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
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🔗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
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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
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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
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🇵🇪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
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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
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🔋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
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🗓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
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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
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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
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📈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
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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
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💰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
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💍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
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🌏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
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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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Morning Bites (part 1)
🏦 Global central banks continued to accumulate gold reserves in February, purchasing 51.7t (net) of gold (vs. the revised 73.7t in January), the World Gold Council reports. The main buyers were China and Turkey (24.9t and 22.5t, respectively). There was only one major net seller, Kazakhstan, which reduced its reserves by 13.1t (vs. the 3.9t increase in January). The continuing steady gold demand further supports our positive outlook on gold prices
#gold
https://metals-wire.com/sector/Gold
🏦 Global central banks continued to accumulate gold reserves in February, purchasing 51.7t (net) of gold (vs. the revised 73.7t in January), the World Gold Council reports. The main buyers were China and Turkey (24.9t and 22.5t, respectively). There was only one major net seller, Kazakhstan, which reduced its reserves by 13.1t (vs. the 3.9t increase in January). The continuing steady gold demand further supports our positive outlook on gold prices
#gold
https://metals-wire.com/sector/Gold
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Morning Bites (part 2)
🇨🇱Chile’s copper production was down 3% YoY in February, after the 1% YoY growth in January. According to the Chilean Copper Commission, the 15% deterioration in Codelco's production contributed the most to the decline in output. The Chilean mining sector is affected by continuous drought and negative structural effects (e.g grade depletion), keeping production close to its historical lows. If these factors continue to affect mining activities in Chile, which accounts for 27% of the world's mined copper production, they could potentially counterbalance the positive impact of upcoming projects, such as Kamoa, QB2 and Udokan, in 2023
#copper
https://metals-wire.com:3000/sector/Copper
🇨🇱Chile’s copper production was down 3% YoY in February, after the 1% YoY growth in January. According to the Chilean Copper Commission, the 15% deterioration in Codelco's production contributed the most to the decline in output. The Chilean mining sector is affected by continuous drought and negative structural effects (e.g grade depletion), keeping production close to its historical lows. If these factors continue to affect mining activities in Chile, which accounts for 27% of the world's mined copper production, they could potentially counterbalance the positive impact of upcoming projects, such as Kamoa, QB2 and Udokan, in 2023
#copper
https://metals-wire.com:3000/sector/Copper
Morning Bites (part 1)
🚘New car registrations in France, the UK, Spain, Italy and Germany grew 27% YoY in March, according to preliminary data. Nevertheless, the figure was still 27% below the (2019) pre-COVID level. Specifically, in Germany and Spain, car sales were down 30% and 19%, respectively, vs. 2019, while sales in France were 19% lower. Moreover, sales in the UK and Italy were 37% and 13% under 2019, respectively. Given the above countries represent ~70% of new vehicle registrations in Europe, local car sales have likely continued to grow YoY, while remaining below their pre-pandemic levels
#cars
https://metals-wire.com:3000/sector/PGM
🚘New car registrations in France, the UK, Spain, Italy and Germany grew 27% YoY in March, according to preliminary data. Nevertheless, the figure was still 27% below the (2019) pre-COVID level. Specifically, in Germany and Spain, car sales were down 30% and 19%, respectively, vs. 2019, while sales in France were 19% lower. Moreover, sales in the UK and Italy were 37% and 13% under 2019, respectively. Given the above countries represent ~70% of new vehicle registrations in Europe, local car sales have likely continued to grow YoY, while remaining below their pre-pandemic levels
#cars
https://metals-wire.com:3000/sector/PGM
Morning Bites (part 2)
🚘US light vehicle sales were up 9% YoY in March from a low base, better than the 5% YoY growth in February but still 15% less than the 2019 level. Seasonally adjusted sales volumes increased 9% YoY in March (-14% vs. 2019). The weak sales data indicates that high car prices, loan payments and growing interest rates are keeping the market under pressure, which underpins our view that automotive demand for PGMs might remain subdued in 2023
#cars
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🚘US light vehicle sales were up 9% YoY in March from a low base, better than the 5% YoY growth in February but still 15% less than the 2019 level. Seasonally adjusted sales volumes increased 9% YoY in March (-14% vs. 2019). The weak sales data indicates that high car prices, loan payments and growing interest rates are keeping the market under pressure, which underpins our view that automotive demand for PGMs might remain subdued in 2023
#cars
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Morning Bites (part 3)
🇨🇳China is considering prohibiting the export of rare earth magnet technology to the US. This measure would either ban or restrict exports of technology to process and refine rare earth elements. China dominates the rare earths market in both mining and processing (~63% and 80%, respectively). The demand for rare earths is driven by magnets, which are used in smartphones, EVs and turbines, and the market consensus is bullish on future demand growth
#rare_earths
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🇨🇳China is considering prohibiting the export of rare earth magnet technology to the US. This measure would either ban or restrict exports of technology to process and refine rare earth elements. China dominates the rare earths market in both mining and processing (~63% and 80%, respectively). The demand for rare earths is driven by magnets, which are used in smartphones, EVs and turbines, and the market consensus is bullish on future demand growth
#rare_earths
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Morning Bites (part 4)
💍US jewellery sales were down 3% YoY in February, following the revised <1% YoY decrease in January. The figure was affected by fears of a recession and financial crisis, in our view. Furthermore, the National Retail Federation expects overall US retail sales to remain sluggish throughout 2023, amid adverse macroeconomic conditions. Hence, we maintain our view that the decline in US jewellery sales (for the 5th consecutive month) might further weigh on the demand for rough diamonds — at least in the short term. We highlight that the US accounts for ~50% of world diamond jewellery sales
#diamonds
https://metals-wire.com/sector/Diamonds
💍US jewellery sales were down 3% YoY in February, following the revised <1% YoY decrease in January. The figure was affected by fears of a recession and financial crisis, in our view. Furthermore, the National Retail Federation expects overall US retail sales to remain sluggish throughout 2023, amid adverse macroeconomic conditions. Hence, we maintain our view that the decline in US jewellery sales (for the 5th consecutive month) might further weigh on the demand for rough diamonds — at least in the short term. We highlight that the US accounts for ~50% of world diamond jewellery sales
#diamonds
https://metals-wire.com/sector/Diamonds
Morning Bites (part 1)
🔗CISA mills daily crude steel production increased 0.3% to 2.26mnt in late March from mid-March (YoY growth of 4.7%). Local steel inventories decreased 9.0% over the same period. Production had been growing continuously YoY since early February, which might indicate the positive effects from China’s easing of its Covid-19 restrictions
#steel
https://metals-wire.com:3000/sector/Steel
🔗CISA mills daily crude steel production increased 0.3% to 2.26mnt in late March from mid-March (YoY growth of 4.7%). Local steel inventories decreased 9.0% over the same period. Production had been growing continuously YoY since early February, which might indicate the positive effects from China’s easing of its Covid-19 restrictions
#steel
https://metals-wire.com:3000/sector/Steel
Morning Bites (part 2)
📈Gold-backed ETFs increased their holdings 32t in March (after the 34t decline in February), the first rise since April 2022. According to the WGC, last month gold ETFs saw inflows in the EU (+18t) and in N. America (+12t), which is in line with the previous data. We consider ETFs as one of the main factors affecting gold performance and, along with CB net purchases, substantial growth in physical gold demand during 4Q22 and the worsening macroeconomic conditions, this strong data supports our bullish view on the precious metal's price
#ETF #gold
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📈Gold-backed ETFs increased their holdings 32t in March (after the 34t decline in February), the first rise since April 2022. According to the WGC, last month gold ETFs saw inflows in the EU (+18t) and in N. America (+12t), which is in line with the previous data. We consider ETFs as one of the main factors affecting gold performance and, along with CB net purchases, substantial growth in physical gold demand during 4Q22 and the worsening macroeconomic conditions, this strong data supports our bullish view on the precious metal's price
#ETF #gold
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