Morning Bites
📉China’s aluminium products output fell 1% YoY to 5.28mnt in July, vs. the +10% YoY in June. This was the first decline since June 2022 (ex. the -4% YoY in December 2022). As China accounted for ~58% of world primary Al demand in 2022, the slowdown in consumption, were it to persist, could be an unfavourable factor for the metal's price. In addition, China might relaunch some of its smelters (>2% of world 2022 Al supply), once local electricity curbs are eased
🥉Chinese output of copper products was roughly flat YoY in July at 1.88mnt, after the +5% YoY in June. The figure might have been partially supported by the 50% YoY surge in the output of domestic power generation equipment (vs. +53% YoY in June). To recap, China represents ~55% of global Cu consumption
#aluminium #copper
https://metals-wire.com:3000/news-reports
📉China’s aluminium products output fell 1% YoY to 5.28mnt in July, vs. the +10% YoY in June. This was the first decline since June 2022 (ex. the -4% YoY in December 2022). As China accounted for ~58% of world primary Al demand in 2022, the slowdown in consumption, were it to persist, could be an unfavourable factor for the metal's price. In addition, China might relaunch some of its smelters (>2% of world 2022 Al supply), once local electricity curbs are eased
🥉Chinese output of copper products was roughly flat YoY in July at 1.88mnt, after the +5% YoY in June. The figure might have been partially supported by the 50% YoY surge in the output of domestic power generation equipment (vs. +53% YoY in June). To recap, China represents ~55% of global Cu consumption
#aluminium #copper
https://metals-wire.com:3000/news-reports
Week ahead data releases in M&M
Several companies are due to report their 2Q23/1H23 financials this week. Regarding the major miners (BHP and South32), our EBITDA forecasts are more upbeat than the consensus estimates
#reporting_season
https://metals-wire.com:3000/events
Several companies are due to report their 2Q23/1H23 financials this week. Regarding the major miners (BHP and South32), our EBITDA forecasts are more upbeat than the consensus estimates
#reporting_season
https://metals-wire.com:3000/events
Morning Bites
🔗China’s steel mills are set to lower production in 2H23, SteelOrbis reports, citing market sources. For instance, producers in the Jiangsu (~11% of local steel output) and Shandong provinces (~8%) might cut utilisation rates by 20-30% and 10-15%, respectively, vs. 1H23. The city of Tangshan (13% of domestic steel supply) has also recently tightened production controls. Overall, these measures are likely to help China to keep steel production below the 2022 level: in 7mo23 it was still +3% YoY. We remind readers that the country accounts for ~57% of global crude steel supply
#steel
https://metals-wire.com/sector/Steel
🔗China’s steel mills are set to lower production in 2H23, SteelOrbis reports, citing market sources. For instance, producers in the Jiangsu (~11% of local steel output) and Shandong provinces (~8%) might cut utilisation rates by 20-30% and 10-15%, respectively, vs. 1H23. The city of Tangshan (13% of domestic steel supply) has also recently tightened production controls. Overall, these measures are likely to help China to keep steel production below the 2022 level: in 7mo23 it was still +3% YoY. We remind readers that the country accounts for ~57% of global crude steel supply
#steel
https://metals-wire.com/sector/Steel
Morning Bites
🏭Global primary aluminium output was roughly flat YoY in July, vs. the 1% YoY increase in June, the International Aluminium Institute reports. Meanwhile, China’s production inched down 1% YoY, while staying 13% above the pre-Covid 2019 level. Ex-China production grew 1% YoY (also +1% vs. 2019). It is worth noting that China might relaunch its previously suspended smelters, as well as commission new capacities in FY23 (together representing ~6% of global Al supply) once local electricity curbs are eased. However, this outlook seems overly bullish to us, while a Reuters source anticipates a maximum resumption of 1.3mnt of China’s halted Al capacity (~2% of global 2022 output)
#aluminium
https://metals-wire.com:3000/sector/Aluminium
🏭Global primary aluminium output was roughly flat YoY in July, vs. the 1% YoY increase in June, the International Aluminium Institute reports. Meanwhile, China’s production inched down 1% YoY, while staying 13% above the pre-Covid 2019 level. Ex-China production grew 1% YoY (also +1% vs. 2019). It is worth noting that China might relaunch its previously suspended smelters, as well as commission new capacities in FY23 (together representing ~6% of global Al supply) once local electricity curbs are eased. However, this outlook seems overly bullish to us, while a Reuters source anticipates a maximum resumption of 1.3mnt of China’s halted Al capacity (~2% of global 2022 output)
#aluminium
https://metals-wire.com:3000/sector/Aluminium
BHP 1H23 results - EBITDA underperforms again
📝BHP's CY 1H23 revenues broadly met market expectations (-3% vs. the consensus and -1% vs. us). However, EBITDA was below forecasts (-5% vs. consensus and -9% vs. us), affected by higher inflationary pressure (mostly in iron ore and coal segments) than we had anticipated
⛏According to BHP’s guidance, iron ore production is to grow ~1% YoY in FY24, while copper output is to gain up to 11% over the period
🛒The miner expects its FY24 copper (Escondida mine) cash costs to jump up to 20% YoY to USD 1.4-1.7/lb. Simultaneously, the figure for iron ore segment might stand at USD 17.4-18.9/t (vs. USD 17.8/t in FY23)
💰The BoD has declared a final dividend of USD 0.80/sh., implying a DY of some 2.9%
📌On our numbers, at spot, BHP's CY 2H23F EBITDA will decline in mid-single digits HoH, stressed by lower prices among the whole commodity basket
#BHP #iron_ore
https://metals-wire.com/company/BHP_AU/
📝BHP's CY 1H23 revenues broadly met market expectations (-3% vs. the consensus and -1% vs. us). However, EBITDA was below forecasts (-5% vs. consensus and -9% vs. us), affected by higher inflationary pressure (mostly in iron ore and coal segments) than we had anticipated
⛏According to BHP’s guidance, iron ore production is to grow ~1% YoY in FY24, while copper output is to gain up to 11% over the period
🛒The miner expects its FY24 copper (Escondida mine) cash costs to jump up to 20% YoY to USD 1.4-1.7/lb. Simultaneously, the figure for iron ore segment might stand at USD 17.4-18.9/t (vs. USD 17.8/t in FY23)
💰The BoD has declared a final dividend of USD 0.80/sh., implying a DY of some 2.9%
📌On our numbers, at spot, BHP's CY 2H23F EBITDA will decline in mid-single digits HoH, stressed by lower prices among the whole commodity basket
#BHP #iron_ore
https://metals-wire.com/company/BHP_AU/
Morning Bites (part 1)
🔗Global crude steel output rose 7% YoY in July to 159mnt, after being unchanged YoY in June, according to the World Steel Association. Meanwhile, China’s production jumped 12% YoY (vs. the flat dynamics seen in June), while ex-China steel output rose 1% YoY. Specifically, EU supply dropped 7% YoY (vs. -11% YoY in June), following the local energy crisis. US steel production inched up 1% YoY, while Russia’s steel output rose 6% YoY in July, after the 4% YoY increase in June. We note that China’s mills in the key steel making provinces (such as Hebei, Jiangsu and Shandong) might lower output in 2H23 in order to keep national steel production below the 2022 level: in 7mo23 it was still +3% YoY. To recap, the country represents ~57% of world crude steel supply
#steel
https://metals-wire.com:3000/sector/Steel
🔗Global crude steel output rose 7% YoY in July to 159mnt, after being unchanged YoY in June, according to the World Steel Association. Meanwhile, China’s production jumped 12% YoY (vs. the flat dynamics seen in June), while ex-China steel output rose 1% YoY. Specifically, EU supply dropped 7% YoY (vs. -11% YoY in June), following the local energy crisis. US steel production inched up 1% YoY, while Russia’s steel output rose 6% YoY in July, after the 4% YoY increase in June. We note that China’s mills in the key steel making provinces (such as Hebei, Jiangsu and Shandong) might lower output in 2H23 in order to keep national steel production below the 2022 level: in 7mo23 it was still +3% YoY. To recap, the country represents ~57% of world crude steel supply
#steel
https://metals-wire.com:3000/sector/Steel
Morning Bites (part 2)
☢️ Sweden is likely to lift the ban on uranium mining, The Times reports. According to the country’s Climate Minister, Romina Pourmokhtari, a majority within the Swedish Parliament supports the decision. Sweden (~2% of global nuclear generation in 2022) has recently announced plans to build at least ten new nuclear reactors by 2045 (in addition to the six reactors currently operating), as the demand for electricity might double in the coming decades. Overall, we do not expect any material volumes from Sweden to come into the market in the medium term: the country accounts for only 0.2% of global uranium resources, per SGU. At the same time, the growing interest in nuclear power might add a positive note to the sentiment on uranium in the long term, we believe
#uranium
https://metals-wire.com/sector/Uranium
☢️ Sweden is likely to lift the ban on uranium mining, The Times reports. According to the country’s Climate Minister, Romina Pourmokhtari, a majority within the Swedish Parliament supports the decision. Sweden (~2% of global nuclear generation in 2022) has recently announced plans to build at least ten new nuclear reactors by 2045 (in addition to the six reactors currently operating), as the demand for electricity might double in the coming decades. Overall, we do not expect any material volumes from Sweden to come into the market in the medium term: the country accounts for only 0.2% of global uranium resources, per SGU. At the same time, the growing interest in nuclear power might add a positive note to the sentiment on uranium in the long term, we believe
#uranium
https://metals-wire.com/sector/Uranium
Morning Bites (part 1)
🔗CISA mills' daily crude steel production during mid-August was 2.22mnt, a 2.9% increase from the previous ten days (also an 11.0% jump YoY). Meanwhile, local steel inventories grew 3.6% over the same period (-4.0% YoY). Although production is still growing YoY, Chinese mills in the top steel making provinces (such as Hebei, Jiangsu and Shandong) might lower their utilisation rates in 2H23, in order to keep output below the 2022 level: in 7mo23 it was still +3% YoY. To recap, China represents ~57% of global steel supply
#steel
https://metals-wire.com/sector/Steel
🔗CISA mills' daily crude steel production during mid-August was 2.22mnt, a 2.9% increase from the previous ten days (also an 11.0% jump YoY). Meanwhile, local steel inventories grew 3.6% over the same period (-4.0% YoY). Although production is still growing YoY, Chinese mills in the top steel making provinces (such as Hebei, Jiangsu and Shandong) might lower their utilisation rates in 2H23, in order to keep output below the 2022 level: in 7mo23 it was still +3% YoY. To recap, China represents ~57% of global steel supply
#steel
https://metals-wire.com/sector/Steel
Morning Bites (part 2)
📉Russia’s gold output dropped 12.3% YoY in July, reversing from the 9.5% YoY growth in June, per Rosstat data. Despite some slowdown in production during July, Russia’s gold output was still +5.5% YoY in 7mo23. Overall, we maintain our positive outlook on the precious metal, amid strong physical gold demand and the rising cash costs of gold miners, as well as unfavorable macroeconomic conditions globally. Russia accounts for ~9% of the world's mined gold output
#gold
https://metals-wire.com/sector/Gold
📉Russia’s gold output dropped 12.3% YoY in July, reversing from the 9.5% YoY growth in June, per Rosstat data. Despite some slowdown in production during July, Russia’s gold output was still +5.5% YoY in 7mo23. Overall, we maintain our positive outlook on the precious metal, amid strong physical gold demand and the rising cash costs of gold miners, as well as unfavorable macroeconomic conditions globally. Russia accounts for ~9% of the world's mined gold output
#gold
https://metals-wire.com/sector/Gold
❤1👍1
Morning Bites
⚠️Another fatal accident at a coal mine in China threatens output growth, Bloomberg reports. On Monday, a gas explosion occurred at a mine in Shaanxi (one of the top three coal mining provinces in China), marking the worst industry accident since February, when 53 workers were buried after a landslide. As with that incident, the news from Shaanxi might trigger nationwide safety checks and add risks to domestic coal output - especially taking into account declining coal quality and frequent emergencies, per Bloomberg. Following the accident, the China Coal Transport and Distribution Association has cut an annual production forecast 2% to 4,600mnt. To recap, China boosted its coal production 10% YoY in 2020, and we believe that safety violations might have come along the way
#coal
https://metals-wire.com/sector/Coal
⚠️Another fatal accident at a coal mine in China threatens output growth, Bloomberg reports. On Monday, a gas explosion occurred at a mine in Shaanxi (one of the top three coal mining provinces in China), marking the worst industry accident since February, when 53 workers were buried after a landslide. As with that incident, the news from Shaanxi might trigger nationwide safety checks and add risks to domestic coal output - especially taking into account declining coal quality and frequent emergencies, per Bloomberg. Following the accident, the China Coal Transport and Distribution Association has cut an annual production forecast 2% to 4,600mnt. To recap, China boosted its coal production 10% YoY in 2020, and we believe that safety violations might have come along the way
#coal
https://metals-wire.com/sector/Coal
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Week ahead data releases in M&M
Reporting season is drawing to a close, and several major miners are to publish their 2Q23/1H23 earnings this week. In particular, we are looking forward to the data from South African miners. Meantime, De Beers reports its Cycle 7 sales
#reporting_season
https://metals-wire.com:3000/events
Reporting season is drawing to a close, and several major miners are to publish their 2Q23/1H23 earnings this week. In particular, we are looking forward to the data from South African miners. Meantime, De Beers reports its Cycle 7 sales
#reporting_season
https://metals-wire.com:3000/events
Morning Bites
💎Petra Diamonds’ LFL rough prices at its August auction were down 4.3% vs. May. To recap, the June tender was postponed to August amid weak demand from India’s midstream. The decline was mostly driven by the 14% cut in 2-11ct diamonds’ LFL prices, while smaller stones saw only a 1-2% decrease. According to Petra CEO Richard Duffy, the rough diamond stocks of Indian cutters (~95% of global polished stones supply) have likely peaked and might decline in the near future, while the upcoming holiday period (Diwali, Thanksgiving, etc.) could well add a positive note to sales. However, we keep our cautious view on the diamond sector globally, given the adverse macroeconomic conditions and ongoing soft US sales (~50% of world gem-set jewellery trade)
#diamonds
https://metals-wire.com/sector/Diamonds
💎Petra Diamonds’ LFL rough prices at its August auction were down 4.3% vs. May. To recap, the June tender was postponed to August amid weak demand from India’s midstream. The decline was mostly driven by the 14% cut in 2-11ct diamonds’ LFL prices, while smaller stones saw only a 1-2% decrease. According to Petra CEO Richard Duffy, the rough diamond stocks of Indian cutters (~95% of global polished stones supply) have likely peaked and might decline in the near future, while the upcoming holiday period (Diwali, Thanksgiving, etc.) could well add a positive note to sales. However, we keep our cautious view on the diamond sector globally, given the adverse macroeconomic conditions and ongoing soft US sales (~50% of world gem-set jewellery trade)
#diamonds
https://metals-wire.com/sector/Diamonds
Fortescue 1H23 results - adjusted EBITDA in line with consensus
📝Fortescue's CY 1H23 revenues have met market expectations. Adjusted EBITDA (ex. a USD 1bn impairment expense from Iron Bridge) also came broadly in line (+2% vs. the consensus and 4% above us). We note that the impairment reflects inflationary pressures and the timing of the project ramp-up
⛏According to the miner’s guidance, FY24 iron ore shipments are seen at 192-197mnt (vs. 192mnt in FY23). At the same time, Pilbara's C1 cost might grow 3-8% YoY to USD 18-19/t
❗️Company CEO Fiona Hick is leaving just six months after taking on the role. In our view, the recent series of departures among top managers is unfavourable for sentiment
💰The BoD has announced a final dividend of AUD 1.00/share, implying a good DY of 4.8%
📌At spot, Fortesque’s CY 2H23 Adjusted EBITDA might grow in the mid-single digits HoH, bolstered by potentially higher sales volumes
#FMG #iron_ore
https://metals-wire.com/company/FMG_AU/
📝Fortescue's CY 1H23 revenues have met market expectations. Adjusted EBITDA (ex. a USD 1bn impairment expense from Iron Bridge) also came broadly in line (+2% vs. the consensus and 4% above us). We note that the impairment reflects inflationary pressures and the timing of the project ramp-up
⛏According to the miner’s guidance, FY24 iron ore shipments are seen at 192-197mnt (vs. 192mnt in FY23). At the same time, Pilbara's C1 cost might grow 3-8% YoY to USD 18-19/t
❗️Company CEO Fiona Hick is leaving just six months after taking on the role. In our view, the recent series of departures among top managers is unfavourable for sentiment
💰The BoD has announced a final dividend of AUD 1.00/share, implying a good DY of 4.8%
📌At spot, Fortesque’s CY 2H23 Adjusted EBITDA might grow in the mid-single digits HoH, bolstered by potentially higher sales volumes
#FMG #iron_ore
https://metals-wire.com/company/FMG_AU/
Morning Bites (part 1)
📌China’s new internal combustion engine car sales fell 12% YoY in July, following the 5% YoY decline in June. The sales remained below their pre-Covid level (-7% vs. July 2019), amid the growing appetite for EVs, which continue to weigh on PGM consumption. The Chinese auto sector represents some 26% and 17% of world autocatalyst Pd and Pt demand, respectively
📌New EV sales in China jumped 32% YoY in July, after the 35% YoY increase in June. Overall, the continuous growth in EV sales might further increase the consumption of the battery metals basket (e.g. cobalt, lithium and nickel), as China has accounted for ~50% of global EV demand in recent months
#cars #EV #nickel #lithium #cobalt
https://metals-wire.com:3000/news-reports
📌China’s new internal combustion engine car sales fell 12% YoY in July, following the 5% YoY decline in June. The sales remained below their pre-Covid level (-7% vs. July 2019), amid the growing appetite for EVs, which continue to weigh on PGM consumption. The Chinese auto sector represents some 26% and 17% of world autocatalyst Pd and Pt demand, respectively
📌New EV sales in China jumped 32% YoY in July, after the 35% YoY increase in June. Overall, the continuous growth in EV sales might further increase the consumption of the battery metals basket (e.g. cobalt, lithium and nickel), as China has accounted for ~50% of global EV demand in recent months
#cars #EV #nickel #lithium #cobalt
https://metals-wire.com:3000/news-reports
Morning Bites (part 2)
🇨🇱Chile’s mining costs surged 29% YoY in 1Q23, Bloomberg reports, citing the local government agency Cochilco. The reduction in ore quality and the higher wages, energy and refinery fees are driving up inflationary pressures in the Chilean mining sector (~27% of world mined copper supply). According to Cochilco, the dynamics would have been more severe if not for the higher proceeds from the sale of molybdenum and gold as by-products. Overall, the increase was even more dramatic than the rise in costs at major global Cu producers (+13% YoY in 1Q23, per our estimates), which is a potentially supportive factor for the sentiment on copper
#copper
https://metals-wire.com:3000/sector/Copper
🇨🇱Chile’s mining costs surged 29% YoY in 1Q23, Bloomberg reports, citing the local government agency Cochilco. The reduction in ore quality and the higher wages, energy and refinery fees are driving up inflationary pressures in the Chilean mining sector (~27% of world mined copper supply). According to Cochilco, the dynamics would have been more severe if not for the higher proceeds from the sale of molybdenum and gold as by-products. Overall, the increase was even more dramatic than the rise in costs at major global Cu producers (+13% YoY in 1Q23, per our estimates), which is a potentially supportive factor for the sentiment on copper
#copper
https://metals-wire.com:3000/sector/Copper
Morning Bites
💎De Beers has reported sales of USD 370mn at its 7th cycle in 2023, 36% below the historical average and 42% weaker YoY (vs. -36% YoY at the 6th cycle in 2023). According to De Beers CEO Al Cook, these dynamics reflect the adverse economic environment and soft diamond jewellery demand in key markets. In addition, De Beers has recently allowed sightholders to defer rough purchases (25-50% of their allocations) at cycles 8-10 amid sluggish consumer demand and high midstream stockpiles. Hence, we maintain our cautious view on the diamond sector, due to unfavourable macroeconomic conditions globally and weak US sales (50% of global diamond consumption)
#diamonds
https://metals-wire.com/sector/Diamonds
💎De Beers has reported sales of USD 370mn at its 7th cycle in 2023, 36% below the historical average and 42% weaker YoY (vs. -36% YoY at the 6th cycle in 2023). According to De Beers CEO Al Cook, these dynamics reflect the adverse economic environment and soft diamond jewellery demand in key markets. In addition, De Beers has recently allowed sightholders to defer rough purchases (25-50% of their allocations) at cycles 8-10 amid sluggish consumer demand and high midstream stockpiles. Hence, we maintain our cautious view on the diamond sector, due to unfavourable macroeconomic conditions globally and weak US sales (50% of global diamond consumption)
#diamonds
https://metals-wire.com/sector/Diamonds
Morning Bites
🚘EU + UK passenger car registrations rose 17% YoY in July, after the 19% YoY growth in June. The results were broadly in line with our estimates. The sales figures, however, were still 23% below the pre-COVID, 2019 level (-15% in June). Hence, we maintain our outlook that the adverse economic environment (indicated by consistently deteriorating PMIs in EU) are likely to further weigh on European car sales. This would in turn continue pressuring PGM consumption. The EU+UK accounted for some 20% and 32% of the world autocatalyst Pd and Pt demand, respectively, in 2022E.
#cars
https://metals-wire.com:3000/sector/PGM
🚘EU + UK passenger car registrations rose 17% YoY in July, after the 19% YoY growth in June. The results were broadly in line with our estimates. The sales figures, however, were still 23% below the pre-COVID, 2019 level (-15% in June). Hence, we maintain our outlook that the adverse economic environment (indicated by consistently deteriorating PMIs in EU) are likely to further weigh on European car sales. This would in turn continue pressuring PGM consumption. The EU+UK accounted for some 20% and 32% of the world autocatalyst Pd and Pt demand, respectively, in 2022E.
#cars
https://metals-wire.com:3000/sector/PGM
Morning Bites (part 1)
🏗China’s preliminary excavator sales were down 30% YoY in August (domestic + export), following the same 30% YoY decline in July, according to CME estimates. Specifically, domestic sales (a key indicator of construction activity) are set to be 42% weaker YoY, after the 49% YoY drop in July. Meanwhile, the negative dynamics are unlikely to improve in the near future, CME added. Were this trend to persist, it would indicate no recovery in China's stressed real estate sector, we believe. However, new potential stimulus for the local economy might add support to construction activity and bolster the demand for industrial metals (e.g. steel, copper and aluminium) later in 2H23
#steel
https://metals-wire.com/sector/Steel
🏗China’s preliminary excavator sales were down 30% YoY in August (domestic + export), following the same 30% YoY decline in July, according to CME estimates. Specifically, domestic sales (a key indicator of construction activity) are set to be 42% weaker YoY, after the 49% YoY drop in July. Meanwhile, the negative dynamics are unlikely to improve in the near future, CME added. Were this trend to persist, it would indicate no recovery in China's stressed real estate sector, we believe. However, new potential stimulus for the local economy might add support to construction activity and bolster the demand for industrial metals (e.g. steel, copper and aluminium) later in 2H23
#steel
https://metals-wire.com/sector/Steel