Global Inc.s earnings fell in its fiscal third quarter
due to lower sales and weakened commodity markets that are
becoming more challenging in the wake of depressed metal and
raw material pricing around the world.
mining equipment manufacturer posted net income of $183.19
million for the three months ended July 26, down 5.3 percent
from $193.52 million in the same period a year earlier on sales
that dipped 4.9 percent to $1.32 billion. The companys
fiscal third-quarter bookings of $695.4 million were down
nearly 36 percent from a year ago.
commodities are in or near supply surplus for the first time in
over a decade," president and chief executive officer Mike
Sutherlin said Aug. 28. "This is primarily the result of the
post-recession economic recovery falling short of expectations.
The eurozone is just starting to recover from a multi-year
recession, China growth has slowed and growth in the U.S.
The surplus has moved
commodity pricing down, "making higher-cost mines uneconomic,
(which) will result in closures that will rebalance the market.
Until this happens, there is little incentive to invest in new
mine capacity," the company said.
Prices for industrial
metals and bulk commodities have declined by 20 to 40 percent
over the past 18 months, the company said.
production rose 2.6 percent during the first half of 2013, with
almost all of the increase coming from China, Joy said. The
company estimated there are 300 million tons of excess
steelmaking capacity globally, with most of that in China and
Europe. "This has limited steel pricing, but volumes have
continued to support demand for iron ore and metallurgical
coal," it said. "Current ore pricing continues to support
investment in capacity expansion, but only in high-grade,
production is more fragmented with less price support, the
company said, but pricing has begun to stabilize after
declining for most of this year. "Stockpiles of both iron ore
and met coal are at low levels, setting the stage for
restocking and price support in the second half of 2013,"
Joy Global sees copper
as having the best fundamentals among mined commodities. "Since
reaching record highs in June, global inventories have declined
14 percent, prices have rebounded 10 percent and inventories at
bonded warehouses have declined 50 percent since the first
quarter. These developments are supporting continued investment
in (copper) mine capacity expansion," the company said.
reduced cash flows have resulted in them cutting capital
expenditures by as much as 40 to 50 percent, and spending will
remain low until demand improves enough to move commodity
pricing above marginal cost and toward incentive levels.