Morning Bites (part 1)
💍Hong Kong jewellery and watch sales dropped 21% YoY in May, decelerating from the 29% YoY decline in April, according to the government data. Sales were also down 40% vs. the pre-Covid May 2019. According to Rapaport, the demand for local diamonds was rather sluggish, as Chinese consumers preferred investing in gold, rather than buying diamonds. Despite the soft demand in HK, sentiment on the key US market (~53% of the world's gem-set jewellery trade) remains strong, which might accelerate the industry's stock release in 2024 and add support to the stressed diamond sector, we believe
#diamonds
https://metals-wire.com/sector/Diamonds
💍Hong Kong jewellery and watch sales dropped 21% YoY in May, decelerating from the 29% YoY decline in April, according to the government data. Sales were also down 40% vs. the pre-Covid May 2019. According to Rapaport, the demand for local diamonds was rather sluggish, as Chinese consumers preferred investing in gold, rather than buying diamonds. Despite the soft demand in HK, sentiment on the key US market (~53% of the world's gem-set jewellery trade) remains strong, which might accelerate the industry's stock release in 2024 and add support to the stressed diamond sector, we believe
#diamonds
https://metals-wire.com/sector/Diamonds
Morning Bites (part 2)
💎Kimberley Process has reported an 8% YoY drop, to 111.5mnct, in global diamond production in 2023, vs the revised 2% YoY increase in 2022. Botswana's output was up 2% YoY, while production in Russia decreased 11% YoY to 37.3mnct. The output in the rest of the world is estimated to have contracted 13% YoY in 2023. In our view, subdued downstream demand and the release of trader inventories has put pressure on the diamond market in 2022-23. The discipline measures taken by De Beers and Alrosa, implementing their price-over-volume strategy, also tightened global supply. Persisting weak prices continue to weigh on global producers. As such, Petra Diamonds has recently announced production guidance cuts of 20% for fiscal 2025-26 in order to optimise costs. Amid supply response, we affirm our view that the market is currently bottoming out and expect to see first signs of recovery in the coming 3-6 months
#diamonds
https://metals-wire.com/sector/Diamonds
💎Kimberley Process has reported an 8% YoY drop, to 111.5mnct, in global diamond production in 2023, vs the revised 2% YoY increase in 2022. Botswana's output was up 2% YoY, while production in Russia decreased 11% YoY to 37.3mnct. The output in the rest of the world is estimated to have contracted 13% YoY in 2023. In our view, subdued downstream demand and the release of trader inventories has put pressure on the diamond market in 2022-23. The discipline measures taken by De Beers and Alrosa, implementing their price-over-volume strategy, also tightened global supply. Persisting weak prices continue to weigh on global producers. As such, Petra Diamonds has recently announced production guidance cuts of 20% for fiscal 2025-26 in order to optimise costs. Amid supply response, we affirm our view that the market is currently bottoming out and expect to see first signs of recovery in the coming 3-6 months
#diamonds
https://metals-wire.com/sector/Diamonds
Morning Bites (part 1)
🇨🇱Chile’s copper output jumped 8% YoY in May, mostly due to the low base effect, after the -2% YoY seen in April, according to the INE data. To recap, Codelco (the leading Chilean miner; ~7% of global Cu supply) plans to increase output up to 5% YoY in 2024. That would bolster local production, which is still being affected by negative structural effects (e.g. ore depletion) and unfavourable weather conditions
In 2023, Chile accounted for ~24% of global copper supply
#copper
https://metals-wire.com/sector/Copper
🇨🇱Chile’s copper output jumped 8% YoY in May, mostly due to the low base effect, after the -2% YoY seen in April, according to the INE data. To recap, Codelco (the leading Chilean miner; ~7% of global Cu supply) plans to increase output up to 5% YoY in 2024. That would bolster local production, which is still being affected by negative structural effects (e.g. ore depletion) and unfavourable weather conditions
In 2023, Chile accounted for ~24% of global copper supply
#copper
https://metals-wire.com/sector/Copper
Morning Bites (part 2)
💎US jewellery sales inched up 1% YoY in May, after the revised +3% YoY in April (and marking the seventh consecutive YoY gain), IDEX reports, citing the US Department of Commerce. According to Rapaport, local diamond trading was seasonally slow, without notable market-moving events, while retailers are not restocking at the moment, as inventories remain at elevated levels. We reiterate our view that the gradual recovery in US demand could speed up the release of industry inventories, supporting sentiment in the global diamond market
The US accounts for ~53% of global gem-set jewellery demand
#diamonds
https://metals-wire.com/sector/Diamonds
💎US jewellery sales inched up 1% YoY in May, after the revised +3% YoY in April (and marking the seventh consecutive YoY gain), IDEX reports, citing the US Department of Commerce. According to Rapaport, local diamond trading was seasonally slow, without notable market-moving events, while retailers are not restocking at the moment, as inventories remain at elevated levels. We reiterate our view that the gradual recovery in US demand could speed up the release of industry inventories, supporting sentiment in the global diamond market
The US accounts for ~53% of global gem-set jewellery demand
#diamonds
https://metals-wire.com/sector/Diamonds
Morning Bites (part 1)
🚘 New car registrations in France, the UK, Spain, Italy and Germany rose 4% YoY in June, after the -2% YoY in May. The figure also remained below the pre-COVID level (-15% vs. June 2019). Specifically, in Germany and Italy, car sales were 9% and 7% lower vs. June 2019, respectively, while registrations in France and Spain were 21% weaker. UK car sales were 20% below those in June 2019
Given that these five countries represented >70% of new vehicle registrations in Europe in 2023, local car sales likely remained subdued in June
#cars
https://metals-wire.com/sector/PGM
🚘 New car registrations in France, the UK, Spain, Italy and Germany rose 4% YoY in June, after the -2% YoY in May. The figure also remained below the pre-COVID level (-15% vs. June 2019). Specifically, in Germany and Italy, car sales were 9% and 7% lower vs. June 2019, respectively, while registrations in France and Spain were 21% weaker. UK car sales were 20% below those in June 2019
Given that these five countries represented >70% of new vehicle registrations in Europe in 2023, local car sales likely remained subdued in June
#cars
https://metals-wire.com/sector/PGM
Morning Bites (part 2)
💎Petra Diamonds’ LFL rough prices at its 7th tender slid 4% from its 6th auction, while realised volumes declined 9% over the previous cycle, according to the company's press release. Meanwhile, average LFL prices for fiscal 2024 (ended on 30 June 2024) were down 12% YoY. According to Petra CEO Richard Duffy, LFL prices in this tender were subdued due to the ongoing soft demand (which is expected to last until the end of 2024, per Petra), exacerbated by seasonal weakness. Petra has also maintained its recently lowered guidance amid the unfavourable price environment
Although weak upstream sales indicate still elevated industry stocks, solid downstream demand in the key US market (~53% of global gem-set jewellery demand) might accelerate the release of inventories and bolster the stressed diamond market, we believe
#diamonds
https://metals-wire.com/sector/Diamonds
💎Petra Diamonds’ LFL rough prices at its 7th tender slid 4% from its 6th auction, while realised volumes declined 9% over the previous cycle, according to the company's press release. Meanwhile, average LFL prices for fiscal 2024 (ended on 30 June 2024) were down 12% YoY. According to Petra CEO Richard Duffy, LFL prices in this tender were subdued due to the ongoing soft demand (which is expected to last until the end of 2024, per Petra), exacerbated by seasonal weakness. Petra has also maintained its recently lowered guidance amid the unfavourable price environment
Although weak upstream sales indicate still elevated industry stocks, solid downstream demand in the key US market (~53% of global gem-set jewellery demand) might accelerate the release of inventories and bolster the stressed diamond market, we believe
#diamonds
https://metals-wire.com/sector/Diamonds
Morning Bites (part 1)
🔗CISA mills' daily crude steel production in late-June was reported at 2.17mnt, down 0.8% from the previous ten days and -3.5% YoY. Meanwhile, local steel inventories decreased 10.5% over the period (and were also down 0.6% YoY). In our view, the overall sluggish domestic steel demand, which has triggered exports growth, might keep weighing on China’s steel production (based on the CISA data, -1.4% YoY in 6mo24)
China accounts for ~57% of global steel supply
#steel
https://metals-wire.com/sector/Steel
🔗CISA mills' daily crude steel production in late-June was reported at 2.17mnt, down 0.8% from the previous ten days and -3.5% YoY. Meanwhile, local steel inventories decreased 10.5% over the period (and were also down 0.6% YoY). In our view, the overall sluggish domestic steel demand, which has triggered exports growth, might keep weighing on China’s steel production (based on the CISA data, -1.4% YoY in 6mo24)
China accounts for ~57% of global steel supply
#steel
https://metals-wire.com/sector/Steel
Morning Bites (part 2)
🪨 Anglo American has declared a force majeure at its Grosvenor coking coal mine, following an underground methane gas explosion, Argus reports. According to the miner, it might take several months to extinguish the underground fire at Grosvenor, which was expected to produce 3.5mnt of coking coal in 2024F (~1% of global seaborne trade)
Overall, the protracted supply disruption might support global coking coal prices, at least in the short-term, we believe
#coal
https://metals-wire.com/sector/Coal
🪨 Anglo American has declared a force majeure at its Grosvenor coking coal mine, following an underground methane gas explosion, Argus reports. According to the miner, it might take several months to extinguish the underground fire at Grosvenor, which was expected to produce 3.5mnt of coking coal in 2024F (~1% of global seaborne trade)
Overall, the protracted supply disruption might support global coking coal prices, at least in the short-term, we believe
#coal
https://metals-wire.com/sector/Coal
Morning Bites (part 3)
🏦 The PBoC's gold reserves remained unchanged for the second month in June, after 18 consecutive months of accumulation, Bloomberg reports, citing official data. Between November 2022 and April 2024, China’s central bank added ~316t of gold (~5% of annualised demand) to its holdings, which currently stand at 2,264t.
However, we recap that, based on the WGC data, reported central bank gold purchases have accounted for <40% of its total official sector demand estimate in the last two years (16% in 1Q24)
Hence, despite the halt in official PBoC purchases, we do not expect material short-term pressure on gold, which continues to trade above its fundamentally reasonable level (2,200-2,300 USD/t for 2024, on our numbers)
#gold
https://metals-wire.com/sector/Gold
🏦 The PBoC's gold reserves remained unchanged for the second month in June, after 18 consecutive months of accumulation, Bloomberg reports, citing official data. Between November 2022 and April 2024, China’s central bank added ~316t of gold (~5% of annualised demand) to its holdings, which currently stand at 2,264t.
However, we recap that, based on the WGC data, reported central bank gold purchases have accounted for <40% of its total official sector demand estimate in the last two years (16% in 1Q24)
Hence, despite the halt in official PBoC purchases, we do not expect material short-term pressure on gold, which continues to trade above its fundamentally reasonable level (2,200-2,300 USD/t for 2024, on our numbers)
#gold
https://metals-wire.com/sector/Gold
Morning Bites (part 1)
🏗China’s excavator sales rose 5% YoY in June (domestic + export), in line with the +6% YoY in May, according to the CCMA data. The figure was also above CME estimates. Specifically, domestic sales were up 26% YoY (although still 55% lower than June 2021), which might indicate that local construction activity is bottoming out. Although the latest government incentives are in our view insufficient for a full-scale recovery in China's property sector, we believe that additional measures, which might be announced after the Third Plenum meeting (15-18 July), would offer reason to be upbeat
China accounts for 52% of global steel consumption, and for 57% and 61% of world Cu and Al demand, respectively
#steel
https://metals-wire.com/sector/Steel
🏗China’s excavator sales rose 5% YoY in June (domestic + export), in line with the +6% YoY in May, according to the CCMA data. The figure was also above CME estimates. Specifically, domestic sales were up 26% YoY (although still 55% lower than June 2021), which might indicate that local construction activity is bottoming out. Although the latest government incentives are in our view insufficient for a full-scale recovery in China's property sector, we believe that additional measures, which might be announced after the Third Plenum meeting (15-18 July), would offer reason to be upbeat
China accounts for 52% of global steel consumption, and for 57% and 61% of world Cu and Al demand, respectively
#steel
https://metals-wire.com/sector/Steel
Morning Bites (part 2)
🚘US light vehicle sales were down 3% YoY in June, reversing from the 5% YoY growth in May. The figure was also 13% below the pre-Covid 2019 level. Similarly, seasonally-adjusted sales volumes were down 3% YoY last month and remained -12% vs. the 2019 level. In our view, the still weak automotive demand, along with the growing appetite for EVs globally, is likely to weigh further on PGM consumption
On our numbers, North America accounted for 22% and 15% of world autocatalyst Pd and Pt consumption, respectively, in 2023
#cars
https://metals-wire.com/news-reports
🚘US light vehicle sales were down 3% YoY in June, reversing from the 5% YoY growth in May. The figure was also 13% below the pre-Covid 2019 level. Similarly, seasonally-adjusted sales volumes were down 3% YoY last month and remained -12% vs. the 2019 level. In our view, the still weak automotive demand, along with the growing appetite for EVs globally, is likely to weigh further on PGM consumption
On our numbers, North America accounted for 22% and 15% of world autocatalyst Pd and Pt consumption, respectively, in 2023
#cars
https://metals-wire.com/news-reports
Morning Bites (part 1)
📈Gold-backed ETFs again raised their gold holdings, up 18t in June, following the +8t in May. According to the World Gold Council (WGC), last month's inflows were concentrated in Europe (+18t) and Asia (+7t), while North American funds sold net 8t
ETFs' return to buying gold, after a long period of selling, creates additional fundamental support for the metal. We estimate that the gold price has exceeded its fundamentally reasonable level of USD 2,200-2,300/oz in 2024 following the persistently strong demand from global central banks and in light of a widely expected US Federal Reserve funds rate cut in 2024. However, gold has more upside risks, such as geopolitical tensions and the upcoming Fed fund rate cut
#ETF #gold
https://metals-wire.com/news-reports
📈Gold-backed ETFs again raised their gold holdings, up 18t in June, following the +8t in May. According to the World Gold Council (WGC), last month's inflows were concentrated in Europe (+18t) and Asia (+7t), while North American funds sold net 8t
ETFs' return to buying gold, after a long period of selling, creates additional fundamental support for the metal. We estimate that the gold price has exceeded its fundamentally reasonable level of USD 2,200-2,300/oz in 2024 following the persistently strong demand from global central banks and in light of a widely expected US Federal Reserve funds rate cut in 2024. However, gold has more upside risks, such as geopolitical tensions and the upcoming Fed fund rate cut
#ETF #gold
https://metals-wire.com/news-reports
Morning Bites (part 2)
💎 Rio Tinto has temporarily halted one of its Diavik mine's pits due to road subsidence, Rapaport reports. Although the miner declined to comment on how long the A154 pit would be shut (or whether this would affect Rio Tinto's rough diamond production in 2024), subsidence usually requires technical work that can often take time
In our view, supply disruptions would be moderately positive for diamond sector sentiment, as Diavik accounted for ~3% of global rough supply in 2023
#diamonds
https://metals-wire.com/sector/Diamonds
💎 Rio Tinto has temporarily halted one of its Diavik mine's pits due to road subsidence, Rapaport reports. Although the miner declined to comment on how long the A154 pit would be shut (or whether this would affect Rio Tinto's rough diamond production in 2024), subsidence usually requires technical work that can often take time
In our view, supply disruptions would be moderately positive for diamond sector sentiment, as Diavik accounted for ~3% of global rough supply in 2023
#diamonds
https://metals-wire.com/sector/Diamonds
Morning Bites
🥉CMOC aims to double copper output at its Congo mines to 0.8-1.0mnt by 2028, Reuters reports, citing a company spokesman. CMOC produced 420kt of copper in 2023 and is set to raise output to ~570kt this year, following the expansion of its Tenke Fungurume and Kisanfu (or KFM) mines in Congo. Overall, CMOC’s additional volumes could account for 2-3% of mined Cu supply in 2023. However, we note that, globally, recent large copper projects have been delayed by ~30%, on average, which adds some scepticism to the announced timeline
We keep our positive view on copper, amid growing demand for renewables and surging investments in China's grid infrastructure, although the spot Cu price is already ~50% above the 90th %-ile cash costs, on our numbers, bolstered by favourable market conditions
#copper
https://metals-wire.com/sector/Copper
🥉CMOC aims to double copper output at its Congo mines to 0.8-1.0mnt by 2028, Reuters reports, citing a company spokesman. CMOC produced 420kt of copper in 2023 and is set to raise output to ~570kt this year, following the expansion of its Tenke Fungurume and Kisanfu (or KFM) mines in Congo. Overall, CMOC’s additional volumes could account for 2-3% of mined Cu supply in 2023. However, we note that, globally, recent large copper projects have been delayed by ~30%, on average, which adds some scepticism to the announced timeline
We keep our positive view on copper, amid growing demand for renewables and surging investments in China's grid infrastructure, although the spot Cu price is already ~50% above the 90th %-ile cash costs, on our numbers, bolstered by favourable market conditions
#copper
https://metals-wire.com/sector/Copper
🗞Today, China published its preliminary import/export statistics for June (see table above)
#statistics #China
https://metals-wire.com/news-reports
#statistics #China
https://metals-wire.com/news-reports
Morning Bites (part 1)
🔗China’s finished steel net exports grew 18% YoY in June, following the +16% YoY in May. To recap, weak domestic demand (amid the prolonged property crisis) has encouraged local producers to find customers abroad, and that led to elevated exports in 1H24. Meanwhile, the new potential economic stimulus, which is expected to be announced after the Third Plenum meeting (15-18 July), might add support to Chinese construction demand, we believe
🪨China’s coal imports rose 12% YoY in June, in line with the +11% YoY in May. According to Reuters, record high temperatures in northwest and east China in June boosted electricity demand (to power air conditioning). Furthermore, China's coal output was down 3% YoY in 5mo23, which has led to increased imports
#coal #steel
https://metals-wire.com/news-reports
🔗China’s finished steel net exports grew 18% YoY in June, following the +16% YoY in May. To recap, weak domestic demand (amid the prolonged property crisis) has encouraged local producers to find customers abroad, and that led to elevated exports in 1H24. Meanwhile, the new potential economic stimulus, which is expected to be announced after the Third Plenum meeting (15-18 July), might add support to Chinese construction demand, we believe
🪨China’s coal imports rose 12% YoY in June, in line with the +11% YoY in May. According to Reuters, record high temperatures in northwest and east China in June boosted electricity demand (to power air conditioning). Furthermore, China's coal output was down 3% YoY in 5mo23, which has led to increased imports
#coal #steel
https://metals-wire.com/news-reports
Morning Bites (part 2)
🇿🇦South Africa’s PGM mining output declined 4% YoY in May, reversing from the +17% YoY in April, according to official statistics. The country’s gold production fell 9% YoY, accelerating from the 2% YoY drop in April. In our view, unfavourable market conditions will likely keep weighing on PGM production in 2024, as demand from the automotive sector remains subdued, in addition to growing consumer interest for EVs globally
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/news-reports
🇿🇦South Africa’s PGM mining output declined 4% YoY in May, reversing from the +17% YoY in April, according to official statistics. The country’s gold production fell 9% YoY, accelerating from the 2% YoY drop in April. In our view, unfavourable market conditions will likely keep weighing on PGM production in 2024, as demand from the automotive sector remains subdued, in addition to growing consumer interest for EVs globally
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/news-reports
Morning Bites (part 3)
⛏BHP aims to halt its Nickel West operations in 4Q24 until 2027, due to global oversupply of nickel, according to a company press release. Specifically, BHP is to suspend work at the Kwinana nickel refinery, the Kalgoorlie nickel smelter and the Mt Keith and Leinster mines, implementing a care and maintenance programme. BHP’s Nickel West mines accounted for ~2.3% of global Ni supply in 2023 (and ~5.3% of Class-1 Ni supply), on our numbers
Overall, the news is in line with the latest nickel mine closures, as the supply side has started to react to the continuous Ni price decline (-27% YoY in 1H24 and -38% vs. 1H22)
#Nickel
https://metals-wire.com/news-reports
⛏BHP aims to halt its Nickel West operations in 4Q24 until 2027, due to global oversupply of nickel, according to a company press release. Specifically, BHP is to suspend work at the Kwinana nickel refinery, the Kalgoorlie nickel smelter and the Mt Keith and Leinster mines, implementing a care and maintenance programme. BHP’s Nickel West mines accounted for ~2.3% of global Ni supply in 2023 (and ~5.3% of Class-1 Ni supply), on our numbers
Overall, the news is in line with the latest nickel mine closures, as the supply side has started to react to the continuous Ni price decline (-27% YoY in 1H24 and -38% vs. 1H22)
#Nickel
https://metals-wire.com/news-reports
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, among major M&M names, Alcoa is to release its 2Q24 earnings. On the EBITDA side, we are broadly in-line with the consensus
This week we also expect to see Chinese industrial production and EU car registrations data
#reporting_season
https://metals-wire.com/events
As the reporting season begins, we commence a series of posts devoted to the forthcoming data releases. This week, among major M&M names, Alcoa is to release its 2Q24 earnings. On the EBITDA side, we are broadly in-line with the consensus
This week we also expect to see Chinese industrial production and EU car registrations data
#reporting_season
https://metals-wire.com/events
🗞Today, China has published its industrial production data for June (see table above)
#statistics #China
https://metals-wire.com/news-reports
#statistics #China
https://metals-wire.com/news-reports