Steel

Investors underrate ThyssenKrupp’s steel woes

13 May 2014

The German industrialist’s restructuring is gaining ground. Investors have responded with enthusiasm to a stronger balance sheet, rising earnings and a better outlook. But the lacklustre steel unit remains a big drag. There are no quick fixes.

Gold miners ominously prospect for M&A treasure

23 Apr 2014

The Newmont and Barrick talks came amid a bidding war for the Canadian Osisko. That’s one deal short of a trend. A 30 pct drop in the bullion price means those with higher-valued shares may spy a chance to nab production on the cheap. The logic behind such digging has holes.

Barrick’s empire building deserves skeptical eye

21 Apr 2014

The Canadian giant is reportedly considering a $33 bln deal with Newmont. Barrick’s outgoing chairman said “hubris” drove past deals. Ex-Goldmanite John Thornton, who takes the chair next month, faces a big hurdle in convincing shareholders this won’t be another value-destroyer.

Glencore $5.9 bln asset sale remoulds China’s MMG

14 Apr 2014

Buying the metals trader’s Peruvian copper project will turn the Chinese group into a focused copper miner, and double its size. MMG’s state-owned parent will help secure the considerable leverage needed. Minority shareholders get to share the ride, but it’s not without risk.

BHP spinoff would swap one problem for another

1 Apr 2014

The miner wants to simplify its portfolio, possibly by demerging less attractive assets. But it’s not certain this would create shareholder value, and the move could cost financial and operational synergies. BHP may be better off patiently selling down as opportunities arise.

Gold benchmarks are next in need of reform

25 Mar 2014

UK and German authorities are probing daily gold “fixings.” They are yet to turn up evidence of market manipulation, and no bank traders have been suspended. But benchmark-setting for the precious metal is archaic, laborious and methodologically unsound. An overhaul is overdue.

Market adjustment is not over yet

17 Mar 2014

Gold’s rise to a six-month high indicates rising fear and coincides with a retreat to assets seen as safe, including the yen and bonds. Emerging market woes may now hit developed markets more keenly. But the Fed seems intent on tapering, which will eventually be bad for gold too. 

Copper and iron ore roil China capital controls

12 Mar 2014

The fear that metal-backed Chinese financing tricks won’t work is pushing down copper and iron ore prices. The drops only encourage further sales. China’s capital controls are supposed to ward off such vicious cycles, but in this case they have probably exacerbated them.

China copper IPO seeks gold in financial recycling

18 Feb 2014

Unloved Chinese companies with U.S. listings will be watching China Metal. Just 15 months after it quit the NYSE, the copper recycler is going public in Hong Kong at 10 times its last public market value. With earnings polished by tax refunds, any upside may be short-lived.

Investors at fault for Arcelor hybrid-bond stink

21 Jan 2014

In buying back one of its hybrid bonds, ArcelorMittal is doing what is financially sensible. Investors, who have taken a big hit, have only themselves to blame for ignoring a risk that was plain to see. It’s a sign the credit yield grab is getting silly. 

Barrick banker-chairman’s advice may not be golden

11 Dec 2013

Former Goldman bigwig John Thornton will soon be sole chairman of the struggling $20 bln gold miner. In theory, an old-school M&A guru could help Barrick’s bosses avoid further bad deals. The worry, though, is that Thornton is already talking about more empire-building.

Deutsche ditch divines commoditized commodities

5 Dec 2013

The German bank is quitting energy and base metals trading. That should free up capital without hurting results. It’s a helpful step that others like Barclays and BNP Paribas may follow. It won’t, however, fully solve the bigger problem of a swoon making profits elusive for all.

ThyssenKrupp’s capital hike may not suffice

2 Dec 2013

The German steelmaker is raising $1.6 bln selling assets to Arcelor and Nippon Steel. But other disposals have collapsed and shareholders now have to find almost 1 bln euros to help cut debt. Even with Thyssen’s operational progress, the measures won’t put it in the comfort zone.

Gold hasn’t melted down to its base yet

21 Nov 2013

Investor demand for gold is likely to continue falling as Fed tapering pushes up market interest rates. That may in turn affect demand from central banks in emerging markets. Asian jewellery demand offers gold an eventual salvation – but probably below $1,000 per ounce.

ThyssenKrupp botches Brazil but moves on

20 Nov 2013

The German conglomerate has admitted that it can’t sell its ill-fated Brazilian steel mill. Hiving off the good parts of Steel Americas is now the least value-destroying option in the short term. And it will allow the group to get serious about a much-needed capital hike.

What ThyssenKrupp’s new investor should fight for

27 Sep 2013

Activist investor Cevian, known for its penchant to streamline conglomerates, has increased its stake in the troubled German industrial group. A breakup of ThyssenKrupp makes sense but would be hard to achieve. Cevian should rather push for a comprehensive governance reform.

Warehousing rules put LME’s new owner on the spot

16 Sep 2013

Hong Kong’s securities exchange paid a fortune for the metals marketplace last year. It’s been a bumpy start with plans to reform price-distorting warehouse rules proving divisive. Yet China-fuelled expansion will fail if market participants lose faith in LME prices.

Metals warehouse mess: a guide for the perplexed

15 Aug 2013

Angry users say big commodity traders, including Goldman and Glencore, trapped industrial metals in warehouses, artificially pumping up prices. As a U.S. probe gathers steam, Breakingviews explains how slick middlemen managed to turn a once-sleepy utility into a money-spinner.

Angry aluminium users should sue the Fed as well

9 Aug 2013

Lawsuits against JPMorgan, Glencore and Goldman allege they all artificially pumped up aluminium prices by keeping metal off the market. The ire is understandable, but some of it should be directed at central bankers. Their low rates make hoarding profitable. 

Gold warns markets of an anxious September

7 Aug 2013

As in April, the yellow metal’s slide to a three-week low suggests broader troubles for markets. Better U.S. data means Fed asset purchases could be reduced in September. Less central bank cash is good for the dollar - and bad for most other global assets.