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Glencore ups profit guidance for trading division

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Glencore ups profit guidance for trading division
In a brief update to the market, Glencore said its asset base performed in line with expectations and its full-year production guidance remains unchanged. Photo: Fabrice Coffrini/AFP via Getty

Mining company Glencore (GLEN.L) lifted its profit guidance for its trading division on Friday, forecasting underlying profit to beat its $2.2bn (£1.7bn) to $3.2bn range.

The company said energy markets had improved, and that it was recovering from the market-driven production cuts initiated within its Australian coal portfolio in the first-half of last year.

It was also benefiting from recent soaring prices, putting it on course for a record year of trading. Its profit of $3.3bn last year was the highest ever.

In a brief update to the market, Glencore said its asset base performed in line with expectations and its full-year production guidance remains unchanged.

Glencore revealed that its own sourced copper production totalled 895,500 tonnes, down 4% compared to the same period a year ago, while forecast production for the metal this year stood at 1.22 million tonnes.

Read more: Gas crisis: 250,000 customers hit as two more suppliers collapse

Copper production slipped 4% to 895,500 tonnes in comparison with 2020 because of lower grades, while nickel production sank 13%, and coal production tumbled 9%. Coal prices have surged to all-time highs this year due to a squeeze in supply.

However, the production of ferrochrome surged 65% to 1,071,000 tonnes over the period, due to an increase in production following a national lockdown in South Africa.

On Friday, the company also confirmed that it had agreed to sell its Chemoil Terminals unit for $242m as it looks to get rid of smaller assets and simplify its business. The unit owns oil products storage terminals in California.

Shares were just 0.4% higher in London on Friday.

Global energy markets have suffered in recent weeks amid soaring prices and rising inflation, but commodities have surged due to the bounce back from the health crisis. The Bloomberg Commodity Spot Index hit a record high this month.

“Considering that extreme commodity price volatility can cause hedges to disconnect, this positive affirmation should, however, reassure the market,” analysts at RBC Capital Markets said in a note.

Watch: Glencore-backed CNG underpins deepening energy crisis as it seeks bids within days

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