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.
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, 11:30 AM
- Presidential challenger Aecio Neves over the weekend received the endorsement of Marina Silva - the 3rd-place finisher in the first election round - and the latest poll shows Neves outgunning incumbent Dilma Rousseff by 52.4% to 36.7%.
- The runoff election is set for October 26.
- The Bovespa is soaring, up 4.4%, led by Petrobas (PBR +9%), Vale (VALE +5.2%), GOL Linhas Aereas (GOL +6.4%), Banco Bradesco (BBD +8.8%), and Itau Unibanco (ITUB +8.7%).
- The iShares MSCI Brazil Index (EWZ +5.1%).
- Brazil ETFs: EWZ, BRF, BRXX, EWZS, BRZU, BRAQ, BZQ, BRAZ, BRAF, UBR, BRZS, DBBR, FBZ
- The iShares S&P Latin America 40 Index (ILF +3.7%).
- Broad South American ETFs: ILF, LBJ, GML, EEML, FLN
Oct. 13, 2014, 9:22 AM
Oct. 9, 2014, 10:49 AM
- Rio Tinto (RIO -1%) is defending its plans to expand iron ore production in Australia at a time of sharply falling prices, as the head of its iron ore division says "if we don't fill that void, somebody else will."
- Rio Tinto is pouring billions of dollars into expanding iron ore mines and infrastructure in Australia's Pilbara region, betting that its huge efficiencies of scale will allow it to increase profits even though iron ore prices have fallen more than 40% this year.
- Earlier this week, BHP Billiton (BHP -0.5%) also said it planned to increase its output by nearly 30% by making its operations more efficient; Vale (VALE -0.8%) also is planning increases in output.
Oct. 7, 2014, 2:22 PM
- Petrobras (PBR +7.1%) and other Brazilian stocks continue to climb higher after Sunday's presidential election resulted in pro-business candidate Aeceo Neves showing surprising strength in making the runoff against incumbent Pres. Rousseff.
- Also: CIG +9.3%, EBR.B +3.9%, ELP +3.2%, EWZ +2.4%, BBD +2%, VALE +1.8%, ITUB +1.8%.
- Separately, PBR says its latest well in the Brigadeiro discovery evaluation plan area has confirmed the presence of good quality oil in the ultradeep waters of the Espirito Santo Basin post-salt deposits.
- PBR, with an 89.9% stake, is the operator of the consortium developing the project.
Oct. 6, 2014, 11:18 AM
- Petrobras (PBR +13.2%) leads Brazilian stocks higher after yesterday's presidential election resulted in a runoff to be held Oct. 26 between incumbent Pres. Rousseff and - in an upset - pro-business challenger Aécio Neves.
- Raymond James analyst Pavel Molchanov says a Neves victory would be the best outcome by far for PBR concerning the potential for loosening domestic content rules and restrictions on foreign investment; but the analyst warns that even under a Neves administration, it would be unrealistic to expect an immediate dramatic fuel price hike since such a move would be very unpopular move and cause economic dislocation.
- Among other Brazilian stocks: VALE +2.5%, ITUB +9.8%, BBD +12.7%.
Oct. 6, 2014, 9:16 AM| Comment!
Oct. 6, 2014, 7:03 AM
- The iShares MSCI Brazil Index ETF (NYSEARCA:EWZ) is ahead by 6.7% premarket after President Dilma Rousseff pulls in just 42% of the vote in Brazil's 3-way election, and her more-conservative challenger Aecio Neves gets 34%, well ahead of the 26% support he saw in the most recent pre-election poll.
- Finishing in 3rd place is Marina Silva with 21% of the votes.
- Brazilian stocks have been rallying all year on hope Rousseff was set to be tossed, but lately have given back some gains on worry she might in fact win another term.
- The runoff election will be on October 26.
- Petrobas (NYSE:PBR) +14.5%, Vale (NYSE:VALE) +3.5%, Itau Unibanco (NYSE:ITUB) +1.6%, Banco Bradesco (NYSE:BBD) +3.9% premarket
- ETFs: EWZ, BRF, BRXX, EWZS, BRZU, BRAQ, BZQ, BRAZ, BRAF, UBR, BRZS, DBBR, FBZ
Sep. 29, 2014, 10:24 AM
- Sumitomo will set up a special investigation into how it lost nearly $1.8B in Texas shale oil and Australian coal mining, after writedowns connected to the investments almost completely wipe out its full-year earnings forecast.
- Most of the losses were incurred at the shale oil project it shares with Devon Energy (NYSE:DVN); in 2012, Sumitomo paid DVN $340M for 30% of the project in the Permian Basin, agreeing to supply another $1B to fund most of the cost of drilling wells, but now it says it wants to sell most of its share since it is “difficult to extract the oil and gas efficiently."
- The company also plans to stop production at the Isaac Plains coal mine in Australia's Queensland state it co-owns with Vale (NYSE:VALE) by the end of January.
- “Even by the standards of trading companies, this is not good,” says the co-head of Japan equities at Mirabaud Securities, drawing parallels to Mitsui's costly exposure to BP’s blowout in the Gulf of Mexico.
Sep. 29, 2014, 9:43 AM
- Brazil's real falls to a five-year low and Petrobras (PBR -11.1%) plunges more than 10% at the open after a new poll showed Pres. Rousseff widening her lead over opposition candidate Marina Silva.
- The real dropped 2.1% in early trading, and the currency has tumbled 11% so far in Q3 with volatility increasing as the Oct. 5 presidential vote approaches.
- Over the weekend, Rousseff rejected rumors of soliciting funds from PBR for her campaign in 2010.
- ITUB -7.6%, BBD -6.8%, GOL -5.4%, GFA -4.8%, BRFS -3.7%, VALE -2.8%, TSU -2.4%, BSBR -2.1%, SID -1.8%, ERJ -1.6%.
- Brazil ETFs: EWZ, BRF, BRXX, EWZS, BRAQ, BRZU, BRAZ, BZQ, BRAF, UBR, BRZS, DBBR, FBZ
Sep. 26, 2014, 5:49 PM
- Vale (NYSE:VALE) reaches a deal to expand its fleet of extremely large ships for carrying iron ore, following a truce with China’s largest shipping company that is expected to allow the vessels to dock at Chinese ports.
- Cosco, China's largest shipping group, had lobbied against the Valemax ships having access to Chinese ports, but Vale is agreeing to transfer ownership of four of the vessels to the Chinese company, which will commission the building of a further 10 vessels.
- Vale, unable to dock its large ore fleet at Chinese ports, has been forced to transfer ore to smaller ships at ports including Subic Bay in the Philippines.
Sep. 25, 2014, 2:54 PM
- Former Rio Tinto (NYSE:RIO) CEO Tom Albanese says the world's biggest mining companies are behaving rationally by digging out more iron ore even as prices continue to fall.
- "If you look at the forward curve two years ago, if you look at the estimates of supply and demand, there are no real surprises in the present market place that had not been anticipated," Albanese says.
- Iron ore prices have plunged 41% YTD to below $80/ton, their lowest level since 2009, exacerbated in large part by the world's three top iron ore miners - Rio, BHP and Vale (NYSE:VALE) - ramping up production in the hope they can profit from efficiencies of scale.
Sep. 22, 2014, 3:47 PM
- Cliffs Natural Resources (CLF -8.5%) plunges to 52-week lows as worries grow over the potential for an economic slowdown in China.
- Chinese steel production grew a mere 1% Y/Y in August, well off 2.6% YTD and 9%-10% growth recognized over the past few years; Wells Fargo's Sam Dubinsky views the data as negative for iron ore pricing, and thinks it means trouble for CLF, whose results could disappoint as the value of assets likely will diminish as pricing continues to fall.
- Also, a Bloomberg weekend report says coal demand in China may peak as soon as this year, which could further hurt coal miners such as CLF.
- Iron ore giants are lower: BHP -3.2%, RIO -2.7%, VALE -4.8%.
- Coal producers: ANR -9.7%, WLT -9.2%, ACI -7.7%, CLD -4.6%, BTU -4.4%, WLB -2.7%.
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