Week ahead data releases in M&M
As the reporting season draws to a close, only SQM (among major miners under our coverage) is scheduled to report earnings this week. We expect slightly stronger results than the consensus
#reporting_season
https://metals-wire.com:3000/events
As the reporting season draws to a close, only SQM (among major miners under our coverage) is scheduled to report earnings this week. We expect slightly stronger results than the consensus
#reporting_season
https://metals-wire.com:3000/events
Morning Bites
🏦China’s aggregate financing declined 32% YoY in July to CNY 0.53tn, the lowest point since July 2014 (vs. -19% YoY in June), and missed the consensus of CNY 1.10tn. At the same time, traditional bank loans fell 49% YoY (+9% YoY in June), 57% below the consensus estimates. According to Trading Economics, although July is usually a weak month for financing activities, these dynamics underpin the slow economic recovery in China, with banks not in a rush to meet their lending targets in early 3Q23. In our view, this might keep weighing on domestic construction activity, and hence, China’s demand for industrial metals
#global
https://metals-wire.com:3000/news-reports
🏦China’s aggregate financing declined 32% YoY in July to CNY 0.53tn, the lowest point since July 2014 (vs. -19% YoY in June), and missed the consensus of CNY 1.10tn. At the same time, traditional bank loans fell 49% YoY (+9% YoY in June), 57% below the consensus estimates. According to Trading Economics, although July is usually a weak month for financing activities, these dynamics underpin the slow economic recovery in China, with banks not in a rush to meet their lending targets in early 3Q23. In our view, this might keep weighing on domestic construction activity, and hence, China’s demand for industrial metals
#global
https://metals-wire.com:3000/news-reports
🗞Today, China has published its industrial production data for July (see table above)
#statistics #China
https://metals-wire.com:3000/news-reports
#statistics #China
https://metals-wire.com:3000/news-reports
Morning Bites
🔗China’s crude steel output was up 12% YoY in July, after the flat dynamics in June. Tangshan (~13% of domestic steel supply) tightened production controls, requiring some plants to shut down at least one blast furnace until the end of July. Although China aims to keep steel production below 2022 level, it remains above last year’s figures (+3% YTD). We note that China represents ~57% of global crude steel supply
🏢China's property sales dropped a further 24% YoY in July (vs. -28% YoY in June) to 7-year lows, and now 50% below the historical highs of 2020. Floor space starts were down 26% YoY in July (-31% YoY in June), while personal mortgage loans also shrank 24% YoY (-13% YoY in June). At the same time, property completions grew 33% YoY in July. Despite the stagnating dynamic, China is aiming to introduce more support for its property sector, which could bolster the demand for industrial metals later in 2H23
#steel #property
https://metals-wire.com:3000/sector/Steel
🔗China’s crude steel output was up 12% YoY in July, after the flat dynamics in June. Tangshan (~13% of domestic steel supply) tightened production controls, requiring some plants to shut down at least one blast furnace until the end of July. Although China aims to keep steel production below 2022 level, it remains above last year’s figures (+3% YTD). We note that China represents ~57% of global crude steel supply
🏢China's property sales dropped a further 24% YoY in July (vs. -28% YoY in June) to 7-year lows, and now 50% below the historical highs of 2020. Floor space starts were down 26% YoY in July (-31% YoY in June), while personal mortgage loans also shrank 24% YoY (-13% YoY in June). At the same time, property completions grew 33% YoY in July. Despite the stagnating dynamic, China is aiming to introduce more support for its property sector, which could bolster the demand for industrial metals later in 2H23
#steel #property
https://metals-wire.com:3000/sector/Steel
Morning Bites (part 1)
🔗CISA mills' daily crude steel production during early August was 2.15mnt, a 0.8% increase from the previous ten days (also a 10.8% jump YoY). Meanwhile, local steel inventories grew 10.8% over the same period (-5.9% YoY). Although the crude steel output growth has followed July’s dynamics, we keep in mind Beijing’s intention not to exceed the 2022 production levels. Overall, new support measures for the domestic real estate segment is still the main potential trigger for steel demand growth, as China represents ~52% of global steel consumption
#steel
https://metals-wire.com/sector/Steel
🔗CISA mills' daily crude steel production during early August was 2.15mnt, a 0.8% increase from the previous ten days (also a 10.8% jump YoY). Meanwhile, local steel inventories grew 10.8% over the same period (-5.9% YoY). Although the crude steel output growth has followed July’s dynamics, we keep in mind Beijing’s intention not to exceed the 2022 production levels. Overall, new support measures for the domestic real estate segment is still the main potential trigger for steel demand growth, as China represents ~52% of global steel consumption
#steel
https://metals-wire.com/sector/Steel
Morning Bites (part 2)
💎India’s rough diamond net imports dropped 49% YoY in July, continuing the decline seen since December 2022 (except the 7% YoY growth in April). Meanwhile, India’s polished diamond net exports dropped 44% YoY in July (after the -33% YoY in June), while synthetic rough diamond net imports fell 16% YoY (vs. -48% YoY in June). The share of lab-grown net rough imports in natural diamond imports was 10% in July, slightly more than the 8% in the same month last year. The weak and still deteriorating demand from India’s midstream (~95% of world polished stones supply) underpins our cautious view on the global diamond market. To recap, GJEPC expects India's gem and jewellery exports to drop 10-15% YoY in 2023 (the YTD decline is already steeper, at 24% YoY)
#diamonds
https://metals-wire.com/sector/Diamonds
💎India’s rough diamond net imports dropped 49% YoY in July, continuing the decline seen since December 2022 (except the 7% YoY growth in April). Meanwhile, India’s polished diamond net exports dropped 44% YoY in July (after the -33% YoY in June), while synthetic rough diamond net imports fell 16% YoY (vs. -48% YoY in June). The share of lab-grown net rough imports in natural diamond imports was 10% in July, slightly more than the 8% in the same month last year. The weak and still deteriorating demand from India’s midstream (~95% of world polished stones supply) underpins our cautious view on the global diamond market. To recap, GJEPC expects India's gem and jewellery exports to drop 10-15% YoY in 2023 (the YTD decline is already steeper, at 24% YoY)
#diamonds
https://metals-wire.com/sector/Diamonds
Morning Bites
💎 De Beers has allowed sightholders to defer rough purchases at cycles 8-10, Rapaport reports, citing a message from the miner. Hence, sightholders can avoid buying parts of their allocations (25-50%) for >1ct diamonds until the end of 2023. Meanwhile, De Beers is also maintaining its buyback policy, which allows clients to sell 10-30% of their purchases back to the company. The decision was made amid sluggish consumer demand and high midstream stockpiles. This underpins our cautious view on the diamond sector, which remains stressed by adverse macroeconomic conditions globally
💍China’s jewellery and watch retail sales declined 4% YoY in July, following the 14% YoY drop in June. According to Rapaport, China’s post-lockdown recovery did not extend to diamonds. On our numbers, the country represents ~15% of the world's gem-set jewellery trade
#diamonds
https://metals-wire.com/sector/Diamonds
💎 De Beers has allowed sightholders to defer rough purchases at cycles 8-10, Rapaport reports, citing a message from the miner. Hence, sightholders can avoid buying parts of their allocations (25-50%) for >1ct diamonds until the end of 2023. Meanwhile, De Beers is also maintaining its buyback policy, which allows clients to sell 10-30% of their purchases back to the company. The decision was made amid sluggish consumer demand and high midstream stockpiles. This underpins our cautious view on the diamond sector, which remains stressed by adverse macroeconomic conditions globally
💍China’s jewellery and watch retail sales declined 4% YoY in July, following the 14% YoY drop in June. According to Rapaport, China’s post-lockdown recovery did not extend to diamonds. On our numbers, the country represents ~15% of the world's gem-set jewellery trade
#diamonds
https://metals-wire.com/sector/Diamonds
SQM 2Q23 results – materially below forecasts
📝SQM's 2Q23 revenues came in weaker than the market had estimated (-10% vs. the consensus and -14% vs. us), mostly affected by lower realised prices. Hence, the EBITDA dynamics were also disappointing (-17% vs. consensus and -18% vs. us)
⛏According to the company, its FY23 lithium production is set to be 180-190kt (+18% YoY), meeting the forecasted >20% growth in global Li market demand
❗️Overall, at spot prices, we expect SQM’s 3Q23 EBITDA to show a single-digit improvement QoQ, amid the guided production increase in 2H23. However, the positive effect is likely to be limited by Li prices, which are currently ~17% lower than the 2Q23 average
#SQM #lithium
https://metals-wire.com:3000/company/SQM_US/
📝SQM's 2Q23 revenues came in weaker than the market had estimated (-10% vs. the consensus and -14% vs. us), mostly affected by lower realised prices. Hence, the EBITDA dynamics were also disappointing (-17% vs. consensus and -18% vs. us)
⛏According to the company, its FY23 lithium production is set to be 180-190kt (+18% YoY), meeting the forecasted >20% growth in global Li market demand
❗️Overall, at spot prices, we expect SQM’s 3Q23 EBITDA to show a single-digit improvement QoQ, amid the guided production increase in 2H23. However, the positive effect is likely to be limited by Li prices, which are currently ~17% lower than the 2Q23 average
#SQM #lithium
https://metals-wire.com:3000/company/SQM_US/
Morning Bites
📉China’s aluminium products output fell 1% YoY to 5.28mnt in July, vs. the +10% YoY in June. This was the first decline since June 2022 (ex. the -4% YoY in December 2022). As China accounted for ~58% of world primary Al demand in 2022, the slowdown in consumption, were it to persist, could be an unfavourable factor for the metal's price. In addition, China might relaunch some of its smelters (>2% of world 2022 Al supply), once local electricity curbs are eased
🥉Chinese output of copper products was roughly flat YoY in July at 1.88mnt, after the +5% YoY in June. The figure might have been partially supported by the 50% YoY surge in the output of domestic power generation equipment (vs. +53% YoY in June). To recap, China represents ~55% of global Cu consumption
#aluminium #copper
https://metals-wire.com:3000/news-reports
📉China’s aluminium products output fell 1% YoY to 5.28mnt in July, vs. the +10% YoY in June. This was the first decline since June 2022 (ex. the -4% YoY in December 2022). As China accounted for ~58% of world primary Al demand in 2022, the slowdown in consumption, were it to persist, could be an unfavourable factor for the metal's price. In addition, China might relaunch some of its smelters (>2% of world 2022 Al supply), once local electricity curbs are eased
🥉Chinese output of copper products was roughly flat YoY in July at 1.88mnt, after the +5% YoY in June. The figure might have been partially supported by the 50% YoY surge in the output of domestic power generation equipment (vs. +53% YoY in June). To recap, China represents ~55% of global Cu consumption
#aluminium #copper
https://metals-wire.com:3000/news-reports
Week ahead data releases in M&M
Several companies are due to report their 2Q23/1H23 financials this week. Regarding the major miners (BHP and South32), our EBITDA forecasts are more upbeat than the consensus estimates
#reporting_season
https://metals-wire.com:3000/events
Several companies are due to report their 2Q23/1H23 financials this week. Regarding the major miners (BHP and South32), our EBITDA forecasts are more upbeat than the consensus estimates
#reporting_season
https://metals-wire.com:3000/events
Morning Bites
🔗China’s steel mills are set to lower production in 2H23, SteelOrbis reports, citing market sources. For instance, producers in the Jiangsu (~11% of local steel output) and Shandong provinces (~8%) might cut utilisation rates by 20-30% and 10-15%, respectively, vs. 1H23. The city of Tangshan (13% of domestic steel supply) has also recently tightened production controls. Overall, these measures are likely to help China to keep steel production below the 2022 level: in 7mo23 it was still +3% YoY. We remind readers that the country accounts for ~57% of global crude steel supply
#steel
https://metals-wire.com/sector/Steel
🔗China’s steel mills are set to lower production in 2H23, SteelOrbis reports, citing market sources. For instance, producers in the Jiangsu (~11% of local steel output) and Shandong provinces (~8%) might cut utilisation rates by 20-30% and 10-15%, respectively, vs. 1H23. The city of Tangshan (13% of domestic steel supply) has also recently tightened production controls. Overall, these measures are likely to help China to keep steel production below the 2022 level: in 7mo23 it was still +3% YoY. We remind readers that the country accounts for ~57% of global crude steel supply
#steel
https://metals-wire.com/sector/Steel
Morning Bites
🏭Global primary aluminium output was roughly flat YoY in July, vs. the 1% YoY increase in June, the International Aluminium Institute reports. Meanwhile, China’s production inched down 1% YoY, while staying 13% above the pre-Covid 2019 level. Ex-China production grew 1% YoY (also +1% vs. 2019). It is worth noting that China might relaunch its previously suspended smelters, as well as commission new capacities in FY23 (together representing ~6% of global Al supply) once local electricity curbs are eased. However, this outlook seems overly bullish to us, while a Reuters source anticipates a maximum resumption of 1.3mnt of China’s halted Al capacity (~2% of global 2022 output)
#aluminium
https://metals-wire.com:3000/sector/Aluminium
🏭Global primary aluminium output was roughly flat YoY in July, vs. the 1% YoY increase in June, the International Aluminium Institute reports. Meanwhile, China’s production inched down 1% YoY, while staying 13% above the pre-Covid 2019 level. Ex-China production grew 1% YoY (also +1% vs. 2019). It is worth noting that China might relaunch its previously suspended smelters, as well as commission new capacities in FY23 (together representing ~6% of global Al supply) once local electricity curbs are eased. However, this outlook seems overly bullish to us, while a Reuters source anticipates a maximum resumption of 1.3mnt of China’s halted Al capacity (~2% of global 2022 output)
#aluminium
https://metals-wire.com:3000/sector/Aluminium
BHP 1H23 results - EBITDA underperforms again
📝BHP's CY 1H23 revenues broadly met market expectations (-3% vs. the consensus and -1% vs. us). However, EBITDA was below forecasts (-5% vs. consensus and -9% vs. us), affected by higher inflationary pressure (mostly in iron ore and coal segments) than we had anticipated
⛏According to BHP’s guidance, iron ore production is to grow ~1% YoY in FY24, while copper output is to gain up to 11% over the period
🛒The miner expects its FY24 copper (Escondida mine) cash costs to jump up to 20% YoY to USD 1.4-1.7/lb. Simultaneously, the figure for iron ore segment might stand at USD 17.4-18.9/t (vs. USD 17.8/t in FY23)
💰The BoD has declared a final dividend of USD 0.80/sh., implying a DY of some 2.9%
📌On our numbers, at spot, BHP's CY 2H23F EBITDA will decline in mid-single digits HoH, stressed by lower prices among the whole commodity basket
#BHP #iron_ore
https://metals-wire.com/company/BHP_AU/
📝BHP's CY 1H23 revenues broadly met market expectations (-3% vs. the consensus and -1% vs. us). However, EBITDA was below forecasts (-5% vs. consensus and -9% vs. us), affected by higher inflationary pressure (mostly in iron ore and coal segments) than we had anticipated
⛏According to BHP’s guidance, iron ore production is to grow ~1% YoY in FY24, while copper output is to gain up to 11% over the period
🛒The miner expects its FY24 copper (Escondida mine) cash costs to jump up to 20% YoY to USD 1.4-1.7/lb. Simultaneously, the figure for iron ore segment might stand at USD 17.4-18.9/t (vs. USD 17.8/t in FY23)
💰The BoD has declared a final dividend of USD 0.80/sh., implying a DY of some 2.9%
📌On our numbers, at spot, BHP's CY 2H23F EBITDA will decline in mid-single digits HoH, stressed by lower prices among the whole commodity basket
#BHP #iron_ore
https://metals-wire.com/company/BHP_AU/
Morning Bites (part 1)
🔗Global crude steel output rose 7% YoY in July to 159mnt, after being unchanged YoY in June, according to the World Steel Association. Meanwhile, China’s production jumped 12% YoY (vs. the flat dynamics seen in June), while ex-China steel output rose 1% YoY. Specifically, EU supply dropped 7% YoY (vs. -11% YoY in June), following the local energy crisis. US steel production inched up 1% YoY, while Russia’s steel output rose 6% YoY in July, after the 4% YoY increase in June. We note that China’s mills in the key steel making provinces (such as Hebei, Jiangsu and Shandong) might lower output in 2H23 in order to keep national steel production below the 2022 level: in 7mo23 it was still +3% YoY. To recap, the country represents ~57% of world crude steel supply
#steel
https://metals-wire.com:3000/sector/Steel
🔗Global crude steel output rose 7% YoY in July to 159mnt, after being unchanged YoY in June, according to the World Steel Association. Meanwhile, China’s production jumped 12% YoY (vs. the flat dynamics seen in June), while ex-China steel output rose 1% YoY. Specifically, EU supply dropped 7% YoY (vs. -11% YoY in June), following the local energy crisis. US steel production inched up 1% YoY, while Russia’s steel output rose 6% YoY in July, after the 4% YoY increase in June. We note that China’s mills in the key steel making provinces (such as Hebei, Jiangsu and Shandong) might lower output in 2H23 in order to keep national steel production below the 2022 level: in 7mo23 it was still +3% YoY. To recap, the country represents ~57% of world crude steel supply
#steel
https://metals-wire.com:3000/sector/Steel
Morning Bites (part 2)
☢️ Sweden is likely to lift the ban on uranium mining, The Times reports. According to the country’s Climate Minister, Romina Pourmokhtari, a majority within the Swedish Parliament supports the decision. Sweden (~2% of global nuclear generation in 2022) has recently announced plans to build at least ten new nuclear reactors by 2045 (in addition to the six reactors currently operating), as the demand for electricity might double in the coming decades. Overall, we do not expect any material volumes from Sweden to come into the market in the medium term: the country accounts for only 0.2% of global uranium resources, per SGU. At the same time, the growing interest in nuclear power might add a positive note to the sentiment on uranium in the long term, we believe
#uranium
https://metals-wire.com/sector/Uranium
☢️ Sweden is likely to lift the ban on uranium mining, The Times reports. According to the country’s Climate Minister, Romina Pourmokhtari, a majority within the Swedish Parliament supports the decision. Sweden (~2% of global nuclear generation in 2022) has recently announced plans to build at least ten new nuclear reactors by 2045 (in addition to the six reactors currently operating), as the demand for electricity might double in the coming decades. Overall, we do not expect any material volumes from Sweden to come into the market in the medium term: the country accounts for only 0.2% of global uranium resources, per SGU. At the same time, the growing interest in nuclear power might add a positive note to the sentiment on uranium in the long term, we believe
#uranium
https://metals-wire.com/sector/Uranium
Morning Bites (part 1)
🔗CISA mills' daily crude steel production during mid-August was 2.22mnt, a 2.9% increase from the previous ten days (also an 11.0% jump YoY). Meanwhile, local steel inventories grew 3.6% over the same period (-4.0% YoY). Although production is still growing YoY, Chinese mills in the top steel making provinces (such as Hebei, Jiangsu and Shandong) might lower their utilisation rates in 2H23, in order to keep output below the 2022 level: in 7mo23 it was still +3% YoY. To recap, China represents ~57% of global steel supply
#steel
https://metals-wire.com/sector/Steel
🔗CISA mills' daily crude steel production during mid-August was 2.22mnt, a 2.9% increase from the previous ten days (also an 11.0% jump YoY). Meanwhile, local steel inventories grew 3.6% over the same period (-4.0% YoY). Although production is still growing YoY, Chinese mills in the top steel making provinces (such as Hebei, Jiangsu and Shandong) might lower their utilisation rates in 2H23, in order to keep output below the 2022 level: in 7mo23 it was still +3% YoY. To recap, China represents ~57% of global steel supply
#steel
https://metals-wire.com/sector/Steel
Morning Bites (part 2)
📉Russia’s gold output dropped 12.3% YoY in July, reversing from the 9.5% YoY growth in June, per Rosstat data. Despite some slowdown in production during July, Russia’s gold output was still +5.5% YoY in 7mo23. Overall, we maintain our positive outlook on the precious metal, amid strong physical gold demand and the rising cash costs of gold miners, as well as unfavorable macroeconomic conditions globally. Russia accounts for ~9% of the world's mined gold output
#gold
https://metals-wire.com/sector/Gold
📉Russia’s gold output dropped 12.3% YoY in July, reversing from the 9.5% YoY growth in June, per Rosstat data. Despite some slowdown in production during July, Russia’s gold output was still +5.5% YoY in 7mo23. Overall, we maintain our positive outlook on the precious metal, amid strong physical gold demand and the rising cash costs of gold miners, as well as unfavorable macroeconomic conditions globally. Russia accounts for ~9% of the world's mined gold output
#gold
https://metals-wire.com/sector/Gold
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Morning Bites
⚠️Another fatal accident at a coal mine in China threatens output growth, Bloomberg reports. On Monday, a gas explosion occurred at a mine in Shaanxi (one of the top three coal mining provinces in China), marking the worst industry accident since February, when 53 workers were buried after a landslide. As with that incident, the news from Shaanxi might trigger nationwide safety checks and add risks to domestic coal output - especially taking into account declining coal quality and frequent emergencies, per Bloomberg. Following the accident, the China Coal Transport and Distribution Association has cut an annual production forecast 2% to 4,600mnt. To recap, China boosted its coal production 10% YoY in 2020, and we believe that safety violations might have come along the way
#coal
https://metals-wire.com/sector/Coal
⚠️Another fatal accident at a coal mine in China threatens output growth, Bloomberg reports. On Monday, a gas explosion occurred at a mine in Shaanxi (one of the top three coal mining provinces in China), marking the worst industry accident since February, when 53 workers were buried after a landslide. As with that incident, the news from Shaanxi might trigger nationwide safety checks and add risks to domestic coal output - especially taking into account declining coal quality and frequent emergencies, per Bloomberg. Following the accident, the China Coal Transport and Distribution Association has cut an annual production forecast 2% to 4,600mnt. To recap, China boosted its coal production 10% YoY in 2020, and we believe that safety violations might have come along the way
#coal
https://metals-wire.com/sector/Coal
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