Morning Bites
📈China’s output of aluminium products fell 2% YoY to 5.9mnt in June, a reversal from the 10% YoY gain in May. The decline is likely associated with the one-off high base effect of June 2023. Given the persistently strong demand for Al in China (~60% of global consumption), bolstered by the rapid expansion of the local new energy sector, we maintain our positive view on the metal. On our numbers, spot Al is still trading below its fundamentally reasonable level for 2024 (USD >2,500/t)
🥉Chinese output of copper products declined 6% YoY in June to 2.0mnt, vs. the 12% YoY drop in May. Despite some slowdown, we note upbeat grid investment plans in China, as well as strong demand trends globally. Furthermore, the potential US Fed funds rate cut in September 2024 might add further positives to sentiment on the red metal's price, in our view
China represents ~55% of global Cu demand
#aluminium #copper
https://metals-wire.com/news-reports
📈China’s output of aluminium products fell 2% YoY to 5.9mnt in June, a reversal from the 10% YoY gain in May. The decline is likely associated with the one-off high base effect of June 2023. Given the persistently strong demand for Al in China (~60% of global consumption), bolstered by the rapid expansion of the local new energy sector, we maintain our positive view on the metal. On our numbers, spot Al is still trading below its fundamentally reasonable level for 2024 (USD >2,500/t)
🥉Chinese output of copper products declined 6% YoY in June to 2.0mnt, vs. the 12% YoY drop in May. Despite some slowdown, we note upbeat grid investment plans in China, as well as strong demand trends globally. Furthermore, the potential US Fed funds rate cut in September 2024 might add further positives to sentiment on the red metal's price, in our view
China represents ~55% of global Cu demand
#aluminium #copper
https://metals-wire.com/news-reports
ArcelorMittal 2Q24 results - EBITDA beats expectations
✏️ArcelorMittal's 2Q24 revenues were roughly in line with market estimates; however, EBITDA outperformed both the consensus and our forecasts (+6% and +7%, respectively), amid a material reduction in non-core business expenses
🏭The steelmaker notes that the Chinese market is oversupplied, which has triggered an aggressive growth in exports, affecting EU and US steel prices. Meanwhile, Arcelor Mittal expects global ex-China apparent steel demand to grow 2.5-3.0% YoY in 2024
💰The company maintained its buyback programme, having repurchased 1.5% of its outstanding shares during 2Q24 (4.2% during the 1H24)
❗️At spot, we expect Arcelor’s 3Q24F EBITDA to be moderately lower QoQ, following the recent slowdown in global steel prices
#MT #steel
https://metals-wire.com/company/MT_US/
✏️ArcelorMittal's 2Q24 revenues were roughly in line with market estimates; however, EBITDA outperformed both the consensus and our forecasts (+6% and +7%, respectively), amid a material reduction in non-core business expenses
🏭The steelmaker notes that the Chinese market is oversupplied, which has triggered an aggressive growth in exports, affecting EU and US steel prices. Meanwhile, Arcelor Mittal expects global ex-China apparent steel demand to grow 2.5-3.0% YoY in 2024
💰The company maintained its buyback programme, having repurchased 1.5% of its outstanding shares during 2Q24 (4.2% during the 1H24)
❗️At spot, we expect Arcelor’s 3Q24F EBITDA to be moderately lower QoQ, following the recent slowdown in global steel prices
#MT #steel
https://metals-wire.com/company/MT_US/
Rio Tinto 1H24 results - overall neutral
📝Rio Tinto's 1H24 revenues broadly met market expectations (+2% vs. the consensus and -2% vs. us). Meanwhile, EBITDA came in 4% above our estimates, amid lower cost pressure in the iron ore segment than we had anticipated
⛏The miner has recently reiterated its 2024 guidance: iron ore and aluminium production is set to remain broadly stable YoY. However, Rio's copper output guidance is now at the lower end of its previous 230-260kt (+31-49% YoY) outlook
💰The company's BoD has declared an interim dividend of USD 1.77/sh (~2.7% DY), in line with company's practice
📌On our numbers, at spot, Rio Tinto's 2H24F EBITDA will be moderately weaker HoH, as current iron ore and aluminium prices are 15% and 7% below, respectively, the 1H24 average
#RIO #Iron_ore
https://metals-wire.com/company/RIO_LN/
📝Rio Tinto's 1H24 revenues broadly met market expectations (+2% vs. the consensus and -2% vs. us). Meanwhile, EBITDA came in 4% above our estimates, amid lower cost pressure in the iron ore segment than we had anticipated
⛏The miner has recently reiterated its 2024 guidance: iron ore and aluminium production is set to remain broadly stable YoY. However, Rio's copper output guidance is now at the lower end of its previous 230-260kt (+31-49% YoY) outlook
💰The company's BoD has declared an interim dividend of USD 1.77/sh (~2.7% DY), in line with company's practice
📌On our numbers, at spot, Rio Tinto's 2H24F EBITDA will be moderately weaker HoH, as current iron ore and aluminium prices are 15% and 7% below, respectively, the 1H24 average
#RIO #Iron_ore
https://metals-wire.com/company/RIO_LN/
Morning Bites
🌏Global manufacturing PMIs weakened in July. The Eurozone Markit Manufacturing PMI remained flat at 45.8. The US ISM manufacturing PMI was at 46.4 (firmly below market expectations of 48.8)
🇨🇳The official NBS Manufacturing PMI in China shrank to 49.4 in July (vs. 49.5 a month ago). Meanwhile, the Caixin China Manufacturing PMI stood at 49.8 in July — missing the forecasts of 51.5
🇮🇳 Although the Indian manufacturing PMI slowed to 58.1 (vs. the consensus of 59.0), it remains one the strongest indicators among the world's key economies
❗️Overall, most of global PMIs remained below 50.0 in July, indicating an ongoing slowdown in their manufacturing activity. However, strong PMI data from India might partly offset the negative impact on demand for industrial metals (e.g. steel, aluminum and copper), we believe
#PMIs
https://metals-wire.com/news-reports
🌏Global manufacturing PMIs weakened in July. The Eurozone Markit Manufacturing PMI remained flat at 45.8. The US ISM manufacturing PMI was at 46.4 (firmly below market expectations of 48.8)
🇨🇳The official NBS Manufacturing PMI in China shrank to 49.4 in July (vs. 49.5 a month ago). Meanwhile, the Caixin China Manufacturing PMI stood at 49.8 in July — missing the forecasts of 51.5
🇮🇳 Although the Indian manufacturing PMI slowed to 58.1 (vs. the consensus of 59.0), it remains one the strongest indicators among the world's key economies
❗️Overall, most of global PMIs remained below 50.0 in July, indicating an ongoing slowdown in their manufacturing activity. However, strong PMI data from India might partly offset the negative impact on demand for industrial metals (e.g. steel, aluminum and copper), we believe
#PMIs
https://metals-wire.com/news-reports
Week ahead data releases in M&M
With the reporting season ongoing, several major M&M companies are due to release their earnings this week. Specifically, we are slightly more optimistic than the consensus estimates on Glencore and CSN EBITDA performance
We also await the China Customs monthly statistics, which are scheduled for Wednesday
#reporting_season
https://metals-wire.com/events
With the reporting season ongoing, several major M&M companies are due to release their earnings this week. Specifically, we are slightly more optimistic than the consensus estimates on Glencore and CSN EBITDA performance
We also await the China Customs monthly statistics, which are scheduled for Wednesday
#reporting_season
https://metals-wire.com/events
Morning Bites (part 1)
🏦 Global central banks purchased net 12t of gold in June, vs. the revised +13t in May, the World Gold Council (WGC) reports. June marked the 13th consecutive month of reserves accumulation. The major contributors in June were India and Uzbekistan (+9t both), while only Singapore and Kazakhstan sold a notable amount (-12t and -6t, respectively)
We maintain our view that the fundamentally reasonable gold price is USD 2,300/oz for 2024; however, as we have previously noted, geopolitical tensions, persistently strong demand from global central banks and the widely expected US Fed funds rate cut in 2H24 create upside risks for gold price
#gold
https://metals-wire.com/sector/Gold
🏦 Global central banks purchased net 12t of gold in June, vs. the revised +13t in May, the World Gold Council (WGC) reports. June marked the 13th consecutive month of reserves accumulation. The major contributors in June were India and Uzbekistan (+9t both), while only Singapore and Kazakhstan sold a notable amount (-12t and -6t, respectively)
We maintain our view that the fundamentally reasonable gold price is USD 2,300/oz for 2024; however, as we have previously noted, geopolitical tensions, persistently strong demand from global central banks and the widely expected US Fed funds rate cut in 2H24 create upside risks for gold price
#gold
https://metals-wire.com/sector/Gold
Morning Bites (part 2)
💎US jewellery sales jumped 6% YoY in June, marking the highest YoY growth in two years, the eighth consecutive YoY gain, after the revised 3% YoY rise in May, IDEX reports, citing the US Department of Commerce. According to Rapaport, US dealers enjoyed decent demand from retailers with stable high-end market
We reiterate our view that the ongoing recovery in US downstream demand (~53% of global retail gem-set jewellery trade) could accelerate the release of industry inventories in 2024, supporting sentiment in the global diamond market
#diamonds
https://metals-wire.com/sector/Diamonds
💎US jewellery sales jumped 6% YoY in June, marking the highest YoY growth in two years, the eighth consecutive YoY gain, after the revised 3% YoY rise in May, IDEX reports, citing the US Department of Commerce. According to Rapaport, US dealers enjoyed decent demand from retailers with stable high-end market
We reiterate our view that the ongoing recovery in US downstream demand (~53% of global retail gem-set jewellery trade) could accelerate the release of industry inventories in 2024, supporting sentiment in the global diamond market
#diamonds
https://metals-wire.com/sector/Diamonds
Morning Bites (part 1)
💍Hong Kong jewellery and watch sales shrank 23% YoY in June, broadly in-line with the 21% YoY decline in May, per government data. According to Rapaport, the slump in demand continued, as consumers preferred investing in gold rather than diamonds, while a lack of overseas visitors amplified the effect (in June, 3.1mn visitors arrived in HK, a 39% drop vs. June 2019)
Despite soft demand in HK, sentiment remains strong on the key US market (~53% of the world's gem-set jewellery trade), while Chinese data (~12% of the global market) was upbeat in recent months, which might add support to the stressed diamond sector, we believe
#diamonds
https://metals-wire.com/sector/Diamonds
💍Hong Kong jewellery and watch sales shrank 23% YoY in June, broadly in-line with the 21% YoY decline in May, per government data. According to Rapaport, the slump in demand continued, as consumers preferred investing in gold rather than diamonds, while a lack of overseas visitors amplified the effect (in June, 3.1mn visitors arrived in HK, a 39% drop vs. June 2019)
Despite soft demand in HK, sentiment remains strong on the key US market (~53% of the world's gem-set jewellery trade), while Chinese data (~12% of the global market) was upbeat in recent months, which might add support to the stressed diamond sector, we believe
#diamonds
https://metals-wire.com/sector/Diamonds
Morning Bites (part 2)
🚘US light vehicle sales were down 3% YoY in July, in-line with June's dynamics. The figure was also 9% below the pre-Covid 2019 level. Similarly, seasonally-adjusted sales volumes decreased 1% YoY last month and remained 7% lower than the 2019 level. We believe that persistently soft automotive demand, along with the growing appetite for EVs globally, are 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 July, in-line with June's dynamics. The figure was also 9% below the pre-Covid 2019 level. Similarly, seasonally-adjusted sales volumes decreased 1% YoY last month and remained 7% lower than the 2019 level. We believe that persistently soft automotive demand, along with the growing appetite for EVs globally, are 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
🗞Today, China published its preliminary import/export statistics for July (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 10% YoY in July, decelerating from the +18% YoY in June. To recap, weak domestic demand (amid the prolonged property crisis) has encouraged local producers to find customers abroad, and that has led to elevated exports in 7mo24. We maintain our view that China’s steel demand is likely to remain soft in 2H24, amid the lack of significant new economic support measures
🪨China’s coal imports rose 18% YoY in July, accelerating from the +12% YoY in June. According to Reuters, imports reached a seven-month high, due to several rounds of record-breaking hot weather in mid-2024, which supported local coal demand to power air conditioning
#coal #steel
https://metals-wire.com/news-reports
🔗China’s finished steel net exports grew 10% YoY in July, decelerating from the +18% YoY in June. To recap, weak domestic demand (amid the prolonged property crisis) has encouraged local producers to find customers abroad, and that has led to elevated exports in 7mo24. We maintain our view that China’s steel demand is likely to remain soft in 2H24, amid the lack of significant new economic support measures
🪨China’s coal imports rose 18% YoY in July, accelerating from the +12% YoY in June. According to Reuters, imports reached a seven-month high, due to several rounds of record-breaking hot weather in mid-2024, which supported local coal demand to power air conditioning
#coal #steel
https://metals-wire.com/news-reports
Morning Bites (part 2)
💎Petra Diamonds has canceled its August/September tender in order to support major producers’ supply discipline measures, amid soft demand, per a company announcement. According to Petra’s CEO Richard Duffy, the decision, along with the seasonally stronger demand in 2H24, migh support rough prices later this year
Although weak upstream sales indicate still elevated industry stocks, solid downstream demand in the key US market (~53% of the world's gem-set jewellery trade) might accelerate the release of inventories and bolster the stressed diamond market, we believe
#diamonds
https://metals-wire.com/sector/Diamonds
💎Petra Diamonds has canceled its August/September tender in order to support major producers’ supply discipline measures, amid soft demand, per a company announcement. According to Petra’s CEO Richard Duffy, the decision, along with the seasonally stronger demand in 2H24, migh support rough prices later this year
Although weak upstream sales indicate still elevated industry stocks, solid downstream demand in the key US market (~53% of the world's gem-set jewellery trade) 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-July was reported at 1.97mnt, the lowest point this year (-8.1% vs. previous ten days and 7.6% lower YoY). Meanwhile, for 7mo24, the output was down 2.0% YoY. At the same time, local steel inventories slid 1.5% over the period (but were up 10.8% YoY). We reiterate our view that soft domestic steel demand, which has triggered export growth, might keep weighing on China’s steel output in the near term
China accounts for ~57% of global steel supply
#steel
https://metals-wire.com/sector/Steel
🔗CISA mills' daily crude steel production in late-July was reported at 1.97mnt, the lowest point this year (-8.1% vs. previous ten days and 7.6% lower YoY). Meanwhile, for 7mo24, the output was down 2.0% YoY. At the same time, local steel inventories slid 1.5% over the period (but were up 10.8% YoY). We reiterate our view that soft domestic steel demand, which has triggered export growth, might keep weighing on China’s steel output in the near term
China accounts for ~57% of global steel supply
#steel
https://metals-wire.com/sector/Steel
Morning Bites (part 2)
🏗China’s excavator sales rose 9% YoY in July (domestic + export), accelerating from the +5% YoY in June, according to the CCMA data. The figure was marginally below the CME estimates. Specifically, domestic sales were up 22% YoY (although still 49% lower than July 2021). Although the dynamics of recent months have been positive, the major sales volumes usually take place in 1Q, making the summer period less representative. We reiterate our view that more government support measures are required for a full-scale recovery in China’s property sector
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 9% YoY in July (domestic + export), accelerating from the +5% YoY in June, according to the CCMA data. The figure was marginally below the CME estimates. Specifically, domestic sales were up 22% YoY (although still 49% lower than July 2021). Although the dynamics of recent months have been positive, the major sales volumes usually take place in 1Q, making the summer period less representative. We reiterate our view that more government support measures are required for a full-scale recovery in China’s property sector
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
Glencore 1H24 results - again below expectations
📝Glencore's 1H24 revenues roughly matched market forecasts. However, EBITDA was materially below expectations (-11% vs. the consensus, and -15% vs. us), due to the lower profitability of marketing activities and higher cost pressure in the coal segment than we had anticipated
📈Glencore's net unit cash costs in the copper segment grew 3% HoH (and 16% YoY) to USD 1.68/lb in 1H24. Meanwhile, in 2H24, the figure is expected to be flat HoH
📍The miner has maintained its 2024 guidance: copper and coal output (ex. the recently acquired 77% interest in Teck's Elk Valley assets) are set to remain broadly stable YoY, while nickel production might decline 8-18% You
📌At spot, we expect Glencore’s 2H24F EBITDA to be materially stronger HoH, supported by the proceeds from the new coal assets
#GLEN #copper #coal
https://metals-wire.com/company/GLEN_LN/
📝Glencore's 1H24 revenues roughly matched market forecasts. However, EBITDA was materially below expectations (-11% vs. the consensus, and -15% vs. us), due to the lower profitability of marketing activities and higher cost pressure in the coal segment than we had anticipated
📈Glencore's net unit cash costs in the copper segment grew 3% HoH (and 16% YoY) to USD 1.68/lb in 1H24. Meanwhile, in 2H24, the figure is expected to be flat HoH
📍The miner has maintained its 2024 guidance: copper and coal output (ex. the recently acquired 77% interest in Teck's Elk Valley assets) are set to remain broadly stable YoY, while nickel production might decline 8-18% You
📌At spot, we expect Glencore’s 2H24F EBITDA to be materially stronger HoH, supported by the proceeds from the new coal assets
#GLEN #copper #coal
https://metals-wire.com/company/GLEN_LN/
Morning Bites (part 1)
📈Gold-backed ETFs accelerated net purchasing to 48t in July, following the +18t in June. According to the World Gold Council (WGC), the inflows were recorded across all the regions: North American funds raised 26t, European and Asian funds added 17t and 5t, respectively. As we have previously noted, the return of ETFs to gold buying, after a long period of net selling, creates additional support for the metal
We maintain our view that gold is trading above its fundamentally justified level for 2024, of USD ~2,300/oz, due to the persistently strong demand from global central banks and in light of the widely expected US Fed funds rate cut in September 2024. However, gold has more upside risks from here, amid an unfavorable geopolitical environment globally
#ETF #gold
https://metals-wire.com/news-reports
📈Gold-backed ETFs accelerated net purchasing to 48t in July, following the +18t in June. According to the World Gold Council (WGC), the inflows were recorded across all the regions: North American funds raised 26t, European and Asian funds added 17t and 5t, respectively. As we have previously noted, the return of ETFs to gold buying, after a long period of net selling, creates additional support for the metal
We maintain our view that gold is trading above its fundamentally justified level for 2024, of USD ~2,300/oz, due to the persistently strong demand from global central banks and in light of the widely expected US Fed funds rate cut in September 2024. However, gold has more upside risks from here, amid an unfavorable geopolitical environment globally
#ETF #gold
https://metals-wire.com/news-reports
Morning Bites (part 2)
💎De Beers has cancelled its August sight and rescheduled cycle dates for later 2024, following an oversupply in the diamond industry, Rapaport, reports. The decision also reflected sharp production cuts of polished stones in India (~95% of world supply), with executives estimating a ~50% YoY reduction in July and early-August. According to De Beers spokesman, the revised scheduling is in-line with sightholders’ business needs
Although weak upstream sales indicate still elevated industry stocks, solid downstream demand in the key US market (~53% of the world's gem-set jewellery trade), combined with ongoing supply cuts, might speed-up the release of inventories in 2024 and bolster the stressed diamond market, in our view
#diamonds
https://metals-wire.com/sector/Diamonds
💎De Beers has cancelled its August sight and rescheduled cycle dates for later 2024, following an oversupply in the diamond industry, Rapaport, reports. The decision also reflected sharp production cuts of polished stones in India (~95% of world supply), with executives estimating a ~50% YoY reduction in July and early-August. According to De Beers spokesman, the revised scheduling is in-line with sightholders’ business needs
Although weak upstream sales indicate still elevated industry stocks, solid downstream demand in the key US market (~53% of the world's gem-set jewellery trade), combined with ongoing supply cuts, might speed-up the release of inventories in 2024 and bolster the stressed diamond market, in our view
#diamonds
https://metals-wire.com/sector/Diamonds
Week ahead data releases in M&M
This week, only a few major global M&M names are scheduled to report their 2Q24 / 1H24 financials. Our forecasts are slightly more conservative than the consensus on Barrick’s EBITDA performance
#reporting_season
https://metals-wire.com/events
This week, only a few major global M&M names are scheduled to report their 2Q24 / 1H24 financials. Our forecasts are slightly more conservative than the consensus on Barrick’s EBITDA performance
#reporting_season
https://metals-wire.com/events
Morning Bites
🚘New car registrations in France, the UK, Spain, Italy and Germany inched up 1% YoY in July, after the 4% YoY gain in June, but remained firmly below their pre-COVID level (-23% vs. July 2019). In particular, in Germany and Spain, car sales were both 28% below 2019 levels, while registrations in France were 27% weaker. As of Italy and UK, local sales were 18% and 6% below July 2019, respectively
Given that these five countries represented >70% of new vehicle registrations in Europe in 2023, the region’s car sales have likely slowed their recovery, remaining well below their pre-pandemic levels
#cars
https://metals-wire.com/sector/PGM
🚘New car registrations in France, the UK, Spain, Italy and Germany inched up 1% YoY in July, after the 4% YoY gain in June, but remained firmly below their pre-COVID level (-23% vs. July 2019). In particular, in Germany and Spain, car sales were both 28% below 2019 levels, while registrations in France were 27% weaker. As of Italy and UK, local sales were 18% and 6% below July 2019, respectively
Given that these five countries represented >70% of new vehicle registrations in Europe in 2023, the region’s car sales have likely slowed their recovery, remaining well below their pre-pandemic levels
#cars
https://metals-wire.com/sector/PGM