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

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

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

🗞Today, China published its preliminary import/export statistics for July (see table above)

#statistics #China
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

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

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

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/

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

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

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

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

Morning Bites (part 1)

🇵🇪 Peru’s copper output slid 12% YoY in June, after the 1% YoY drop in May, per Ministry of Energy and Mines data. According to the Ministry, the June drop was partly explained by the lower performance of assets controlled by Chinese companies: Chinalco (-61% YoY) and MMG (-13% YoY)

The Peruvian government plans to increase Cu supply 9% YoY in 2024 (after the +13% YoY in 2023). For 1H24, however, output was down 2% YoY. In our view, the YTD dynamics suggest a sceptical view of the announced plan

Peru accounts for ~12% of global Cu supply

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

Morning Bites (part 2)

🇿🇦South Africa’s PGM mining output shrank 6% YoY in June, following the 4% YoY decline in May, according to official statistics. The country’s gold production was also 13% lower YoY, after the 9% YoY drop in May

In our view, the ongoing shift to EVs globally remains a key factor weighing on PGM consumption. 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)

💎A third of Surat diamond polishers have reported temporary closures or have cut working weeks to 2-3 days as the slump in global demand persists, IDEX reports. The news follows a recent announcement made by Kiran Gems (one of the key midstream producers) that it would halt production on 17-27 August, with the aim of rebalancing supply and supporting prices. Historically the Indian midstream provides ~95% of global polished supply

Although midstream inventories remain elevated, production stoppages in the Indian polishing sector, as well as De Beers’ August tender cancellation, might, combined with stable downstream demand, accelerate industry stock release in 2H24 and in turn lift sentiment in the stressed diamond sector

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

🗞Today, China has published its industrial production data for July (see table above)

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