Week ahead data releases in M&M
As the reporting season continues, several major M&M names are to report their earnings. For the PGM miners publishing this week (Sibanye and Impala), our EBITDA forecast is slightly below the consensus. For other producers, our outlook is more upbeat
#reporting_season
https://metals-wire.com:3000/events
As the reporting season continues, several major M&M names are to report their earnings. For the PGM miners publishing this week (Sibanye and Impala), our EBITDA forecast is slightly below the consensus. For other producers, our outlook is more upbeat
#reporting_season
https://metals-wire.com:3000/events
Morning Bites (part 1)
🔗CISA mills daily crude steel production grew 1.5% to 2.09mnt in mid-February, from the first ten days of the month. This was 10.2% higher YoY, vs. the 7.2% YoY growth in the previous ten days. Meanwhile, local steel stock increased 8.3% over the period (15.5% above the 2022 level, as of 20 February), which implies that domestic demand for steel remains soft. To recap, China has recently published strong financing data for January (historically, the most important month). That, in our view, might support domestic construction activity and, hence, demand for industrial metals in 2023 (e.g. steel and base metals)
#steel
https://metals-wire.com/sector/Steel
🔗CISA mills daily crude steel production grew 1.5% to 2.09mnt in mid-February, from the first ten days of the month. This was 10.2% higher YoY, vs. the 7.2% YoY growth in the previous ten days. Meanwhile, local steel stock increased 8.3% over the period (15.5% above the 2022 level, as of 20 February), which implies that domestic demand for steel remains soft. To recap, China has recently published strong financing data for January (historically, the most important month). That, in our view, might support domestic construction activity and, hence, demand for industrial metals in 2023 (e.g. steel and base metals)
#steel
https://metals-wire.com/sector/Steel
Morning Bites (part 2)
🏗China’s excavator sales fell 33% YoY in January (domestic + export), after the 30% YoY drop in December. We note that the decline was sharper than envisaged by the previous estimate from SteelOrbis. Meanwhile, domestic excavator sales shrank 59% YoY, after the 60% YoY fall in December, amid the Covid-19 effects and unfavourable market conditions. The still weak domestic sales imply no short-term recovery in the stagnating Chinese real estate segment. However, the country’s strong liquidity injections data for January might add support to the local demand for industrial metals in 2023, in our view
📈Russia’s gold output dropped 9.6% YoY in January, after the 9.3% YoY growth in December, according to Rosstat. Overall, some slowdown in Russia's production (~9% of global gold mined output) is favourable for our positive view on the yellow metal's price, bolstered by the strong prospects for demand
#steel #gold
https://metals-wire.com:3000/news-reports
🏗China’s excavator sales fell 33% YoY in January (domestic + export), after the 30% YoY drop in December. We note that the decline was sharper than envisaged by the previous estimate from SteelOrbis. Meanwhile, domestic excavator sales shrank 59% YoY, after the 60% YoY fall in December, amid the Covid-19 effects and unfavourable market conditions. The still weak domestic sales imply no short-term recovery in the stagnating Chinese real estate segment. However, the country’s strong liquidity injections data for January might add support to the local demand for industrial metals in 2023, in our view
📈Russia’s gold output dropped 9.6% YoY in January, after the 9.3% YoY growth in December, according to Rosstat. Overall, some slowdown in Russia's production (~9% of global gold mined output) is favourable for our positive view on the yellow metal's price, bolstered by the strong prospects for demand
#steel #gold
https://metals-wire.com:3000/news-reports
Morning Bites (part 1)
⚠️The recent accident at a Chinese coal mine has triggered nationwide safety checks, Bloomberg reports. After a landslide buried over 50 people in the Inner Mongolia region last Wednesday, the local ministry of emergency management dispatched 20 inspection teams across the country to prevent further incidents. We see additional risks for domestic coal capacity, given that the 10% YoY supply boost in 2022 might have come on the back of more safety violations
🇨🇳China's Tangshan has initiated production curbs ahead of major political meetings, Bloomberg reports. Meanwhile, according to a Mysteel report, several mills planned to reduce their sintering capacity 30-50% to meet the government requirements. However, the timing of the measure was not specified. In our view, the decision might add some stress to global iron ore prices: the city accounts for 13% of China’s steel supply
#coal #steel #iron_ore
https://metals-wire.com:3000/news-reports
⚠️The recent accident at a Chinese coal mine has triggered nationwide safety checks, Bloomberg reports. After a landslide buried over 50 people in the Inner Mongolia region last Wednesday, the local ministry of emergency management dispatched 20 inspection teams across the country to prevent further incidents. We see additional risks for domestic coal capacity, given that the 10% YoY supply boost in 2022 might have come on the back of more safety violations
🇨🇳China's Tangshan has initiated production curbs ahead of major political meetings, Bloomberg reports. Meanwhile, according to a Mysteel report, several mills planned to reduce their sintering capacity 30-50% to meet the government requirements. However, the timing of the measure was not specified. In our view, the decision might add some stress to global iron ore prices: the city accounts for 13% of China’s steel supply
#coal #steel #iron_ore
https://metals-wire.com:3000/news-reports
Morning Bites (part 2)
💎Rio Tinto has decided to extend its Diavik mine life until at least to early-2026, the company has announced. The mine was previously slated to end commercial production in 2025. Rio estimates that the approved USD 40mn investment will yield an additional 1.4mnct of rough diamonds (1.1% of global supply in 2022E). Meanwhile, the second phase (subject to approval in 2024) might produce a further 0.8mnct (0.7%). Overall, the long-term pipeline remains insufficient to cover demand, we estimate: hence, this news is unlikely to materially affect the rough diamond supply
#diamonds
https://metals-wire.com/sector/Diamonds
💎Rio Tinto has decided to extend its Diavik mine life until at least to early-2026, the company has announced. The mine was previously slated to end commercial production in 2025. Rio estimates that the approved USD 40mn investment will yield an additional 1.4mnct of rough diamonds (1.1% of global supply in 2022E). Meanwhile, the second phase (subject to approval in 2024) might produce a further 0.8mnct (0.7%). Overall, the long-term pipeline remains insufficient to cover demand, we estimate: hence, this news is unlikely to materially affect the rough diamond supply
#diamonds
https://metals-wire.com/sector/Diamonds
Sibanye-Stillwater 2H22 results – financials underperformed
📝The miner's 2H22 revenues were below both the consensus and our expectations (by 8% and 6%, respectively), affected by ~10% lower PGM and gold sales volumes. This was mainly due to the persisting supply issues in SA. Meanwhile, a single-digit HoH growth in AISC exacerbated the negative impact on EBITDA (which was -20% vs. consensus and -17% vs. us)
⛏Per the company's FY23 guidance, its SA PGM output is to grow up to 4% YoY, which is still 5% below the 2021 level. Meantime, US PGMs and SA gold supply are set to increase >20% YoY
💰Management has declared a final dividend for 2022 of ZAR 3.5bn (USD 191mn), which implies a DY of some 3.2%
📌On our numbers, at spot, Sibanye's 1H23F EBITDA might be slightly softer HoH, mainly due to the recent fall in palladium prices
#SBSW #PGMs
https://metals-wire.com/company/SBSW_US/
📝The miner's 2H22 revenues were below both the consensus and our expectations (by 8% and 6%, respectively), affected by ~10% lower PGM and gold sales volumes. This was mainly due to the persisting supply issues in SA. Meanwhile, a single-digit HoH growth in AISC exacerbated the negative impact on EBITDA (which was -20% vs. consensus and -17% vs. us)
⛏Per the company's FY23 guidance, its SA PGM output is to grow up to 4% YoY, which is still 5% below the 2021 level. Meantime, US PGMs and SA gold supply are set to increase >20% YoY
💰Management has declared a final dividend for 2022 of ZAR 3.5bn (USD 191mn), which implies a DY of some 3.2%
📌On our numbers, at spot, Sibanye's 1H23F EBITDA might be slightly softer HoH, mainly due to the recent fall in palladium prices
#SBSW #PGMs
https://metals-wire.com/company/SBSW_US/
Morning bites (part 1)
🇨🇱Chile’s copper production grew 1% YoY in January, slightly rebounding from the 2% YoY fall in December. Overall, in January, output remained close to its historical lows, amid the drought and negative structural effects (e.g. grade depletion). In our view, were these factors to continue affecting mining in Chile (27% of world mined Cu production), they might partially offset the positive effect from new projects (Kamoa, QB2, Udokan, etc) in 2023
#copper
https://metals-wire.com:3000/sector/Copper
🇨🇱Chile’s copper production grew 1% YoY in January, slightly rebounding from the 2% YoY fall in December. Overall, in January, output remained close to its historical lows, amid the drought and negative structural effects (e.g. grade depletion). In our view, were these factors to continue affecting mining in Chile (27% of world mined Cu production), they might partially offset the positive effect from new projects (Kamoa, QB2, Udokan, etc) in 2023
#copper
https://metals-wire.com:3000/sector/Copper
Morning Bites (part 2)
🏗China’s preliminary excavator sales are seen 10% lower YoY in February (domestic + export), vs. the 33% YoY drop in January, based on industry estimates provided by SteelOrbis. Meanwhile, the decline in domestic excavator sales might decelerate to 30% YoY, after the 59% YoY fall in January, still affected by Covid-19 and unfavourable market conditions. We note that Caterpillar CEO Jim Umpleby has recently warned about slowing business activity in China following the subdued demand. Hence, we reiterate our view that the stagnating Chinese property sector is unlikely to recover in the near future. However, the country’s strong financial data for January might bolster domestic construction activity and, hence, support the demand for industrial metals in 2023, in our view
#steel
https://metals-wire.com/sector/Steel
🏗China’s preliminary excavator sales are seen 10% lower YoY in February (domestic + export), vs. the 33% YoY drop in January, based on industry estimates provided by SteelOrbis. Meanwhile, the decline in domestic excavator sales might decelerate to 30% YoY, after the 59% YoY fall in January, still affected by Covid-19 and unfavourable market conditions. We note that Caterpillar CEO Jim Umpleby has recently warned about slowing business activity in China following the subdued demand. Hence, we reiterate our view that the stagnating Chinese property sector is unlikely to recover in the near future. However, the country’s strong financial data for January might bolster domestic construction activity and, hence, support the demand for industrial metals in 2023, in our view
#steel
https://metals-wire.com/sector/Steel
Morning Bites (part 1)
🌏Global manufacturing PMIs showed mixed dynamics in February. The Eurozone Markit Manufacturing PMI decreased slightly to 48.5 (from 48.8 in January, in line with consensus). Meanwhile, the US ISM manufacturing PMI inched up to 47.7 (from 47.4, but still below the consensus estimate of 48.0)
🇨🇳At the same time, China's official PMI surged to 52.6 in February (from 50.1 in January), substantially outperforming the market forecast of 50.5. China's Caixin manufacturing PMI also increased, to 51.6 (from 49.2), beating the consensus estimate of 50.2
❗️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, upbeat Chinese PMIs provide some positive read-across on the country's manufacturing sector. This underpins our view on higher demand for industrial metals, amid the reopening in China
#PMIs
https://metals-wire.com:3000/news-reports
🌏Global manufacturing PMIs showed mixed dynamics in February. The Eurozone Markit Manufacturing PMI decreased slightly to 48.5 (from 48.8 in January, in line with consensus). Meanwhile, the US ISM manufacturing PMI inched up to 47.7 (from 47.4, but still below the consensus estimate of 48.0)
🇨🇳At the same time, China's official PMI surged to 52.6 in February (from 50.1 in January), substantially outperforming the market forecast of 50.5. China's Caixin manufacturing PMI also increased, to 51.6 (from 49.2), beating the consensus estimate of 50.2
❗️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, upbeat Chinese PMIs provide some positive read-across on the country's manufacturing sector. This underpins our view on higher demand for industrial metals, amid the reopening in China
#PMIs
https://metals-wire.com:3000/news-reports
Morning Bites (part 2)
⛏Freeport McMoran has fully restored operations at its Grasberg copper mine, the company reports. Mining operations (3.1% of global copper supply) had been temporarily suspended since mid-February, due to the heavy rains and mud flows that caused damage to facilities. Hence, the accident has not substantially affected the copper market balance, in our view
#copper
https://metals-wire.com/sector/Copper
⛏Freeport McMoran has fully restored operations at its Grasberg copper mine, the company reports. Mining operations (3.1% of global copper supply) had been temporarily suspended since mid-February, due to the heavy rains and mud flows that caused damage to facilities. Hence, the accident has not substantially affected the copper market balance, in our view
#copper
https://metals-wire.com/sector/Copper
☃1
SQM 4Q22 results – largely in-line with expectations
📝SQM's 4Q22 revenues were slightly above both the consensus and our estimates (+5% and +3%, respectively), mostly due to higher lithium output, which offset a ~10% lower realised price. Overall, EBITDA was close to our expectations (+3% vs. consensus and +1% vs. us)
⛏Management expects >20% lithium demand growth in FY23 and guides for the company’s lithium capacity to reach 265kt in 2025 (+45% vs the 2022 level)
❗️At spot prices, we expect 1Q23 EBITDA to grow in the low-single digits QoQ
$SQM #lithium
https://metals-wire.com:3000/company/SQM_US/
📝SQM's 4Q22 revenues were slightly above both the consensus and our estimates (+5% and +3%, respectively), mostly due to higher lithium output, which offset a ~10% lower realised price. Overall, EBITDA was close to our expectations (+3% vs. consensus and +1% vs. us)
⛏Management expects >20% lithium demand growth in FY23 and guides for the company’s lithium capacity to reach 265kt in 2025 (+45% vs the 2022 level)
❗️At spot prices, we expect 1Q23 EBITDA to grow in the low-single digits QoQ
$SQM #lithium
https://metals-wire.com:3000/company/SQM_US/
🍓3
Implats CY 2H22 results - EBITDA outperformance due to one-off
📝In CY 2H22, the company's revenues came 4% below consensus and 3% under our forecast, mostly due to softer proceeds from its refining division (IRS). However, EBITDA outperformed (+8% vs. consensus and +10% vs. us), due to a positive one-off effect (site-by-site EBITDA was still 6% below our estimates)
⛏The miner reiterated its FY23 (ending 30 June 2023) production guidance: on average, refined 6E PGMs output is expected to stay flat YoY. However, the growth in cash costs per ounce was revised to 9% YoY (from ~7% YoY)
💰The BoD has declared an interim cash dividend for FY23 of ZAR 3.57bn (~USD 206mn), which implies a DY of 2.7%
📌On our numbers, at spot, Impala's CY 1H23F EBITDA might be moderately weaker HoH, due to the recent drop in palladium and rhodium prices
#IMP #PGMs
https://metals-wire.com/company/IMP_SJ/
📝In CY 2H22, the company's revenues came 4% below consensus and 3% under our forecast, mostly due to softer proceeds from its refining division (IRS). However, EBITDA outperformed (+8% vs. consensus and +10% vs. us), due to a positive one-off effect (site-by-site EBITDA was still 6% below our estimates)
⛏The miner reiterated its FY23 (ending 30 June 2023) production guidance: on average, refined 6E PGMs output is expected to stay flat YoY. However, the growth in cash costs per ounce was revised to 9% YoY (from ~7% YoY)
💰The BoD has declared an interim cash dividend for FY23 of ZAR 3.57bn (~USD 206mn), which implies a DY of 2.7%
📌On our numbers, at spot, Impala's CY 1H23F EBITDA might be moderately weaker HoH, due to the recent drop in palladium and rhodium prices
#IMP #PGMs
https://metals-wire.com/company/IMP_SJ/
Morning Bites (part 1)
🏦 Global Central Banks continued to accumulate gold reserves in January, purchasing 32.7t of gold (vs. 26.5t in December), the World Gold Council reports. The main buyers were Turkey and China (23.3t and 14.9t, respectively). Meantime, the only net-seller was Uzbekistan, which reduced its reserves by 11.5t (vs. -1.2t in December). Overall, the dynamics are supportive for the sentiment on gold, especially as demand from central banks jumped >10x YoY in 4Q22. However, Turkey (~3% of world physical gold demand in 2022) is considering a reduction of its gold imports after the recent earthquakes, which might pressure future gold consumption
#gold
https://metals-wire.com/sector/Gold
🏦 Global Central Banks continued to accumulate gold reserves in January, purchasing 32.7t of gold (vs. 26.5t in December), the World Gold Council reports. The main buyers were Turkey and China (23.3t and 14.9t, respectively). Meantime, the only net-seller was Uzbekistan, which reduced its reserves by 11.5t (vs. -1.2t in December). Overall, the dynamics are supportive for the sentiment on gold, especially as demand from central banks jumped >10x YoY in 4Q22. However, Turkey (~3% of world physical gold demand in 2022) is considering a reduction of its gold imports after the recent earthquakes, which might pressure future gold consumption
#gold
https://metals-wire.com/sector/Gold
Morning Bites (part 2)
💍Hong Kong jewellery and watch sales surged 23% YoY in January, rebounding from the revised 5% YoY drop in December. Meanwhile, the category's revenues were the highest since January 2020. According to Rapaport, this growth reflected the recent opening of the Hong Kong border with Mainland China, as well as improved labour market conditions and the earlier start to the Lunar New Year. In our view, this might slightly support the demand for rough diamonds, which is still affected by the unfavourable macroeconomic conditions globally
🔋Lithium Americas has begun construction of its Thacker Pass lithium project, after the US federal court rejected environmental claims, the company reports. To recap, the project aims to achieve 80kt LCE production in two phases. During the Phase 1, the miner is set to achieve 40kt LCE output by 2H26 (~2% of global Li supply in 2026F), which is in line with growing consumer interest for EVs
#diamonds #lithium
https://metals-wire.com:3000/news-reports
💍Hong Kong jewellery and watch sales surged 23% YoY in January, rebounding from the revised 5% YoY drop in December. Meanwhile, the category's revenues were the highest since January 2020. According to Rapaport, this growth reflected the recent opening of the Hong Kong border with Mainland China, as well as improved labour market conditions and the earlier start to the Lunar New Year. In our view, this might slightly support the demand for rough diamonds, which is still affected by the unfavourable macroeconomic conditions globally
🔋Lithium Americas has begun construction of its Thacker Pass lithium project, after the US federal court rejected environmental claims, the company reports. To recap, the project aims to achieve 80kt LCE production in two phases. During the Phase 1, the miner is set to achieve 40kt LCE output by 2H26 (~2% of global Li supply in 2026F), which is in line with growing consumer interest for EVs
#diamonds #lithium
https://metals-wire.com:3000/news-reports
Week ahead data releases in M&M
Several companies are due to report their 4Q22/2H22 earnings this week. Our forecasts are, on average, less upbeat than the consensus estimates
#reporting_season
https://metals-wire.com:3000/events
Several companies are due to report their 4Q22/2H22 earnings this week. Our forecasts are, on average, less upbeat than the consensus estimates
#reporting_season
https://metals-wire.com:3000/events
Morning Bites
🇵🇪 Peruvian communities are set to resume transportation blockades this week, after a truce that had allowed local companies to restart mining, Reuters reports. Furthermore, starting from Monday, the protesters are going to demand that operations at the Antapaccay, Las Bambas and Constancia mines (2.2% of world mined copper supply in 2022E) be stopped. Overall, the blockades are likely to keep weighing on domestic copper supply. However, we do not expect a substantial impact on sentiment - most of the effect from Peru’s political unrest is already priced in by the market, we believe
#copper
https://metals-wire.com/sector/Copper
🇵🇪 Peruvian communities are set to resume transportation blockades this week, after a truce that had allowed local companies to restart mining, Reuters reports. Furthermore, starting from Monday, the protesters are going to demand that operations at the Antapaccay, Las Bambas and Constancia mines (2.2% of world mined copper supply in 2022E) be stopped. Overall, the blockades are likely to keep weighing on domestic copper supply. However, we do not expect a substantial impact on sentiment - most of the effect from Peru’s political unrest is already priced in by the market, we believe
#copper
https://metals-wire.com/sector/Copper
🗞Today, China published its preliminary import/export statistics for January-February (see table above)
#statistics #China
https://metals-wire.com:3000/news-reports
#statistics #China
https://metals-wire.com:3000/news-reports
Morning Bites (part 1)
🔗China’s finished steel net exports surged 83% YoY in January-February, accelerating from the 17% YoY growth in December. Meanwhile, average daily steel production and inventories grew further, on the YoY basis, in the previous two months. Hence, some steel volumes might have been shipped abroad, given that domestic consumption had not yet fully recovered. We remind readers that China has recently published strong financing data for January (historically, the most important month), which might support domestic construction activity and, hence, the demand for steel in 2023
🪨China’s coal imports jumped 71% YoY in January-February (vs. flat YoY in December). According to Reuters, the strong dynamics were mostly due to the low base effect, as utilities replenished inventories, on expectations of upbeat demand after the country abandoned its zero-COVID policy in late 2022
#coal #steel
https://metals-wire.com:3000/news-reports
🔗China’s finished steel net exports surged 83% YoY in January-February, accelerating from the 17% YoY growth in December. Meanwhile, average daily steel production and inventories grew further, on the YoY basis, in the previous two months. Hence, some steel volumes might have been shipped abroad, given that domestic consumption had not yet fully recovered. We remind readers that China has recently published strong financing data for January (historically, the most important month), which might support domestic construction activity and, hence, the demand for steel in 2023
🪨China’s coal imports jumped 71% YoY in January-February (vs. flat YoY in December). According to Reuters, the strong dynamics were mostly due to the low base effect, as utilities replenished inventories, on expectations of upbeat demand after the country abandoned its zero-COVID policy in late 2022
#coal #steel
https://metals-wire.com:3000/news-reports