown for plant improvement at the Onca Puma project in Brazil; Vale plans to close facilities at Sudbury and Thompson in August for maintenance.
Thu, Jul. 23, 12:20 PM
- While Vale presses ahead with output expansion, Australia’s Fortescue Metals (OTCPK:FSUMF -4.7%) says it is capping iron ore shipments, becoming the first of the top exporters to quit the race to funnel fresh supplies into the oversupplied market.
- The miner says iron ore shipments totaled 165.4M metric tons in the fiscal year through June, up 33% Y/Y and at the top end of its earlier projection of 160M-165M tons.
- Fortescue says it expects to cut costs a further US$1.4B in the fiscal year through June 2016, almost matching the US$1.6B of savings recorded over the prior two years, which CFO Stephen Pearce says “means we will produce the same amount of tons as we did last year, and we will spend US$1.4B less in doing so.”
- Nevertheless, iron ore producers are broadly lower again amid slumping commodity prices: VALE -1.7%, BHP -2.4%, RIO -1.4%.
Thu, Jul. 23, 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.
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. 21, 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).
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