Shell, after eating for two, starts strict diet 4 May 2016 After buying rival BG, Shell has cut costs. But it will need the $30 bln of planned asset sales to help cover gaps in cashflow over the next three years. It looks like a tall order, though the rising oil price will help. Shell probably has scope to reduce spending further.
U.S. Steel’s China hacking gripe clever but risky 29 Apr 2016 The giant producer claims cyber thefts breach trade laws and has asked a federal commission to block offending firms’ imports. It’s a novel way to fight a thorny problem but one unlikely to attract imitators. The Middle Kingdom may be too lucrative a market to tempt retaliation.
Chancellor: Oil prices don’t need a Doha to rise 22 Apr 2016 An agreement among feuding OPEC members to cut production may still be elusive. But the Saudis and other oil-producing nations are in no position to ramp up. As U.S. oil output is set to fall sharply this year, the price of energy is likely to keep heading upwards.
Anglo American’s pay mess is self-inflicted wound 22 Apr 2016 Over two-fifths of the mining group’s investors rejected Mark Cutifani’s pay in a non-binding vote. Anglo should be in investors’ good books: its CEO’s turnaround is working. But by offering a pay package that hedged the risk of it failing, the group shot itself in the foot.
OPEC freeze failure could hasten oil’s recovery 18 Apr 2016 Producers failed to agree a deal to freeze supply at a meeting in Doha. The failure was largely due to Saudi Arabia’s refusal to allow Iran to be exempted from an agreement. Prices will drop initially, but if OPEC disintegrates the stalemate could hasten crude’s recovery.
Weak trade has China looking to stimulus at home 13 Apr 2016 Exports grew faster than expected in March helped by comparisons with a weak 2015. First-quarter trade figures are the worst in at least four years. That puts more pressure on Beijing to cut rates and boost spending – and may revive talk of devaluing the yuan.
Canada buys its way into Glencore’s sweet spot 6 Apr 2016 The Canada Pension Plan is to buy a 40 pct stake in the Swiss trader’s agricultural business. The financial returns, at first glance, look pedestrian. But the Canucks get access to Glencore’s wheeler-dealing skills, without having to share in its $26 bln group debt pile.
Rio Tinto new boss can end foolish price war 17 Mar 2016 Outgoing chief Sam Walsh cut costs and investment to leave the miner admirably lean. But he also boosted production, pushing down iron prices in the belief that rivals would go to the wall. They didn’t. His successor has a chance to copy the first strategy and ditch the second.
Iron ore rally is triumph of hope over reality 8 Mar 2016 Prices for the steel-making commodity may have rebounded. Imports into China increased last month and a new railway building spree could boost demand. But miners still can’t accurately forecast demand and haven’t learned their lesson on supply.
Mexico’s oil star may start to outshine Brazil’s 3 Mar 2016 Low prices mean both countries’ state-controlled producers could need bailouts. After years of falling output at oil giant Pemex, Mexico is imposing smart reforms. Brazil’s Petrobras, though, is hobbled by debt and scandal, undermining hopes of tapping huge deep-sea deposits.
Baltic Dry’s economic compass looks wet 16 Feb 2016 The indexed cost of shipping grains and minerals has hit record lows. While its prescience in 2008 may renew fears of a sharp global slowdown, the Baltic Dry has become a far less reliable health indicator. China’s troubles are partly to blame for the fall, but so are too many ships.
Rio Tinto maims but doesn’t kill a sacred cow 11 Feb 2016 The miner has scrapped its cherished progressive dividend policy as it warned of a tougher year ahead for global miners. It’s a smart move that gives Rio room to manoeuvre should prices dip again. But it isn’t changing its strategy of pumping out more iron ore into a downturn.
Arcelor does more than needed, less than enough 5 Feb 2016 After a $7.9 bln net loss for 2015 and big writedowns, the steelmaker has launched a $3 bln rights issue. It buys time for a cost-cutting programme, but ArcelorMittal’s real issue is outside its control: the aggressive supply tactics of Chinese steelmakers and Australian miners.
Phibro deal resurrects Wall Street’s worst ways 27 Jan 2016 Morgan Stanley’s ex-commodities boss is acquiring assets of the oil-trading shop that once bought Salomon Bros. Breathing life into this old brand is misplaced sentimentality. Phibro’s history is stuffed with coups, excess pay, trading hubris and the buy-high, sell-low mentality.
Cheap oil reveals market-reality rift 27 Jan 2016 Equities are slumping along with crude prices. That’s surprising, since less expensive oil should ultimately boost demand in energy-importing countries like the U.S. and China. The best explanation is that market prices have lost touch with what’s going on in the real economy.
Gold’s prospects are dull 25 Jan 2016 The precious metal isn’t behaving like a safe haven should. The dollar’s rise is weighing on its price, Asian demand is dented, investors don’t need inflation hedges, and past price gyrations have tarnished its defensive allure. Grimmer news is needed to restore gold’s lustre.
Sweeter Cairn bid is Vedanta’s least bad option 25 Jan 2016 Anil Agarwal’s Vedanta Resources is edging towards loan covenant limits. Bondholders are losing faith in the mining tycoon’s ability to tap buried cash and repay $8 bln of debt. The stress may force Agarwal to sweeten a deal to merge subsidiaries and simplify the group structure.
Chancellor: Best cure for low oil is low prices 21 Jan 2016 Having invested heavily, both mining and energy firms are struggling with oversupply and weak prices. New mining production from BHP and others will continue to weigh on commodities for years. But oil investment cuts set the stage for the next bull market in the black stuff.
BHP Billiton plays catch-up with $7 bln shale hit 15 Jan 2016 Plunging energy prices forced the miner to write down its U.S. oil and gas assets again. The non-cash charge is large but just brings BHP’s balance sheet closer to the outside world’s estimation. A bigger step would be to follow the market’s lead once more and slash the dividend.
Noble’s banks matter more than its credit score 8 Jan 2016 A second rating agency has downgraded the struggling commodity trader to “junk”. That’s a further blow to sentiment. But investors were already wary and the financial impact should be limited. What matters is that Noble’s lenders, acting in their own interests, remain supportive.