Morning Bites (part 2)
📄EU plants might lower 1H23 HRC prices 15-23% HoH to EUR 800-850/t with delivery, Metal Expert reports. Although the parties have not yet reached a consensus, negotiations for significant price cuts are already underway. In addition, some buyers are trying to push the level to EUR 700/t, although we think they are unlikely to succeed amid high costs. In our view, the news is unfavourable for EU steel producers, some of which are already loss-making amid the ongoing energy crisis, and this might further pressure supply
💎Lucara Diamond expects 385-415kct of diamond sales in 2023 (vs. 300-340 kct in the 2022 guidance). Meanwhile, the junior miner estimates revenues at USD 200-230mn next year (vs. USD 195-225mn expected in 2022). We note that the higher estimated sales volumes with lower revenues implies a ~15% softer realised price in 2023, which might reflect the global economic slowdown
#diamonds #steel
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📄EU plants might lower 1H23 HRC prices 15-23% HoH to EUR 800-850/t with delivery, Metal Expert reports. Although the parties have not yet reached a consensus, negotiations for significant price cuts are already underway. In addition, some buyers are trying to push the level to EUR 700/t, although we think they are unlikely to succeed amid high costs. In our view, the news is unfavourable for EU steel producers, some of which are already loss-making amid the ongoing energy crisis, and this might further pressure supply
💎Lucara Diamond expects 385-415kct of diamond sales in 2023 (vs. 300-340 kct in the 2022 guidance). Meanwhile, the junior miner estimates revenues at USD 200-230mn next year (vs. USD 195-225mn expected in 2022). We note that the higher estimated sales volumes with lower revenues implies a ~15% softer realised price in 2023, which might reflect the global economic slowdown
#diamonds #steel
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Morning Bites (part 1)
Rio Tinto sees 2023 iron ore output in Australia flat YoY at 320-335mnt. Meanwhile, in the medium term, the company plans to produce 345-360mnt/a. Of note, Rio expects rough diamond production at 4.5-5.0mnct, in 2022, and 3.0-3.8mnct in 2023. Refined copper output is to slightly decline from 190-220kt this year to 180-210kt in 2023. Overall, the news is neutral for the iron ore price from the supply side, given Rio Tinto captures ~20% of the seaborn market, on our numbers. Furthermore, a YoY decrease of some 30% in the diamond output is just a very slightly supportive factor for sentiment in the segment, since the miner accounted for only ~3% of the global diamond production in 2021. The forecasted number might be a result of the ongoing macroeconomic slowdown
#steel #diamonds
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Rio Tinto sees 2023 iron ore output in Australia flat YoY at 320-335mnt. Meanwhile, in the medium term, the company plans to produce 345-360mnt/a. Of note, Rio expects rough diamond production at 4.5-5.0mnct, in 2022, and 3.0-3.8mnct in 2023. Refined copper output is to slightly decline from 190-220kt this year to 180-210kt in 2023. Overall, the news is neutral for the iron ore price from the supply side, given Rio Tinto captures ~20% of the seaborn market, on our numbers. Furthermore, a YoY decrease of some 30% in the diamond output is just a very slightly supportive factor for sentiment in the segment, since the miner accounted for only ~3% of the global diamond production in 2021. The forecasted number might be a result of the ongoing macroeconomic slowdown
#steel #diamonds
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Morning Bites (part 2)
⚒Norilsk Nickel expects a 110kt nickel market surplus and 800koz palladium deficit in 2023
• The nickel market market is to remain in surplus to the tune of ~110kt in 2022-23 due to the robust Indonesian supply ramp-up. NorNik sees nickel supply at 3.19 mnt next year (+18% YoY), with low-grade metal production driving most of the figure (94kt). In our view, some nickel market surplus would obviously be unfavourable for the price, but such a situation would unlikely affect Norilsk Nickel too much, given it produces high grade metal
• The Pd market is to stay in a 0.6-0.8mnoz deficit in 2022-23 amid operational disruptions at major South African and the US producers and lower recycling volumes. Refined palladium production is to stand at 6.5 moz next year (+4% YoY). Platinum is estimated to be in balance in 2022 and in 300koz surplus in 2023, with a 6% YoY increase in supply to 5.9 moz in 2023
#nickel #PGMs
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⚒Norilsk Nickel expects a 110kt nickel market surplus and 800koz palladium deficit in 2023
• The nickel market market is to remain in surplus to the tune of ~110kt in 2022-23 due to the robust Indonesian supply ramp-up. NorNik sees nickel supply at 3.19 mnt next year (+18% YoY), with low-grade metal production driving most of the figure (94kt). In our view, some nickel market surplus would obviously be unfavourable for the price, but such a situation would unlikely affect Norilsk Nickel too much, given it produces high grade metal
• The Pd market is to stay in a 0.6-0.8mnoz deficit in 2022-23 amid operational disruptions at major South African and the US producers and lower recycling volumes. Refined palladium production is to stand at 6.5 moz next year (+4% YoY). Platinum is estimated to be in balance in 2022 and in 300koz surplus in 2023, with a 6% YoY increase in supply to 5.9 moz in 2023
#nickel #PGMs
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Morning Bites (part 1)
💎Petra Diamond's Williamson mine is to be idled until mid-2023, the company reports. The decision came after the partial collapse of a tailings storage facility on 7 November (the pit mine was unaffected and the accident caused no deaths or injuries). On our numbers, the Williamson mine accounted for ~0.2% of global rough diamonds production in 2021, so a half-year halt is unlikely to have a material effect on supply or prices
💍Hong Kong jewellery and watch sales rose 14% YoY in October, following the 7% YoY growth in September. According to Rapaport, the increase reflected the third round of HKD 5,000 (USD 640) stimulus payments (consumption vouchers) that were distributed in early October. The dynamics might provide small support for short-term rough diamond demand
#diamonds
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💎Petra Diamond's Williamson mine is to be idled until mid-2023, the company reports. The decision came after the partial collapse of a tailings storage facility on 7 November (the pit mine was unaffected and the accident caused no deaths or injuries). On our numbers, the Williamson mine accounted for ~0.2% of global rough diamonds production in 2021, so a half-year halt is unlikely to have a material effect on supply or prices
💍Hong Kong jewellery and watch sales rose 14% YoY in October, following the 7% YoY growth in September. According to Rapaport, the increase reflected the third round of HKD 5,000 (USD 640) stimulus payments (consumption vouchers) that were distributed in early October. The dynamics might provide small support for short-term rough diamond demand
#diamonds
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Morning Bites (part 2)
🌏Global manufacturing PMIs kept shrinking in November. However, the Eurozone Markit Manufacturing PMI grew somewhat to 47.1, from 46.4 in October (slightly below the preliminary reading of 47.3), although it remained firmly below 50.0. The US ISM manufacturing PMI declined to 49.0 (from 50.2 in October), and is now at its lowest level since May 2020 (although a touch above the consensus estimate of 48.9)
🇨🇳China's official PMI dropped further to 48.0 (from 49.2 in October), which was below the market forecast of 49.0. Meanwhile, China's Caixin manufacturing PMI rose to 49.4, from 49.2 a month ago, slightly outperforming the consensus estimate of 48.9
❗️The below-50 manufacturing PMIs in the US, Eurozone and China indicate a manufacturing sector contraction in these regions, which is negative for the demand for industrial metals, at least in the short term
#PMIs
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🌏Global manufacturing PMIs kept shrinking in November. However, the Eurozone Markit Manufacturing PMI grew somewhat to 47.1, from 46.4 in October (slightly below the preliminary reading of 47.3), although it remained firmly below 50.0. The US ISM manufacturing PMI declined to 49.0 (from 50.2 in October), and is now at its lowest level since May 2020 (although a touch above the consensus estimate of 48.9)
🇨🇳China's official PMI dropped further to 48.0 (from 49.2 in October), which was below the market forecast of 49.0. Meanwhile, China's Caixin manufacturing PMI rose to 49.4, from 49.2 a month ago, slightly outperforming the consensus estimate of 48.9
❗️The below-50 manufacturing PMIs in the US, Eurozone and China indicate a manufacturing sector contraction in these regions, which is negative for the demand for industrial metals, at least in the short term
#PMIs
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Morning Bites (part 1)
🇨🇱Chile’s copper production was up 2% YoY in October (vs. -4% YoY in September), breaking the 15-month series of consecutive YoY declines. The recent slowdown was likely due to the continuing drought, as well some grade depletion and the lower refining rate, although the latter improved last month. On our numbers, Chile accounts for ~27% of global mined copper supply
☢️A three-year extension has been agreed to the UK's Hinkley Point C contract, the government's counterparty in the contract reports. Hence, the 'long-stop date' is now November 2036, but the plant's start-up schedule has not been changed. This extension reflects the work required to understand the impacts of COVID-19, as well as the outcome of negotiations with CGN on the Sizewell C nuclear project. Therefore, the news underpins our concern that British nuclear plans are probably too upbeat, with the final costs likely to be higher and the timeline longer
#copper #uranium
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🇨🇱Chile’s copper production was up 2% YoY in October (vs. -4% YoY in September), breaking the 15-month series of consecutive YoY declines. The recent slowdown was likely due to the continuing drought, as well some grade depletion and the lower refining rate, although the latter improved last month. On our numbers, Chile accounts for ~27% of global mined copper supply
☢️A three-year extension has been agreed to the UK's Hinkley Point C contract, the government's counterparty in the contract reports. Hence, the 'long-stop date' is now November 2036, but the plant's start-up schedule has not been changed. This extension reflects the work required to understand the impacts of COVID-19, as well as the outcome of negotiations with CGN on the Sizewell C nuclear project. Therefore, the news underpins our concern that British nuclear plans are probably too upbeat, with the final costs likely to be higher and the timeline longer
#copper #uranium
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Morning Bites (part 2)
🚘US light vehicle sales were up 10% YoY in November from the low base (the same as in September-October). However, this was 19% below the 2019 level. Seasonally adjusted sales volumes also rose 10% YoY in November (17% below the 2019 level). Meanwhile, according to Reuters, some US car buyers are now pulling back from spending amid higher loan payments. We reiterate our negative outlook on US car sales amid inflationary pressures, which are unfavourable for PGM demand
#cars
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🚘US light vehicle sales were up 10% YoY in November from the low base (the same as in September-October). However, this was 19% below the 2019 level. Seasonally adjusted sales volumes also rose 10% YoY in November (17% below the 2019 level). Meanwhile, according to Reuters, some US car buyers are now pulling back from spending amid higher loan payments. We reiterate our negative outlook on US car sales amid inflationary pressures, which are unfavourable for PGM demand
#cars
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Morning Bites (part 1)
💍US jewellery sales were down 2% YoY in October, after the 1% YoY increase in September. As a result, this was the first negative YoY indication since May 2020, when COVID lockdowns were affecting the industry. Overall, the results were in-line with the negative preliminary figures. The latter underpins our concern that the ongoing global economic slowdown will pose risks to jewellery sales and diamond demand
#diamonds
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💍US jewellery sales were down 2% YoY in October, after the 1% YoY increase in September. As a result, this was the first negative YoY indication since May 2020, when COVID lockdowns were affecting the industry. Overall, the results were in-line with the negative preliminary figures. The latter underpins our concern that the ongoing global economic slowdown will pose risks to jewellery sales and diamond demand
#diamonds
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Morning Bites (part 2)
🔋Canadian miner Sigma Lithium plans a 45% expansion for its Brazil project, according to the company's co-CEO. The Grota do Cirilo project expansion study found potential to produce 768kt of battery grade lithium concentrate (104kt LCE equivalent) at the second stage – an increase from the earlier estimate of 531kt (~80kt LCE). Meanwhile, integrated production is to start with 270kt in 2023, and then triple to 768kt in the second year. On our numbers, the revised, 45% capacity increase accounts for ~5% of global lithium demand for 2021, and is in-line with growing consumer interest for EVs
#lithium
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🔋Canadian miner Sigma Lithium plans a 45% expansion for its Brazil project, according to the company's co-CEO. The Grota do Cirilo project expansion study found potential to produce 768kt of battery grade lithium concentrate (104kt LCE equivalent) at the second stage – an increase from the earlier estimate of 531kt (~80kt LCE). Meanwhile, integrated production is to start with 270kt in 2023, and then triple to 768kt in the second year. On our numbers, the revised, 45% capacity increase accounts for ~5% of global lithium demand for 2021, and is in-line with growing consumer interest for EVs
#lithium
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🗞Today China published preliminary import/export statistics for November. See preliminary data in the table above
#statistics #China
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#statistics #China
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Morning Bites (part 1)
🔗China’s finished steel net exports were up 65% YoY in November, accelerating from the 31% YoY growth in October. Meanwhile, China’s average daily steel production grew substantially YoY in October-November, which implies that some additional steel volumes might have been exported, with local demand not having completely recovered
🪨China’s coal imports dropped 8% YoY in November (vs. +8% YoY in October). However, the figure represents MoM growth of 11%. According to Reuters, the YoY dynamics were triggered by the sluggish power demand in China, amid COVID curbs, which cut the need for extra imported volumes of coal
#coal #steel
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🔗China’s finished steel net exports were up 65% YoY in November, accelerating from the 31% YoY growth in October. Meanwhile, China’s average daily steel production grew substantially YoY in October-November, which implies that some additional steel volumes might have been exported, with local demand not having completely recovered
🪨China’s coal imports dropped 8% YoY in November (vs. +8% YoY in October). However, the figure represents MoM growth of 11%. According to Reuters, the YoY dynamics were triggered by the sluggish power demand in China, amid COVID curbs, which cut the need for extra imported volumes of coal
#coal #steel
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Morning Bites (part 2)
🔗CISA mills daily crude steel output was up 1.3% to 2.03mnt in late-November from the second ten days of the month. The dynamics show an 18.2% YoY increase (vs. +13.6% YoY in the previous ten days). In turn, steel inventories declined 11.5% over the period (22.6% above the 2021 level, as of 30 November). In our view, the recent steel production growth, combined with the substantial inventories release of the metal, might indicate some recovery in midstream activity over the period
🔍Glencore cut its 2023 operating guidance for most mined commodities, missing consensus estimates, Reuters reports. Currently, the company aims to produce 1.04mnt of copper next year (-2% YoY), which is below analyst forecasts of 1.12mnt. Glencore produces ~5% of global copper, so a minor output cut is unlikely to have a material effect on the global market balance for the metal
#steel #copper
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🔗CISA mills daily crude steel output was up 1.3% to 2.03mnt in late-November from the second ten days of the month. The dynamics show an 18.2% YoY increase (vs. +13.6% YoY in the previous ten days). In turn, steel inventories declined 11.5% over the period (22.6% above the 2021 level, as of 30 November). In our view, the recent steel production growth, combined with the substantial inventories release of the metal, might indicate some recovery in midstream activity over the period
🔍Glencore cut its 2023 operating guidance for most mined commodities, missing consensus estimates, Reuters reports. Currently, the company aims to produce 1.04mnt of copper next year (-2% YoY), which is below analyst forecasts of 1.12mnt. Glencore produces ~5% of global copper, so a minor output cut is unlikely to have a material effect on the global market balance for the metal
#steel #copper
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Morning Bites (part 3)
🏦Global central banks were net purchasers of 31t of gold in October (vs. 54t in September), the World Gold Council reports. The biggest buyer was United Arab Emirates, with 9t in October (vs. 10t in September), while Turkey also purchased 9t (vs. 11t). It is noteworthy that none of the central banks sold gold in October. Hence, the accumulation of gold reserves by central banks might be a positive factor for gold prices, if it persists in the coming months. Furthermore, in 2021, massive purchases of gold by central banks were triggered by the yellow metal's price declining to USD 1,700/oz; that might to some extent be repeated this year
#gold
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🏦Global central banks were net purchasers of 31t of gold in October (vs. 54t in September), the World Gold Council reports. The biggest buyer was United Arab Emirates, with 9t in October (vs. 10t in September), while Turkey also purchased 9t (vs. 11t). It is noteworthy that none of the central banks sold gold in October. Hence, the accumulation of gold reserves by central banks might be a positive factor for gold prices, if it persists in the coming months. Furthermore, in 2021, massive purchases of gold by central banks were triggered by the yellow metal's price declining to USD 1,700/oz; that might to some extent be repeated this year
#gold
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Morning Bites (part 4)
🚘New car registrations in France, the UK, Spain, Italy and Germany rose 20% YoY in November from a low base, according to the preliminary data. However, this was 16% below the pre-COVID 2019 level. In France and Germany, car sales decreased 22% and 13% relative to 2019, respectively, while sales in Italy and Spain dropped 20% and 21%, respectively. UK sales contracted 9% relative to 2019. We note that these five countries account for ~70% of total new vehicle registrations in Europe, so EU + UK car sales were likely up YoY, but still below the pre-pandemic level. The full results for November sales are to be published on 15 December
#cars
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🚘New car registrations in France, the UK, Spain, Italy and Germany rose 20% YoY in November from a low base, according to the preliminary data. However, this was 16% below the pre-COVID 2019 level. In France and Germany, car sales decreased 22% and 13% relative to 2019, respectively, while sales in Italy and Spain dropped 20% and 21%, respectively. UK sales contracted 9% relative to 2019. We note that these five countries account for ~70% of total new vehicle registrations in Europe, so EU + UK car sales were likely up YoY, but still below the pre-pandemic level. The full results for November sales are to be published on 15 December
#cars
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Morning Bites (part 1)
🇨🇳 In November, China's central bank resumed gold purchases for the first time in three years, buying 32t (1mnoz) to bring its total holding to 1,980t. The increase, on our numbers, was the equivalent of 8.5% of the global monthly physical gold demand in 2022. We note that in the last few years, the People’s Bank of China has entered the gold market twice – in 2015-16 and 2019 – and both purchase cycles lasted several months. In our view, further purchases in coming months might materially improve gold demand, supporting the price
#gold
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🇨🇳 In November, China's central bank resumed gold purchases for the first time in three years, buying 32t (1mnoz) to bring its total holding to 1,980t. The increase, on our numbers, was the equivalent of 8.5% of the global monthly physical gold demand in 2022. We note that in the last few years, the People’s Bank of China has entered the gold market twice – in 2015-16 and 2019 – and both purchase cycles lasted several months. In our view, further purchases in coming months might materially improve gold demand, supporting the price
#gold
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Morning Bites (part 2)
🇵🇪Peru’s copper output was up 8% YoY in October, decelerating from the 13.5% YoY in September. Meanwhile, most of the gains were driven by the Las Bambas, Cerro Verde and Southern Peru Copper mines. We note that production was the highest in more than six years and that rising copper output might weigh slightly on the metal's price, as Peru accounts for some 11% of global mine copper supply
⛏Vale sees its iron ore production is to remain flat YoY in 2023 at 310-320mnt, which is roughly in line with the 310mnt expected for 2022 (the lower bound of the previous guidance) and 316mnt mined in 2021. The miner also sees the figure for 2026 at 340-360mnt. According to Reuters, the outlook reflects other global miners like Rio Tinto amid concerns about soft iron ore prices. Per our estimate, Vale accounts for ~24% of the global iron ore seaborne sales in 2021, and flat YoY output is overall neutral for the iron ore price in medium term
#copper #steel
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🇵🇪Peru’s copper output was up 8% YoY in October, decelerating from the 13.5% YoY in September. Meanwhile, most of the gains were driven by the Las Bambas, Cerro Verde and Southern Peru Copper mines. We note that production was the highest in more than six years and that rising copper output might weigh slightly on the metal's price, as Peru accounts for some 11% of global mine copper supply
⛏Vale sees its iron ore production is to remain flat YoY in 2023 at 310-320mnt, which is roughly in line with the 310mnt expected for 2022 (the lower bound of the previous guidance) and 316mnt mined in 2021. The miner also sees the figure for 2026 at 340-360mnt. According to Reuters, the outlook reflects other global miners like Rio Tinto amid concerns about soft iron ore prices. Per our estimate, Vale accounts for ~24% of the global iron ore seaborne sales in 2021, and flat YoY output is overall neutral for the iron ore price in medium term
#copper #steel
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Morning Bites (part 3)
📉Gold-backed ETFs reduced their holdings a further 26t through November (after outflows of 59t in October and 102t in September). The YTD net outflow had reached 106t at the end of November. According to the World Gold Council (WGC), top US ETFs again reported the biggest losses during last month, likely amid the sixth consecutive interest rate increase by the US Fed. Despite net ETF outflows, the price of gold was up 7% YoY in November due to falling yields and the overall softer USD. Moreover, gold might have been supported by PBoC, which started to build up gold reserves in November. We note that global physical demand for gold remains strong and generally the only factor pressuring gold prices is ETF sales
#ETF #gold
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📉Gold-backed ETFs reduced their holdings a further 26t through November (after outflows of 59t in October and 102t in September). The YTD net outflow had reached 106t at the end of November. According to the World Gold Council (WGC), top US ETFs again reported the biggest losses during last month, likely amid the sixth consecutive interest rate increase by the US Fed. Despite net ETF outflows, the price of gold was up 7% YoY in November due to falling yields and the overall softer USD. Moreover, gold might have been supported by PBoC, which started to build up gold reserves in November. We note that global physical demand for gold remains strong and generally the only factor pressuring gold prices is ETF sales
#ETF #gold
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Morning Bites (part 1)
🏗China’s domestic excavator sales grew 3% YoY in November, roughly in line with the preliminary estimates. Thus, the monthly figure saw a slight rebound after more than a year of YoY declines (-10% YoY in October). Meanwhile, total excavator sales (domestic + export) surged 16% YoY in November, accelerating from the 8% YoY increase in October. As a leading indicator of construction activity, the minor YoY increase in domestic excavator sales is not yet enough to call a recovery in China’s property sector, although the figure might look like stabilisation. The latter would, overall, be adverse for the local demand for industrial metals (particularly for steel). In addition, we reiterate our view that, year-to-date, the announced stimulus measures are not enough for a recovery in China's real estate sector
#global
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🏗China’s domestic excavator sales grew 3% YoY in November, roughly in line with the preliminary estimates. Thus, the monthly figure saw a slight rebound after more than a year of YoY declines (-10% YoY in October). Meanwhile, total excavator sales (domestic + export) surged 16% YoY in November, accelerating from the 8% YoY increase in October. As a leading indicator of construction activity, the minor YoY increase in domestic excavator sales is not yet enough to call a recovery in China’s property sector, although the figure might look like stabilisation. The latter would, overall, be adverse for the local demand for industrial metals (particularly for steel). In addition, we reiterate our view that, year-to-date, the announced stimulus measures are not enough for a recovery in China's real estate sector
#global
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