Commodities

BP escrow idea further muddies oily waters

14 Jun 2010

The U.S. wants the UK oil major to put cash in escrow for Gulf of Mexico claims even though BP is already on the hook and there's no doubt it can pay. An early signal on cutting the dividend might have defused the issue. Now, BP's task is to avoid the worst of both worlds.

BP oil spill revision heightens vulnerability

11 Jun 2010

New data show much more oil may have leaked from BP's Gulf of Mexico well than the group and scientists previously thought. The numbers are just one of several measures. But they add to the spill's likely cost and impose another big obstacle to BP's hopes of recovery in the U.S.

BP isn’t the innocent victim

10 Jun 2010

It faces an environmental crisis in the Gulf of Mexico, harsh words from Obama and a share price in free fall. British business leaders have expressed some sympathy for the oil company, but the attacks on BP aren't way out of line, given how the company hasn't handled things.

BP uncertainty is an opportunity for the brave

10 Jun 2010

The hit to the UK oil major's shares can be explained partly by the mounting costs of the Gulf of Mexico spill and intense U.S. political pressure. But the continuing uncertainty surrounding the situation is also a big chunk and that may tempt bold investors.

Glencore will find it hard to avoid an IPO

2 Jun 2010

The commodities trader is keen on a merger with Xstrata, the listed miner in which it has a 35 pct stake, so its partners can cash out and it can continue to fund growth. But as long as Glencore is privately owned, a deal will be a tough sell to Xstrata's other shareholders.

BP’s Gulf bungling puts deepwater in hot water

26 May 2010

With its top hats and golf balls, BP's tragicomic efforts to plug its gusher erode the credibility of deepwater drilling. Each dead pelican increases the risk of a government clampdown. But oilmen and taxpayers must hope Uncle Sam doesn't stamp too hard on offshore exploration.

Euro’s slide may give U.S. more rope to hang itself

20 May 2010

Haven status in a market storm sounds good for the U.S. but could make it less safe. Sure, it bolsters the dollar s standing and delivers the perk of cheap financing. But for a nation that desperately needs to kick its borrowing habit, the weak euro could be a bad influence.

How the gold price could go north of $5,000

13 May 2010

If the 1980 peak price of $875 an ounce is inflated by U.S. CPI, today s equivalent is about $2,400 almost twice the current level. Scaled up by global GDP it would be $5,300, and by money supply $5,700. With paper currencies out of favor, it s far from impossible.

E.ON’s $7 bln U.S. sale comes with tolerable pain

29 Apr 2010

The German power giant is flagging a 900 mln euro writedown on the sale of its Kentucky operations to U.S. rival PPL. E.ON seems to have misjudged the strategic opportunity in the U.S. utility sector. But after overpaying on the way in, at least it has got a fair price on exit.

Unilever scrubs up rather well

29 Apr 2010

After years of pedestrian performance, the UK consumer goods group has pulled off the trick of raising volumes and margins simultaneously. Just 16 months in the job, Unilever's new CEO is showing that selling soap in emerging markets can allow both buyer and seller to clean up.

Ukraine’s new government makes progress

22 Apr 2010

President Yanukovich has traded a Black Sea naval lease renewal for a $4 billion annual saving on Russian gas. That should clear the way for a $12 billion IMF loan. But Yanukovich still has to face his biggest test: straightening up the deeply troubled domestic economy.

ACS’s passion for Iberdrola could go all the way

16 Apr 2010

The Spanish construction firm says it will lift its stake in Iberdrola from 12 pct to 20 pct even though it may still not secure a board seat at the energy group. Why is financially strained ACS so determined? Perhaps it thinks it could one day mount a joint bid for Iberdrola.

RUSAL’s results offer little comfort for investors

12 Apr 2010

Costcutting helped the Russian aluminium giant report betterthanexpected results for 2009. Yet the shares are 12 percent below their January IPO price. RUSAL's $12 billion debt load, rising electricity prices and illiquid shares mean any significant recovery is some way off.

Markets test EU’s resolve on Greece

7 Apr 2010

Spreads on Greek debt keep widening, nudging the country s cost of funding towards prohibitively expensive levels. The market wants the EU to honour pledges of support for Greece. But Europe doesn t seem ready to offer real help yet. And Greece s remaining options are unpleasant.

China cornered by iron ore price change

30 Mar 2010

BHP Billiton and Vale have persuaded Japanese steelmakers to accept quarterly prices for iron ore, ditching the system of annual fixedprice contracts. China may complain, but its hunger for iron ore meant it did not agree a benchmark price last year. It is likely to fail again.

Benign U.S. inflation report is pause, not break

18 Mar 2010

February s flat CPI index stemmed from a price dip for energy and the stronger dollar. Global stimulus and a rising U.S. trade deficit should reverse both soon. Wages are still under pressure, but higher costs for commodities, energy and capital will keep inflation ticking up.

U.S. Congress needs new financial regulations, too

18 Mar 2010

A top aide to Senate Banking Committee Chairman Chris Dodd traded financial stocks during the crisis. The trades were apparently allowed, but look dodgy. With so much marketsensitive activity going on in Washington, it's time to toughen up Capitol Hill's investing rules.

Manipulator label could ease China-U.S. relations

17 Mar 2010

The U.S. Treasury Department may finally tag China a currency manipulator next month. Beijing may not rejoice, but should be neither shocked nor angered. The likely alternative is protectionist laws from Congress. And the label brings negotiations first, sanctions only later.

BP deal confirms oil majors’ resource land grab

11 Mar 2010

The UK oil giant is paying $7 bln to expand its future reserves. The move into Brazil makes strategic sense and should provide highmargin growth after 2015. It underscores oil majors' dwindling options for growth: Exxon and Shell have also recently paid up for extra barrels.

RUSAL convertible bond would make sense

10 Mar 2010

The Russian metals giant has around $13 bln of net debt even after raising $2.2 bln in its float. RUSAL has a plan for deleveraging, but debt covenants are a constraint. It should pursue a partial refinancing via a convertible bond while the market is favourable.