Morning Bites (part 1)

🏗China’s preliminary excavator sales were down 34% YoY in November (domestic + export), following the 29% YoY decline in October, according to CME estimates. Specifically, domestic sales (a key indicator of construction activity) are set to be 47% weaker YoY, after the 43% YoY drop in October. In our view, this trend, if it persists, would indicate that there is no recovery in China's stressed real estate sector, despite Beijing's efforts to bolster the sector. However, the 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) in 2024

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

Morning Bites (part 2)

📌 The Platinum market is set to be in a deficit in 2023-24, the World Platinum Investment Council (WPIC) reports. Per the WPIC, demand is to grow ~26% YoY in FY23 amid automotive and industrial demand recovery, as well as a surge in investment demand (16% of total demand in 2022). Meantime, supply is set to drop ~3% YoY in 2023, mostly due to lower secondary supplies. We also note two recently announced job cut programmes in SA (~70% of global platinum supply) amid the protracted decline in PGM prices (-13% YTD for platinum) given weak automotive demand, which might also weigh on supply in 2024

However, WPIC expectations are far more bullish than ours: the WPIC expects the market to be in deficits of 1,071koz and 353koz in 2023 and 2024 respectively, while our estimates imply only a ~140koz deficit in 2023 and a ~60koz surplus in 2024

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

Morning Bites

🥉Global copper production rose 1.1% YoY in 9mo23, the International Copper Study Group reports. Specifically, in September, output was roughly flat (+0.4% YoY) vs. the revised +3.0% YoY in August. Over the period, new start-ups and expansions were mainly offset by operational issues in Chile (-1.9% YoY in 9mo23, as per the ICSG) in addition to the drought and lower ore grades in the country. Meanwhile, Indonesian output was down 9% YoY in 9mo23 due to operational constraints at the Grasberg mine. At the same time, output in the DRC grew ~7.0% YoY in 9mo23, mainly on the back of the Kamoa mine expanding, while Peruvian mine production increased 16% YoY in 9mo23, despite actions by the local communities

#copper
https://metals-wire.com/sector/Copper

Morning Bites (part 1)

🔗ArcelorMittal has halted operations in South Africa, amid failing power and transport systems as well as a skilled labour deficit, Bloomberg reports. The steelmaker’s facilities are to be switched into maintenance mode, while 3,500 workers (~40% of its total SA headcount) are to be laid off. Of note, this continues the series of recently announced job cuts, which might indicate a worsening economic environment in the country. Arcelor has also closed its facilities in Bosnia amid weakening demand

ArcelorMittal South Africa is the largest steel producer in the region, with 2.5mnt (implies ~30% capacity utilisation rate) produced in 2022 (0.1% of global steel output in 2022, but 17% of total African production in 2022)

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

Morning Bites (part 2)

💎Angola has officially opened Luaxe, one of the world's largest diamond deposits, Reuters reports. The initial plan implied launch in 2020, but it was postponed due to Covid-19. The project has an estimated resource base of 628mnct with an average grade of 0.95ct/t and a ~60-year lifetime. During the pilot stage alone, Luaxe mined 5mnct of diamonds. Although the production plan wasn’t disclosed, we estimate that with an initial annual capacity of ~4mnct and the option to increase to ~11.5mnct, the deposit might account for 3-9% of global mined diamonds output in 2022. In our view, this large project was launched at a difficult time for the diamond market, driven by overstocking issues, falling prices and various supply constraints, which might result in protracted mine ramp-up, we believe

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

Morning Bites (part 1)

📉Russia’s gold output dropped 26.7% YoY in October, accelerating from the 9.2% YoY drop in September, per Rosstat data. In our view, this sharp decline was mostly driven by the high base effect (output surged 19.1% YoY in October 2022). There have now been four consecutive months of YoY declines, pushing Russia’s 10mo23 gold output 2.2% lower YoY. Overall, we maintain our positive outlook on gold performance, amid strong physical demand and rising cash costs for gold miners, as well as the unfavourable macroeconomic conditions globally. Of note, Russia accounts for ~9% of the world's mined gold output

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

Morning Bites (part 2)

📈China’s output of aluminium products rose 5% YoY to 5.5mnt in October, after the 2% YoY growth in September. In our view, the positive impact of persistently strong demand for aluminium in China (~58% of global primary Al consumption in 2022) might be at least partially offset by the increase in global aluminium output, which is growing at a comparable rate

🥉Chinese output of copper products inched up 1% YoY in October to 2.0mnt, reversing from the -9% YoY in September. Domestic power generation equipment output showed similar dynamics (vs. +17% in September). We remind our readers that China remains the world's major copper consumer, representing ~55% of global Cu demand

#aluminium #copper 
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Morning Bites (part 1)

⛏PGM miner Sibanye-Stillwater is to cut jobs at its Americas operations, Reuters reports. Overall, this continues a series of recent job cuts in favour of cost reduction among major PGM miners. Sibanye has said that although its US operations have recovered from the stoppage after the recent accident, cost pressures remained elevated. As a result, the company is to release 100 employees. It also plans to shed 187 contract workers (~70% of its current non-essential mining contract workforce). The company noted that the restructuring would not significantly affect 2E output. Overall, the series of job cuts among PGM miners indicates that the supply side has started to react to consistently weak prices: palladium has fallen >40% YTD, while the platinum price has declined >10% YTD from already subdued levels. Meanwhile, adverse economic conditions are pressuring automotive demand for PGMs. We therefore believe that the supply cuts might continue

#PGMs
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Morning Bites (part 2)
 
💍China’s jewellery and watch retail sales surged 45% YoY in October, accelerating from the 30% YoY rise in September. However, this was mostly due to the low base effect (October 2022 was the second weakest month last year, while the October 2023 results were 2% below the 2021 levels). Overall, given the persistently high inflation and weak sentiment on the major consumer markets (the US and China account for 53% and 12% of global gem-set jewellery trade, respectively), we keep our cautious view on the diamond sector
 
#diamonds
https://metals-wire.com/sector/Diamonds

Morning Bites (part 1)

🌏Global manufacturing PMIs were broadly weak in November. The Eurozone Markit Manufacturing PMI was 44.2 (vs. consensus estimates of 43.8), a slight increase from October's 43.1. The US ISM manufacturing PMI was unchanged MoM at 46.7

🇨🇳The official NBS Manufacturing PMI in China slightly fell to 49.4 in November (49.5 in October), below 49.7 estimates. However, the Caixin China Manufacturing PMI recovered to 50.7 in November (from 49.5), beating the consensus estimates of 49.8

❗️Overall global PMIs remained below 50.0, which might weigh further on the manufacturing sector. However, Beijing's efforts to bolster the local economy via the property sector might support the country’s construction activity and, therefore, the demand for industrial metals (e.g. steel, copper and aluminium) in 2024

#PMIs 
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Morning Bites (part 2)

🇨🇱Chile’s copper production fell 4% YoY in October, reversing from the 4% YoY increase in September, remaining near historical lows. Meanwhile, in 10mo23, output was down 2% YoY. We note that the persistent drought and unfavourable structural effects (e.g. grade depletion) continue to pressure Chile's mining industry. Chile represents ~27% of the world’s mined copper output, and if the adverse factors in its mining sector persist, in addition to the ongoing supply disruptions at a major mine in Panama, that could at least partially offset the supply additions from new Cu projects (e.g. QB2 and Udokan), which are due to ramp up in the near future

#copper
https://metals-wire.com:3000/sector/Copper

Morning Bites (part 3)

💍Hong Kong jewellery and watch sales rose 27% YoY in October, following the 28% YoY increase in September, according to the government data. To recap, the reopening of HK’s border with the Mainland became a major trigger for the trade recovery in early 2023 (and in October, 3.5mn visitors arrived in HK vs. 81k a year ago). Sales were also 30% stronger than the pre-Covid 2019 levels. Despite some recovery in HK, sentiment remains subdued in the key US and China diamond markets (~53% and ~12% of the world's gem-set jewellery trade, respectively). Hence, given the adverse economic conditions globally, as well as the supply discipline measures recently taken by major miners and the midstream, we reiterate our cautious view on the diamond sector, at least in the short term

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

Morning Bites (part 1)

🏦 Global central banks purchased net 43t of gold in October, vs. the revised +72t in September, marking the fifth consecutive increase in holdings, the World Gold Council (WGC) reports. As has become traditional in recent months, the main contributors were China and Turkey (+23t and +19t, respectively), as well as Poland (+6t). The only material net seller was Uzbekistan (-11t). We reiterate our view that persistently strong gold demand from global CBs, gold miners’ rising cash costs and potentially lower US Fed funds rate in 1H24 might support the precious metal's performance

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

Morning Bites (part 2)

💍Signet has reported another 11.8% YoY drop in same-store sales in 3Q23 (Aug-Oct), in line with the 2Q23 dynamics. Same-store sales in North America shrank 12.3% YoY (-12.2% YoY in the previous quarter); proceeds from the international segment were also down 4.6% YoY (-8.4% YoY in 2Q23). According to Signet CEO Virginia Drosos, Black Friday underpinned a sequential improvement in engagement trends (~50% of Signet's revenues comes from bridal), though 4Q23 sales are expected to be 3-10% down YoY. The retailer has also maintained its FY24 sales outlook, anticipating a 7-9% decline YoY

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

Morning Bites (part 3)

💎Rapaport's rough diamond price index showed a slight recovery in November. In particular, the 1ct index rose 0.8% last month, while the smaller 0.3ct and 0.5ct categories saw increases of 0.3% and 1.2%, respectively. This marked the first positive index dynamics since 1H22, although prices remain at subdued levels (up to -27% YTD, per the Rapaport data). According to the agency, US pre-holiday purchases added some optimism to the market, though buyers’ preferences currently tend to low-budget items. Overall, looming improvements in consumer sentiment (the US accounts for 53% of the global gem-set jewellery trade) might provide some support for the stressed diamond market, we believe

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

🗞Today, China published its preliminary import/export statistics for November (see table above)

#statistics #China
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