Commodities

Noble CEO exit signals reduced ambitions

30 May 2016

Yusuf Alireza is leaving the embattled commodity trader after four years in charge. Though Noble has avoided an immediate liquidity crisis, investors still question its long-term viability. Flogging its U.S. energy arm will raise cash at the expense of further shrinkage.

Opening Iran means uncloaking Revolutionary Guard

18 May 2016

Post-sanctions, Tehran offers huge potential for foreign investment. But the military guardians of the Islamic revolution are deeply entwined in business life. If Iran’s President Hassan Rouhani wants to open things up, the Guards’ influence needs to become much less opaque.

China could pick up more bargains in commodities

10 May 2016

The People’s Republic is warming up to the sector as global miners race to cut debt. The latest deal sees China Molybdenum snap up Freeport’s Congo copper project for $2.7 bln. At the current pace, China’s hunger for overseas mining assets could return close to peak levels. 

Rio Tinto goes Genghis on the copper market

6 May 2016

By expanding its $5.3 bln Oyu Tolgoi mine in Mongolia, the miner hopes to ride an upswing in demand. Under-investment in new mines and declining quality could see the market in deficit by 2020. But there’s a risk that copper goes the way of iron ore, into a damaging supply war.

Farcical oil deal prompts George Costanza defense

5 May 2016

Like the character in sitcom “Seinfeld,” Energy Transfer hopes to shake up a sour relationship: the $21 bln takeover of pipeline rival Williams. ETE aims to pay less cash, seeming to force the issue by making itself as unattractive as possible. The stakes are no laughing matter.

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.