Daily Brief Energy/Materials: Rex Minerals, Deepak Nitrite, Asia Cement China, Platinum, Hanwha Corporation, Crude Oil, Copper, Tullow Oil PLC, Energy Transfer LP and more

• Rex Minerals (RXM AU) has entered a scheme implementation deed with MACH Metals Australia at A$0.47 per share, a 70.9% premium to the undisturbed price (5 July).
• The key conditions are shareholder and FIRB approvals. FIRB approval should be forthcoming as Salim is the largest shareholder and the cordial Indonesia-Australia relations.
• While the offer represents a 10-year high, it implies multiples, which are light compared to precedent transactions. Nevertheless, this is a done deal. At last close, the spread was 9.3%.

• Deepak Nitrite spending INR 9000 crore on capex for backward integration and forward integration along with focus on import substitution with foray into domain like Polycarbonates and Fluorination
• Deepak Nitrite promoters have been continuously increasing stake by 5% in the last few years and recently added 36 crore worth of equities
• The most interesting thesis building operationally is the revival of its key chemical spreads

• Many minority shareholders have lodged complaints against ACC with the SFC, since unfair privatization price damages the ecology of the entire market.It depends on whether the SFC will take action.
• The failure of privatization does not necessarily mean better returns for investors. On the contrary, it may result in greater losses. ACC can have other ways “hollow out” the Company.
• Arbitrageurs can choose to bet on a second privatization (with higher Offer Price) and also on the potential dividends, but the prerequisite is that the management choose to “act honorably”.

• Manganese ore, alumina, molybdenum, and chrome ore prices are up, while cobalt prices are down due to market surplus
• Precious metals like gold are well placed and resilient, with potential for record industry profitability
• Copper is still the best way to play the acceleration in global electrification, with potential opportunities in zinc and bulk commodities as well

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• With Hanwha Corporation (000880 KS) trading around a one-year low NAV discount, the Hanwha Group has made a Tender Offer for 8% of shares outstanding at ₩30,000/share.
• Preceding my comments on Hanwha are the current setup/unwind tables for Asia-Pacific Holdcos.
• These relationships trade with a minimum liquidity of US$1mn, and a % market capitalisation >20%.

• US oil rig count stabilises at 479 as of the week ending on 5/July, after falling for five consecutive weeks.
• The US natural gas rig count rose by 4 to 101, yet it remains 34 rigs lower than the count from the same week last year
• Drilling activities in the US remain soft as upstream players prioritise shareholder returns over increasing output.

• ISM vs Commodity Prices The latest ISM Manufacturing data came in lower than expected. It almost seems like economic momentum in the US is fading.
• But on the other hand, commodities that are most sensitive to change in economic momentum, namely copper and crude oil, remain in a sideways consolidation or in the case of crude are already breaking out to new short-term highs.
• That price action behavior opens up a gap between both metrics, and one thing is clear.

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Tullow Oil’s ESG as “Adequate”, in line with its Environmental and Social scores, while the Governance pillar is “Strong”. Controversies are “Immaterial” and Disclosure is “Adequate”. 

• Energy Transfer LP reported robust financial results for the first quarter of 2024, generating an adjusted EBITDA of $3.9 billion, an increase from $3.4 billion in the same period of 2023.
• Distributable cash flow (DCF) attributable to partners was $2.4 billion, compared to $2 billion in the prior year, resulting in excess cash flow after distributions of $1.3 billion.
• The company announced a quarterly cash distribution of $0.3175 per common unit, up 3.3% from the previous year.