Rio Tinto PLC
Why Rio Tinto has key advantages over its peers
Rio is the largest owner and operator of autonomous—driverless—trucks in the world. These initiatives are part of Rio’s “Mine of the Future” program.
Must-know: Is the share buyback the right thing to do?
Cliffs Natural Resources’ (CLF) new management changed the terms of its debt agreement to repurchase the company’s shares. The shares are worth up to $200 million.
Copper Weaker on August 19 Due to Weaker Demand Signs
After starting the day with decreased momentum, copper prices remains mixed on Friday, August 19. At 1:50 PM EDT on August 19, the COMEX copper futures contract for September delivery was trading at ~$2.17 per pound, a gain of ~0.16%.
Why It’s No Surprise that Alcoa Cut Aluminum Demand Guidance
Alcoa has revised down its 2016 global aluminum demand growth projection to 5%.
Analyzing JPMorgan Intrepid European Fund’s Allocation in 2015
The JPMorgan Intrepid European Fund’s assets were spread across 79 holdings as of December 2015.
How China’s Credit Growth Could Progress in 2018
Aggregate financing in China (MCHI) came in at 1.6 trillion yuan in November 2017.
UK Industrial Production Regained Strength in August
With a rise in mining and quarrying activities, the UK industrial production index rose by 1% in August 2015 against a fall of 0.3% in July.
Copper Rose to 1-Month High Price Levels on September 20
At 1:15 PM EST on September 20, the COMEX copper futures contract for December delivery rose ~0.35%. It was trading at $2.16 per pound.
China’s Credit Growth Metrics Also Worsen in April
China’s credit growth clearly has been weaker than expected, especially given the recent easing measures adopted by the government.
Why BHP focuses on productivity
Under equipment, the focus is on increasing availability, utilization, and rate. A 6% increase in utilization helped achieve a 9% increase in group production in FY14.
Freeport or Glencore: Which Company Looks Set for 2017?
According to data compiled by Thomson Reuters, analysts expect Freeport-McMoRan (FCX) to post an adjusted EBITDA of $5.3 billion in 2017, compared to $4.9 billion in 2016.
How does Chinese credit easing help iron ore names?
The immediate impact of Chinese credit easing was seen as China’s iron ore and rebar futures posted their strongest gains in three weeks.
China’s industrial output growth slows in November
FAI is a good indicator of how much investment occurs in a country or region. It’s a closely watched indicator of construction activity in China.
Copper Weakened amid Recovery in Dollar on August 3
After starting the day on a weaker note on Wednesday, August 3, copper maintained the same sentiment throughout the day and declined lower.
Copper Remains Stable as Brexit Fears Eased
Although the fundamentals are not as supportive of the Market’s sentiment, the weakness of the dollar and decreased anxiety over the Brexit vote helped copper on Friday.
China’s Crude Steel Production Impacts Iron Ore Miners Like Vale
Since 98% of mined iron ore goes into making steel, it’s important to track steel production. China consumes two-thirds of seaborne iron ore.
Copper, Gold, and Silver Are Trading Lower on Thursday Morning
Copper is trading lower on Thursday. At 6:36 AM EST, the COMEX copper futures contract for July delivery was trading at $2.06—a decline of 1.1%.
How Do Analysts Rate Rio Tinto?
Citigroup (C) upgraded Rio Tinto’s (RIO) rating from “sell” to “neutral” on June 6, 2016. The broker also raised the target price for the stock from 20 pounds to 21 pounds.
Base Metal Miners Declined the Week Ended January 2, 2016
The equities of major base metal mining companies fell in the week ended on January 2. Freeport-McMoRan, one of the leading copper producers, fell last week and ended in a loss.
Japanese iron ore imports were flat year-over-year in 2014
Japan accounts for 10%–13% of the seaborne market, so Japanese iron ore imports are another good indicator of demand.
Why is the market reacting?
Market analysts have started turning bearish on Cliffs Natural Resources (CLF). There are many downgrades. The target price has been revised down in recent weeks.
Why the demerger of non-core assets makes sense for BHP
BHP had been contemplating whether to sell the non-core assets or go for a demerger. Finally, the company decided in favor of a demerger on August 15. The proposed company will likely have assets in the range of $12–$20 billion.
Why Did Merrill Lynch Resume Coverage of Freeport-McMoRan?
On Wednesday, March 2, 2016, Merrill Lynch resumed Freeport-McMoRan’s (FCX) coverage, with a neutral rating and a price target of $9.
Factors That Could Cause an Upside to CLF’s Free Cash Flow in 2017
Cleveland-Cliffs’ management noted during its 4Q16 earnings call that it is expecting to generate FCF of $550 million in 2017.
Base Metal Miners Freeport-McMoRan and Glencore Fell Last Week
Freeport-McMoRan is one of the largest copper miners in the world. It fell for the second consecutive trading week. In the week ending on April 2, it fell 2.2%.
Copper Prices Hold at $4,500 amid Commodity Meltdown
Copper has been on a downtrend for nearly two months. The goodwill generated by supply cuts by major miners failed to last beyond a month, and copper again resumed its downtrend.
Alcoa’s Leverage Ratio Misses The Mark
Alcoa’s leverage ratio has increased over 2Q 2014. This basically means that the proportion of debt in Alcoa’s capital structure has increased.
Why Alcoa is improving its competitive position
Alcoa idled several smelting plants since 2007. Its aluminum smelting capacity has come down by 28% over the period. Most of these smelters had high unit production costs.
Why Vale’s Iron Ore Margins Should Remain Supported
In this series, we’ll see how Vale is planning to deal with the current volatile commodity price environment.
Must Know: Goldman Provided Fodder to Copper Bears
Goldman Sachs (GS) now expects copper prices to fall to $4,000 per metric ton this year. In its previous guidance, Goldman had expected copper to fall to $4,500 per metric ton in 2016.
What Does the Current Supply Outlook Mean for Iron Ore Prices?
The weak demand from China is hurting iron ore prices. The supply side, on the other hand, remains quite strong.
Copper, Gold, and Silver Are Stable Early on October 7
At 6:35 AM EST on October 7, the COMEX copper futures contract for December delivery was trading at $2.15 per pound—a fall of ~0.12%.
Why Did Base Metals Fall in the Second Week of March?
LME nickel fell to lower price levels last week and stood as the biggest loser in base metals. It fell 5.5% and ended the week at $8,830 per metric ton.
Why did the Cliff’s share price rally?
Iron ore prices are down 19% year-over-year (or YoY) and coal prices are down 30% YoY—volumes were also down YoY, but the stock rallied 7% in a single trading session the next day of the earnings call and up 3% the subsequent trading day.
Why Is Copper Trading High in the Early Hours on September 14?
At 6:20 AM EST on September 14, the COMEX copper futures contract for December delivery was trading at $2.13 per pound—a gain of ~1.2%.
Copper Dove in July 22 Due to a Stronger Dollar
At 1:15 PM EDT on July 22, major copper producers Freeport-McMoRan (FCX), Billiton (BHP), and Rio Tinto (RIO) fell by ~1.7%, ~1.7%, and ~1.19%, respectively.
Must-know: Why Brazilian iron ore exports fell 9% in August
Brazilian exports show how much volume is shipped out of Brazilian ports to China and the rest of the world. Along with exports from Port Hedland, Australia, this is an important supply side indicator.
Iron Ore Pricing Pressures Likely to Persist
Almost all of the iron ore miners are cutting costs, which is driving the cost curve down. This will put additional pressure on prices.
Aluminum company metrics compared
Trading on the London metal exchange determines the price for primary aluminum. Any increase in the price of aluminum benefits companies that produce primary aluminum.
China’s Steel Prices Might Have Started Giving Up: More Downside?
One of the most dominant factors driving iron ore’s price rally is rising steel production and the resulting increase in steel prices in China (FXI).
China Moves from Manufacturing to Consumption: Impact on Iron Ore
Over the past few months, we’ve seen that China (MCHI) (ASHR) is transitioning from a manufacturing-based to consumption-based economy.
China’s Steel Production Outlook Pressures Iron Ore Prices
According to the China Iron and Steel Association, China’s 2015 crude steel output could decline by as much as 2%. This estimate is lower than CISA’s March estimate of a 1.1% decline.
Why Analysts Have Mixed Views on Iron Ore Prices
Goldman Sachs (GS) is notably still quite bearish on iron ore. The bank cited the recent string of shipment data from Australia to support its view.
Could the OPEC Meeting Have an Impact on Alcoa?
It could be déjà vu for Alcoa (AA) investors after the OPEC meeting on December 4, 2015. Last year’s decision to maintain daily crude output had a negative impact on all commodities.
How Were Copper, Gold, and Silver Trading on Monday?
China’s better-than-expected growth in real estate investments in April supported copper prices on Monday.
Must-know: Alcoa’s third quarter portfolio transformation
Alcoa announced the acquisition of Firth Rixson. Firth Rixson is the largest jet engine ring manufacturer. It gets ~75% of its revenues from aerospace industries.
Why the Aluminum Supply Deficit Is Not Causing Premiums to Strengthen
US Midwest aluminum premiums are currently quoted at $0.07 per pound. Premiums have fallen slightly in July and are now down more than 22% year-to-date.
It’s Hard to Be Positive on Long-Term Iron Ore Price Fundamentals
Vale SA will cut the high-cost iron ore production from its Southern and Southeastern systems by 25 million–30 million tons per year. Its 2015 iron ore guidance production is unchanged at 340 million tons.
Understanding S11D’s Impact on Vale’s Earnings Estimates for 2017
Vale’s total volumes should see a significant boost from iron ore volumes as its S11D project starts commercial production.
Why Alumina Prices Are a Challenge for Alcoa
The decline in alumina prices is a concern for Alcoa. The profitability of its alumina operations would be hit due to lower alumina prices.
Roy Hill Has the Potential to Push Iron Ore Prices Further Down
Australia’s billionaire Gina Rinehart’s $10 billion Roy Hill iron ore project expects to start shipping iron ore to world markets starting in October 2015.
Why Copper Bears Shouldn’t Lose Heart
While copper bears have been overshadowed by the bulls this month, they might like their chances in 4Q17.
What is Driving the Valuation for Iron Ore Miners?
Valuation multiple The EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple is a widely used relative valuation multiple for capital-intensive industries such as metals and mining. It takes into account a company’s capital structure. By using this multiple, we can compare companies’ valuations. Miners’ EV-to-EBITDA Vale (VALE) has a forward EV-to-EBITDA multiple […]
Understanding China’s Monthly Record in Steel Production
In April, China’s steel production surpassed the previous monthly record of 72 million achieved in March 2017 by producing 72.78 million tons.
2 Factors That Could Impact Aluminum Premiums In 2015
Aluminum premiums are negotiated between aluminum warehouses and the end buyers. This makes them less susceptible to speculation.
Freeport-McMoRan’s Technical and Fundamental Indicators
Freeport-McMoRan (FCX) closed at $10.54 on September 21. It rose almost 6% from its closing the previous day. The stock has gained 2.4% in September.
Must-know: Alcoa is placed better than other aluminum companies
The aluminum process starts by extracting bauxite from the Earth’s crust. The bauxite is refined into alumina. Alumina is a key raw material—along with carbon and electricity.
How Integrated Operations Would Be Alcoa’s Competitive Advantage
Alcoa (AA) has integrated operations. Under the current market scenario, integrated operations could become Alcoa’s competitive advantage.
How Freeport’s Valuation Looks Going into 3Q16
Freeport’s asset sales program has restored investor confidence, helping it to trade at a higher valuation multiple.
Why the Outlook on Iron Ore Is Still Negative
Major iron ore producers are further reducing costs to weather the current market downturn.
Will Teck Resources Have a Merry Christmas in 2017 Also?
Higher commodity prices and an improved risk-on sentiment were Teck Resources’ key drivers in 2016.
How Does Alcoa’s Record Aluminum Deficit Projection Look?
Earlier, Alcoa projected a 1.1 million metric ton deficit for global aluminum markets. It revised down its deficit projection during its 2Q16 conference call.
Aluminum Executives Discuss the Industry Outlook
For commodity companies like Rio Tinto (RIO), the industry outlook is as important, if not more important, than the company’s position in the industry.
UK Stock Market Stymies Awaiting a US Rate Hike in September
September 4 saw rises in none of the 109 constituent stocks of the EWU. The Fed’s rate-hike indecision impacted UK investors.
Aluminum Industry Outlook: What Do Top Executives Have to Say?
Aluminum industry outlook For commodity companies like Rio Tinto (RIO), industry outlook is as important—if not more important—than the company’s position in the industry. Let’s see what senior aluminum executives have had to say about the aluminum industry’s outlook during their companies’ 3Q16 earnings calls. Century Aluminum Century Aluminum (CENX) expects two million metric tons […]
Trouble Ahead For Alcoa? Halcyon Days Of 2014 Could Be Over
Aluminum prices were strong for most of 2014. But OPEC changed all that last fall when it decided to maintain crude oil output levels.
ArcelorMittal’s Key Risks in 2H15: Investor Must-Knows
ArcelorMittal faces certain macro risks. We’ll discuss these risks in this part of our series.
Understanding Glencore’s Metals and Mining Business
Glencore’s metals and mining segment was the second-biggest contributor to its 1H15 revenues.
Did Alcoa Just Bail Out Century Aluminum?
Century Aluminum’s earnings have come under severe pressure because of the steep correction in aluminum prices. The company posted a gross loss in 3Q15.
Global Turmoil Continues to Weigh on Freeport-McMoRan
Metal shares bear the brunt whenever there’s a global turmoil in the markets. China’s slowdown could continue to weigh heavily on metal companies like Freeport.
Analyzing Newcrest Mining’s Rising Costs and Falling Gold Prices
Newcrest Mining is based in Australia. It’s engaged in the exploration, mining, and sale of gold and copper. It produced about 2,396,000 ounces of gold in 2014.
Will Iron Ore Prices Benefit from China’s Credit Growth Prospects?
China’s aggregate financing stood at ~3.7 trillion Chinese yuan in January 2017, as compared to 1.6 trillion yuan in December 2016.
How Will Cliffs Natural Resources’ Costs Progress in 2017?
In 4Q16, Cliffs’ cash costs of goods sold for APIO was $36.4 per ton, or 8% higher YoY.
Which Iron Ore Miners Currently Look Undervalued or Overvalued?
Rio Tinto has received a boost due to its recent announcement regarding $5 billion of additional free cash flow generation through productivity improvements.
What Rio Tinto’s Balance Sheet Means for Future Growth
Rio Tinto’s (RIO) net debt at the end of 1H17 was $7.6 billion, compared with $12.9 billion at the end of 1H16 and $9.6 billion at the end of December 2016.
What to Expect from Freeport-McMoRan’s 3Q15 Earnings
Looking at Freeport’s earnings sensitivity to WTI and copper prices, its 3Q15 earnings could take a hit compared to the previous quarter.
How Bond Buybacks Add Value
As of June 30, 11 fallen angel companies had issued tender offers YTD, boosting their bond prices by 5% on average.
Rio Tinto: In-Line Aluminum, More-than-Expected Bauxite Production
Rio Tinto (RIO) and Alcan combined in 2007 to form Rio Tinto Alcan, a global leader in the aluminum industry. Its fully integrated facilities include high-quality bauxite mines…
Cliffs’ Asia-Pacific: Will Strong Seaborne Iron Ore Prices Lead to Mine-Extension?
Seaborne iron ore prices have held firm in 2016 and 2017 YTD, despite market participants calling for a downturn.
Will the Demand-Supply Mismatch Spur Chinese Aluminum Exports?
China’s unwrought aluminum exports rose 20.4% YoY in August. Although the increase is a concern, things aren’t as bad as suggested by the big YoY spike.
Here’s What’s Driving Iron Ore Prices through the Roof
Iron ore prices reached a six-month high of $62.7 per ton on October 26, 2016, bringing the YTD (year-to-date) gains for the commodity to an impressive 46%.
Global Copper Inventory Stabilizes, Supports Prices
Stable copper inventories seem to support copper prices. Copper’s upside might be capped due to global uncertainty and copper’s projected surplus.
Was Alcoa Smart to Sell Mt. Holly Smelter to Century Aluminum?
In 2014, Alcoa (AA) sold its stake in the Mt. Holly smelter to Century Aluminum (CENX).
Will Freeport Follow Glencore and Restore Its Dividend?
Freeport-McMoRan and Glencore suffered from the same issues last year. While Glencore restored its dividend, Freeport hasn’t restored its dividend yet.
What Are Analysts Recommending for Cliffs Natural Resources?
Of the analysts covering Cliffs, one analyst has a “buy” recommendation, eight have “hold” recommendations, and six have “sell” recommendations.
Key Takeaways from Alcoa’s 4Q16 Earnings Call
The question of restarting US plants cropped up during Alcoa’s 4Q16 earnings call. However, Alcoa’s management sounded wary.
Why Rio Tinto’s Kestrel Ramp-Up Keeps Coal Volumes Going
RIO’s hard coking coal production was up 10% YoY to 4 million tons in 9M15 due to improved production rates at Kestrel.
What Chile’s Mining Strike Means for a Highly Privatized Economy
Chile had been known as the best-managed economy in Latin America—until recently.
China Has A Limited Impact On The Global Aluminum Industry
Bauxite is the main raw material in aluminum production. China lacks high-quality bauxite reserves. Until last year, China was relying on bauxite from Indonesia.
How Are Analysts Rating Southern Copper This Month?
According to consensus estimates compiled by Bloomberg, Southern Copper (SCCO) has a one-year price target of $27.82—7.5% above its current stock price.
Rio Tinto Maintained Copper Production Guidance for 2015
Rio Tinto (RIO) had combined its coal and copper divisions to form a single division earlier in the year. Together they contributed to 20% of RIO’s underlying EBITDA for 1H15.
Why October Could Be a Crucial Month for Freeport-McMoRan
In the previous parts of this series, we looked at some of the macro developments that could impact Freeport-McMoRan (FCX) in October.
Must Know: What Value Can Elliott Management Add to Alcoa?
Elliott Management noted that it plans to engage in a “constructive dialogue” with Alcoa’s (AA) board regarding Alcoa’s split transaction and “additional available opportunities to maximize shareholder value.”
Do Analysts See Value in Turquoise Hill Resources?
According to Reuters, TRQ has a mean one-year price target of 5.68 Canadian dollars (~$4.28), which is a 24.3% upside over its closing price on January 20.
Inside BHP Billiton’s Iron Ore Price Concerns
Iron ore prices were very strong in 2016 and have remained so year-to-date. Prices increased by more than 80% in 2016.
How Alumina Prices Affect Century Aluminum
Alcoa (AA) is an integrated aluminum producer like Rio Tinto (RIO) and Norsk Hydro (NHYDY) and produces alumina and aluminum (DBB).
Why Arconic Investors Can Find Solace in Alcoa’s Gains
While Alcoa (AA) has seen upward price action following its split, Arconic (ARNC) has sagged. However, Arconic’s investors can still find some solace in Alcoa’s gains.
Alcoa’s Split: Is the ‘Crown Jewel’ Doing as Expected?
When the split was announced last year, Arconic was supposed to be the crown jewel that would help drive value for shareholders once listed as a separate entity.
Chinese Copper Imports Impact the Global Inventory
Since China’s refined copper imports started to taper down starting in April, we saw big drawdowns in the SHFE copper inventory.
Key Takeaways from Freeport-McMoRan’s 3Q16 Earnings Call
During its 3Q16 earnings call, Freeport-McMoRan (FCX) reduced its production guidance. The company expects its 2016 copper shipments to be 4.8 billion pounds.