Commodities

U.S.-China trade gap is best filled with software

23 May 2018

Beijing plans to shrink the $375 bln surplus by buying commodities like oil and soybeans. Better to import intellectual property, and pay for the millions of unlicensed copies of Microsoft and Adobe products running in China. Local firms could use the productivity upgrade.

Rio Tinto can ease out of Indonesian mine mess

23 May 2018

The Anglo-Australian group may be ready to accept $3.5 bln for its interest in Freeport-McMoRan's Grasberg copper operation. The offer is hardly full, but a deal would save on costs and frustration. It also should make it easier for both companies to extract from a tough spot.

Citi’s Hong Kong slap has lesson for new IPO boom

18 May 2018

The securities watchdog fined the U.S. lender $7 mln over a troubled 2009 flotation. One failing was a lack of oversight from senior staff. As a wave of biotech outfits, many boasting complex and unproven products, prepares to list, banks in the city will have to stay vigilant.

Saudi risks squandering looming oil boon

14 May 2018

The scope to plug gaps left by sanctioned Iranian oil will help Riyadh’s budget. The surplus would be best spent on education and measures to grow the private sector. The danger is that the money will be used for flashy Vision 2030 state projects that look good but change little.

Saudi gets new license to be selfish over oil

9 May 2018

Since 2016 the kingdom has championed output cuts that have drained a supply glut and helped spur prices. Now that the U.S. President has amped up sanctions on Iran, Saudi can fill any gap left by lower Iranian exports. What it loses on price, it gains in volume and U.S. gratitude.

Asia’s hunger for cheap energy will sustain coal

4 May 2018

The era of steam coal is not over yet. Banks don’t want to finance it, big miners are dropping it, and China is migrating to cleaner natural gas. But the shift to green fuels is slow, and regional demand for electricity is outpacing it. That will keep prices lofty.

Arconic is sorely testing Elliott’s mettle

30 April 2018

Investors wiped $2 bln off the parts maker’s value after it slashed its earnings outlook. Activist Elliott helped oust CEO Klaus Kleinfeld last year. But new boss Chip Blankenship faces the same old production snafus and aluminum price hikes. It’s looking like a long campaign.

Enel and Iberdrola’s Brazil war lacks restraint

30 April 2018

The two companies’ rival bids for Eletropaulo have nearly doubled the market value of Brazil’s top utility in a month, to $1.6 billion. The Europeans want to boost their presence in Latin America’s biggest nation. But the deal is too pricey to create much value for the winner.

Glencore can dig its way out of Kinshasa quagmire

30 April 2018

A former partner is threatening to freeze two of the $71 bln commodity giant's operations in Congo, demanding $3 bln. It's the latest in a list of woes in the African country, including a tough new mining code. But the 6 pct drop in the stock over the past week is overblown.

Nigeria’s FX reserve fetish is bad for growth

30 April 2018

President Muhammadu Buhari is vaunting a rapid rise in foreign exchange reserves. A decent war chest is worth having in case the naira needs defending. But accumulating a vast pile of dollars will deprive the economy of the hard currency it needs to keep growing and create jobs.

Electrolux buffeted by perfect Trump tariff storm

27 April 2018

The Swedish fridge maker lost a tenth of its value after operating profit almost halved in the first quarter. A rejig of its freezer factories in the U.S. was one culprit. But investors are dubious that cost cuts will enable such a global business to offset higher steel prices.

ConocoPhillips shows way on cash discipline

26 April 2018

Higher oil prices are fortifying Big Oil’s finances, as the U.S. producer’s earnings confirm. CEOs have to balance buying new assets, beefing up balance sheets, and paying cash out to shareholders. Wasteful opportunities abound, and Conoco’s measured approach is worth mimicking.

BP’s chairman pick is odd balm for old pay scars

26 April 2018

The UK oil major has picked ex-Statoil CEO Helge Lund to replace Carl-Henric Svanberg. Lund is a respected figure, but drew investor heat for his high remuneration when at BG Group. Given BP Boss Bob Dudley himself had a pay spat in 2016, it will raise investor eyebrows.

Indonesia’s green ploy for copper raises red flag

25 April 2018

New environmental rules complicate and delay already tricky negotiations over control of Freeport-McMoRan's Grasberg mine. Cleaning up is a good thing, but the timing smacks of strong-arm tactics. It's a cautionary tale to foreign investors about an economy with so much appeal.

Water M&A fight puts governance center stage

24 April 2018

Eversource’s bid to upset SJW’s $750 mln deal with CWS is a close call on financial grounds. The interloper feels unfairly shut out, though, because SJW’s CEO ran the target until last year. And Eversource’s last big merger was messy. Watchdogs have to navigate choppy currents.

U.S. sanctions rethink is only partly reassuring

24 April 2018

A Treasury decision to delay the effects of sanctions on Rusal and allow it to disentangle itself from Oleg Deripaska has boosted the shares of the Russian group. But it leaves U.S. policy harder to gauge. That doesn’t augur well for next month’s crunch decision on Iran.

Vivo Energy offers pricey road to African growth

24 April 2018

The operator of 1,800 fuel stations across the continent is planning a stock market listing that values it at up to $3.3 billion. Earnings growth is healthy, and the company has scale. But a comparison with smaller regional rivals suggests the premium price tag is a stretch.

Subsea 7 can still save McDermott from itself

23 April 2018

The Oslo-listed oil services group has lobbed in a $2 bln offer for its U.S. counterpart. Subsea 7’s bid looks low, and hinges on McDermott ditching an agreed deal with CB&I. But CB&I’s sale of Stone & Webster to Toshiba is a bad precedent, and Subsea 7 can afford to pay more.

Trump’s OPEC smackdown more relevant than it looks

20 April 2018

The president slammed the oil cartel for production cuts that spurred the highest oil prices since 2014. Whatever his intent, members meeting in Jeddah should be wary of leaving the field open for rivals. A U.S. shale-drilling frenzy would hurt prices more than a tweet.

Zambia debt dispute undermines African credit

17 April 2018

The copper producer has denied it has dollar debt beyond its $8.7 bln of foreign borrowing. Its vague clarification comes two years after a $3 bln bond scandal in neighbouring Mozambique. Bilateral lending, particularly from China, is blurring the credit picture across Africa.