📌Cost support for PGMs is still far away; platinum price is more likely to decline
🛒On our numbers, major South African miners' costs grew >60% over the last 4 years, affected by grade depletion, higher labour and material costs. However, given the PGM price increase was also dramatic (spot prices of Pd were up 62%, while of Pt rose by 15%, compared to 2018), the average EBITDA margin remains at solid ~30% level
❗️Meanwhile, yet distant cost support is posing material downside risks for PGM prices (including a potential double-digit drop)
📝To sum up, platinum prices are likely to stay stressed in the near future, mostly due to weak demand and heavy surplus. As for palladium prices, they might remain at currently elevated levels in the medium term, supported by the market deficit, but with no strong growth triggers
#PGMs
https://metals-wire.com/sector/PGM
🛒On our numbers, major South African miners' costs grew >60% over the last 4 years, affected by grade depletion, higher labour and material costs. However, given the PGM price increase was also dramatic (spot prices of Pd were up 62%, while of Pt rose by 15%, compared to 2018), the average EBITDA margin remains at solid ~30% level
❗️Meanwhile, yet distant cost support is posing material downside risks for PGM prices (including a potential double-digit drop)
📝To sum up, platinum prices are likely to stay stressed in the near future, mostly due to weak demand and heavy surplus. As for palladium prices, they might remain at currently elevated levels in the medium term, supported by the market deficit, but with no strong growth triggers
#PGMs
https://metals-wire.com/sector/PGM
What's the value behind PGM miners?
📉On the back of softening demand for PGMs, the segment's miners do not seem very attractive to us
💰However, at spot prices, pure-play PGM producers: Impala and Sylvania might be moderately appealing, trading at 2-3x 1-y fwd EV/EBITDA with a 9-13% FCF yield. Meanwhile, Amplats, compared to its peer group, seems expensive at 5x 1-y fwd EV/EBITDA, and modest 7% FCF-yield
💰At the same time, more diversified PGM-oriented miners (Sibanye and Norilsk Nickel) are also not very attractive at 4-5x 1-y fwd EV/EBITDA and the lowest 3-5% FCF-yields in the sector. However, the Russian producer is not subject to the ongoing supply-side disruptions in South Africa, that have been experienced throughout 2022 and may continue in the future
#PGMs
https://metals-wire.com/sector/PGM
📉On the back of softening demand for PGMs, the segment's miners do not seem very attractive to us
💰However, at spot prices, pure-play PGM producers: Impala and Sylvania might be moderately appealing, trading at 2-3x 1-y fwd EV/EBITDA with a 9-13% FCF yield. Meanwhile, Amplats, compared to its peer group, seems expensive at 5x 1-y fwd EV/EBITDA, and modest 7% FCF-yield
💰At the same time, more diversified PGM-oriented miners (Sibanye and Norilsk Nickel) are also not very attractive at 4-5x 1-y fwd EV/EBITDA and the lowest 3-5% FCF-yields in the sector. However, the Russian producer is not subject to the ongoing supply-side disruptions in South Africa, that have been experienced throughout 2022 and may continue in the future
#PGMs
https://metals-wire.com/sector/PGM
Week ahead data releases in M&M
This week, ArcelorMittal is due to report its 4Q22 earnings: our EBITDA forecast is in the mid-single digits above the consensus estimate. Meanwhile, we note that the weak performance shown by the EU segment of US Steel in 4Q22 might imply a negative read-across for ArcelorMittal's results in the European segment as well
#reporting_season
https://metals-wire.com:3000/events
This week, ArcelorMittal is due to report its 4Q22 earnings: our EBITDA forecast is in the mid-single digits above the consensus estimate. Meanwhile, we note that the weak performance shown by the EU segment of US Steel in 4Q22 might imply a negative read-across for ArcelorMittal's results in the European segment as well
#reporting_season
https://metals-wire.com:3000/events
Morning Bites (part 1)
🌏Global manufacturing PMIs showed mixed dynamics in January. The Eurozone Markit Manufacturing PMI grew to 48.8 (up from 47.8 in December, in line with the preliminary reading), but still below 50.0. The US ISM manufacturing PMI declined for the eighth consecutive month, to 47.4 (from 48.4 in December), its lowest level since May 2020 (and below the consensus estimate of 48.0)
🇨🇳China's official PMI surged to 50.1 (from 47.0 in December), above the market forecast of 49.8. However, China's Caixin manufacturing PMI only increased to 49.2, from 49.0 a month ago, underperforming the consensus estimate of 49.5
❗️Overall, below-50 manufacturing PMIs in the US and Eurozone indicate a manufacturing sector contraction in these regions, which is negative for the demand for industrial metals. At the same time, the Chinese PMIs provide some mixed evidence regarding the state of the country's manufacturing sector
#PMIs
https://metals-wire.com:3000/news-reports
🌏Global manufacturing PMIs showed mixed dynamics in January. The Eurozone Markit Manufacturing PMI grew to 48.8 (up from 47.8 in December, in line with the preliminary reading), but still below 50.0. The US ISM manufacturing PMI declined for the eighth consecutive month, to 47.4 (from 48.4 in December), its lowest level since May 2020 (and below the consensus estimate of 48.0)
🇨🇳China's official PMI surged to 50.1 (from 47.0 in December), above the market forecast of 49.8. However, China's Caixin manufacturing PMI only increased to 49.2, from 49.0 a month ago, underperforming the consensus estimate of 49.5
❗️Overall, below-50 manufacturing PMIs in the US and Eurozone indicate a manufacturing sector contraction in these regions, which is negative for the demand for industrial metals. At the same time, the Chinese PMIs provide some mixed evidence regarding the state of the country's manufacturing sector
#PMIs
https://metals-wire.com:3000/news-reports
Morning Bites (part 2)
🚘US light vehicle sales were up 4% YoY in January from a low base, slightly decelerating from the 5% YoY growth in December. The figure was still 9% less than the 2019 level. Seasonally adjusted sales volumes increased 5% YoY in December (-6% vs. the 2019 level). Overall, market participants in US are still concerned about elevated car prices and expensive loan payments. The latter, in our view, might add some stress to domestic car sales in 2023 and, hence, affect demand for PGMs
💍Hong Kong jewellery and watch sales fell 3% YoY in December, vs. the 8% YoY drop in November. Meanwhile, in January, according to Rapaport, local jewellery trading was relatively quiet after the Lunar New Year festival, but Mainland demand was improving amid easing Covid-19 restrictions and the opening of the Hong Kong border. In our view, this might slightly support rough diamond demand, still heavily stressed by adverse macroeconomic conditions
#cars #diamonds
https://metals-wire.com:3000/news-reports
🚘US light vehicle sales were up 4% YoY in January from a low base, slightly decelerating from the 5% YoY growth in December. The figure was still 9% less than the 2019 level. Seasonally adjusted sales volumes increased 5% YoY in December (-6% vs. the 2019 level). Overall, market participants in US are still concerned about elevated car prices and expensive loan payments. The latter, in our view, might add some stress to domestic car sales in 2023 and, hence, affect demand for PGMs
💍Hong Kong jewellery and watch sales fell 3% YoY in December, vs. the 8% YoY drop in November. Meanwhile, in January, according to Rapaport, local jewellery trading was relatively quiet after the Lunar New Year festival, but Mainland demand was improving amid easing Covid-19 restrictions and the opening of the Hong Kong border. In our view, this might slightly support rough diamond demand, still heavily stressed by adverse macroeconomic conditions
#cars #diamonds
https://metals-wire.com:3000/news-reports
Morning Bites (part 1)
💎 India – Jewellery segment revenues at Titan grew 15% YoY in CY 4Q22. The retailer saw strong festive consumer demand in October-November. In our view, these dynamics might imply a somewhat positive read-across for local gold and diamonds consumption. However, global diamond demand is likely to remain heavily squeezed in the near future, due to the adverse macroeconomic conditions
⛏First Quantum has halted copper concentrate loading at Panama's port, after local authorities ordered the stoppage amid certification issues. Furthermore, First Quantum might temporarily shut down its Cobre Panama mine (1.5% of global copper supply), due to the lack of storage space, if the material is not shipped by mid-February. Overall, the news is supportive for the sentiment on copper, but in our view the effect might already be partially priced in, given that the miner has been in a dispute with the Panamanian government since late 2022
#diamonds #copper
https://metals-wire.com:3000/news-reports
💎 India – Jewellery segment revenues at Titan grew 15% YoY in CY 4Q22. The retailer saw strong festive consumer demand in October-November. In our view, these dynamics might imply a somewhat positive read-across for local gold and diamonds consumption. However, global diamond demand is likely to remain heavily squeezed in the near future, due to the adverse macroeconomic conditions
⛏First Quantum has halted copper concentrate loading at Panama's port, after local authorities ordered the stoppage amid certification issues. Furthermore, First Quantum might temporarily shut down its Cobre Panama mine (1.5% of global copper supply), due to the lack of storage space, if the material is not shipped by mid-February. Overall, the news is supportive for the sentiment on copper, but in our view the effect might already be partially priced in, given that the miner has been in a dispute with the Panamanian government since late 2022
#diamonds #copper
https://metals-wire.com:3000/news-reports
Morning Bites (part 2)
🚘New car registrations in France, the UK, Spain, Italy and Germany grew 12% YoY in January from a low base, according to preliminary data. Nevertheless, the figure was still 26% below the (2019) pre-COVID level. Specifically, in Italy and France, car sales were down 22% and 28%, respectively, vs. 2019, while sales in Spain and Germany have been hit the most by ~32%. In addition, UK sales were 18% lower relative to 2019. The full EU + UK results for January sales are to be published on 21 February; however, given the above five countries represent ~70% of new vehicle registrations in Europe, EU + UK car sales are likely to show some YoY growth in January while remaining below the pre-pandemic level
#cars
https://metals-wire.com:3000/sector/PGM
🚘New car registrations in France, the UK, Spain, Italy and Germany grew 12% YoY in January from a low base, according to preliminary data. Nevertheless, the figure was still 26% below the (2019) pre-COVID level. Specifically, in Italy and France, car sales were down 22% and 28%, respectively, vs. 2019, while sales in Spain and Germany have been hit the most by ~32%. In addition, UK sales were 18% lower relative to 2019. The full EU + UK results for January sales are to be published on 21 February; however, given the above five countries represent ~70% of new vehicle registrations in Europe, EU + UK car sales are likely to show some YoY growth in January while remaining below the pre-pandemic level
#cars
https://metals-wire.com:3000/sector/PGM
Morning Bites (part 1)
🇨🇳In January, China's central bank increased its gold holdings a further 15t, to a total of 2,025t, after the 32-30t growth in November and December. The increase, on our numbers, represents ~4% of the global monthly physical gold demand in 2022. We note that the PBoC’s two recent gold purchase cycles (in 2015-16 and 2019) lasted from several months to almost a year: hence, we might see more purchases in 2023, in our view. Overall, the ongoing accumulation of gold reserves by global institutions (their purchases more than doubled YoY in 2022) is likely to provide further support to the precious metal's price
#gold
https://metals-wire.com:3000/sector/Gold
🇨🇳In January, China's central bank increased its gold holdings a further 15t, to a total of 2,025t, after the 32-30t growth in November and December. The increase, on our numbers, represents ~4% of the global monthly physical gold demand in 2022. We note that the PBoC’s two recent gold purchase cycles (in 2015-16 and 2019) lasted from several months to almost a year: hence, we might see more purchases in 2023, in our view. Overall, the ongoing accumulation of gold reserves by global institutions (their purchases more than doubled YoY in 2022) is likely to provide further support to the precious metal's price
#gold
https://metals-wire.com:3000/sector/Gold
Morning bites (part 2)
🇨🇱Chile’s copper production declined 2% YoY in December (vs. -6% YoY in November), which was better than the preliminary estimates. Hence, during FY22, the country's output fell 5% YoY, amid lower production at its major mines and unfavourable structural effects (such as grade depletion and bad weather). Overall, if these factors in Chile's mining persist (27% of global mined Cu production), they might partially offset the positive effect of new supply additions in 2023
🇵🇪Glencore's Antapaccay mine in Peru has reopened with improved security measures, Reuters reports, citing a company representative. Noteworthy is that the mine (0.7% of world mined Cu supply in 2022E) was shut down for only 11 days following local political unrest. Although the news is unfavourable for the sentiment on copper (due to the rapid production restart), protests might still be a negative factor for the company's operations
#copper
https://metals-wire.com:3000/sector/Copper
🇨🇱Chile’s copper production declined 2% YoY in December (vs. -6% YoY in November), which was better than the preliminary estimates. Hence, during FY22, the country's output fell 5% YoY, amid lower production at its major mines and unfavourable structural effects (such as grade depletion and bad weather). Overall, if these factors in Chile's mining persist (27% of global mined Cu production), they might partially offset the positive effect of new supply additions in 2023
🇵🇪Glencore's Antapaccay mine in Peru has reopened with improved security measures, Reuters reports, citing a company representative. Noteworthy is that the mine (0.7% of world mined Cu supply in 2022E) was shut down for only 11 days following local political unrest. Although the news is unfavourable for the sentiment on copper (due to the rapid production restart), protests might still be a negative factor for the company's operations
#copper
https://metals-wire.com:3000/sector/Copper
Morning Bites
🇵🇪Peru’s copper output was up 20% YoY in December, accelerating from the 15% YoY growth in November. Hence, the country's monthly output reached a new historical record, while its FY22 production rose 5% YoY. According to the Peruvian authorities, the upbeat dynamics were mainly due to higher production at major local mines, including Cerro Verde and Las Bambas. As a result, the combined output of Chile and Peru (~40% of global mined Cu supply) increased 5% YoY in December (vs. roughly flat YoY in November). However, we note that Las Bambas (1.5% of the global supply) has been temporary closed since early February, which poses risks to upcoming copper supplies
#copper
https://metals-wire.com:3000/sector/Copper
🇵🇪Peru’s copper output was up 20% YoY in December, accelerating from the 15% YoY growth in November. Hence, the country's monthly output reached a new historical record, while its FY22 production rose 5% YoY. According to the Peruvian authorities, the upbeat dynamics were mainly due to higher production at major local mines, including Cerro Verde and Las Bambas. As a result, the combined output of Chile and Peru (~40% of global mined Cu supply) increased 5% YoY in December (vs. roughly flat YoY in November). However, we note that Las Bambas (1.5% of the global supply) has been temporary closed since early February, which poses risks to upcoming copper supplies
#copper
https://metals-wire.com:3000/sector/Copper
ArcelorMittal 4Q22 results - EBITDA above consensus
✏️ArcelorMittal's 4Q22 revenues outperformed both consensus and us, mainly amid better realised prices and sales in the EU segment. However, the increase in cash costs was more dramatic than we expected, which resulted in a modest EBITDA performance (4% above consensus and in line with our estimates)
📉Overall, the company's financials were substantially affected by global inflationary pressures. As a result, Arcelor's cash costs per ton surged >20% YoY and ~9% QoQ, on our numbers
🏭Meanwhile, the company expects its FY23 steel shipments to grow ~5% YoY, supported by a forecasted increase in global ex-China apparent steel consumption (+2-3% YoY)
❗️Overall, at spot, the 1Q23 EBITDA might be materially higher QoQ, bolstered by some stabilisation in cash costs, in our view
#MT #steel
https://metals-wire.com:3000/company/MT_US/
✏️ArcelorMittal's 4Q22 revenues outperformed both consensus and us, mainly amid better realised prices and sales in the EU segment. However, the increase in cash costs was more dramatic than we expected, which resulted in a modest EBITDA performance (4% above consensus and in line with our estimates)
📉Overall, the company's financials were substantially affected by global inflationary pressures. As a result, Arcelor's cash costs per ton surged >20% YoY and ~9% QoQ, on our numbers
🏭Meanwhile, the company expects its FY23 steel shipments to grow ~5% YoY, supported by a forecasted increase in global ex-China apparent steel consumption (+2-3% YoY)
❗️Overall, at spot, the 1Q23 EBITDA might be materially higher QoQ, bolstered by some stabilisation in cash costs, in our view
#MT #steel
https://metals-wire.com:3000/company/MT_US/
Morning Bites (part 1)
📉Gold-backed ETFs reduced their holdings by 26t through January (after -4t in December). Last month, according to the World Gold Council (WGC), ETF outflows in Europe (-33t) and Asia (-3t) outweighed additions in N. America (+9t) and the rest of the world (+2t). In our view, ETF sales still remain the main factor pressuring gold prices – especially amid skyrocketing physical gold demand in 4Q22
💎US jewellery sales fell 2% YoY in December, decelerating after the revised 5% YoY drop in November. Overall, the results were slightly better than the preliminary figure. Hence, we reiterate our view that the ongoing decline in US jewellery sales is one of the negative drivers for the diamond sector (at least in the short-term), given the country accounts for ~50% of global diamond jewellery sales
#diamonds #ETF #gold
https://metals-wire.com:3000/news-reports
📉Gold-backed ETFs reduced their holdings by 26t through January (after -4t in December). Last month, according to the World Gold Council (WGC), ETF outflows in Europe (-33t) and Asia (-3t) outweighed additions in N. America (+9t) and the rest of the world (+2t). In our view, ETF sales still remain the main factor pressuring gold prices – especially amid skyrocketing physical gold demand in 4Q22
💎US jewellery sales fell 2% YoY in December, decelerating after the revised 5% YoY drop in November. Overall, the results were slightly better than the preliminary figure. Hence, we reiterate our view that the ongoing decline in US jewellery sales is one of the negative drivers for the diamond sector (at least in the short-term), given the country accounts for ~50% of global diamond jewellery sales
#diamonds #ETF #gold
https://metals-wire.com:3000/news-reports
Morning Bites (part 2)
🇿🇦South Africa’s PGM mining output declined a further 5% YoY in December, after the 22% YoY drop in November. Meanwhile, the country’s gold production shrank 3% YoY, slightly decelerating from the -5% YoY in November. We note that electricity shortages, logistical issues and inflationary pressures keep affecting domestic production. Furthermore, according to Bloomberg, the electricity crunch and blackouts are expected to last at least two more years. Hence, in our view, the continuous production disruptions are supportive for PGMs and gold prices, given South Africa accounts for ~70% and 38% of global platinum and palladium supply, respectively (and 3% of gold output). However, as of today, we do not see substantial growth triggers in Pd/Pt prices, mostly amid the weak prospects for automotive demand
#PGMs #gold
https://metals-wire.com:3000/news-reports
🇿🇦South Africa’s PGM mining output declined a further 5% YoY in December, after the 22% YoY drop in November. Meanwhile, the country’s gold production shrank 3% YoY, slightly decelerating from the -5% YoY in November. We note that electricity shortages, logistical issues and inflationary pressures keep affecting domestic production. Furthermore, according to Bloomberg, the electricity crunch and blackouts are expected to last at least two more years. Hence, in our view, the continuous production disruptions are supportive for PGMs and gold prices, given South Africa accounts for ~70% and 38% of global platinum and palladium supply, respectively (and 3% of gold output). However, as of today, we do not see substantial growth triggers in Pd/Pt prices, mostly amid the weak prospects for automotive demand
#PGMs #gold
https://metals-wire.com:3000/news-reports
Morning Bites (part 3)
⛏MMG's Las Bambas copper mine in Peru continues to produce at a reduced rate, despite the recent announcement of a suspension of operations. According to the company, it managed to secure critical supplies, but they are still low: Las Bambas remains under the risk of a temporary closure (a period of care and maintenance). According to Reuters, power usage at the key mines in Peru (11% of the global Cu production) remained near normal levels, despite protests that have lasted for more than two months. Although the news might add some stress to sentiment, we maintain our positive view on copper, amid historically low level of inventories and the potential recovery of demand in China
#copper
https://metals-wire.com/sector/Copper
⛏MMG's Las Bambas copper mine in Peru continues to produce at a reduced rate, despite the recent announcement of a suspension of operations. According to the company, it managed to secure critical supplies, but they are still low: Las Bambas remains under the risk of a temporary closure (a period of care and maintenance). According to Reuters, power usage at the key mines in Peru (11% of the global Cu production) remained near normal levels, despite protests that have lasted for more than two months. Although the news might add some stress to sentiment, we maintain our positive view on copper, amid historically low level of inventories and the potential recovery of demand in China
#copper
https://metals-wire.com/sector/Copper
Week ahead data releases in M&M
As reporting season continues, several major miners are to report their earnings. For most of the names publishing this week, our 4Q22/2H22 EBITDA forecasts are slightly below the consensus estimates, but we are more upbeat on Agnico, Fortescue and Barrick
#reporting_season
https://metals-wire.com:3000/events
As reporting season continues, several major miners are to report their earnings. For most of the names publishing this week, our 4Q22/2H22 EBITDA forecasts are slightly below the consensus estimates, but we are more upbeat on Agnico, Fortescue and Barrick
#reporting_season
https://metals-wire.com:3000/events
Morning Bites (part 1)
🔗CISA mills daily crude steel production grew 2.6% to 1.99mnt in late-January, from the second ten days of the month. This was 1.3% lower YoY, vs. the 2.6% YoY decline in the previous ten days. The local steel stock rose 2.6% over the period (20.5% above the 2022 level, as of 31 January), which implies soft domestic demand for steel. We note that China’s upcoming aggregate financing data for January (historically the most important month) might determine the steel sector’s prospects in 2023
💍China’s jewellery and watch retail sales were up 2% YoY in December, after the 1% YoY growth in November. However, the sales were down 9% YoY in FY22 (vs +31% in 2021), affected by city-wide lockdowns and employment issues. Although easing Covid-19 measures might bolster future gem-set jewellery sales in China (some 15% of the world market), this is unlikely to trigger a global recovery in the stressed diamond sector, in our view
#steel #diamonds
https://metals-wire.com:3000/news-reports
🔗CISA mills daily crude steel production grew 2.6% to 1.99mnt in late-January, from the second ten days of the month. This was 1.3% lower YoY, vs. the 2.6% YoY decline in the previous ten days. The local steel stock rose 2.6% over the period (20.5% above the 2022 level, as of 31 January), which implies soft domestic demand for steel. We note that China’s upcoming aggregate financing data for January (historically the most important month) might determine the steel sector’s prospects in 2023
💍China’s jewellery and watch retail sales were up 2% YoY in December, after the 1% YoY growth in November. However, the sales were down 9% YoY in FY22 (vs +31% in 2021), affected by city-wide lockdowns and employment issues. Although easing Covid-19 measures might bolster future gem-set jewellery sales in China (some 15% of the world market), this is unlikely to trigger a global recovery in the stressed diamond sector, in our view
#steel #diamonds
https://metals-wire.com:3000/news-reports