Morning Bites (part 3)

🏦China is continuing to accumulate gold reserves, purchasing 23t (~6% of annualised physical gold demand in 2022) in July, the 9th consecutive month of additions, Bloomberg reports. Hence, PBoC gold holdings now stand at 2,137t, with ~188t added since November 2022. Of note, in annualised terms, the county’s November 2022 - July 2023 purchases accounted for ~5% of world physical gold demand in 2022. Overall, given adverse macroeconomic conditions globally, as well as miners’ rising cash costs and persistent inflationary pressures, we maintain our bullish view on gold performance

#gold
https://metals-wire.com/sector/Gold

Glencore 1H23 results - firmly below expectations

📝Glencore's 1H23 revenues underperformed both the consensus and us (by 16% and 19%, respectively), due to lower realised coal prices and proceeds from marketing. Meanwhile, EBITDA came in 18% below forecasts, also affected by lower Ni/Cu sales, as well as the ongoing costs pressure

📈Glencore anticipates cash costs to normalize. Specifically, in copper, they rose 2.7x YoY to USD 1.45/lb in 1H23, while the FY23 cost is expected at USD 1.32/lb (although that would still be +65% YoY)

📍The company reiterated its FY23 guidance: copper output is set to shrink ~2% YoY, while zinc and coal are to stay unchanged

💰The group has announced a dividend of USD 0.08/sh (~1.3% DY), as well as a new USD 1.2bn semi-annual buyback programme (~1.6% yield until February 2024)

📌At spot, we expect Glencore’s EBITDA to show a modest HoH improvement in 2H23, as the costs normalisation is to offset lower commodity prices

#GLEN #copper
https://metals-wire.com/company/GLEN_LN/

Barrick 2Q23 results - EBITDA meets consensus estimates

📝Barrick's 2Q23 revenues were below market estimates (-6% vs. the consensus and -3% vs. us). Meanwhile, EBITDA slightly beat forecasts (+1% vs. consensus, and +8% vs. us), mostly driven by lower expenses at major Carlin mine than we had expected

📉In 2Q23, despite the company's expectations of cash cost normalisation, AISC jumped 12% YoY to USD 1,355/oz (-2% QoQ). However, Barrick still sees total AISC at USD 1,170 - 1,250/oz (-1% YoY) in FY23

📈The gold miner reiterated its FY23 production guidance, which implies output growth of ~6% YoY

💰The BoD has declared a quarterly dividend of USD 0.10/sh., which offers a 0.6% DY — in line with the dividend policy

📌At spot, we expect Barrick's 3Q23 EBITDA to materially improve QoQ, amid the guided production ramp-up and cost normalisation

#GOLD #gold
https://metals-wire.com/company/GOLD_US/

Morning Bites (part 1)

📉Gold-backed ETFs saw outflows of 34t in July, down from the 56t net sales in June, according to the World Gold Council (WGC). Meanwhile, on the YTD basis, outflows stood at 84t. According to the WGC, last month's outflows were concentrated in Europe, which lost 18t in July (-87t YTD), while North American ETFs have sold 16t (+4t YTD). In our view, world ETF sales remain the foremost factor pressuring the yellow metal’s performance. However, we maintain our bullish view on gold, amid continuous inflationary pressures globally, as well as miners' rising cash costs

#ETF #gold  
https://metals-wire.com:3000/news-reports

Morning Bites

🪨 Indian coking coal imports surged 31% YoY to 5.38mnt in July, CoalMint reports. Meanwhile, Coal India (a large, state-run miner) has reported 13% YoY growth in its coking coal output, to 4.41mnt in July 2023. We note that, during the twelve months to end-July 2023, India’s coking coal imports were still 4% lower than in FY2021-22 (but +8% vs. FY2020-21). Despite the sustainable coal demand, the increasing domestic production (as well as forthcoming rainy season) might cool the growth of imports and weigh somewhat on the prices of the raw materials for making steel. To recap, India accounted for ~24% of global seaborne coking coal imports in 2022

#coal
https://metals-wire.com/sector/Coal

Antofagasta 1H23 results - EBITDA misses forecasts
  
📝 Antofagasta's 1H23 revenues were in line with the consensus, but slightly weaker than our expectations (-2%) due to lower realised Cu prices. The negative effect of this on EBITDA was amplified by stronger pressure on cash costs than we had forecast. EBITDA therefore came below both the consensus and us (-6% and -8%, respectively)
  
⛏The miner has lowered its FY23 copper production guidance to 640-670kt from the previous 670-710kt (-5%), due to water availability issues at its Los Pelambres asset
  
💰The company's BoD has recommended a dividend of USD 0.117/sh, which implies a DY of some 0.6% — in accordance with company practice
  
📌At spot, we expect Antofagasta's EBITDA to materially improve HoH, as production at its major Los Pelambres mine is to ramp-up through the 2H23, in our view
 
#ANTO #copper  
https://metals-wire.com/company/ANTO_LN/

Morning Bites (part 1)

🏗China’s excavator sales dropped 30% YoY in July (domestic + export), after the 24% YoY fall in June. The decline was slightly more dramatic than CME had estimated (-26% YoY). Specifically, domestic excavator sales — a key indicator of construction activity — were down 45% YoY, in line with June's dynamic. Continuously weak excavator sales indicate ongoing stagnation in China’s real estate segment, which might keep weighing on demand for industrial metals. To recap, China represents 52% of global steel consumption, as well as 55% and 58% of world Cu and Al demand, respectively

#steel  
https://metals-wire.com/sector/Steel

Morning Bites (part 2)

🇿🇦South Africa’s PGM mining output rose 11% YoY in June, reversing from the 12 consecutive months of YoY declines (ex. the +3% YoY in February 2023). Meanwhile, the country’s gold production jumped 29% YoY, vs. the revised 28% YoY growth in May. To recap, SA accounts for ~70% of global platinum, 38% of palladium supply and 3% of global gold production. Although the local PGM/gold output showed a sharp recovery, this could be a one-off, bolstered by the likely low comparison base, as the country's mining activity is still being affected by the ongoing energy crisis and logistical issues. Hence, we do not expect this to have a material impact on the sentiment on these metals

#PGMs #gold    
https://metals-wire.com:3000/news-reports

Newcrest 1H23 results - EBITDA beats consensus

📝Newcrest's CY 1H23 revenues were broadly in line with consensus, but slightly below us (+1% and -4%, respectively). Although EBITDA came significantly above the consensus, it was in line with our estimates

📍The miner has announced its FY24 guidance (ending June 2024), implying gold production broadly flat YoY at 2.0-2.3mnoz

⌛To recap, Newmont is to acquire 100% of the issued shares in Newcrest. NCM’s shareholders are to receive 0.4 Newmont shares for each Newcrest share and a special dividend of up to USD 1.10/share paid by Newcrest, which is already included in the NCM valuation. The transaction is expected to close in 4Q23

💰Meanwhile, the BoD has declared a dividend of USD 0.20/share, which implies a 1.2% DY and exceeds the minimum payout envisaged by the policy
   
📌At spot, we expect Newcrest's CY 2H23F EBITDA to show a moderate improvement HoH, as the company guides for some ramp-up in production

#NCM #gold
https://metals-wire.com/company/NCM_AU/

Week ahead data releases in M&M

As the reporting season draws to a close, only SQM (among major miners under our coverage) is scheduled to report earnings this week. We expect slightly stronger results than the consensus

#reporting_season 
https://metals-wire.com:3000/events

Morning Bites

🏦China’s aggregate financing declined 32% YoY in July to CNY 0.53tn, the lowest point since July 2014 (vs. -19% YoY in June), and missed the consensus of CNY 1.10tn. At the same time, traditional bank loans fell 49% YoY (+9% YoY in June), 57% below the consensus estimates. According to Trading Economics, although July is usually a weak month for financing activities, these dynamics underpin the slow economic recovery in China, with banks not in a rush to meet their lending targets in early 3Q23. In our view, this might keep weighing on domestic construction activity, and hence, China’s demand for industrial metals

#global  
https://metals-wire.com:3000/news-reports

🗞Today, China has published its industrial production data for July (see table above)

#statistics #China
https://metals-wire.com:3000/news-reports

Morning Bites (part 1)

🔗CISA mills' daily crude steel production during early August was 2.15mnt, a 0.8% increase from the previous ten days (also a 10.8% jump YoY). Meanwhile, local steel inventories grew 10.8% over the same period (-5.9% YoY). Although the crude steel output growth has followed July’s dynamics, we keep in mind Beijing’s intention not to exceed the 2022 production levels. Overall, new support measures for the domestic real estate segment is still the main potential trigger for steel demand growth, as China represents ~52% of global steel consumption

#steel
https://metals-wire.com/sector/Steel

Morning Bites (part 2)

💎India’s rough diamond net imports dropped 49% YoY in July, continuing the decline seen since December 2022 (except the 7% YoY growth in April). Meanwhile, India’s polished diamond net exports dropped 44% YoY in July (after the -33% YoY in June), while synthetic rough diamond net imports fell 16% YoY (vs. -48% YoY in June). The share of lab-grown net rough imports in natural diamond imports was 10% in July, slightly more than the 8% in the same month last year. The weak and still deteriorating demand from India’s midstream (~95% of world polished stones supply) underpins our cautious view on the global diamond market. To recap, GJEPC expects India's gem and jewellery exports to drop 10-15% YoY in 2023 (the YTD decline is already steeper, at 24% YoY)

#diamonds  
https://metals-wire.com/sector/Diamonds

Morning Bites

💎 De Beers has allowed sightholders to defer rough purchases at cycles 8-10, Rapaport reports, citing a message from the miner. Hence, sightholders can avoid buying parts of their allocations (25-50%) for >1ct diamonds until the end of 2023. Meanwhile, De Beers is also maintaining its buyback policy, which allows clients to sell 10-30% of their purchases back to the company. The decision was made amid sluggish consumer demand and high midstream stockpiles. This underpins our cautious view on the diamond sector, which remains stressed by adverse macroeconomic conditions globally

💍China’s jewellery and watch retail sales declined 4% YoY in July, following the 14% YoY drop in June. According to Rapaport, China’s post-lockdown recovery did not extend to diamonds. On our numbers, the country represents ~15% of the world's gem-set jewellery trade

#diamonds 
https://metals-wire.com/sector/Diamonds

SQM 2Q23 results – materially below forecasts

📝SQM's 2Q23 revenues came in weaker than the market had estimated (-10% vs. the consensus and -14% vs. us), mostly affected by lower realised prices. Hence, the EBITDA dynamics were also disappointing (-17% vs. consensus and -18% vs. us)

⛏According to the company, its FY23 lithium production is set to be 180-190kt (+18% YoY), meeting the forecasted >20% growth in global Li market demand

❗️Overall, at spot prices, we expect SQM’s 3Q23 EBITDA to show a single-digit improvement QoQ, amid the guided production increase in 2H23. However, the positive effect is likely to be limited by Li prices, which are currently ~17% lower than the 2Q23 average

#SQM #lithium
https://metals-wire.com:3000/company/SQM_US/