☢️ Kazatomprom – 6% FY21 dividends yield in line with the policy
 
📌 Kazatomprom BoD recommended to pay KZT 876.74/share (USD c.1.94/sh) as FY21 dividends. This implies c.75% payout of Kazatomprom’s FCF for dividends, which stands in line with the company’s dividends policy

❗️On our numbers, FY21 dividend yield equals 6%

⛏Mechel – why this coalminer is still interesting in 2022
 
📝 Mechel is an integrated long steel producer with large-scale coal operations. The company produces c.5.6mnt of coking coal, selling 3.5mnt externally

💵 The company historically dragged a heavy debt burden – ND/EBITDA stood at 7.8x in YE20. However, this had declined to 2.3x by YE21. If spot prices persist, we calculate it would decline to 0.6x by YE22

💰 However, the abnormal coal prices are supportive for the company. On our numbers, Mechel offers a FCF yield of c.320% on ords. at spot prices. Robust FCF generation paves the way for strong equity expansion in the coming quarters. The prefs also look interesting, offering a 60% 1-y fwd div. yield at spot prices 

🚢 In the current tight environment, with Russian export volumes redirecting to Asia, Mechel continues to operate normally as sanctions have had a limited impact on its business so far. Moreover, its major exporting asset – Yakutugol – is located to the RHS of the railway bottleneck

⛏ Raspadskaya – major Russian coking coal producer 
  
📝 Raspadskaya is a pure semi-soft coking coal producer with a cash cost of USD с.70/t FOB (right side of cash cost curve), low financial leverage, and an established dividend policy. Raspadskaya externally sells 15.5mnt of coal concentrate per year 
 
💰The company offers an attractive 74% 1y-fwd FCF yield at spot, trading at 0.6x EV/EBITDA. However, as Evraz, a London entity, holds a >90% stake in RASP, it would make little sense to pay dividends in the short-term, as the holding company cannot receive them 
 
🚢In light of the EU ban on Russian coal exports, we note that Raspadskaya has low exposure to EU markets: shipments to the EU accounted for only 10% in 2021. However, Raspadksaya’s assets are located to the left of railway bottleneck, which might cause difficulties with the redirection of its volumes to Eastern countries

🗞Today China published preliminary import/export statistics for March. See preliminary data in the table above

#statistics #China

🗞China’s iron ore imports fell 15% YoY in March, according to China Customs

📝In 2mo22, China’s iron ore imports were roughly flat YoY (vs. the 18% YoY decline in December)

• The decline might have been caused by logistical issues amid the COVID-19 outbreak, the reduction of steel production at the beginning of the month, and the strong domestic iron ore output in recent months

• We note that iron ore imports might be supported by the easing of the COVID-19 situation in the country in the coming months

#iron_ore #statistics #China

⛏Labour unions plan to strike at Sibanye-Stillwater's platinum operations in South Africa

· The strikes would take place at the Rustenburg and the Marikana operations, which combined account for 15% of global platinum supply and 6% of palladium supply

❗️Potentially supportive for PGM prices

$SBSW #PGMs

🗞Chinese finished steel net exports declined 35% YoY in March, according to China Customs

📝In 2mo22, Chinese finished steel net exports declined 22% YoY to 6mnt in 2mo22

• While steel imports fell 54% YoY in March, steel exports were down 40%

❗️Given there is no incentive for producers to boost exports, we do not expect a significant recovery in net exports in the coming months

#steel #statistics #China

📈How to play coal price upside risk

⛏Among global coal producers, we want to draw attention to four miners:Peabody (BTU US), Warrior Met Coal (HCC US), Mongolian Mining Corp. (MMC; 975 HK) and Thungela (TGA LN). BTU mines coking (70% of revenue) and thermal coal (30%) in Australia and the US. HCC produces coking coal in the US and sells in the US, the EU and elsewhere, while MMC mines coking coal in Mongolia and exports mostly to China. TGA is a South African producer, running high quality thermal coalmines

💰At spot prices, TGA and BTU are the most interesting stocks. TGA trades at -0.4x 1-y fwd EV/EBITDA and generates a 140% FCF yield, while BTU trades at 0.7x EV/EBITDA, and a 62% FCF yield. MMC also looks attractive (1.2x EV/EBITDA and 40% FCF yield); however, we note downside risk to the company’s sales amid the COVID-19 outbreak in China. While HCC trades below its peers at roughly 0x EV/EBITDA and offers a 100% FCF yield, there is production and sales risk associated with the continuing strike

#coal

🚘What is the effect of the EV roll-out on nickel demand?
 
📌There are 3 major nickel-intensive industries – stainless steel, alloys, and batteries for EVs. High-grade nickel is an essential material for the production of batteries of almost all types

🔋Since 2016, the share of batteries in nickel consumption has been exponentially increasing. However, it is still a modest share of global nickel demand

🚗Recent car sales data show that EV adoption is continuing at a breakneck pace. Globally, EV sales increased at a 51% CAGR in 2018-2021

📈As we expect this trend to persist, we see demand from EVs for nickel at c.1.2mnt/a (or 30% of global demand) by 2025F, growing at a 42% CAGR in 2021-2025F. Of this 42%, 32% is attributable to EVs sales growth and 10% - to NMC 811 adoption

#nickel #EVs

📌India’s gold imports were down 89% YoY in March from a high base

• This was also 74% below the historical average

• According to Reuters, the decline might have been caused by the increase in secondary gold supply in the country amid growing inflation

❗️Potentially negative for gold prices since India accounts for roughly 25% of global gold jewellery demand

#gold

💎De Beers has reported sales of USD 565mn at its 3rd cycle in 2022

• This was 4% above the historical average and 26% YoY higher

• According to Bruce Cleaver, the CEO of De Beers, the demand for rough diamonds remained strong on the back of continued YoY growth of consumer demand for jewellery

❗️However, we note downside risks to downstream diamond demand in the coming months due to weakening consumer sentiment, a possible economic slowdown and COVID-19 lockdowns in China

$AAL #diamonds

📈Who are the major beneficiaries of higher nickel prices?
 
• As we wrote earlier, nickel demand has good prospects in the medium term amid the rapid EV roll-out

💰Nornilckel will in our view benefit from the strengthening price for nickel, which accounts for more than 35% of the company’s revenue at spot. However, we note that weak car sales create risks for Nornickel's PGMs sales. On our numbers, Nornickel looks interesting at spot, trading at 3.4x 1-y fwd EV/EBITDA and offering an 18% FCF yield

💰Among global nickel producers, we see the most attractive being the Australian company IGO. Nickel accounts for 80% of its revenues at spot, with the potential to increase to 85% after the acquisition of WSA. IGO has a share of a lithium mine, which is to add up to 100% of FY21 (ending June) attr. EBITDA by FY23. On spot prices IGO trades 6x 1-y fwd EV/EBITDA, offering an 11% FCF yield

#nickel #lithium $IGO $GMKN

📌 The World Steel Association (WSA) has revised down its 2022 steel demand growth forecast to 0.4% YoY (1,840mnt) 

• Previously, the WSA saw a 2.2% YoY increase in global steel demand in 2022

• The WSA expects China’s steel consumption to be flat YoY and ex-China steel demand to rise 0.7% YoY in 2022

• According to the WSA, global steel demand is to be negatively impacted by geopolitics, surging inflation, tightening of US monetary policy and weak China’s construction activity

• At the same time, the WSA expects world steel demand to rise 2.2% YoY in 2023

 #steel

📌South Africa’s PGM mining production declined 17% YoY in February, while the country’s gold output was down 9% YoY in February

• The drop in gold output might have been caused by strikes at some Sibanye-Stillwater gold mines (0.7% of global gold supply)

• Meanwhile, PGM output fell, partially due to the rebuild of one of the furnaces at Impala Platinum’s Rustenburg production facility

📈Potentially supportive for gold and PGM prices

❗️We also note short-term risks to South Africa’s PGM output due to possible strikes at some of Sibanye-Stillwater's PGM operations (15% of global platinum supply and 6% of palladium supply)

📝 South Africa accounts for roughly 70% and 34% of platinum and palladium supply, respectively, and for 3% of global gold production

#PGMs #gold

📌CISA mills’ daily crude steel output increased 3% in early April, compared with the last ten days of March 

• However, this was 2% YoY lower

❗️Even though at the end of March the COVID-19 lockdown in Tangshan (14% of China’s steel output) was lifted, we note risks of further restrictions

#steel #China

🗞Today, China published it's industrial production data for March. See the table above

#statistics #China