Steel

End of warehousing gravy train is reason to cheer

23 Jul 2013

Low rates, light regulation and a lack of publicity let banks and commodity traders pocket easy profits hoarding metal in their own warehouses. Banks were already eyeing the exit, but U.S. authorities’ fresh scrutiny of the socially useless practice should accelerate its demise.

ThyssenKrupp’s pride well worth 1 billion euros

1 Jul 2013

That’s how much new capital the German steelmaker may need. The RAG foundation, a local rival to the one that controls Thyssen, seems willing to buy a stake. While hurting vanities, this would be an elegant fix to the company’s woes. Pride is a luxury Thyssen can’t afford.

Copper will eventually be safer than iron ore

24 Jun 2013

Prices of both industrial metals are well off recent highs. Iron ore should bottom first; it could take two years for copper demand to catch up to supply. After that, geology should rule. Attractive new copper deposits are rare. Iron ore is abundant and easy to dig.

JPMorgan and Apple rows upstaged by Timken’s

6 Jun 2013

Bigger quarry like Jamie Dimon and the iPad creator were targeted this shareholder polling season. But Ralph Whitworth’s successful ballot campaign to break up steelmaker Timken was more significant. Boards should beware agitators pushing for votes on strategic initiatives.

Buoyant markets too sanguine on end-of-QE threat

22 May 2013

The bursting of the gold bubble is just the harbinger. Other asset classes are vulnerable to the U.S. central bank dialling down its money-printing programme. Safe-haven bonds are already easing. Commodities look next in line. Stocks are the best bet but they too may suffer.

Gold moves back to the brink

17 May 2013

The yellow metal recovered from an April plunge, but the price is now slipping. New figures show why. While jewellery demand rose by 12 percent in the first quarter, investment demand fell by half. Funds are selling. Physical gold sales may follow, bringing big price falls.

New ThyssenKrupp deserves benefit of the doubt

15 May 2013

The stricken industrial conglomerate is in the midst of a painful turnaround. The cleanup blew another hole in half-year profit. But investors are right to look ahead. After governance changes and asset sales, ThyssenKrupp’s transformation is moving into a second phase.

ENRC board needs to summon its poker skills

9 May 2013

The hapless miner’s independent directors hold a weak hand. But they shouldn’t just fold if ENRC’s dominant shareholders team up to make a low-ball bid for the company. There are risks to losing a deal. Still, there is a floor to a recommendable offer.

Gold miners still look expensive

16 Apr 2013

It’s hard to see value in the sector despite shares being savaged. Miners’ earnings will be crushed as high costs meet falling prices. Management has few levers to pull. Gold’s peculiar dynamics mean that closing unprofitable mines may have only a muted effect on the market.

Gold teeters on edge of bigger falls

11 Apr 2013

The safe-haven metal is vulnerable. The Cyprus crisis and Korean fears have helped it surprisingly little. Cypriot gold sales and analysts’ downgrades are soft blows. Barring Korean disaster, gold faces nemesis in the Fed’s growing unease about money printing and a tapering of QE.

Gold melts as economy warms and Fed warns

21 Feb 2013

The price of the yellow metal has fallen by 12 pct since October, including a 3 pct drop after the U.S. central bank minutes suggested money printing might stop. Gold’s two-way bet - both safe-haven currency and speculative punt - looks to be ending. It has a long way to fall.

Iron miners need to know when to quit digging

14 Feb 2013

Rio Tinto’s new boss, like his peers, is offering spending restraint. But the huge profit from fast growing Chinese demand for iron ore won’t last forever. For low-cost producers, the temptation is to dig, dig, dig. If everyone does the same, prices and profit could tumble.

ThyssenKrupp’s turnaround faces headwinds

12 Feb 2013

The German group’s new management is trying hard to shed its legacy of ill-fated investments, a dysfunctional culture and corporate scandals. Its turnaround is on track, but far from finished. And the bleak economy doesn’t help.

Polyus sale could leave gold deal bulls hanging

6 Feb 2013

Russian billionaire Mikhail Prokhorov’s potential exit from Polyus, the Siberian gold miner, has revived talk of a tie-up with fellow Russian producer Polymetal. An enlarged national player might please the Kremlin, but the industrial logic of gold mergers is weak.

Anglo opts for high-risk, high-reward in platinum

15 Jan 2013

The embattled miner deserves credit. Its long-awaited platinum restructuring was more aggressive than expected. The task for the incoming CEO is to execute without more of the labour unrest that hit output in 2012. The shares’ subdued response suggests investors are rightly wary.

ArcelorMittal strikes while market is hot

9 Jan 2013

The world’s biggest steelmaker is raising new capital to help cut debts. Arcelor sensibly waited for a warmer market to hold a $3.5 bln placing of shares and convertible bonds. This is easier than a rights issue but the controlling Mittal family will get diluted again.

Iron ore market shows perverse efficiency

4 Jan 2013

The steel ingredient is a middleman’s dream. Spot prices fell 37 pct from Jan to Sept, then lurched two-thirds higher to end last year up 5 pct. That’s a kind of efficiency; the market is responding to changes in supply and demand. But for steel mill customers, it’s a nightmare.

Grains are the commodities to watch in 2013

18 Dec 2012

Iffy global economics make it hard to gauge the outlook for copper and iron ore. Grains are different. Stocks are low and the drought that hit harvests in 2012 has continued. Low rainfall is also hitting river-borne U.S. trade routes. Expect prices to stay high.

ThyssenKrupp boxed in by dilapidated governance

4 Dec 2012

The steelmaker has survived an orgy of mismanagement that would have annihilated most companies. New management is trying hard to turn things around. Unfortunately, its room to manoeuvre is limited by a controlling foundation, which has too much power and not enough sense.

Lonmin doesn’t have to surrender to Xstrata – yet

9 Nov 2012

The big platinum miner spurned 25 pct owner Xstrata’s demand for management change in return for backing its $817 mln rights issue. It can afford to, for now: the fundraising is underwritten and Xstrata is probably loath to be diluted. But after this battle, Lonmin faces a war.