Morning Bites
🏗China’s domestic excavator sales decreased 10% YoY in October, with the decline rate decelerating from 25% YoY in September. Meanwhile, total excavator sales (domestic + export) rose 8% YoY in October, accelerating from the 5% YoY increase in September. As a leading indicator of construction activity, sluggish domestic excavator sales imply that China’s property sector might remain weak in the short term, which could be negative for China’s demand for industrial metals, and in particular for steel. However, we also note that the decline rate of China’s domestic excavator sales has been decelerating for several months
#global
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🏗China’s domestic excavator sales decreased 10% YoY in October, with the decline rate decelerating from 25% YoY in September. Meanwhile, total excavator sales (domestic + export) rose 8% YoY in October, accelerating from the 5% YoY increase in September. As a leading indicator of construction activity, sluggish domestic excavator sales imply that China’s property sector might remain weak in the short term, which could be negative for China’s demand for industrial metals, and in particular for steel. However, we also note that the decline rate of China’s domestic excavator sales has been decelerating for several months
#global
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Kinross 3Q22 results - worse than expected
💰3Q22 revenues were up 47% YoY, which was 10% below our forecast due to lower than expected sales volumes. 3Q22 EBITDA was up 98% YoY (-24% vs. consensus; -19% vs. our forecast), mainly due to lower than expected revenues
💵In 3Q22, AISC per gold equivalent ounce sold fell 6% YoY (-4% QoQ) to USD 1,282/oz
⛏The company revised its 2022 and 2023 gold production guidance down 7% and 9%, respectively, due to operational issues at La Coipa and Tasiast. Meanwhile, the company reiterated its 2022 AISC guidance of USD 1,240/oz
❗️On our numbers, the company’s 4Q22 adjusted EBITDA might show a mild double-digit QoQ decline, at spot prices, affected by subdued production
$K #gold
https://metals-wire.com:3000/company/K_CN/
💰3Q22 revenues were up 47% YoY, which was 10% below our forecast due to lower than expected sales volumes. 3Q22 EBITDA was up 98% YoY (-24% vs. consensus; -19% vs. our forecast), mainly due to lower than expected revenues
💵In 3Q22, AISC per gold equivalent ounce sold fell 6% YoY (-4% QoQ) to USD 1,282/oz
⛏The company revised its 2022 and 2023 gold production guidance down 7% and 9%, respectively, due to operational issues at La Coipa and Tasiast. Meanwhile, the company reiterated its 2022 AISC guidance of USD 1,240/oz
❗️On our numbers, the company’s 4Q22 adjusted EBITDA might show a mild double-digit QoQ decline, at spot prices, affected by subdued production
$K #gold
https://metals-wire.com:3000/company/K_CN/
ArcelorMittal 3Q22 results: EBITDA above consensus
💰3Q22 revenues were down 6% YoY, which was 1% below our forecast, with lower than expected sales volumes being offset by higher than expected average realised prices
💰3Q22 EBITDA fell 56% YoY (+15% vs. consensus; +21% vs. our forecast). The significant deviation of EBITDA was caused by 4% lower than expected pre-EBITDA costs
❗️ArcelorMittal expects its variable costs per tonne to decline QoQ in 4Q22, but less than the revenue per tonne. At the same time, the company sees steel demand improvement in 4Q22 after the current destocking phase has passed
❗️On our numbers, the company’s 4Q22 EBITDA might be below the 3Q22 level, at spot prices
$MT #steel
https://metals-wire.com:3000/company/MT_US/
💰3Q22 revenues were down 6% YoY, which was 1% below our forecast, with lower than expected sales volumes being offset by higher than expected average realised prices
💰3Q22 EBITDA fell 56% YoY (+15% vs. consensus; +21% vs. our forecast). The significant deviation of EBITDA was caused by 4% lower than expected pre-EBITDA costs
❗️ArcelorMittal expects its variable costs per tonne to decline QoQ in 4Q22, but less than the revenue per tonne. At the same time, the company sees steel demand improvement in 4Q22 after the current destocking phase has passed
❗️On our numbers, the company’s 4Q22 EBITDA might be below the 3Q22 level, at spot prices
$MT #steel
https://metals-wire.com:3000/company/MT_US/
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Morning Bites
🏦China’s aggregate financing dropped 43% YoY in October, falling 43% short of the consensus estimate. Traditional bank loans dropped 26% YoY, underperforming the market forecast by 23%. According to Bloomberg, the credit contraction suggests a continued economic slowdown and property market slump. We also note that China’s plans to adhere to its zero-COVID policy might impede the prospects for an economic recovery, which would be negative for the demand for industrial metals
📈Peru’s copper production rose 13.5% YoY in September, reversing from the 1.5% YoY decline in August. According to the Ministry of Energy and Mines of Peru, the increase in production was mainly driven by the improved performance of Antamina (+11.9% YoY) and Cerro Verde (+18.2% YoY). The output growth seems a one-off event, since there was no significant capacity expansion that month. We note that Peru accounts for ~11% of global mine copper supply
#global #copper
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🏦China’s aggregate financing dropped 43% YoY in October, falling 43% short of the consensus estimate. Traditional bank loans dropped 26% YoY, underperforming the market forecast by 23%. According to Bloomberg, the credit contraction suggests a continued economic slowdown and property market slump. We also note that China’s plans to adhere to its zero-COVID policy might impede the prospects for an economic recovery, which would be negative for the demand for industrial metals
📈Peru’s copper production rose 13.5% YoY in September, reversing from the 1.5% YoY decline in August. According to the Ministry of Energy and Mines of Peru, the increase in production was mainly driven by the improved performance of Antamina (+11.9% YoY) and Cerro Verde (+18.2% YoY). The output growth seems a one-off event, since there was no significant capacity expansion that month. We note that Peru accounts for ~11% of global mine copper supply
#global #copper
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Morning Bites
💍Richemont jewellery segment sales were up 29% YoY in 3Q22, with the growth rate accelerating from 20% YoY in 2Q22. According to the company, there was growth in all regions, while Europe and Japan showed the strongest performances. The company did not provide any clear outlook on future sales, though it noted that the jewellery industry would likely face volatile times amid the economic uncertainty, which is in line with our view
#diamonds
💍Richemont jewellery segment sales were up 29% YoY in 3Q22, with the growth rate accelerating from 20% YoY in 2Q22. According to the company, there was growth in all regions, while Europe and Japan showed the strongest performances. The company did not provide any clear outlook on future sales, though it noted that the jewellery industry would likely face volatile times amid the economic uncertainty, which is in line with our view
#diamonds
Week ahead data releases in M&M
As the reporting season comes to an end, among the major miners only SQM is due to release its 3Q22 earnings this week. As concerns SQM’s 3Q22 EBITDA, our forecast is slightly above the consensus estimate
#reporting_season
https://metals-wire.com:3000/events
As the reporting season comes to an end, among the major miners only SQM is due to release its 3Q22 earnings this week. As concerns SQM’s 3Q22 EBITDA, our forecast is slightly above the consensus estimate
#reporting_season
https://metals-wire.com:3000/events
🗞Today China has published its industrial production data for October (see the table above)
#statistics #China
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#statistics #China
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Morning Bites (part 1)
🔗China’s crude steel output rose 11% YoY in October, decelerating from the 18% YoY in September. The growth in annual terms is generally due the low base effect. In October 2022, apparent steel consumption rose 10% YoY, decelerating from the 18% YoY increase in September. On our numbers, 10mo22 production was down 2.3% YoY. China is on track to reach its goal of flat or lower steel output in 2022 YoY
🏢China's property sales fell 21% YoY in October (vs. -16% YoY in September). Floor space starts were down 35% YoY in October, after the 44% YoY drop in September. Similarly, personal mortgage loans were down 31% YoY in October (vs. -18% in September). At the same time, property completions declined 9% YoY in October (vs. -6% YoY in September). While we have not yet seen any substantial measures that might bring about a recovery in the Chinese real estate sector, Beijing's recent announcement could slightly support sentiment
#steel #property
https://metals-wire.com:3000/sector/Steel
🔗China’s crude steel output rose 11% YoY in October, decelerating from the 18% YoY in September. The growth in annual terms is generally due the low base effect. In October 2022, apparent steel consumption rose 10% YoY, decelerating from the 18% YoY increase in September. On our numbers, 10mo22 production was down 2.3% YoY. China is on track to reach its goal of flat or lower steel output in 2022 YoY
🏢China's property sales fell 21% YoY in October (vs. -16% YoY in September). Floor space starts were down 35% YoY in October, after the 44% YoY drop in September. Similarly, personal mortgage loans were down 31% YoY in October (vs. -18% in September). At the same time, property completions declined 9% YoY in October (vs. -6% YoY in September). While we have not yet seen any substantial measures that might bring about a recovery in the Chinese real estate sector, Beijing's recent announcement could slightly support sentiment
#steel #property
https://metals-wire.com:3000/sector/Steel
Morning Bites (Part 2)
💎India’s rough diamond net imports dropped 32% YoY in October, accelerating from the 7% YoY decline in September. Similarly, India’s polished diamond net exports were down 26% YoY in October (vs. +14% YoY in September). According to GJEPC chairman, Vipul Shah, the slowdown in the EU, the interest rate hike in the US and the zero Covid policy in China are challenges for the diamond sector. We reiterate our view that the unfavourable macroeconomic conditions may adversely affect upcoming diamond sales on the YoY basis.
At the same time, India’s lab-grown rough diamond net imports were down 49% YoY in October (vs +4% YoY in September). The share of lab-grown net rough imports in natural diamond imports declined to 5% in October, from 7% in September.
#diamonds
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💎India’s rough diamond net imports dropped 32% YoY in October, accelerating from the 7% YoY decline in September. Similarly, India’s polished diamond net exports were down 26% YoY in October (vs. +14% YoY in September). According to GJEPC chairman, Vipul Shah, the slowdown in the EU, the interest rate hike in the US and the zero Covid policy in China are challenges for the diamond sector. We reiterate our view that the unfavourable macroeconomic conditions may adversely affect upcoming diamond sales on the YoY basis.
At the same time, India’s lab-grown rough diamond net imports were down 49% YoY in October (vs +4% YoY in September). The share of lab-grown net rough imports in natural diamond imports declined to 5% in October, from 7% in September.
#diamonds
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🗓3Q22 reporting season - concluding remarks
📉On average, the 3Q22 EBITDA results of major miners came 12% below the consensus estimates and our forecasts. This deviation was mainly driven by lower than expected revenues, while absolute pre-EBITDA costs were roughly in line with our expectations.
🌊The revenue underperformance was driven by lower than expected sales volumes due to weak demand for metals amid the unfavourable macroeconomic conditions. Meanwhile, realised prices met our expectations, on average.
💵It is worth noting that, since sales volumes were lower than we expected and the absolute pre-EBITDA costs were in line with our forecasts, the unit costs significantly exceeded our estimates.
#reporting_season
https://metals-wire.com:3000/events
📉On average, the 3Q22 EBITDA results of major miners came 12% below the consensus estimates and our forecasts. This deviation was mainly driven by lower than expected revenues, while absolute pre-EBITDA costs were roughly in line with our expectations.
🌊The revenue underperformance was driven by lower than expected sales volumes due to weak demand for metals amid the unfavourable macroeconomic conditions. Meanwhile, realised prices met our expectations, on average.
💵It is worth noting that, since sales volumes were lower than we expected and the absolute pre-EBITDA costs were in line with our forecasts, the unit costs significantly exceeded our estimates.
#reporting_season
https://metals-wire.com:3000/events
Morning Bites (part 1)
💍According to MasterCard SpendingPulse, preliminary US jewellery sales shrank 4% YoY in October, after the 1% YoY increase in September. Of note, if these estimates materialise, October will show negative YoY dynamics for the first time since May 2020. Meanwhile, we reiterate our concern that the currently unfavourable economic conditions pose risks to jewellery sales and diamond demand. In addition, luxury goods sales (excluding jewellery) are also expected to be down 9% YoY in October
#diamonds
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💍According to MasterCard SpendingPulse, preliminary US jewellery sales shrank 4% YoY in October, after the 1% YoY increase in September. Of note, if these estimates materialise, October will show negative YoY dynamics for the first time since May 2020. Meanwhile, we reiterate our concern that the currently unfavourable economic conditions pose risks to jewellery sales and diamond demand. In addition, luxury goods sales (excluding jewellery) are also expected to be down 9% YoY in October
#diamonds
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Morning bites (part 2)
⛏Tesla-backed Goro nickel mine has been forced to curtail its production in 4Q22, as heavy rain caused a “limited release of salt-laden liquid” from its tailing dam. Goro mine produced 1.3% of global nickel in 2020. However, the impact on 2022 world output is likely to be rather limited, as the company expects to meet the minimum quantities required by its customer contracts and return to full capacity shortly. We note that LME Nickel prices jumped 7% on Tuesday amid the miner's supply concerns
#Nickel
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⛏Tesla-backed Goro nickel mine has been forced to curtail its production in 4Q22, as heavy rain caused a “limited release of salt-laden liquid” from its tailing dam. Goro mine produced 1.3% of global nickel in 2020. However, the impact on 2022 world output is likely to be rather limited, as the company expects to meet the minimum quantities required by its customer contracts and return to full capacity shortly. We note that LME Nickel prices jumped 7% on Tuesday amid the miner's supply concerns
#Nickel
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Morning Bites (part 3)
💎De Beers has reported sales of USD 450mn at its 9th cycle in 2022. This was in line with the historical average and also 5% higher YoY (vs. +3% YoY at the 8th cycle in 2022). According to De Beers CEO Bruce Cleaver, the miner faced good demand for rough stones. Of note, Cycle 9 sales decreased 11% relative to Сycle 8, reflecting the traditionally quieter time ahead of polishing factories reopening in India following Diwali. Despite some acceleration of YoY growth, we are concerned about the unfavourable economic conditions, which pose risks to the current diamond demand
#diamonds
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💎De Beers has reported sales of USD 450mn at its 9th cycle in 2022. This was in line with the historical average and also 5% higher YoY (vs. +3% YoY at the 8th cycle in 2022). According to De Beers CEO Bruce Cleaver, the miner faced good demand for rough stones. Of note, Cycle 9 sales decreased 11% relative to Сycle 8, reflecting the traditionally quieter time ahead of polishing factories reopening in India following Diwali. Despite some acceleration of YoY growth, we are concerned about the unfavourable economic conditions, which pose risks to the current diamond demand
#diamonds
https://metals-wire.com:3000/news-reports
Morning Bites (part 1)
⛏The Uzbekistan government plans to triple copper mining in the coming years. According to President Shavkat Mirziyoyev, local red metal output will grow to 500kt as the country aims to create an industrial copper cluster. Uzbekistan currently mines 150kt of copper, and processes 70kt. On our numbers, the increase would be equal to 1.5% of the estimated global mine supply in 2022, were it to materialise. However, no details of the government's plan have been announced yet. Separately, we note that recent large copper projects globally have been delayed by up to 30%, and in this case it might be even longer, given the team’s lack of execution experience
#copper
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⛏The Uzbekistan government plans to triple copper mining in the coming years. According to President Shavkat Mirziyoyev, local red metal output will grow to 500kt as the country aims to create an industrial copper cluster. Uzbekistan currently mines 150kt of copper, and processes 70kt. On our numbers, the increase would be equal to 1.5% of the estimated global mine supply in 2022, were it to materialise. However, no details of the government's plan have been announced yet. Separately, we note that recent large copper projects globally have been delayed by up to 30%, and in this case it might be even longer, given the team’s lack of execution experience
#copper
https://metals-wire.com:3000/news-reports
Morning Bites (part 2)
🏭Indonesia's Antam and China's CNGR 80kt nickel industrial park are to start operations in 2025. Although the project was announced earlier, the timeline has only now been officially revealed. Meanwhile, CNGR is to invest in the nickel matte facility in a park managed by Antam’s unit. The park's installed capacity accounted for 3% of global refined nickel production in 2021, which is likely to support the metal's supply amid the growing demand for electric vehicles
#nickel
https://metals-wire.com:3000/news-reports
🏭Indonesia's Antam and China's CNGR 80kt nickel industrial park are to start operations in 2025. Although the project was announced earlier, the timeline has only now been officially revealed. Meanwhile, CNGR is to invest in the nickel matte facility in a park managed by Antam’s unit. The park's installed capacity accounted for 3% of global refined nickel production in 2021, which is likely to support the metal's supply amid the growing demand for electric vehicles
#nickel
https://metals-wire.com:3000/news-reports
SQM 3Q22 results - moderately above expectations
✏️3Q22 revenue rose 4.5x YoY (+7% vs. our forecast) supported by strong sales volumes. Meanwhile, EBITDA was up 7.2x YoY in 3Q22, +14% vs. the consensus and +12% vs. us as sales were higher than expected, while costs were essentially in line
⛏The company's BoD approved expanding its lithium hydroxide capacity from 40mt to 100mt in Chile by 2025, requiring additional USD 360mn capex
❗️On our numbers, 4Q22 EBITDA might show a low-single digit increase QoQ, at spot prices
$SQM #lithium
https://metals-wire.com:3000/company/SQM_US/
✏️3Q22 revenue rose 4.5x YoY (+7% vs. our forecast) supported by strong sales volumes. Meanwhile, EBITDA was up 7.2x YoY in 3Q22, +14% vs. the consensus and +12% vs. us as sales were higher than expected, while costs were essentially in line
⛏The company's BoD approved expanding its lithium hydroxide capacity from 40mt to 100mt in Chile by 2025, requiring additional USD 360mn capex
❗️On our numbers, 4Q22 EBITDA might show a low-single digit increase QoQ, at spot prices
$SQM #lithium
https://metals-wire.com:3000/company/SQM_US/
Morning Bites (part 1)
🔗China’s aluminium product output rose 8.6% YoY to 5.25mt in October, accelerating from the 6.1% YoY upside in September. According to Reuters, the growth is associated with the low base of 2021, amid domestic electricity curbs that lowered demand from the midstream, as well as with growing overseas demand for Chinese aluminium goods
📈Chinese output of copper products was up 15% YoY in October to 1.95mt (vs. +17% YoY in September). In particular, the figure was supported by a 33% YoY hike in the output of local power generation equipment (vs. +78% YoY in previous month), as well as a 5% YoY increase in the production of air conditioners (in line YoY in September). In our view, despite the weak construction data, China's copper demand might be further bolstered by the recovery in industrial production, which would be favourable for the red metal's price
#aluminium #copper
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🔗China’s aluminium product output rose 8.6% YoY to 5.25mt in October, accelerating from the 6.1% YoY upside in September. According to Reuters, the growth is associated with the low base of 2021, amid domestic electricity curbs that lowered demand from the midstream, as well as with growing overseas demand for Chinese aluminium goods
📈Chinese output of copper products was up 15% YoY in October to 1.95mt (vs. +17% YoY in September). In particular, the figure was supported by a 33% YoY hike in the output of local power generation equipment (vs. +78% YoY in previous month), as well as a 5% YoY increase in the production of air conditioners (in line YoY in September). In our view, despite the weak construction data, China's copper demand might be further bolstered by the recovery in industrial production, which would be favourable for the red metal's price
#aluminium #copper
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