BASIC INDUSTRIES
Iron Ore tested $90 early in the week, considered a key support level. That brought $80-85 levels, seen as marginal cost for smaller producers, into focus. Meanwhile the majors are ploughing ahead with output as Vale increased its full year production forecast. Prices have recovered somewhat in the last few sessions to end the week marginally higher.
- Spreads performed in-line at +3bp on the week. While high beta names like CIMAU and CNHI suffered 10+ moves wider, SIENFI gapped the other way. AKZANA repriced thanks to a new issue on what was a very weak day on Wednesday.
- Albemarle spreads were weak despite a small equity bounce. CALT announced a lithium mine closure, helping prices of the oversupplied metal find a bottom.
- Glencore received a surprise Moody’s upgrade, leaving spreads looking even more of a ratings outlier.
- Primary saw deals from Akzo Nobel and MTU Aero Engines. The latter performed strongly in secondary, highlighting value to us in Rolls-Royce once again with the A350 scare bringing making it looks interesting again.
Siemens Energy put in a strong move, leaving less room for upside with spreads in line with comparables.
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