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.
U.S. Government Invests in Nickel Mining in $25 Million Deal
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.
How China’s Credit Growth Could Progress in 2018
Aggregate financing in China (MCHI) came in at 1.6 trillion yuan in November 2017.
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.
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.
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.
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.
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.
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.
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.
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 Brazil’s central bank is making a hawkish move on the Selic
On October 29, the central bank’s monetary policy committee in Brazil raised the benchmark Selic interest rate by 25 basis points to 11.25%. The increase was an attempt to fight inflation.
Why Goldman and Macquarie Don’t Think Iron Ore Rally Will Last
Goldman Sachs (GS) has warned the Markets that iron ore prices will slump below $40 per ton as supply growth outpaces demand.
How Consumer Staples Saved the Aberdeen Latin American Equity Fund Class A in September 2015
The Aberdeen Latin American Equity Fund Class A fell by 6.3% in September from August. But between September and October 28, the fund has risen by 6.0%.
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.
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.
Lower Aluminum Prices Dint Alcoa’s 1Q 2015 Earnings
Alcoa prices its aluminum with a 15-day lag to LME aluminum prices. Its 1Q earnings lost $84 million due to a decline in aluminum prices.
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.
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.
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.
Why the Outlook on Iron Ore Is Still Negative
Major iron ore producers are further reducing costs to weather the current market downturn.
Latest European Economic Data Points to Recovery
The latest European economic data point to a recovery. However, there are still several sectors, such as housing, where demand is weak.
Health Care and Utilities Sectors: Best Performers on November 29
The health care sector rose 0.65% on November 29. Alexion Pharm (ALXN) (+5.2%) and Centene (CNC) (+3.9%) are the top performers.
Are Commodities a Boon or a Bane for Brazil?
Brazil (EWZ) is rich in commodities. It’s among the top producers and exporters of iron ore, crude petroleum, soybeans, sugar, and meat.
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.
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.
Seaborne Iron Ore Prices Look Firm, Supporting Cliffs
For the first time in two years, in November, iron ore prices crossed the $80 per ton level, and YTD gains for the steel-making commodity have reached 82%.
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.
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.
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%.
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.
BHP’s Balance Sheet: The 2017 Outlook
BHP’s net debt was $20.1 billion at the end of December 2016, as compared to $26.1 billion on June 30, 2016.
Falling Commodity Prices Impact Brazil’s Trade Balance
Commodity-rich Brazil happens to be one of the important emerging markets (EEM) of the world. However, declining commodity prices are impacting Brazil’s exports.
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.
Why IMF Slashed Brazil’s Economic Growth Outlook in 2017
Economic activity in Brazil (EWZ) has been slow as it tries to emerge from its deep recession in 2016. But consumer and business confidence is improving.
Inside the Strong Iron Ore Shipments in January
In January 2017, 40.3 million tons of iron ore were exported from Port Hedland—an impressive rise of 19.0% YoY.
Europe’s Manufacturing PMI Is Steady in April: Signals Recovery
In April, the Eurozone’s PMI was 52—down from 52.2 in March. However, Europe’s manufacturing PMI held above 50 for almost two years.
Will BHP Billiton Borrow to Maintain Progressive Dividends in 2016?
During its AGM on October 22, BHP highlighted its commitment to a strong, stable balance sheet, specifying that it won’t put its “A” credit rating at risk.
Do Steel Capacity Cuts in China Bode Well for Iron Ore Miners?
China has been reeling under its overcapacity in the steel industry. In 2016, China planned to cut 45 million tons but wound up cutting 80 million tons.
Why investors should know Cliffs’ outlook
Cliffs Natural Resources (CLF) is mainly an iron ore producer. A small percentage of its revenue comes from metallurgical coal sales.
What China’s High Iron Ore Imports Suggest
China imported 92 million tons of iron ore in January 2017—a growth of 12.0% YoY and 3.4% month-over-month.
Are China’s Steel Capacity Cuts for Real?
China produced 808.4 million tons of steel in 2016 and 68.9 million tons of steel products in December 2016—a YoY 7.1% rise.
Inside China’s Credit Growth Metrics in April
By tracking credit growth in China, investors can gauge patterns that forecast future demand.
Beneath the Sagging Auto Demand—And Its Impact on Iron Ore Prices
Vehicle sales in China, including trucks and buses, fell 2.2% YoY (year-over-year) to 2.1 million in April 2017.
Is the Pullback in Iron Ore Miners Based on Technical Indicators?
Among the stocks under review in this series, Vale SA (VALE) has given the highest trailing-three-month return of 36.4%, while Rio Tinto (RIO) has generated the lowest return of 15.4%.
This Could Lead BHP’s Cost-Reduction Efforts in Iron Ore
Iron ore makes up 38% of BHP Billiton’s (BHP) revenues and 42% of its EBITDA.
Why Rio Tinto Believes Iron Ore Prices Can Sustain
According to Bloomberg, Rio Tinto CFO Chris Lynch has suggested that iron ore prices will not collapse, as many expect.
How’s Chinese Copper Demand Looking in 2018?
So far, China’s copper imports look strong in the year. Meanwhile, copper’s 2018 bullish theme is built around supply-side disruptions.
Why Commodity Stocks Surged on April 18—All You Need to Know
On April 18, commodity stocks saw their highest one-day gains in months. Iron ore, copper, and aluminum helped these stocks.
Why these Iron Ore Miners Could Offer Valuation Upside
Vale’s (VALE) is trading at a forward EV-to-EBITDA (earnings before, interest, tax, depreciation, and amortization) multiple of 6.4x, which reflects a discount of 5% to its last-five-year average multiple.
Latin America-Focused Mutual Funds: Outlook after September 2015
The Latin America-focused mutual funds that have a lion’s share of their assets invested in companies from Mexico did better than those invested in Brazil.
Can Vale SA Reverse Its 2Q17 Performance in 2017?
While Vale SA outperformed peers including Rio Tinto (RIO) and BHP Billiton by rising 24.7% in 1Q17, its performance deteriorated significantly in 2Q17.
How Price Impacts Iron Ore Inventory
China’s (MCHI) iron ore port inventory is a key indicator that reflects the commodity’s supply-and-demand balance.
Rio’s Earnings in 2017: What’s Impacting Its Estimates?
Analysts are concerned about Rio Tinto’s (RIO) overexposure to iron ore. The commodity contributes ~70% of Rio’s EBITDA.
How are Cliffs’s Cost-Cutting Initiatives Progressing?
In 1Q15, Cliffs Natural Resources (CLF) embarked on various cost-cutting initiatives in order to increase its cash flow so it could navigate through the tough iron ore market conditions.
Cliffs’ Initiatives to Navigate through the Tough Iron Ore Market
During 1Q15, Cliffs Natural Resources embarked on various initiatives to lower its costs and increase its cash flow to navigate through the iron ore market.
Brazil’s SELIC Rate Rises to 14.25% yet Inflation Continues to Soar
The Central Bank of Brazil has attempted to rein in inflation by raising Brazil’s key interest rate, also known as the SELIC rate.
These Could Be Vale’s Key Valuation Catalysts in 2017
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. The metric takes into account a company’s capital structure. By using this multiple, we can compare companies’ valuations. EV-to-EBITDA Vale (VALE) has a forward EV-to-EBITDA multiple […]
Which Iron Ore Miners Can Offer Valuation Upsides in 2017 and Beyond?
Vale SA (VALE) has a forward EV-to-EBITDA multiple of 6.1x, reflecting a 10% discount to its past five-year average multiple.
Why Are Vale Analysts Are Feeling Upbeat?
The word on Wall Street Among the analysts that track Vale (VALE), 30.0% have given the company “buy” recommendations, and 17.0% have given it “sell” recommendations. Vale’s target price is $9.67, which implies a downside potential of 16%. In the past year, its target price has risen 111%, with its share price staying firm due to […]
Must-know: Rio production supply continues unabated
Rio Tinto released its third-quarter production report on October 15. The company’s aggregate iron ore production increased by 12% year-over-year to 76.8 million tons.
How Vale Reacted to Higher Iron Ore Prices in 4Q16
Iron ore price realization In 4Q16, Vale’s (VALE) ferrous division accounted for ~85.0% of its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization). The company’s EBITDA for ferrous minerals came in at $4.1 billion, which was $1.6 billion higher than 3Q16. Higher realized prices and higher sales volumes led to these rises. The CFR […]
Should BHP Investors Expect a Valuation Upside?
BHP is trading at a forward EV-to-EBITDA of 6.0x, which represents an 11% discount to its last five-year average multiple.
Assessing BHP Billiton’s Iron Ore Production Target in 1Q16
BHP Billiton’s iron ore production for 1Q16 was 61 million tons, a growth of 7% year-over-year. It plans total production to increase by 6% in fiscal 2016.
Analyzing How the Demerger Will Benefit BHP and South32
BHP Billiton (BHP) chose the demerger approach after considering many alternatives to simplify its portfolio. It plans to focus on its core operations.
Why are iron ore futures downward sloping?
“Backwardation” occurs when futures contracts trade below the spot price, and the futures curve begins to downward slope. This means that the market expects further decline in iron ore prices based on current indicators and fundamentals.
Why the ProFunds UltraLatin America Inv Fund (UBPIX) Tanked in August 2015
The ProFunds UltraLatin America (UBPIX) nose-dived by 19.4% in August 2015 from a month ago—the biggest fall among the eight funds we’ve analyzed in this series.
How Long Can Seaborne Iron Ore Volatility Haunt Cleveland Cliffs?
Higher grade iron ore is showing strength on the back of higher Chinese steel futures.
How China’s Auto Sales Impact Iron Ore Miners
China’s (FXI) auto sales rose to 2.6 million in September 2016 from 2.1 million in August. These auto sales were 26% higher than the same period in 2015.
Brazil’s Inflation Continues to Soar While Growth Is Stagnant
Brazil (EWZ) is in a state popularly known as “stagflation.” The economy is characterized by low growth, high unemployment levels, and a rising inflation rate.
These Factors Hit Rio Tinto’s Earnings Most
Rio Tinto returned to profitability in 2016 after a hard 2015. The company is now trying to sustain its margins in a low commodity price environment.
Inflationary woes in Brazil continue despite rise in Selic rate
Investors should watch inflationary woes in Brazil. For the week ended March 15, the IPC-S consumer price index was at 1.49 against an expected 1.42.
Gauging the Upside Potential for Iron Ore Stocks
A major factor impacting mining companies’ revenues and earnings is commodity price—especially for iron ore—and analysts’ ratings take cues from prices.
Understanding BHP Billiton’s Earnings Beat in Fiscal 2H17
BHP’s underlying net profit of $3.2 million was a solid improvement, as compared to the profit of $412 million in 4Q15.
These Iron Ore Stocks Could Offer a Valuation Upside in 2017
Vale has a forward EV-to-EBITDA multiple of 4.3x, which represents a discount of 37% compared with its past five-year average multiple.
Why has Brazil’s growth slowed in recent years?
Brazil, a $2.5 trillion economy, is the seventh largest economy in the world. Brazil exports commodities such as iron ore, cotton, and coffee.
Iron Ore’s Record-High Inventories, and What It Could Mean for Prices
Iron ore inventories at Chinese ports have risen 11% YTD in 2017. Port inventories stood at 127 million tons on February 10.
What Led Robust Chinese Iron Ore Imports despite Contrary Views
Contrary to what was suggested by many market participants, the iron ore imports by China increased in September 2016 instead of declining.
George Soros Is Bearish on Brazil, Russia, and Asian Currencies
George Soros sees Russia in a weak position. He believes that it has enough reserves to last a couple of years. It might see a lot of debt coming due in 2017.
Look Out for These Valuation Catalysts for Iron Ore in 2018
Vale SA’s (VALE) forward EV-to-EBITDA (enterprise value to earnings before, interest, tax, depreciation, and amortization) multiple is trading at close to 7.2x, the highest among its seaborne iron ore peers.
Which Iron Ore Miners Could Provide Valuation Upsides in 2017?
Vale (VALE) has a forward EV-to-EBITDA multiple of 6.6x, which is almost same as the average of its last four-year valuation multiple.
Service Sector in Emerging Economies Remains Mixed in September
Emerging economies remain mixed in September, with Russia expanding and Brazil contracting further. Although Russia has moved back to expansionary phase, its overall economic environment remains challenging with rising inflationary pressure.
What the Highest Iron Ore Inventory on Record Means
China’s iron ore port inventory reflects supply and demand. It also indicates the safety net and imbalance between iron ore supplies and steel mill demand.
How China Affected Markets in September
According to the monthly data released by the NBS of China, China’s industrial output rose at an annualized rate of 6.1% YoY in September.
The Bulls Are Running on Iron Ore
Citigroup has downgraded BHP Billiton (BHP) and Rio Tinto (RIO) because the bank believes there could be a big pullback in commodities by the end of 2016.
Why China’s Real Estate Outlook Matters to Iron Ore Miners
According to its National Bureau of Statistics, China’s real estate sector grew 7.7% in 4Q16, as compared to 8.8% in 3Q16.
Will Cliffs Natural Resources’ Cost-Cutting Initiatives Work?
Cliffs Natural Resources (CLF) reduced its capex (capital expenditure) budget for 2015 from $100–$125 million to $85–$95 million.
This Is Boosting Steel Prices in China
In December 2016, steel prices in China hit 3,557 Chinese yuan per ton—the highest level in two and a half years.
Why investors should track Japanese iron ore imports
Japan has not taken advantage of lower iron ore prices, which are down ~38% in the year to date. Japan’s steel output is up 2.2% year-over-year and 0.5% month-over-month, in August.