Christmas is coming so I’ll soon be watching Disney’s Frozen with the kids, which naturally makes me think of the Glencore (LSE: GLEN) share price.
The film’s signature tune, Queen Elsa’s Let It Go, popped into my head this morning while reviewing my position in the London-listed commodities giant.
I bought Glencore shares on 26 July 2023 for 472.6p and again on 1 September that year for 429.1p.
Given that the shares had traded as high as 585.5p that January, I thought I was getting in at a bargain price but alas it wasn’t to be.
This FTSE 100 stock is a real tear jerker
Glencore’s troubles can be summed up in a single word: China. The world’s second biggest economy was a voracious consumer of metals and minerals for years, swallowing 60% of global production. But the glory days of double-digit GDP growth are over as Premier Xi Jinping tightens his political grip and repeated stimulus packages underwhelm.
US President-elect Donald Trump’s plans to turn China into a “kingdom of isolation”, to quote the song, could test its limits.
And so the Glencore share price falls like snow. It’s down 18% over one year and 24.19% over two. At today’s 387.2p I’m personally down 15.22%. Actually, I’ve just refreshed my trading account, and it’s 15.97%.
So is it time to heed Queen Elsa’s sage advice and “Let it go, let it go, Turn away and slam the door”?
That goes about against my principles. I don’t buy FTSE 100 companies hoping to make a quick profit and move on. I look to hold them for years, ideally decades, to give their share prices and reinvested dividends time to compound and grow.
Glencore’s latest production guidance, published on 30 October, showed mixed performance for the first three quarters of the year, with copper, cobalt, zinc, and nickel output down but steelmaking coal significantly up.
A swirling storm of geopolitics
Production is one thing, price another. Commodity prices have been sliding since the energy shock and the latest World Bank estimates suggest little respite.
It forecasts that global commodity prices will slump to five-year lows in 2025, although that’s largely driven by oil. Industrial metal prices should be relatively stable for the next two years as tight supply offsets Chinese real estate woes. Also, the energy transition may drive demand for certain metals.
Glencore is still making a lot of money. First-half group adjusted EBITDA earnings plunged 33% to $6.3bn but the board could still cut net debt from $4.9bn to $3.6bn and find $1bn for shareholder returns.
It also floated the prospect of “potential top-up shareholder returns, above our base cash distribution, in February 2025”.
I’m not missing that, and I’m not letting Glencore go. At some point, its shares should recover, possibly at speed.“Here I stand and here I stay”, as Queen Elsa declared. I’m with her.
