📌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
Morning Bites (part 1)
🚗💨The rate of decline of China’s new internal combustion engine car sales decelerated to 26% YoY in May from 57% YoY in April. China’s falling ICE car sales are negative for the PGM demand as the country’s automotive sector accounts for some 26% and 17% of global autocatalyst Pd and Pt demand, respectively. However, in the short term, China’s car sales might be supported by the extension of car plate quotas and the announced vehicle purchase tax relief
🚙China’s new EV sales increased 105% YoY in May (vs. 45% YoY growth in April). Moreover, China’s New Energy Vehicle (NEV) sales might be further fuelled by the subsidies on NEV purchases announced in May. Growing NEV sales are supportive for the demand for battery metals: nickel, lithium and cobalt. We note that in 2021, China accounted for 49% of global EV sales (passenger cars and light-duty vehicles)
#cars #EV #nickel #lithium #cobalt
🚗💨The rate of decline of China’s new internal combustion engine car sales decelerated to 26% YoY in May from 57% YoY in April. China’s falling ICE car sales are negative for the PGM demand as the country’s automotive sector accounts for some 26% and 17% of global autocatalyst Pd and Pt demand, respectively. However, in the short term, China’s car sales might be supported by the extension of car plate quotas and the announced vehicle purchase tax relief
🚙China’s new EV sales increased 105% YoY in May (vs. 45% YoY growth in April). Moreover, China’s New Energy Vehicle (NEV) sales might be further fuelled by the subsidies on NEV purchases announced in May. Growing NEV sales are supportive for the demand for battery metals: nickel, lithium and cobalt. We note that in 2021, China accounted for 49% of global EV sales (passenger cars and light-duty vehicles)
#cars #EV #nickel #lithium #cobalt
Morning Bites (part 2)
Severstal has announced a July HRC price of RUB 48k/t (USD 833/t) excluding tax – 9% below the current producer price, which itself has declined 6% MoM. The price reduction was caused by weak domestic steel demand and rouble appreciation. We note that the stronger rouble has resulted in a domestic HRC price premium of USD 213/t. If other producers follow, the premium might narrow to USD 130/t; however, if the USD/RUB exchange rate returns to 70, the premium could drop to USD 10/t
#steel #rusteel
Severstal has announced a July HRC price of RUB 48k/t (USD 833/t) excluding tax – 9% below the current producer price, which itself has declined 6% MoM. The price reduction was caused by weak domestic steel demand and rouble appreciation. We note that the stronger rouble has resulted in a domestic HRC price premium of USD 213/t. If other producers follow, the premium might narrow to USD 130/t; however, if the USD/RUB exchange rate returns to 70, the premium could drop to USD 10/t
#steel #rusteel
🗞Today, China published its industrial production data for May
🏢China property sales continued to fall in May, declining 32% YoY (vs. -39% YoY in April). Furthermore, floor space starts dropped 42% YoY in May (vs. -44% YoY in April). Meanwhile, property completions were 31% YoY lower in May from the 14% YoY decrease in April. China’s weakened real estate sector is negative for industrial metals demand. However, a slight recovery might arrive in the short term if China eases COVID restrictions and implements its previously announced economic support measures
🏭China’s thermal power generation dropped 11% YoY in May (vs. 12% YoY decline in April). Meanwhile, total electricity generation was down 3% YoY in May (vs. 4% drop in April) due to COVID-related factory shutdowns. This is negative for China’s coal demand and prices in the short term; however, power generation could well recover in the coming months if COVID restrictions are eased
#statistics #China #steel #aluminium #copper #coal
🏢China property sales continued to fall in May, declining 32% YoY (vs. -39% YoY in April). Furthermore, floor space starts dropped 42% YoY in May (vs. -44% YoY in April). Meanwhile, property completions were 31% YoY lower in May from the 14% YoY decrease in April. China’s weakened real estate sector is negative for industrial metals demand. However, a slight recovery might arrive in the short term if China eases COVID restrictions and implements its previously announced economic support measures
🏭China’s thermal power generation dropped 11% YoY in May (vs. 12% YoY decline in April). Meanwhile, total electricity generation was down 3% YoY in May (vs. 4% drop in April) due to COVID-related factory shutdowns. This is negative for China’s coal demand and prices in the short term; however, power generation could well recover in the coming months if COVID restrictions are eased
#statistics #China #steel #aluminium #copper #coal
Morning Bites
🌊Sibanye-Stillwater’s US PGM operations were affected by a heavy flood. According to the company, the flood was triggered by snow melting and intense rains, which destroyed the road to the Stillwater mine. The company is now assessing the impact on its facilities. Possible production disruptions might slightly support PGM prices, as Sibanye-Stillwater’s US PGM operations account for some 6% and 2% of global palladium and platinum supply, respectively. However, given there is no damage to underground mine facilities, we do not expect any medium-term effect from this
$SBSW #PGMs
🌊Sibanye-Stillwater’s US PGM operations were affected by a heavy flood. According to the company, the flood was triggered by snow melting and intense rains, which destroyed the road to the Stillwater mine. The company is now assessing the impact on its facilities. Possible production disruptions might slightly support PGM prices, as Sibanye-Stillwater’s US PGM operations account for some 6% and 2% of global palladium and platinum supply, respectively. However, given there is no damage to underground mine facilities, we do not expect any medium-term effect from this
$SBSW #PGMs
Morning Bites
💎India’s rough diamond net imports increased 17% YoY in May, reversing from the 22% YoY decline in April. At the same time, India’s polished diamond net exports were up 5% YoY in May (vs. 3% YoY decline in April). The rebound of India’s rough net imports might mean a replenishment of the rough diamond supply, previously tightened by sanctions on Alrosa (30% of the global rough diamond market). Meanwhile, India’s lab-grown rough diamond net imports rose 20% YoY in May (vs. 24% YoY growth in April). The share of lab-grown net rough imports in natural diamond imports was 8% in May (as in April)
🏦China’s aggregate financing rose 45% YoY in May from the low base, outperforming market expectations by 39%. Traditional bank loans were up 26% YoY, outperforming the consensus forecast by 45%. However, according to Bloomberg, China’s credit growth was mostly driven by government bond sales and short-term consumer lending, which is unlikely to spur economic recovery
#diamonds #China #global
💎India’s rough diamond net imports increased 17% YoY in May, reversing from the 22% YoY decline in April. At the same time, India’s polished diamond net exports were up 5% YoY in May (vs. 3% YoY decline in April). The rebound of India’s rough net imports might mean a replenishment of the rough diamond supply, previously tightened by sanctions on Alrosa (30% of the global rough diamond market). Meanwhile, India’s lab-grown rough diamond net imports rose 20% YoY in May (vs. 24% YoY growth in April). The share of lab-grown net rough imports in natural diamond imports was 8% in May (as in April)
🏦China’s aggregate financing rose 45% YoY in May from the low base, outperforming market expectations by 39%. Traditional bank loans were up 26% YoY, outperforming the consensus forecast by 45%. However, according to Bloomberg, China’s credit growth was mostly driven by government bond sales and short-term consumer lending, which is unlikely to spur economic recovery
#diamonds #China #global
Morning Bites (part 1)
📉CISA mills’ daily crude steel output declined 1.3% in early June from the last ten days of May. This represented a 2.0% YoY decline (vs. the 1.5% YoY increase in late May). The steel output reduction might have been caused by weak domestic demand, as suggested by the 3.4% increase in steel inventories from 31 May to 10 June (up 30.3% YoY)
🚘EU + UK passenger car registrations were down 13% YoY in May (vs. the 20% YoY drop in April). The actual rate of decline was in line with the preliminary estimate we reported earlier. As before, the decrease stemmed from the automotive parts shortage and growing inflation, which erodes consumer purchasing power. Falling car sales are negative for PGM demand
#China #steel #cars
📉CISA mills’ daily crude steel output declined 1.3% in early June from the last ten days of May. This represented a 2.0% YoY decline (vs. the 1.5% YoY increase in late May). The steel output reduction might have been caused by weak domestic demand, as suggested by the 3.4% increase in steel inventories from 31 May to 10 June (up 30.3% YoY)
🚘EU + UK passenger car registrations were down 13% YoY in May (vs. the 20% YoY drop in April). The actual rate of decline was in line with the preliminary estimate we reported earlier. As before, the decrease stemmed from the automotive parts shortage and growing inflation, which erodes consumer purchasing power. Falling car sales are negative for PGM demand
#China #steel #cars
Morning Bites (part 2)
💍According to MasterCard SpendingPulse, preliminary US jewellery sales increased 22% YoY in May (vs. the 18% YoY growth in April). According to MasterCard, jewellery sales were supported by weddings and other social events postponed from the pandemic period. We note, however, that the MasterCard data must be treated carefully given that in April it showed a 33% YoY growth, while the US Department of Commerce reported a much more modest increase of 18% YoY. We also note that the current economic situation in the US is not conducive to jewellery sales growth
#diamonds
💍According to MasterCard SpendingPulse, preliminary US jewellery sales increased 22% YoY in May (vs. the 18% YoY growth in April). According to MasterCard, jewellery sales were supported by weddings and other social events postponed from the pandemic period. We note, however, that the MasterCard data must be treated carefully given that in April it showed a 33% YoY growth, while the US Department of Commerce reported a much more modest increase of 18% YoY. We also note that the current economic situation in the US is not conducive to jewellery sales growth
#diamonds
Morning Bites
• Australia has invoked emergency powers to block coal exports, according to Reuters. The country’s authorities have given themselves the power to block coal exports if it is needed to mitigate the power crisis. Moreover, the government of New South Wales invoked emergency powers last week to oblige miners to redirect export coal to local power generators. Given Australia accounts for 21% of global thermal coal exports, this might further support the already elevated thermal coal prices (thermal coal FOB Newcastle +114% YTD)
• Russia’s Ministry of Energy sees the country’s coal production falling 17% YoY in 2022 in the worst case scenario. The Ministry also sees that exports might decline 30% YoY in 2022 in the worst case scenario. We note that the transportation of coal in export directions fell 8% YoY in 5mo22, while coal production was roughly flat YoY in 4mo22
#coal
• Australia has invoked emergency powers to block coal exports, according to Reuters. The country’s authorities have given themselves the power to block coal exports if it is needed to mitigate the power crisis. Moreover, the government of New South Wales invoked emergency powers last week to oblige miners to redirect export coal to local power generators. Given Australia accounts for 21% of global thermal coal exports, this might further support the already elevated thermal coal prices (thermal coal FOB Newcastle +114% YTD)
• Russia’s Ministry of Energy sees the country’s coal production falling 17% YoY in 2022 in the worst case scenario. The Ministry also sees that exports might decline 30% YoY in 2022 in the worst case scenario. We note that the transportation of coal in export directions fell 8% YoY in 5mo22, while coal production was roughly flat YoY in 4mo22
#coal
⛏Are Russian coal producers competitive enough?
📈The cash cost of Russian thermal coal producers rose to USD 63/t amid rouble appreciation and rising raw material prices, now exceeding the country’s major rivals on the seaborne market. Though in the mid-cycle the current exchange rate might make them loss-making, producers remain profitable as prices remain elevated amid a continuing energy shortage
📉The cash costs of coking coal producers reached USD 139/t, exceeding the seaborne export costs of other producing countries. And while the coking coal price has significant support from thermal coal consumers, we see downside risks to coking coal prices in the short term amid declining steel production worldwide (-5% YoY in April)
❗️However, the coal industry was underinvested in recent years, resulting in capacity expansion requiring more time and investments, which, in turn, supports prices
#coal
📈The cash cost of Russian thermal coal producers rose to USD 63/t amid rouble appreciation and rising raw material prices, now exceeding the country’s major rivals on the seaborne market. Though in the mid-cycle the current exchange rate might make them loss-making, producers remain profitable as prices remain elevated amid a continuing energy shortage
📉The cash costs of coking coal producers reached USD 139/t, exceeding the seaborne export costs of other producing countries. And while the coking coal price has significant support from thermal coal consumers, we see downside risks to coking coal prices in the short term amid declining steel production worldwide (-5% YoY in April)
❗️However, the coal industry was underinvested in recent years, resulting in capacity expansion requiring more time and investments, which, in turn, supports prices
#coal
❓Is rouble appreciation a problem for steelmakers in Russia?
📝The cash cost of steel production has reached USD 361/t, and USD 704/t for integrated and non-integrated steel producers. This is still 15-30% lower than the cash costs of global producers. Thus, despite the need of Russian steelmakers to provide discounts in order to redirect exports, producers remain competitive on the global market
📉However, given HRC FOB Black Sea has declined 8% YTD, Russia’s non-integrated steel exporters are close to breakeven. This means that only integrated producers now have a positive export margin.
📈Meanwhile, domestic prices exceed the cash cost of non-integrated steel producers by more than 25% now. However, we note downside risks to prices on the back of the weak domestic steel demand and rouble appreciation
#steel
📝The cash cost of steel production has reached USD 361/t, and USD 704/t for integrated and non-integrated steel producers. This is still 15-30% lower than the cash costs of global producers. Thus, despite the need of Russian steelmakers to provide discounts in order to redirect exports, producers remain competitive on the global market
📉However, given HRC FOB Black Sea has declined 8% YTD, Russia’s non-integrated steel exporters are close to breakeven. This means that only integrated producers now have a positive export margin.
📈Meanwhile, domestic prices exceed the cash cost of non-integrated steel producers by more than 25% now. However, we note downside risks to prices on the back of the weak domestic steel demand and rouble appreciation
#steel
❓And what about the cash cost of aluminium producers?
📈The main cash cost driver for aluminium production is the cost of energy. Given the major Russian aluminium producing company, Rusal, consumes hydro energy at fixed contract prices, it is more competitive than coal-based producers. Rusal’s cash cost of USD 2,387/t is more than 40% lower than the cash cost of companies operating using thermal coal power generation. Moreover, En+’s fully-integrated cash cost is lower, at USD 2,095/t
📉However, on the back of rouble appreciation, Rusal’s cash cost exceeds by more than 25% cash cost of global producers, which operate using their own sources of renewable energy or at fixed prices. Meanwhile, Rusal remains profitable despite the falling aluminium price (down 11% YTD)
📈The main cash cost driver for aluminium production is the cost of energy. Given the major Russian aluminium producing company, Rusal, consumes hydro energy at fixed contract prices, it is more competitive than coal-based producers. Rusal’s cash cost of USD 2,387/t is more than 40% lower than the cash cost of companies operating using thermal coal power generation. Moreover, En+’s fully-integrated cash cost is lower, at USD 2,095/t
📉However, on the back of rouble appreciation, Rusal’s cash cost exceeds by more than 25% cash cost of global producers, which operate using their own sources of renewable energy or at fixed prices. Meanwhile, Rusal remains profitable despite the falling aluminium price (down 11% YTD)
Morning Bites
Chile's Codelco has decided to stop its Ventanas copper smelter after an environmental incident. Previously, the company halted its Ventanas smelter and refinery to carry out maintenance after the authorities declared an environmental emergency in the region. Moreover, Codelco unions announced that they are ready to strike after the smelter shuttered. The Las Ventanas smelter accounts for some 0.5% of global primary copper supply. However, some sources have stated that the operations of the associated copper refinery are to remain unaffected (1.6% of refined supply). Given the copper refinery will continue to operate, we do not expect a significant impact on global supply or copper prices
#copper
Chile's Codelco has decided to stop its Ventanas copper smelter after an environmental incident. Previously, the company halted its Ventanas smelter and refinery to carry out maintenance after the authorities declared an environmental emergency in the region. Moreover, Codelco unions announced that they are ready to strike after the smelter shuttered. The Las Ventanas smelter accounts for some 0.5% of global primary copper supply. However, some sources have stated that the operations of the associated copper refinery are to remain unaffected (1.6% of refined supply). Given the copper refinery will continue to operate, we do not expect a significant impact on global supply or copper prices
#copper
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