Week ahead data releases in M&M
This week, Cleveland-Cliffs and Southern Copper are to report their 4Q23 earnings: our EBITDA forecasts for both names are in the low-single digits above the consensus estimates. Meanwhile, we also await De Beers's sales results at its 1st Cycle in 2024. Rapaport sources expect rather limited demand at the sight, with sales of USD ~300mn (50% less than the historical average)
#reporting_season
https://metals-wire.com/events
This week, Cleveland-Cliffs and Southern Copper are to report their 4Q23 earnings: our EBITDA forecasts for both names are in the low-single digits above the consensus estimates. Meanwhile, we also await De Beers's sales results at its 1st Cycle in 2024. Rapaport sources expect rather limited demand at the sight, with sales of USD ~300mn (50% less than the historical average)
#reporting_season
https://metals-wire.com/events
Morning Bites
🏗China’s preliminary excavator sales numbers for January showed a 7% YoY increase (domestic + export), vs. the 1% YoY decline in December, per CME estimates. The positive dynamics, however, were mostly due to the low base effect (the figure was 43% below the January 2021 level). Meanwhile, domestic excavator sales are to grow 66% YoY from the low base (still -64% vs. January 2021). Hence, continuously weak domestic sales suggest ongoing stagnation in the Chinese real estate sector. At the same time, the new economic support measures recently announced by Beijing might bolster domestic construction activity and thus lift demand for industrial metals in 2024, we believe
We also remind readers that China accounts for 52% of global steel consumption, and for 55% and 58% of world Cu and Al demand, respectively
#steel
https://metals-wire.com/sector/Steel
🏗China’s preliminary excavator sales numbers for January showed a 7% YoY increase (domestic + export), vs. the 1% YoY decline in December, per CME estimates. The positive dynamics, however, were mostly due to the low base effect (the figure was 43% below the January 2021 level). Meanwhile, domestic excavator sales are to grow 66% YoY from the low base (still -64% vs. January 2021). Hence, continuously weak domestic sales suggest ongoing stagnation in the Chinese real estate sector. At the same time, the new economic support measures recently announced by Beijing might bolster domestic construction activity and thus lift demand for industrial metals in 2024, we believe
We also remind readers that China accounts for 52% of global steel consumption, and for 55% and 58% of world Cu and Al demand, respectively
#steel
https://metals-wire.com/sector/Steel
Morning Bites
📈China’s output of aluminium products rose 6% YoY to 5.9mnt in December, accelerating from the +3% YoY in November. Despite persistently strong demand for aluminium in China (~58% of world primary Al consumption in 2022), domestic and global supply are also growing (+3% and +2% YoY, respectively, in 2023), which limits the potential upside in the metal’s prices. Furthermore, on our numbers, ~50% of global non-integrated Al suppliers are breakeven or loss-making at spot
🥉Chinese output of copper products dropped 10% YoY in December, to 2.0mnt, accelerating from the -4% YoY in November. China remains the world's major copper consumer, representing ~55% of global Cu demand. Hence, if the negative dynamics were to persist, it might add some stress to copper prices
#aluminium #copper
https://metals-wire.com/news-reports
📈China’s output of aluminium products rose 6% YoY to 5.9mnt in December, accelerating from the +3% YoY in November. Despite persistently strong demand for aluminium in China (~58% of world primary Al consumption in 2022), domestic and global supply are also growing (+3% and +2% YoY, respectively, in 2023), which limits the potential upside in the metal’s prices. Furthermore, on our numbers, ~50% of global non-integrated Al suppliers are breakeven or loss-making at spot
🥉Chinese output of copper products dropped 10% YoY in December, to 2.0mnt, accelerating from the -4% YoY in November. China remains the world's major copper consumer, representing ~55% of global Cu demand. Hence, if the negative dynamics were to persist, it might add some stress to copper prices
#aluminium #copper
https://metals-wire.com/news-reports
Morning Bites
💎De Beers has reported sales of USD 370mn at its 1st cycle in 2024, ~40% below the historical average and 19% weaker YoY (vs. -67% YoY at the 10th cycle in 2023). This was roughly in line with the Rapaport estimates. According to De Beers CEO Al Cook, solid consumer demand in the US over the winter holiday season helped to stabilise the diamond industry, as did the resumption of India's rough diamond imports in late-2023. However, Cook noted that it might take some time for rough diamond demand to recover fully
Despite De Beers' ~10% rough diamond price cut in early-2024, the still weak realised volumes indicate that the elevated levels of the industry’s inventories have not been unwound yet. Therefore, the news is moderately negative for sentiment over the diamond market, in our view
#diamonds
https://metals-wire.com/sector/Diamonds
💎De Beers has reported sales of USD 370mn at its 1st cycle in 2024, ~40% below the historical average and 19% weaker YoY (vs. -67% YoY at the 10th cycle in 2023). This was roughly in line with the Rapaport estimates. According to De Beers CEO Al Cook, solid consumer demand in the US over the winter holiday season helped to stabilise the diamond industry, as did the resumption of India's rough diamond imports in late-2023. However, Cook noted that it might take some time for rough diamond demand to recover fully
Despite De Beers' ~10% rough diamond price cut in early-2024, the still weak realised volumes indicate that the elevated levels of the industry’s inventories have not been unwound yet. Therefore, the news is moderately negative for sentiment over the diamond market, in our view
#diamonds
https://metals-wire.com/sector/Diamonds
Morning Bites (part 1)
🏆Global physical gold demand dropped 12% YoY to 1,245t in 4Q23, in line with the -13% YoY in 3Q23, according to the World Gold Council (WGC) data. The figure was also down 2% YoY in 2023. Specifically, central bank purchases in 4Q23 plunged 40% YoY, mostly due to the high base effect (we note that in 2023, they were only -5% YoY). The demand for gold jewellery was reported roughly flat again (-1% YoY in 3Q23 and 4Q23). Meanwhile, total global gold demand was down 11% YoY in 4Q23 (-5% YoY in 2023), accelerating from the revised -6% YoY in 3Q23. At the same time, world mined gold production inched down 2% YoY in 4Q23 (being broadly flat YoY in 2023).
Overall, given the persistently strong demand from CBs and the rising cash costs of global gold miners, we keep our positive view on the precious metal's performance. In addition, a potentially lower US Fed funds rate in 2024 would be a favourable factor for the sentiment on gold, we believe
#gold
https://metals-wire.com/sector/Gold
🏆Global physical gold demand dropped 12% YoY to 1,245t in 4Q23, in line with the -13% YoY in 3Q23, according to the World Gold Council (WGC) data. The figure was also down 2% YoY in 2023. Specifically, central bank purchases in 4Q23 plunged 40% YoY, mostly due to the high base effect (we note that in 2023, they were only -5% YoY). The demand for gold jewellery was reported roughly flat again (-1% YoY in 3Q23 and 4Q23). Meanwhile, total global gold demand was down 11% YoY in 4Q23 (-5% YoY in 2023), accelerating from the revised -6% YoY in 3Q23. At the same time, world mined gold production inched down 2% YoY in 4Q23 (being broadly flat YoY in 2023).
Overall, given the persistently strong demand from CBs and the rising cash costs of global gold miners, we keep our positive view on the precious metal's performance. In addition, a potentially lower US Fed funds rate in 2024 would be a favourable factor for the sentiment on gold, we believe
#gold
https://metals-wire.com/sector/Gold
Morning Bites (part 2)
📉Russia’s gold output dropped 7.3% YoY in December, after the flat dynamics seen in November, according to Rosstat data. Russia’s gold output also declined 2.5% YoY in 2023. Overall, we remain bullish on gold, amid strong demand from global central banks, high cost support level and potentially lower key rates in the world's top economies (e.g. the EU and US) in 2024. To recap, Russia accounts for ~9% of the world's mined gold output
#gold
https://metals-wire.com/sector/Gold
📉Russia’s gold output dropped 7.3% YoY in December, after the flat dynamics seen in November, according to Rosstat data. Russia’s gold output also declined 2.5% YoY in 2023. Overall, we remain bullish on gold, amid strong demand from global central banks, high cost support level and potentially lower key rates in the world's top economies (e.g. the EU and US) in 2024. To recap, Russia accounts for ~9% of the world's mined gold output
#gold
https://metals-wire.com/sector/Gold
Morning Bites (part 1)
🌏Global manufacturing PMIs showed some improvement in January. The Eurozone Markit Manufacturing PMI was reported at 46.6, the highest in ten months and in line with the preliminary estimates. The US ISM manufacturing PMI unexpectedly jumped to 49.1 (from 47.4 in December), the highest since October 2022
🇨🇳The official NBS Manufacturing PMI in China rose to 49.2 in January (from 49.0 in December), meeting the consensus estimates. At the same time, the Caixin China Manufacturing PMI remained at 50.8 in January, ahead of the 50.6 estimates
❗️Although some of the global PMIs showed a moderate recovery in January, they mostly remained below 50.0 (an unfavourable factor for the manufacturing sector). However, we believe that new economic stimulus for the Chinese economy might bolster its demand for industrial metals (e.g. steel, copper and aluminium) later in 2024
#PMIs
https://metals-wire.com/news-reports
🌏Global manufacturing PMIs showed some improvement in January. The Eurozone Markit Manufacturing PMI was reported at 46.6, the highest in ten months and in line with the preliminary estimates. The US ISM manufacturing PMI unexpectedly jumped to 49.1 (from 47.4 in December), the highest since October 2022
🇨🇳The official NBS Manufacturing PMI in China rose to 49.2 in January (from 49.0 in December), meeting the consensus estimates. At the same time, the Caixin China Manufacturing PMI remained at 50.8 in January, ahead of the 50.6 estimates
❗️Although some of the global PMIs showed a moderate recovery in January, they mostly remained below 50.0 (an unfavourable factor for the manufacturing sector). However, we believe that new economic stimulus for the Chinese economy might bolster its demand for industrial metals (e.g. steel, copper and aluminium) later in 2024
#PMIs
https://metals-wire.com/news-reports
Morning Bites (part 2)
☢️ Kazatomprom has published its trading update for 4Q23 and provided guidance for 2024. Last year, production was roughly flat YoY (on a 100% basis) and in line with the previous guidance. The group’s sales rose 10% YoY in 2023 (and came 16% above the guidance) thanks to the extraordinary realised volumes in 4Q23 (+94% YoY). The miner also noted the robust contracting activity, of an average 79% of total U trading in 2023 (vs. 69% in 2022), together with the 31% YoY higher avg. long-term contract prices at the end of 2023. To recap, in early-2024, spot U3O8 prices hit 15-year highs, amid supply issues and the growing state interest in nuclear energy
Although we might see some disruptions on the supply side in 2024-25, high spot U308 prices are likely to trigger the reopening of inefficient mines. Hence, the current price level is unlikely to be sustainable in the long term, we believe
#uranium
https://metals-wire.com/sector/Uranium
☢️ Kazatomprom has published its trading update for 4Q23 and provided guidance for 2024. Last year, production was roughly flat YoY (on a 100% basis) and in line with the previous guidance. The group’s sales rose 10% YoY in 2023 (and came 16% above the guidance) thanks to the extraordinary realised volumes in 4Q23 (+94% YoY). The miner also noted the robust contracting activity, of an average 79% of total U trading in 2023 (vs. 69% in 2022), together with the 31% YoY higher avg. long-term contract prices at the end of 2023. To recap, in early-2024, spot U3O8 prices hit 15-year highs, amid supply issues and the growing state interest in nuclear energy
Although we might see some disruptions on the supply side in 2024-25, high spot U308 prices are likely to trigger the reopening of inefficient mines. Hence, the current price level is unlikely to be sustainable in the long term, we believe
#uranium
https://metals-wire.com/sector/Uranium
Week ahead data releases in M&M
As reporting season continues, Arcelor Mittal and Peabody Energy are to report their 4Q23 earnings this week. Our EBITDA forecasts for both names are in the low-single digits above the consensus. Meanwhile, China is scheduled report its monthly liquidity injections data by the end of the week
#reporting_season
https://metals-wire.com/events
As reporting season continues, Arcelor Mittal and Peabody Energy are to report their 4Q23 earnings this week. Our EBITDA forecasts for both names are in the low-single digits above the consensus. Meanwhile, China is scheduled report its monthly liquidity injections data by the end of the week
#reporting_season
https://metals-wire.com/events
Morning Bites (part 1)
🇨🇱Chile’s December copper production was flat YoY, after the 2% YoY decline in November, remaining close to historical lows, per INE data. Meanwhile, in 2023, the country’s output also fell 2% YoY. We remind readers that Chile's mining industry (~27% of world copper output) has been affected by a persistent drought and unfavourable structural issues such as grade depletion. Hence, in our view, if the adverse factors in Chile’s mining sector persist, they might add pressure to global copper production, together with halted operations at Cobre Panama mine (~2% of world's copper supply)
#copper
https://metals-wire.com/sector/Copper
🇨🇱Chile’s December copper production was flat YoY, after the 2% YoY decline in November, remaining close to historical lows, per INE data. Meanwhile, in 2023, the country’s output also fell 2% YoY. We remind readers that Chile's mining industry (~27% of world copper output) has been affected by a persistent drought and unfavourable structural issues such as grade depletion. Hence, in our view, if the adverse factors in Chile’s mining sector persist, they might add pressure to global copper production, together with halted operations at Cobre Panama mine (~2% of world's copper supply)
#copper
https://metals-wire.com/sector/Copper
Morning Bites (part 2)
🚘US light vehicle sales rose 3% YoY in January, decelerating from the 13% YoY growth in December. However, the figure was still 7% short of the pre-Covid 2019 level. Meanwhile, seasonally adjusted sales volumes declined 4% YoY last month (and were also 10% below the 2019 level). Given that US car sales are still close to the historical lows, the weak dynamics might weigh further on the automotive demand for PGMs, especially given the growing interest for EVs globally
We recap that North America accounted for ~22% and ~16% of world autocatalyst Pd and Pt consumption, respectively, in 2022
#cars
https://metals-wire.com/news-reports
🚘US light vehicle sales rose 3% YoY in January, decelerating from the 13% YoY growth in December. However, the figure was still 7% short of the pre-Covid 2019 level. Meanwhile, seasonally adjusted sales volumes declined 4% YoY last month (and were also 10% below the 2019 level). Given that US car sales are still close to the historical lows, the weak dynamics might weigh further on the automotive demand for PGMs, especially given the growing interest for EVs globally
We recap that North America accounted for ~22% and ~16% of world autocatalyst Pd and Pt consumption, respectively, in 2022
#cars
https://metals-wire.com/news-reports
Morning Bites (part 3)
💍Hong Kong jewellery and watch sales added 50% YoY in December, following the 61% YoY increase in November, according to the government data. Overall, in 2023 the figure gained 55%, mostly due to the low base effect (sales were -9% vs. the 2019 results). To recap, the reopening of HK’s border with the Mainland became a major trigger for the trade recovery in early 2023. Despite some recovery in HK, market sentiment remains rather subdued, as even with the 10% price cut by De Beers' in its 1st cycle in 2024, volumes remained low, indicating the still elevated levels of the industry’s inventories
#diamonds
https://metals-wire.com/sector/Diamonds
💍Hong Kong jewellery and watch sales added 50% YoY in December, following the 61% YoY increase in November, according to the government data. Overall, in 2023 the figure gained 55%, mostly due to the low base effect (sales were -9% vs. the 2019 results). To recap, the reopening of HK’s border with the Mainland became a major trigger for the trade recovery in early 2023. Despite some recovery in HK, market sentiment remains rather subdued, as even with the 10% price cut by De Beers' in its 1st cycle in 2024, volumes remained low, indicating the still elevated levels of the industry’s inventories
#diamonds
https://metals-wire.com/sector/Diamonds
Morning Bites (part 4)
💎US jewellery sales jumped 6% YoY in December, the sharpest increase since Jul-22, accelerating from +3% YoY in November, IDEX reports, citing the US Department of Commerce. In our view, the recovery in the main gem-set jewellery retail market (the US accounts for ~53% of global demand), might become the main trigger for an improvement of sentiment in the diamond market, which would in turn accelerate the release of stock
#diamonds
https://metals-wire.com/sector/Diamonds
💎US jewellery sales jumped 6% YoY in December, the sharpest increase since Jul-22, accelerating from +3% YoY in November, IDEX reports, citing the US Department of Commerce. In our view, the recovery in the main gem-set jewellery retail market (the US accounts for ~53% of global demand), might become the main trigger for an improvement of sentiment in the diamond market, which would in turn accelerate the release of stock
#diamonds
https://metals-wire.com/sector/Diamonds
Morning Bites (part 1)
🏦 Global central banks purchased net 30t of gold in December, vs. +44t in November, marking the seventh consecutive increase in holdings, the World Gold Council (WGC) reports. Specifically, the major contributors were Turkey (+18t), China and Uzbekistan (+9t both), while only Kazakhstan sold a material volume of gold (-10t). We reiterate our view that persistently strong gold demand from global CBs, gold miners’ rising cash costs and a potentially lower US Fed funds rate in 2024 would add support to the precious metal's performance
#gold
https://metals-wire.com/sector/Gold
🏦 Global central banks purchased net 30t of gold in December, vs. +44t in November, marking the seventh consecutive increase in holdings, the World Gold Council (WGC) reports. Specifically, the major contributors were Turkey (+18t), China and Uzbekistan (+9t both), while only Kazakhstan sold a material volume of gold (-10t). We reiterate our view that persistently strong gold demand from global CBs, gold miners’ rising cash costs and a potentially lower US Fed funds rate in 2024 would add support to the precious metal's performance
#gold
https://metals-wire.com/sector/Gold
Morning Bites (part 2)
🚘 EV sales in Germany might drop 14% YoY in 2024 without government incentives, Bloomberg reports. According to market sources, the cancellation of government subsidies in December 2023 would trigger the first decline in EV sales since 2016. Overall, if this scenario for the largest European automotive market were to materialise, it would negatively affect the demand for the battery metals basket (e.g., nickel, lithium and cobalt) this year, we believe
To recap, Germany accounted for 27% (22% of EU + UK) of electric and hybrid vehicles in the EU in 2023
#cars #EV #nickel #lithium #cobalt
https://metals-wire.com/news-reports
🚘 EV sales in Germany might drop 14% YoY in 2024 without government incentives, Bloomberg reports. According to market sources, the cancellation of government subsidies in December 2023 would trigger the first decline in EV sales since 2016. Overall, if this scenario for the largest European automotive market were to materialise, it would negatively affect the demand for the battery metals basket (e.g., nickel, lithium and cobalt) this year, we believe
To recap, Germany accounted for 27% (22% of EU + UK) of electric and hybrid vehicles in the EU in 2023
#cars #EV #nickel #lithium #cobalt
https://metals-wire.com/news-reports
Morning Bites (part 1)
🚘New car registrations in France, the UK, Spain, Italy and Germany were up 17% YoY in January, returning to the positive dynamics after the one-off 3% YoY decline in December. However, the figure is still well below the pre-COVID level (-15% vs. January 2019). In particular, in Germany and Spain, car sales were 20% and 27% lower, respectively, than the same period in 2019, while registrations in France were 3% lower. Sales in Italy were 14% below the 2019 figures, while UK sales were 11% weaker
Given that these five countries represented >70% of new vehicle registrations in Europe in 2023, the region’s car sales have likely followed the recovery trend, while remaining below their pre-pandemic levels
#cars
https://metals-wire.com/sector/PGM
🚘New car registrations in France, the UK, Spain, Italy and Germany were up 17% YoY in January, returning to the positive dynamics after the one-off 3% YoY decline in December. However, the figure is still well below the pre-COVID level (-15% vs. January 2019). In particular, in Germany and Spain, car sales were 20% and 27% lower, respectively, than the same period in 2019, while registrations in France were 3% lower. Sales in Italy were 14% below the 2019 figures, while UK sales were 11% weaker
Given that these five countries represented >70% of new vehicle registrations in Europe in 2023, the region’s car sales have likely followed the recovery trend, while remaining below their pre-pandemic levels
#cars
https://metals-wire.com/sector/PGM
Morning Bites (part 2)
🔋Piedmont Lithium has laid off some of its workforce amid weak Li prices, aсcording to a company press release. As the junior miner is targeting annual cost savings of USD 10mn, it has initiated a 27% reduction in its workforce (it had only 40 employees as of the end of 2022). Although Piedmont represented <1% of global lithium production in 2023, the supply side reaction underpins our view that inefficient projects are becoming unprofitable at the currently low Li prices
To recap, lithium prices have plunged >80% from their record high late-2022 levels. Furthermore, potentially weaker EV sales in Europe might add some stress to the demand for the battery metal this year
#lithium
https://metals-wire.com/news-reports
🔋Piedmont Lithium has laid off some of its workforce amid weak Li prices, aсcording to a company press release. As the junior miner is targeting annual cost savings of USD 10mn, it has initiated a 27% reduction in its workforce (it had only 40 employees as of the end of 2022). Although Piedmont represented <1% of global lithium production in 2023, the supply side reaction underpins our view that inefficient projects are becoming unprofitable at the currently low Li prices
To recap, lithium prices have plunged >80% from their record high late-2022 levels. Furthermore, potentially weaker EV sales in Europe might add some stress to the demand for the battery metal this year
#lithium
https://metals-wire.com/news-reports
Morning Bites (part 1)
🔗CISA mills daily crude steel production during late January was reported at 2.02mnt, down 3.7% vs. the previous ten days, and 1.5% higher YoY. Local steel inventories fell sharply 20.6% over the period (-26.0% YoY), due to the approaching Chinese New Year holiday. Meanwhile, Beijing’s further efforts to bolster domestic construction activity might support steel products prices in 2024, in addition to the overall declining steel output, we believe
We recap, that Chinese steel production is set to decline 7% vs. 2023 in 2025, per CISA estimates, which could affect ~4% of global steel supply. China represents ~57% of world steel output
#steel
https://metals-wire.com/sector/Steel
🔗CISA mills daily crude steel production during late January was reported at 2.02mnt, down 3.7% vs. the previous ten days, and 1.5% higher YoY. Local steel inventories fell sharply 20.6% over the period (-26.0% YoY), due to the approaching Chinese New Year holiday. Meanwhile, Beijing’s further efforts to bolster domestic construction activity might support steel products prices in 2024, in addition to the overall declining steel output, we believe
We recap, that Chinese steel production is set to decline 7% vs. 2023 in 2025, per CISA estimates, which could affect ~4% of global steel supply. China represents ~57% of world steel output
#steel
https://metals-wire.com/sector/Steel
Morning Bites (part 2)
📌China’s new internal combustion engine car sales jumped 38% YoY in January from a low base, accelerating from the 12% YoY increase in December. However, the figures remained below their pre-Covid level (-25% vs. January 2019), amid the solid appetite for EVs, which continues to weigh on PGM consumption. To recap, the Chinese auto sector represents some 26% and 17% of the world’s autocatalyst Pd and Pt demand, respectively
📌New EV sales in China surged 79% YoY in January, after the 47% YoY rise in December. To recap, CAAM expects the local EV penetration rate to hit 40% in 2024 (vs. ~30% in January). Overall, the continuous growth in EV sales might further drive up the consumption of the battery metals basket (e.g. cobalt, lithium and nickel), as China has represented ~50% of global EV demand in recent months
#cars #EV #nickel #lithium #cobalt
https://metals-wire.com/news-reports
📌China’s new internal combustion engine car sales jumped 38% YoY in January from a low base, accelerating from the 12% YoY increase in December. However, the figures remained below their pre-Covid level (-25% vs. January 2019), amid the solid appetite for EVs, which continues to weigh on PGM consumption. To recap, the Chinese auto sector represents some 26% and 17% of the world’s autocatalyst Pd and Pt demand, respectively
📌New EV sales in China surged 79% YoY in January, after the 47% YoY rise in December. To recap, CAAM expects the local EV penetration rate to hit 40% in 2024 (vs. ~30% in January). Overall, the continuous growth in EV sales might further drive up the consumption of the battery metals basket (e.g. cobalt, lithium and nickel), as China has represented ~50% of global EV demand in recent months
#cars #EV #nickel #lithium #cobalt
https://metals-wire.com/news-reports