Glencore business arm boosted by soaring commodity prices

Glencore’s business arm got off to a good start to the year, boosted by higher prices for its core commodities as the global economic outlook improved.

The Switzerland-based company, which is also a big miner, said annual profits for its marketing unit would be at the high end of its $ 2.2 billion to $ 3.2 billion range.

Raw materials, from copper to coal, have skyrocketed thanks to strong demand from China and elsewhere as the global economy emerges from the coronavirus pandemic.

Copper, which is used in everything from home appliances to electric vehicles, nearly traded at more than $ 10,000 a tonne on Wednesday, continuing a strong advance since its Covid-19. low in March 2020.

The metal was less than $ 200 outside surpass its previous record, set in 2011 during a commodity boom.

In a quarterly production report, Glencore said copper prices averaged $ 8.501 in the three months ending March, up 51% from the same period last year, while zinc was up 29%, nickel 38% and thermal coal 27%.

RBC analyst Tyler Broda said the favorable winds supporting Glencore’s trading arm will continue for some time due to continued supply disruptions in major commodity-producing countries like Chile.

Glencore’s trading arm helps smooth the most volatile profits from its mining assets. It is closely followed by investors because of the large amounts of cash it can generate. It also underpins Glencore’s dividend policy.

The unit had one of its best performances on record last year, reporting earnings before interest and taxes of $ 3.3 billion as its traders took advantage of the turmoil created by the coronavirus in the oil markets and metals.

In Wednesday’s update, Glencore said production from its mining assets in the first quarter of 2021 was as expected.

Glencore CEO Ivan Glasenberg will retire in June. He will be replaced by Gary Nagle, responsible for its coal assets.

A proposed compensation package for Nagle has been criticized by agent groups and some investors. However, company chairman Tony Hayward said he expects strong support for the package at its annual meeting in Switzerland later today.

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