Steel

British steel is sad lesson in why price wars fail

29 Mar 2016

The Port Talbot plant probably can’t survive in a world flooded with cheap Chinese steel. Yet it has hung on stubbornly long. Across markets like iron, oil and steel, the idea that price wars drive high-cost suppliers to the wall is proving more complicated than once thought.

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.

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.

BHP and Rio look out of touch on China

25 Nov 2015

Low-cost iron ore miners BHP Billiton and Rio Tinto are accomplished experts digging for the ferro-raw material. They are much less good at consumption estimates. With the ore at 10-year lows, the companies’ investment cases depend on them getting ahead of China’s demand curve.

VW’s dieselgate may be Lonmin cash call decider

19 Nov 2015

The South African platinum miner wants to raise $407 mln to fund restructuring. The 46-for-one rights issue means investors that fail to subscribe will be diluted almost out of sight. Much of the investment decision rests on demand for catalytic converters as VW cleans itself up. 

D-day nears for Tata Steel as Europe woes grow

6 Nov 2015

The Indian steelmaker has written off another $1.3 billion at its ailing European division. Under pressure from cheap Chinese imports, the unit’s EBITDA has turned negative. Tata will need to make tough choices about the business it bought in 2007 sooner rather than later.

European crisis will bend but not break Tata Steel

6 Oct 2015

The Indian steelmaker’s net debt of $9 bln is three times its market value. Its European business, acquired in 2007, is suffering from cheap Chinese imports. Yet last year’s timely refinancing and support from its parent means Tata Steel can avoid the fate of British rival SSI.

Alcoa split is canny move – not least for its CEO

28 Sep 2015

The $12 bln aluminum producer is cleaving sluggish smelting from healthier aerospace. Based on rival valuations, Alcoa shareholders can expect a modest uplift. Boss Klaus Kleinfeld, however, gets a new gig atop a more promising business, one he has been building by acquisition.

China dumping fortifies Thai steelmaker debt woes

22 Sep 2015

Dumping by China has pushed struggling Sahaviriya over the edge: Thailand’s biggest steelmaker is in talks to restructure $1.4 bln of debt. As rival Tata Steel has found, buyers for high-cost European producers are scarce. That suggests SSI’s creditors will have to take the pain.

Rio Tinto is winning in dirty ore wars

6 Aug 2015

The Australian miner’s earnings from iron ore more than halved in the first half, yet production is booming. Low costs give Rio and big peers ammo to drive others out of the market as metal prices crater. It’s a brutal demonstration of market forces, and geological good luck.

Gold deposits can cushion India’s current account

28 May 2015

A proposal to let banks offer interest on gold deposits could lure some of the country’s hoard of yellow metal into the financial system. Turkey has shown such schemes can work. Even if Indians only partly kick their gold habit, it could meaningfully cut the nation’s import bill.

Mongols and miners bow to market reality

19 May 2015

Rio Tinto and Mongolia have ended a two-year stand-off on the giant Oyu Tolgoi mine by both giving ground. The nomad state now has a fix for plummeting investment inflows. While the miner’s hand looks stronger, falling metals prices have made civility the better part of valour.

Hardened ThyssenKrupp can now get real on steel

18 May 2015

The 15 bln euros engineering group has overcome its existential crisis. ThyssenKrupp is now strong enough to consider consolidation in steel-making, which is dogged by low company margins and industry overcapacity. Hammering out a JV with a European rival could be a fix.

Gold’s rally won’t outlast tectonic rate shift

11 Dec 2014

The yellow metal is up as tumbling oil prices and a rising dollar destabilise many financial markets. Euro zone fears and Russian gold buying have also helped. But U.S. rate rises will create major shifts in the financial world. Gold is set for a bad 2015. 

ThyssenKrupp recovery is credible but priced in

20 Nov 2014

After three years of losses, the German engineer’s annual results showed 195 mln euros of earnings. Cost-cutting is ahead of plan, orders are up and debt is down. A surprise dividend shows new confidence. On a rough 30 pct premium, the shares optimistically expect more good news.

Gold bulls have precious little to cling to

6 Nov 2014

The asset was first to swoon when investors awoke to the end of U.S. money-printing. Coin sales, a recovering Indian rupee and declining supply offer some hope. But even after a near-40 pct fall, the price hasn’t adjusted to the end of speculative fervour. Sub-$1,000/oz looms.

World should steel for peak China demand

26 Sep 2014

Chinese consumption of crude steel fell in August for the first time this century. Slowing housebuilding is adding financial strain to a troubled supply chain. A rethink of how much is enough for the world’s biggest steel user could also throw the global market off kilter.  

AngloGold spinoff faces headwinds

10 Sep 2014

The bullion producer wants to carve out non-South African assets into a London listing. This could attract investors wary of problems in the group’s domestic business. But gold has lost its shine and miners have a reputation for wasting capex. It may be a tough investment story.

Gold’s geopolitical ledge won’t hold up

1 Sep 2014

International tension has helped stabilise the gold price after a 2013 plunge. But the fundamentals are bad. ETF redemptions persist while bar and coin investment has dropped heavily. Jewellery demand remains soft. Consumers want cheaper gold. They are likely to get it next year.  

China’s vanishing metals corrode confidence

12 Jun 2014

Traders may have pledged copper or aluminium as collateral for multiple loans. Lenders can’t always spot such behaviour, and may have reasons not to complain too much or pull back too quickly. But metal-related antics are another sign of the weakness in China’s financing chains.