🗞Today, China has published its industrial production data for April (see table above)
#statistics #China
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#statistics #China
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Morning Bites (part 1)
🔗China’s crude steel output fell 2% YoY in April, following the 7% YoY growth in March. The decrease in output comes in line with the government's plan to limit production, as well as the similar call from the CISA. Hence, further production cuts (China represents ~58% of global crude steel supply), were they to materialise, might support local steel prices
🏢China's property sales were down 17%YoY in April (vs. flat YoY in March), and 46% below the historical highs of 2021. The decline in floor space starts was 28% YoY last month, in line with the 29% YoY drop in March. However, personal mortgage loans jumped 22% YoY (vs. +20% YoY in March), while property completions also grew 37% YoY in April (vs. +31% YoY). Despite some ongoing uncertainty in China’s real estate segment, the strong liquidity injections data in early 2023 might trigger a recovery in construction activity later this year
#steel #property
https://metals-wire.com:3000/sector/Steel
🔗China’s crude steel output fell 2% YoY in April, following the 7% YoY growth in March. The decrease in output comes in line with the government's plan to limit production, as well as the similar call from the CISA. Hence, further production cuts (China represents ~58% of global crude steel supply), were they to materialise, might support local steel prices
🏢China's property sales were down 17%YoY in April (vs. flat YoY in March), and 46% below the historical highs of 2021. The decline in floor space starts was 28% YoY last month, in line with the 29% YoY drop in March. However, personal mortgage loans jumped 22% YoY (vs. +20% YoY in March), while property completions also grew 37% YoY in April (vs. +31% YoY). Despite some ongoing uncertainty in China’s real estate segment, the strong liquidity injections data in early 2023 might trigger a recovery in construction activity later this year
#steel #property
https://metals-wire.com:3000/sector/Steel
Morning Bites (part 2)
🔗CISA mills daily crude steel production during early May was 2.25mnt, a 2.0% increase from the previous ten days (but a YoY drop of 2.4%). Meanwhile, local steel inventories declined 2.8% over the same period (-6% YoY). We also remind our readers of CISA’s recent call to cut production amid low domestic steel prices: some Tangshan mills (~13% of China’s steel output) have already received a municipal notice not to exceed the 2022 production level. Hence, we reiterate our view that such restrictions are likely to be favorable for domestic steel prices
#steel
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🔗CISA mills daily crude steel production during early May was 2.25mnt, a 2.0% increase from the previous ten days (but a YoY drop of 2.4%). Meanwhile, local steel inventories declined 2.8% over the same period (-6% YoY). We also remind our readers of CISA’s recent call to cut production amid low domestic steel prices: some Tangshan mills (~13% of China’s steel output) have already received a municipal notice not to exceed the 2022 production level. Hence, we reiterate our view that such restrictions are likely to be favorable for domestic steel prices
#steel
https://metals-wire.com:3000/sector/Steel
Morning Bites (part 3)
📌Johnson Matthey expects slight deficit on Pd and Pt markets in 2023
🚗JM expects the auto industry's demand for PGMs to see only marginal gains in 2023, as battery EVs keep capturing all the growth in the light duty sector. Meanwhile, gasoline car output in China is set to fall ~5% YoY in 2023, amid the growing popularity of EVs locally. To recap, the Chinese auto sector accounts for some 26% and 17% of world autocatalyst Pd and Pt demand, respectively
📊We note that JM sees the trend for platinum-for-palladium substitution continuing in 2023. As a result, the share of Pd in automotive PGM demand might shrink to 77% (from 83% in 2020)
⛏On the supply side, according to JM, the only supportive factor for PGM prices is subdued South African shipments (70% and 38% of world Pt and Pd supply, respectively), that were hit by electricity outages and difficult operating conditions
#PGMs
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📌Johnson Matthey expects slight deficit on Pd and Pt markets in 2023
🚗JM expects the auto industry's demand for PGMs to see only marginal gains in 2023, as battery EVs keep capturing all the growth in the light duty sector. Meanwhile, gasoline car output in China is set to fall ~5% YoY in 2023, amid the growing popularity of EVs locally. To recap, the Chinese auto sector accounts for some 26% and 17% of world autocatalyst Pd and Pt demand, respectively
📊We note that JM sees the trend for platinum-for-palladium substitution continuing in 2023. As a result, the share of Pd in automotive PGM demand might shrink to 77% (from 83% in 2020)
⛏On the supply side, according to JM, the only supportive factor for PGM prices is subdued South African shipments (70% and 38% of world Pt and Pd supply, respectively), that were hit by electricity outages and difficult operating conditions
#PGMs
https://metals-wire.com:3000/sector/PGM
Morning Bites (part 1)
💎De Beers has reported sales of USD 480mn at its 4th cycle in 2023, 10% lower than the historical average and a 21% YoY drop (vs. -5% YoY at the third cycle in 2023). According to De Beers' Chief Executive, Al Cook, rough diamond demand was affected by current macroeconomic uncertainty and a weaker than anticipated consumer demand recovery in China
❗Importantly, according to IDEX, De Beers has postponed its auctions (generally ~10% of its rough sales) during Cycle 5 and 6 amid weak demand from Indian cutters and a consumer slowdown in the US and China. Hence, we maintain our view that unfavorable economic conditions globally, and continuously weak US jewellery sales (50% of world demand), are continuing to stress the diamond sector
#diamonds
https://metals-wire.com/sector/Diamonds
💎De Beers has reported sales of USD 480mn at its 4th cycle in 2023, 10% lower than the historical average and a 21% YoY drop (vs. -5% YoY at the third cycle in 2023). According to De Beers' Chief Executive, Al Cook, rough diamond demand was affected by current macroeconomic uncertainty and a weaker than anticipated consumer demand recovery in China
❗Importantly, according to IDEX, De Beers has postponed its auctions (generally ~10% of its rough sales) during Cycle 5 and 6 amid weak demand from Indian cutters and a consumer slowdown in the US and China. Hence, we maintain our view that unfavorable economic conditions globally, and continuously weak US jewellery sales (50% of world demand), are continuing to stress the diamond sector
#diamonds
https://metals-wire.com/sector/Diamonds
Morning Bites (part 2)
💎India’s rough diamond net imports rose 7% YoY in April, marking the first increase since November 2022. Specifically, India’s polished diamond net exports dropped 39% YoY (vs. -25% YoY in March), while the county’s synthetic rough diamond net imports decreased 52% YoY in April (vs. -53% YoY in March). The share of lab-grown net rough imports in natural diamond imports was 7% in April — the same as a year ago
🚘EU + UK passenger car registrations rose 16% YoY in April, decelerating from the 26% YoY growth in March. The results were in line with the preliminary estimates. Nevertheless, the figure was still 28% below the pre-COVID 2019 level (vs. -20% in March). We keep our cautious outlook on EU car sales amid the economic slowdown. To recap, the EU + UK accounted for 20% and 32% of the world auto-catalyst Pd and Pt demand, respectively, in 2022E. Hence, weak car sales could keep PGM demand at subdued levels
#cars #diamonds
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💎India’s rough diamond net imports rose 7% YoY in April, marking the first increase since November 2022. Specifically, India’s polished diamond net exports dropped 39% YoY (vs. -25% YoY in March), while the county’s synthetic rough diamond net imports decreased 52% YoY in April (vs. -53% YoY in March). The share of lab-grown net rough imports in natural diamond imports was 7% in April — the same as a year ago
🚘EU + UK passenger car registrations rose 16% YoY in April, decelerating from the 26% YoY growth in March. The results were in line with the preliminary estimates. Nevertheless, the figure was still 28% below the pre-COVID 2019 level (vs. -20% in March). We keep our cautious outlook on EU car sales amid the economic slowdown. To recap, the EU + UK accounted for 20% and 32% of the world auto-catalyst Pd and Pt demand, respectively, in 2022E. Hence, weak car sales could keep PGM demand at subdued levels
#cars #diamonds
https://metals-wire.com:3000/news-reports
Morning Bites (part 3)
💎Alrosa has resumed operations at its Zarya mine, after the 16-month suspension. Production is set to restart in 2024. On our numbers, the mine's full capacity accounts for 0.4% of global rough diamond supply in 2024F. As such, we expect a rather limited impact on the diamond market from Zarya being ramped up
☢️ The French parliament has voted for simplified permits to construct six new reactors, according to the authority’s website. The new law follows the country’s recent nuclear investment plan, which cancels the previously scheduled phase-out programme to decrease the share of nuclear generation to 50% of local electricity production by 2035 (which could cut 3.5-5.0% of world nuclear capacity). Hence, in our view, the news is supportive for long-term uranium demand
#diamonds #uranium
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💎Alrosa has resumed operations at its Zarya mine, after the 16-month suspension. Production is set to restart in 2024. On our numbers, the mine's full capacity accounts for 0.4% of global rough diamond supply in 2024F. As such, we expect a rather limited impact on the diamond market from Zarya being ramped up
☢️ The French parliament has voted for simplified permits to construct six new reactors, according to the authority’s website. The new law follows the country’s recent nuclear investment plan, which cancels the previously scheduled phase-out programme to decrease the share of nuclear generation to 50% of local electricity production by 2035 (which could cut 3.5-5.0% of world nuclear capacity). Hence, in our view, the news is supportive for long-term uranium demand
#diamonds #uranium
https://metals-wire.com:3000/news-reports
Morning Bites
🔋Albemarle is set to double its lithium hydroxide output in Australia. According to the company, the plan implies a capacity increase of ~53kt/a LCE in 2026 at its Kemerton Industrial Park facility, Western Australia. On our numbers, the additional Li volumes account for ~3% of global supply in 2026F. Overall, the plan likely reflects the growing consumer appetite for EVs globally
#lithium #copper
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🔋Albemarle is set to double its lithium hydroxide output in Australia. According to the company, the plan implies a capacity increase of ~53kt/a LCE in 2026 at its Kemerton Industrial Park facility, Western Australia. On our numbers, the additional Li volumes account for ~3% of global supply in 2026F. Overall, the plan likely reflects the growing consumer appetite for EVs globally
#lithium #copper
https://metals-wire.com:3000/news-reports
SQM 1Q23 results – below forecasts amid weaker sales
📝SQM's 1Q23 revenues came in weaker than both the consensus and our estimates (by -5% and -22%, respectively), mostly affected by lower lithium sales. In addition, the average realised price was ~10% lower than we had envisaged, while the unit cash cost was 2% below our estimates. Hence, EBITDA was also disappointing (-15% vs. consensus and -19% vs. us)
⛏According to the company, the 1Q23 sales were hit by softer demand in the key Lithium and Derivatives segment. However, SQM expects sales volumes to recover in the coming quarters as the Li market is set to remain tight until the end of 2023, with demand growing at least 20% YoY and new supply delayed
❗️At spot prices, we expect 2Q23 EBITDA to show a low-single digit QoQ improvement, amid a potential recovery in sales and production. However, the positive effect is limited by lower prices: at spot, Li hydroxide is 25% lower than the 1Q23 average
#SQM #lithium
https://metals-wire.com:3000/company/SQM_US/
📝SQM's 1Q23 revenues came in weaker than both the consensus and our estimates (by -5% and -22%, respectively), mostly affected by lower lithium sales. In addition, the average realised price was ~10% lower than we had envisaged, while the unit cash cost was 2% below our estimates. Hence, EBITDA was also disappointing (-15% vs. consensus and -19% vs. us)
⛏According to the company, the 1Q23 sales were hit by softer demand in the key Lithium and Derivatives segment. However, SQM expects sales volumes to recover in the coming quarters as the Li market is set to remain tight until the end of 2023, with demand growing at least 20% YoY and new supply delayed
❗️At spot prices, we expect 2Q23 EBITDA to show a low-single digit QoQ improvement, amid a potential recovery in sales and production. However, the positive effect is limited by lower prices: at spot, Li hydroxide is 25% lower than the 1Q23 average
#SQM #lithium
https://metals-wire.com:3000/company/SQM_US/
Morning Bites
💍China’s jewellery and watch retail sales jumped 58% YoY in April, accelerating from the 45% YoY growth in March. Although the growth was mostly due to the low base effect from 2022 (when demand was negatively affected by strict Covid-19 restrictions), the figure was also 7% above the (pre-pandemic) 2019 level. We reiterate our view that China’s reopening might further bolster local jewellery spending this year. However, the positive impact on the global rough diamond market (the momentum of which is negative, amid global recessionary risks and inflationary pressures) is likely to be limited: China represents only ~15% of the world's gem-set jewellery trade
#diamonds
https://metals-wire.com/sector/Diamonds
💍China’s jewellery and watch retail sales jumped 58% YoY in April, accelerating from the 45% YoY growth in March. Although the growth was mostly due to the low base effect from 2022 (when demand was negatively affected by strict Covid-19 restrictions), the figure was also 7% above the (pre-pandemic) 2019 level. We reiterate our view that China’s reopening might further bolster local jewellery spending this year. However, the positive impact on the global rough diamond market (the momentum of which is negative, amid global recessionary risks and inflationary pressures) is likely to be limited: China represents only ~15% of the world's gem-set jewellery trade
#diamonds
https://metals-wire.com/sector/Diamonds
🗓1Q23 reporting season - outperforming the consensus
📌The represented results are ex. Vale, which was an outlier: the company's EBITDA was significantly below forecasts (-26% vs. the consensus and -30% vs. us), which would distort reporting season conclusions
📝 The weighted average EBITDA of global miners under our coverage was generally stronger than both the consensus and we had anticipated (by +4% and +1%, respectively). Meanwhile, our spot engine estimates for absolute numbers were roughly as accurate as the consensus, with a deviation rate of ~9%
📝In our next post we take a deeper look at revenue effects on the miners’ financials
#reporting_season
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📌The represented results are ex. Vale, which was an outlier: the company's EBITDA was significantly below forecasts (-26% vs. the consensus and -30% vs. us), which would distort reporting season conclusions
📝 The weighted average EBITDA of global miners under our coverage was generally stronger than both the consensus and we had anticipated (by +4% and +1%, respectively). Meanwhile, our spot engine estimates for absolute numbers were roughly as accurate as the consensus, with a deviation rate of ~9%
📝In our next post we take a deeper look at revenue effects on the miners’ financials
#reporting_season
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🗓1Q23 reporting season - concluding remarks
📈On average, larger miners (ex. Vale) reported 14% stronger revenues than market expectations mostly due to the higher realised prices and larger volumes
📉However, cash costs remained relatively flat QoQ, which ran counter to the consensus view of some cost normalisation. The latter negatively affected companies' EBITDA, which, as mentioned in the previous post, was 1% stronger than our estimates (+4% vs. consensus) on a weighted average basis
#reporting_season
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📈On average, larger miners (ex. Vale) reported 14% stronger revenues than market expectations mostly due to the higher realised prices and larger volumes
📉However, cash costs remained relatively flat QoQ, which ran counter to the consensus view of some cost normalisation. The latter negatively affected companies' EBITDA, which, as mentioned in the previous post, was 1% stronger than our estimates (+4% vs. consensus) on a weighted average basis
#reporting_season
https://metals-wire.com:3000/events
Morning Bites
💎Petra Diamonds’ LFL rough prices dropped 13.0% at its May auction, vs. March. However, on an annual basis, the prices were still 8.9% higher YoY. According to the miner, most of the decline in May was recorded in diamonds smaller than 2ct, while more premium goods (2-11ct) also faced a 3-5% decrease. Petra has withheld ~15% of its sales volumes, expecting a better pricing environment later in 2023. Per the company’s CEO, Richard Duffy, the softer demand was affected by midstream stocks and extended manufacturing shutdowns, given the recent holidays in India (~95% of world polished stones supply). Overall, we maintain our cautious view on the diamond sector globally, following continuously soft US jewellery data and weak De Beers sales since early-2023
#diamonds
https://metals-wire.com/sector/Diamonds
💎Petra Diamonds’ LFL rough prices dropped 13.0% at its May auction, vs. March. However, on an annual basis, the prices were still 8.9% higher YoY. According to the miner, most of the decline in May was recorded in diamonds smaller than 2ct, while more premium goods (2-11ct) also faced a 3-5% decrease. Petra has withheld ~15% of its sales volumes, expecting a better pricing environment later in 2023. Per the company’s CEO, Richard Duffy, the softer demand was affected by midstream stocks and extended manufacturing shutdowns, given the recent holidays in India (~95% of world polished stones supply). Overall, we maintain our cautious view on the diamond sector globally, following continuously soft US jewellery data and weak De Beers sales since early-2023
#diamonds
https://metals-wire.com/sector/Diamonds
Morning Bites (part 1)
📈Global primary aluminium production remained flat YoY in April, after the 1% YoY growth in March, the International Aluminium Institute (IAI) reports. Meanwhile, last month, China’s aluminium output was unchanged YoY, following the series of recent increases. The country’s output was also 12% higher than the pre-Covid (2019) level, while ex-China production rose 1% YoY (+2% vs. 2019). Despite the stable dynamics in April, we remind readers that China might relaunch its previously suspended capacities, as well as commission new smelters in FY23 (together representing 6% of global aluminium supply). Although this outlook seems overly ambitious to us, were it to be realised, that might put substantial pressure on the metal’s price
#aluminium
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📈Global primary aluminium production remained flat YoY in April, after the 1% YoY growth in March, the International Aluminium Institute (IAI) reports. Meanwhile, last month, China’s aluminium output was unchanged YoY, following the series of recent increases. The country’s output was also 12% higher than the pre-Covid (2019) level, while ex-China production rose 1% YoY (+2% vs. 2019). Despite the stable dynamics in April, we remind readers that China might relaunch its previously suspended capacities, as well as commission new smelters in FY23 (together representing 6% of global aluminium supply). Although this outlook seems overly ambitious to us, were it to be realised, that might put substantial pressure on the metal’s price
#aluminium
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Morning Bites (part 2)
🚗💨Internal combustion engine (ICE) car registrations in EU rose 13% YoY in 1Q23 from a low base, after the 3% YoY growth in 4Q22. Petrol car sales were up 18% YoY (vs. +5% YoY in 1Q22), while diesel car registrations were almost flat (vs. -1% YoY). Diesel cars accounted for 26% of ICE car sales (vs. 28% in 4Q22 and 29% in 1Q22). Overall, the sales are still far below the 2019 levels, weighing on PGMs prices: the EU represents 20% and 31% of global Pd and Pt autocatalyst demand, respectively
🚘EU+UK EV sales rose 18% YoY in 1Q23, following the 31% YoY growth in 4Q22. BEV sales gained 33% YoY (vs. +36% YoY in 4Q22), while PHEV sales shrank 3% YoY (vs. +22% YoY). The share of BEVs in total EV sales grew slightly to 66%, from 64% in 4Q22. In our view, continuously strong local EV sales likely to positively affect the demand for battery metals (e.g. nickel, lithium and cobalt)
#cars #EV #nickel #lithium #cobalt
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🚗💨Internal combustion engine (ICE) car registrations in EU rose 13% YoY in 1Q23 from a low base, after the 3% YoY growth in 4Q22. Petrol car sales were up 18% YoY (vs. +5% YoY in 1Q22), while diesel car registrations were almost flat (vs. -1% YoY). Diesel cars accounted for 26% of ICE car sales (vs. 28% in 4Q22 and 29% in 1Q22). Overall, the sales are still far below the 2019 levels, weighing on PGMs prices: the EU represents 20% and 31% of global Pd and Pt autocatalyst demand, respectively
🚘EU+UK EV sales rose 18% YoY in 1Q23, following the 31% YoY growth in 4Q22. BEV sales gained 33% YoY (vs. +36% YoY in 4Q22), while PHEV sales shrank 3% YoY (vs. +22% YoY). The share of BEVs in total EV sales grew slightly to 66%, from 64% in 4Q22. In our view, continuously strong local EV sales likely to positively affect the demand for battery metals (e.g. nickel, lithium and cobalt)
#cars #EV #nickel #lithium #cobalt
https://metals-wire.com:3000/news-reports
Morning Bites (part 3)
💎 India – Jewellery segment revenues at Titan were up 33% YoY in CY 1Q23, accelerating from the 15% YoY growth in CY 4Q22. According to the retailer, the average realised ticket price was up 8% YoY, while the number of buyers rose 15%, following the strong Indian wedding season. Hence, we reiterate our view that these dynamics might indicate a somewhat positive read-across for local gold and rough diamonds demand. Nevertheless, the diamond segment globally is likely to remain materially stressed in the near future, given the unfavourable macroeconomic conditions
#diamonds
https://metals-wire.com:3000/sector/Diamonds
💎 India – Jewellery segment revenues at Titan were up 33% YoY in CY 1Q23, accelerating from the 15% YoY growth in CY 4Q22. According to the retailer, the average realised ticket price was up 8% YoY, while the number of buyers rose 15%, following the strong Indian wedding season. Hence, we reiterate our view that these dynamics might indicate a somewhat positive read-across for local gold and rough diamonds demand. Nevertheless, the diamond segment globally is likely to remain materially stressed in the near future, given the unfavourable macroeconomic conditions
#diamonds
https://metals-wire.com:3000/sector/Diamonds
Morning Bites
🔗Global crude steel output declined 2% YoY to 161mnt in April, reversing from the 2% YoY growth in March, according to the World Steel Association. Specifically, China’s production fell 2% YoY (vs. the 7% YoY growth in March), which likely reflected Beijing's plan to limit national steel output, as well as the similar call from CISA amid low domestic realised prices. China represented 57% of the global steel supply in April. Overall, ex-China steel production shrank 4% YoY. In particular, EU production dropped 12% YoY (after -6% YoY in March), while US steel production also declined by 5% YoY. Russia’s steel output was up 2% YoY after the flat YoY dynamics in March
#steel
https://metals-wire.com:3000/sector/Steel
🔗Global crude steel output declined 2% YoY to 161mnt in April, reversing from the 2% YoY growth in March, according to the World Steel Association. Specifically, China’s production fell 2% YoY (vs. the 7% YoY growth in March), which likely reflected Beijing's plan to limit national steel output, as well as the similar call from CISA amid low domestic realised prices. China represented 57% of the global steel supply in April. Overall, ex-China steel production shrank 4% YoY. In particular, EU production dropped 12% YoY (after -6% YoY in March), while US steel production also declined by 5% YoY. Russia’s steel output was up 2% YoY after the flat YoY dynamics in March
#steel
https://metals-wire.com:3000/sector/Steel
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