Morning Bites
💎De Beers has reported sales of USD 500mn at its 8th cycle in 2022. This was 2% above the historical average and also 2% higher YoY (vs. +22% YoY at the 7th cycle in 2022). According to De Beers CEO Bruce Cleaver, the results were in line with the company’s expectations. Cycle 8 sales decreased 22% relative to cycle 7, as India’s polishing factories prepared for seasonal closures ahead of the Diwali holidays. We note, however, that the deceleration in the YoY growth rate might imply some softening of diamond demand amid inflationary pressures
🛑Glencore plans to place its Nordenham zinc smelter in Germany on care and maintenance from 1 November. According to the company, the production halt was caused by the energy crisis. Previously, Nyrstar closed its Budel zinc smelter in the Netherlands for the same reason. Given that the two smelters combined account for ~3% of global zinc production, this might be slightly positive for zinc prices
#diamonds #zinc
💎De Beers has reported sales of USD 500mn at its 8th cycle in 2022. This was 2% above the historical average and also 2% higher YoY (vs. +22% YoY at the 7th cycle in 2022). According to De Beers CEO Bruce Cleaver, the results were in line with the company’s expectations. Cycle 8 sales decreased 22% relative to cycle 7, as India’s polishing factories prepared for seasonal closures ahead of the Diwali holidays. We note, however, that the deceleration in the YoY growth rate might imply some softening of diamond demand amid inflationary pressures
🛑Glencore plans to place its Nordenham zinc smelter in Germany on care and maintenance from 1 November. According to the company, the production halt was caused by the energy crisis. Previously, Nyrstar closed its Budel zinc smelter in the Netherlands for the same reason. Given that the two smelters combined account for ~3% of global zinc production, this might be slightly positive for zinc prices
#diamonds #zinc
Morning Bites
📉Gold-backed ETFs reduced their holdings 102t through September (after outflows of 57t in August and 84t in July). This was the largest outflow since March 2021. Moreover, the YTD net flow turned negative (-24t). According to the World Gold Council (WGC), the outflows were triggered by contractionary monetary policy in the US and Europe. The outflows led to a 3% decline in the gold price through September
💍US jewellery and watch sales were up 3.7% YoY in August, according to data from the US Department of Commerce. This was the weakest growth since June 2020. The growth rate decelerated from the revised 5.9% YoY increase in July (growth of 10.2% YoY had previously been reported for July). The softening in jewellery sales was most likely caused by inflationary pressures, and is negative for diamond demand
#ETF #gold #diamonds
📉Gold-backed ETFs reduced their holdings 102t through September (after outflows of 57t in August and 84t in July). This was the largest outflow since March 2021. Moreover, the YTD net flow turned negative (-24t). According to the World Gold Council (WGC), the outflows were triggered by contractionary monetary policy in the US and Europe. The outflows led to a 3% decline in the gold price through September
💍US jewellery and watch sales were up 3.7% YoY in August, according to data from the US Department of Commerce. This was the weakest growth since June 2020. The growth rate decelerated from the revised 5.9% YoY increase in July (growth of 10.2% YoY had previously been reported for July). The softening in jewellery sales was most likely caused by inflationary pressures, and is negative for diamond demand
#ETF #gold #diamonds
Morning Bites (part 1)
🚘New car registrations in France, the UK, Spain, Italy and Germany rose 8% YoY in September from a low base, according to the preliminary data. However, this was 22% below the 2019 level, although that was a deceleration from the 31% in August. In France and Germany, car sales contracted 19% and 8% relative to 2019, respectively, while sales in Italy and Spain dropped 22% and 18%, respectively. UK registrations were down 34% relative to 2019. We note that these 5 countries make up ~70% of total new vehicle registrations in Europe, so EU + UK car sales remained subdued relative to their pre-pandemic levels, but rose YoY from the low base. The full results for September sales are to be published on 18 October
#cars
🚘New car registrations in France, the UK, Spain, Italy and Germany rose 8% YoY in September from a low base, according to the preliminary data. However, this was 22% below the 2019 level, although that was a deceleration from the 31% in August. In France and Germany, car sales contracted 19% and 8% relative to 2019, respectively, while sales in Italy and Spain dropped 22% and 18%, respectively. UK registrations were down 34% relative to 2019. We note that these 5 countries make up ~70% of total new vehicle registrations in Europe, so EU + UK car sales remained subdued relative to their pre-pandemic levels, but rose YoY from the low base. The full results for September sales are to be published on 18 October
#cars
Morning Bites (part 2)
📈Severstal has announced a 2% increase in the domestic HRC price for traders to RUB 46.3k/t (USD 755/t) excluding VAT, Metal Expert reports. According to Metal Expert, the price increase was mainly caused by supply limitations amid planned maintenance works. Given the price increase, the domestic premium might widen to USD 208/t, from USD 193/t at present (other things being equal)
#steel #rusteel
📈Severstal has announced a 2% increase in the domestic HRC price for traders to RUB 46.3k/t (USD 755/t) excluding VAT, Metal Expert reports. According to Metal Expert, the price increase was mainly caused by supply limitations amid planned maintenance works. Given the price increase, the domestic premium might widen to USD 208/t, from USD 193/t at present (other things being equal)
#steel #rusteel
Morning Bites
📉CISA mills daily crude steel output fell 0.6% in late September from the second ten days of the month. The steel production might have been reduced ahead of China’s public holidays, which take place during the first week of October. However, the average daily steel output was up 20.5% YoY in late September (vs. +7.7% YoY in mid-September). Meanwhile, steel inventories contracted 10.1% through the period, which might mean a slight recovery in steel consumption. However, as of 30 September, steel inventories were still up 32.9% YoY. In the short term, we maintain our negative outlook on China’s steel production given the poor performance of the construction sector
#steel
📉CISA mills daily crude steel output fell 0.6% in late September from the second ten days of the month. The steel production might have been reduced ahead of China’s public holidays, which take place during the first week of October. However, the average daily steel output was up 20.5% YoY in late September (vs. +7.7% YoY in mid-September). Meanwhile, steel inventories contracted 10.1% through the period, which might mean a slight recovery in steel consumption. However, as of 30 September, steel inventories were still up 32.9% YoY. In the short term, we maintain our negative outlook on China’s steel production given the poor performance of the construction sector
#steel
Morning Bites
📉Copper output in Chile and Peru fell 7% YoY in August (vs. -8% YoY in July)
🇨🇱Chile’s copper production fell 9% YoY in August (the same as in July). The YoY decline continued for the 13th consecutive month. The steady contraction of the country’s copper production might have been caused by grade depletion and the continuing drought
🇵🇪Peru’s copper output decreased 2% YoY in August, with the decline rate decelerating from 7% YoY in July. According to Reuters, the production decrease was caused by lower activity from Freeport-McMoran’s mines (down 12% YoY) and Southern Copper’s facilities (down 11% YoY)
✏️Chile and Peru, combined, account for ~37% of global mine copper supply
❗️Despite the weak production, we see downside to copper prices amid the subdued demand
#copper
📉Copper output in Chile and Peru fell 7% YoY in August (vs. -8% YoY in July)
🇨🇱Chile’s copper production fell 9% YoY in August (the same as in July). The YoY decline continued for the 13th consecutive month. The steady contraction of the country’s copper production might have been caused by grade depletion and the continuing drought
🇵🇪Peru’s copper output decreased 2% YoY in August, with the decline rate decelerating from 7% YoY in July. According to Reuters, the production decrease was caused by lower activity from Freeport-McMoran’s mines (down 12% YoY) and Southern Copper’s facilities (down 11% YoY)
✏️Chile and Peru, combined, account for ~37% of global mine copper supply
❗️Despite the weak production, we see downside to copper prices amid the subdued demand
#copper
Morning Bites (part 1)
📌China’s new internal combustion engine car sales rose 11% YoY in September, after the 16% YoY increase in August. The positive dynamics were driven by government stimulus measures. Since China’s automotive sector accounts for some 26% and 17% of global autocatalyst Pd and Pt demand, respectively, this might be a positive factor for PGM demand
📌China’s new EV sales jumped 94% YoY in September, after the 104% YoY growth in August. The strong performance of EV sales in China is supportive for the demand for battery metals (nickel, lithium and cobalt), given that China accounts for 49% of the global EV market
#cars #EV #nickel #lithium #cobalt
📌China’s new internal combustion engine car sales rose 11% YoY in September, after the 16% YoY increase in August. The positive dynamics were driven by government stimulus measures. Since China’s automotive sector accounts for some 26% and 17% of global autocatalyst Pd and Pt demand, respectively, this might be a positive factor for PGM demand
📌China’s new EV sales jumped 94% YoY in September, after the 104% YoY growth in August. The strong performance of EV sales in China is supportive for the demand for battery metals (nickel, lithium and cobalt), given that China accounts for 49% of the global EV market
#cars #EV #nickel #lithium #cobalt
Morning Bites (part 2)
📌S&P Global Mobility expects EU car production to fall 40% YoY in 2023 in the worst case scenario, Reuters reports. According to S&P, the production decline might be caused by soaring energy costs and possible power cuts in winter. This could be a negative factor for PGM demand. We note that in September, according to the preliminary data, EU car sales were up 8% YoY but came 22% below the 2019 level
💍According to MasterCard SpendingPulse, preliminary US jewellery sales rose 7% YoY in September, after the 4% YoY increase in August. However, we note risks to jewellery sales and, hence, to diamond demand amid the unfavourable economic conditions. We also note that the preliminary data might differ from the official results released by the US Department of Commerce
#cars #diamonds
📌S&P Global Mobility expects EU car production to fall 40% YoY in 2023 in the worst case scenario, Reuters reports. According to S&P, the production decline might be caused by soaring energy costs and possible power cuts in winter. This could be a negative factor for PGM demand. We note that in September, according to the preliminary data, EU car sales were up 8% YoY but came 22% below the 2019 level
💍According to MasterCard SpendingPulse, preliminary US jewellery sales rose 7% YoY in September, after the 4% YoY increase in August. However, we note risks to jewellery sales and, hence, to diamond demand amid the unfavourable economic conditions. We also note that the preliminary data might differ from the official results released by the US Department of Commerce
#cars #diamonds
Morning Bites
💍LVMH has reported a 16% YoY increase in the organic sales of watches and jewellery in 3Q22, a slight acceleration from the 13% YoY in 2Q22. According to the company, sales in the watches and jewellery segment were supported by the strong performance of Tiffany & Co products in the US. However, in our view, despite the positive results for 3Q22, there are still risks to jewellery demand posed by the unfavourable macroeconomic environment, which might be a limiting factor for diamond demand
#diamonds
💍LVMH has reported a 16% YoY increase in the organic sales of watches and jewellery in 3Q22, a slight acceleration from the 13% YoY in 2Q22. According to the company, sales in the watches and jewellery segment were supported by the strong performance of Tiffany & Co products in the US. However, in our view, despite the positive results for 3Q22, there are still risks to jewellery demand posed by the unfavourable macroeconomic environment, which might be a limiting factor for diamond demand
#diamonds
Morning Bites (part 1)
📉CISA mills daily crude steel output fell 1.1% in early October from the last ten days of September. Steel production might have decreased amid China’s public holidays during the first week of October. However, the average daily steel output was up 12.5% YoY in early October (vs. +20.5% YoY in late September). Meanwhile, steel inventories increased 2.7% through the period, apparently due to weaker demand during the holidays. As of 10 October, steel inventories were up 27.1% YoY. In the short term, we maintain our negative outlook on China’s steel production due to the weak demand from the construction sector
#steel
📉CISA mills daily crude steel output fell 1.1% in early October from the last ten days of September. Steel production might have decreased amid China’s public holidays during the first week of October. However, the average daily steel output was up 12.5% YoY in early October (vs. +20.5% YoY in late September). Meanwhile, steel inventories increased 2.7% through the period, apparently due to weaker demand during the holidays. As of 10 October, steel inventories were up 27.1% YoY. In the short term, we maintain our negative outlook on China’s steel production due to the weak demand from the construction sector
#steel
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Morning Bites (part 2)
🇿🇦South Africa’s PGM mining production fell 13% YoY in August, after the 12% YoY decline in July. Meanwhile, the country’s gold output fell 17% YoY (vs. -19% YoY in July). The continuing decline in South Africa’s mining output was mainly driven by frequent power cuts. Given that South Africa accounts for some 70% and 38% of platinum and palladium supply, respectively, and for 3% of global gold production, the drop in output might be slightly positive for the prices of PGMs and gold
#PGMs #gold
🇿🇦South Africa’s PGM mining production fell 13% YoY in August, after the 12% YoY decline in July. Meanwhile, the country’s gold output fell 17% YoY (vs. -19% YoY in July). The continuing decline in South Africa’s mining output was mainly driven by frequent power cuts. Given that South Africa accounts for some 70% and 38% of platinum and palladium supply, respectively, and for 3% of global gold production, the drop in output might be slightly positive for the prices of PGMs and gold
#PGMs #gold
Week ahead data releases in M&M
As the reporting season begins, we commence a series of posts devoted to the forthcoming data releases. This week, among the major M&M names, Alcoa and Freeport are to release their 3Q22 financial results on Wednesday 19 and Thursday 20 October, respectively. For both companies, our 3Q22 EBITDA forecasts are slightly above the consensus estimates
#reporting_season
As the reporting season begins, we commence a series of posts devoted to the forthcoming data releases. This week, among the major M&M names, Alcoa and Freeport are to release their 3Q22 financial results on Wednesday 19 and Thursday 20 October, respectively. For both companies, our 3Q22 EBITDA forecasts are slightly above the consensus estimates
#reporting_season
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Morning Bites
💎India’s rough diamond net imports fell 7% YoY in September, reversing from the 10% YoY growth in August. Meanwhile, India’s polished diamond net exports increased 14% YoY in September (vs. -9% YoY in August). The decline in rough net imports, coupled with the growth of polished net exports, might imply a stock release in the Indian polishing market as a result of market participants’ negative outlook on future sales. We note that the unfavourable macroeconomic conditions could negatively affect diamond sales in the near term
Meanwhile, India’s lab-grown rough diamond net imports were up 4% YoY in September, with the growth decelerating from 62% YoY in August. The share of lab-grown net rough imports in natural diamond imports declined to 7% in September, from 9% in August
#diamonds
💎India’s rough diamond net imports fell 7% YoY in September, reversing from the 10% YoY growth in August. Meanwhile, India’s polished diamond net exports increased 14% YoY in September (vs. -9% YoY in August). The decline in rough net imports, coupled with the growth of polished net exports, might imply a stock release in the Indian polishing market as a result of market participants’ negative outlook on future sales. We note that the unfavourable macroeconomic conditions could negatively affect diamond sales in the near term
Meanwhile, India’s lab-grown rough diamond net imports were up 4% YoY in September, with the growth decelerating from 62% YoY in August. The share of lab-grown net rough imports in natural diamond imports declined to 7% in September, from 9% in August
#diamonds
Morning Bites
🚘EU + UK passenger car registrations were up 8% YoY in September from the low base (vs. +4% YoY in August). However, this was 19% below the pre-pandemic 2019 level (vs. -31% in August). The actual results were close to the preliminary estimates we published earlier. We keep our negative outlook on EU car sales, given the energy crisis and the economic slowdown. The weak dynamics shown by EU car sales are an adverse factor for PGM demand
#cars
🚘EU + UK passenger car registrations were up 8% YoY in September from the low base (vs. +4% YoY in August). However, this was 19% below the pre-pandemic 2019 level (vs. -31% in August). The actual results were close to the preliminary estimates we published earlier. We keep our negative outlook on EU car sales, given the energy crisis and the economic slowdown. The weak dynamics shown by EU car sales are an adverse factor for PGM demand
#cars
Morning Bites (part 1)
💍China’s jewellery retailers reported a 6-8% YoY decline in LFL (same store) sales of gem-set jewellery in 3Q22. Chow Tai Fook reported a 6% YoY drop in LFL sales of gem-set, platinum and K-gold jewellery in 3Q22. Sales in Mainland China were down 11% YoY, while HK and Macau sales rose 6% YoY. Meanwhile, Luk Fook reported an 8% YoY decline in gem-set jewellery sales in 3Q22. In Mainland China, gem-set jewellery sales dropped 23% YoY, while in HK and Macau they rose 3% YoY. The decline in Mainland Chins’s sales was mostly caused by relatively stringent COVID-19 measures. However, HK sales slightly recovered amid eased travel restrictions in the region. We note that falling jewellery sales in Mainland China is negative for diamond demand
#diamonds
💍China’s jewellery retailers reported a 6-8% YoY decline in LFL (same store) sales of gem-set jewellery in 3Q22. Chow Tai Fook reported a 6% YoY drop in LFL sales of gem-set, platinum and K-gold jewellery in 3Q22. Sales in Mainland China were down 11% YoY, while HK and Macau sales rose 6% YoY. Meanwhile, Luk Fook reported an 8% YoY decline in gem-set jewellery sales in 3Q22. In Mainland China, gem-set jewellery sales dropped 23% YoY, while in HK and Macau they rose 3% YoY. The decline in Mainland Chins’s sales was mostly caused by relatively stringent COVID-19 measures. However, HK sales slightly recovered amid eased travel restrictions in the region. We note that falling jewellery sales in Mainland China is negative for diamond demand
#diamonds