Basic Materials Roundup: Market Talk

The latest Market Talks covering Basic Materials. Published exclusively on Dow Jones Newswires at 4:20 ET, 12:20 ET and 16:50 ET.

0118 GMT - Press Metal Aluminium's recent share-price rally following stronger LME aluminum prices due to a Russian metal ban may continue, Citi analyst Lester Siew says in a note. Although the stock has gained 11% so far this year, it remains relatively modest compared with sector peers that have seen significant gains, he says. Currently higher aluminum spot prices suggest a substantial increase in 2Q earnings, while raw material costs remain rather benign, he adds. Siew expects Press Metal's 1Q earnings to be 5%-10% higher sequentially on lower carbon anode prices. Citi raises Press Metal's target price to MYR6.10 from MYR5.60 while maintaining a buy rating on the stock. Shares are 1.5% higher at MYR5.36. (yingxian.wong@wsj.com)

0106 GMT - Ongoing road access concerns to Gold Road's Gruyere gold mine were the key takeaway for RBC Capital Markets from the producer's quarterly update. In a note, analyst Alex Barkley highlights that Gold Road and Gruyere operator Gold Fields have yet to re-establish normal western supply road access. "Gruyere is now employing a convoluted supply chain system, with some consumables coming from vast distances and alternate suppliers," RBC says. "While the supply chain reorganization seems an admirable response to the weather impacts, this is likely to come at an incremental cost for Gold Road." With it unclear when Gold Road can reopen the road, RBC says it's difficult to assess the impact on cost and production. "If haul road access remains impaired, this could bring 2024 guidance into doubt," RBC says.(david.winning@wsj.com; @dwinningWSJ)

0056 GMT - Whitehaven Coal's sales guidance for its recently acquired Blackwater and Daunia metallurgical coal mines cheers Ord Minnett. Whitehaven says it expects coal sales from the operations, bought from BHP and Mitsubishi, to total 3.5 million-4.0 million tons in FY 2024. In a note, analyst Tim Elder says that is 12% higher than he had forecast. "And, while this appears slightly softer than consensus (-4% at the midpoint), it significantly de-risks production expectations for the assets," says Ord Minnett, which rates Whitehaven a buy. (david.winning@wsj.com; @dwinningWSJ)

1614 GMT - Alcoa is liking the look of potential higher tariffs on Chinese aluminum. CEO William Oplinger says on a call with analysts that the company expects greater protectionism to benefit its North American customers, and the company is in favor of anything that's positive for customers. President Biden this week called for increasing levies on Chinese steel and aluminum imports to 25% from 7.5%. Oplinger adds the caveat that the tariffs in question would affect a small segment of the aluminum that's used. Shares slip 0.7% to $35.31. (ben.glickman@wsj.com; @benglickman)

1509 GMT - North American Construction Group's focus on high-carbon energy markets gives it an edge over its Australian peers, TD Cowen's Aaron MacNeil says in a report. The analyst points out that 50% of NACG's revenues come from these end-markets, and while Australian peers are focusing more on what he calls future-focused metals exposure. "NACG addresses what appears to be a decreasingly competitive wedge of the energy mix," MacNeil says, pointing to high-carbon energy sources such as oil sands and coal, while competitors pivot to other end markets. He adds that the company's estimated free cash flow yield of 18% "is more than justified and that investors can expect enhanced project economics and a continuation of its strong historical growth profile." (adriano.marchese@wsj.com)

0848 GMT - Ferrexpo's pending legal cases continue to weigh on sentiment to the shares as they look cheap, Peel Hunt analysts writes. The London-listed iron-ore pellets exporter swing to a pretax loss due to legal provisions is a reminder of the apparent risks facing the group, even before taking into account those associated with the Russian invasion of Ukraine, the analyst say. The U.K. brokerage expects the lawsuits to continue to act as a drag on sentiment, limiting share price and suppressing multiples. Shares remain unchanged at 46.25 pence. (najat.kantouar@wsj.com)

(END) Dow Jones Newswires

April 19, 2024 04:20 ET (08:20 GMT)

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