Berenberg downgrades Anglo American on poor operational delivery, economic headwinds

Analysts at Berenberg downgraded their recommendation for shares of Anglo American, citing "poor operational delivery" and macroeconomic headwinds.

That was expected to weigh on the share price until one or both of those factors improved.

On the operational side of things, they highlighted the problems with metallurgical coal, production for which was running at a third of annualised guidance at the half year point chiefly due to "lacklustre" performance at its Moranbah North mine in Australia due to recent safety issues.

The result was that they now saw downside risks to Anglo's full-year guidance at Moranbah.

Regarding the economic outlook, the slowdown in the global economy, due to elevated inflation, coupled with the deterioration of relations between the West on the one hand and Russia and China on the other, were expected to create "a number of material headwinds" for the mining sector.

They conceded that sentiment might be buoyed in the near-term by the announcement of Chinese stimulus around the data of the next party congress on 16 October, but they expected the recessionary narrative to outweigh the positive impact from stimulus.

Hence their recommendation to sell into strength.

The analysts also trimmed their target price on the shares from 3,200p to 3,000p.

Anglo American was scheduled to report on third quarter production on 27 October.