Morning Bites (part 2)
🔗CISA mills' daily crude steel production in mid-July was reported at 2.15mnt, in-line with the previous ten days and 4.4% lower than the same period a year earlier. At the same time, local steel inventories grew 5.8% over the period (and were also up 4.0% YoY). We reiterate our view that soft domestic steel demand, which has triggered export growth, might keep weighing on China’s steel output in the short term (-1.1% YoY in 1H24)
China accounts for ~57% of global steel supply
#steel
https://metals-wire.com/sector/Steel
🔗CISA mills' daily crude steel production in mid-July was reported at 2.15mnt, in-line with the previous ten days and 4.4% lower than the same period a year earlier. At the same time, local steel inventories grew 5.8% over the period (and were also up 4.0% YoY). We reiterate our view that soft domestic steel demand, which has triggered export growth, might keep weighing on China’s steel output in the short term (-1.1% YoY in 1H24)
China accounts for ~57% of global steel supply
#steel
https://metals-wire.com/sector/Steel
Morning Bites (part 1)
🥉Global mined copper production stood broadly flat YoY in May, decelerating from the revised +2.0% YoY in April, the International Copper Study Group (ICSG) reports. On a 5mo24 basis, output was up 4.1% YoY, following some production recovery at existing assets (mainly in Chile, Indonesia, and the USA), as well as the ramp-up of new projects in DR Congo (~11% of global supply). On the demand side, the ICSG notes strong refined copper consumption (+3.7% YoY in 5mo24), mainly driven by China (+5.5% YoY)
Overall, we maintain our positive view on copper, amid growing demand for renewables globally, and surging investments in China’s grid infrastructure
#copper
https://metals-wire.com/sector/Copper
🥉Global mined copper production stood broadly flat YoY in May, decelerating from the revised +2.0% YoY in April, the International Copper Study Group (ICSG) reports. On a 5mo24 basis, output was up 4.1% YoY, following some production recovery at existing assets (mainly in Chile, Indonesia, and the USA), as well as the ramp-up of new projects in DR Congo (~11% of global supply). On the demand side, the ICSG notes strong refined copper consumption (+3.7% YoY in 5mo24), mainly driven by China (+5.5% YoY)
Overall, we maintain our positive view on copper, amid growing demand for renewables globally, and surging investments in China’s grid infrastructure
#copper
https://metals-wire.com/sector/Copper
Morning Bites (part 2)
💎Ekati diamond mine's sales dropped 23% YoY to 1.1mnct in 2Q24, according to a company press release. The average realised price slipped 5% YoY to USD 103/ct. According to Burgundy CEO Kim Trustee, market sentiment remains pressured by excessive inventories in the midstream, despite long-term supply tightening globally. To recap, Ekati is the largest Canadian diamond mine: in 2023, it accounted for ~4% of global rough supply
We reiterate our view that junior diamond miners (~30% of global supply) have remained loss-making or nearly breakeven at spot since 1H23, which implies limited downside for rough prices
#diamonds
https://metals-wire.com/sector/Diamonds
💎Ekati diamond mine's sales dropped 23% YoY to 1.1mnct in 2Q24, according to a company press release. The average realised price slipped 5% YoY to USD 103/ct. According to Burgundy CEO Kim Trustee, market sentiment remains pressured by excessive inventories in the midstream, despite long-term supply tightening globally. To recap, Ekati is the largest Canadian diamond mine: in 2023, it accounted for ~4% of global rough supply
We reiterate our view that junior diamond miners (~30% of global supply) have remained loss-making or nearly breakeven at spot since 1H23, which implies limited downside for rough prices
#diamonds
https://metals-wire.com/sector/Diamonds
Fresnillo 1H24 results - EBITDA beats consensus
📝Fresnillo's 1H24 revenues broadly matched both the consensus and our estimates. However, EBITDA came in way ahead of the market forecasts (+19% vs. the consensus) and +10% above us, due to costs normalising more than we had anticipated
⛏ The miner has reiterated its 2024 guidance: silver output is set to grow 15% YoY to 55-62mnoz (incl. Silverstream), while gold production is expected at 580-630koz (flat YoY)
💰The BoD has declared an interim dividend of USD 0.064/share, implying a yield of some ~1%
📌At spot, we expect Fresnillo’s 2H24F EBITDA to be firmly stronger HoH, as current gold and silver prices are 8% and 7% above the 1H24 average, respectively
#FRES #gold
https://metals-wire.com/company/FRES_LN/
📝Fresnillo's 1H24 revenues broadly matched both the consensus and our estimates. However, EBITDA came in way ahead of the market forecasts (+19% vs. the consensus) and +10% above us, due to costs normalising more than we had anticipated
⛏ The miner has reiterated its 2024 guidance: silver output is set to grow 15% YoY to 55-62mnoz (incl. Silverstream), while gold production is expected at 580-630koz (flat YoY)
💰The BoD has declared an interim dividend of USD 0.064/share, implying a yield of some ~1%
📌At spot, we expect Fresnillo’s 2H24F EBITDA to be firmly stronger HoH, as current gold and silver prices are 8% and 7% above the 1H24 average, respectively
#FRES #gold
https://metals-wire.com/company/FRES_LN/
Morning Bites (part 1)
🏆Global physical gold demand dropped 8% YoY to 916t in 2Q24, reversing from the revised +2% YoY in 1Q24, according to the World Gold Council (WGC) data. Central bank purchases in 2Q24 were 6% higher YoY, in line with the +5% YoY (revised) seen in 1Q24. The demand for gold jewellery slid 19% YoY, materially accelerating from the 1-2% YoY declines in 3Q23-1Q24. Overall, total global gold demand shrank 7% YoY in 2Q24 (vs. -6% YoY in 1Q24), as ETFs switched to gold buying in May-June. World mined gold output grew 3% YoY in 2Q24
We reiterate our view that gold, at spot, continues to trade above its fundamentally reasonable level (USD 2,200-2,300/oz for 2024), boosted by strong demand from global central banks and market expectations of a US Fed funds rate cut in 2024
#gold
https://metals-wire.com/sector/Gold
🏆Global physical gold demand dropped 8% YoY to 916t in 2Q24, reversing from the revised +2% YoY in 1Q24, according to the World Gold Council (WGC) data. Central bank purchases in 2Q24 were 6% higher YoY, in line with the +5% YoY (revised) seen in 1Q24. The demand for gold jewellery slid 19% YoY, materially accelerating from the 1-2% YoY declines in 3Q23-1Q24. Overall, total global gold demand shrank 7% YoY in 2Q24 (vs. -6% YoY in 1Q24), as ETFs switched to gold buying in May-June. World mined gold output grew 3% YoY in 2Q24
We reiterate our view that gold, at spot, continues to trade above its fundamentally reasonable level (USD 2,200-2,300/oz for 2024), boosted by strong demand from global central banks and market expectations of a US Fed funds rate cut in 2024
#gold
https://metals-wire.com/sector/Gold
👍1
Morning Bites (part 2)
💍China’s jewellery and watch retail sales rose 11% YoY in June, in line with the 10% YoY growth in May. However, according to Rapaport, Chinese diamond demand remains soft, as shoppers switched to gold buying and there is a lack purchase power amid concerns over local economic growth. Meanwhile, China’s jewellery sales returned close to the historical highs (+10% vs. June 2019, and +3% vs. June 2021), which might be a favourable read-across for local diamond demand in the long term, were this trend to persist
Overall, a further improvement in sentiment on the China and US downstream markets (which jointly represent ~65% of global demand for polished diamonds) might accelerate the diamond industry’s stock release, we believe
#diamonds
https://metals-wire.com/sector/Diamonds
💍China’s jewellery and watch retail sales rose 11% YoY in June, in line with the 10% YoY growth in May. However, according to Rapaport, Chinese diamond demand remains soft, as shoppers switched to gold buying and there is a lack purchase power amid concerns over local economic growth. Meanwhile, China’s jewellery sales returned close to the historical highs (+10% vs. June 2019, and +3% vs. June 2021), which might be a favourable read-across for local diamond demand in the long term, were this trend to persist
Overall, a further improvement in sentiment on the China and US downstream markets (which jointly represent ~65% of global demand for polished diamonds) might accelerate the diamond industry’s stock release, we believe
#diamonds
https://metals-wire.com/sector/Diamonds
Morning Bites
📈China’s output of aluminium products fell 2% YoY to 5.9mnt in June, a reversal from the 10% YoY gain in May. The decline is likely associated with the one-off high base effect of June 2023. Given the persistently strong demand for Al in China (~60% of global consumption), bolstered by the rapid expansion of the local new energy sector, we maintain our positive view on the metal. On our numbers, spot Al is still trading below its fundamentally reasonable level for 2024 (USD >2,500/t)
🥉Chinese output of copper products declined 6% YoY in June to 2.0mnt, vs. the 12% YoY drop in May. Despite some slowdown, we note upbeat grid investment plans in China, as well as strong demand trends globally. Furthermore, the potential US Fed funds rate cut in September 2024 might add further positives to sentiment on the red metal's price, in our view
China represents ~55% of global Cu demand
#aluminium #copper
https://metals-wire.com/news-reports
📈China’s output of aluminium products fell 2% YoY to 5.9mnt in June, a reversal from the 10% YoY gain in May. The decline is likely associated with the one-off high base effect of June 2023. Given the persistently strong demand for Al in China (~60% of global consumption), bolstered by the rapid expansion of the local new energy sector, we maintain our positive view on the metal. On our numbers, spot Al is still trading below its fundamentally reasonable level for 2024 (USD >2,500/t)
🥉Chinese output of copper products declined 6% YoY in June to 2.0mnt, vs. the 12% YoY drop in May. Despite some slowdown, we note upbeat grid investment plans in China, as well as strong demand trends globally. Furthermore, the potential US Fed funds rate cut in September 2024 might add further positives to sentiment on the red metal's price, in our view
China represents ~55% of global Cu demand
#aluminium #copper
https://metals-wire.com/news-reports
ArcelorMittal 2Q24 results - EBITDA beats expectations
✏️ArcelorMittal's 2Q24 revenues were roughly in line with market estimates; however, EBITDA outperformed both the consensus and our forecasts (+6% and +7%, respectively), amid a material reduction in non-core business expenses
🏭The steelmaker notes that the Chinese market is oversupplied, which has triggered an aggressive growth in exports, affecting EU and US steel prices. Meanwhile, Arcelor Mittal expects global ex-China apparent steel demand to grow 2.5-3.0% YoY in 2024
💰The company maintained its buyback programme, having repurchased 1.5% of its outstanding shares during 2Q24 (4.2% during the 1H24)
❗️At spot, we expect Arcelor’s 3Q24F EBITDA to be moderately lower QoQ, following the recent slowdown in global steel prices
#MT #steel
https://metals-wire.com/company/MT_US/
✏️ArcelorMittal's 2Q24 revenues were roughly in line with market estimates; however, EBITDA outperformed both the consensus and our forecasts (+6% and +7%, respectively), amid a material reduction in non-core business expenses
🏭The steelmaker notes that the Chinese market is oversupplied, which has triggered an aggressive growth in exports, affecting EU and US steel prices. Meanwhile, Arcelor Mittal expects global ex-China apparent steel demand to grow 2.5-3.0% YoY in 2024
💰The company maintained its buyback programme, having repurchased 1.5% of its outstanding shares during 2Q24 (4.2% during the 1H24)
❗️At spot, we expect Arcelor’s 3Q24F EBITDA to be moderately lower QoQ, following the recent slowdown in global steel prices
#MT #steel
https://metals-wire.com/company/MT_US/
Rio Tinto 1H24 results - overall neutral
📝Rio Tinto's 1H24 revenues broadly met market expectations (+2% vs. the consensus and -2% vs. us). Meanwhile, EBITDA came in 4% above our estimates, amid lower cost pressure in the iron ore segment than we had anticipated
⛏The miner has recently reiterated its 2024 guidance: iron ore and aluminium production is set to remain broadly stable YoY. However, Rio's copper output guidance is now at the lower end of its previous 230-260kt (+31-49% YoY) outlook
💰The company's BoD has declared an interim dividend of USD 1.77/sh (~2.7% DY), in line with company's practice
📌On our numbers, at spot, Rio Tinto's 2H24F EBITDA will be moderately weaker HoH, as current iron ore and aluminium prices are 15% and 7% below, respectively, the 1H24 average
#RIO #Iron_ore
https://metals-wire.com/company/RIO_LN/
📝Rio Tinto's 1H24 revenues broadly met market expectations (+2% vs. the consensus and -2% vs. us). Meanwhile, EBITDA came in 4% above our estimates, amid lower cost pressure in the iron ore segment than we had anticipated
⛏The miner has recently reiterated its 2024 guidance: iron ore and aluminium production is set to remain broadly stable YoY. However, Rio's copper output guidance is now at the lower end of its previous 230-260kt (+31-49% YoY) outlook
💰The company's BoD has declared an interim dividend of USD 1.77/sh (~2.7% DY), in line with company's practice
📌On our numbers, at spot, Rio Tinto's 2H24F EBITDA will be moderately weaker HoH, as current iron ore and aluminium prices are 15% and 7% below, respectively, the 1H24 average
#RIO #Iron_ore
https://metals-wire.com/company/RIO_LN/
Morning Bites
🌏Global manufacturing PMIs weakened in July. The Eurozone Markit Manufacturing PMI remained flat at 45.8. The US ISM manufacturing PMI was at 46.4 (firmly below market expectations of 48.8)
🇨🇳The official NBS Manufacturing PMI in China shrank to 49.4 in July (vs. 49.5 a month ago). Meanwhile, the Caixin China Manufacturing PMI stood at 49.8 in July — missing the forecasts of 51.5
🇮🇳 Although the Indian manufacturing PMI slowed to 58.1 (vs. the consensus of 59.0), it remains one the strongest indicators among the world's key economies
❗️Overall, most of global PMIs remained below 50.0 in July, indicating an ongoing slowdown in their manufacturing activity. However, strong PMI data from India might partly offset the negative impact on demand for industrial metals (e.g. steel, aluminum and copper), we believe
#PMIs
https://metals-wire.com/news-reports
🌏Global manufacturing PMIs weakened in July. The Eurozone Markit Manufacturing PMI remained flat at 45.8. The US ISM manufacturing PMI was at 46.4 (firmly below market expectations of 48.8)
🇨🇳The official NBS Manufacturing PMI in China shrank to 49.4 in July (vs. 49.5 a month ago). Meanwhile, the Caixin China Manufacturing PMI stood at 49.8 in July — missing the forecasts of 51.5
🇮🇳 Although the Indian manufacturing PMI slowed to 58.1 (vs. the consensus of 59.0), it remains one the strongest indicators among the world's key economies
❗️Overall, most of global PMIs remained below 50.0 in July, indicating an ongoing slowdown in their manufacturing activity. However, strong PMI data from India might partly offset the negative impact on demand for industrial metals (e.g. steel, aluminum and copper), we believe
#PMIs
https://metals-wire.com/news-reports
Week ahead data releases in M&M
With the reporting season ongoing, several major M&M companies are due to release their earnings this week. Specifically, we are slightly more optimistic than the consensus estimates on Glencore and CSN EBITDA performance
We also await the China Customs monthly statistics, which are scheduled for Wednesday
#reporting_season
https://metals-wire.com/events
With the reporting season ongoing, several major M&M companies are due to release their earnings this week. Specifically, we are slightly more optimistic than the consensus estimates on Glencore and CSN EBITDA performance
We also await the China Customs monthly statistics, which are scheduled for Wednesday
#reporting_season
https://metals-wire.com/events
Morning Bites (part 1)
🏦 Global central banks purchased net 12t of gold in June, vs. the revised +13t in May, the World Gold Council (WGC) reports. June marked the 13th consecutive month of reserves accumulation. The major contributors in June were India and Uzbekistan (+9t both), while only Singapore and Kazakhstan sold a notable amount (-12t and -6t, respectively)
We maintain our view that the fundamentally reasonable gold price is USD 2,300/oz for 2024; however, as we have previously noted, geopolitical tensions, persistently strong demand from global central banks and the widely expected US Fed funds rate cut in 2H24 create upside risks for gold price
#gold
https://metals-wire.com/sector/Gold
🏦 Global central banks purchased net 12t of gold in June, vs. the revised +13t in May, the World Gold Council (WGC) reports. June marked the 13th consecutive month of reserves accumulation. The major contributors in June were India and Uzbekistan (+9t both), while only Singapore and Kazakhstan sold a notable amount (-12t and -6t, respectively)
We maintain our view that the fundamentally reasonable gold price is USD 2,300/oz for 2024; however, as we have previously noted, geopolitical tensions, persistently strong demand from global central banks and the widely expected US Fed funds rate cut in 2H24 create upside risks for gold price
#gold
https://metals-wire.com/sector/Gold
Morning Bites (part 2)
💎US jewellery sales jumped 6% YoY in June, marking the highest YoY growth in two years, the eighth consecutive YoY gain, after the revised 3% YoY rise in May, IDEX reports, citing the US Department of Commerce. According to Rapaport, US dealers enjoyed decent demand from retailers with stable high-end market
We reiterate our view that the ongoing recovery in US downstream demand (~53% of global retail gem-set jewellery trade) could accelerate the release of industry inventories in 2024, supporting sentiment in the global diamond market
#diamonds
https://metals-wire.com/sector/Diamonds
💎US jewellery sales jumped 6% YoY in June, marking the highest YoY growth in two years, the eighth consecutive YoY gain, after the revised 3% YoY rise in May, IDEX reports, citing the US Department of Commerce. According to Rapaport, US dealers enjoyed decent demand from retailers with stable high-end market
We reiterate our view that the ongoing recovery in US downstream demand (~53% of global retail gem-set jewellery trade) could accelerate the release of industry inventories in 2024, supporting sentiment in the global diamond market
#diamonds
https://metals-wire.com/sector/Diamonds
Morning Bites (part 1)
💍Hong Kong jewellery and watch sales shrank 23% YoY in June, broadly in-line with the 21% YoY decline in May, per government data. According to Rapaport, the slump in demand continued, as consumers preferred investing in gold rather than diamonds, while a lack of overseas visitors amplified the effect (in June, 3.1mn visitors arrived in HK, a 39% drop vs. June 2019)
Despite soft demand in HK, sentiment remains strong on the key US market (~53% of the world's gem-set jewellery trade), while Chinese data (~12% of the global market) was upbeat in recent months, which might add support to the stressed diamond sector, we believe
#diamonds
https://metals-wire.com/sector/Diamonds
💍Hong Kong jewellery and watch sales shrank 23% YoY in June, broadly in-line with the 21% YoY decline in May, per government data. According to Rapaport, the slump in demand continued, as consumers preferred investing in gold rather than diamonds, while a lack of overseas visitors amplified the effect (in June, 3.1mn visitors arrived in HK, a 39% drop vs. June 2019)
Despite soft demand in HK, sentiment remains strong on the key US market (~53% of the world's gem-set jewellery trade), while Chinese data (~12% of the global market) was upbeat in recent months, which might add support to the stressed diamond sector, we believe
#diamonds
https://metals-wire.com/sector/Diamonds
Morning Bites (part 2)
🚘US light vehicle sales were down 3% YoY in July, in-line with June's dynamics. The figure was also 9% below the pre-Covid 2019 level. Similarly, seasonally-adjusted sales volumes decreased 1% YoY last month and remained 7% lower than the 2019 level. We believe that persistently soft automotive demand, along with the growing appetite for EVs globally, are likely to weigh further on PGM consumption
On our numbers, North America accounted for 22% and 15% of world autocatalyst Pd and Pt consumption, respectively, in 2023
#cars
https://metals-wire.com/news-reports
🚘US light vehicle sales were down 3% YoY in July, in-line with June's dynamics. The figure was also 9% below the pre-Covid 2019 level. Similarly, seasonally-adjusted sales volumes decreased 1% YoY last month and remained 7% lower than the 2019 level. We believe that persistently soft automotive demand, along with the growing appetite for EVs globally, are likely to weigh further on PGM consumption
On our numbers, North America accounted for 22% and 15% of world autocatalyst Pd and Pt consumption, respectively, in 2023
#cars
https://metals-wire.com/news-reports
🗞Today, China published its preliminary import/export statistics for July (see table above)
#statistics #China
https://metals-wire.com/news-reports
#statistics #China
https://metals-wire.com/news-reports
Morning Bites (part 1)
🔗China’s finished steel net exports grew 10% YoY in July, decelerating from the +18% YoY in June. To recap, weak domestic demand (amid the prolonged property crisis) has encouraged local producers to find customers abroad, and that has led to elevated exports in 7mo24. We maintain our view that China’s steel demand is likely to remain soft in 2H24, amid the lack of significant new economic support measures
🪨China’s coal imports rose 18% YoY in July, accelerating from the +12% YoY in June. According to Reuters, imports reached a seven-month high, due to several rounds of record-breaking hot weather in mid-2024, which supported local coal demand to power air conditioning
#coal #steel
https://metals-wire.com/news-reports
🔗China’s finished steel net exports grew 10% YoY in July, decelerating from the +18% YoY in June. To recap, weak domestic demand (amid the prolonged property crisis) has encouraged local producers to find customers abroad, and that has led to elevated exports in 7mo24. We maintain our view that China’s steel demand is likely to remain soft in 2H24, amid the lack of significant new economic support measures
🪨China’s coal imports rose 18% YoY in July, accelerating from the +12% YoY in June. According to Reuters, imports reached a seven-month high, due to several rounds of record-breaking hot weather in mid-2024, which supported local coal demand to power air conditioning
#coal #steel
https://metals-wire.com/news-reports
Morning Bites (part 2)
💎Petra Diamonds has canceled its August/September tender in order to support major producers’ supply discipline measures, amid soft demand, per a company announcement. According to Petra’s CEO Richard Duffy, the decision, along with the seasonally stronger demand in 2H24, migh support rough prices later this year
Although weak upstream sales indicate still elevated industry stocks, solid downstream demand in the key US market (~53% of the world's gem-set jewellery trade) might accelerate the release of inventories and bolster the stressed diamond market, we believe
#diamonds
https://metals-wire.com/sector/Diamonds
💎Petra Diamonds has canceled its August/September tender in order to support major producers’ supply discipline measures, amid soft demand, per a company announcement. According to Petra’s CEO Richard Duffy, the decision, along with the seasonally stronger demand in 2H24, migh support rough prices later this year
Although weak upstream sales indicate still elevated industry stocks, solid downstream demand in the key US market (~53% of the world's gem-set jewellery trade) might accelerate the release of inventories and bolster the stressed diamond market, we believe
#diamonds
https://metals-wire.com/sector/Diamonds
Morning Bites (part 1)
🔗CISA mills' daily crude steel production in late-July was reported at 1.97mnt, the lowest point this year (-8.1% vs. previous ten days and 7.6% lower YoY). Meanwhile, for 7mo24, the output was down 2.0% YoY. At the same time, local steel inventories slid 1.5% over the period (but were up 10.8% YoY). We reiterate our view that soft domestic steel demand, which has triggered export growth, might keep weighing on China’s steel output in the near term
China accounts for ~57% of global steel supply
#steel
https://metals-wire.com/sector/Steel
🔗CISA mills' daily crude steel production in late-July was reported at 1.97mnt, the lowest point this year (-8.1% vs. previous ten days and 7.6% lower YoY). Meanwhile, for 7mo24, the output was down 2.0% YoY. At the same time, local steel inventories slid 1.5% over the period (but were up 10.8% YoY). We reiterate our view that soft domestic steel demand, which has triggered export growth, might keep weighing on China’s steel output in the near term
China accounts for ~57% of global steel supply
#steel
https://metals-wire.com/sector/Steel