Morning Bites (part 1)
🚘EU + UK passenger car registrations increased 13% YoY in December, decelerating from the 17% YoY gain in November. The results were slightly below our estimates. Sales, however, were still down 16% vs. the pre-COVID 2019 level (-17% in November): although the market improved starting from August, most of the YoY gain was due to the low base effect. Hence, we keep our bearish view on EU car sales in the short term, amid the unfavourable macroeconomic conditions globally. Hence, soft EU car sales might weigh on demand for PGM from the auto industry
🏭Eramet is likely to invest in a new nickel processing plant in Indonesia. The French miner, together with Germany’s BASF, is finalising a USD 2.6bln deal to invest into the facility with 67kt of nickel in NPH capacity, for use in EV batteries. The first output is to be in early 2026, depending on the decision. On our numbers, this is equivalent to ~2% of refined nickel supply in 2022F
#cars #nickel
https://metals-wire.com:3000/news-reports
🚘EU + UK passenger car registrations increased 13% YoY in December, decelerating from the 17% YoY gain in November. The results were slightly below our estimates. Sales, however, were still down 16% vs. the pre-COVID 2019 level (-17% in November): although the market improved starting from August, most of the YoY gain was due to the low base effect. Hence, we keep our bearish view on EU car sales in the short term, amid the unfavourable macroeconomic conditions globally. Hence, soft EU car sales might weigh on demand for PGM from the auto industry
🏭Eramet is likely to invest in a new nickel processing plant in Indonesia. The French miner, together with Germany’s BASF, is finalising a USD 2.6bln deal to invest into the facility with 67kt of nickel in NPH capacity, for use in EV batteries. The first output is to be in early 2026, depending on the decision. On our numbers, this is equivalent to ~2% of refined nickel supply in 2022F
#cars #nickel
https://metals-wire.com:3000/news-reports
Morning Bites (Part 2)
💎India’s rough diamond net imports fell 27% YoY in December, reversing from the 34% YoY growth in November. Meanwhile, India’s polished diamond net exports were also down, dropping 28% YoY in December, accelerating from the -12% YoY in November. According to GJEPC Chairman Vipul Shah, demand from China remains muted, while supply concerns might intensify when the demand for polished stones starts to recover. We note that the diamonds sector is likely to remain stressed in the short term, amid the unfavourable economic conditions globally and weak 4Q22 gem-set jewellery sales in China (~15% of world sales)
At the same time, India’s lab-grown rough diamond net imports decreased 12% YoY in December (vs. -9% YoY in November). The share of lab-grown net rough imports in natural diamond imports was slightly up to 7% in December (vs. 6% YoY)
#diamonds
https://metals-wire.com/sector/Diamonds
💎India’s rough diamond net imports fell 27% YoY in December, reversing from the 34% YoY growth in November. Meanwhile, India’s polished diamond net exports were also down, dropping 28% YoY in December, accelerating from the -12% YoY in November. According to GJEPC Chairman Vipul Shah, demand from China remains muted, while supply concerns might intensify when the demand for polished stones starts to recover. We note that the diamonds sector is likely to remain stressed in the short term, amid the unfavourable economic conditions globally and weak 4Q22 gem-set jewellery sales in China (~15% of world sales)
At the same time, India’s lab-grown rough diamond net imports decreased 12% YoY in December (vs. -9% YoY in November). The share of lab-grown net rough imports in natural diamond imports was slightly up to 7% in December (vs. 6% YoY)
#diamonds
https://metals-wire.com/sector/Diamonds
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📌Copper output remains subdued, underperforming industry estimates
⛏World refined copper production demonstrated growth rates of 0.5-2.4% YoY in 2019-22F, firmly below industry forecasts. For 2023, industry reports suggest robust production growth, supported by several projects being ramped up or launched (Kamoa, QB2, Udokan, etc). However, previous industry estimates have been consistently overly bullish
📉Furthermore, the structural negative factors (unpleasant weather conditions and social unrest) are adversely affecting production in two major countries, Chile and Peru (~40% of global mined Cu supply). As a result, the two countries’ combined production is close to its six-year lows
❗️Were the negative factors in mining to persist, that might partially offset the positive effects of new project launches, restraining Cu supply growth in 2023, in our view
#copper
https://metals-wire.com/sector/Copper
⛏World refined copper production demonstrated growth rates of 0.5-2.4% YoY in 2019-22F, firmly below industry forecasts. For 2023, industry reports suggest robust production growth, supported by several projects being ramped up or launched (Kamoa, QB2, Udokan, etc). However, previous industry estimates have been consistently overly bullish
📉Furthermore, the structural negative factors (unpleasant weather conditions and social unrest) are adversely affecting production in two major countries, Chile and Peru (~40% of global mined Cu supply). As a result, the two countries’ combined production is close to its six-year lows
❗️Were the negative factors in mining to persist, that might partially offset the positive effects of new project launches, restraining Cu supply growth in 2023, in our view
#copper
https://metals-wire.com/sector/Copper
📌China's reopening might further support the red metal's price
📈Copper demand was negatively affected by the global economic downturn in 2022. However, Beijing's recent cancellation of its Zero-Covid policy is likely to bolster demand and, hence, keep prices at current elevated levels; the Cu price is up >20% since mid-2022 and >10% since early December 2022, when China announced the possible easing of Covid-19 restrictions
🏅We note that China remains by far the biggest Cu consumer, with ~55% of global refined Cu consumption
❗️At the same time, copper inventories are close to their lowest level in more than ten years: current stocks are sufficient for only three days of global consumption (vs. the averages of 9 in 2010-20 and 5 in 2021). Hence, the potential demand boost from China might trigger some price squeezes in 2023
📝In our next post, we shall elaborate on the valuation of major Cu producers
#copper
https://metals-wire.com/sector/Copper
📈Copper demand was negatively affected by the global economic downturn in 2022. However, Beijing's recent cancellation of its Zero-Covid policy is likely to bolster demand and, hence, keep prices at current elevated levels; the Cu price is up >20% since mid-2022 and >10% since early December 2022, when China announced the possible easing of Covid-19 restrictions
🏅We note that China remains by far the biggest Cu consumer, with ~55% of global refined Cu consumption
❗️At the same time, copper inventories are close to their lowest level in more than ten years: current stocks are sufficient for only three days of global consumption (vs. the averages of 9 in 2010-20 and 5 in 2021). Hence, the potential demand boost from China might trigger some price squeezes in 2023
📝In our next post, we shall elaborate on the valuation of major Cu producers
#copper
https://metals-wire.com/sector/Copper
📌How do copper miners look at spot prices?
💰On our numbers, most of the pure-play copper producers (such as Antofagasta, Freeport and Southern Copper) appear expensive at spot, trading at 6-10x 1-y fwd EV/EBITDA. In comparison, MMG seems much cheaper: it trades at 3.6x 1-y fwd EV/EBITDA with a 35% FCF yield. However, the company continues to struggle from operational issues at its Las Bambas mine (~78% of the miner's EBITDA at spot), which remains major reason behind relatively generous valuation
💰Although Glencore and Teck Resources have less exposure to copper, they are much cheaper than the pure-play miners, trading at 2.4x and 2.2x 1-y fwd EV/EBITDA, respectively, which makes them the most attractive stories in the sector, in our view. In addition, both firms have a ~40% exposure to coal, which is also supportive for the case, as coal prices are likely to stay elevated in 2023F
#copper
https://metals-wire.com/sector/Copper
💰On our numbers, most of the pure-play copper producers (such as Antofagasta, Freeport and Southern Copper) appear expensive at spot, trading at 6-10x 1-y fwd EV/EBITDA. In comparison, MMG seems much cheaper: it trades at 3.6x 1-y fwd EV/EBITDA with a 35% FCF yield. However, the company continues to struggle from operational issues at its Las Bambas mine (~78% of the miner's EBITDA at spot), which remains major reason behind relatively generous valuation
💰Although Glencore and Teck Resources have less exposure to copper, they are much cheaper than the pure-play miners, trading at 2.4x and 2.2x 1-y fwd EV/EBITDA, respectively, which makes them the most attractive stories in the sector, in our view. In addition, both firms have a ~40% exposure to coal, which is also supportive for the case, as coal prices are likely to stay elevated in 2023F
#copper
https://metals-wire.com/sector/Copper
Alcoa 4Q22 results - EBITDA hit by higher costs
✏️4Q22 revenues fell 20% YoY due to lower realised prices and sales volumes, broadly in line with consensus and us. Adjusted EBITDA, however, was down 97% YoY in 4Q22, 73% short of consensus and 72% lower than us, on the back of higher costs. The main contributor to the costs overshoot was the aluminium segment, due to higher materials and power costs
⛏The company released its FY23 sales guidance: aluminium and alumina shipments are both expected to shrink ~2% YoY, on average
❗️On our numbers, 1Q23 EBITDA is likely to show a substantial improvement QoQ, mainly due to the growth in prices: the Al spot price is ~11% higher than the 4Q22 average
$AA #Aluminium
https://metals-wire.com/company/AA_US
✏️4Q22 revenues fell 20% YoY due to lower realised prices and sales volumes, broadly in line with consensus and us. Adjusted EBITDA, however, was down 97% YoY in 4Q22, 73% short of consensus and 72% lower than us, on the back of higher costs. The main contributor to the costs overshoot was the aluminium segment, due to higher materials and power costs
⛏The company released its FY23 sales guidance: aluminium and alumina shipments are both expected to shrink ~2% YoY, on average
❗️On our numbers, 1Q23 EBITDA is likely to show a substantial improvement QoQ, mainly due to the growth in prices: the Al spot price is ~11% higher than the 4Q22 average
$AA #Aluminium
https://metals-wire.com/company/AA_US
Morning Bites
🏆China’s gold production rose 11% YoY in 4Q22 (vs. +13% YoY in 3Q22), according to the China Gold Association. This was supported by a recovery in the production of the major mines in Shandong to a pre-Covid level, as well as new capacity in the northern Shanxi province, Reuters reported. Meanwhile, the country's gold consumption shrank 27% YoY in 4Q22, amid the 28% YoY decline in gold jewellery demand, affected by the COVID-19. Overall, rising gold output in China (~9% of world metal's output) might be a negative factor for the commodity's prices. However, we are still bullish on gold, amid strong demand prospects
🔗India's authorities have approved a new 7mnt steel plant project. Of note, the USD 4.68bln project is to be built by a joint venture of ArcelorMittal and Nippon Steel, but the timeline is yet not revealed. Overall, the new capacity accounts for <1% of global steel output, so we do not expect any material effect on the market
#gold #steel
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🏆China’s gold production rose 11% YoY in 4Q22 (vs. +13% YoY in 3Q22), according to the China Gold Association. This was supported by a recovery in the production of the major mines in Shandong to a pre-Covid level, as well as new capacity in the northern Shanxi province, Reuters reported. Meanwhile, the country's gold consumption shrank 27% YoY in 4Q22, amid the 28% YoY decline in gold jewellery demand, affected by the COVID-19. Overall, rising gold output in China (~9% of world metal's output) might be a negative factor for the commodity's prices. However, we are still bullish on gold, amid strong demand prospects
🔗India's authorities have approved a new 7mnt steel plant project. Of note, the USD 4.68bln project is to be built by a joint venture of ArcelorMittal and Nippon Steel, but the timeline is yet not revealed. Overall, the new capacity accounts for <1% of global steel output, so we do not expect any material effect on the market
#gold #steel
https://metals-wire.com:3000/news-reports
Week ahead data releases in M&M
This week, among the major miners, only Freeport McMoran is due to release its 4Q22 earnings. In light of the company’s EBITDA for the period, our forecast is slightly below the consensus estimate
#reporting_season
https://metals-wire.com:3000/events
This week, among the major miners, only Freeport McMoran is due to release its 4Q22 earnings. In light of the company’s EBITDA for the period, our forecast is slightly below the consensus estimate
#reporting_season
https://metals-wire.com:3000/events
Morning Bites
⛔️Glencore has temporarily halted operations at its Antapaccay mine in Peru. The decision was made after vandals once again attacked the mine’s area. As a result of the recent protests, the company’s buildings and four vehicles have suffered serious damage. The combined output at Peru’s temporarily suspended Antapaccay and Las Bambas mines accounted for >2% of world copper supply in 2021. So, this is conducive for our positive view on copper prices, at least in the short term
🚘US light vehicle sales were up 5% YoY in December from a low base, decelerating from the 10% YoY growth in November. The figure was still 17% below the 2019 level. Seasonally adjusted sales volumes also grew 7% YoY in December (-21% vs. the 2019 level). However, market participants are concerned about worsening car affordability in the US, amid inflationary pressures. This might negatively affect local car sales in 2023 and, hence, further weigh on PGM consumption
#copper #cars
https://metals-wire.com:3000/news-reports
⛔️Glencore has temporarily halted operations at its Antapaccay mine in Peru. The decision was made after vandals once again attacked the mine’s area. As a result of the recent protests, the company’s buildings and four vehicles have suffered serious damage. The combined output at Peru’s temporarily suspended Antapaccay and Las Bambas mines accounted for >2% of world copper supply in 2021. So, this is conducive for our positive view on copper prices, at least in the short term
🚘US light vehicle sales were up 5% YoY in December from a low base, decelerating from the 10% YoY growth in November. The figure was still 17% below the 2019 level. Seasonally adjusted sales volumes also grew 7% YoY in December (-21% vs. the 2019 level). However, market participants are concerned about worsening car affordability in the US, amid inflationary pressures. This might negatively affect local car sales in 2023 and, hence, further weigh on PGM consumption
#copper #cars
https://metals-wire.com:3000/news-reports
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Morning Bites
🪨New South Wales (Australia) might require coal exporters to reserve 7-10% of their output for domestic use. Local producers are in talks with the authorities over the plan, amid the state’s efforts to curb high energy prices (NSW accounts for ~14% of world seaborne coal exports). However, this scheme is only going to apply to uncontracted volumes, which are likely to be limited. Hence, we do not expect any substantial effect on coal prices, at least at this point
📉The refined copper market faced an 89kt deficit in November, vs. the 68kt surplus in October, according to International Copper Study Group (ICSG). Meanwhile, for 11mo22, the market was in a 384kt deficit, moderately above our estimates for the period. Overall, growing supply concerns in South America might, to some extent, offset the positive effect of new project launches/ramp-ups in 2023 (Kamoa, QB2, Utokan, etc.), which supports our positive view on copper prices
#coal #copper
https://metals-wire.com:3000/news-reports
🪨New South Wales (Australia) might require coal exporters to reserve 7-10% of their output for domestic use. Local producers are in talks with the authorities over the plan, amid the state’s efforts to curb high energy prices (NSW accounts for ~14% of world seaborne coal exports). However, this scheme is only going to apply to uncontracted volumes, which are likely to be limited. Hence, we do not expect any substantial effect on coal prices, at least at this point
📉The refined copper market faced an 89kt deficit in November, vs. the 68kt surplus in October, according to International Copper Study Group (ICSG). Meanwhile, for 11mo22, the market was in a 384kt deficit, moderately above our estimates for the period. Overall, growing supply concerns in South America might, to some extent, offset the positive effect of new project launches/ramp-ups in 2023 (Kamoa, QB2, Utokan, etc.), which supports our positive view on copper prices
#coal #copper
https://metals-wire.com:3000/news-reports
Morning Bites
🇨🇱 Copper output at Chile's Codelco dropped 10% YoY in FY22, due to operational problems and project delays. Overall, the miner produced ~1.45mt of copper in 2022, slightly below its guidance of 1.49-1.51mt. Although Codelco's outlook for this year has not been updated yet (1.45mt of Cu), unfavourable structural factors (including grades depletion and the weather) pose risks to the performance of the world’s largest copper miner in 2023, in our view
📈 Global primary aluminium production was up 6% YoY in December, vs. the 5% YoY growth in November, the International Aluminium Institute (IAI) reported. Hence, output grew ~2% YoY in FY22, despite the production cuts in Europe and North America. According to the IAI, China's aluminium output rose 4% YoY (+13% vs. 2019), overcoming the implications of Covid-19. Despite the potential support from China's industrial recovery, we do not expect world output to rise substantially in 2023
#copper #aluminium
https://metals-wire.com:3000/news-reports
🇨🇱 Copper output at Chile's Codelco dropped 10% YoY in FY22, due to operational problems and project delays. Overall, the miner produced ~1.45mt of copper in 2022, slightly below its guidance of 1.49-1.51mt. Although Codelco's outlook for this year has not been updated yet (1.45mt of Cu), unfavourable structural factors (including grades depletion and the weather) pose risks to the performance of the world’s largest copper miner in 2023, in our view
📈 Global primary aluminium production was up 6% YoY in December, vs. the 5% YoY growth in November, the International Aluminium Institute (IAI) reported. Hence, output grew ~2% YoY in FY22, despite the production cuts in Europe and North America. According to the IAI, China's aluminium output rose 4% YoY (+13% vs. 2019), overcoming the implications of Covid-19. Despite the potential support from China's industrial recovery, we do not expect world output to rise substantially in 2023
#copper #aluminium
https://metals-wire.com:3000/news-reports
Freeport McMoran 4Q22 results - above expectations
✏️4Q22 revenues fell ~7% YoY, due to lower realised prices across the whole commodity basket. However, that was better than both the consensus and our estimates, supported by stronger sales volumes. Reflecting the latter, adjusted EBITDA was 17% ahead of consensus and 18% above us (-30% YoY)
📌Unit net cash costs were down a slight 3% QoQ in 4Q22, but were still up 31% YoY
⛏The company released its FY23 outlook: copper sales are expected to stay relatively flat YoY, but gold sales are seen shrinking ~7% YoY. Unit cash costs are set to grow >6% YoY
❗️We think the 1Q23 EBITDA will be materially stronger QoQ, on the back of improved market conditions: the spot price of Cu (~80% of the miner's revenues) is 16% above the 4Q22 average
$FCX #copper
https://metals-wire.com/company/FCX_US
✏️4Q22 revenues fell ~7% YoY, due to lower realised prices across the whole commodity basket. However, that was better than both the consensus and our estimates, supported by stronger sales volumes. Reflecting the latter, adjusted EBITDA was 17% ahead of consensus and 18% above us (-30% YoY)
📌Unit net cash costs were down a slight 3% QoQ in 4Q22, but were still up 31% YoY
⛏The company released its FY23 outlook: copper sales are expected to stay relatively flat YoY, but gold sales are seen shrinking ~7% YoY. Unit cash costs are set to grow >6% YoY
❗️We think the 1Q23 EBITDA will be materially stronger QoQ, on the back of improved market conditions: the spot price of Cu (~80% of the miner's revenues) is 16% above the 4Q22 average
$FCX #copper
https://metals-wire.com/company/FCX_US
Morning Bites
🇨🇱Chile’s preliminary copper production was down 8% YoY in December, accelerating from the 6% YoY drop in November, Reuters reported, citing the country's regulator report. According to the source, local copper production is expected to reach 5.345mt in 2022 (-5% YoY), but will grow 2% in 2023 (still -3% vs. 2021) and 8% per annum in 2024. In our view, some stretched production recovery, in case of demand revival, would add support to our bullish copper case
⛏Freeport-McMoran has delayed its expansion projects in Chile for political reasons, per the miner’s executive. The company is considering a major expansion at its El Abra asset (the mine accounts for 1.3% of the country’s Cu supply), but the decision has been delayed amid uncertainties related to local laws. The latter might negatively affect Chilean copper output in the long term, especially if other miners follow the decision
#copper
https://metals-wire.com:3000/news-reports
🇨🇱Chile’s preliminary copper production was down 8% YoY in December, accelerating from the 6% YoY drop in November, Reuters reported, citing the country's regulator report. According to the source, local copper production is expected to reach 5.345mt in 2022 (-5% YoY), but will grow 2% in 2023 (still -3% vs. 2021) and 8% per annum in 2024. In our view, some stretched production recovery, in case of demand revival, would add support to our bullish copper case
⛏Freeport-McMoran has delayed its expansion projects in Chile for political reasons, per the miner’s executive. The company is considering a major expansion at its El Abra asset (the mine accounts for 1.3% of the country’s Cu supply), but the decision has been delayed amid uncertainties related to local laws. The latter might negatively affect Chilean copper output in the long term, especially if other miners follow the decision
#copper
https://metals-wire.com:3000/news-reports
Morning Bites
🔋Eramet is considering a geothermal lithium project in France. The potential output is estimated at 10kt of LCE (2% of the global Li demand in 2021) per annum. However, the final investment decision could take up to four years and production might only start near to 2030. So, at this point, we do not expect any material impact on market sentiment or prices
🪨Coal exports from Richards Bay terminal fell 14% YoY in FY22. Hence, shipments from the South African port (~4% of the global seaborne coal exports) hit their lowest level since 1993, amid a lack of trains to carry bulks, resulting in a utilisation rate of only 55%. In 2023, the terminal’s exports are set to grow 19% YoY, but this figure looks overly upbeat to us, given the ongoing infrastructure problems in both the country and the port itself. In our view, this might add slight support to coal prices this year, but most of the effect is likely already priced in
#lithium #coal
https://metals-wire.com:3000/news-reports
🔋Eramet is considering a geothermal lithium project in France. The potential output is estimated at 10kt of LCE (2% of the global Li demand in 2021) per annum. However, the final investment decision could take up to four years and production might only start near to 2030. So, at this point, we do not expect any material impact on market sentiment or prices
🪨Coal exports from Richards Bay terminal fell 14% YoY in FY22. Hence, shipments from the South African port (~4% of the global seaborne coal exports) hit their lowest level since 1993, amid a lack of trains to carry bulks, resulting in a utilisation rate of only 55%. In 2023, the terminal’s exports are set to grow 19% YoY, but this figure looks overly upbeat to us, given the ongoing infrastructure problems in both the country and the port itself. In our view, this might add slight support to coal prices this year, but most of the effect is likely already priced in
#lithium #coal
https://metals-wire.com:3000/news-reports
What is happening with aluminium?
📌Production was sluggish in 2022; costs pressure increased
📝On our numbers, the global supply of primary aluminium was almost flat YoY in 2022F, affected by persistent capacity closures in Europe (due to the ongoing local energy crisis). In our view, output is unlikely to substantially increase this year either, despite the support from China's anticipated industrial recovery
📊Although some market reports anticipate a >5% YoY rise in FY23F aluminium production, the actual figures have underperformed industry estimates for several years
❗️At spot prices, ~60% of smelters are close to breakeven or are loss-making. Overall, with further demand recovery, the aluminium price would need to rise at least to the marginal level (USD 3,000/t+) to stimulate new supply
#aluminium
https://metals-wire.com/sector/Aluminium
📌Production was sluggish in 2022; costs pressure increased
📝On our numbers, the global supply of primary aluminium was almost flat YoY in 2022F, affected by persistent capacity closures in Europe (due to the ongoing local energy crisis). In our view, output is unlikely to substantially increase this year either, despite the support from China's anticipated industrial recovery
📊Although some market reports anticipate a >5% YoY rise in FY23F aluminium production, the actual figures have underperformed industry estimates for several years
❗️At spot prices, ~60% of smelters are close to breakeven or are loss-making. Overall, with further demand recovery, the aluminium price would need to rise at least to the marginal level (USD 3,000/t+) to stimulate new supply
#aluminium
https://metals-wire.com/sector/Aluminium
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📌Demand started to recover in 2H22; China's reopening might further bolster consumption
📝Generally, demand for aluminium was subdued in 1H22 due to the global economic slowdown, but it started to gradually recover in 2H22. In addition to this, the recent easing of Beijing's anti-Covid policies is likely to boost demand for the metal amid the ramp-up of end-user facilities (e.g. carmakers). Markets are yet to gain momentum from the country's reopening: the Al price has only added some 3% since the first news of the zero-Covid policy cancellation in late-2022
🛒China accounts for ~58% of world primary Al demand, being by far the leading Al consumer
❗️Along with the brightening demand prospects, we note that traceable Al stocks have shrunk by ~85% since 2014, which is now sufficient for only five days of world consumption (vs. the average of 25 in 2010-20 and 10 in 2021). This might amplify the positive effect of demand revival on Al prices
#aluminium
https://metals-wire.com/sector/Aluminium
📝Generally, demand for aluminium was subdued in 1H22 due to the global economic slowdown, but it started to gradually recover in 2H22. In addition to this, the recent easing of Beijing's anti-Covid policies is likely to boost demand for the metal amid the ramp-up of end-user facilities (e.g. carmakers). Markets are yet to gain momentum from the country's reopening: the Al price has only added some 3% since the first news of the zero-Covid policy cancellation in late-2022
🛒China accounts for ~58% of world primary Al demand, being by far the leading Al consumer
❗️Along with the brightening demand prospects, we note that traceable Al stocks have shrunk by ~85% since 2014, which is now sufficient for only five days of world consumption (vs. the average of 25 in 2010-20 and 10 in 2021). This might amplify the positive effect of demand revival on Al prices
#aluminium
https://metals-wire.com/sector/Aluminium
📌Top pick names to benefit from looming Al price growth
💰In our view, at spot, among the ex-China producers, South 32 and UC Rusal look attractive, trading at a low 4.4x and 4.8x 1-y fwd EV/EBITDA, respectively. US-based Alcoa seems much more expensive to us: it trades at 9.1x 1-y fwd EV/EBITDA with only a 3% FCF yield. Furthermore, Alcoa was nearly break-even recently, on the back of a higher cost burden, making it less attractive than its peer
💰At the same time, the Chinese producers (Chalco and Hongqiao) are slightly less expensive than Alcoa, trading at 7-9x 1-y fwd EV/EBITDA, respectively. In addition, these names might be more sensitive to the positive effects we expect from China's reopening, amid high operational leverage and the loosening of domestic restrictions on electricity use
#aluminium
https://metals-wire.com/sector/Aluminium
💰In our view, at spot, among the ex-China producers, South 32 and UC Rusal look attractive, trading at a low 4.4x and 4.8x 1-y fwd EV/EBITDA, respectively. US-based Alcoa seems much more expensive to us: it trades at 9.1x 1-y fwd EV/EBITDA with only a 3% FCF yield. Furthermore, Alcoa was nearly break-even recently, on the back of a higher cost burden, making it less attractive than its peer
💰At the same time, the Chinese producers (Chalco and Hongqiao) are slightly less expensive than Alcoa, trading at 7-9x 1-y fwd EV/EBITDA, respectively. In addition, these names might be more sensitive to the positive effects we expect from China's reopening, amid high operational leverage and the loosening of domestic restrictions on electricity use
#aluminium
https://metals-wire.com/sector/Aluminium
Morning Bites (part 1)
☢️Kazatomprom’s output declined 1% YoY in 4Q22. Overall, throughout FY22, the company produced 3% less uranium YoY (on a 100% basis), which was close to the lower end of its guidance. Sales volumes plunged 63% YoY in 4Q22, because of the specific timing of deliveries and customer requirements. As for 2023, production is now seen 1% below the FY22 level, due to delays and limited access to some key materials and equipment. We note that the updated guidance for 2023 is 8% lower than the previous forecast. Hence, in our view, the production recovery previously envisaged in 2023-24 might also be at risk. That is likely to add support for the commodity's price, as Kazakhstan represents almost 40% of global mined uranium output
#uranium
https://metals-wire.com/sector/Uranium
☢️Kazatomprom’s output declined 1% YoY in 4Q22. Overall, throughout FY22, the company produced 3% less uranium YoY (on a 100% basis), which was close to the lower end of its guidance. Sales volumes plunged 63% YoY in 4Q22, because of the specific timing of deliveries and customer requirements. As for 2023, production is now seen 1% below the FY22 level, due to delays and limited access to some key materials and equipment. We note that the updated guidance for 2023 is 8% lower than the previous forecast. Hence, in our view, the production recovery previously envisaged in 2023-24 might also be at risk. That is likely to add support for the commodity's price, as Kazakhstan represents almost 40% of global mined uranium output
#uranium
https://metals-wire.com/sector/Uranium
Morning Bites (part 2)
⛏First Quantum will not be allowed to expand operations at its Panama mine. According to the country’s Environment Minister, the company asked for some additional operating area at its Cobre Panama asset (1.5% of global copper output), but the request has been denied amid environmental concerns. At the same time, First Quantum denied requesting additional land. In our view, the obstacles to expanding local mining might be a slightly positive factor for copper prices in the long term
#copper
https://metals-wire.com/sector/Copper
⛏First Quantum will not be allowed to expand operations at its Panama mine. According to the country’s Environment Minister, the company asked for some additional operating area at its Cobre Panama asset (1.5% of global copper output), but the request has been denied amid environmental concerns. At the same time, First Quantum denied requesting additional land. In our view, the obstacles to expanding local mining might be a slightly positive factor for copper prices in the long term
#copper
https://metals-wire.com/sector/Copper