Glencore International PLC, St. Helier was a notable decliner in the overnight trading session. The stock plummeted by close to 5% on the back of high volumes indicative of the shift of momentum towards the sell side. The stock has been in strong downtrend over the past few months and has been forming lower lows and lower highs pointing towards the fact that bears are using every rally in the stock as a selling opportunity. The stock currently trades below all important daily moving averages. Traders on the street believe the stock could head to levels of $2.5 in the near term.
According to a recently published report by Reuters, Glencore International PLC, St. Helier (OTCMKTS:GLNCY) is planning to cut down its commodity inventory by as much as %18 billion. Market experts think that this move can help the company ease its concerns about financial position and balances sheet.
Insights On The Matter
In a recent chat with Reuters, a close source of Glencore told that the way market’s behaving nowadays, things cannot be certain for a long time. Commodity market’s disturbed by the way international events have taken place lately, making commodities a risky bet for the company. Reducing its commodity inventory by $18 billion will keep it out of any probable trouble that can pop up anytime whenever the commodity market collapses in the near future.
The role of rating agencies like Moody’s and S&P has become important in deciding a company’s worth and risk exposure. As of now they rate Glencore just two places above the junk companies carrying a negative outlook. With this step, Glencore can improve its rating as well as reduce risk exposure.
A Reuters source said that balance-sheet could be a lot more important than the simple contango play for a company like Glencore. This step can prove to be a game-changer for the company, he added.
Meanwhile, Glencore resumed the operations at its recently closed Nickel Rim South mine, which is located in Sudbury, Ontario. Not long ago, a worker was killed at this site, forcing the company to shut the operations immediately until the matter’s resolved. Glencore spokesperson told reporters that the investigation’s going on, and the person behind this cruel act would be found and punished very soon.
A Good Option To Buy
Soon after Glencore announced that it’d taken a number of steps to uplift its financial position, Deutsche Bank upgraded it to buy from hold. It looks forward to continuing the same performance in the future as well.