Morning Bites (Part 2)
⛏Construction work has resumed at the Simandou mine, the world’s biggest untapped reserve of iron ore. The project, which includes a railway and a port, had been suspended for almost a year. Simandou is jointly owned by Rio Tinto Group and Winning Consortium. The mine accounts for ~1.2% of the world's crude ore reserves, grading 40% iron metal, with potential production of 120mntpa (~4.6% of global iron ore output). The project was originally scheduled for launch in March 2025; however, the suspension of construction might lead to the launch date being pushed back
#iron_ore
https://metals-wire.com:3000/sector/Iron_ore
⛏Construction work has resumed at the Simandou mine, the world’s biggest untapped reserve of iron ore. The project, which includes a railway and a port, had been suspended for almost a year. Simandou is jointly owned by Rio Tinto Group and Winning Consortium. The mine accounts for ~1.2% of the world's crude ore reserves, grading 40% iron metal, with potential production of 120mntpa (~4.6% of global iron ore output). The project was originally scheduled for launch in March 2025; however, the suspension of construction might lead to the launch date being pushed back
#iron_ore
https://metals-wire.com:3000/sector/Iron_ore
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Morning Bites (Part 1)
🚘EU + UK passenger car registrations rose 13% YoY in February, slightly accelerating from the 12% YoY growth in January. The results were in line with our estimates. Nevertheless, the figure was still 21% below the pre-COVID 2019 level (-25% in January), with most of the annual gain due to the low base effect. Therefore, we reiterate our view that European car sales are likely to remain stressed, at least in the short term, amid the unfavourable macroeconomic conditions globally. Overall, this might keep weighing on the consumption of PGMs: the region accounted for ~20% and 32% of the world autocatalyst Pd and Pt demand, respectively, in 2022E
#cars
https://metals-wire.com:3000/sector/PGM
🚘EU + UK passenger car registrations rose 13% YoY in February, slightly accelerating from the 12% YoY growth in January. The results were in line with our estimates. Nevertheless, the figure was still 21% below the pre-COVID 2019 level (-25% in January), with most of the annual gain due to the low base effect. Therefore, we reiterate our view that European car sales are likely to remain stressed, at least in the short term, amid the unfavourable macroeconomic conditions globally. Overall, this might keep weighing on the consumption of PGMs: the region accounted for ~20% and 32% of the world autocatalyst Pd and Pt demand, respectively, in 2022E
#cars
https://metals-wire.com:3000/sector/PGM
Morning Bites (Part 2)
🚘US light vehicle sales were up 5% YoY in February from a low base, slightly ahead of the 4% YoY growth in January but still 12% less than the 2019 level. Seasonally adjusted sales volumes increased 6% YoY in February (-11% vs. 2019). Generally, market participants in the US continue to be concerned about inflated car prices and high loan payments, along with growing interest rates. This might keep car sales on the domestic market under pressure in 2023 and, therefore, mean the demand for PGMs from the automotive sector remains subdued
📈Gold-backed ETFs increased their holdings 22t in mid-March, according to Bloomberg, after the recent series of outflows. In addition, this was the highest weekly build-up since March 2022. Overall, the news might imply a positive read-across for the sentiment on gold: ETFs sales have been the main factor pressuring the metal’s performance, despite the strong physical gold demand in 4Q22
#ETF #gold #cars
https://metals-wire.com:3000/news-reports
🚘US light vehicle sales were up 5% YoY in February from a low base, slightly ahead of the 4% YoY growth in January but still 12% less than the 2019 level. Seasonally adjusted sales volumes increased 6% YoY in February (-11% vs. 2019). Generally, market participants in the US continue to be concerned about inflated car prices and high loan payments, along with growing interest rates. This might keep car sales on the domestic market under pressure in 2023 and, therefore, mean the demand for PGMs from the automotive sector remains subdued
📈Gold-backed ETFs increased their holdings 22t in mid-March, according to Bloomberg, after the recent series of outflows. In addition, this was the highest weekly build-up since March 2022. Overall, the news might imply a positive read-across for the sentiment on gold: ETFs sales have been the main factor pressuring the metal’s performance, despite the strong physical gold demand in 4Q22
#ETF #gold #cars
https://metals-wire.com:3000/news-reports
Morning Bites (Part 1)
📈Global primary aluminium production rose 3% YoY in February, in line with the 3% YoY growth in January, the International Aluminium Institute (IAI) reports. Meanwhile, Chinese aluminium output rose 4% YoY last month (+12% vs. the 2019 level), while ex-China production remained flat YoY (+1% vs. 2019)
⛏️MMG is to recommence operations at its Dugald River zinc mine. They were suspended from 15 February due to a fatal incident, but having now received government approval, the company is restarting its operations. Dugald River accounts for ~1.3% of global zinc supply. This resumption in production is in line with market expectations, so we do not expect any effect on zinc prices
#aluminium #zinc
https://metals-wire.com:3000/news-reports
📈Global primary aluminium production rose 3% YoY in February, in line with the 3% YoY growth in January, the International Aluminium Institute (IAI) reports. Meanwhile, Chinese aluminium output rose 4% YoY last month (+12% vs. the 2019 level), while ex-China production remained flat YoY (+1% vs. 2019)
⛏️MMG is to recommence operations at its Dugald River zinc mine. They were suspended from 15 February due to a fatal incident, but having now received government approval, the company is restarting its operations. Dugald River accounts for ~1.3% of global zinc supply. This resumption in production is in line with market expectations, so we do not expect any effect on zinc prices
#aluminium #zinc
https://metals-wire.com:3000/news-reports
Morning Bites (Part 2)
🏗China’s excavator sales fell 12% YoY in February (domestic + export), after the 33% YoY drop in January. We note that the decline was slightly sharper than the previous SteelOrbis estimate. Domestic excavator sales declined 33% YoY, after the 59% YoY fall in January. In spite of the protracted deterioration in sales, China's recent PMI data is strong, which could be a sign of a potential reversal in the trend
#steel
https://metals-wire.com:3000/news-reports
🏗China’s excavator sales fell 12% YoY in February (domestic + export), after the 33% YoY drop in January. We note that the decline was slightly sharper than the previous SteelOrbis estimate. Domestic excavator sales declined 33% YoY, after the 59% YoY fall in January. In spite of the protracted deterioration in sales, China's recent PMI data is strong, which could be a sign of a potential reversal in the trend
#steel
https://metals-wire.com:3000/news-reports
Morning Bites
⛏️The development of Udokan, the world’s third largest copper mine, is 95% complete. The project had been delayed from the initial plan of 2022 and is now to be launched in 3Q23, in line with the latest plan. The Udokan field is expected to bring 0.6% of global copper output in the first production stage, with a potential expansion to 1.6%. The mine accounts for ~3.1% of global copper reserves, grading 1.05%. We do not expect any effect on the market when the mine opens, at least at the first stage, since the project is well-known and is likely already priced in
#copper
https://metals-wire.com/sector/Copper
⛏️The development of Udokan, the world’s third largest copper mine, is 95% complete. The project had been delayed from the initial plan of 2022 and is now to be launched in 3Q23, in line with the latest plan. The Udokan field is expected to bring 0.6% of global copper output in the first production stage, with a potential expansion to 1.6%. The mine accounts for ~3.1% of global copper reserves, grading 1.05%. We do not expect any effect on the market when the mine opens, at least at the first stage, since the project is well-known and is likely already priced in
#copper
https://metals-wire.com/sector/Copper
Morning Bites (part 1)
🔗Global crude steel output was down 1% YoY to 142mnt in February, following the 3% YoY decline in January, according to the World Steel Association. The dynamics were mixed in China and ex-China regions. The 6% YoY growth in China's output (56% of global steel supply in February) was likely due to the low base effect from production curbs a year ago, as well as to the economic recovery withthe country exiting its zero-COVID policy. Ex-China steel production, however, shrank 8% YoY. In particular, steel output in the EU declined further, down 13% YoY, amid the local energy crisis. US steel production decreased 5% YoY (vs. the 10% YoY decline in January). Russia’s steel output also shrunk: it was down 9% YoY in February, the same dynamics as in January
#steel
https://metals-wire.com:3000/sector/Steel
🔗Global crude steel output was down 1% YoY to 142mnt in February, following the 3% YoY decline in January, according to the World Steel Association. The dynamics were mixed in China and ex-China regions. The 6% YoY growth in China's output (56% of global steel supply in February) was likely due to the low base effect from production curbs a year ago, as well as to the economic recovery withthe country exiting its zero-COVID policy. Ex-China steel production, however, shrank 8% YoY. In particular, steel output in the EU declined further, down 13% YoY, amid the local energy crisis. US steel production decreased 5% YoY (vs. the 10% YoY decline in January). Russia’s steel output also shrunk: it was down 9% YoY in February, the same dynamics as in January
#steel
https://metals-wire.com:3000/sector/Steel
Morning Bites (part 2)
🔗China’s aluminium products output rose 1% YoY to 4.36mnt in Jan-Feb, vs. a 4% YoY decline in December. As these production levels are above historical highs, it implies robust demand for aluminium commodity. A persistence of this dynamic would bolster aluminium prices in 2023, we believe
📈China's output of copper products jumped 10% YoY in Jan-Feb to 1.56mnt, accelerating from the 4% YoY growth in December. The figure was supported by an 11% and 14% YoY increase in the output of domestic refrigerators and air conditioners, respectively
📌We maintain our positive view on copper and aluminium, as strong China PMIs are likely to raise the consumption of industrial metals, given China represents some 55% and 58% of world copper and aluminium demand, respectively. At the same time, global Cu and Al inventories remain low, which might amplify the positive effect on prices
#aluminium #copper
https://metals-wire.com:3000/news-reports
🔗China’s aluminium products output rose 1% YoY to 4.36mnt in Jan-Feb, vs. a 4% YoY decline in December. As these production levels are above historical highs, it implies robust demand for aluminium commodity. A persistence of this dynamic would bolster aluminium prices in 2023, we believe
📈China's output of copper products jumped 10% YoY in Jan-Feb to 1.56mnt, accelerating from the 4% YoY growth in December. The figure was supported by an 11% and 14% YoY increase in the output of domestic refrigerators and air conditioners, respectively
📌We maintain our positive view on copper and aluminium, as strong China PMIs are likely to raise the consumption of industrial metals, given China represents some 55% and 58% of world copper and aluminium demand, respectively. At the same time, global Cu and Al inventories remain low, which might amplify the positive effect on prices
#aluminium #copper
https://metals-wire.com:3000/news-reports
Morning Bites
🔗CISA mills daily crude steel production increased 4.7% to 2.25mnt in mid-March from early-March (YoY growth of 9.9%). Local steel inventories increased 7.1% over the same period. Production continued to increase YoY, which might indicate an economic recovery as China reopens after the COVID-19 restrictions were lifted
⛏Global copper mine production increased 4.5% YoY in January, according to preliminary ICSG data, while world refined copper production increased 5.5% YoY. According to the report, D.R.Congo's output surged 15% YoY as a consequence of rises at the new Kamoa mine and expanded capacity at other mines. This surge, along with China's strong output, contributed the most to global output growth, the ICSG said
#steel #copper
https://metals-wire.com:3000/news-reports
🔗CISA mills daily crude steel production increased 4.7% to 2.25mnt in mid-March from early-March (YoY growth of 9.9%). Local steel inventories increased 7.1% over the same period. Production continued to increase YoY, which might indicate an economic recovery as China reopens after the COVID-19 restrictions were lifted
⛏Global copper mine production increased 4.5% YoY in January, according to preliminary ICSG data, while world refined copper production increased 5.5% YoY. According to the report, D.R.Congo's output surged 15% YoY as a consequence of rises at the new Kamoa mine and expanded capacity at other mines. This surge, along with China's strong output, contributed the most to global output growth, the ICSG said
#steel #copper
https://metals-wire.com:3000/news-reports
Morning Bites
🇨🇳China has decided to extend the tax-free regime for coal imports. The country’s tariff commission has announced that a zero tax rate will be applied from 1 April to December 2023. This action, along with the recently lifted restrictions on coal imports from Australia, further confirms the stated intention to tackle inflation in commodity prices and support the steady supply of coal for the domestic market. Overall, the coal market was materially tight in 2022, and so we believe these measures to be reasonable. To recap, China’s coal imports accounted for 21% of global coal shipments in 2022, according to an IEA report
#coal
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🇨🇳China has decided to extend the tax-free regime for coal imports. The country’s tariff commission has announced that a zero tax rate will be applied from 1 April to December 2023. This action, along with the recently lifted restrictions on coal imports from Australia, further confirms the stated intention to tackle inflation in commodity prices and support the steady supply of coal for the domestic market. Overall, the coal market was materially tight in 2022, and so we believe these measures to be reasonable. To recap, China’s coal imports accounted for 21% of global coal shipments in 2022, according to an IEA report
#coal
https://metals-wire.com:3000/news-reports
Morning Bites (part 1)
🇵🇪Nexa Resources has resumed its operations at the Cerro Lindo mine. After a 15-day suspension due to heavy rainfalls, operations at this major mine in Peru were restarted, as the company had expected. To recap, Cerro Lindo brings ~0.7% of global zinc supply. Despite the production interruption leading to lower output in 1Q23, the company expects to fulfill the initial guidance for 2023, by producing more in further quarters
🔋Pilbara Minerals is set to increase production capacity further at its Pilgangoora lithium project. Australia’s largest independent Li miner expects to raise the mine’s capacity 47% to 125kt (LCE equivalent), over and above the previous plan. On our numbers, this increase represents ~3% of global lithium supply in 2025F, when the mine is expected to reach the full capacity
#zinc #lithium
https://metals-wire.com:3000/news-reports
🇵🇪Nexa Resources has resumed its operations at the Cerro Lindo mine. After a 15-day suspension due to heavy rainfalls, operations at this major mine in Peru were restarted, as the company had expected. To recap, Cerro Lindo brings ~0.7% of global zinc supply. Despite the production interruption leading to lower output in 1Q23, the company expects to fulfill the initial guidance for 2023, by producing more in further quarters
🔋Pilbara Minerals is set to increase production capacity further at its Pilgangoora lithium project. Australia’s largest independent Li miner expects to raise the mine’s capacity 47% to 125kt (LCE equivalent), over and above the previous plan. On our numbers, this increase represents ~3% of global lithium supply in 2025F, when the mine is expected to reach the full capacity
#zinc #lithium
https://metals-wire.com:3000/news-reports
Morning Bites (part 2)
💍China’s jewellery and watch retail sales shrank 3% YoY in January-February, after the 2% YoY growth in December. The figure stayed close to its historical highs, while it was 31% above the pre-Covid 2019 level. In our view, China’s reopening (accompanied by the strong February PMIs and liquidity injections data) might further bolster local jewellery sales. However, the positive impact on the stressed global rough diamond market is likely to be limited, as China represents only 15% of world gem-set jewellery sales
#diamonds
https://metals-wire.com/sector/Diamonds
💍China’s jewellery and watch retail sales shrank 3% YoY in January-February, after the 2% YoY growth in December. The figure stayed close to its historical highs, while it was 31% above the pre-Covid 2019 level. In our view, China’s reopening (accompanied by the strong February PMIs and liquidity injections data) might further bolster local jewellery sales. However, the positive impact on the stressed global rough diamond market is likely to be limited, as China represents only 15% of world gem-set jewellery sales
#diamonds
https://metals-wire.com/sector/Diamonds
Morning Bites
📈Russia’s gold output was up 6.9% YoY in February, after the 9.6% YoY decline in January, according to Rosstat. Despite some recovery in local production, we maintain our positive view on the precious metal, especially amid the strong global physical gold demand. To recap, Russia accounts for ~9% of world mined gold output
#gold
https://metals-wire.com/sector/Gold
📈Russia’s gold output was up 6.9% YoY in February, after the 9.6% YoY decline in January, according to Rosstat. Despite some recovery in local production, we maintain our positive view on the precious metal, especially amid the strong global physical gold demand. To recap, Russia accounts for ~9% of world mined gold output
#gold
https://metals-wire.com/sector/Gold
Morning Bites
🔋AMG is to start lithium hydroxide production this year. The company plans to launch the project in 4Q23, which is in line with initial expectations of 2H23. The Bitterfeld-Wolfen refinery, located in Germany, is to be the first battery-grade lithium hydroxide refinery within the EU; it has a potential capacity of 20ktpa, which is equivalent of ~1.7% of 2024F global lithium supply, per our estimates. Moreover, the company plans to expand production 5x by 2030F, Bloomberg reports
🔋Sayona has resumed lithium mining in Canada. After obtaining a mining permit, operations at NAL were resumed in line with the company’s plans. On our numbers, the unit’s annual capacity accounts for ~4% of global lithium supply. To recap, the operations were halted in 2019 amid low prices for lithium products
#lithium
https://metals-wire.com:3000/news-reports
🔋AMG is to start lithium hydroxide production this year. The company plans to launch the project in 4Q23, which is in line with initial expectations of 2H23. The Bitterfeld-Wolfen refinery, located in Germany, is to be the first battery-grade lithium hydroxide refinery within the EU; it has a potential capacity of 20ktpa, which is equivalent of ~1.7% of 2024F global lithium supply, per our estimates. Moreover, the company plans to expand production 5x by 2030F, Bloomberg reports
🔋Sayona has resumed lithium mining in Canada. After obtaining a mining permit, operations at NAL were resumed in line with the company’s plans. On our numbers, the unit’s annual capacity accounts for ~4% of global lithium supply. To recap, the operations were halted in 2019 amid low prices for lithium products
#lithium
https://metals-wire.com:3000/news-reports
🗓4Q22/2H22 reporting season - less upbeat than market forecasts
The global miners’ weighted average EBITDA (under our coverage) was softer than both the consensus and we had anticipated (by -2% and -1%, respectively). Meanwhile, our spot engine estimates for absolute numbers were generally more accurate than the consensus, at a 6% EBITDA miss vs. 7% from the consensus
📝In our next post we take a deeper look at cost and revenue effects on the miners’ financials
#reporting_season
https://metals-wire.com:3000/events
The global miners’ weighted average EBITDA (under our coverage) was softer than both the consensus and we had anticipated (by -2% and -1%, respectively). Meanwhile, our spot engine estimates for absolute numbers were generally more accurate than the consensus, at a 6% EBITDA miss vs. 7% from the consensus
📝In our next post we take a deeper look at cost and revenue effects on the miners’ financials
#reporting_season
https://metals-wire.com:3000/events
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🗓4Q22/2H22 reporting season - concluding remarks
📈On average, larger miners reported 10% stronger revenues than market expectations on greater realised commodity prices and better sales results (most names had released their production reports in advance)
📉However, the growth in unit cash costs entirely eliminated the positive effect on EBITDA, which, as mentioned in the previous post, was 2% weaker on a weighted average basis
#reporting_season
https://metals-wire.com:3000/events
📈On average, larger miners reported 10% stronger revenues than market expectations on greater realised commodity prices and better sales results (most names had released their production reports in advance)
📉However, the growth in unit cash costs entirely eliminated the positive effect on EBITDA, which, as mentioned in the previous post, was 2% weaker on a weighted average basis
#reporting_season
https://metals-wire.com:3000/events
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🚀What about production costs?
💰On our numbers, the unit cash costs of the 10 major miners jumped 15% YoY in FY22, mostly affected by a >20% growth in materials and fuel/energy prices, as well as >10% higher labour and maintenance expenses
📌 Miners are guiding some 5% YoY further growth in FY23 unit costs (on average), amid persistent inflationary pressures globally
❗️In our view, this figure might be overly bullish. As inflation has not materially eased yet, we believe that costs might overtake guidance: miners’ 2022 costs were almost 2x USD inflation
#reporting_season
https://metals-wire.com:3000/events
💰On our numbers, the unit cash costs of the 10 major miners jumped 15% YoY in FY22, mostly affected by a >20% growth in materials and fuel/energy prices, as well as >10% higher labour and maintenance expenses
📌 Miners are guiding some 5% YoY further growth in FY23 unit costs (on average), amid persistent inflationary pressures globally
❗️In our view, this figure might be overly bullish. As inflation has not materially eased yet, we believe that costs might overtake guidance: miners’ 2022 costs were almost 2x USD inflation
#reporting_season
https://metals-wire.com:3000/events
Morning Bites
💍Hong Kong jewellery and watch sales rose 129% YoY in February, after the 23% YoY growth in January. The sales in February were the highest total for any month since January 2020, according to the government’s data. The data reflects the improvement in consumer sentiment, along with the low comparison base from the previous year due to the COVID-19 restrictions
📈The first copper concentrate has been produced at QB2, Teck reports. The operation targets achieving 285kt – 315kt (~1.1% of global copper supply in 2025F) of annual copper production in 2024-26F. The mine opening is set to double Teck's copper output on a consolidated basis, as the project ramps up to full production through 2023. We note that Teck owns 60% of the project
#diamonds #copper
https://metals-wire.com:3000/news-reports
💍Hong Kong jewellery and watch sales rose 129% YoY in February, after the 23% YoY growth in January. The sales in February were the highest total for any month since January 2020, according to the government’s data. The data reflects the improvement in consumer sentiment, along with the low comparison base from the previous year due to the COVID-19 restrictions
📈The first copper concentrate has been produced at QB2, Teck reports. The operation targets achieving 285kt – 315kt (~1.1% of global copper supply in 2025F) of annual copper production in 2024-26F. The mine opening is set to double Teck's copper output on a consolidated basis, as the project ramps up to full production through 2023. We note that Teck owns 60% of the project
#diamonds #copper
https://metals-wire.com:3000/news-reports
Morning Bites (part 1)
🌏Global manufacturing PMIs showed negative dynamics in March. The Eurozone Markit Manufacturing PMI fell to 47.1 from 48.5 in February. The US ISM manufacturing PMI also dropped, to 46.3, the lowest since May 2020
🇨🇳 The official NBS Manufacturing PMI in China declined to 51.9 in March from February's near 11-year high of 52.6, but exceeded market estimates of 51.5. China's Caixin manufacturing PMI, however, fell to 50 from 51.6 in February, missing the forecasts of 51.7
❗️The manufacturing sector in the US and Eurozone is contracting, as indicated by PMIs below 50, which is negative for industrial metals demand. Despite the decline, the Chinese PMIs remain positive, reflecting the country’s manufacturing sector condition. Nevertheless, this is a dynamic we intend to closely monitor. Generally, the China PMIs support our view that demand for industrial metals is likely to increase due to the country's post-COVID reopening
#PMIs
https://metals-wire.com:3000/news-reports
🌏Global manufacturing PMIs showed negative dynamics in March. The Eurozone Markit Manufacturing PMI fell to 47.1 from 48.5 in February. The US ISM manufacturing PMI also dropped, to 46.3, the lowest since May 2020
🇨🇳 The official NBS Manufacturing PMI in China declined to 51.9 in March from February's near 11-year high of 52.6, but exceeded market estimates of 51.5. China's Caixin manufacturing PMI, however, fell to 50 from 51.6 in February, missing the forecasts of 51.7
❗️The manufacturing sector in the US and Eurozone is contracting, as indicated by PMIs below 50, which is negative for industrial metals demand. Despite the decline, the Chinese PMIs remain positive, reflecting the country’s manufacturing sector condition. Nevertheless, this is a dynamic we intend to closely monitor. Generally, the China PMIs support our view that demand for industrial metals is likely to increase due to the country's post-COVID reopening
#PMIs
https://metals-wire.com:3000/news-reports
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Morning Bites (part 2)
🇵🇪Peru’s copper output rebounded to 11% YoY growth in February, after the 2% decline YoY in January. This recovery might indicate that the industry has now overcome the impact of the protests. The overall mining sector has also improved as a result of the positive performance in the domestic metallic mining subsector, including higher production of copper and iron ore, according to INEI
#copper
https://metals-wire.com/sector/Copper
🇵🇪Peru’s copper output rebounded to 11% YoY growth in February, after the 2% decline YoY in January. This recovery might indicate that the industry has now overcome the impact of the protests. The overall mining sector has also improved as a result of the positive performance in the domestic metallic mining subsector, including higher production of copper and iron ore, according to INEI
#copper
https://metals-wire.com/sector/Copper
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