Morning Bites

🥉Global mined copper production jumped 5.0% YoY in December, vs. the revised +3.2% YoY in November, the International Copper Study Group (ICSG) reports. Overall, in 2024, global output was up 2.4% YoY, mainly driven by higher DRC and Chilean supply (+14% and +5% YoY, respectively), while the ICSG also notes solid global refined Cu consumption growth (+2.9% YoY in 2024), mainly driven by China (+3.5% YoY)

We maintain our positive view on copper, amid long-term supply issues, growing demand for renewables globally and surging investments in China’s grid infrastructure (which represents ~8% of global Cu demand, on our numbers)

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

Morning Bites (part 1)

🔗Global crude steel output fell 4% YoY to 151mnt in January, after the 6% YoY growth seen in December, according to World Steel Association (WSA) data. China’s production (54% of global crude steel supply) fell 6% YoY (vs. +12% YoY in December), while ex-China steel output also slipped 3% YoY. The WSA numbers show that Russian output inched down 1% YoY, while the US production rose 1% YoY last month, and EU supply fell 3% YoY. Indian output (~8% of global steel supply) grew 7% YoY in January

We reiterate our view that the new economic support measures announced by Beijing might bolster the local property sector in 2025, but that more actions are required for a full-scale recovery in construction activity. To recap, Beijing might announce the first details of its new consumption-related fiscal stimulus in March

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

Morning Bites (part 2)

🚘EU + UK passenger car registrations slid 3% YoY in January, vs. the +4% YoY in December. The figure matched our estimates, remaining 19% below the pre-COVID 2019 level

We maintain our view that the ongoing monetary easing cycle in the EU/US and China, the increase in EU import duties (from 10% up to 45%) on Chinese BEVs (encouraging the production of catalyst-containing cars), as well as the expected cancellation of EV-support programmes in the US (which could even be replaced with USD 1,000 new EV purchase tax) might stoke the PGM price recovery in 2025, given gradual shift from BEVs to hybrid vehicles

In 2023, the EU+UK accounted for some 23% and 30% of world autocatalyst Pd and Pt demand, respectively

#cars
https://metals-wire.com/sector/PGM

Morning Bites

📉Russia’s gold output declined 2.5% YoY in January, after the 5.9% YoY gain in December, per Rosstat data. The country’s output was also down over 40% MoM due to seasonal factors. Russia accounted for ~9% of the world's mined gold supply in 2023

Although, at spot, gold continues to trade above what we see as its fundamentally reasonable level for 1H25 (~USD 2,500/oz), we think the precious metal’s price will remain elevated in 2025, given continuing inflows into global ETFs and central banks

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

Morning Bites

🔗CISA mills' daily crude steel production in mid-February was reported at 2.15mnt, up 0.8% vs. the previous ten days, and +2.4% YoY. Meanwhile, on a YTD basis (through 20 February), the output rose 2.3% YoY, per CISA data. Local steel inventories also increased 3.2% over the period (-11.9% YoY)

We reiterate our view that the new economic support measures announced by Beijing might bolster the local property sector in 2025, but that more actions are required for a full-scale recovery in construction activity. To recap, Beijing might announce the first details of its new consumption-related fiscal stimulus in March

China accounts for ~57% of global steel supply

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

Week ahead data releases in M&M

As the reporting season is drawing to a close, several major M&M names are still due to release their 4Q/2H24 financials. Of those companies reporting this week, we are more conservative than the consensus on Fresnillo’s and SQM's EBITDA, but more upbeat on Ero Copper's upcoming results

This week is also due to bring the Chinese import/export data for January-February period
  
#reporting_season
https://metals-wire.com/events

Morning Bites

🏭Global primary aluminium output grew 2.8% YoY in January, in line with the revised +3.3% YoY seen in December, per International Aluminium Institute (IAI) data. Chinese production (60% of global Al output) gained 3.7% YoY last month, while ex. China output was up 1.5% YoY. Overall, strong consumption dynamics in Asia (incl. grid) and the ongoing monetary easing cycle in key economies (EU/US and China) are likely to add further support to Al, which continues to trade below what we see as its fundamentally reasonable level (USD 2,900-3,000/t for 2025F, on our numbers)

We also note that there is limited potential for additional supply growth in China, as local Al output is capped at 45mnt (China produced 43.4mnt in 2024, as well as 44.9mnt in January 2025 in annualised terms, per IAI data)

#aluminium
https://metals-wire.com/sector/Aluminium

Morning Bites

🌏Global manufacturing PMIs mainly improved in February. The Eurozone Markit Manufacturing PMI was 47.6 (vs. 46.6 in January), while the US ISM manufacturing PMI stood at 50.3

🇨🇳The official NBS Manufacturing PMI in China was 50.2 (vs. 49.1 a month ago). Meanwhile, the Caixin China Manufacturing PMI stood at 50.8

🇮🇳 India’s manufacturing PMI of 56.3 remains one of the strongest indicators among the world's key economies

❗️Global PMIs slightly improved in February, but the EU index remains well below 50.0, underlining the ongoing slowdown in European manufacturing activity. Meanwhile, we reiterate our view that China’s upcoming fiscal stimulus, which we expect to be announced in an annual parliamentary meeting (held from March 4 to 11) might bolster local demand for industrial metals this year (e.g. steel, aluminum and copper)

#PMIs
https://metals-wire.com/news-reports

Morning Bites (part 1)

💍Hong Kong jewellery and watch sales dropped 18% YoY in January, vs. the -14% YoY seen in December, per government data. According to Rapaport, the drop is due to the high base effect, as retail trade benefiting from the revival of tourism last year. Meanwhile, the change in the timing of the Lunar New Year (January 29 this year, vs. February 10 last year) also weighed on consumer activity

Despite strong sales in the key US downstream market (~53% of the global gem-set jewellery trade), the diamond market recovery might take longer than we had anticipated. In our view, the 2024 winter holidays sales did not bring much positivity, while midstream inventories remain elevated in early-2025, according to market participants

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

Morning Bites (part 2)

🏦 Global central banks purchased net 19t of gold in January, vs. the revised +23t in December, marking the 20th consecutive month of reserves accumulation, the World Gold Council (WGC) reports. The major contributors were Uzbekistan (+8t) and China (+5t). On the sellers' side were Russia and Jordan: each sold 3t

At spot, gold continues to trade above what we see as its fundamentally reasonable level for 1H25 (~USD 2,500/oz); however, upside risks still prevail for the precious metal’s price, given the steady inflows into global ETFs and central banks, as well as trade war concerns

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

Morning Bites

💎US jewellery sales fell 3% YoY in January, vs. the revised down +2% YoY in December, IDEX reports, citing the local Department of Commerce data. According to Rapaport, local diamond trading was seasonally slow in January, but market participants are underpinning the steady demand for some 1.5+ct stones

Overall, we keep our cautiously upbeat view on the global diamond market, but it might take longer than we had anticipated to recover, given the still high midstream inventories and the slowdown in the US downstream market in early-2025 (~53% of the world gem-set jewellery trade)

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

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

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

Morning Bites (part 2)

📈Gold-backed ETFs purchased net 100t of gold in February, after the +34t in January, marking the greatest gain since purchasing 185t in March 2022. According to the World Gold Council data, inflows were recorded in every region, with the strongest accumulation seen in N. America (+72t). Overall, since the return of ETFs to gold purchasing in May 2024, global funds have accumulated net 274t (~7% of world physical demand, in annualised terms), following the recently started monetary easing cycle in key economies (EU/US and China)

Although, at spot, gold keeps trading above what we see as its fundamentally reasonable level for 1H25 (~USD 2,500/oz), we think the precious metal’s price will remain elevated in 2025, given continuing inflows into global ETFs and central banks, in addition to ongoing geopolitical tensions

#ETF #gold
https://metals-wire.com/news-reports

Morning Bites

🔗CISA mills' daily crude steel production in late-February was reported at 2.25mnt, up 5.0% vs. the previous ten days, and +6.1% YoY. Meanwhile, on a YTD basis (through 28 February), the output rose 1.0% YoY, per CISA data. Local steel inventories slid 2.5% over the period (-9.5% YoY)

In our view, China’s fiscal stimulus for 2025, announced last week (incl. 5% GDP growth target, increase in official budget deficit from 3% to 4%, etc), might bolster the recovery in the local property sector, which started to gradually bottom out in 2H24. Furthermore, Beijing plans to cut 'excessive' steel output in 2025 (might affect 2-5% of China’s 2024 supply, per market participants’ estimates). Overall, these measures might cool down surging Chinese steel exports, and support global steel prices in 2025, we believe

China accounts for ~57% of global steel supply

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

Morning Bites (part 1)

🚘New car registrations in France, the UK, Spain, Italy and Germany fell 2% YoY in February, in line with the 3% decline seen in January, and remained firmly below their pre-COVID level (-20% vs. February 2019). In Germany, car sales were 28% below their 2019 levels, while registrations in France and Italy were 33% and 2% weaker, respectively. UK sales were 3% above the 2019 level. Sales in Spain were -15% vs. the 2019 levels

Given these five countries represented more than 70% of new vehicle registrations in Europe in 2024, the region’s car sales likely inched down YoY last month, and remained well below their pre-pandemic levels

#cars
https://metals-wire.com/sector/PGM

Morning Bites (part 2)

⛏ Indonesia has proposed higher royalty rates across the Ni supply chain, Reuters reports, citing the local Ministry of Energy and Mineral Resources. Specifically, the royalty rate for nickel ore sales might switch from a fixed 10% to a variable 14-19%, depending on the global Ni price benchmark. Furthermore, ferronickel and NPI royalties are also proposed at variable 5-7% (vs. currently fixed rates of 2% and 5%, respectively)

Although the measure is still being discussed, we calculate that the new Ni royalty rates in Indonesia, if applied, would raise the 90%-lie marginal Ni cash cost by 4-6%, on our numbers, which would support global equilibrium Ni price

#Nickel
https://metals-wire.com/news-reports

Morning Bites

🏗China’s excavator sales jumped 53% YoY in February (domestic + export) from a low base, after the 1% YoY growth seen in January, according to CCMA data. Specifically, domestic sales roughly doubled YoY (but were still down 52% vs. 2021 level). We remind readers that the upcoming March data is the most seasonally important print for Chinese excavator sales, and might provide insight into the prospects for the local property sector recovery in 2025

In our view, China’s new fiscal stimulus for 2025, (incl. 5% GDP growth target, and an increase in official budget deficit from 3% to 4%, etc), could spur recovery in the Chinese real estate sector, which started to gradually bottom out in 2H24. Furthermore, Beijing plans to cut 'excessive' steel output in 2025 (up to 2-5% of China’s 2024 supply, per market estimates). Overall, these measures might cool surging Chinese steel exports, and support global steel prices in 2025, we believe

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