Copper bounces as traders look to China for more support on Saturday
MiFID II exempt information – see disclaimer below
Empire Metals* (EEE LN) – Gravity separation continues as metallurgical work accelerates
Founders Metals (FDR CA) – Upsized equity raise for gold exploration in Suriname
Neometals (NMT AU) – A$4m equity raise and up to A$5m rights issue
Sibanye Stillwater (SBSW US) – Legal proceedings with Appian Capital over nickel mines
Copper ($9,750/oz) bounces as traders look to China stimulus rollout on Saturday
- Copper prices have bounced off recent lows, having sold off on disappointing Chinese stimulus this week.
- Traders are now repositioning for another update on Saturday, when Beijing is expected to announce $283bn of new stimulus measures.
- The number is a consensus Bloomberg survey, with the majority of funding expected to come in the form of government bonds.
- However, industrial metals’ reaction will depend on the extent to which the package focuses on the downbeat property sector.
- Economists are calling for funding to be directed at consumption , rather than debt fuelled construction expansion.
- Escondida production fell in August, sliding to 105.3kt.
Gold ($2,640/oz) prices bounce following CPI data as BRICs summit approaches
- Gold prices climbed to $2,647/oz this morning, before paring gains to $2,637/oz.
- The metal was volatile yesterday amid US CPI data, which came in higher than expected, pushing US Treasury yields higher.
- Gold seems to have shrugged off the sell-off in US Government bonds, with the 10 year yield now at 4.1% and gold pushing back towards record highs.
- The BRICs summit is likely to be closely watched by gold traders, with Russia hosting the conference in Kazan later this month.
- Brazil, Russia, India, China, South Africa, Ethiopia, Iran, Egypt and the UAE are set to meet, however Saudi Arabia has pulled out.
- Russia and China have been major drivers of gold’s upwards momentum over the past year, with both bolstering holdings in their central reserves.
- Russia announced plans last week to add further holdings to their reserves, however China has held off new purchases for the past few months.
- Chinese retail buyers were very active in September and early October, however they likely pulled back on gold speculation in favour of equities amid the recent sharp rally.
- Gold has also been supported by ETF additions amid the current rate cutting environment, with the Fed cutting 50bp in September and most global central banks easing monetary policy.
- Global gold ETF inflows have now flipped positive at $389m, although we would expect there remains substantial upside as retail investors and speculators look to chase the rally.
China’s NEV retail sales reach 1.12m in September, up 9% from August
- China’s passenger NEV retail sales surpassed the 1 million mark for the second consecutive month, preliminary data from the CPCA showed.
- September, retail sales of passenger NEVs in China totalled 1.12m units, up 51% from the same month last year and up 9% from August.
- NEVs achieved a 54.3% market penetration for September.
- Cumulative retail sales of China’s passenger NEVs have totalled 7.13m units, up 37% from the same period last year, according to the CPCA.
Iron ore steady as steel mill profitability climbs on improved demand
- Iron ore prices in Singapore continue to tick along around $105/106/t for the 62% Fe contract.
- Prices jumped nearly 20% this month on surprise stimulus discussions from Beijing.
- They subsequently retreated after a press conference deflated the optimism.
- Mysteel reports that China’s steel mill profitability, which has been negative for much of the year, rose to profitability for the first time since June.
- However, analysts expect steel consumption down 20% ytd.
- Iron ore has found strong cost curve support in the low $90/t levels, which is what market players expect brings high-cost magnetite supply offline.
Alumina prices rally on supply disruptions and steady demand from China
- Alumina futures spiked overnight, up 4.2% in China to $644/t.
- The move brings alumina prices to their highest since June 2023.
- Aluminium prices ticked up, climbing to 1.4%.
- Bauxite supply from Guinea has been disrupted, according to Mysteel.
- Bloomberg reports that Chinese supplies have been disrupted by bauxite shortages on environmental inspections.
Earth’s mantle may be more uniform than previously considered
- A study of volcanic lava from hotspots around the world appears to show that magma comes from a homogenous middle layer (https://www.livescience.com/planet-earth/volcanos)
- Analysis of magma from volcanoes shows the composition of this mantle to be well mixed with differences in magma thought to be due to temperature changes as the molten rock comes to surface.
- New modelling indicates a more efficient mixing of the earth’s magma with the concentration of certain elements as the magma comes to surface. Eg:
- Nickel incorporates into crystals with liquid portions of the melt holding lower concentrations as the magma changes.
- Chromium behaves similarly but on a different timeline,
- Niobium tends to remain in the liquid magma.
- There are many more elements which are driven towards the surface by magma flows with nickel, chromium and niobium concentrations studied in this work.
- The interaction of the melt with the earth’s crust as the magma comes to surface appears to be more a important differentiator than the initial melt mixture.
- This will give a few geologists something to think about and might require the rewriting of just a few papers for the dusty library at the Geological Society.
This is Why Gold is Rising and It Will Probably Continue:
| Dow Jones Industrials | -0.14% | at | 42,454 | |
| Nikkei 225 | 0.57% | at | 39,606 | |
| HK Hang Seng | 2.98% | at | 21,252 | |
| Shanghai Composite | -2.55% | at | 3,218 | |
| US 10 Year Yield (bp change) | +1.6 | at | 4.077 |
Economics
US – Inflation slowed down to 2.4% in September but came ahead of expectations with markets expecting a 25bp cut now at the November meeting.
- Headline gauge was below 2.5% recorded in August and 2.3% expected by markets.
- Core measure picked 0.1pp to 3.3%.
- Equity indices closed slightly lower on the day with 10y yields trading up currently
China – We are looking for further statements to support Chinese equity markets from the Ministry of Finance press conference on Saturday
- Curiously, China has not gone all out on its Tariff response to the EU and US indicating a full on trade war is not beneficial to China just now.
- The recent substantial jump in Chinese equities followed President Xi’s stimulus comments and measures which look partly designed to encourage savers to release funds for consumption
- The new collateral replacement scheme enables institutional investors to support growth companies and should help stimulate new funding through equity markets
- New policies should also encourage further lending for share buybacks pumping further funds into the market and back into savers
- China’s gross savings rate is running at a whopping 44.3% as of last December representing $1.85tn for the year.
- Add this to the $8.22tn total calculated by the World Bank and you have $10.07tn in savings that could be mobilised to support EV and other high-tech manufacturing led by listed companies.
- Ironically, this is the Communist state supporting Capitalist working practices but the CCP has had a love / hate relationship with capitalists over the past 25 years.
- The CCP is also going soft on its detention, fining and punishment of private and public entities, though words may not be enough for many entrepreneurs.
- Premier Li Qiang told business leaders that Beijing would “resolutely root out” persistent problems like fines, inspections and forced closures to guarantee peace of mind. (SCMP)
- “The key to stabilising the economy is to stabilise enterprises,” Li was quoted by state news agency Xinhua as saying. “We must do a good job in helping them tide over difficulties and ensure they can benefit from policies.”
- Localities with abnormal rises in fines and seizures, he added, would be subject to investigation by the commission.
UK – The economy grew 0.2%mom, in line with expectations, following two consecutive months of no growth.
- Growth was driven by expansion in services, manufacturing and construction sectors.
- The report comes less than three weeks before Labour’s first Budget with Chancellor Rachel Reeves considering options to raising government revenues including hiking capital gains taxes.
- Yesterday, the Guardian reported Reeves is looking at a potential increase in capital gains tax to 39%.
Israel – A strike in central Beirut killed 22 people and injured more than 100 yesterday with one of Hezbollah high ranking targets reported to have survived.
- Separately, in the south of Lebanon two UN peacekeepers were reported to have been injured after an Israeli tank fired at a watchtower in Naqoura, according to Reuters.
- Gulf states are talking with Washington to stop Israel from attacking Iran’s oil sites on concerns that Tehran proxies may start targeting their own facilities in escalation of the conflict, according to Reuters.
- Saudi Arabia, the UAE and Qatar are refusing Israel a fly over for any attack on Iran.
Indonesia – plans to raise refined capacity by a further 500,000t over the next three years.
- We suspect this will barely maintain the supply / demand balance as new Solid-state NCM batteries regain market share from cheaper but lower power capacity LFP chemistry.
Zinc – ILZSG estimate the market is heading for a 164,000t supply deficit vs a 64kt surplus previously.
- Closing capacity in Europe combined with lower output in China is to blame.
India – The Reserve Bank of India left rates at 6.5%
- The Indian economy has been benefitting from discounted Russian oil and other products
Currencies
US$1.0940/eur vs 1.0934/eur previous. Yen 148.79/$ vs 149.11/$. SAr 17.437/$ vs 17.625/$. $1.306/gbp vs $1.308/gbp. 0.674/aud vs 0.673/aud. CNY 7.070/$ vs 7.071/$.
Dollar Index 102.88 vs 102.89previous
Precious metals:
Gold US$2,644/oz vs US$2,614/oz previous
Gold ETFs 83.4moz vs 83.5moz previous
Platinum US$976/oz vs US$964/oz previous
Palladium US$1,080/oz vs US$1,055/oz previous
Silver US$31.2/oz vs US$30.6/oz previous
Rhodium US$4,775/oz vs US$4,750/oz previous
Base metals:
Copper US$9,714/t vs US$9,686/t previous
Aluminium US$2,621/t vs US$2,555/t previous
Nickel US$17,645/t vs US$17,325/t previous
Zinc US$3,093/t vs US$3,015/t previous
Lead US$2,082/t vs US$2,063/t previous
Tin US$33,150/t vs US$32,655/t previous
Energy:
Oil US$78.5/bbl vs US$76.9/bbl previous
Natural Gas €39.7/MWh vs €38.4/MWh previous
Uranium Futures $83.4/lb vs $83.5/lb previous
Bulk:
Iron Ore 62% Fe Spot (cfr Tianjin) US$105.8/t vs US$105.2/t
Chinese steel rebar 25mm US$515.6/t vs US$510.9/t
HCC FOB Australia US$209.0/t vs US$208.0/t
Thermal coal swap Australia FOB US$149.3/t vs US$146.3/t
Other:
Cobalt LME 3m US$24,300/t vs US$24,300/t
NdPr Rare Earth Oxide (China) US$61,387/t vs US$61,583/t
Lithium carbonate 99% (China) US$10,184/t vs US$10,394/t
China Spodumene Li2O 6%min CIF US$750/t vs US$740/t
Ferro-Manganese European Mn78% min US$985/t vs US$985/t
China Tungsten APT 88.5% FOB US$335/mtu vs US$335/mtu
China Graphite Flake -194 FOB US$445/t vs US$445/t
Europe Vanadium Pentoxide 98% 4.6/lb vsUS$4.6/lb
Europe Ferro-Vanadium 80% 24.55/kg vs US$24.55/kg
China Ilmenite Concentrate TiO2 US$319/t vs US$319/t
China Rutile Concentrate 95% TiO2 US$1,323/t vs US$1,322/t
Spot CO2 Emissions EUA Price US$63.9/t vs US$62.9/t
Brazil Potash CFR Granular Spot US$277.5/t vs US$277.5/t
Germanium China 99.99% US$2,825.0/kg vs US$2,825.0/kg
China Gallium 99.99% US$455.0/kg vs US$455.0/kg
Battery News
Northvolt in talks for €200m in funding
- Northvolt is in talks with investors and lenders to secure €200m in funding, according to sources familiar with the matter. (Reuters)
- The Swedish battery maker is seeking to stabilise its short term finances while it tries to raise larger amounts of capital.
- On Friday, the company said it had made significant progress in recent weeks in its effort to raise cash. It declined to comment further.
Tesla unveil new Cybercab self-driving robotaxi
- Elon Musk has unveiled the highly anticipated autonomous taxi, the Cybercab, as Tesla bets on a shift from low cost mass-market cars to robotic vehicles.
- The Cybercab will have no steering wheel or pedals, and will feature inductive charging rather than having a plug
- It will be produced before 2027, according to Musk, and will be priced under $30,000.
- Musk also surprised the event with the announcement of a future Robovan, that will carry up to 20 people and goods.
Nio reaches 600,000th car delivery milestone
- Nio delivered its 600,000th production vehicle, about four months after delivering its 500,000th vehicle.
- Nio’s brief announcement didn’t mention any further details, though the 600,000th vehicle delivery milestone was achieved with the main Nio brand, not including sales of sub-brand Onvo.
Company News
| Overnight Change | Weekly Change | Overnight Change | Weekly Change | ||
| BHP | -1.1% | -2.6% | Freeport-McMoRan | 1.4% | -0.5% |
| Rio Tinto | -0.2% | -3.3% | Vale | 0.7% | -4.3% |
| Glencore | -0.2% | -2.8% | Newmont Mining | 1.3% | 0.4% |
| Anglo American | 0.4% | -5.0% | Fortescue | -1.3% | -1.5% |
| Antofagasta | -0.1% | -2.9% | Teck Resources | 2.5% | -0.5% |
Empire Metals* (EEE LN) 7.1p, Mkt Cap £45m – Gravity separation continues as metallurgical work accelerates
- Empire posted on X.com yesterday that gravity separation tests are ongoing for the weathered anatase ore cap. (CLICK LINK)
- The Company expects to receive data from the test work in the coming weeks.
- The results will support the optimisation of a titanium flowsheet for the Pitfield project.
- Empire recently raised gross proceeds of £2.5m via an equity placing at 7p/share.
- Use of funds includes resource drilling, mineralogical and metallurgical studies, alongside environmental baseline studies.
- Empire sees this section of the large Pitfield project to be more suitable for a potential high-quality Tio2 concentrate.
*SP Angel acts as nomad and broker to Empire Metals
Founders Metals (FDR CA) C$2.75, Mkt cap C$203m – Upsized equity raise for gold exploration in Suriname
- Suriname gold explorer Founders Metals has raised C$20m at a price of $2.40.
- The Company also announces it has agreed a LOI with a ‘major precious metals producer for a 5% equity investment.’
- Founders expects the funds will cover their planned 2025 exploration activities.
- Founders holds the Antino gold project in Suriname.
- The 2024 drilling programme is currently covering 45,000m of drilling, trenching, augering and geological mapping.
- Newmont and Zijin both hold assets in Suriname, with Newmont operating the 7moz Merian mine and Zijin holding the 13.7moz Rosebel asset.
- Recent drilling included 20m at 7.65g/t Au from 162m, 44m at 2g/t Au from 133m, 30m at 2.77g/t Au from 186m.
Neometals (NMT AU) A$0.10, Mkt Cap A$71m – A$4m equity raise and up to A$5m rights issue
- The Company raised A$4m in new equity to progress its lithium batteries recycling business.
- ~44m new shares are being issued at A$0.09/share implying a ~20% discount to previous close.
- Additionally, the Company is launching a 1 for 12 rights issue to raise up to A$5m at the same price with the offer to run between 21 and 30 October.
Sibanye Stillwater (SBSW US) $4.1 Mkt cap $2.9bn – Legal proceedings with Appian Capital over nickel mines
- Sibanye-Stillwater and Appian both announced yesterday that legal proceedings have commenced following a court judgement.
- Appian had brought legal proceedings against Sibanye over a termination of a Share Purchase Agreement for two mines in Brazil following a geotechnical evewnt.
- Sibanye had terminated the transaction by arguing that the geotechnical event had had a material impact on the operations of Santa Rita.
- The Court ruled yesterday that the geotechnical event was not material, and that Sibanye ‘was not entitled to terminate the SPAs.’
- Appian is now seeking damages from Sibanye-Stillwater regarding interest on the lost sales revenue, among other losses.
- Sibanye argues that Appian ‘received multiple offers for the mines after Sibanye-Stillwater terminated the SPAs.’
- Sibanye’s stock fell 12% on the news.
No.1 in Base Metals: SP Angel mining team awarded No 1. ranking for Base Metals forecasting in LSEG Quarterly Starmine Award for Reuters Polls Q1 2024
No.1 in Copper: “The winner of the 2020 Fastmarkets Apex contest for copper was the team at SP Angel comprising John Meyer, Sergey Raevskiy and Simon Beardsmore, with an accuracy score of 93.8%”
No1. In Gold: “SP Angel’s trio took the top spot for the gold price prediction throughout the year, with an accuracy score of 97.59%”
The SP Angel team also ranked 1st in Palladium, 3rd in Tin and 5th in Silver in the fourth quarter of 2020
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
Sales
Richard Parlons –Richard.Parlons@spangel.co.uk – 0203 470 0472
Abigail Wayne – Abigail.Wayne@spangel.co.uk – 0203 470 0534
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Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471
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*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)
+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.
| Sources of commodity prices | |
| Gold, Platinum, Palladium, Silver | BGNL (Bloomberg Generic Composite rate, London) |
| Gold ETFs, Steel | Bloomberg |
| Copper, Aluminium, Nickel, Zinc, Lead, Tin, Cobalt | LME |
| Oil Brent | ICE |
| Natural Gas, Uranium, Iron Ore | NYMEX |
| Thermal Coal | Bloomberg OTC Composite |
| Coking Coal | SSY |
| RRE | Steelhome |
| Lithium Carbonate, Ferro Vanadium, Tungsten, Spodumene, Ferro-Manganese, Graphite, Rutile | Asian Metal |
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