Daily Brief Energy/Materials: CPMC Holdings, Iron Ore, Gold, Pulsar Helium, Scorpio Tankers, Zephyr Energy and more

• Baosteel’s SOE background helps bring more advantages- This deal is a consolidation of assets under SASAC, which may involve some strategic intent at national level. Baosteel has an upper hand. 
• ORG cannot afford to fail considering the strategic significance of CMPC for ORG. Major shareholder of CPMC Zhang Wei has picked ORG side, making it maintain the hope of winning.
• For arbitrageurs, the good news is CPMC would be acquired by either Changping Industrial or ORG, with high certainty.Baosteel is also worth watching since it could be a new leader. 

• With ORG offering a 4.9% higher price and securing Zhang Wei’s acceptance, the ball is now back in Baowu’s hands. Good reasons exist for Baowu to raise its offer price. 
• Baowu’s subsidiary Shanghai Baosteel Packaging-A (601968 CH) needs CPMC Holdings (906 HK) more than ORG, given its smaller market share and weaker profitability.
• At ORG’s offer price, CPMC’s PERs for FY24 and FY25 of 15.4x and 14.2x are cheaper than Baosteel Packaging’s 22x and 18.7x. This gives additional justifications for a higher offer. 

• Champion Iron (CIA AU) reported an inline result for FY24, with revenue/profits up 9%/16% YoY.  Q4 revenue/profits were -28%YoY/-73%YoY due to lower pricing on 60% of volumes in transit. 
• The company-guided production volumes have reached the annualized 15 mnt mark, but logistics continued to be challenging in Q1. Easing is expected in August, and base case a 1.5-year destock.
• The name carries some risks trading at 7x PE FY25 (March end), but it could be one to watch in case the 65-62 spread widens.

• Unpredictable Corn Supply from South America The grain supply from South America, especially corn, is among the most unpredictable globally.
• During the 2022-23 season, Argentina’s corn production dropped by nearly 29% due to drought, but then surged by 26% in the 2023-24 season, influenced by the El Niño phenomenon.
• Similarly, favorable weather conditions boosted Brazil’s corn production by approximately 17% in 2022-23. However, in 2023-24, it declined by 16% due to varying weather patterns.

• The Jetstream # 1 appraisal well has been tested at a rate of up to 0.8 mmcf/d with helium concentration of 8.7%-14.5%.
• The flow rate initially reached 0.15 mmcf/d with flowing tubing head pressure of 34 psi. The bottom hole pressure was 162 psi.
• A compressor was then installed at the well head to reduce the flowing tubing head pressure to 20 psi, thereby increasing the difference between the flowing pressure and the reservoir pressure.

• Author discusses investment in STNG for over-earning potential and short-term catalyst
• Mentions other stocks like VAL, TDW, and TNK in oil & gas industry
• Believes STNG stock price won’t fall significantly and discusses intrinsic value in comparison to bitcoin volatility through haiku

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• The State 36-2R well has reached TD.
• The well penetrated a folded and naturally fractured section of the Cane Creek reservoir, encountering drilling mud gas shows of a similar magnitude to the original well.
• Pore pressure analysis suggests formation pressures estimated at approximately 9,300 psi (which is broadly consistent with previously drilled offset wells).