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. 11, 2014, 12:52 PM
- Vale (VALE -2.5%) tumbles to eight-year lows after Citigroup recommends selling the stock on falling expectations for iron ore prices.
- Citi's global commodity team downgrades shares to Sell from Neutral as it cuts its forecast for iron ore prices in 2015 and 2016 by 19% to $65/ton.
- Citi sees Vale generating $7.5B in operating cash flow next year, which the firm says is insufficient to cover planned investments, and expects the company to defer maintenance capex, sell more assets and increase net debt.
Nov. 10, 2014, 8:56 AM
- Rio Tinto (NYSE:RIO) CEO Sam Walsh tells Reuters he is unfazed by plunging ore prices, believing his company's industry-low production costs of $20.40/metric ton in H1 2014 will help it ride out the storm.
- Walsh also says he is confident of increasing returns to shareholders at full-year results in February, adding that RIO has no plans to cut its 2015 capital spending target of $8B, announced last year.
- RIO is on track to increase output 9% to 290M metric tons ahead of a push to 360M metric tons, ranking it second in size behind VALE and far ahead of third-place BHP.
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. 30, 2014, 9:32 AM
Oct. 30, 2014, 7:59 AM
- Vale (NYSE:VALE) -6% premarket after reporting a surprising Q3 net loss due a sharp depreciation in the Brazilian real and the lowest iron ore prices since 2010.
- Vale posted a $1.44B Q3 loss from a net profit of $3.5B a year earlier and analyst consensus expectations for a $1.49B net profit, hit by $2.68B in foreign exchange and monetary losses on debt and derivatives; EBITDA fell 48% Y/Y to $3B.
- Vale’s average sales price for iron ore plunged 36% Y/Y to $68.02/ton from $109.93.
- Produced a record 85.7M metric tons of iron ore but inventories rose by 9.3M tons, as protests that closed its main railroad in northern Brazil contributed to stockpiles.
- Since ferrous metals, mostly iron ore, account for nearly two-thirds of Vale’s sales, Q3 net revenues sank 27% Y/Y to $9.06B, the company's lowest revenue since Q1 2010 and below expectations of $9.65B.
- Says it completed construction of its 30M tons/year Teluk Rubiah distribution center in Malaysia, which will allow it to cut costs in Asia, and began operations from its Serra Leste iron ore plant at the Carajas complex in Brazil.
Oct. 28, 2014, 2:24 PM
- "I think we'd be crazy not to," says Jim Chanos, still short Brazil, but taking some profits after a near 20% dive in the Bovespa over the last couple of months which may or may not have had its denouement in yesterday's post-election plunge.
- Among the individual names Chanos had in the past talked about being short were Petrobas (PBR +4.3%) and Vale (VALE +0.6%), from which the Bovespa is heavily weighted. The two combine to represent about 8% of the assets in the iShares MSCI Brazil Capped ETF (EWZ +5.6%).
- "I think a lot of [Rousseff's reelection] is priced in already now," says Chanos.
- ETFs: EWZ, BRF, BRXX, EWZS, BRZU, BRAQ, BZQ, BRAZ, BRAF, UBR, BRZS, DBBR, FBZ
Oct. 27, 2014, 6:25 PM
- Cliffs Natural Resources (NYSE:CLF) -0.2% AH after reporting Q3 earnings that beat expectations and a 16% Y/Y drop in revenues that nevertheless met estimates.
- CLF swung to a loss in the quarter, dragged down by a $6B writedown related to its purchase of a Canadian iron ore mine as well as 32% lower iron ore prices and 17% lower met coal prices.
- CLF says Q3 costs at its eastern Canadian operations were $81.71/ton, and it expects costs to remain at $80-$85; the big three miners - BHP, RIO and VALE - control massive mines, ports and railroads, which allows them to produce iron ore at $50/ton or lower.
- Iron ore pellet sales volume totaled 6.8M tons (+8% Y/Y) for the U.S., 3.1M tons (+11%) for Asia Pacific, and 2.3M tons for eastern Canada (-12%); North American coal sales volume was 1.9M tons (+15%).
- Gross margin narrowed to 9.8% from 22.5% a year earlier.
- "Despite continued cost cutting progress at Bloom Lake, Phase I is not feasible. By the end of this year, we will have a solution for Bloom Lake," CEO Lourenco Goncalves says.
Oct. 27, 2014, 10:31 AM
- It's an ugly open for Petrobras (PBR -14.2%) following Pres. Rousseff's re-election as Brazil's president, as hopes are dashed for a regime change that might have helped investor confidence in the country and the company.
- Rousseff's victory "was not totally priced in yet," Loomis Sayles analyst Bianca Taylor says, adding that she expects a slump in Brazil assets as a whole in the next few days.
- PBR and state-controlled utility Centrais Eletricas Brasileiras (EBR -12.3%) were the two worst performing stocks in the 834-member MSCI Emerging Markets Index this morning.
- Also: VALE -5.9%, ITUB -6.5%, BBD -8.1%, GOL -7.6%.
- Brazil ETFs: EWZ -6.7%, BRF, BRXX, EWZS, BRZU, BRAQ, BZQ, BRAZ, BRAF, UBR, BRZS, DBBR, FBZ
Oct. 27, 2014, 9:13 AM| 1 Comment
Oct. 27, 2014, 7:12 AM
- The iShares MSCI Brazil Index ETF (NYSEARCA:EWZ) is lower by 9.5% premarket after President Rousseff narrowly won re-election over the weekend.
- Petrobas (NYSE:PBR) -16.5%, Vale (NYSE:VALE) -6.5%
- The iShares S&P Latin America 40 Index (NYSEARCA:ILF) -2.2%
- ETFs: EWZ, BRF, ILF, BRXX, EWZS, BRZU, LBJ, BRAQ, BZQ, BRAZ, GML, BRAF, UBR, BRZS, DBBR, EEML, FBZ, FLN
Oct. 26, 2014, 8:41 PM
- Incumbent Dilma Rousseff is re-elected to a second term as Brazil's president, winning about 51% of the votes, according to the official count. It could be bad news for Brazilian stocks, or just maybe her victory was already priced in.
- The Bovespa had been about 2014's strongest major global market through roughly August as polls showed support evaporating for Rousseff, but the index has slumped more than 15% over the past two months as a victory by her more conservative challenger Aecio Neves looked less and less likely.
- Brazil ETFs: EWZ, BRF, BRXX, EWZS, BRZU, BRAQ, BZQ, BRAZ, BRAF, UBR, BRZS, DBBR, FBZ
- Among individual stocks: Petrobas (NYSE:PBR), Vale (NYSE:VALE), Itau Unibanco (NYSE:ITUB), Banco Bradesco (NYSE:BBD), Gol Linhas (NYSE:GOL).
- Broad Latin American ETFs: ILF, LBJ, GML, EEML, FLN
Oct. 24, 2014, 11:11 AM
- An outlier of a poll shows opposition candidate Aecio Neves with a sizable (though shrinking) lead over President Dilma Rousseff. Other polls have consistently shown Rousseff with a lead of six to eight percentage points. Still to come is big debate between the two contenders tonight. The election is on Sunday.
- The credibility of opinion polling is somewhat suspect in Brazil, with different surveys showing wildly different results, not to mention all the major pollsters failing to capture the extent of Neves' support ahead of the first round of elections earlier this month.
- The Bovespa is up 3.6%. EWZ +5.3%
- Petrobas (PBR +6.3%), Vale (VALE +4.4%), Itau Unibanco (ITUB +6.1%), Banco Bradesco (BBD +5.5%), Gol Linhas (GOL +6.6%)
- ETFs: EWZ, BRF, BRXX, EWZS, BRZU, BRAQ, BZQ, BRAZ, BRAF, UBR, BRZS, DBBR, FBZ
- The iShares S&P Latin America 40 (ILF +3%)
- Broad South American ETFs: ILF, LBJ, GML, EEML, FLN
Oct. 23, 2014, 8:34 AM
- Vale (NYSE:VALE) -2.3% premarket after saying its Q3 iron ore output rose 3.1% to 85.7M metric tons from 83.1M tons a year ago and is on track to set a record for the year despite plunging prices.
- Output beat the previous quarterly record of 85M tons set in Q3 2011; YTD, iron ore output has climbed 8.1% at 236.2M tons, the highest ever.
- Q3 iron ore shipments fell by 3.6M tons due to protests at its cargo railroad out of Carajas in September, resulting in a 9.3M ton increase in iron ore global stocks.
- Q3 nickel production rose 16% Y/Y to 72.1K tons after the company brought the Onça Puma mine in Brazil online this year.
- Copper output rose 11% to 104.8K tons, and coal production fell 1.5% to 2.34M tons.
Oct. 21, 2014, 3:13 PM
- Jefferies lowers its commodity price forecasts, cuts 2015 earnings estimates for mining companies it covers by an average of 21%, and downgrades BHP Billiton (BHP +0.6%) to Hold from Buy but maintains a Buy rating on Rio Tinto (RIO +1.5%) and a Hold on Vale (VALE +1.1%).
- The firm expects BHP to outperform over the very long-term but sees limited upside potential over the next 6-12 months, with shares now trading at a premium on price/NPV; BHP also has limited scope to materially grow its dividend over the next year.
- Jefferies maintain its Buy rating on RIO based on relative valuation as well as capital return potential, high return on capital invested and strong free cash flow even in a weaker iron ore price environment.
Oct. 20, 2014, 7:54 AM
- Vale (NYSE:VALE) says a revised nickel mining contract with Indonesia to extend its contract in the country will require it to raise maximum royalties, cut land holdings and sell another 20% of its shares to local investors.
- Vale will have to pay the Indonesian government a significantly higher royalty rate of 2%-3%, depending on the price of nickel, effective immediately, after paying an average 0.63% royalty on nickel revenues between 2010-13.
- The agreement entitles Vale to continue operations in Indonesia for up to 20 years after its existing contract of work expires in late 2025.
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