Mon, Jan. 26, 8:31 AM
- Iron ore prices extend their retreat to the lowest levels in more than five years, due to slower demand growth for steel in China as the largest mining companies add to supply.
- Ore with 62% content delivered to Qingdao, China, fell 4.3% to $63.54/dry metric ton, the lowest price since May 2009, and extends its 11% YTD decline.
- Goldman Sachs last week joined other global banks in cutting price forecasts for 2015, predicting a return to a bull market is probably more than a decade away.
- VALE -2.5%, BHP -0.5%, RIO +0.4% premarket.
Fri, Jan. 23, 5:42 PM
- Vale's (NYSE:VALE) credit rating is downgraded by Standard & Poor’s for the first time in more than eight years, as market fundamentals for iron ore continue to weaken and erode Vale's operating cash flow generation as the company's capital expenses remain high.
- The downgrade follows S&P's revision of iron ore price assumptions to $65/ton in 2015 and 2016 and to $70/ton in 2017.
- S&P reduces its rating to BBB+, the third-lowest investment grade, from A-.
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
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
Tue, Jan. 13, 2:54 PM
- Former Xstrata CEO Mick Davis is considering a bid for Vale’s (VALE +1.3%) nickel business, according to a Bloomberg report.
- Davis’ X2 resources investment is said to value Vale’s nickel business at $5B-$7B, but the report says there has not yet been any formal negotiation between X2 and Vale about the assets.
- Vale, the world's leading nickel producer as well as the biggest iron ore miner, has said its nickel output will climb to 303K tons this year.
Dec. 31, 2014, 7:35 AM
- "The major factor that undercut ore prices in 2014 was the Australian-led supply surge," says Morgan Stanley's Tom Price. "In terms of price downside, the worst is probably over."
- A late-year rally has prices down "only" about 50% for the year.
- The bear market occurred as low-cost supplies from the like of BHP Billiton (BHP, BBL) and Rio Tinto (NYSE:RIO) came online just as demand from China began to cool, and the market shifted to surplus in the middle of the year. Goldman Sachs sees the excess widening to roughly 300M tons by 2017 as past investments from the miners continue to lift supplies.
- Behind Morgan Stanley's quasi-bullishness is the idea of the price decline pushing high-cost producers to the sideline, a thought echoed by VALE CEO Murilo Ferreira last month.
Dec. 22, 2014, 6:15 PM
- Global iron ore producers fell today after Australia's Department of Industry slashed its iron ore price estimate by a third due to surging output, which has outpaced Chinese demand and growth, creating a surplus.
- Iron ore prices will average $63/metric ton, vs. $94/ton forecast in September and this year's expected average of ~$88, according to the government's latest quarterly report.
- Ore with 62% content delivered to Qingdao, China, fell 1.8% to $67.90/metric ton, the lowest price since June 2009 and extending this year’s rout to 50%.
- Not everyone is quite so gloomy: Prices appear oversold and there’s potential for a relief rally in H2 2015, Australia & New Zealand Banking says, forecast iron ore to average $80/ton, noting that any recovery will be driven by supply cuts, including high-cost mines in China, where the industry is losing at current prices.
- During today's trading: BHP -2%, RIO -1.8%, VALE -0.6%, CLF -7.9%.
Dec. 17, 2014, 7:07 PM
- A U.S. District Court today rejected Vale’s (NYSE:VALE) request to dismiss a lawsuit alleging it conspired with Israeli billionaire Benjamin Steinmetz to take a West African mine away from rival Rio Tinto (NYSE:RIO).
- The judge also dismissed Vale’s argument that the suit should be brought in an English court, saying Rio’s choice of a U.S. court is justified based on the plaintiff’s likelihood of obtaining jurisdiction over all of the defendants.
- The civil lawsuit, filed in April, alleges that Vale and its former partner Steinmetz worked together to take Rio’s rights to the Simandou iron ore deposit through corruption.
Dec. 15, 2014, 5:57 PM
- BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RIO) are amassing vast copper holdings in a push to capture a greater chunk of the $140B world market, apparently aiming to squeeze out high-cost producers just as they did in the global iron ore business, Reuters reports.
- Separately and in joint ventures, Rio and BHP intend to mine millions of additional tons of copper, despite seeing an oversupplied market for the next few years.
- While Rio and BHP likely would not hold the same degree of dominance over copper that they do in iron ore - Codelco, Glencore (OTCPK:GLCNF, OTCPK:GLNCY) and Freeport McMoran (NYSE:FCX) will remain bigger producers for the foreseeable future - their influence on global supply would be enhanced.
- The drive in copper also could give BHP and Rio an advantage over rival Vale (NYSE:VALE), whose exposure to copper is less than half that of BHP and Rio.
Dec. 13, 2014, 8:25 AM
- BHP Billiton (NYSE:BHP) iron ore chief Jimmy Wilson says the days of $100/metric ton iron ore likely are over amid a supply glut and weak Chinese demand.
- Iron ore fetched ~$135/metric ton a year ago, but it is now below $70 as output from global giants such as BHP, Rio Tinto (NYSE:RIO) and Vale (NYSE:VALE) increases, hurting higher-cost producers.
- "It's hard to see the sort of significant bump that we've seen come from China happen again," Wilson says.
- BHP general manager for iron ore marketing Alan Chirgwin says the company expects China's growth in consumption of steel - in which iron ore is a crucial component - to slow to 0.5%-1.5% next year.
Dec. 9, 2014, 8:29 AM
- Mining companies sink in premarket trading as J.P. Morgan lowers its iron ore outlook through 2017, predicting prices will extend declines as growth in low-cost supply from the world’s largest producers outstrips demand.
- Iron ore will average $67/metric ton next year, 24% less than previously forecast, $65 in 2016, down 23%, and $69/ton in 2017, down 16%, the firm says; iron ore has averaged $98.82/ton YTD but recently slumped to a five-year low $68.49.
- "The only way the oversupply can be averted is if the low-cost producers cut back on their growth targets," which is unlikely, JPM says, as "feedback from recent site visits to the Pilbara suggests there is currently no consideration for slowing capacity growth from either Rio Tinto or BHP Billiton."
- BHP -2.1%, RIO -1.2%, VALE -1.2% premarket.
Dec. 9, 2014, 7:39 AM
- Mitsui (OTCPK:MITSY) agrees to pay $763M for stakes in a Mozambique coal project owned by Vale (NYSE:VALE), signaling confidence from Japan’s second-largest trading house in a recovery in coking coal prices.
- Mitsui will pay $450M for a 15% stake in the Moatize mine, one of the world's biggest deposits of coal used for steelmaking, and $313M for half of Vale’s 70% stake in the associated Nacala Logistic Corridor rail and port infrastructure.
- "The partial sale of the troubled Moatize mine and logistics project appears to be at a very attractive price for Vale. The proposed sale would likely make the company net free cash flow break-even for the year," BMO Capital says.
Dec. 5, 2014, 4:50 PM
- Vale (NYSE:VALE) says it may consider an out-of-court settlement to the massive lawsuit in which it has been accused of “stealing” a west African mine from rival Rio Tinto (NYSE:RIO).
- The suit alleges that Vale and former partner Beny Steinmetz worked together to misappropriate Rio’s rights to the Simandou iron ore deposit through corruption.
- Rio says it lost billions of dollars in assets and investments made before its Simandou rights were revoked, and claims it is entitled to treble damages.
Dec. 5, 2014, 11:28 AM
- Japan's Mitsui is set to buy a 15% stake in Vale's (VALE -0.6%) Moatize coal project in Mozambique for ~$450M, Reuters reports.
- Moatize, one of the largest metallurgical coal mines in the world, is considered Vale's best asset in its coal portfolio, but it has not been an easy market in which to find a buyer as coal prices have declined steadily for more than three years.
- Mitsui also may take a 50% stake in the project's rail and port, on condition of contributions to future capex costs.
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