Sunday 11th December 2016

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Posts tagged ‘steel’

American election fosters forecasting frenzy

November 11th, 2016

by Greg Klein | November 11, 2016

An anti-establishment crusader, a dangerous extremist or a sensible person given to outrageous bombast, that new U.S. president-elect has some mining and metals observers in as much of a tizzy as the official commentariat.

Soon after the election result was announced, the World Gold Council cheered as their object of affection passed $1,300, “compared with $1,275 an ounce before the vote counting began.

U.S. election fosters forecasting frenzy

“We are seeing increasingly fractious politics across the advanced economies and this trend, combined with uncertainty over the aftermath of years of unconventional monetary policies measures, will firmly underpin investment demand for gold in the coming years,” the WGC maintained.

Two days later gold plunged to a five-month low, “hit by a broad selloff in commodities as well as surging bond yields on speculation a splurge of U.S. infrastructure spending could stoke inflation.” At least that was Reuters’ explanation.

GoldSeek presented a range of comments, with Brien Lundin predicting a short rally for gold. GATA’s Chris Powell suggested the metal’s status quo would prevail. “Trump won’t be giving instructions to the Fed and Treasury until January, if he even has any idea by then of the market rigging the government does.”

About a day after that comment, Reuters noted that Trump’s team had been courting big banking bigshot Jamie Dimon of JPMorgan Chase & Co for Treasury secretary.

Powell added that a post-election “great grab for physical gold” might overpower “the paper market antics of the central bank. But geopolitical turmoil hasn’t done much for gold in recent decades and I’d be surprised if that changed any time soon.”

A pre-existing rally pushed copper past $6,000 a tonne on November 11, which Bloomberg (posted in the Globe and Mail) attributed to “Chinese speculators and bets that Donald Trump will pour money into U.S. infrastructure.”

Initial effects of Trump’s 10-year, $10-trillion campaign promise are “unlikely to kick in until the third quarter of 2017 and would in our view have the largest effect on steel, zinc and nickel demand,” Goldman analyst Max Layton told the Financial Times.

The FT also quoted Commerzbank cautioning that “metal prices still appear to be supported by the euphoria exhibited by market participants in the wake of Trump’s election victory, a reaction we find somewhat inexplicable.”

Industrial Minerals called a copper bubble.

Some sources consulted by the journal wondered whether the “pragmatic businessman” would carry out his threatened restrictions to free trade. As for Trump’s climate scepticism and opposition to green energy subsidies, Chris Berry told IM the economic case alone will sustain vehicle electrification and the resulting demand for lithium, cobalt and graphite.

Looking at a more sumptuous form of carbon, Martin Rapaport declared, “The diamond and jewelry trade will benefit as the new policies create a more prosperous middle class and greater numbers of wealthy consumers. Global uncertainty will also increase demand for investment diamonds as a store of wealth.”

But the outsider’s victory might have shocked Rapaport into ambiguity. While saying the election “sets the stage for growth and development,” a preamble to his November 9 press release called the result “positively dangerous.”

Not to be left out of the forecasting frenzy, ResourceClips.com predicts the Yukon tourist industry will add Frederick Trump, the Donald’s bordello-owning granddad, to its romanticized cast of colourful Klondike characters.

World’s biggest steelmaker “cautiously optimistic” about 2014

February 7th, 2014

by Ana Komnenic | February 7, 2014 | Reprinted by permission of MINING.com

World’s biggest steelmaker “cautiously optimistic” about 2014

 

The world’s largest steelmaker, ArcelorMittal NYE:MT, has reported a net loss of $2.5 billion for 2013—a $1.2-billion improvement on the 2012 financial year.

The loss is largely the result of impairment charges and restructuring costs.

Operating profit—earnings before interest, tax, depreciation and amortization—of $6.9 billion were slightly lower than the year before and net debt decreased by more than 25%. The company ended the year with its lowest net debt level since its creation in 2006.

Lower steel prices dragged sales down by 5.7% to $79.4 billion.

Outlook

ArcelorMittal says it’s “cautiously optimistic” for 2014 and is forecasting EBITDA earnings of approximately $8 billion.

But the steelmaker cautions that this performance hinges on several key conditions. Most importantly, steel shipments need to increase by 3% and marketable iron ore shipments must rise by 15%. Canadian mines, having reached full ramp-up in December, should help boost iron ore volumes.

Based on the current economic outlook, especially in regard to European manufacturing activity, ArcelorMittal expects global steel consumption to grow by as much as 4% this year.

The outlook is also based on an average iron ore price in line with the market consensus (approximately $120 per tonne for 62% Fe CFR China) and a moderate improvement in steel margins.

“While there remain risks to the global demand picture, ArcelorMittal expects the fundamentals, particularly in our key markets in the developed world, to be more supportive in 2014 than in 2013,” the company wrote in its 2013 report.

The company is targeting net debt of $15 billion in the medium term and will not increase dividend payments until that point. In a separate announcement, the steelmaker announced a yearly gross dividend of 20 cents per share, to be paid out in July 2014.

The Luxembourg-based company’s share price spiked early February 7 on the New York exchange but by mid-afternoon was trading down to the previous day’s range of around $17 per share.

Reprinted by permission of MINING.com