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

Morning Bites (part 2)

📉Gold-backed ETFs reduced their holdings by 33t in April, accelerating from the revised -13t in March, the World Gold Council reports. This was the 11th consecutive month of declines. Specifically, the main sellers were European funds with a net outflow of 52t, which was partially offset by net purchases of 19t in Asia. Overall, in the last 11 months, global ETF holdings have shrank 397t (~9% of physical gold demand in 2023 in annualised terms)

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

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

Morning Bites (part 3)

💎US jewellery sales increased 7% YoY in March, slightly accelerating from the +6% YoY in February, which marked the sharpest gain in the last two years, IDEX reports, citing the US Department of Commerce. According to Rapaport, local diamond trading was stable in March, despite weak orders for some rough categories (1.0-1.5ct). In our view, a further recovery in local demand would accelerate the release of the industry's inventories and underpin improving sentiment in the global diamond market

We remind readers that the US accounts for ~53% of global gem-set jewellery demand

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

Morning Bites (part 1)

🔗CISA mills' daily crude steel production in late April was reported at 2.20mnt, up 3.8% from the previous ten days, but -0.5% YoY. Meanwhile, local steel inventories were 12.3% lower over the period (and also -12.3% YoY). In our view, China’s subdued production (based on the CISA data, -1.6% YTD) reflects overall sluggish domestic steel demand, which has also triggered exports growth. Record high liquidity inflows in early 2024, however, might bolster China’s construction recovery this year (and, hence, local steel demand), in our view

China accounts for ~57% of world steel supply

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