Commodity prices diverged in the quarter. Despite solid China steel production, iron ore and metallurgical coal prices are down, while copper rose on supply issues and hopes of faster global growth. However, prices are elevated compared with history and cost-curve support.
GLEN is trading within a range we consider fairly valued.
Price
GBX 497.00
Fair Value
GBX 777.00
Uncertainty
High
1-Star Price
GBX 881.20
5-Star Price
GBX 361.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say
Bulls
Glencore's globe-spanning network of traders and logistics assets generates significant economies of scope.
Bears
Glencore's mining portfolio is overweight higher-risk countries with relatively underdeveloped institutions and limited legal safeguards for foreign investors.
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Glencore is one of the world’s largest commodities traders, active in markets for metals and minerals, energy products, and agricultural goods. The firm's Marketing business provides sourcing, logistics, transportation, storage, and financing services to commodity producers and consumers around the globe. Core exposures are in the production of thermal coal, coking coal, copper, zinc, nickel, cobalt, and ferroalloys. Unlike other major miners, Glencore plans to produce thermal coal until its mines exhaust, arguing that it is better for listed, western companies to own these assets and then rehabilitate them consistent with western standards. It has also agreed to buy Teck's metallurgical coal business, with the deal likely closing in the third quarter of 2024.