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
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💍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
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👍2
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
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🌏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
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👍2
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
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🔥2
🗓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
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#statistics #China
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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
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🔗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
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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
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🚗💨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
👍2
Morning Bites (part 1)
📉Gold-backed ETFs reduced their holdings 46t in August (vs. the revised -35t in July), the third consecutive month to record a decline. As a result, global ETF net outflows YTD reached 130t. According to the World Gold Council (WGC), last month, North American funds sold 44t, while net outflows from the EU was 8t, which was slightly offset by 7t inflows in Asia. We reiterate our view that ETF sales remain the main factor pressuring gold prices, amid strong demand from central banks, an unfavorable macroeconomic environment globally and rising cash costs of gold miners
#ETF #gold
https://metals-wire.com:3000/sector/Gold
📉Gold-backed ETFs reduced their holdings 46t in August (vs. the revised -35t in July), the third consecutive month to record a decline. As a result, global ETF net outflows YTD reached 130t. According to the World Gold Council (WGC), last month, North American funds sold 44t, while net outflows from the EU was 8t, which was slightly offset by 7t inflows in Asia. We reiterate our view that ETF sales remain the main factor pressuring gold prices, amid strong demand from central banks, an unfavorable macroeconomic environment globally and rising cash costs of gold miners
#ETF #gold
https://metals-wire.com:3000/sector/Gold
Morning Bites (part 2)
🚘New car registrations in France, the UK, Spain, Italy and Germany rose 20% YoY in August, vs. the +18% YoY in July. However, the figure was still 17% below the (2019) pre-COVID level. Specifically, in Germany and Spain, car sales were down 22% and 25%, respectively, on the 2019 level, while registrations in France were 12% lower. At the same time, sales in the UK and Italy were 7% and 11% below the 2019 figures, respectively. Given that these five countries represent ~70% of new vehicle registrations in Europe, the region’s car sales have likely followed the recovery trend, while remaining below their pre-pandemic levels
#cars
https://metals-wire.com:3000/sector/PGM
🚘New car registrations in France, the UK, Spain, Italy and Germany rose 20% YoY in August, vs. the +18% YoY in July. However, the figure was still 17% below the (2019) pre-COVID level. Specifically, in Germany and Spain, car sales were down 22% and 25%, respectively, on the 2019 level, while registrations in France were 12% lower. At the same time, sales in the UK and Italy were 7% and 11% below the 2019 figures, respectively. Given that these five countries represent ~70% of new vehicle registrations in Europe, the region’s car sales have likely followed the recovery trend, while remaining below their pre-pandemic levels
#cars
https://metals-wire.com:3000/sector/PGM
Morning Bites (part 3)
🥉Global copper production was up 2.1% YoY in 1H23, the International Copper Study Group reports. In June, output increased 4.5% YoY (vs. +1.5% YoY in May). Although global mined Cu supply in 1H23 was supported by some start-ups and expansions, this growth was partially offset by the operational issues in Chile, China, Indonesia, Panama and the US, as well as the protests in Peru, noted in the report. In particular, Indonesian output was down 6% YoY in 1H23, as operations at Grassberg were disrupted by rainfall and landslides, while Panamian production is estimated to have declined 8% YoY since Cobre Panama supply was interrupted for 15 days as a result of export restrictions imposed by the Maritime Port Authority
#copper
https://metals-wire.com:3000/sector/Copper
🥉Global copper production was up 2.1% YoY in 1H23, the International Copper Study Group reports. In June, output increased 4.5% YoY (vs. +1.5% YoY in May). Although global mined Cu supply in 1H23 was supported by some start-ups and expansions, this growth was partially offset by the operational issues in Chile, China, Indonesia, Panama and the US, as well as the protests in Peru, noted in the report. In particular, Indonesian output was down 6% YoY in 1H23, as operations at Grassberg were disrupted by rainfall and landslides, while Panamian production is estimated to have declined 8% YoY since Cobre Panama supply was interrupted for 15 days as a result of export restrictions imposed by the Maritime Port Authority
#copper
https://metals-wire.com:3000/sector/Copper
Morning Bites (part 1)
🚘US light vehicle sales rose 16% YoY in August, following the 15% YoY growth in July (but were still -20% vs. the pre-Covid 2019 level). Seasonally adjusted sales volumes were up 15% YoY last month (-11% vs. 2019). According to market participants, economic headwinds driven by high interest rates and car prices might slow the sales recovery in 2H23. Overall, we do not expect the US car market to rebound to pre-Covid levels in 2023, and so think that the local demand for PGMs from the automotive sector is likely to remain subdued. We remind readers that North America accounted for ~22% and 16% of the world autocatalyst Pd and Pt consumption, respectively, in 2022
#cars
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🚘US light vehicle sales rose 16% YoY in August, following the 15% YoY growth in July (but were still -20% vs. the pre-Covid 2019 level). Seasonally adjusted sales volumes were up 15% YoY last month (-11% vs. 2019). According to market participants, economic headwinds driven by high interest rates and car prices might slow the sales recovery in 2H23. Overall, we do not expect the US car market to rebound to pre-Covid levels in 2023, and so think that the local demand for PGMs from the automotive sector is likely to remain subdued. We remind readers that North America accounted for ~22% and 16% of the world autocatalyst Pd and Pt consumption, respectively, in 2022
#cars
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Morning Bites (part 2)
🏦China’s aggregate financing recovered 26% YoY in August to CNY 3.12tn, after hitting the lowest point since July 2014 the previous month. At the same time, the figure came in 27% ahead of the consensus. Meanwhile, traditional bank loans rose 9% YoY to CNY 1.36tn, also surpassing the consensus estimate of CNY 1.20tn. Overall, although China’s economic recovery has stumbled after solid 1Q23, its PMI data was the strongest among largest economies. We also keep in mind Beijing’s intention to support the economy via the real estate segment, which might bolster industrial metals demand later in 2H23
China represents 52% of global steel consumption, as well as 55% and 58% of world copper and aluminium demand, respectively
#global
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🏦China’s aggregate financing recovered 26% YoY in August to CNY 3.12tn, after hitting the lowest point since July 2014 the previous month. At the same time, the figure came in 27% ahead of the consensus. Meanwhile, traditional bank loans rose 9% YoY to CNY 1.36tn, also surpassing the consensus estimate of CNY 1.20tn. Overall, although China’s economic recovery has stumbled after solid 1Q23, its PMI data was the strongest among largest economies. We also keep in mind Beijing’s intention to support the economy via the real estate segment, which might bolster industrial metals demand later in 2H23
China represents 52% of global steel consumption, as well as 55% and 58% of world copper and aluminium demand, respectively
#global
https://metals-wire.com:3000/news-reports
Morning Bites (part 1)
🏦China has increased its gold reserves for the 10th consecutive month, purchasing 29t in August (~7% of annualised physical gold demand in 2022), after the +23t in July, Bloomberg reports. Hence, PBoC gold holdings now stand at 2,165t, with ~218t added in November 2022 - August 2023 (~6% of annualised demand). Given adverse macroeconomic conditions globally, as well as the rising cash costs of miners and strong demand from central banks, we maintain our positive view on gold performance
⛏️Udokan has produced its first copper concentrate, Reuters reports. One of the world's largest copper projects, it had been delayed (2022), before being launched on Monday in line with the revised plan. To recap, Udokan is expected to bring 0.6% of global Cu output in the first production stage, with a potential expansion to 1.6%. The mine accounts for ~3.1% of global Cu reserves
#gold #copper
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🏦China has increased its gold reserves for the 10th consecutive month, purchasing 29t in August (~7% of annualised physical gold demand in 2022), after the +23t in July, Bloomberg reports. Hence, PBoC gold holdings now stand at 2,165t, with ~218t added in November 2022 - August 2023 (~6% of annualised demand). Given adverse macroeconomic conditions globally, as well as the rising cash costs of miners and strong demand from central banks, we maintain our positive view on gold performance
⛏️Udokan has produced its first copper concentrate, Reuters reports. One of the world's largest copper projects, it had been delayed (2022), before being launched on Monday in line with the revised plan. To recap, Udokan is expected to bring 0.6% of global Cu output in the first production stage, with a potential expansion to 1.6%. The mine accounts for ~3.1% of global Cu reserves
#gold #copper
https://metals-wire.com:3000/news-reports
Morning Bites (part 2)
💎US jewellery sales shrank 2% YoY in July, vs. the revised 5% YoY drop in June, IDEX reports, citing the US Department of Commerce. This was the 10th month of YoY drops since October 2022 (only January 2023 saw a rise, of 1% YoY). According to IDEX, still high inflation and rising interest rates continue to weigh on consumer spending, especially as concerns luxury goods. This underpins our view that persistently weak US sales (~50% of world gem-set jewellery trade) are likely to put further stress on the demand for rough diamonds, which has been affected by the adverse macroeconomic conditions globally
#diamonds
https://metals-wire.com/sector/Diamonds
💎US jewellery sales shrank 2% YoY in July, vs. the revised 5% YoY drop in June, IDEX reports, citing the US Department of Commerce. This was the 10th month of YoY drops since October 2022 (only January 2023 saw a rise, of 1% YoY). According to IDEX, still high inflation and rising interest rates continue to weigh on consumer spending, especially as concerns luxury goods. This underpins our view that persistently weak US sales (~50% of world gem-set jewellery trade) are likely to put further stress on the demand for rough diamonds, which has been affected by the adverse macroeconomic conditions globally
#diamonds
https://metals-wire.com/sector/Diamonds