Fortescue 1H23 results - adjusted EBITDA in line with consensus
📝Fortescue's CY 1H23 revenues have met market expectations. Adjusted EBITDA (ex. a USD 1bn impairment expense from Iron Bridge) also came broadly in line (+2% vs. the consensus and 4% above us). We note that the impairment reflects inflationary pressures and the timing of the project ramp-up
⛏According to the miner’s guidance, FY24 iron ore shipments are seen at 192-197mnt (vs. 192mnt in FY23). At the same time, Pilbara's C1 cost might grow 3-8% YoY to USD 18-19/t
❗️Company CEO Fiona Hick is leaving just six months after taking on the role. In our view, the recent series of departures among top managers is unfavourable for sentiment
💰The BoD has announced a final dividend of AUD 1.00/share, implying a good DY of 4.8%
📌At spot, Fortesque’s CY 2H23 Adjusted EBITDA might grow in the mid-single digits HoH, bolstered by potentially higher sales volumes
#FMG #iron_ore
https://metals-wire.com/company/FMG_AU/
📝Fortescue's CY 1H23 revenues have met market expectations. Adjusted EBITDA (ex. a USD 1bn impairment expense from Iron Bridge) also came broadly in line (+2% vs. the consensus and 4% above us). We note that the impairment reflects inflationary pressures and the timing of the project ramp-up
⛏According to the miner’s guidance, FY24 iron ore shipments are seen at 192-197mnt (vs. 192mnt in FY23). At the same time, Pilbara's C1 cost might grow 3-8% YoY to USD 18-19/t
❗️Company CEO Fiona Hick is leaving just six months after taking on the role. In our view, the recent series of departures among top managers is unfavourable for sentiment
💰The BoD has announced a final dividend of AUD 1.00/share, implying a good DY of 4.8%
📌At spot, Fortesque’s CY 2H23 Adjusted EBITDA might grow in the mid-single digits HoH, bolstered by potentially higher sales volumes
#FMG #iron_ore
https://metals-wire.com/company/FMG_AU/
Morning Bites (part 1)
📌China’s new internal combustion engine car sales fell 12% YoY in July, following the 5% YoY decline in June. The sales remained below their pre-Covid level (-7% vs. July 2019), amid the growing appetite for EVs, which continue to weigh on PGM consumption. The Chinese auto sector represents some 26% and 17% of world autocatalyst Pd and Pt demand, respectively
📌New EV sales in China jumped 32% YoY in July, after the 35% YoY increase in June. Overall, the continuous growth in EV sales might further increase the consumption of the battery metals basket (e.g. cobalt, lithium and nickel), as China has accounted for ~50% of global EV demand in recent months
#cars #EV #nickel #lithium #cobalt
https://metals-wire.com:3000/news-reports
📌China’s new internal combustion engine car sales fell 12% YoY in July, following the 5% YoY decline in June. The sales remained below their pre-Covid level (-7% vs. July 2019), amid the growing appetite for EVs, which continue to weigh on PGM consumption. The Chinese auto sector represents some 26% and 17% of world autocatalyst Pd and Pt demand, respectively
📌New EV sales in China jumped 32% YoY in July, after the 35% YoY increase in June. Overall, the continuous growth in EV sales might further increase the consumption of the battery metals basket (e.g. cobalt, lithium and nickel), as China has accounted for ~50% of global EV demand in recent months
#cars #EV #nickel #lithium #cobalt
https://metals-wire.com:3000/news-reports
Morning Bites (part 2)
🇨🇱Chile’s mining costs surged 29% YoY in 1Q23, Bloomberg reports, citing the local government agency Cochilco. The reduction in ore quality and the higher wages, energy and refinery fees are driving up inflationary pressures in the Chilean mining sector (~27% of world mined copper supply). According to Cochilco, the dynamics would have been more severe if not for the higher proceeds from the sale of molybdenum and gold as by-products. Overall, the increase was even more dramatic than the rise in costs at major global Cu producers (+13% YoY in 1Q23, per our estimates), which is a potentially supportive factor for the sentiment on copper
#copper
https://metals-wire.com:3000/sector/Copper
🇨🇱Chile’s mining costs surged 29% YoY in 1Q23, Bloomberg reports, citing the local government agency Cochilco. The reduction in ore quality and the higher wages, energy and refinery fees are driving up inflationary pressures in the Chilean mining sector (~27% of world mined copper supply). According to Cochilco, the dynamics would have been more severe if not for the higher proceeds from the sale of molybdenum and gold as by-products. Overall, the increase was even more dramatic than the rise in costs at major global Cu producers (+13% YoY in 1Q23, per our estimates), which is a potentially supportive factor for the sentiment on copper
#copper
https://metals-wire.com:3000/sector/Copper
Morning Bites
💎De Beers has reported sales of USD 370mn at its 7th cycle in 2023, 36% below the historical average and 42% weaker YoY (vs. -36% YoY at the 6th cycle in 2023). According to De Beers CEO Al Cook, these dynamics reflect the adverse economic environment and soft diamond jewellery demand in key markets. In addition, De Beers has recently allowed sightholders to defer rough purchases (25-50% of their allocations) at cycles 8-10 amid sluggish consumer demand and high midstream stockpiles. Hence, we maintain our cautious view on the diamond sector, due to unfavourable macroeconomic conditions globally and weak US sales (50% of global diamond consumption)
#diamonds
https://metals-wire.com/sector/Diamonds
💎De Beers has reported sales of USD 370mn at its 7th cycle in 2023, 36% below the historical average and 42% weaker YoY (vs. -36% YoY at the 6th cycle in 2023). According to De Beers CEO Al Cook, these dynamics reflect the adverse economic environment and soft diamond jewellery demand in key markets. In addition, De Beers has recently allowed sightholders to defer rough purchases (25-50% of their allocations) at cycles 8-10 amid sluggish consumer demand and high midstream stockpiles. Hence, we maintain our cautious view on the diamond sector, due to unfavourable macroeconomic conditions globally and weak US sales (50% of global diamond consumption)
#diamonds
https://metals-wire.com/sector/Diamonds
Morning Bites
🚘EU + UK passenger car registrations rose 17% YoY in July, after the 19% YoY growth in June. The results were broadly in line with our estimates. The sales figures, however, were still 23% below the pre-COVID, 2019 level (-15% in June). Hence, we maintain our outlook that the adverse economic environment (indicated by consistently deteriorating PMIs in EU) are likely to further weigh on European car sales. This would in turn continue pressuring PGM consumption. The EU+UK accounted for some 20% and 32% of the world autocatalyst Pd and Pt demand, respectively, in 2022E.
#cars
https://metals-wire.com:3000/sector/PGM
🚘EU + UK passenger car registrations rose 17% YoY in July, after the 19% YoY growth in June. The results were broadly in line with our estimates. The sales figures, however, were still 23% below the pre-COVID, 2019 level (-15% in June). Hence, we maintain our outlook that the adverse economic environment (indicated by consistently deteriorating PMIs in EU) are likely to further weigh on European car sales. This would in turn continue pressuring PGM consumption. The EU+UK accounted for some 20% and 32% of the world autocatalyst Pd and Pt demand, respectively, in 2022E.
#cars
https://metals-wire.com:3000/sector/PGM
Morning Bites (part 1)
🏗China’s preliminary excavator sales were down 30% YoY in August (domestic + export), following the same 30% YoY decline in July, according to CME estimates. Specifically, domestic sales (a key indicator of construction activity) are set to be 42% weaker YoY, after the 49% YoY drop in July. Meanwhile, the negative dynamics are unlikely to improve in the near future, CME added. Were this trend to persist, it would indicate no recovery in China's stressed real estate sector, we believe. However, new potential stimulus for the local economy might add support to construction activity and bolster the demand for industrial metals (e.g. steel, copper and aluminium) later in 2H23
#steel
https://metals-wire.com/sector/Steel
🏗China’s preliminary excavator sales were down 30% YoY in August (domestic + export), following the same 30% YoY decline in July, according to CME estimates. Specifically, domestic sales (a key indicator of construction activity) are set to be 42% weaker YoY, after the 49% YoY drop in July. Meanwhile, the negative dynamics are unlikely to improve in the near future, CME added. Were this trend to persist, it would indicate no recovery in China's stressed real estate sector, we believe. However, new potential stimulus for the local economy might add support to construction activity and bolster the demand for industrial metals (e.g. steel, copper and aluminium) later in 2H23
#steel
https://metals-wire.com/sector/Steel
Morning Bites (part 2)
🇵🇪Peru’s copper output continued its upward trend, having grown 18% YoY in July and 22% YoY in June, INEI reports. Overall, production in 7mo23 grew ~19% YoY, which still exceeds the Peruvian government's ambitious plan to boost domestic Cu output 15% YoY in 2023. However, Anglo American launched the Quellaveco copper mine in September 2022, hence, the comparison base for late-2023 is likely to be higher. To recap, Peru accounts for ~11% of global Cu supply
#copper
https://metals-wire.com/sector/Copper
🇵🇪Peru’s copper output continued its upward trend, having grown 18% YoY in July and 22% YoY in June, INEI reports. Overall, production in 7mo23 grew ~19% YoY, which still exceeds the Peruvian government's ambitious plan to boost domestic Cu output 15% YoY in 2023. However, Anglo American launched the Quellaveco copper mine in September 2022, hence, the comparison base for late-2023 is likely to be higher. To recap, Peru accounts for ~11% of global Cu supply
#copper
https://metals-wire.com/sector/Copper
Morning Bites (part 3)
💍Signet has reported a further 12.0% YoY decline in same-store sales in 2Q23 (May-July), after the 13.9% YoY fall in 1Q23. Same-store sales in North America shrank 12.2% YoY (-14.2% YoY in the previous quarter), while the international segment’s sales were down 8.4% YoY (-8.5% YoY in 1Q23). According to Signet CEO Virginia Drosos, the upcoming multi-year recovery of engagements might begin in 4Q23 (half of Signet's revenues comes from bridal). The company has also reiterated its FY24 sales guidance, expecting the figure to be 7-9% lower YoY. Overall, the results correspond to soft US jewellery sales (since October 2022) and underpin our cautious outlook on the diamond sector globally
#diamonds
https://metals-wire.com:3000/news-reports
💍Signet has reported a further 12.0% YoY decline in same-store sales in 2Q23 (May-July), after the 13.9% YoY fall in 1Q23. Same-store sales in North America shrank 12.2% YoY (-14.2% YoY in the previous quarter), while the international segment’s sales were down 8.4% YoY (-8.5% YoY in 1Q23). According to Signet CEO Virginia Drosos, the upcoming multi-year recovery of engagements might begin in 4Q23 (half of Signet's revenues comes from bridal). The company has also reiterated its FY24 sales guidance, expecting the figure to be 7-9% lower YoY. Overall, the results correspond to soft US jewellery sales (since October 2022) and underpin our cautious outlook on the diamond sector globally
#diamonds
https://metals-wire.com:3000/news-reports
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Morning Bites (part 1)
💍Hong Kong jewellery and watch sales grew 20% YoY in July, following the 64% YoY increase in June, according to government data. However, the figure remained moderately below the pre-Covid level (-10% vs. July 2019). According to Rapaport, local retail sales continued to rise in July as tourists returned to Hong Kong, while the job market improved. Although the jewellery sentiment in Hong Kong remains upbeat, the positive effect is limited, in our view, given weak diamond sales on key US and China’s markets (~50% and 15% of world gem-set jewellery trade)
#diamonds
https://metals-wire.com/sector/Diamonds
💍Hong Kong jewellery and watch sales grew 20% YoY in July, following the 64% YoY increase in June, according to government data. However, the figure remained moderately below the pre-Covid level (-10% vs. July 2019). According to Rapaport, local retail sales continued to rise in July as tourists returned to Hong Kong, while the job market improved. Although the jewellery sentiment in Hong Kong remains upbeat, the positive effect is limited, in our view, given weak diamond sales on key US and China’s markets (~50% and 15% of world gem-set jewellery trade)
#diamonds
https://metals-wire.com/sector/Diamonds
Morning Bites (part 2)
🌏Global manufacturing PMIs remained soft in August. The Eurozone Markit Manufacturing PMI was reported at 43.5 (consensus estimate - 43.7), slightly up from 42.7 in July. The US ISM manufacturing PMI grew to 47.6 (from 46.4 in July)
🇨🇳The official NBS Manufacturing PMI in China recovered to 49.7 in August (from 49.3 in July), ahead of the 49.4 estimates. Of note, the Caixin China Manufacturing PMI jumped to 51.0 in August (from 49.2), beating market estimates of 49.3
❗️Although global PMIs showed some recovery in August, most of them remained below 50.0, indicating soft sentiment in the manufacturing sector. Were these dynamics to persist, that might have an adverse impact on the demand for industrial metals (e.g. steel, aluminium and copper). However, China’s new potential support measures for the real estate sector could bolster construction activity later in 2H23, we believe
#PMIs
https://metals-wire.com:3000/news-reports
🌏Global manufacturing PMIs remained soft in August. The Eurozone Markit Manufacturing PMI was reported at 43.5 (consensus estimate - 43.7), slightly up from 42.7 in July. The US ISM manufacturing PMI grew to 47.6 (from 46.4 in July)
🇨🇳The official NBS Manufacturing PMI in China recovered to 49.7 in August (from 49.3 in July), ahead of the 49.4 estimates. Of note, the Caixin China Manufacturing PMI jumped to 51.0 in August (from 49.2), beating market estimates of 49.3
❗️Although global PMIs showed some recovery in August, most of them remained below 50.0, indicating soft sentiment in the manufacturing sector. Were these dynamics to persist, that might have an adverse impact on the demand for industrial metals (e.g. steel, aluminium and copper). However, China’s new potential support measures for the real estate sector could bolster construction activity later in 2H23, we believe
#PMIs
https://metals-wire.com:3000/news-reports
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Morning Bites (part 1)
🇨🇱Chile’s copper production was up 1% YoY in July, after the -1% YoY in June, and stood near the historical lows. The country’s mining industry is facing a persistent drought and unfavourable structural effects (e.g. grade depletion). In the meantime, the combined output of Chile and Peru was up 6% YoY (the same as in June). To recap, Chile represents ~27% of global copper production and so if the adverse factors in its mining sector persist, they could at least partially offset the supply additions from new Cu projects (e.g. QB2 and Udokan) which are due to launch in 2023
#copper
https://metals-wire.com:3000/sector/Copper
🇨🇱Chile’s copper production was up 1% YoY in July, after the -1% YoY in June, and stood near the historical lows. The country’s mining industry is facing a persistent drought and unfavourable structural effects (e.g. grade depletion). In the meantime, the combined output of Chile and Peru was up 6% YoY (the same as in June). To recap, Chile represents ~27% of global copper production and so if the adverse factors in its mining sector persist, they could at least partially offset the supply additions from new Cu projects (e.g. QB2 and Udokan) which are due to launch in 2023
#copper
https://metals-wire.com:3000/sector/Copper
Morning Bites (part 2)
🏦 Global central banks accumulated net 55t of gold in July, vs. the revised +86t in June, the World Gold Council reports. The main buyers were China (23t), Poland (22t) and Turkey (17t). On the sellers' side were Uzbekistan (-11t) and Kazakhstan (-4t). As we had anticipated, the countries’ selling capacity turned out to be limited, which underpins our positive view on the precious metal’s performance, amid strong physical gold demand, the adverse macroeconomic environment globally and miners' growing cash costs
#gold
https://metals-wire.com/sector/Gold
🏦 Global central banks accumulated net 55t of gold in July, vs. the revised +86t in June, the World Gold Council reports. The main buyers were China (23t), Poland (22t) and Turkey (17t). On the sellers' side were Uzbekistan (-11t) and Kazakhstan (-4t). As we had anticipated, the countries’ selling capacity turned out to be limited, which underpins our positive view on the precious metal’s performance, amid strong physical gold demand, the adverse macroeconomic environment globally and miners' growing cash costs
#gold
https://metals-wire.com/sector/Gold
🗓2Q23/1H23 reporting season - highlights
📝 The weighted average EBITDA of global miners under our coverage came in weaker than both the consensus and we had anticipated (by -3% and -4%, respectively). This was generally driven by the sluggish normalisation in costs
📌 Meanwhile, the most disappointing financials were reported by South African PGM miners amid the ongoing electricity crisis, which affected their EBITDA margins
#reporting_season
https://metals-wire.com:3000/events
📝 The weighted average EBITDA of global miners under our coverage came in weaker than both the consensus and we had anticipated (by -3% and -4%, respectively). This was generally driven by the sluggish normalisation in costs
📌 Meanwhile, the most disappointing financials were reported by South African PGM miners amid the ongoing electricity crisis, which affected their EBITDA margins
#reporting_season
https://metals-wire.com:3000/events
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🗓2Q23/1H23 reporting season - inflationary pressure persists
📈On average, major miners reported slightly stronger revenues than we had anticipated (+3% vs. us), amid higher realised prices and larger volumes
📉However, cash costs again exceeded our expectations in 2Q23/1H23, running counter to the guided normalisation. This effect is now likely to shift into late-2023. Higher costs thus outweighed the positive revenue impact on companies' EBITDA, which, as mentioned in our previous post, was 4% softer than our estimates (-3% vs. consensus) on a weighted average basis
📍Continuous inflationary pressure brings additional support to future commodity price performance, we believe. In addition, some large diversified miners (e.g. BHP and Fortescue) expect their cash costs to grow YoY in FY24 (starts in July 2023)
#reporting_season
https://metals-wire.com:3000/events
📈On average, major miners reported slightly stronger revenues than we had anticipated (+3% vs. us), amid higher realised prices and larger volumes
📉However, cash costs again exceeded our expectations in 2Q23/1H23, running counter to the guided normalisation. This effect is now likely to shift into late-2023. Higher costs thus outweighed the positive revenue impact on companies' EBITDA, which, as mentioned in our previous post, was 4% softer than our estimates (-3% vs. consensus) on a weighted average basis
📍Continuous inflationary pressure brings additional support to future commodity price performance, we believe. In addition, some large diversified miners (e.g. BHP and Fortescue) expect their cash costs to grow YoY in FY24 (starts in July 2023)
#reporting_season
https://metals-wire.com:3000/events
🗞Today, China published its preliminary import/export statistics for August (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 net finished steel exports surged 45% YoY in August, following the 13% YoY increase in July. Meanwhile, we note Beijing’s stated intention to boost the domestic economy via new support measures for the property sector, as well as plans to cap steel output at the 2022 level (it was still +3% YoY in 7mo23). These factors might add some support for steel prices, we believe
🪨China’s coal imports grew 51% YoY in August (vs. +67% YoY in July). The surge in imports has continued (+82% YoY in 8mo23): seaborne prices for power-generation fuel remain attractive, especially taking into account the constrained domestic supplies, Reuters reports. To recap, China, accounted for 53% of global coal consumption in 2022E, according to the IEA estimates
#coal #steel
https://metals-wire.com:3000/news-reports
🔗China’s net finished steel exports surged 45% YoY in August, following the 13% YoY increase in July. Meanwhile, we note Beijing’s stated intention to boost the domestic economy via new support measures for the property sector, as well as plans to cap steel output at the 2022 level (it was still +3% YoY in 7mo23). These factors might add some support for steel prices, we believe
🪨China’s coal imports grew 51% YoY in August (vs. +67% YoY in July). The surge in imports has continued (+82% YoY in 8mo23): seaborne prices for power-generation fuel remain attractive, especially taking into account the constrained domestic supplies, Reuters reports. To recap, China, accounted for 53% of global coal consumption in 2022E, according to the IEA estimates
#coal #steel
https://metals-wire.com:3000/news-reports
Morning Bites (part 2)
🔗CISA mills' daily crude steel production during late-August was 2.01mnt, a 7.7% drop from the previous ten days (+0.7% YoY). Meanwhile, local steel inventories fell 11.4% over the same period (-7.6% YoY). We note that Tangshan has announced new steel production restrictions for September, in addition to the recent measures aimed at producers in the top steelmaking provinces (Jiangsu, Shandong). Although China’s crude steel supply was stronger YoY in 2023 (+3% YoY in 7mo23), we keep in mind Beijing’s intention not to exceed the 2022 production levels
#steel
https://metals-wire.com/sector/Steel
🔗CISA mills' daily crude steel production during late-August was 2.01mnt, a 7.7% drop from the previous ten days (+0.7% YoY). Meanwhile, local steel inventories fell 11.4% over the same period (-7.6% YoY). We note that Tangshan has announced new steel production restrictions for September, in addition to the recent measures aimed at producers in the top steelmaking provinces (Jiangsu, Shandong). Although China’s crude steel supply was stronger YoY in 2023 (+3% YoY in 7mo23), we keep in mind Beijing’s intention not to exceed the 2022 production levels
#steel
https://metals-wire.com/sector/Steel
Morning Bites (part 3)
🚗💨Internal combustion engine (ICE) car registrations in the EU rose 7% YoY in 2Q23, after the 13% YoY growth in 1Q23. Diesel cars accounted for 25% of ICE car sales (vs. 26% in 1Q23 and 29% in 2Q22). Overall, the demand for PGMs in the EU remains subdued, as sales have been persistently below their pre-pandemic 2019 levels. To recap, the EU represents ~20% and 31% of global Pd and Pt autocatalyst demand, respectively
🚘EU+UK EV sales rose 35% YoY in 2Q23, following the 18% YoY growth in 1Q23. BEV sales gained 57% YoY (vs. +33% YoY in 1Q23), while PHEV sales inched up 6% YoY (vs. -3% YoY in 1Q23). The share of BEVs in total EV sales grew slightly to 67%, from 66% in 1Q23. Non-ICE cars accounted for 51% of total EU sales (vs. 46% in 2Q22). Overall, EVs continue to gain popularity, which is a favourable factor for the demand for battery metals (nickel, lithium and cobalt)
#cars #EV #nickel #lithium #cobalt
https://metals-wire.com:3000/news-reports
🚗💨Internal combustion engine (ICE) car registrations in the EU rose 7% YoY in 2Q23, after the 13% YoY growth in 1Q23. Diesel cars accounted for 25% of ICE car sales (vs. 26% in 1Q23 and 29% in 2Q22). Overall, the demand for PGMs in the EU remains subdued, as sales have been persistently below their pre-pandemic 2019 levels. To recap, the EU represents ~20% and 31% of global Pd and Pt autocatalyst demand, respectively
🚘EU+UK EV sales rose 35% YoY in 2Q23, following the 18% YoY growth in 1Q23. BEV sales gained 57% YoY (vs. +33% YoY in 1Q23), while PHEV sales inched up 6% YoY (vs. -3% YoY in 1Q23). The share of BEVs in total EV sales grew slightly to 67%, from 66% in 1Q23. Non-ICE cars accounted for 51% of total EU sales (vs. 46% in 2Q22). Overall, EVs continue to gain popularity, which is a favourable factor for the demand for battery metals (nickel, lithium and cobalt)
#cars #EV #nickel #lithium #cobalt
https://metals-wire.com:3000/news-reports
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