📌Russian authorities push an increase in scrap export duty to EUR 290/t from May, up from current minimum level of EUR 100/t
• It is now up for government approval
• However, the measure is not to be applied to the fixed quota of 810-830kt/a
❗️Given historical volume of scrap exports of 3.2mnt/a, this will create significant surplus on domestic market and ease cost pressure for steelmakers.

⛏Brazil’s CSN plans to double its iron ore output capacity up to 70mnt/a by 2026
• CSN also expects to reach an iron ore capacity of 116mnt/a by 2036
• 2036 plan implies increase in global seaborne supply by 5% from current level
💰At spot CSN is trading at 2.3x EV/EBITDA and 30% FCFE yield. If doubles production multiples will drop to 1.7x EV/EBITDA and FCF yield is to grow to 37%

📌China’s copper smelters set the 2Q22 floor for TC/RCs at USD 80/t
• This is 14% above the 1Q22 level of USD 70/t and 18% higher than spot TC/RCs of USD 68/t
❗️The growth in TC/RCs floor means an increase in concentrate supply at the market

⛏Vale plans to increase its copper production to 450kt/a by 2027 (up 52% from the 2021 level)
• 2027 plan implies increase in global supply by 0.7% from current level
💰At spot Vale is trading at 3x EV/EBITDA and 13% FCF yield. If copper production reaches 450kt/a multiples will drop to 2.9x EV/EBITDA and FCF yield is to grow to 18%

📌Secondary market rough diamond prices declined 10-40% in recent weeks
• Prices of large stones fell 10%, while the prices of smaller diamond categories decreased 40%
❗️In the last few months, secondary market prices rose more significantly than the contract prices of Alrosa and De Beers, which led to the secondary market price correction.

📌NLMK is catching up with market prices, raising Russian domestic rebar price for April to RUB 70.5k/t
• We note that producers’ average domestic rebar prices are already at about RUB 71k/t

⛏ArcelorMittal partially suspended operations at some of its steel mills in Spain
• This was caused by lack of raw materials supplies on the back of truck drivers protests
• The affected steel mills produce about 2% of EU crude steel output
• Previously, the company had already reduced output at some of its EAFs in Spain due to rising energy costs
❗️This might support EU steel prices, especially given that further steel output reductions are possible

📌 China’s National Coal Association (CNCA) expects the country's 2022 coal production to increase moderately
• However, CNCA did not provide any exact estimates
• In 2021, China’s authorities approved new coal capacity of 300mnt/a (8% of annual production)
❗️This, coupled with China’s coal price regulations might pressure coal prices

📌Why will Russian steelmakers quickly restore capacity utilization to 100%?
 
❗️Russian steelmakers are in the top 10% of the most efficient producers: their integrated cash costs are at USD 230-380/t, which is 2x lower than the global average and 3x lower than in the US or Europe.
• At the same time, steel prices reached USD 895/t in China (HRC FOB) and USD 1,600/t in Europe (EU HRC). Even with increased delivery costs, exports of steel will remain profitable for Russian steel producers
📝Even during the global financial crisis in 2009, when global steel production fell by 8% YoY, Russian steelmakers restored their capacity utilization up to 100% in just two quarters

#steel #rusteel

📌Russian PGM output was down 7.4% YoY in February
• The decline rate decelerated from January's 13% YoY drop
❗️The production decline might slightly support PGM prices, given Russia accounts for some 28% of global PGM supply

#PGMs #Russia

📌Some of China’s steel exporters expect the country to impose a new billet export duty
• As a result, some producers have suspended billet exports from China
❗️This could support seaborne steelmaking margins

#steel #China

📌 The COVID-19 lockdown in the major steelmaking city of Tangshan, China was lifted on 31 March
• Previously, some steel mills in Tangshan had idled their BFs due to shortages of raw materials caused by the lockdown
❗️This might support China's steel supply and pressure steel prices
📝Tangshan accounts for 14% of China's steel output

#steel #China #COVID_19

💎Rough diamond market robust in February 
• Rough diamond sales were strong in February, supported by continuing midstream restocking: De Beers sales grew 12% vs. the historical average level
• Further rough sales depend on the global demand for diamonds, which is, in turn, highly correlated with global macro trends
• Rapaport noted a strong decline in rough prices on secondary market in March. In our view, it means secondary market normalization after several months of abnormal prices

#diamonds

💎Midstream restocking continues
• Indian net imports of roughs in February were 57% higher than the 2019 level -- an acceleration from January's 52%.
• Meanwhile, India’s polished diamond net exports decreased 17% vs. 2019 after 18% increase in January
🤓 India accounts for c.95% of global diamond polishing

#diamonds

💎Downstream sales were strong in Jan-Feb, but might be pressured amid the COVID-19 outbreak in China and weak consumer sentiment in the US
• Downstream sales were robust in February: preliminary data suggest a 22% YoY increase in US sales, driven by the rebound in consumer spending on apparel and accessories as consumers were preparing to return to physical offices as well as strong sales for Valentine’s Day.
• China’s jewellery and watch sales rose 20% in 2mo22, in line with our bullish expectations on Lunar holiday sales.
• However, downside risks loom due to Covid-19 related restrictions in China. Moreover, US consumer sentiment worsened in March, adversely affected by rising inflation and macro uncertainty – the respective index further declined 5% MoM

#diamonds