Week ahead data releases in M&M

Among the major M&M names reporting this week, Vale, Teck and Newmont are due to release their 1Q23 financials. For these miners, our EBITDA estimates are moderately above the consensus estimates

#reporting_season 
https://metals-wire.com:3000/events

Morning Bites (part 1)

🔗Global crude steel output was up 2% YoY to 165mnt in March, after the 1% YoY decline in February, according to the World Steel Association. China’s production grew 7% YoY, but this was likely due to the low base effect from 2022 and the local economic recovery. Nevertheless, Beijing might soon announce a limit on national steel output (58% of the global steel supply in March) at its 2022 levels. Ex-China steel production shrank 5% YoY. In particular, EU production dropped 6% YoY (after the -13% YoY in February), following the local energy crisis. US steel production also declined, down 2% YoY (-5% YoY). Russia’s steel output was flat YoY in March, after the 9% YoY drop in February

#steel
https://metals-wire.com:3000/sector/Steel

Morning Bites (part 2)

🇨🇱Chile aims to enhance lithium industry consolidation under state control, the country’s president announced on Thursday. Following the decision of the Mexican government to increase control over its Li resources, Chile, one of the world's leading two lithium producers, declared the similar measure. Two companies currently mine lithium in Chile, Albemarle and SQM. Their concessions are set to expire in 2043 and 2030, respectively, but the government is not planning to terminate these contracts itself. Meanwhile, Chile aims to create a regional lithium association with Argentina and Bolivia: these three countries together account for 53% of global lithium resources and ~35% of the world's mined production in 2022E

#lithium 
https://metals-wire.com:3000/sector/Lithium

Morning Bites (part 1)

🏗China’s preliminary excavator sales dropped 27% YoY in April (domestic + export), vs. the 31% YoY decline in March, according to the China Construction Machinery Association. Meanwhile, domestic excavator sales declined 44% YoY, roughly in line with the 48% YoY fall in March. Export sales continued to grow, being up 6% YoY (vs. +11% YoY in March). As one of the key indicators of construction activity, excavator sales continue to follow the downtrend which has been in place since May 2021. Although the dynamics indicate an ongoing stagnation in the Chinese property segment, liquidity inflows, together with China's plan for massive infrastructure projects, might bolster the demand for steel and industrial metals (e.g. aluminium and copper) later in 2023

#steel
https://metals-wire.com/sector/Steel

Morning Bites (part 2)

🏆China’s gold production was up 7% YoY in 1Q23 (vs. +11% YoY in 4Q22), according to the China Gold Association. In particular, the mined gold output rose 2% YoY. The figures were partly bolstered by a jump in demand, as investors turned to less volatile assets, Reuters reported. Meanwhile, the country's gold consumption grew 12% YoY in 1Q23 (vs. -27% YoY in 4Q22), amid the 12% and 20% YoY increase in gold jewellery and bars&coins demand, respectively. We reiterate our view that China’s rising gold output (~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

#gold
https://metals-wire.com/sector/Gold

Cleveland-Cliffs 1Q23 results — EBITDA outperforms

✏️Cleveland-Cliffs 1Q23 revenues beat both the consensus and us, mainly amid sales that were 4% higher than we had expected and an average realised price that was 8% above our expectations. EBITDA also beat market expectations (+24% vs. consensus and +16% vs. our estimates)

🏭Meanwhile, the company achieved >4mnt steel shipments in 1Q23. Hence, Cliff is on track to meet its FY23 sales guidance of 16mnt, in our view (vs. 14.8mnt in FY22)

❗️Overall, at spot, the US steelmaker’s 2Q23 EBITDA is likely to be significantly higher QoQ, bolstered by an improvement on the domestic market and a rebound in local HRC/CRC prices

#CLF #steel
https://metals-wire.com:3000/company/CLF_US/

Morning Bites (part 1) 
     
🔗CISA mills' daily crude steel production decreased 1.4% to 2.29mnt in mid-April from the first ten days of the month (YoY growth of 2.7%). Meanwhile, local steel inventories increased 1.2% over the same period (-5.7% YoY). Although production (on an annual basis) has been growing continuously since early February, Beijing might soon announce a limit on national output at the level of 2022. Furthermore, CISA is urging steelmakers to cut production amid low domestic steel prices (on our numbers, they shrank over 20% YoY, but are still 8% higher YTD), that are posing challenges to the mills. Overall, these two factors are likely to be supportive for the sentiment on the steel segment globally

#steel 
https://metals-wire.com:3000/sector/Steel

Morning Bites (part 2)

🌕Most central banks are set to raise their gold holdings in 2023, according to poll results by the HSBC Reserve Management Trends Survey. Specifically, more than two thirds of 83 reserve managers believe their peers will increase gold holdings this year, citing inflation and geopolitical risks as the most important concerns. We remind our readers that global institutions already boosted purchases 2.5x YoY to 1,136t in 2022, while they kept buying gold in 2mo23. Hence, the news is in line with the current dynamics and our bullish view on the yellow metal, amid the substantial growth in physical gold demand and unfavourable macroeconomic conditions globally

#gold
https://metals-wire.com/sector/Gold

Teck 1Q23 results - in-line with expectations

📝The miner's 1Q23 revenues were weaker than we had expected (-6% vs. the consensus and -12% vs. us), mostly amid lower proceeds from the copper business unit. However, the cash costs line was more upbeat, and EBITDA thus arrived broadly in-line with consensus and us

⛏The miner reiterated its FY23 guidance, expecting copper output to jump >40% YoY due to the ramp up of the QB2 project (the Quebrada Blanca production outlook remained unchanged, at 150-180kt, for this year)

📌At spot, we expect Teck's 2Q23F EBITDA to grow in low-single digits QoQ, bolstered by gradual production growth, despite some slowdown in prices across most of the company's commodity basket

#TECK #copper
https://metals-wire.com/company/TECK_US/

First Quantum 1Q23 results -  EBITDA disappoints
 
📝The company's 1Q23 revenues came below market expectations, following materially weaker gold/copper sales volumes than we had expected. Meanwhile, the negative effect on EBITDA (-23% vs. consensus and -28% vs. us) was even stronger, due to higher unit cash costs
 
📌According to the miner, its C1 copper cash cost surged 20% QoQ and ~40% YoY to USD 2.24/lb in 1Q23, affected by lower production. However, First Quantum sees the figure normalising to USD 1.65-1.85/lb in FY23
 
🏭The company has reiterated its outlook for 2023: copper production to grow ~4% YoY, with gold output remaining relatively flat
 
📌At spot prices, we expect the miner's 2Q23 EBITDA to see a substantial rebound QoQ, amid a potentially lower costs burden and operations at Cobre Panama recovering -  local authorities and First Quantum agreed on the details for the copper mine contract in early-March
 
#FM #copper 
https://metals-wire.com/company/FM_CN/

Morning Bites (part 1)

📈Russia’s gold output was up 9.1% YoY in March, after the 6.9% YoY increase in February, according to Rosstat. We believe this was partially due to the low base of 2022. Despite some recovery in Russian domestic production (~9% of global mined gold supply), we maintain our positive view on the precious metal amid strong physical demand, rising cash costs and turbulence in the global economy. To recap, according to the recent study by HSBC, most central banks’ reserve managers are likely to increase their gold holdings further in 2023. In our view, that might add more support to the already elevated physical gold demand

#gold
https://metals-wire.com/sector/Gold

Morning Bites (part 2)

Global EV sales are set to gain 35% YoY in 2023, according to an International Energy Agency (IEA) report. Meanwhile, the agency envisages further growth of the EV share of total car sales from 14% in 2022 to 18% in 2023. China was the main EV consumer last year, representing ~60% of global demand, and the agency expects the country to retain its position in the coming years. Overall, the IEA’s forecast for 2023 is more bullish than our market estimates, and supports our expectations of increasing appetite for EVs globally. We believe this dynamic will further bolster demand for the battery metals basket (e.g. lithium, nickel and cobalt)

#cars #EV #nickel #lithium #cobalt 
https://metals-wire.com:3000/news-reports

Vale 1Q23 results - financials hit by weaker prices

📝Vale's revenues in 1Q23 were materially lower than both the consensus and our expectations (by 17% and 13%, respectively), mostly due to a softer realised iron ore price (sales volumes had been disclosed earlier) that was >15% below our forecast. Furthermore, higher unit cash costs exacerbated the negative effect on EBITDA (-26% vs. the consensus and -30% vs. us)

⛏To recap, the company has recently reiterated its FY23 production guidance: iron ore output is set to grow 2% YoY; however, the figure for nickel is to shrink 6% YoY, due to depletion of the Ovoid mine and expansion delays

📌On our numbers, Vale's 2Q23F EBITDA will be significantly stronger QoQ, at spot, bolstered by seasonally higher iron ore sales, as well as the steady ramp-up of the Salobo copper project

#VALE #Iron_ore
https://metals-wire.com/company/VALE_US/

Newmont 1Q23 results - slightly below forecasts

📉Newmont's revenues in 1Q23 were moderately weaker than the consensus (-5%) and our estimates (-6%), mostly due to lower gold sales than we had anticipated. As a result, adjusted EBITDA was also a miss

⛏The company reiterated its guidance of 5.7-6.3mnoz for FY23: gold production is to remain unchanged YoY despite a showdown of some 5% YoY in payable output during 1Q23

💰The company's BoD has declared a 1Q dividend of USD 0.40/sh, which implies a modest DY of some 0.8%

❗️On our numbers, Newmont’s 2Q23F EBITDA will show a moderate recovery QoQ at spot: gold prices are now ~5% higher than the 1Q23 average

#NEM #gold
https://metals-wire.com:3000/company/NEM_US/

Peabody Energy 1Q23 results - another positive report 

✏️Peabody's quarterly revenues have again outperformed both the consensus and us, with the 1Q23 numbers being 14% and 17% higher, respectively, driven by greater (than expected) proceeds from spot coal sales and other activities. However, the growth in cash costs limited the positive effect on EBITDA (+11% vs. the consensus and +10% vs. us)

❗️The coal miner reiterated its guidance for FY23: sales are expected to grow 6% YoY to ~130mnst

💰To recap, in mid-April, the BoD approved a new buyback programme (up to USD 1bn, implying a ~30% yield through the repurchase period), as well as a regular quarterly cash dividend of USD 0.075/sh. For 1Q23, the miner declared its first for 3.5 years, in line with the new policy, offering a ~0.3% DY, on our numbers

📊At spot, the company’s 2Q23F EBITDA might be moderately stronger QoQ, amid potentially higher sales from the completion of the longwall move at Wambo

#BTU #coal
https://metals-wire.com:3000/company/BTU_US/

Morning Bites

🪨 The EU has recently reduced its thermal coal consumption. According to an Ember study, coal energy generation during 4Q22-1Q23 dropped a sharp ~11% YoY. Furthermore, local energy generation from renewables outweighed fossil fuels for the first time. According to the IEA data, the EU accounted for 6% of global coal consumption in 2022 and 12% of world thermal coal imports, which might partially explain the weak thermal coal dynamics in recent months. Meanwhile, the study reveals that the reduction in energy consumption resulted in a ~6% fall (vs. the 5-year average) in EU electricity demand during the period. However, we note that such dynamics were mostly the result of favourable weather conditions (warm winter, strong wind) and so do not rule out a correction in the next 12 months

#coal
https://metals-wire.com/sector/Coal

Agnico Eagle 1Q23 results - firmly above consensus

📝Agnico Eagle has published 1Q23 revenues that outperformed the consensus (+5%), but were slightly below our forecast (-4%). EBITDA was significantly higher than the consensus and roughly in line with us (+10% and +2% respectively). Sales came in slightly lower than we had anticipated, though cash costs were also lower, by 4%

📈Meanwhile, the company's TCC grew ~3% QoQ, and management sees further growth — by an average 4% in 2023 to USD 865/oz

⛏The miner reiterated its production guidance for 2023. Expected payable gold output in 2023 remains unchanged at approximately 3.24-3.44mnoz (~6% YoY growth)

📌At spot, we expect Agnico Eagle's 2Q23F EBITDA to show moderate improvement QoQ, bolstered by the slight production recovery and conducive prices environment: the current gold price is ~5% higher than the 1Q23 average

#AEM #gold
https://metals-wire.com/company/AEM_US/

Week ahead data releases in M&M

Among the major M&M names reporting this week, Barrick and ArcelorMittal are due to release their 1Q23 financials. For the former, our EBITDA estimate is moderately below the consensus estimate, while our forecast for ArcelorMittal is slightly more upbeat
 
#reporting_season   
https://metals-wire.com:3000/events