The copper stories are interesting, for which I shall get round to penning my thoughts (subject to time). The basis of it is, everyone's expanding and demand is not. Where have we heard that before? Strange isn't it that reporters have to wait until it's staring them in the face before acknowledging the obvious. One would have hoped they could have worked out with the expansion of Chile's production by 2mt's that others would "not be reducing." Alas, with everyone on the fence, no wonder companies make so much monies from people long/shorting (cfd or spread betting) as they appear to be the lambs to slaughter (hiding my soapbox).
The amount of distressed copper being traded gives an indication copper is likely to trade around $2.65-2.85/lb for the forseeable future, with higher point demand perhaps peaking at $3.15-3.30lb, so presents some significant trading ops for those like-minded folks. In essence when you compare this with Iron Ore, Steel and the like there's a squall ensuing for most commodities, save for Zinc and Nickel? Supercycle? Super Supply...
Speaking of which, with no surprise whatsoever the Bond/debtholders of Rusal have agreed to take no action for 3 months. Well it would have made no difference, so better to be seen as obliging than problematic with the situation. One question for these holders is, why would you in the first place? These defaults were not a sudden surprise, they were coming with a guarantee or no money back small print assured. When will debt funders wise up to this? I suspect the time will be never...with fees attached.
Speaking of fees, you could argue at 4% ($10M) fee, Gulf Keystone's 13% US$250 million debt financing + 40M warrants for Gulf Keystone was a good deal. This now presents an opportunity to market the company which also presents as an opportunity to short the stock post marketing? So with some sudden relief in the market, GKP only needs 32$m a year.
Staying with oil, Trap appear to be promoting the virtues of the company.... Tower Resources PLC Placing at 3.5p, Acquisition of Rift Petroleum with Preliminary Results (saving cash on RNS's as well! What next a director change?). With confetti hitting the market, one would be wise to wait for settlement! It would however appear to be a very shrewd move for risk/reward exposure, especially for those that sold higher! One wonders if a similar namesake TRAP will start producing some decent news flow as well.
Atb Fraser
Fraser- agree re copper- the extra supply seems to be ill judged looking at the mkt as a whole, perhaps the miners know something we don't but they seem to be in danger of flooding the mkt and eroding margins. I guess it wouldn't be the first time.
ReplyDeleteRe Rusal- one of Putins pals Oleg Deripaska is the owner of that aluminium giant and their losses of $3.2bn last year have put doubts over repayment of their $10bn of debt with various banks. But he did help Vlad by building the new airport and athletes village for his Sochi Olympics showcase, and Rusal are the second largest Norilsk shareholder too, so I wouldn't bet against the state owned banks giving him every assistance needed in the Rusal restructure. Then again as a EXI holder I may not have called my Russian plays correctly in the past :-))
Cheers. The Leggie
Fraser- Im sure you have seen the overnight news- Guinea is likely to put 2 of the 4 Simandou licences back on the block after they acknowledged the "issues" with the first award to BSG Resources and the knock on effect on Vale, who paid $2.5bn for 51%. The ebola outbreak only adds further intrigue here but the queue for new buyers is extensive, given the quality of the asset. Interesting times. Cricket moves to joinery skills today- still it keeps me out of the pub :-))
ReplyDeletehttp://online.wsj.com/news/articles/SB10001424052702303603904579491061291340156?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702303603904579491061291340156.html
Cheers. The Leggie
Fraser- the Japanese have passed their Basic Energy Plan, which sees the reintroduction of nuclear into their long term energy mix, which will take time to implement but will help the uranium price stabilize at least.
ReplyDeletehttp://digitaljournal.com/news/world/japan-approves-new-energy-policy-reinstating-nuclear-power/article/380478
Cheers. The Leggie
Cheers Leggie....Had I realised I would have acknowledged your commentary. There's a couple of issues within the plan...waiting on my copy of the 78 pages in English.
ReplyDeleteTrust you're relaxing this weekend! Atb Fraser