Rio Tinto's (NYSE:RTP) net profit surged in the first half, with earnings increasing by 125 percent to $5.77 billion, up from $2.56 billion in the same half last year. Analysts had expected earnings of $5.38 billion.
Underlying earnings were $1.62 billion last year, which was different from the net earnings because of an adjustment coming from $827 million in derivative gains.
Also helping the performance of Rio Tinto in the first half was the prices of the major commodities it produces, which were all up significantly.
Leading the way were copper and molybdenum prices, which were both up by 78 percent from the first half of 2009. Aluminum prices increased by 50 percent during the same period, while gold moved up 26 percent.
Rio slashed their debt load to $12 billion, down from the $18.9 billion they had on the books at the end of 2009.
Rio Tinto's CEO Tom Albanese said on commodity demand going forward, "Global growth of nearly four per cent is predicted by the IMF for both this and next year, with Chinese GDP expected to grow at approximately nine per cent. This would have positive implications for metals and minerals markets but it is clear that economic conditions on a global scale will be volatile. Our longer term view remains that industrialization and urbanization in China, followed by India, will drive robust commodity demand growth."
The company has committed about $6 billion in capital expenditures to expand their operations over the next 12 months.
Showing posts with label Iron Ore Demand. Show all posts
Showing posts with label Iron Ore Demand. Show all posts
Friday, August 6, 2010
Friday, July 30, 2010
Citigroup (NYSE:C) Maintains "Buy" Rating on Cliffs Natural Resources (NYSE:CLF)
Citigroup (NYSE:C) kept its "Buy" rating on Cliffs Natural Resources (NYSE:CLF), with a price target of $87 a share.
Even though they missed their earnings numbers in the last quarter, Cliffs
still generated earnings five times what they were last year in the second quarter, garnering $260.7 million, or $1.92 a share. Analysts were looking for $2.02 a share.
Still, iron ore prices are the key for the performance of Cliffs, and even if the economy slows down, steel should still be in demand a decent levels, which bodes well for the company.
Uncertainty about China, Europe and the United States makes this a difficult call, but Citigroup evidently believes Cliffs will perform well in the near term, and has called it that way.
Even though they missed their earnings numbers in the last quarter, Cliffs
still generated earnings five times what they were last year in the second quarter, garnering $260.7 million, or $1.92 a share. Analysts were looking for $2.02 a share.
Still, iron ore prices are the key for the performance of Cliffs, and even if the economy slows down, steel should still be in demand a decent levels, which bodes well for the company.
Uncertainty about China, Europe and the United States makes this a difficult call, but Citigroup evidently believes Cliffs will perform well in the near term, and has called it that way.
Thursday, July 29, 2010
Cliffs Natural Resources (NYSE:CLF) Earnings Up Fivefold
Cliffs Natural Resources Inc (NYSE:CLF) reported earnings for the second quarter surged by over five times what they were the year before in the same quarter, based on strong iron ore demand and higher prices.
Profits in the quarter increased to $260.7 million, or $1.92 a share, up from $45.5 million last year, or 36 cents a share. It was still below the $2.02 a share analysts had been looking for.
The earnings also had the benefit of iron ore prices rising to their peak level over the last 12 months during the quarter, making you wonder what lies ahead in what appears to be more economic slowdown in the steel sector.
Second quarter commodity prices were solid in general, and has helped many raw materials companies look good.
Now the obvious question is where do they go from here, as the global economy looks somewhat feeble at best.
Even in a slower economy though, iron ore demand should remain fairly strong, at least in the short term, and that could bode well for Cliffs Natural Resources and other iron ore producers.
Profits in the quarter increased to $260.7 million, or $1.92 a share, up from $45.5 million last year, or 36 cents a share. It was still below the $2.02 a share analysts had been looking for.
The earnings also had the benefit of iron ore prices rising to their peak level over the last 12 months during the quarter, making you wonder what lies ahead in what appears to be more economic slowdown in the steel sector.
Second quarter commodity prices were solid in general, and has helped many raw materials companies look good.
Now the obvious question is where do they go from here, as the global economy looks somewhat feeble at best.
Even in a slower economy though, iron ore demand should remain fairly strong, at least in the short term, and that could bode well for Cliffs Natural Resources and other iron ore producers.
Monday, July 26, 2010
BHP (NYSE:BHP), Vale (NYSE:VALE), Rio Tinto (NYSE:RTP) Get Boost from Iron Ore Prices
Iron ore prices shot up to their highest levels in seven months, and Vale SA (NYSE:VALE), Rio Tinto Group (NYSE:RTP) and BHP Billiton Ltd (NYSE:BHP) are hoping it's a pattern that will continue, being the three largest suppliers of iron ore in the world.
The increase is being attributed to China buying up iron ore again, with the thinking being that drew from their stockpiles while hoping for prices to drop.
That can't be confirmed yet though, and it remains to be seen if they're really back in the market or traders drove the iron ore prices up.
Spot price for iron ore increased to $133.40 a metric ton, a gain of 5 percent.
China, the largest producer of steel in the world, acquires the iron ore for steel production.
The increase is being attributed to China buying up iron ore again, with the thinking being that drew from their stockpiles while hoping for prices to drop.
That can't be confirmed yet though, and it remains to be seen if they're really back in the market or traders drove the iron ore prices up.
Spot price for iron ore increased to $133.40 a metric ton, a gain of 5 percent.
China, the largest producer of steel in the world, acquires the iron ore for steel production.
Wednesday, July 21, 2010
Vale (NYSE:VALE) Up as Morgan Stanley (NYSE:MS) Says China Easing Tightening
Morgan Stanley (NYSE:MS) says China appears to be easing tightening measures to manage growth, and Vale SA (NYSE:VALE) responded Tuesday by rising over 6 percent in New York on the news.
Vale is the leading producer of iron ore in the world, and would benefit strongly if the assertion by Morgan Stanley proves to be true. It would of course help their competitors like BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RTP), along with those in the steel industry as well.
The problem seems to be there is no proof of the assertion, only speculation.
It would be a major change in policy, which seems to have barely started to be implemented, making it a stretch as to it being true. This hasn't stopped analysts and others from jumping on the bandwagon and acting as if this is already a story that has happened.
Vale is reportedly running its iron ore plants at full capacity in anticipation of the possibility, and the company director, Claudio Alves claims China is starting to replenish their steel stockpiles.
This may or may not mean they are changing policy, as rebuilding stockpiles could be from prior use which isn't scheduled for huge building projects going forward.
If this is found to be true, just about every precious metal and companies producing them would shoot up in price. For now, we should wait to see if this is really the case, as many assertions have been made but no proof offered.
Vale is the leading producer of iron ore in the world, and would benefit strongly if the assertion by Morgan Stanley proves to be true. It would of course help their competitors like BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RTP), along with those in the steel industry as well.
The problem seems to be there is no proof of the assertion, only speculation.
It would be a major change in policy, which seems to have barely started to be implemented, making it a stretch as to it being true. This hasn't stopped analysts and others from jumping on the bandwagon and acting as if this is already a story that has happened.
Vale is reportedly running its iron ore plants at full capacity in anticipation of the possibility, and the company director, Claudio Alves claims China is starting to replenish their steel stockpiles.
This may or may not mean they are changing policy, as rebuilding stockpiles could be from prior use which isn't scheduled for huge building projects going forward.
If this is found to be true, just about every precious metal and companies producing them would shoot up in price. For now, we should wait to see if this is really the case, as many assertions have been made but no proof offered.
Thursday, June 10, 2010
ArcelorMittal (NYSE:MT) Starts Up West African Iron Ore Mines Again
After closing down operations at two iron ore projects in West Africa, ArcelorMittal (NYSE:MT) has now restarted them again.
Located at Faleme in Senegal and Mount Nimba in Liberia, the two iron ore mines had operations suspended in 2009 in response to iron ore prices falling in response to decreasing demand.
Production for the Mount Nimbi project in Liberia is scheduled to resume sometime in the middle of 2011. No specifics on reopening Faleme were given by the company, although original estimates were to have it producing by 2011.
After delaying the projects in 2009, the company is cautiously moving forward in what appears to be a mild rebound in demand, although recent events in Europe with their sovereign debt crisis and slowdown in China, along with the U.S. economy going nowhere, has generated concerns in all companies supplying raw materials as whether or not demand in the near- and mid-term is going to grow.
Located at Faleme in Senegal and Mount Nimba in Liberia, the two iron ore mines had operations suspended in 2009 in response to iron ore prices falling in response to decreasing demand.
Production for the Mount Nimbi project in Liberia is scheduled to resume sometime in the middle of 2011. No specifics on reopening Faleme were given by the company, although original estimates were to have it producing by 2011.
After delaying the projects in 2009, the company is cautiously moving forward in what appears to be a mild rebound in demand, although recent events in Europe with their sovereign debt crisis and slowdown in China, along with the U.S. economy going nowhere, has generated concerns in all companies supplying raw materials as whether or not demand in the near- and mid-term is going to grow.
Monday, June 7, 2010
BHP Billiton (NYSE:BHP), Rio Tinto (NYSE:RTP) Raising Iron Ore Prices
Contrary to other commodity prices, it seems iron ore remains a hot commodity, and BHP Billiton (NYSE:BHP) and Rio Tinto (NYSE:RTP) are going to raise prices again for the main ingredient to make steel, this time by close to 23 percent from the last quarter.
This price increase was made in relationship to Japanese steelmakers, although will apply to other buyers as well.
It is thought that Vale (NYSE:VALE) will follow in the footsteps of their peers and raise iron ore prices as well.
Prices after the latest increase per ton for iron ore will be at about $147 a ton, far above the 2009 fiscal prices, which were 140 percent less than today's prices.
Steelmakers are poised to add those extra costs onto their products, essentially passing the higher prices to consumers.
This does make one wonder if this is sustainable, as other commodity demand has fallen, and if demand has fallen for other metals used to make products, it's hard to see how iron ore and steel are able to stand on their own, as it points to demand drying up and people hanging onto their money.
I don't think the general public has processed what they're up against in the emerging or ongoing economic challenges in Europe, China and the U.S., and this could backfire on BHP, Rio and Vale if demand starts to implode on them and they're stuck with high prices with nowhere to go but down.
This price increase was made in relationship to Japanese steelmakers, although will apply to other buyers as well.
It is thought that Vale (NYSE:VALE) will follow in the footsteps of their peers and raise iron ore prices as well.
Prices after the latest increase per ton for iron ore will be at about $147 a ton, far above the 2009 fiscal prices, which were 140 percent less than today's prices.
Steelmakers are poised to add those extra costs onto their products, essentially passing the higher prices to consumers.
This does make one wonder if this is sustainable, as other commodity demand has fallen, and if demand has fallen for other metals used to make products, it's hard to see how iron ore and steel are able to stand on their own, as it points to demand drying up and people hanging onto their money.
I don't think the general public has processed what they're up against in the emerging or ongoing economic challenges in Europe, China and the U.S., and this could backfire on BHP, Rio and Vale if demand starts to implode on them and they're stuck with high prices with nowhere to go but down.
Wednesday, May 26, 2010
Rio Tinto (NYSE:RTP) Sees Some Metal Demand Doubling in 15 Years
Rio Tinto (NYSE:RTP) CEO Tom Albanese commented at an annual meeting for the company that metals like aluminum, copper and iron ore will increase in demand by twice what they are today in the next 15 years.
Primary drivers of demand, according to Albanese, will be urbanization and industrialization. Those two trends obviously relate to emerging markets, especially China and India, which will continue to grow exponentially during that time, although probably at a couple percentage points down from their growth today.
Albanese also likes the energy sector, where coal and uranium will continue to be in high demand.
“These trends will require a significant response from producers,” Albanese said.
Rio Tinto is positioned strongly to be a major player in these important natural resources, with the major caveat being the macro-economic picture emerging and Europe and inflation in China. These could lower demand for raw materials, and the European sovereign debt crisis could drag us into an even worse recession than we're just starting to recover from.
Even so, it's not a matter of if these raw materials will increase in demand, but when. The 15-year estimate is a good one to me, as it takes into accounts the inevitable swing in demand that accompanies slow economic times, and even if things to get much worse for several years, ultimately they're recover, and mining companies like Rio Tinto should participate in the resultant rise in prices from the growing demand.
Primary drivers of demand, according to Albanese, will be urbanization and industrialization. Those two trends obviously relate to emerging markets, especially China and India, which will continue to grow exponentially during that time, although probably at a couple percentage points down from their growth today.
Albanese also likes the energy sector, where coal and uranium will continue to be in high demand.
“These trends will require a significant response from producers,” Albanese said.
Rio Tinto is positioned strongly to be a major player in these important natural resources, with the major caveat being the macro-economic picture emerging and Europe and inflation in China. These could lower demand for raw materials, and the European sovereign debt crisis could drag us into an even worse recession than we're just starting to recover from.
Even so, it's not a matter of if these raw materials will increase in demand, but when. The 15-year estimate is a good one to me, as it takes into accounts the inevitable swing in demand that accompanies slow economic times, and even if things to get much worse for several years, ultimately they're recover, and mining companies like Rio Tinto should participate in the resultant rise in prices from the growing demand.
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