Commodities

Glencore inches towards public life

10 Mar 2010

The Swiss trader saw earnings fall 43 percent last year and has warned of a volatile recovery. With Glencore looking to an IPO, the statement is hardly auspicious. But one set of mixed results shouldn't derail Glencore's needed transformation to a new structure.

Yukos might yet cost Russia

9 Mar 2010

Russian courts approved the dismantling of the oil company to pay back taxes. But it always looked political. Former Yukos shareholders are suing in international courts for as much as $100 billion. Russia probably won't pay up, but it could suffer if it becomes a scofflaw.

BP tries to motivate with self-flagellation

2 Mar 2010

Companies don't usually say their financial performance has been subpar. But the UK oil and gas major wants to show there is a big gap that it will close. The $3 bln of cost cuts should be manageable. The greater challenge for BP is to boost its long term growth profile.

Gazprom may need to budge further on pricing

2 Mar 2010

The Russian gas giant is twiddling with its longterm pricing model, to make it more sensitive to the spot market. The move goes as far as necessary to calm customers. But with rival gas sources emerging, Gazprom may yet need to be more responsive to changing market dynamics.

Governance and money vital to earthquake outcomes

1 Mar 2010

Haiti s tremors killed 233,000 while Chile s more severe quake has so far taken 711 lives. Death tolls in natural disasters tend to rise with societal corruption, crime and administrative chaos, and fall with more wealth. In this context, Chile s performance looks admirable.

Currency buyers suffer from King Lear’s problem

26 Feb 2010

Shakespeare s ruler moved from one daughter to another, trying to decide which was least awful. Traders are rightly repulsed by dollar, yen, euro and pound. Which they hate most depends where catastrophe looks most likely. The euro s time as ugliest princess could be brief.

IMF sale should worry the gold bugs

18 Feb 2010

Gold continues to develop an illustrious hedge fund fan base with George Soros recently doubling his holdings. But enthusiasts for the yellow metal should be perturbed by the waning interest from central banks. Their unwillingness to scoop up IMF gold is an ominous sign.

Ghana may come to regret shunning Exxon

9 Feb 2010

The African nation is the latest to squeeze an oil major to retain more profit from resources. True, national energy firms are quickly gaining the expertise to push for better deals. But by playing hardball with Big Oil, Ghana may wind up with a bigger slice of a smaller pie.

U.S. biofuels shift needs to go much further

4 Feb 2010

The Obama administration finally wants ethanol and other biofuels to be judged on their full environmental impact. That's a welcome small step towards eliminating the distortions that result from subsidizing U.S. corn crops. But the corn lobby is still getting off too lightly.

China needs fertilizer more than steel

27 Jan 2010

If the Middle Kingdom's industrialization follows the course of other nations, per capita demand for infrastructure like concrete and steel will peak long before meat consumption. This may explain why M&A in agriculture, not steel, is so hot. Case in point: Vale's $3.8 bln deal.

Eni needs slimming, not dismemberment

15 Jan 2010

Activist investor Knight Vinke wants the Italian oil and gas group to be broken in two. That goes too far. But its less radical proposal spinning off a majority stake in Eni's regulated transport business could please regulators and other investors.

Glencore cash-call raises awkward Xstrata question

23 Dec 2009

When Xstrata raised $6 bln in January, Glencore, the miner's top shareholder, couldn't afford to subscribe. So it sold Xstrata a mine, with the option to buy it back a year later. Now the commodity trader is raising capital, have Xstrata's other shareholders been used as a bank?

Retail ban for RUSAL would be risky solution

17 Dec 2009

Hong Kong's financial regulator may bar retail investors from RUSAL's forthcoming IPO. The unorthodox proposal highlights the risks the aluminium group poses to both investors and the exchange. If it goes ahead, Hong Kong must make doubly sure these risks are fully disclosed.

Exxon’s $31 bln gas deal looks well timed

14 Dec 2009

The oil giant ticks many boxes with XTO. It gains a potentially lucrative foothold in US gas and gets a needed boost to energy reserves. The longterm bet strikes as gas recovers from historical lows. Plus, Exxon need only issue 10 pct more shares. All in, the deal seems smart.

Record gold price isn’t only about insecurity

2 Dec 2009

Sure, the huge uncertainties in financial markets help. But hedge funds, retail investors, retirement funds and even central banks are rediscovering the yellow metal. If gold is regaining its lost status as a key portfolio component, that should up to a point support prices.

Russian support wouldn’t help Rusal IPO much

19 Nov 2009

A Russian lender chaired by Vladimir Putin may take a stake in Rusal when the metals giant floats. With Rusal owing E4.5bn to the state bank, this would amount to a partial debtforequity swap. But Kremlin involvement could also make the IPO a tougher sell.

Not everyone can do a Canon

17 Nov 2009

The Japanese group is offering a juicy 70% premium for the Dutch Océ. That makes bids for Cadbury and Dragon Oil look paltry. But merger arbs shouldn t get their hopes up. Canon has good reasons to be generous. Others needn t and won t rush to follow its example.

Gold price could go much higher

16 Nov 2009

Cheap money strengthens the case for gold, and reduces the cost of holding it. Gold miners won t slow the rally. A jump in hedge fund or central bank interest would swamp annual production, worth $88bn and falling. The 20% increase since August could be only the beginning.

Rusal’s $7bn debt restructuring goes to the wire

11 Nov 2009

The world's largest aluminium producer must clinch a deal with western creditors before it can pursue a crucial listing in Hong Kong and Paris by the year end. Failure could leave owner Oleg Deripaska having to buy out minority investors which the tycoon cannot afford to do.

EU should heed Putin’s call for help on Ukraine

3 Nov 2009

The Russian president is meddling in Ukrainian politics by hinting that a new gas row is looming, and that Europe should help Kiev pay its bills. But he has a point. The EU hasn t done enough to assert its influence and help Ukraine sort out its industrial and political mess.