📌 Chile’s copper output fell 10% YoY in April, with the rate of decline accelerating from 6% YoY in March
• In 4mo22, the country’s copper production dropped 8% YoY
• Public sources suggest that main reason for decline is tight water availability amid drought, though we believe that this might be partly driven by lockdowns in China and hence reduced demand for concentrate.
❗️Since Chile accounts for 28% of global copper supply, this might slightly support copper prices
#copper #Chile
• In 4mo22, the country’s copper production dropped 8% YoY
• Public sources suggest that main reason for decline is tight water availability amid drought, though we believe that this might be partly driven by lockdowns in China and hence reduced demand for concentrate.
❗️Since Chile accounts for 28% of global copper supply, this might slightly support copper prices
#copper #Chile
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🌏Global manufacturing PMIs broadly surpassed market expectations in May
∙ US ISM manufacturing PMI rebounded to 56.1 in May from 55.4 in April, exceeding Bloomberg consensus expectations of 54.5
∙ Eurozone Markit Manufacturing PMI declined to 54.6 in May (vs. 55.5 in April), slightly outperforming the market forecast of 54.4
❗️In May, manufacturing PMIs provided a mixed picture of the global manufacturing sector state. The US and Eurozone PMIs above 50 indicate continuing manufacturing momentum in these regions. However, as we wrote previously, China’s PMIs fell short of the 50 threshold, implying the continued manufacturing sector weakening
#PMIs
∙ US ISM manufacturing PMI rebounded to 56.1 in May from 55.4 in April, exceeding Bloomberg consensus expectations of 54.5
∙ Eurozone Markit Manufacturing PMI declined to 54.6 in May (vs. 55.5 in April), slightly outperforming the market forecast of 54.4
❗️In May, manufacturing PMIs provided a mixed picture of the global manufacturing sector state. The US and Eurozone PMIs above 50 indicate continuing manufacturing momentum in these regions. However, as we wrote previously, China’s PMIs fell short of the 50 threshold, implying the continued manufacturing sector weakening
#PMIs
🚘The growth rate of global EV sales (passenger cars and light-duty vehicles) slowed down to 35% YoY in April - the weakest dynamics since June 2020
∙ Global EV sales started to lose momentum in March: up 61% YoY vs. 91% YoY increase in February
∙ In the US & Canada, EV sales rose 25% YoY in April (vs. 31% YoY growth in March)
∙ EU & UK EV sales increased only 1% YoY in April (vs. 12% YoY and 41% YoY growth in March and February, respectively)
❗️Even though increasing EV sales are supportive for the demand for battery metals (nickel, lithium and cobalt), the rapid deceleration of the growth rate is a concern
#EV #nickel #lithium #cobalt
∙ Global EV sales started to lose momentum in March: up 61% YoY vs. 91% YoY increase in February
∙ In the US & Canada, EV sales rose 25% YoY in April (vs. 31% YoY growth in March)
∙ EU & UK EV sales increased only 1% YoY in April (vs. 12% YoY and 41% YoY growth in March and February, respectively)
❗️Even though increasing EV sales are supportive for the demand for battery metals (nickel, lithium and cobalt), the rapid deceleration of the growth rate is a concern
#EV #nickel #lithium #cobalt
📌Russian gold output contracted 19.9% YoY in April
∙ The rate of decline accelerated from 3.1% YoY in March
∙ In 4mo22, the country’s gold production was down 3.4% YoY
∙ Previously, the Union of Gold Producers of Russia forecasted a 10% YoY decline in Russian gold output in 2022 due to possible disruptions in machinery deliveries, export restrictions and uncertain domestic gold demand
❗️Given Russia accounts for some 10% of global gold mine production, this might be supportive for gold prices
#gold
∙ The rate of decline accelerated from 3.1% YoY in March
∙ In 4mo22, the country’s gold production was down 3.4% YoY
∙ Previously, the Union of Gold Producers of Russia forecasted a 10% YoY decline in Russian gold output in 2022 due to possible disruptions in machinery deliveries, export restrictions and uncertain domestic gold demand
❗️Given Russia accounts for some 10% of global gold mine production, this might be supportive for gold prices
#gold
📌EU and US aluminium premiums have reached historically high levels, while the Japan’s premium remained weak
∙ The Rotterdam duty paid premium was up 35% in Feb-May, mostly due to Russia's supply uncertainty. Moreover, the CRU expects that the same issues, coupled with logistics constrains, might keep the premium high
∙ While the US Midwest premium rose 3% in Feb-May, it started to fall last week (-6% WoW) amid negative sentiment stemming from the current economic environment
∙ As for Japan, global aluminium producers offered Japanese buyers 1.5% higher premiums for 3Q22 (vs. USD 172/t in 2Q22). While it is 66% above the spot, we note that the regional premium remains weak (-21% in Feb-May) amid growing aluminium exports from China and weak demand from the automotive sector
❗️We note that while the aluminium LME price declined 9% in Feb-May, premiums for physical delivery are skyrocketing, which means that physical spot aluminium declined only 3% in the EU and 6% in the US during Feb-May
#aluminium
∙ The Rotterdam duty paid premium was up 35% in Feb-May, mostly due to Russia's supply uncertainty. Moreover, the CRU expects that the same issues, coupled with logistics constrains, might keep the premium high
∙ While the US Midwest premium rose 3% in Feb-May, it started to fall last week (-6% WoW) amid negative sentiment stemming from the current economic environment
∙ As for Japan, global aluminium producers offered Japanese buyers 1.5% higher premiums for 3Q22 (vs. USD 172/t in 2Q22). While it is 66% above the spot, we note that the regional premium remains weak (-21% in Feb-May) amid growing aluminium exports from China and weak demand from the automotive sector
❗️We note that while the aluminium LME price declined 9% in Feb-May, premiums for physical delivery are skyrocketing, which means that physical spot aluminium declined only 3% in the EU and 6% in the US during Feb-May
#aluminium
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Morning Bites
💍Hong Kong jewellery & watch sales grew 13% YoY in April, reversing from the 36% YoY decline in February. The April sales recovery was driven by eased COVID restrictions and the disbursement of consumption stimulus payments by the HK authorities at the beginning of the month. This might be positive for diamond demand.
📌Turkey’s finished steel production rose 1.6% YoY in April, reversing from the 2.9% YoY decline in March. The slight increase in steel output might have been caused by the partial recovery of domestic steel consumption, which declined only 1.2% YoY in April (vs. the 16.8% YoY decrease in March). Turkey’s steel imports were down 17.9% YoY in April (vs. 20.7% YoY drop in March), while steel exports fell 12.1% YoY in April, reversing from the 7.2% YoY increase in March
#news #diamonds #steel
💍Hong Kong jewellery & watch sales grew 13% YoY in April, reversing from the 36% YoY decline in February. The April sales recovery was driven by eased COVID restrictions and the disbursement of consumption stimulus payments by the HK authorities at the beginning of the month. This might be positive for diamond demand.
📌Turkey’s finished steel production rose 1.6% YoY in April, reversing from the 2.9% YoY decline in March. The slight increase in steel output might have been caused by the partial recovery of domestic steel consumption, which declined only 1.2% YoY in April (vs. the 16.8% YoY decrease in March). Turkey’s steel imports were down 17.9% YoY in April (vs. 20.7% YoY drop in March), while steel exports fell 12.1% YoY in April, reversing from the 7.2% YoY increase in March
#news #diamonds #steel
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Morning Bites
🚘US light vehicle sales decreased 30% YoY in May (vs. 19% YoY drop in April). The seasonally adjusted annual sales rate declined 25% YoY in May (vs. the 22% YoY decrease in April). The contraction might have been caused by the parts shortage and burgeoning inflation. Falling car sales are negative for PGM demand
🥇Strikes at Sibanye-Stillwater’s gold operations in South Africa have ended. According to the company, the labour unions have finally decided to accept the three-year wage deal. The strikes commenced on 9 March and caused disruptions at the company’s gold operations in South Africa, which account for some 1% of global gold production. The resumption of operations at the mines might slightly support gold supply and pressure gold prices
#cars #gold
🚘US light vehicle sales decreased 30% YoY in May (vs. 19% YoY drop in April). The seasonally adjusted annual sales rate declined 25% YoY in May (vs. the 22% YoY decrease in April). The contraction might have been caused by the parts shortage and burgeoning inflation. Falling car sales are negative for PGM demand
🥇Strikes at Sibanye-Stillwater’s gold operations in South Africa have ended. According to the company, the labour unions have finally decided to accept the three-year wage deal. The strikes commenced on 9 March and caused disruptions at the company’s gold operations in South Africa, which account for some 1% of global gold production. The resumption of operations at the mines might slightly support gold supply and pressure gold prices
#cars #gold
Morning Bites (part 1)
🏦Global central banks were net purchasers of 19t of gold in April (vs. net sales of 8t in March). In April, the biggest purchaser was Uzbekistan, with 9t of gold purchases (vs. 1t sold in March). The biggest seller was Germany, which sold 1t of gold in April (vs. no change in reserves in March). Positive central banks’ net purchases are slightly supportive for the gold price
🥇India’s gold imports jumped 677% YoY in May to 3.2koz from the low base. The growth rate reversed from April’s 75% YoY decline. The increase was driven by strong gold jewellery sales as the price correction occurred prior to India’s traditional festival and the wedding season, which was postponed from 2021 to 2022 for COVID-related reasons. Strong gold imports to India might be positive for the gold price
#gold
🏦Global central banks were net purchasers of 19t of gold in April (vs. net sales of 8t in March). In April, the biggest purchaser was Uzbekistan, with 9t of gold purchases (vs. 1t sold in March). The biggest seller was Germany, which sold 1t of gold in April (vs. no change in reserves in March). Positive central banks’ net purchases are slightly supportive for the gold price
🥇India’s gold imports jumped 677% YoY in May to 3.2koz from the low base. The growth rate reversed from April’s 75% YoY decline. The increase was driven by strong gold jewellery sales as the price correction occurred prior to India’s traditional festival and the wedding season, which was postponed from 2021 to 2022 for COVID-related reasons. Strong gold imports to India might be positive for the gold price
#gold
Morning Bites (part 2)
📌Peru’s copper output declined 1.7% YoY in April (vs. 0.5% YoY decline in March). As in March, Peru’s copper production was affected by protests at the Las Bambas mine (1.7% of global copper supply). Falling copper production might slightly support copper prices given Peru accounts for some 11% of global mine copper supply
🚘Preliminary data suggest a 13% YoY decline in new car registrations in France, the UK, Spain, Italy and Germany in May. In France and Germany, car sales decreased 10% YoY. Italy car sales declined 15% YoY, while Spain vehicle registrations were down 11% YoY. UK vehicle sales declined 21% YoY. Given these 5 countries accounted for 70% of total new vehicle sales in Europe in 2021, this implies a continuing YoY decrease in EU and UK new car registrations in May, which is negative for PGM demand. The full results for May registrations are to be published on 16 June
#copper #cars
📌Peru’s copper output declined 1.7% YoY in April (vs. 0.5% YoY decline in March). As in March, Peru’s copper production was affected by protests at the Las Bambas mine (1.7% of global copper supply). Falling copper production might slightly support copper prices given Peru accounts for some 11% of global mine copper supply
🚘Preliminary data suggest a 13% YoY decline in new car registrations in France, the UK, Spain, Italy and Germany in May. In France and Germany, car sales decreased 10% YoY. Italy car sales declined 15% YoY, while Spain vehicle registrations were down 11% YoY. UK vehicle sales declined 21% YoY. Given these 5 countries accounted for 70% of total new vehicle sales in Europe in 2021, this implies a continuing YoY decrease in EU and UK new car registrations in May, which is negative for PGM demand. The full results for May registrations are to be published on 16 June
#copper #cars
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Morning Bites (part 1)
📌CISA mills’ daily crude steel output rose 0.9% in the last ten days of May from the second ten days of the month. This represented a 1.5% YoY increase (vs. the 3.4% YoY decline in mid-May). The increase might have been caused by demand recovery amid the easing COVID restrictions and the announcement of economic stimulus measures. Demand revival was shown by the 10.2% reduction in steel inventories from 20 to 31 May (up 33.8% YoY). We note, however, that in the coming months, China’s steel manufacturers might be forced to lower their output run-rates in order to achieve the targeted steel output reduction in 2022 relative to 2021
📉Gold-backed ETFs reduced their holdings through May, with net outflows at 51t, partly on the back of rising fund rates. In April, ETFs increased their holdings by 33t. We note, however, that in the coming months gold investment demand might be supported by the rising inflation
#China #steel #ETF #gold
📌CISA mills’ daily crude steel output rose 0.9% in the last ten days of May from the second ten days of the month. This represented a 1.5% YoY increase (vs. the 3.4% YoY decline in mid-May). The increase might have been caused by demand recovery amid the easing COVID restrictions and the announcement of economic stimulus measures. Demand revival was shown by the 10.2% reduction in steel inventories from 20 to 31 May (up 33.8% YoY). We note, however, that in the coming months, China’s steel manufacturers might be forced to lower their output run-rates in order to achieve the targeted steel output reduction in 2022 relative to 2021
📉Gold-backed ETFs reduced their holdings through May, with net outflows at 51t, partly on the back of rising fund rates. In April, ETFs increased their holdings by 33t. We note, however, that in the coming months gold investment demand might be supported by the rising inflation
#China #steel #ETF #gold
Morning Bites (part 2)
💍US jewellery and watch sales rose 18% YoY in April, according to US Department of Commerce data. The growth rate accelerated from the revised 11% YoY increase in March. Growing jewellery sales might be positive for diamond prices; however, we note risks to the downstream demand amid surging inflation
💎De Beers raised the prices of smaller rough diamonds 5-7% at its 5th sales cycle in 2022, according to Bloomberg. The price increase was caused by the shortage of rough diamonds amid sanctions on Alrosa, which accounts for some 30% of the rough diamond market. We note that further price hikes are possible, given the jewellery demand remains strong
#diamonds
💍US jewellery and watch sales rose 18% YoY in April, according to US Department of Commerce data. The growth rate accelerated from the revised 11% YoY increase in March. Growing jewellery sales might be positive for diamond prices; however, we note risks to the downstream demand amid surging inflation
💎De Beers raised the prices of smaller rough diamonds 5-7% at its 5th sales cycle in 2022, according to Bloomberg. The price increase was caused by the shortage of rough diamonds amid sanctions on Alrosa, which accounts for some 30% of the rough diamond market. We note that further price hikes are possible, given the jewellery demand remains strong
#diamonds
Morning Bites (part 3)
📌According to World Platinum Investment Council (WPIC), the platinum market surplus in 2022 is unsustainable. First of all, WPIC sees risks to Russia’s platinum supply (10% of total). Secondly, WPIC expects a strengthening of platinum demand due to palladium-for-platinum substitution in petrol car catalytic converters and the increased platinum use in hydrogen energy industry. Still, WPIC forecasts platinum market surplus of 627koz in 2022
#PGMs
📌According to World Platinum Investment Council (WPIC), the platinum market surplus in 2022 is unsustainable. First of all, WPIC sees risks to Russia’s platinum supply (10% of total). Secondly, WPIC expects a strengthening of platinum demand due to palladium-for-platinum substitution in petrol car catalytic converters and the increased platinum use in hydrogen energy industry. Still, WPIC forecasts platinum market surplus of 627koz in 2022
#PGMs
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📉What falling global steel consumption could mean for the economy
📝Steel is mostly used in the early stage of construction, both for property and infrastructure. As such, steel demand dynamics can be treated as one of the leading indicators of economic growth. We now see a significant slowdown in steel demand: -9% in 1Q22 in China, due to lockdowns, and, more importantly, -1% in the world ex-China in 1Q22 (in April, the dip in ex-China steel output was an even larger -5%).
❗️The most vulnerable to the deceleration in the demand from steel are iron ore producers and, in turn, integrated steelmakers. This is the reason we find iron ore producers unattractive. The continuing decline in steel production also suggests a negative outlook for nickel and copper prices, which are later stages in the consumption cycle
📉However, aluminium prices are supported by rising energy costs, despite a slowdown in the demand
#steel
📝Steel is mostly used in the early stage of construction, both for property and infrastructure. As such, steel demand dynamics can be treated as one of the leading indicators of economic growth. We now see a significant slowdown in steel demand: -9% in 1Q22 in China, due to lockdowns, and, more importantly, -1% in the world ex-China in 1Q22 (in April, the dip in ex-China steel output was an even larger -5%).
❗️The most vulnerable to the deceleration in the demand from steel are iron ore producers and, in turn, integrated steelmakers. This is the reason we find iron ore producers unattractive. The continuing decline in steel production also suggests a negative outlook for nickel and copper prices, which are later stages in the consumption cycle
📉However, aluminium prices are supported by rising energy costs, despite a slowdown in the demand
#steel
📈Australian thermal coal prices almost catch up with hard coking coal prices
⛏Over the past week, Australian FOB Newcastle (6,000 kcal/kg) increased 4% WoW to USD 410/t, stoked by strong demand. Meanwhile, HCC FOB Australia fell 8% WoW to USD 418/t (only 2% above thermal coal), driven by the falling steel production (down 5% YoY in April globally). Furthermore, Australian SSCC now trades at a USD 50/t discount compared with the Australian FOB Newcastle thermal coal export price
❗️Given that SSCC can be partly added to a thermal coal mix for power generation, we view this deviation as temporary. As such, in the short term, we would expect this to provide support for coking coal prices
#coal
⛏Over the past week, Australian FOB Newcastle (6,000 kcal/kg) increased 4% WoW to USD 410/t, stoked by strong demand. Meanwhile, HCC FOB Australia fell 8% WoW to USD 418/t (only 2% above thermal coal), driven by the falling steel production (down 5% YoY in April globally). Furthermore, Australian SSCC now trades at a USD 50/t discount compared with the Australian FOB Newcastle thermal coal export price
❗️Given that SSCC can be partly added to a thermal coal mix for power generation, we view this deviation as temporary. As such, in the short term, we would expect this to provide support for coking coal prices
#coal
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🗞Today China published preliminary import/export statistics for May
📈China’s finished steel net exports rose 71% YoY in May (vs. 41% YoY decline in April). Steel imports were down 33% YoY, while steel exports rose 47% YoY in May. The growth of China’s steel net exports might have been caused by the weak domestic steel demand amid COVID lockdowns and a relatively high steel output level (average CISA mills daily crude steel output was only 2% YoY lower in May)
📌China’s unwrought aluminium and product exports were up 54% YoY in May (vs. 37% YoY increase in April). The growth might have been driven by weak domestic demand in China amid the country’s COVID restrictions. Rising aluminium exports from China might be negative for aluminium prices. We note, however, that China’s domestic consumption might partially recover in the coming months, which could slow the growth of aluminium exports from the country
#statistics #China #steel #aluminium
📈China’s finished steel net exports rose 71% YoY in May (vs. 41% YoY decline in April). Steel imports were down 33% YoY, while steel exports rose 47% YoY in May. The growth of China’s steel net exports might have been caused by the weak domestic steel demand amid COVID lockdowns and a relatively high steel output level (average CISA mills daily crude steel output was only 2% YoY lower in May)
📌China’s unwrought aluminium and product exports were up 54% YoY in May (vs. 37% YoY increase in April). The growth might have been driven by weak domestic demand in China amid the country’s COVID restrictions. Rising aluminium exports from China might be negative for aluminium prices. We note, however, that China’s domestic consumption might partially recover in the coming months, which could slow the growth of aluminium exports from the country
#statistics #China #steel #aluminium