Fri, May 22, 12:34 PM
- Brazil stocks are sharply lower after Eletrobras (EBR -4.5%), the country’s largest utility by revenue, was cut to junk by Moody’s.
- While EBR showed “some financial improvement” in its Q1 earnings, its credit metrics remain too weak to remain at investment grade, Moody’s said, also citing an investigation on alleged bribes involving the former head of a subsidiary.
- Meanwhile, Pres. Rousseff is trying to salvage her presidency as things go from bad to worse amid the Petrobras (PBR -3.8%) corruption scandal, with a new poll finding that 63% of Brazilians favor impeachment proceedings.
- Brazilian opposition lawmakers are considering impeachment, either as an accessory to the corruption or for crimes of “irresponsibility” with finances.
- Also: PBR.A -3.8%, EBR.B -6.6%, VALE -0.2%, ELP -1.2%, CIG -3.3%, CPL -2%, SBS -4.7%, BSBR -2.7%, BBD -2.6%, ITUB -2.3%.
- ETFs: EWZ, BRF, BRZU, EWZS, BRXX, BRAQ, BZQ, BRAZ, BRAF, UBR, DBBR, FBZ
Wed, Apr. 29, 7:52 AM
- Vale (NYSE:VALE) is in talks with Chinese shipbuilders and leasing companies to build ~50 giant Valemax bulk carriers that would move iron ore from Brazil to China, WSJ reports.
- Brokers in Singapore say the potential order is aggressive given the soft markets in both iron ore and bulk shipping in general; the Baltic Dry Index has been hovering near 30-year lows since the beginning of the year on weaker imports of coal and iron ore from China.
- If confirmed, the order would be the largest in history for such ships.
- VALE -3.1% premarket.
Fri, Apr. 24, 5:37 PM
Fri, Apr. 24, 12:29 PM
- Vale (VALE +9.1%) continues to surge, headed for its biggest weekly gain in 16 years and gaining nearly 50% since Wednesday's announcement that it produced record-high levels of iron ore, nickel and other commodities during Q1.
- Also on Wednesday, BHP Billiton (BHP +3.4%) said it was curbing expansion plans and supplies from higher-cost mines dropped, easing concerns over a global glut and sparking iron ore biggest one-day price jump since 2012.
- "Vale is reacting to the rebound in iron ore prices,” said an equity analyst at CM Capital in Sao Paulo. “Most of Vale’s costs are fixed, so whenever there’s an increase in prices, there’s a direct impact on earnings.”
- Iron ore prices jumped 5.5% overnight to $57.81/dry ton and have rallied 23% since bottoming out at $47.08 on April 2.
- Also: RIO +1.6%, CLF +3.7%.
Wed, Apr. 22, 10:43 AM
- Vale (VALE +7.4%) says it produced 74.5M metric tons of iron ore during Q1, up 4.9% Y/Y and a company record for the period, as it increased output despite weak prices.
- Vale's total was aided by the N4WS mine in the Carajás complex in the Brazilian Amazon which began operating in December and contributed to an 18% rise in Carajás production during the quarter.
- Output of iron ore pellets, which sells at higher prices, rose 15% to 11.4M tons.
- Vale also produced a Q1 record 69.2K metric tons of nickel, up 2.5% Y/Y, while copper production surged 21% to a record 107.2K tons, adding by the ramp-up of the Salobo mine in northern Brazil; coal output fell 5.1% to 1.7M metric tons.
Wed, Apr. 1, 2:25 PM
- Petrobras (PBR +7%) and other Brazilian stocks post strong gains in reaction to Pres. Rousseff's declaration that her government will do whatever it takes for the country to meet its fiscal target this year.
- Rousseff says PBR may release its audited results by the end of the month, and issues a strong denial that she knew about the bribery that has shaken the company she chaired during 2003-10.
- Also: PBR.A +6.5%, EBR +6.6% EBR.B +9%, ELP +6%, CIG +4.9%, CPL +3%, SBS +4.9%, BSBR +5%, BBD +4.5%, ITUB +3.9%; however, with continued negative headlines on iron ore prices, VALE -1.9%.
- ETFs: EWZ, BRF, BRXX, EWZS, BRZU, BRAQ, BZQ, BRAZ, BRAF, UBR, DBBR, FBZ
Wed, Apr. 1, 10:49 AM
- Petrobras (PBR +6%) board member Silvio Sinedino points to potential conflicts of interest on the company's next board, citing the nomination of Vale (NYSE:VALE) CEO Murilo Ferreira as chairman and the selection of the president of Brazil's BNDES development bank, Luciano Coutinho, as interim chairman.
- Vale is Brazil's largest diesel consumer and pays PBR ~1B reais/year ($300M) to fuel its mines and railways, while PBR buys raw materials from Vale for its fertilizer plants.
- Sinedino, who represents PBR workers' interests on the board and is one of three members not appointed by the government, also says PBR will not sell its fuel distribution unit as part of its ongoing $13.7B asset sale plan.
Wed, Mar. 18, 2:57 PM
- Fortescue Metals (OTCPK:FSUMF -7.2%) earlier today pulled a proposed $2.5B debt sale, highlighting an iron ore market in deepening distress as prices closed at six-year lows.
- "Rather than lowering the interest cost, we understand the funding cost for the proposed $2.5B secured note was likely to be 8.5%-9%; hence why the offering was pulled," according to Citigroup analysts.
- Fortescue, the world's fourth largest iron ore miner, made the decision to pull the bond issue as iron ore prices fell by 5% to US$54.50/ton, driven down by a rapid expansion in supply by the miner as well as rivals BHP Billiton (BHP +1.2%), Rio Tinto (RIO -0.2%) and Vale (VALE -0.6%); stock prices had been much lower before today's Fed announcement.
- Analysts expect iron ore prices to fall even further as BHP and Rio press ahead with mine expansions in coming years and China’s economic growth slows.
- Also: CLF -3.9%.
Tue, Mar. 10, 8:28 AM
- BHP Billiton (NYSE:BHP) iron ore boss Jimmy Wilson is out in defense of the company's strategy of boosting iron ore output at a time of falling prices and global oversupply.
- "If we pull back our volume, that volume will be filled by other companies... We [would] be penalizing, in essence, our shareholders," Wilson argues, signaling no change of course from BHP even as prices drop.
- "The big guys are saying: ‘We’ve got huge margins, so we’ll keep pumping out iron ore because we’re still making money’,” says a top economist at Westpac Banking.
- Iron ore prices have cut in half over the past year as rising supply from new and expanded mines outpaces demand from steelmakers.
- Premarket: BHP -3%, VALE -2.7%, RIO -1.4%.
Mon, Mar. 2, 5:19 PM
- Silver Wheaton (NYSE:SLW) -3% AH after agreeing to sell ~$800M of stock to fund its purchase of an additional supply of gold from a Vale's (NYSE:VALE) Salobo mine in Brazil.
- SLW says it will use the proceeds of the offering to fund its acquisition of an additional 25% gold stream from the mine, which is in addition to the 25% of the mine's gold production SLW acquired in 2013.
- The deal raises SLW’s production and cash flow profile by adding expected average gold production of 70K oz./year for the first 10 years and 60K oz./year over the first 30 years.
Thu, Feb. 26, 8:59 AM
- Vale (NYSE:VALE) -2.6% premarket after posting below consensus Q4 earnings, as iron ore prices fell by nearly half and the Brazilian currency weakened vs. the dollar.
- Vale reported a Q4 loss of $1.85B, far worse than analyst expectations for a $740M loss, which impacted lower than expected FY 2014 net income of $657M; Vale wrote off almost $2B in fertilizer, iron ore, coal and nickel assets during the quarter, including a $1.05B charge on the fertilizer business in Brazil.
- Q4 EBITDA tumbled by two-thirds to $2.19B and fell 41% for the full year to $13.35B, the lowest figure since the 2009 global recession.
- Strength in Vale's base metals division helped to cushion the fall in iron ore prices, with EBITDA up 54% to $2.52B; Vale became the world's largest producer of nickel in 2014.
- Because cash generation has not been enough to cover Vale's $4.2B in dividend payments and $11.98B in capital spending, the company has been seeking to cut costs, find partners and sell assets, which CFO Luciano Siani says will intensify moving forward.
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
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
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