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Ferroglobe PLC (GSM)

NasdaqCM - NasdaqCM Real Time Price. Currency in USD
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7.63-0.01 (-0.13%)
At close: 4:00PM EDT
7.63 0.00 (0.00%)
After hours: 05:48PM EDT
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  • R
    Robin
    Reiterating a word of caution just short-term. I made a couple of replies earlier to C-Square posts, including fact I have further reduced my holdings). I remain very Bullish on GSM's 2022 outlook as prices are high and already reflects high electricity prices. However, I cannot ignore (and be disappointed) that GSM is doing a $100 mm ATM. I have no idea how much of the $100 mm GSM is raising, but I can't imagine they aren't raising some money otherwise they would not initiate an ATM now. In the very near-term, GSM may be facing very tight liquidity - poor free cash flow and escalating A/R and inventories that needs to be financed. So unfortunate GSM has to look to issue shares at current prices. Overall, not a big deal as dilution not large, but I would take as a sign that Q3 would surprise in a very negative way. And I have to "call out management" for not disclosing both the two furnace shutdowns (news on Seeking Alpha) and the ATM (I have never seen a company do an ATM and not issue a press release) - It is not right. I still love the stock for 2022, but maybe "love it a bit less" now (more so for dilution and disclosure). I'd rather have long standing longs take some money off the table and hold onto a smaller position (i.e., Sell to get cost base back for many that bought below $5) in case stock does "temporarily" tank if the market really does not like Q3 results.
  • J
    Josef
    Surging prices of metals such as magnesium and silicon - ingredients in aluminium alloys - also hurt fabricators, said Wang Weidong, analyst with state-backed research house Antaike.
    Antaike forecast the Chinese aluminium market would swing into a deficit of 200,000 tonnes in 2022 from a surplus of 180,000 tonnes this year, and projected Chinese state reserve sales of 300,000 tonnes next year.
    Read more at https://www.todayonline.com/world/surging-aluminium-price-squeezing-processors-profits-nanshan-exec

    Sounds bad, unless you are one of leading silicon metal manufacturers
    TAIYUAN, China - Aluminium processors in China face slimmer profits this year due to surging metal prices, Shandong Nanshan Aluminium Co Ltd's chairman said on Thursday.
    TAIYUAN, China - Aluminium processors in China face slimmer profits this year due to surging metal prices, Shandong Nanshan Aluminium Co Ltd's chairman said on Thursday.
    www.todayonline.com
  • R
    Robin
    Spain electricity prices - Yikes!

    Just got a hold of prices. It is 207 euros now - that is mind-blowing after thinking the Q3 average of 140 euros was nutty. It was 54 euros average in Q1. GSM has not only fixed-priced contracts on SiMe, but that quarter lag is now a killer. As a general rule, GSM's Q3 sales prices are based on benchmark prices back in Q2. I think GSM is going to report puny EBITDA in Q3 and Q4. Now I understand why they are doing a $100 mm ATM. The company has working capital requirements to finance and some CAPEX too. I'm OK - sold 75% of my position. Not selling more - Still see a great year next year - a big year. If sells-off then I can reload.
  • E
    E
    Any thoughts on why GSM has been so weak the last week or so, including todays $.16 decline in a super strong market? With GSM up over 1000% in little over a year could this signal a big equity offering , given their weak balance sheet?
    Neutral
  • C
    CsquaredH
    I DO NOT trust B. Riley or Fitzgerald. Expect an upgrade, or least some Ferroglobe coverage, because they will be selling Ferroglobe shares. OK, here come the "official" delusion. "We have entered into an equity distribution agreement (the “Equity Distribution Agreement”) with B. Riley Securities, Inc. and Cantor Fitzgerald & Co. relating to the ordinary shares, par value $0.01 per share, of Ferroglobe PLC offered by this prospectus supplement and the accompanying prospectus. In accordance with the terms of the Equity Distribution Agreement, we may offer and sell ordinary shares having an aggregate offering price of up to $100,000,000 from time to time through B. Riley Securities, Inc. and Cantor Fitzgerald & Co. as our sales agents."
  • J
    Josef
    LME WEEK 2021: Risk aversion prevails in silicon, magnesium, manganese flake amid shortages and talk of reneges in ChinaMarket participants are gathering in London this week while some minor metals with energy-intensive manufacturing processes and a reliance on China for supply have surged to multi-year highs.The sharp price increases in the Chinese market are rapidly filtering across Europe, resulting in the depletion of silicon and magnesium inventories in Rotterdam.?This LME Week is different, totally different, especially for certain products in which there is a big question mark such as silicon, magnesium or manganese flake,? a European trader told Fastmarkets.?The situation is very desperate,? the trader said. ?Prompt material is very difficult to find and there is panic everywhere; the more energy-intensive the market is, the more panic.?Power supply problems in many of China's key industrial and manufacturing hubs have worsened since September while the nation tries to meet strict carbon reduction regulations. Energy prices have set repeated multi-year highs.Fastmarkets assessed the price of silicon grade 4-4-1 99% Si min, in-whs Rotterdam at #$%$8,500-8,650 ($9,825-9,894) per tonne on Friday October 8, up by 31.9% from #$%$6,000-7,000 per tonne week on week.
  • P
    PriceCycles
    For those following markets at home, Silicon metal in the US up 57% on the week to $3.06/lb; Europe up 56% to $3.67/lb.

    Ferro Silicon up 14% in the US $2.70 and in Europe up 23% to $2.00.

    And anyone concerened about the shares, this is the ideal situation where investors can buy these shares and see a pretty solid gain over the coming months.
  • J
    Josef
    On Friday, Norwegian chemicals manufacturer Elkem ASA said it and several other companies making silicone-based products suspended some sales due to to the shortage.

    Silicon, which makes up 28% of the earth’s crust by weight, is one of mankind’s most diverse building blocks. It’s used in everything from computer chips and concrete, to glass and car parts. It can be purified into the ultra-conductive material that helps convert sunlight into electricity in solar panels. And it’s the raw material for silicone -- a water- and heat-resistant compound used widely in medical implants, caulk, deodorants, oven mitts and more.

    Despite its natural abundance in crude forms such as sand and clay, there have been warnings in recent years that surging industrial demand risks creating improbable shortages for raw materials like gravel.
    Now, with China curbing production of high-purity silicon metal, the unlikely fragility of the silicon supply chain is being exposed to an alarming degree.
    The knock-on consequences are also particularly alarming for automakers, where silicon is alloyed with aluminum to make engine blocks and other parts.

    Along with silicon, they’re also facing a surge in magnesium, another alloying ingredient that’s faced production issues during China’s power crunch.

    “If you have silicon supply constraints, then you’ve got a problem,” Keith Wildie, head of trading at aluminum alloy-maker Romco Metals, said by phone from London. “There is still some supply out there, but it’s trading at a clearing price that is obviously very high.”

    Solar Costs
    The shortage is already bubbling up in the solar industry, where a refined and purified form is used in photovoltaic panels.

    The price of solar-grade polysilicon jumped 13% on Wednesday, the highest since 2011, in the wake of the supply cuts. It’s up more than 400% since the start of June 2020.

    “It is yet another excuse for polysilicon makers to increase the price, and the pricing environment for solar modules is very nervous at the moment,” said Jenny Chase, BloombergNEF’s head of global solar research.

    The impact on the price of solar panels, however, is apt to be limited. Polysilicon makers are enjoying high margins this year, putting them in position to absorb higher feedstock prices better than other industries, BloombergNEF analysts said in a report Thursday.

    Lasting Shortage
    Silicon also plays a key role in aluminum alloys, acting as a softening agent. It makes makes the metal less brittle when producers shape it into different products needed in everything from automobiles to appliances.
    Prices are expected to remain elevated around current levels through next summer, until more production comes online in the second half of the year, said Yang Xiaoting, senior analyst at Shanghai Metals Market. Demand is growing from sectors like solar power and electronic equipment.

    “Even if there were no energy consumption curbs, there would be a shortage of industrial silicon,” she said.

    Search for article "Silicon’s 300% surge throws another price shock at the world"
  • P
    PriceCycles
    In China some prices fell, likely due to electricity related demand. But in the US, Ferro si up 12% since last friday to $3.07 and Silicon metal up 20% to $3.67/lb.
  • J
    Jose
    I've mentioned this before but here's some continued evidence. A week ago, record prices were reached on many raw materials particularly aluminum and steel who happen to be key high volume buyers of silicon metal. But share prices are not joining the party as they are far below prior peaks. Just look at US Steel, Alcoa, Century Aluminum, etc. It seems investors know those past valuations were undeserved albeit also the outcome of short squeezes.
    There's been rampant speculation of GSM going past the teens. So, is GSM the exception to those other companies mentioned above? Grupo VM and GSM management know it is not and they are fully aware that electricity prices is their Achilles heel. This is the reason for the +/- month old $400M shelf registration.
  • J
    Josef
    Institutional investors and hedge funds own 25.95% of the company’s stock. 50% owned by GVM. Float 24%
    Not that much...
    I tend to believe that both announcement coming from either GSM and GVM that they MIGHT decide to sell quite a number of shares should allow somebody to enter cheap before the new contracts will start to be announced...just 2 months to go...just 2 months left to keep the prices down...

    Otherwise is does not make too much sense...Normaly they sell and then announce...I have seen many offerings announced AFTER....
    While these two are announcing IN ADVANCE..that they MAY sell....strange :-)
  • J
    Joseph
    Q1 and Q2 earnings slides showed total silicon metal volume of approximately 128,000 tons. Double that for yearly estimate is 256,000 tons. The Selma plant adds 22,000 tons silica metal per year. So adds about 8.5% production capacity.
  • J
    Jose
    I've been saying for at least 5 weeks now that FerroGlobe has a "run-away" breakeven point because they can't control/manage their variable costs especially power consumption. Well, they've now idled a couple furnaces in Spain as a result. Combine that with the 72K euro WEEKLY interest coupon paid to noteholders and you can understand clearly why mgmnt has primed the pump with that $400M shelf. Levi will not forget last year when the stock reached 40 cents and the delisting suits came to the doorstep twice.
  • R
    Robin
    Hate to say this, but I have to be honest Bull on the stock and not hide from things perturbing me... Could GSM have already done most of its fixed-priced contracts for 2022? But more importantly, what is the chance we can be disappointed in the fixed-price? I can see customers saying "last month" the spike was abnormal and that GSM should fix prices somewhat lower than spot at that time. And now spot is up way more - but due to way higher electricity costs too. Hard to imagine GSM still isn't gonna have a monster year in 2022, but could it be a mini-monster in a "kinda nightmare" scenario they priced it too low - and then stock another year with that? Stock been on a decline and down 4% on a big up day?
  • R
    Robin
    I can find no news to explain sell-off, but then GSM often has big swings for no apparent reason. My guess is we can get such moves when hedge fund decides to buy or sell. I do not think Group is selling, but maybe they are for some amount if they really needed cash - Again, I do not think they are selling, but just musing of what is possible explanation, Though the most likely reason is "just because"...today.
  • S
    Sophie
    Just like comment below from Josh said:

    I’d say this dip is most definitely a lucky extra chance to buy more stock at a total bargain to me! 🙂

    (I literally just bought more myself! So exciting!!)
  • P
    PriceCycles
    Bloomberg article on silicon
    Silicon’s 300% Surge Throws Another Price Shock at the World

    can't show a link
  • S
    Sophie
    Great article about silicon (at least for GSM investors!) in Russia’s electrical engineering magazine!

    (I had actually no idea silicon needed for things like electronics & solar takes so long to grow. So great!! 🙂)

    https://www.elec.ru/publications/peredacha-raspredelenie-i-nakoplenie-elektroenergi/6923/
  • R
    Robin
    China SiMe was $4.09/lb last Monday on SMM website. China price double that of Europe/U.S. Prices will converge! Just take time. $4.00/lb just doe not seem sustainable. But hey how about we all settle around $2.50/lb - or roughly 2X the 10-year average? GSM should be EPS>$2.50 under that scenario (2022).
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