Commodities

Trade and pig diseases infect China’s pork giant

31 Oct 2018

WH Group, $11 bln owner of U.S.-based Smithfield, is fighting a losing battle on two fronts. Deadly swine fever is sweeping China, while tariffs hammer its American market. Quarterly earnings fell by almost a third from a year earlier. It will get worse before it gets better.

China’s oil windfall covers up hints of gas pain

31 Oct 2018

PetroChina has reported a more than fourfold rise in quarterly earnings, a bumper profit fuelled by higher crude prices. But the $210 bln state producer also took a heavy hit on gas imports this year. Those losses may widen as China cranks up a shift away from coal at all costs.

China’s Guinea snub sends bearish iron ore signal

29 Oct 2018

Chinalco has stepped back from a 2016 deal to take control of the $23 bln-plus Simandou project from partner Rio Tinto. That’s a headache for the mining giant and a blow to West Africa's ambitions. It suggests Beijing sees sustained cooling in demand for the steel ingredient.

Khashoggi showcases moral trilemma of big business

26 Oct 2018

Total sent its CEO to Riyadh for Saudi’s flagship conference despite its role in a Saudi journalist’s death. HSBC fielded a big team, too. Firms strive to be larger, profitable and ethical, but often only achieve the first two. Profit’s lead over ethics appears to be narrowing.

Metal tycoons test India’s new era of governance

26 Oct 2018

The Ruia family’s $7.4 bln offer to pull Essar Steel from bankruptcy is a brazen attempt to stop ArcelorMittal's winning bid. Creditors will do better with the former owners, but it makes a mockery of a young insolvency code and undermines the fight against errant moguls.

China aims rare-earth bazooka at trade rivals

25 Oct 2018

Beijing is limiting output of tough-to-mine minerals like cerium and neodymium, starving foreign buyers of key ingredients used in electronics and weapons. It's a drastic escalation that will punish profit margins, and yet an overdue rush to develop new supply will come too late.

Succession cloud is one issue Glencore can clarify

22 Oct 2018

Boss Ivan Glasenberg may have talked to investors of retiring in up to five years. The company's driving force is a youthful 61. But the group has had a torrid 2018, including a U.S. subpoena, and lost some $16 bln in value. A clearer view of the next generation would help.

Cooled coal IPO singes commodities exuberance

22 Oct 2018

Private equity-backed Coronado shrunk a $1 bln share sale Down Under to just $550 mln and priced it at the bottom of the range. A rosy comparison to Rio Tinto’s recent asset sales came up short. And it is the latest sign of shakier prospects for steel and China demand.

Oil makes Saudi Arabia slippery sanctions target

16 Oct 2018

U.S. lawmakers are invoking a law used to impose Russian sanctions to demand answers about a missing journalist. There’s momentum for a similar penalty for the kingdom. But Saudi retaliation could hike oil prices - the opposite of what President Trump has been agitating for.

Chinese battery drive hits amber light in Chile

12 Oct 2018

To clinch a $4.1 bln stake in lithium giant SQM, China's Tianqi has agreed with antitrust officials to limit access to sensitive information. A hostile shareholder may yet thwart the deal but as Beijing's clout in the industry grows, such acquisitions will only get tougher.

Louis Dreyfus showcases downside of being private

10 Oct 2018

The commodity trader’s dividends are a bigger proportion of net profits than rival Cargill. The latter is demonstrating that non-listed status and success are compatible. But the short-term needs of Margarita Louis-Dreyfus jar with those of the French company that she controls.

Russia and Saudi’s oil stitch-up will unravel

4 Oct 2018

Moscow and Riyadh’s deal to boost crude output is the best chance of cooling red-hot prices. Yet the duo’s power is more limited than it appears. U.S. sanctions on Iran will dent the Islamic Republic’s supply faster than they can pump. Prices could still spike in the short term.

Copper caught in crossfire of trade war

4 Oct 2018

Escalating tensions between Washington and Beijing have helped drag down the red metal by some 14 pct since June. The price is now well below levels required to inspire mining giants to invest in new supply, even though existing pits are ageing fast and green demand is on a tear.

BHP can hide behind Unilever dual-listing mutiny

2 Oct 2018

Some big shareholders oppose the Dove soap maker’s plan to switch to one, Dutch, headquarters. Pushy investor Elliott has been calling for a similar corporate overhaul at the world’s largest miner. There are differences, but the campaign for simplicity just got more complicated.

Eritrea’s potash potential justifies the risk

2 Oct 2018

Miner Danakali is looking to add a big chunk to global potash production via a $322 million mine in the African state. Ongoing demand for fertiliser and a surprise Ethiopian peace deal underscore its interest. Investors should apply an exotic risk discount though.

U.S. fritters oil stockpile at worst time

1 Oct 2018

While President Trump chides OPEC, his Iran sanctions are pushing up prices. Meanwhile the government is selling down its stockpile to plug a budget hole, not calm the market. With shale producers constrained, the White House should be more strategic with its crude reserve.

African miner deals deserve state-fleece discount

1 Oct 2018

Democratic Republic of Congo claims Barrick’s $6.5 bln Randgold deal means it owes the government money. Two years ago, Kinshasa extracted $100 mln when Freeport sold out. Investors should be discounting their synergy estimates to reflect the risk of something similar.

Review: Shale oil exposé misses bigger picture

28 Sep 2018

In “Saudi America” Bethany McLean tackles the U.S. fracking industry. The author who spotted fraud at Enron accurately depicts aggressive wildcatters digging themselves to their demise. But factors that are pushing up global oil prices may yet save the industry from itself.

Thyssenkrupp gets half a breakup

27 Sep 2018

The German conglomerate’s shares surged on plans to split the company in two. Thyssenkrupp’s businesses are probably worth more apart than together. But the separation will take time, and one of the units will still have a stake in the other.

Barrick’s growth bet looks like a reverse takeover

24 Sep 2018

The Canadian miner led by former Goldman banker John Thornton has agreed a $18 bln tie-up with Randgold. But the smaller London rival seems to be in the driving seat, injecting its pugnacious boss and entrepreneurial spirit. The welcome reboot could prove a boardroom strain.