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
Morning Bites (part 2)
🔗World Steel Association (WSA) expects a 2% YoY decline in global steel demand in 2022, followed by a 1% YoY recovery in 2023. According to WSA, China’s steel demand might drop 4% YoY in 2022 due to COVID restrictions and the slump in the property market. In 2023, WSA expects China’s steel demand to be flat YoY, supported by the mild recovery in the real estate market and new infrastructure projects
Meanwhile, WSA sees YoY declines of 3.5% and 1.3% in EU steel demand in 2022 and 2023, respectively. According to WSA, EU steel demand is to be pressured by energy shortages and rising inflation
US steel demand, however, might grow 2.1% YoY and 1.6% YoY in 2022 and 2023, respectively, according to WSA estimates. The main factors limiting US demand might be Fed rate hikes and the strong dollar
#steel
🔗World Steel Association (WSA) expects a 2% YoY decline in global steel demand in 2022, followed by a 1% YoY recovery in 2023. According to WSA, China’s steel demand might drop 4% YoY in 2022 due to COVID restrictions and the slump in the property market. In 2023, WSA expects China’s steel demand to be flat YoY, supported by the mild recovery in the real estate market and new infrastructure projects
Meanwhile, WSA sees YoY declines of 3.5% and 1.3% in EU steel demand in 2022 and 2023, respectively. According to WSA, EU steel demand is to be pressured by energy shortages and rising inflation
US steel demand, however, might grow 2.1% YoY and 1.6% YoY in 2022 and 2023, respectively, according to WSA estimates. The main factors limiting US demand might be Fed rate hikes and the strong dollar
#steel
📉Alcoa has reported weak 3Q22 results
💰3Q22 revenue fell 8% YoY (2% below our forecast) due to 14% and 8% YoY decrease in aluminium and alumina shipment volumes, respectively. Adjusted EBITDA declined 71% YoY, which was 31% below our forecast and 26% less than the consensus estimate. The decrease in EBITDA was driven by increased energy costs and weak revenues. Since the actual pre-EBITDA costs were only 2% above our expectations and the revenues fell only 2% below the forecast, the significant deviation of EBITDA was mainly caused by the low margin of only 7%
⛏Despite the production cuts in Europe, the company reiterated its 2022 aluminium shipments guidance of 2.5-2.6mnt. However, 2022 alumina shipments guidance was reduced 4% to 13.1-13.3mnt. At the same time, the company lowered its bauxite shipments guidance 2% to 43-44mnt in 2022
❗️We note, that at current commodity prices and FX financials might further deteriorate in 4Q22 with EBITDA downside of 50% QoQ
$AA #aluminium
💰3Q22 revenue fell 8% YoY (2% below our forecast) due to 14% and 8% YoY decrease in aluminium and alumina shipment volumes, respectively. Adjusted EBITDA declined 71% YoY, which was 31% below our forecast and 26% less than the consensus estimate. The decrease in EBITDA was driven by increased energy costs and weak revenues. Since the actual pre-EBITDA costs were only 2% above our expectations and the revenues fell only 2% below the forecast, the significant deviation of EBITDA was mainly caused by the low margin of only 7%
⛏Despite the production cuts in Europe, the company reiterated its 2022 aluminium shipments guidance of 2.5-2.6mnt. However, 2022 alumina shipments guidance was reduced 4% to 13.1-13.3mnt. At the same time, the company lowered its bauxite shipments guidance 2% to 43-44mnt in 2022
❗️We note, that at current commodity prices and FX financials might further deteriorate in 4Q22 with EBITDA downside of 50% QoQ
$AA #aluminium
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🌅Freeport reports modest 3Q22 results
📉3Q22 revenue fell 18% YoY, 8% below our estimates due to lower copper sales volumes and realised prices. Adjusted EBITDA almost halved YoY, lagging 7% and 10% behind consensus and our estimates, respectively
💵Copper mine unit costs of USD 1.75/lb in 3Q22 represented a >40% YoY increase, beating the quarterly guidance by 5%, driven up by higher energy and consumables prices. The company expects 4Q22F costs to drop 4% QoQ to USD 1.68/lb, with the annual cost averaging USD 1.55/lb
⛏The company marginally reduced its FY22 copper sales guidance to ~4.2mnlb (or ~1.9mnt), lowered its Moly sales guidance 5% to 76kt, and increased its gold sales forecast ~5% or 1.8mnoz
❗️On our numbers, at spot FX and commodities prices, Freeport’s 4Q22 EBITDA might further decline QoQ by a high-single-digit percentage
$FCX #copper
📉3Q22 revenue fell 18% YoY, 8% below our estimates due to lower copper sales volumes and realised prices. Adjusted EBITDA almost halved YoY, lagging 7% and 10% behind consensus and our estimates, respectively
💵Copper mine unit costs of USD 1.75/lb in 3Q22 represented a >40% YoY increase, beating the quarterly guidance by 5%, driven up by higher energy and consumables prices. The company expects 4Q22F costs to drop 4% QoQ to USD 1.68/lb, with the annual cost averaging USD 1.55/lb
⛏The company marginally reduced its FY22 copper sales guidance to ~4.2mnlb (or ~1.9mnt), lowered its Moly sales guidance 5% to 76kt, and increased its gold sales forecast ~5% or 1.8mnoz
❗️On our numbers, at spot FX and commodities prices, Freeport’s 4Q22 EBITDA might further decline QoQ by a high-single-digit percentage
$FCX #copper
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Morning Bites
🏗China’s domestic excavator sales fell 25% YoY in September (vs. -26% YoY in August). Meanwhile, total excavator sales (domestic + export) increased 5% YoY in September, after being roughly flat YoY in August. As a leading indicator of construction activity, weak domestic excavator sales imply that China’s property sector might remain weak in the short term. This could be a negative factor for China’s demand for industrial metals
#global
🏗China’s domestic excavator sales fell 25% YoY in September (vs. -26% YoY in August). Meanwhile, total excavator sales (domestic + export) increased 5% YoY in September, after being roughly flat YoY in August. As a leading indicator of construction activity, weak domestic excavator sales imply that China’s property sector might remain weak in the short term. This could be a negative factor for China’s demand for industrial metals
#global
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🗞Today China has published its industrial production data for September (see the table above)
#statistics #China
https://metals-wire.com:3000/news-reports
#statistics #China
https://metals-wire.com:3000/news-reports
🗞Today China published preliminary import/export statistics for September. See preliminary data in the table above
#statistics #China
https://metals-wire.com:3000/news-reports
#statistics #China
https://metals-wire.com:3000/news-reports
Morning Bites (part 1)
🔗China’s crude steel output rose 18% YoY in September, accelerating from the 1% YoY increase in August. According to industry sources, Chinese steelmakers ramped up production due to improved steel demand. In September, apparent steel consumption rose 18% YoY, reversing from the 1% YoY decline in August
🏢China's property sales fell 16% YoY in September (vs. -23% YoY in August). Floor space starts dropped 44% YoY in September, after the 46% YoY decline in August. At the same time, personal mortgage loans were down 18% YoY in September (the same as in August). Meanwhile, property completions declined 6% YoY in September (vs. -3% YoY in August). We note that the peak of China's property crisis appears to be over, which might imply a potential recovery in the near term
#steel #aluminium #copper
https://metals-wire.com:3000/sector/Steel
🔗China’s crude steel output rose 18% YoY in September, accelerating from the 1% YoY increase in August. According to industry sources, Chinese steelmakers ramped up production due to improved steel demand. In September, apparent steel consumption rose 18% YoY, reversing from the 1% YoY decline in August
🏢China's property sales fell 16% YoY in September (vs. -23% YoY in August). Floor space starts dropped 44% YoY in September, after the 46% YoY decline in August. At the same time, personal mortgage loans were down 18% YoY in September (the same as in August). Meanwhile, property completions declined 6% YoY in September (vs. -3% YoY in August). We note that the peak of China's property crisis appears to be over, which might imply a potential recovery in the near term
#steel #aluminium #copper
https://metals-wire.com:3000/sector/Steel
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Morning Bites (part 2)
🔗China’s finished steel net exports were up 12% YoY in September, with the growth rate slowing from 32% YoY in August. Given that steel production was up 18% YoY, the deceleration in net exports might have been caused by improving domestic steel demand
📈China’s unwrought copper imports rose 26% YoY in September (the same as in August). Meanwhile, the country’s copper concentrate imports were up 8% YoY in September (vs. +20% YoY in August). According to Reuters, the growth of copper imports was driven by the anticipated increase in domestic copper demand due to the new infrastructure projects aimed at supporting China’s economic recovery
#steel #copper
https://metals-wire.com:3000/news-reports
🔗China’s finished steel net exports were up 12% YoY in September, with the growth rate slowing from 32% YoY in August. Given that steel production was up 18% YoY, the deceleration in net exports might have been caused by improving domestic steel demand
📈China’s unwrought copper imports rose 26% YoY in September (the same as in August). Meanwhile, the country’s copper concentrate imports were up 8% YoY in September (vs. +20% YoY in August). According to Reuters, the growth of copper imports was driven by the anticipated increase in domestic copper demand due to the new infrastructure projects aimed at supporting China’s economic recovery
#steel #copper
https://metals-wire.com:3000/news-reports
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Morning Bites (part 3)
📈China’s unwrought aluminium and product exports rose 1% YoY in September (vs. +10% YoY in August). Given that China’s aluminium output increased 9% YoY in September, the deceleration of exports might have been caused by the weak global demand coupled with the recovery of China’s domestic consumption
🔗Severstal has announced a 2% decrease in Russian domestic rebar prices for November to RUB 37k/t (USD 605/t) (excl. VAT). According to Metal Expert, the decline was caused by falling warehouse prices and a relatively high level of rebar inventories. Given the decline in prices, the rebar-billet premium might decrease to USD 69/t from the current level of USD 82/t, other things being equal (vs. the historical average of a USD 20/t premium). We note that currently the billet premium to slab export prices is USD 25/t (vs. the historical average of USD 0/t)
#aluminium #rusteel
https://metals-wire.com:3000/news-reports
📈China’s unwrought aluminium and product exports rose 1% YoY in September (vs. +10% YoY in August). Given that China’s aluminium output increased 9% YoY in September, the deceleration of exports might have been caused by the weak global demand coupled with the recovery of China’s domestic consumption
🔗Severstal has announced a 2% decrease in Russian domestic rebar prices for November to RUB 37k/t (USD 605/t) (excl. VAT). According to Metal Expert, the decline was caused by falling warehouse prices and a relatively high level of rebar inventories. Given the decline in prices, the rebar-billet premium might decrease to USD 69/t from the current level of USD 82/t, other things being equal (vs. the historical average of a USD 20/t premium). We note that currently the billet premium to slab export prices is USD 25/t (vs. the historical average of USD 0/t)
#aluminium #rusteel
https://metals-wire.com:3000/news-reports
Week ahead data releases in M&M
This week, we expect mostly positive surprises from global M&M names. However, on our numbers, consensus overestimates Vale profitability
#reporting_season
https://metals-wire.com:3000/events
This week, we expect mostly positive surprises from global M&M names. However, on our numbers, consensus overestimates Vale profitability
#reporting_season
https://metals-wire.com:3000/events
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Morning Bites
💍China’s jewellery and watch retail sales were up 2% YoY in September, following the 7% YoY increase in August. The deceleration in the growth rate might have been caused by the relatively stringent COVID restrictions that are still in place in China. Furthermore, the difficult global economic conditions could limit downstream diamond demand in the near term
#diamonds
https://metals-wire.com:3000/news-reports
💍China’s jewellery and watch retail sales were up 2% YoY in September, following the 7% YoY increase in August. The deceleration in the growth rate might have been caused by the relatively stringent COVID restrictions that are still in place in China. Furthermore, the difficult global economic conditions could limit downstream diamond demand in the near term
#diamonds
https://metals-wire.com:3000/news-reports
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