Yesterday, 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
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
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.
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, 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).
Fri, Jul. 17, 3:59 PM
- Brazil's political crisis deepens as Eduardo Cunha, the head of Brazil’s lower house, said today he is breaking with the ruling coalition.
- Cunha accused Pres. Rousseff's administration of pressuring prosecutors to implicate him in the widening corruption scandal at Petrobras scheme; late yesterday, the federal judge leading the investigation broadcast testimony from a defendant who turned state’s evidence alleging that Cunha took bribes.
- The move comes after a series of recent defeats in congress for Rousseff as lawmakers turned aside efforts to contain spending and raise taxes as she seeks to preserve Brazil’s investment-grade credit rating.
- PBR -5.5%, VALE -2.2%, EBR -2.1%, ELP -2.9%, CIG -5.8%, CPL -2.1%, SBS -2.9%, BSBR -1.1%, BBD -2.2%, ITUB -1.5%.
- ETFs: EWZ, BRF, BRZU, EWZS, BRXX, BRAQ, BZQ, BRAZ, BRAF, UBR, DBBR, FBZ
Tue, Jul. 14, 10:57 AM
- ArcelorMittal (MT -1.7%) says it likely will idle the long steel mills it recently installed in its João Monlevade plant in Brazil, citing excess capacity in the sector and stagnating demand.
- The comments from MT's South American head of long steel echo those of the company's chief executive in Brazil, who warned yesterday that the outlook for demand in Brazil's domestic steel market remains gloomy.
- Also: GGB -5.7%, VALE -3.3%, TX -0.7%.
Tue, Jul. 14, 10:31 AM
- Vale (VALE -3.5%) gives back part of yesterday's big gains sparked by news that it would withdraw 25M metric tons of annual production starting this month.
- Vale’s "cut" was not really a cut, as it is merely adjusting its operations to shift production from higher-cost tons to more profitable output; it maintained its 2015 production guidance at 340M tons as well as its longer-term target of producing 450M tons by 2018.
- Morgan Stanley says Vale's move will not reduce supply and will not lead to higher iron ore prices in the short term, and could even have the opposite effect.
- Citigroup says any move would need to result in reduced supply to have a prolonged influence on physical markets and prices, adding that BHP Billiton (BHP -1%) and Rio Tinto (RIO -0.8%) are unlikely to follow Vale’s move.
Mon, Jul. 13, 2:15 PM
- Vale (VALE +6.9%) and other iron ore peers are rallying after reports that Vale plans to cut iron ore production in an attempt to boost profit.
- Peter Poppinga, Vale's executive director for ferrous and strategy, told an industry conference in Sao Paulo today the company would lower iron ore output by 25M metric tons starting this month, with the cuts coming from lower quality products at its mines in south and southeast Brazil and from third-party purchases.
- “Our mantra is not volume at any cost anymore, it’s to maximize margins,” Poppinga said. “It doesn’t mean shutting mines, it means optimizing some production flows at plants.”
- Poppinga also said prices for iron ore, which have been cut almost in half in the past year, are poised to rebound as China shuts mines and replenishes inventories.
- Also: RIO +3.9%, BHP +2.9%, SID +8.4%, CLF +7.2%, X +4.7%, AKS +7.4%, MT +2.4%, NUE +2%, STLD +2.3%.
Wed, Jul. 8, 8:42 AM
- Iron ore prices plunge to their lowest levels in at least six years, sparked by fears that the rout in China’s stock market could hurt demand while the biggest producers continue to raise output.
- Ore delivered to Qingdao sank 10% to $44.59/metric ton overnight, the lowest price dating back to May 2009.
- Iron ore’s 10-day drop started with figures that showed holdings at ports in China rebounded last week while exports from Australia’s Port Hedland climbed to an all-time high., and the slump deepened as China’s stock rout worsened.
- BHP -3%, RIO -4.2%, VALE -3.2%, CLF -4.8% premarket.
Tue, Jul. 7, 11:59 AM
- Vale (VALE -4.2%) shares extend their three-day slide and touches their lowest levels in 10 years, as iron ore drops below $50/metric ton for the first time since April on concern low-cost supplies from producers including Brazil will expand further while demand falls in China.
- Iron ore prices are lower by 5.1% to $49.60, according to a price index compiled by Metal Bulletin, down more than 20% from a June high and capping a nine-day losing streak, the longest losing streak since last August.
- Bloomberg reports that inventories at Chinese ports rose 2.8% last week to 81.55M tons; as trade seems to pick up, analysts say iron ore prices could slump to $40.
- Earlier: China's stock turmoil whacks Freeport McMoRan, copper producers
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