Morning Bites (part 1)

🔗CISA mills' daily crude steel production in mid-April was reported at 2.12mnt, up 0.3% from the previous ten days, but down 7.5% YoY. On a YTD basis, output was -1.7% YoY, which might reflect Beijing’s plans to limit national steel production further in 2024, per the National Development and Reform Commission (NDRC). Meanwhile, local steel inventories were 0.8% lower vs. the previous ten days (-2.3% YoY). Despite the currently sluggish domestic steel demand, China's record high liquidity injections in early 2024 and the new economic support measures are likely to bolster its construction activity this year, we believe

We remind readers that China accounts for ~57% of global steel supply

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

Morning Bites (part 2)

📈Russia’s gold output declined 14.5% YoY in March, reversing from the 23.4% YoY gain in February, according to Rosstat data. Russia’s gold output was also down 9.6% MoM, while on a 1Q24 basis, the production was 3.2% YoY higher. Regarding the market fundamentals, in our view, the spot gold price has already exceeded its fundamentally reasonable level (USD 2,200-2,300/oz for 2024), driven by persistently strong demand from global central banks and market expectations of upcoming US Fed funds rate cut in 2024

Russia represents ~9% of the world's mined gold output

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

Vale 1Q24 results -- in-line with consensus

📝Vale's 1Q24 revenues were in line with the consensus, but were 7% weaker than our forecast, mainly due to deeper discounts in the iron ore segment than we had anticipated. This affected EBITDA, which was 6% below our estimates

⛏The miner reiterated its 2024 production guidance: iron ore (incl. pellets) output is to stay broadly unchanged YoY. Meanwhile, copper production might increase as much as 8% YoY, following the ramp-up of Vale’s Salobo 3 complex

💰According to the company, its iron ore C1 cash costs (ex. 3-rd party purchases) were slightly lower y/y, reaching $23.5/t in 1Q24 (+13% QoQ), despite the negative effects of the BRL appreciation

📌On our numbers, Vale's 2Q24F EBITDA might materially improve QoQ at spot, following 15% higher copper prices (vs. the 1Q24 av.), while iron ore discounts are likely to recover to historical levels, in our view

#VALE #Iron_ore
https://metals-wire.com/company/VALE_US/

Morning Bites (part 1)

🏗China’s preliminary excavator sales were down 1% YoY in April (domestic + export), broadly in line with the -2% YoY dynamics in March, per the CME estimates. The figure is also 60% below the 2021 level. Domestic excavator sales are likely to remain flat YoY in April (-77% vs. April 2021), suggesting there is still no recovery in the depressed Chinese real estate sector. However, record high liquidity injections in early 2024 and Beijing’s recently announced new support measures for the economy might bolster domestic construction activity this year, we believe

We recap 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 (part 2)

🪙 The global silver market remained in heavy physical deficit, of 184mnoz, in 2023 (~15% of demand), remaining broadly in-line with the 21% deficit seen in 2022, according to the World Silver Institute annual report. Despite the slowdown in net physical investment (-28% YoY), the 2023 demand was bolstered by the rapid increases in solar energy installations globally (e.g., +55% YoY in China to 610GW), which accounted for 16% of silver consumption

The World Silver Institute expects the silver market deficit to intensify in 2024F (up to 18% of demand), driven by further growth in renewable energy installations, which supports our bullish view on silver (as a key beneficiary metal of global clean energy transition)

#silver
https://metals-wire.com/news-reports

Morning Bites (part 1)

🏆China’s gold production inched up 1% YoY in 1Q24, vs. the +2% YoY in 4Q23, according to data from the China Gold Association. Meanwhile, the country's gold consumption grew 6% YoY in 1Q24 vs. the 14% YoY growth seen in 4Q23 (also being 8% above the pre-COVID level). However, gold jewellery demand slid 3% YoY, reversing from the 17% YoY gain in 4Q23

As concerns the gold market fundamentals, the precious metal’s price, at spot, has already exceeded its fundamentally reasonable level (USD 2,200-2,300/oz for 2024), in our view, boosted by strong demand from global central banks and market expectations of an upcoming US Fed funds rate cut in 2024

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

Morning Bites (part 1)

🌏Global manufacturing PMIs showed mixed dynamics in April. The Eurozone Markit Manufacturing PMI dropped to 45.6 (4-month low), below the consensus estimate of 46.5. Meanwhile, the US ISM manufacturing PMI again turned into the negative zone, standing at 49.2 in April (vs. the consensus estimate of 50.0)

🇨🇳The official NBS Manufacturing PMI in China slid to 50.4 in April (vs. 50.8 in March), which was in-line with the market estimates of 50.3. Meanwhile, the Caixin China Manufacturing PMI was at 51.4 — vs. the forecasts of 51.0

🇮🇳 Indian manufacturing PMI remained near record highs at 58.8, but slightly short of consensus (59.5)

❗️Although US an especially EU PMIs were weak in April (by staying below 50.0), Chinese and Indian PMIs dynamics were strong. In our view, this underpins improving sentiment in the respective local manufacturing sectors — a positive factor for the industrial metals consumption (e.g. steel, aluminum and copper)

#PMIs
https://metals-wire.com/news-reports

Morning Bites (part 2)

🏆Global physical gold demand inched up 1% YoY to 1,160t in 1Q24, reversing from the revised -13% YoY in 4Q23, according to the World Gold Council (WGC) data. Specifically, central bank purchases in 1Q24 were 1% YoY higher, after the -43% YoY seen in 4Q23 due to the high base effect (in 2023, they were only -5% YoY). The demand for gold jewellery fell 2%, broadly in line with the -1% YoY in 3Q23 and 4Q23. Meanwhile, total global gold demand shrank 7% YoY in 1Q24 (vs. -11% YoY in 4Q23), amid persistent sales by ETFs. At the same time, world mined gold output grew 4% YoY in 1Q24, per the WGC

We reiterate our view that the price of gold, at spot, has already exceeded its fundamentally reasonable level (USD 2,200-2,300/oz for 2024), likely boosted by strong demand from global central banks and market expectations of an upcoming US Fed funds rate cut in 2024

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

Morning Bites

🥉Global mined copper production jumped 6.6% YoY to 3.6mnt in 2mo24, the International Copper Study Group reports. The main growth contributor was DR Congo (~11% of global supply), where output surged 26% YoY, supported by the expansion of the Kamoa mine. This also offset the negative effects from the closure of Cobre Panama (since November 2023). Meanwhile, the ICSG notes an increase in refined copper consumption (+7% YoY in 2mo24), driven by strong demand in China, with usage in the rest of the world estimated to have declined

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

Week ahead data releases in M&M

Reporting season is drawing to a close, but several major M&M names are still to release their 1Q24 financials. Of those reporting this week, we are more bullish than the consensus forecasts on the EBITDA level, except for Torex and Lucara

This week is also due to bring China’s official customs data for April, as well as monthly liquidity injections statistics
  
#reporting_season
https://metals-wire.com/events

Morning Bites (part 1)

🏦 Global central banks purchased net 19t of gold in March, vs. the revised +24t in February, marking the tenth consecutive increase in holdings, the World Gold Council (WGC) reports. The major contributors were Turkey (+14t), India and China (+5t both). On the sellers' side were Uzbekistan and Thailand, which sold 11t and 10t, respectively

Regarding the market fundamentals, we reiterate our view that the spot gold price has already exceeded its fundamentally reasonable level (USD 2,200-2,300/oz for 2024), driven by persistently strong demand from global central banks and market expectations of an upcoming US Fed funds rate cut in 2024

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

Morning Bites (part 2)

💍Hong Kong jewellery and watch sales decreased 17% YoY in March, after the decline of 2% YoY in February, per the government data. The sales were also 37% below the 2019 level. According to Rapaport, in March, local demand for diamonds was sluggish, as Chinese consumers preferred to invest in gold (jewellery sales in China were -7% YoY in March)

Although sentiment slightly weakened in HK, sales in the US and Chinese markets (~53% and ~12% of the world's gem-set jewellery trade, respectively) remain close to its historical highs, which might accelerate destocking, bolstering the stressed diamond sector, we believe

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

Morning Bites (part 3)

💍Luk Fook’s 1Q24 LFL sales dropped 37% YoY in the diamond jewellery segment, reversing from the +18% YoY in 4Q23. Specifically, sales in HK and Macau slid 38% YoY. As follows from Luk Fook's press release, although demand for diamond products remained subdued in early 2024, the ongoing improvement in local macroeconomic conditions is likely to bolster the business performance in the Hong Kong and Macau markets

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

Morning Bites

💍China’s jewellery and watch retail sales declined 7% YoY in March, after the flat dynamics in 2mo24. The sales, however, remained close to historical highs, and were also 21% above their pre-Covid 2019 level. Overall, the softening in local diamond demand might have been at least partially driven by the switch of Chinese consumer interest to gold investment, according to Rapaport

Despite some slowdown in Chinese sales, we note that demand in the key US and Chinese markets, which jointly represent ~65% of the world's polished demand, remains close to historical highs, which might support stock release in the diamond industry

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

Morning Bites (part 1)

💎De Beers has cut <0.75ct rough prices 4-6% at its fourth cycle in 2024, Rapaport reports, citing its sources. Meanwhile, bigger items (1.0-1.5ct) also faced a decline of around 4%. According to market participants, De Beers' small diamonds performed better during the market downturn in 2023, which resulted in a widened gap between De Beers’ rough prices and those on the outside market

Although this was the second decline in De Beers’ rough prices this year, after the miner cut small stones prices 5-10% at its first cycle in 2024, we keep our positive view on the diamond sector, which might show the first signs of a recovery in the coming ~6 months

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

Morning Bites (part 2)

🏦 The PBoC has further slowed its gold purchases, having bought only 2t of gold in April, after the +5t in March, marking the 18th consecutive month of reserves accumulation. China’s central bank's gold holdings now stand at 2,264t, with ~316t added since November 2022 (~5% of annualised demand). We reiterate our view that the gold price, at spot, has already exceeded its fundamentally reasonable level (USD 2,200-2,300/oz for 2024, on our numbers)

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

Morning Bites (part 3)

🚘New car registrations in France, the UK, Spain, Italy and Germany gained 12% YoY in April, after the broadly flat dynamics in March. However, the figure remained well below the pre-COVID level (-21% vs. April 2019). Specifically, in Germany, France and Italy, car sales were 22% lower than the same month in 2019, while registrations in Spain and UK were 23% and 17% weaker, respectively

Given these five countries represented >70% of new vehicle registrations in Europe in 2023, local car sales have likely remained subdued in April

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

🗞Last week, China published its preliminary import/export statistics for April (see table above)

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