BUSINESS FORECASTING

Rinehart’s Hancock Prospecting bullish on iron ore prices

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Original article by Perry Williams
The Australian Financial Review – Page: 13 & 20 : 4-Apr-16

Hancock Prospecting is upbeat about the outlook for the iron ore price in the near-term. Executive director Tad Watroba is optimistic that it will remain within the range of $U55 to $U60 per tonne for the remainder of 2016. He notes that about 25 million tonnes of the Roy Hill iron ore project’s output of 55 million tonnes will be shipped to Chinese buyers. The project’s first shipment to China will shortly arrive at the port of Caofeidian.

CORPORATES
HANCOCK PROSPECTING PTY LTD, ROY HILL HOLDINGS PTY LTD, BOAO FORUM FOR ASIA, RIO TINTO LIMITED – ASX RIO, HOPE DOWNS IRON ORE PTY LTD, POSCO, MARUBENI CORPORATION, CHINA STEEL CORPORATION, CREDIT SUISSE (AUSTRALIA) LIMITED, METAL BULLETIN LIMITED, CHINA IRON AND STEEL INDUSTRY ASSOCIATION

Rio’s long game in copper hunt

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Original article by Amanda Saunders
The Australian Financial Review – Page: 59-60 : 24-Mar-16

Expectations of a looming global undersupply of copper has prompted renewed interest in the red metal among the world’s biggest mining companies. Jean-Sebastien Jacques, the head of Rio Tinto’s copper division and the group’s incoming CEO, forecasts that global copper supply will go into deficit in 2018-19. He says Rio would consider buying any so-called tier one copper assets that are put on the market, but notes that even tier two and tier three copper assets are expensive now.

CORPORATES
RIO TINTO LIMITED – ASX RIO, BHP BILLITON LIMITED – ASX BHP, UBS HOLDINGS PTY LTD, ANTOFAGASTA PLC, SUMITOMO CORPORATION, INTERNATIONAL COPPER STUDY GROUP

What goes up … comes down a week later

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Original article by Barry FitzGerald
The Australian – Page: 31 : 17-Mar-16

Commodity prices and the share prices of mining companies have retreated after a brief rally in mid-March 2016, with the iron ore price shedding 18 per cent in seven trading days. However, Ricardo Aceves of FocusEconomics says analysts are generally upbeat about the outlook for commodity prices, with overall growth of 4.4 per cent by the December quarter. The consensus forecast is for crude oil to be 18 per cent higher by the fourth quarter, while the nickel price is expected to rebound by 12 per cent.

CORPORATES
FOCUSECONOMICS, BHP BILLITON LIMITED – ASX BHP, PENGANA CAPITAL LIMITED, PENGANA GLOBAL RESOURCES FUND

Oil and gas players gaining confidence that the worst is over

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Original article by Angela Macdonald-Smith
The Australian Financial Review – Page: 15 : 15-Mar-16

The price of Brent crude oil was trading at around $US40 per barrel on 14 March 2016, compared with a low of around $US28/barrel in January. Beach Energy director Jim McKerlie expects the oil price to remain at around $US40 in the near-term, and he forecasts that it will eventually rebound. Meanwhile, Fat Prophets expects the price of Brent crude oil to be trading at around $US55/barrel by the end of 2016.

CORPORATES
BEACH ENERGY LIMITED – ASX BPT, FAT PROPHETS, INTERNATIONAL ENERGY AGENCY, AUSTRALIA. DEPT OF INDUSTRY, INNOVATION AND SCIENCE, DRILLSEARCH ENERGY LIMITED, BERNSTEIN RESEARCH, AWE LIMITED – ASX AWE, SANTOS LIMITED – ASX STO, ORIGIN ENERGY LIMITED – ASX ORG

Vanguard sees lower returns

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Original article by Sally Patten
The Australian Financial Review – Page: 8 : 11-Mar-16

Vanguard Group CEO and chairman Bill McNabb is bearish about the outlook for global investment returns over the next decade. He expects returns to be around two per cent below the long-term average over this period, although he anticipates a subsequent upturn. Meanwhile, McNabb says there should be greater transparency regarding Australian superannuation funds’, while he argues that consolidation in the industry could also be used to put downward pressure on fees.

CORPORATES
THE VANGUARD GROUP INCORPORATED

China tips iron ore price to slip back to $US40

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Original article by Perry Williams
The Australian Financial Review – Page: 24 : 10-Mar-16

The iron ore price rose above $US63 per tonne on 7 March 2016, but Li Xinchuang of the China Iron & Steel Association does not expect this to be sustained. Li forecasts that the price of the steel input will retreat to around the $US40/tonne level in the near-term, arguing that there has not been sufficient change in demand and supply to support current pricing. Li adds that Chinese regulators may oppose a potential alliance between Fortescue Metals Group and Vale on competition grounds.

CORPORATES
CHINA IRON AND STEEL ASSOCIATION, FORTESCUE METALS GROUP LIMITED – ASX FMG, VALE SA, CHINA METALLURGICAL INDUSTRY PLANNING AND RESEARCH INSTITUTE, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, MOODY’S INVESTORS SERVICE INCORPORATED

Fortescue’s Vale deal good for costs, but concerns remain

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Original article by Amanda Saunders, James Thomson
The Australian Financial Review – Page: 19 & 24 : 10-Mar-16

Iron ore miner Fortescue Metals Group aims to reduce its cash costs to $US13 per tonne by mid-2016, having slashed its cost of production from about $US32/tonne to around $US16 in the last year. The proposed iron ore blending joint venture with Brazilian rival Vale may allow Fortescue to further reduce its cash costs. Paul Young of Deutsche Bank notes that Chinese competition regulators may oppose the alliance, although Fortescue CEO Nev Power is confident that this will not be an issue.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, VALE SA, DEUTSCHE BANK AG, CLSA AUSTRALIA PTY LTD, UBS HOLDINGS PTY LTD, JEFFERIES AND COMPANY, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, ATLAS IRON LIMITED – ASX AGO, BC IRON LIMITED – ASX BCI

Citi expects bank dividends to be ‘significantly lower’

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Original article by James Chessell
The Australian Financial Review – Page: 18 : 8-Mar-16

Citi Global Markets’ Sebastien Bland has warned that hedge funds and long-only fund managers in the UK and Europe are not convinced that Australian banks’ dividend payouts are sustainable given their current capital levels. He says hedge funds believe that the banks will need to reduce their dividend payout ratios, but he adds that long-only funds expect the banks to maintain dividends via measures such as dividend reinvestment plans.

CORPORATES
CITI GLOBAL MARKETS, CITIGROUP INCORPORATED, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, VARIANT PERCEPTION

Iron ore leads commodities bounce as high-cost producers exit

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Original article by Barry FitzGerald
The Australian – Page: 32 : 8-Mar-16

The iron ore price has risen by 41 per cent since late December 2015, reaching a high of $US52.40 per tonne in early March 2016. The price of the steel input has averaged $US51.60 per tonne over the last 12 months. The rebound is partly attributable to the withdrawal of iron ore miners with high production costs from the market. According to Rio Tinto, supply of high-cost iron ore fell by around 130 million tonnes in 2015, while just 75 million tonnes of new supply will enter the market in 2016.

CORPORATES
RIO TINTO LIMITED – ASX RIO, BHP BILLITON LIMITED – ASX BHP, MACQUARIE GROUP LIMITED – ASX MQG, THE STEEL INDEX LIMITED

Energy M&A on rise as new players emerge

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Original article by Angela Macdonald-Smith
The Australian Financial Review – Page: 24 : 3-Mar-16

Herbert Smith Freehills partner Rob Merrick says expectations that the downturn in the crude oil price will be sustained may prompt consolidation in the global oil and gas industry. Many Australian-listed energy groups announced asset writedowns during the February 2016 reporting season, but Merrick says they are at less risk of being forced sellers of assets than their overseas peers. The law firm says private equity firms, pension funds and infrastructure funds may actively pursue oil and gas industry acquisitions.

CORPORATES
HERBERT SMITH FREEHILLS PTY LTD, ROYAL DUTCH SHELL PLC, BG GROUP PLC, WOODSIDE PETROLEUM LIMITED – ASX WPL, SENEX ENERGY LIMITED – ASX SXY, SANTOS LIMITED – ASX STO, MITSUI AND COMPANY LIMITED, APACHE CORPORATION, FIRST OIL EXPRO LIMITED, THE BLACKSTONE GROUP LP, THE CARLYLE GROUP, OAKTREE CAPITAL MANAGEMENT LLC, NATIONAL GRID TRANSCO