Morning Bites (part 2)

🇿🇦South Africa’s PGM mining output rose 3% YoY in August, vs. the -10% YoY in July, according to government data. Meanwhile, the country’s gold production inched up 1% YoY, vs. the 28% YoY growth in July. Although PGM/gold output recovered negligibly, South Africa's mining activity is still dampened by the country's ongoing energy crisis and logistical issues. Overall, we see the sentiment on the PGMs market as remaining heavily stressed by subdued demand from the auto sector. To recap, SA accounts for ~70% of global Pt, 38% of Pd supply and 3% of global gold production

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

Morning Bites (part 3)

💍 Chow Tai Fook’s 3Q23 LFL sales dropped 21% YoY in the gem-set, platinum and K-gold jewellery segment (vs. +1% YoY in 2Q23), the company has reported. Meanwhile, the sales were ~36% below pre-pandemic 2019 levels, while the slight increase in 2Q23 was mostly due to the low base effect (-30% vs. 2Q19), on our numbers. Particularly, sales in the gem-set segment in Mainland China were down 28% YoY (vs. -4% YoY in 2Q23), while HK and Macau sales fell 4% YoY, after the 17% YoY growth in the previous quarter. Overall, given weak data from the main gem-set jewellery trading hubs (the US and China, which jointly represent ~65% of the global polished stones demand) we maintain our cautious view on the diamond sector, that is still heavily stressed by the adverse macroeconomic conditions globally

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

Week ahead data releases in M&M

As the reporting season begins, we commence a series of posts devoted to the forthcoming data releases. This week, several major M&M names are due to release their 3Q23 financial results. Regarding Freeport and JSW Steel, our EBITDA forecasts are more conservative vs. the consensus

We also await for the official production data from China and the EU car sales statistics

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

Morning Bites (part 2)

🏦China’s aggregate financing rose 16% YoY in September to CNY 4.12tn (vs. +26% YoY in August) -- ahead of the CNY 3.80tn consensus estimate. Meanwhile, traditional bank loans declined 7% YoY (vs. +9% YoY in August), being 8% below the consensus. According to Trading Economics, the overall dynamics shifted to positive following the central bank's (PBoC) efforts to bolster economic growth (which is also indicated by China’s PMIs >50.0 in September). In our view, new economic stimulus, in the form of higher government spending, aimed at infrastructure investment, might add support to local construction activity, and hence, China’s demand for industrial metals in late 2023-2024

To recap, China represents 52% of global steel consumption, as well as 55% and 58% of world copper and aluminium demand, respectively

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

Morning Bites (part 1)

🔗CISA mills' daily crude steel production during early October was 2.08mnt, a 0.8% growth from the previous ten days (but a 1.2% decline YoY). Meanwhile, local steel inventories grew 7.3% over the same period (+0.3% YoY). Although the output declined for the 3rd consecutive 10-day period, Chinese steel production on a YTD basis was still +2.7% YoY, per CISA data. Hence, considering Beijing’s intention to cap national steel output below the 2022 levels, we might see tighter supply later in 4Q23. In our view, more production restrictions materialising would be supportive for steel prices. To recap, China represents ~57% of global steel output

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

Morning Bites (part 2)

🏗China’s excavator sales dropped 33% YoY in September (domestic + export), after the 28% YoY fall in August. The decline was more dramatic than the preliminary estimates of -25% YoY, mostly amid lower export sales. Furthermore, CCMA sales expectations of -14% YoY in FY23 look overly bullish to us, given the fall of 26% in 9mo23. Specifically, domestic excavator sales — a key indicator of construction activity — were down 40% YoY in September (vs. -38% YoY in August). Hence, continuously weak sales dynamics underpin the stagnation in China’s property sector, which might further weigh on demand for industrial metals. To recap, China accounts for 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

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

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

Morning Bites (part 2)

💎India’s rough diamond net imports dropped 33% YoY in September, marking the 10th consecutive month of declines since December 2022 (ex. April, which showed some 7% YoY growth). Meanwhile, India’s polished diamond net exports dropped 25% YoY, after the 38% YoY fall in August. Synthetic rough diamond net imports dropped 21% YoY, after the one-off 16% YoY increase in August. As such, the share of lab-grown net rough imports in diamond trading was 8% in September, vs. 9% in August. We also remind readers that India (~95% of world polished stones supply) decided to halt rough imports for 2 months since mid-October, which underpins our cautious view on the global diamond sector in the short-term, along with weak market data

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

Morning Bites (part 3)

💎Over 40% of diamond polishing factories in India's Botad have shut down, while another 20% are set to halt operations by the end-October, IDEX reports, citing the Botad Diamond Association. On our numbers, the city accounts for 3-5% of global polished stones supply. The decision comes amid poor demand for diamonds globally, which underpins our cautious view on the sector, at least in the short term. However,  the recent supply discipline measures taken by De Beers and Alrosa (which jointly accounted for ~60% of the world's rough diamonds output in 2022) could help to normalise midstream inventories in the medium term, we believe

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

Morning Bites

💍China’s jewellery and watch retail sales jumped 30% YoY in September, accelerating from the +5% YoY in August. However, this was mostly due to the low base effect (the results were 11% below the 2021 levels). According to Rapaport, Chinese sales remain low after the sluggish Golden Week holiday (1-7 October), while suppliers are hoping for sales to recover somewhat by the Chinese New Year (10 February). This underpins our cautious view on the diamond sector globally, given the weak demand in the key trading hubs: the US and China account for 53% and 12% of global gem-set jewellery trade, respectively

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

Alcoa 3Q23 results - another weak quarter for earnings
  
✏️Alcoa's 3Q23 revenues came roughly in line with the consensus and us, with the adjusted EBITDA margin also broadly matching our and consensus estimates, staying at a subdued 3%. Overall, this was due to the still high costs pressures, as well as low aluminium prices. We note that adj. EBITDA was also ~85% lower than the av. 2017-22 level
 
⛏The producer reiterated its FY23 sales guidance: alumina and aluminium shipments are set to remain relatively unchanged YoY at 12.7-12.9mnt, and 2.5-2.6mnt, respectively

📊 According to Alcoa CEO William F. Oplinger, in 3Q23, the company saw some positive improvements in raw materials and production costs, but financials were affected by lower realised prices
   
❗️At spot, we expect Alcoa’s 4Q23F EBITDA to show material growth QoQ, driven by potentially higher proceeds from its Bauxite and Alumina business
   
#AA #Aluminium    
https://metals-wire.com/company/AA_US

Freeport McMoran 3Q23 results - slightly ahead of consensus
   
✏️Freeport's 3Q23 revenues were 6% above consensus estimates and 3% higher than us. As a result, adjusted EBITDA also exceeded expectations (+5% vs. the consensus and +8% vs. us), bolstered by costs normalising earlier than we had expected at the company's Indonesian assets

⛏The miner slightly improved its FY23 outlook, though copper and gold sales are both expected to shrink ~4% YoY and stay at 1.84mnt and 1.74mnoz, respectively. Regarding the unit cash costs, the figure for 2023 was revised up to $1.63/t (+5% vs. the previous indication)

💰The BoD has declared a 3Q cash dividend of $0.15/sh., which implies some 0.4% quarterly yield
   
❗️At spot, we expect Freeport’s 4Q23F EBITDA to be moderately weaker QoQ, mainly due to lower copper prices (-6% vs. 3Q23 avg.)

#FCX #copper
https://metals-wire.com/company/FCX_US

Morning Bites

💍Luk Fook’s 3Q23 LFL sales jumped 36% YoY in the gem-set, platinum and K-gold jewellery segment (vs. +54% YoY in 2Q23). Specifically, sales in the gem-set segment in Mainland China were down 20% YoY. Meanwhile, HK and Macau sales surged 52% YoY (>20% drop vs. 2019, on our numbers), after the border with Mainland China was reopened in early-2023 (in August, 4.1mn visitors arrived in HK vs. <60k a year ago)

Despite jewellery sales showing a YoY recovery, they remain well below the 2019 levels (-17% vs 3Q19). Hence, we keep our cautious outlook on the diamond sector globally, given the weak demand in the key downstream regions (the US and China account for 53% and 12% of the global gem-set jewellery trade, respectively)

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

Week ahead data releases in M&M

As the reporting season continues, several M&M names are scheduled to publish their earnings. For the major miners publishing this week (SCCO, Teck and First Quantum), our EBITDA forecasts are slightly below the consensus, while for the rest we are more bullish

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

Morning Bites (part 1)

🚘EU + UK passenger car registrations grew 12% YoY in September, after the 20% YoY increase in August, meeting our preliminary estimates. However, the sales figures were still 9% below the pre-COVID, 2019 level (-16% in August). To recap, the EU+UK accounted for some 20% and 32% of global autocatalyst Pd and Pt demand, respectively, in 2022. Therefore, given the continuously weak PMIs data in the region and the substantial inflationary pressures, we reiterate our cautious view on European car sales. This factor is likely to weigh further on PGM consumption, at least in the short term, we believe

#cars
https://metals-wire.com:3000/sector/PGM

Morning Bites (part 2)

🏭Global primary aluminium output rose 3% YoY in September, vs. the 2% YoY growth in August, the International Aluminium Institute reports. Specifically, China’s production increased 4% YoY, while ex-China production inched up 1% YoY (also +1% vs. 2019). According to Reuters, China (59% of the global Al output in 2022) is experiencing a production surge (+0.8mnt in 9mo23) amid improved power supply in previously drought-hit parts of the country's hydro-electric system. Overall, the dynamics are in line with previous estimates of the maximum resumption of 1.3mnt of China’s halted Al capacity (~2% of global 2022 output). Meanwhile, further production growth seems unlikely to us, given that >50% of global Al suppliers are currently breakeven or loss-making at spot, on our numbers, amid low Al prices

#aluminium
https://metals-wire.com:3000/sector/Aluminium