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
Morning Bites (part 1)
🔗China’s crude steel output was broadly flat YoY in June, after the 3% YoY gain in May. Meanwhile, the production remained 1% lower YoY in 1H24, amid slow domestic demand and subdued steel margins, per Reuters. China represents ~57% of global steel supply
🏢China's property sales decreased 14% YoY in June (after the -16% YoY in May), and were 49% below the 2021 level. Floor space starts declined 22% YoY in June (vs. -23% YoY in May), and were -71% vs. 2021. Personal mortgage loans were 25% lower YoY (vs. -42% in May), while property completions dropped 30% YoY (vs. -18% YoY). Although China’s property sector remains depressed, new potential economic stimulus - an announcement on which is broadly expected after the Third Plenum meeting (15-18 July) - might add support to construction demand, we believe
#steel #property
https://metals-wire.com/sector/Steel
🔗China’s crude steel output was broadly flat YoY in June, after the 3% YoY gain in May. Meanwhile, the production remained 1% lower YoY in 1H24, amid slow domestic demand and subdued steel margins, per Reuters. China represents ~57% of global steel supply
🏢China's property sales decreased 14% YoY in June (after the -16% YoY in May), and were 49% below the 2021 level. Floor space starts declined 22% YoY in June (vs. -23% YoY in May), and were -71% vs. 2021. Personal mortgage loans were 25% lower YoY (vs. -42% in May), while property completions dropped 30% YoY (vs. -18% YoY). Although China’s property sector remains depressed, new potential economic stimulus - an announcement on which is broadly expected after the Third Plenum meeting (15-18 July) - might add support to construction demand, we believe
#steel #property
https://metals-wire.com/sector/Steel
Morning Bites (part 2)
📌China’s new internal combustion engine car sales decreased 17% YoY in June, after the 12% YoY decline in May. The sales remained materially below their pre-Covid levels (-21% vs. June 2019), amid persistently strong appetite for EVs, which is in turn affecting PGM consumption. To recap, the Chinese automotive sector represents some 20% and 17% of the global demand for Pd and Pt, respectively
📌New EV sales in China increased 30% YoY in June, after the 33% YoY gain in May. Overall, continuously strong local EV demand might add further support to the consumption of the battery metals basket (cobalt, lithium and nickel), as China accounted for ~55% of global EV sales in 1Q24
#cars #EV #nickel #lithium #cobalt
https://metals-wire.com/news-reports
📌China’s new internal combustion engine car sales decreased 17% YoY in June, after the 12% YoY decline in May. The sales remained materially below their pre-Covid levels (-21% vs. June 2019), amid persistently strong appetite for EVs, which is in turn affecting PGM consumption. To recap, the Chinese automotive sector represents some 20% and 17% of the global demand for Pd and Pt, respectively
📌New EV sales in China increased 30% YoY in June, after the 33% YoY gain in May. Overall, continuously strong local EV demand might add further support to the consumption of the battery metals basket (cobalt, lithium and nickel), as China accounted for ~55% of global EV sales in 1Q24
#cars #EV #nickel #lithium #cobalt
https://metals-wire.com/news-reports
Morning Bites
🇵🇪 Peru’s copper output inched down 1% YoY in May, after the 8% YoY drop in April, according to the MINEM data. Although the Peruvian government plans to boost domestic Cu supply 9% YoY in 2024 (after the +13% YoY in 2023), output on the 5mo24 basis remained broadly flat YoY. In our view, the YTD dynamics add some scepticism to the announced plan
The joint production of Chile and Peru (~24% and ~12% of global Cu supply, respectively) gained 5% YoY in May
#copper
https://metals-wire.com/sector/Copper
🇵🇪 Peru’s copper output inched down 1% YoY in May, after the 8% YoY drop in April, according to the MINEM data. Although the Peruvian government plans to boost domestic Cu supply 9% YoY in 2024 (after the +13% YoY in 2023), output on the 5mo24 basis remained broadly flat YoY. In our view, the YTD dynamics add some scepticism to the announced plan
The joint production of Chile and Peru (~24% and ~12% of global Cu supply, respectively) gained 5% YoY in May
#copper
https://metals-wire.com/sector/Copper
Morning Bites (part 1)
💎 De Beers has allowed sightholders to defer some rough purchases at its 6th cycle in 2024, Rapaport reports, citing a miner’s message. Hence, sightholders will be able to avoid buying up to 50% of their allocations for <0.75ct diamonds (of medium and high quality) at the upcoming July trading session. In addition, De Beers is to allow sightholders to sell up to 30% of certain rough back to the miner (this option is usually capped at 10%)
Overall, the announced measures are in line with De Beers’ price-over-volume strategy, and could brighten the sentiment on diamonds in 2024, we believe
#diamonds
https://metals-wire.com/sector/Diamonds
💎 De Beers has allowed sightholders to defer some rough purchases at its 6th cycle in 2024, Rapaport reports, citing a miner’s message. Hence, sightholders will be able to avoid buying up to 50% of their allocations for <0.75ct diamonds (of medium and high quality) at the upcoming July trading session. In addition, De Beers is to allow sightholders to sell up to 30% of certain rough back to the miner (this option is usually capped at 10%)
Overall, the announced measures are in line with De Beers’ price-over-volume strategy, and could brighten the sentiment on diamonds in 2024, we believe
#diamonds
https://metals-wire.com/sector/Diamonds