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
Morning Bites (part 1)
💍Signet has reported a 3% YoY increase in same store sales in 1Q22 (February-April). The growth rate decelerated from 24% YoY in 4Q21 (October-January). According to the company, the sales of lower-priced items were negatively affected by rising inflation, which, apparently, yielded a weaker revenue growth rate. Nevertheless, Signet reiterated its revenue guidance for 2022. As we have previously noted, growing inflation poses risks to jewellery sales and, therefore, to diamond demand.
📌South Africa’s PGM mining production contracted 23% YoY in April, while the country’s gold output fell 28% YoY. According to some market sources, the decline was caused by electricity supply constraints that were exacerbated by logistical challenges and floods. This is potentially positive for gold and PGM prices, given South Africa accounts for some 70% and 34% of platinum and palladium supply, respectively, and for 3% of global gold production
#diamonds #PGMs #gold
💍Signet has reported a 3% YoY increase in same store sales in 1Q22 (February-April). The growth rate decelerated from 24% YoY in 4Q21 (October-January). According to the company, the sales of lower-priced items were negatively affected by rising inflation, which, apparently, yielded a weaker revenue growth rate. Nevertheless, Signet reiterated its revenue guidance for 2022. As we have previously noted, growing inflation poses risks to jewellery sales and, therefore, to diamond demand.
📌South Africa’s PGM mining production contracted 23% YoY in April, while the country’s gold output fell 28% YoY. According to some market sources, the decline was caused by electricity supply constraints that were exacerbated by logistical challenges and floods. This is potentially positive for gold and PGM prices, given South Africa accounts for some 70% and 34% of platinum and palladium supply, respectively, and for 3% of global gold production
#diamonds #PGMs #gold
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Morning Bites (part 2)
📌The decline rate of China’s domestic excavator sales decelerated to 45% YoY in May from 61% YoY in April. Meanwhile, the country's total excavator sales (domestic + export) fell 24% YoY in May (vs. 47% YoY drop in April). Decreasing excavator sales indicate weak construction activity in China, which is negative for the demand for industrial metals. However, the relatively more moderate decline rate in May slightly brightens the outlook for China’s construction sector over the coming months
#China #steel #aluminium #copper
📌The decline rate of China’s domestic excavator sales decelerated to 45% YoY in May from 61% YoY in April. Meanwhile, the country's total excavator sales (domestic + export) fell 24% YoY in May (vs. 47% YoY drop in April). Decreasing excavator sales indicate weak construction activity in China, which is negative for the demand for industrial metals. However, the relatively more moderate decline rate in May slightly brightens the outlook for China’s construction sector over the coming months
#China #steel #aluminium #copper
📌China’s nickel pig iron (NPI) output was up 9% YoY in May (vs. the 16% YoY increase in April) -- both from a relatively low base. However, in the short term, the country’s NPI production might be pressured by the weak demand from stainless steel manufacturers. China’s stainless steel output was down 2% YoY in April (vs. the 1% YoY decline in March). Moreover, CRU expects the country’s stainless steel production to fall 7% YoY in June as the weak demand has led to a build-up of stainless steel inventories in China
#China #nickel
#China #nickel