SP Angel Morning View -Today’s Market View, Friday 24th January 2025

Metals rally as Trump softens tone on China tariffs

MiFID II exempt information – see disclaimer below

Atlantic Lithium* (ALL LN) – Edward Koranteng resigns as NED following departure from MIIF Sovereign Wealth fund

Freeport McMoran (FCX US) – Quarterly results as CAPEX programme continues

Premier African Minerals (PREM LN) – Placing to provide working capital for Zulu project

Metals rally as Trump softens tone on China tariffs

• Copper prices climbed to recent highs of $9,350/t overnight as the dollar weakened on Trump tariff comments.
• They rose in unison with the Hang Seng index, with alumium, lead and PGMs all rising, with nickel the only major metal holding steady.
• The dollar cooled as Trump stated he would ‘rather not have to use’ tariffs on China, having previously threatened 10% tariffs by 1^st February.
• Metals traders have been holding off taking positions in the wake of the inauguration amid constant tariff rhetoric.
• However, this boosted confidence, triggering buying overnight.
• The Yuan extended gains from recent lows, now sitting at 7.23 for the USD/CNY.
• A stronger Yuan supports Chinese metal buying on the international market.
• Meanwhile Freeport warns production will be lower in 1Q25 as a result of export bans and maintenance programmes.
• Freeport expects to receive a licence to export copper concentrate this quarter, with a 7.5% duty.

Gold ($2,774/oz) extends gains on lower dollar as China ETF holdings increase 87%yoy

• Gold prices have pushed higher, testing recent record highs as a fading dollar rally supports prices.
• The dollar index hit two year highs in the run up to Trump’s Inauguration, as concerns over tariffs and sustainably higher interest rates saw inflows of capital.
• However this move has reversed, with expectations of less punitive tariffs supporting global currencies and bringing down US interest rates.
• Whilst the gold price shrugged off the dollar rally, sliding momentarily below $2,600/oz in December, it has been supported by a weaker dollar.
• Gold has been enjoying substantial buying from both the PBoC for their reserves and Chinese retail.
• Recent World Gold Council data shows China gold ETFs saw physical holdings increase 87%yoy in 2024.
• Chinese retail investors are turning to gold as government = bond yields slide further into record lows on sustained buying.
• Chinese bonds are rallying on deflation concerns amid low consumption and an extended property contraction.
• China reserves are reported to have hit record highs of 2,280t by 2024 end.
• It is likely that reports of China beginning to add to their reserves again in November has been supportive for gold.

Iron ore strengthens on Portland storm damage and Xi visit to steel plant

• Iron ore prices have climbed as steelmaking sentiment improves.
• Chinese steelmakers rallied overnight after Xi Jinping toured a Bengang steel mill.
• This raised hopes of incoming policy initiatives to boost steel consumption and demand.
• Xi stated the industry should ‘work hard to make up for shortcomings’ and ‘optimise the structure’ of their sector. (Bloomberg)
• China mill profitability has been impacted by weak demand from the slowing property sector and iron ore prices stubborn around $100/t.
• Rio Tinto has warned that shipments will be impacted from Dampier Port owing to cyclone damage at the facility, with 3-4mt likely removed from short term supply.

Economics

China – Year of the Wood Snake starts on Wednesday 29^th January

• Taboos:

• • Harming and killing Snakes is believed to bring bad luck.
  • Travelling West is not so good either, so Chinese officials should fly East to visit Trump
• Colours:
• Red is considered to bring good fortune warding off evil spirits and misfortune.
• Gold is seen as attracting positive energy, enhancing financial prosperity and maintaining a healthy balance between the elemental associations of the East (Wood) and West (Metal).
• Higher gold prices are already enhancing the prosperity of the PBoC and other Chinese buyers.

Japan – BoJ raises interest rates 25bp to 0.50% following upgrade to forecast inflation

• Core CPI forecast to to 2.4% from 1.9% for fy 2025 and to 2.0% from 1.9% for fy 2026.
• Core-core CPI (excluding energy and fresh food) forecast rises to 2.1% from 1.9% for fy 2025 and unch at 2.1% for fy 2026.
• Real GDP growth forecast held at 1.1% for fy 2025 and 1.0% for fy 2026.
• CPI core (ex-food) rose to 3.0% yoy in December from 2.7% yoy due to poor rice harvest in China
• CPI core-core (ex-food & energy) unch. at 2.4% yoy.
• Headline CPI rose to 3.6% yoy from 2.9% yoy.

Eurozone – Composite PMI rises to 50.2 from 49.6

• Manufacturing PMI gained to to 46.1
• Services PMI slipped slightly to 51.4
• Inflation remains a concern
• German Composite PMI gained to 50.1 from 48.0
• French Composite PMI rose to 48.3

UK – UK Composite PMI rose slightly to 50.9 in January from 50.4

• Manufacturing PMI gained to 48.2 from 47.0
• Services PMI also gained to 51.2 from 51.1
• We expect all UK PMI numbers to fall on rising unemployment, inflation, weaker sterling and falling confidence.
• There is a good chance the BoE will need to consider new QE to avert a slide into recession and stagflation.

Scenario analysis ideas

Scenario 1

• Trump takes pragmatic approach to trade
• US economy goes really well
• Energy prices remain around current Goldilocks’ levels
• Inflation remains steady and lowish
• Interest rates fall
• US dollar weakens
• Richer Americans buy lots of cheap Chinese and Asean products
• World continues to grow

Scenario 2

• Trump negotiates good deals for the US.
• Tariffs imposed at manageable levels.
• Trump and Xi remain friends and China is accepted as a necessary trading partner.
• Energy prices remain around current Goldilocks’ levels
• American’s buy slightly more expensive goods as a result of tariffs.
• Inflation rises slightly.
• Interest rates are reduced modestly
• US dollar remains firm.
• World continues to grow but at slower pace

Scenario 3

• Trump ego makes the president increasingly erratic
• The presidency upsets China, Europe the Middle East and everybody else
• Tariffs spiral into full-blown trade wars slowing global trade
• Energy prices rise as more OPEC companies break away
• Inflation takes off in America
• Interest rates do not fall and potentially hike higher
• US dollar strengthens
• Yuan falls to offset impact of Tariffs
• China continues to export lots to US but manufacturers struggle
• World collapses into recession

Scenario 4 – Quite likely

• Trump and Xi remain on good talking real terms apart from occasional Trump comment which gets the diplomats worked up
• Tariffs – minor tariffs imposed
• Energy prices remain around current Goldilocks’ levels
• Inflation holds like a sticky gobstopper
• Interest rates remain unchanged at elevated levels
• US dollar remains strong
• US GDP grows, Europe struggles
• China struggles to recover from property crisis and cost of producing so many loss making EVs. Only 7 car manufacturers survive in China.
• Ukraine war continues as Putin refuses to negotiate.
• Trump builds the Trumpopolis and declares it the 1^st Wonder of the World ahead of the Great Wall of China and the Great Pyramid of Giza. This upsets the Chinese!

Currencies

US$1.0487/eur vs 1.0419/eur previous. Yen 155.29/$ vs 155.58/$. SAr 18.335/$ vs 18.490/$. $1.240/gbp vs $1.232/gbp. 0.632/aud vs 0.627/aud. CNY 7.242/$ vs 7.278/$

Dollar Index 107.553 vs 108.12 previous

Precious metals:         

Gold US$2,772/oz vs US$2,753/oz previous

Gold ETFs 83.4moz vs 83.3moz previous

Platinum US$959/oz vs US$945/oz previous

Palladium US$1,008/oz vs US$982/oz previous

Silver US$30.8/oz vs US$30.6/oz previous

Rhodium US$4,675/oz vs US$4,675/oz previous

Base metals:

Copper US$9,345/t vs US$9,176/t previous

Aluminium US$2,655/t vs US$2,614/t previous

Nickel US$15,735/t vs US$15,590/t previous

Zinc US$2,893/t vs US$2,854/t previous

Lead US$1,970/t vs US$1,956/t previous

Tin US$30,150/t vs US$30,150/t previous

Energy:

Oil US$78.2/bbl vs US$78.9/bbl previous

• Crude oil prices edged lower after US President Trump announced plans to urge Saudi Arabia and OPEC to reduce oil prices, which came on top of policy initiatives this week aiming to boost US production.
• The EIA contrasted with earlier API estimates in reporting US inventory w/w draws of 1mb to crude and 3.1mb to diesel stocks, partially offset by a 2.3mb build to gasoline, with refinery utilisation down 5.8% w/w to 85.9%.
• US Henry Hub natural gas prices fell as the EIA reported a below consensus 223bcf w/w draw to 2,892bcf (vs -244bcf exp), with storage inventories falling to 1.9% below last year and 0.7% above the 5-year average.
• As the northern hemisphere winter heating season reaches its demand midpoint, US gas inventories have largely eliminated the huge surplus inherited at the end of last year’s winter season.
• Halliburton generated $2.6bn of free cash flow in FY24 despite reporting small declines in y/y revenue and operating income. The Company expects 2025 to be sequentially softer in North America driven primarily driven by lower stimulation activity and decreased fluid services.
• Following significant market hype over the last few weeks, Venture Global raised $1.75bn from its IPO and achieved a $60bn valuation for its two operational LNG export facilities located in Louisiana, USA.

Natural Gas €49.7/MWh vs €49.2/MWh previous

Uranium Futures $73.2/lb vs $73.4/lb previous

Bulk:   

Iron Ore 62% Fe Spot (Singapore) US$104.9/t vs US$103.9/t

Chinese steel rebar 25mm US$488.0/t vs US$484.9/t

HCC FOB Australia US$191.0/t vs US$190.5/t

Thermal coal swap Australia FOB US$117.0/t vs US$121.3/t        

Other:  

Cobalt LME 3m US$24,300/t vs US$24,300/t

NdPr Rare Earth Oxide (China) US$57,297/t vs US$56,944/t

Lithium carbonate 99% (China) US$10,148/t vs US$10,085/t

China Spodumene Li2O 6%min CIF US$815/t vs US$815/t

Ferro-Manganese European Mn78% min US$1,005/t vs US$1,005/t

China Tungsten APT 88.5% FOB US$338/mtu vs US$338/mtu

China Graphite Flake -194 FOB US$430/t vs US$430/t

Europe Vanadium Pentoxide 98% US$4.5/lb vs US$4.5/lb

Europe Ferro-Vanadium 80% US$24.6/kg vs US$24.6/kg

China Ilmenite Concentrate TiO2 US$296/t vs US$294/t

Global Rutile Spot Concentrate 95% TiO2 US$1,588/t vs US$1,588/t

Spot CO2 Emissions EUA Price US$65.1/t vs US$65.1/t

Brazil Potash CFR Granular Spot US$305.0/t vs US$305.0/t

Germanium China 99.99% US$2,725.0/kg vs US$2,725.0/kg

China Gallium 99.99% US$385.0/kg vs US$385.0/kg

Battery News

Chinese automakers file complaints at Court of Justice of the European Union over tariffs

• BYD, Geely and SAIC have filed complaints with the Court of Justice of the European Union (CJEU) against the EU’s import tariffs.
• The challenges are likely to include arguments over the assessment of subsidies, the establishment of injury to EU industry and the Commission’s unusual decision to launch a case on its own, rather than following an industry complaint.
• China-based EV makers have also complained that Tesla, the largest exporter of EVs from China into the EU, was not included in the official sample, from which the rate for other companies is calculated.
• Tesla secured the lowest extra tariff of 7.8%. If it had been part of the sample, cooperating companies would have benefited from a lower tariff than the 20.7% they now face.
• It is not clear if other EV makers have submitted complaints, including European firms producing in China, or the China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME), which represents Chinese EV producers.
• Following the conclusion of the EU’s anti-subsidy investigation, Chinese EV makers were hit with varying additional tariffs to the EU’s standard import duty of 10%.
• BYD were given a 17.0% additional tariff.
• Geely were given an 18.8% additional tariff.
• SAIC were given a 35.5% additional tariff.

Rivian to launch hands-free driving system this year

• EV maker Rivian plans to launch its advanced hands-free driver assistance system and its ‘eyes-off’ systems in 2026.
• Rivian’s Gen 2 vehicles are currently equipped with the “Rivian Autonomy Platform”, which assists drivers but still requires their continuous attention and control of the vehicle.
• Rivian finalised a loan agreement with the outgoing Biden administration for $6.6bn to build the company’s production facility in Georgia.
• The automaker does not believe its loan has substantial risk despite new President, Donald Trump, reversing many of the Biden administration’s plans for EVs.
• Since taking office, Trump has revoked the 2021 executive order issued by Biden which aimed to ensure half of all new vehicles sold in the US would be electric by 2030.
• Trump has also called for ending a waiver that allows states to adopt zero-emission vehicle rules by 2035 and said his administration would consider ending EV tax credits.

Tesla to release software updates to fix 1.2m cars in China due to safety concerns

• Tesla will release a software update to about 1.2m of its cars in China, approx. 50% of its fleet in the country, to fix issues with vehicles’ power steering and rear-view cameras that pose safety risks.
• Tesla will deploy an over-the-air software fix to 871,087 domestically produced Model 3 and Model Y cars to address the power steering failure.
• Another 335,716 vehicles, a mix of imported Model S and Model X cars and domestically produced Model 3 and Model Y cars, will get an update for the camera malfunction.

Company News

Atlantic Lithium* (ALL LN) 11.75p, Mkt Cap £82m – Edward Koranteng resigns as NED following departure from MIIF Sovereign Wealth fund

1. Atlantic lithium report the resignation and immediate departure of Edward Koranteng .
2. Edward Koranteng was the MIIF Sovereign Wealth fund nominee and will likely be replaced by MIIF in due course.
3. Koranteng resigned from MIFF earlier this month.
4. Koranteng also sat as Atlantic’s chairman of the remuneration and nomination committee of the board.

*SP Angel acts as Nomad and Broker to Atlantic Lithium

Freeport McMoran (FCX US) $39, Mkt Cap $55bn – Quarterly results as CAPEX programme continues

• Freeport produced 472kt Cu over the quarter and 1,911kt Cu over the FY24, flat yoy.
• 432koz Au produced over Q4 and 1,880koz over the year, vs 1,993koz 2023.
• Net cash cost for 2024 copper at $1.56/lb vs 1.61/lb 2023.
• Company held US$3.9bn in cash at 31^st December, generating operating cash flows of US$1.4bn over the quarter.
• Inventory being as a result of the timing of approval for copper concentrate exports from Indonesia and the development of the PT-FI downstream processing facilities.
• Company spent US$1.2bn on CAPEX over the quarter and US$4.8bn over the year.
• 2025 estimated at US$5bn
• Freeport is advancing new leaching processes, which it state contributed an incremental 97kt to production in 2024.
• Company is also advancing automation technologies to reduce costs.
• Current expansion programmes include Bagdad, in NW Arizona, where new concentrating facilities are expected to add between 91-113kt Cu for $3.5bn CAPEX.
• PFSs currently being completed for Safford/Lone Star, due mid-2026.
• Aims to boost production from Chile include a recently defined large sulphide resource at El Abra to boost a larger concentrator.
• In Indonesia, FCX is requesting approval to export copper concentrate until it has repaired the damage from the October 2024 fire incident, with exports expected during 1Q25.
• Company is developing the Kucing Liar for a ramp up to 2029 and CAPEX of $4bn to produce over 3,000kt Cu between 2029 and 2041.

Premier African Minerals (PREM LN) 0.02p, Mkt Cap £7.7m – Placing to provide working capital for Zulu project

• Premier African Minerals, who are developing the Zulu lithium project in Zimbabwe, have raised money via a placing.
• The Company issued 2.7bn new shares to raise £540k gross proceeds at 0.02p.
• Premier is in discussions with their offtake partner, with management stating that today’s funding is ‘interim and does not fully address the Group’s short-term funding requirements.’
• CEO Roach states that the funds will ‘provide working capital to both support essential operational requirements at Zulu’ alongside funding for ‘the instalaliton of the additional float cells and assist in plant readiness for the limited test run.’

LSE Group Starmine awards for 2024 commodity forecasting:

No.1 in Precious Metals: SP Angel mining team awarded No 1. ranking for Precious Metals forecasting in LSEG Annual Starmine Award for Reuters Polls 2024

No.2 in Base Metals: SP Angel mining team awarded No 2. ranking for Base Metals forecasting in LSEG Annual Starmine Award for Reuters Polls 2024

Analysts

John Meyer – John.Meyer@spangel.co.uk – 0203 470 0490

Simon Beardsmore – Simon.Beardsmore@spangel.co.uk – 0203 470 0484

Sergey Raevskiy –Sergey.Raevskiy@spangel.co.uk – 0203 470 0474

Arthur Parish – Arthur.Parish@spangel.co.uk – 0203 470 0476

Sales

Richard Parlons –Richard.Parlons@spangel.co.uk – 0203 470 0472

Abigail Wayne – Abigail.Wayne@spangel.co.uk – 0203 470 0534

Rob Rees – Rob.Rees@spangel.co.uk – 0203 470 0535

Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471

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