US$ pulls back lifting metal prices as US debt ceiling talks continue
MiFID II exempt information – see disclaimer below
Wishbone Gold* (WSBN LN) – Magnetotellurics illuminate targets within 400m depth on Cottesloe prospect, Patterson Range, Western Australia
| Dow Jones Industrials | -0.11% | at | 32,765 | |
| Nikkei 225 | +0.37% | at | 30,916 | |
| HK Hang Seng | -1.93% | at | 18,747 | |
| Shanghai Composite | +0.35% | at | 3,213 |
Economics
US – Markets remain focused on progress of US debt ceiling negotiations.
- The Treasury cash balance is reported to have dropped to just under $50bn, the lowest level since 2021 and down on $140bn two weeks ago.
- Meanwhile, optimism over a potential deal saw yields on government due in early June that are most exposed to a potential default should the Congress agree to raise the debt ceiling pulling back after reaching levels above 7% earlier in the week.
- Separately, weekly jobless claims through May 20 came in lower than expected with previous two week revised lower after one state is reported to have detected a surge in fraud.
- A report earlier yesterday showed Massachusetts downwardly revised three months’ worth of claims or roughly 171k based on non-seasonally adjusted data that the state said were largely due to fraud, Bloomberg writes.
- That would suggest the market remains quite strong with four week moving average that is less volatile is estimated to have remained unchanged.
- Weekly Jobless Claims: 229k v 225k (revised from 242k) the previous week and 245k est.
China – Bloomberg surveyed economists see chances of a reserve requirement ratio cut as early as Q3/23 increasing as economic growth momentum slows down.
- The survey estimates the PBOC to bring rates down by 25bp to 10.5% by the end of Q3/23.
- Estimates are for GDP growth to average 5.5% for this year, down on 5.6% forecast earlier and compared to an official target of around 5%.
France – Business confidence slipped to 99 in May vs 101 in April.
UK – Retail sales came in stronger than expected in April albeit from a revised lower base with elevated inflation continuing to weigh on consumer spending.
- With core inflationary pressures continuing and expectations for another 25bp rate hike in June consumer spending is likely to remain subdued.
- Retail Sales (%mom): 0.5 v -1.2 (revised from -0.9) March and 0.3 est.
- Retail Sales (%yoy): -3.0 v -3.9 (revised from -3.1) March and -2.8 est.
South Korean – PPI 1.6% yoy in May and 3.3% yoy in April.
Turkey – The lira continued to slide lower on Friday as markets expect long time leader President Recep Erdogan to win presidential elections run off this Sunday.
- The currency is trading close to 20 against the US$ with derivatives markets pricing in a >50% chance that it falls to 29 in Q4/23 amid dwindling official foreign exchange reserves.
- The central bank left rates unchanged at 8.5% at its monetary policy meeting yesterday despite headline and core inflation running at ~44-45%.
Indonesia – Interest rates unchanged at 5.75%.
South Africa – The central bank 50bp rate hike fails to calm FX markets with the Rand sell off continuing and the currency hitting a record low of 19.8.
- The bank raised rates to 8.25% in the first unanimous decision since the start of the tightening cycle in November.
- Additionally, the governor did not offer an indication if the MPC is nearing the end of tightening.
- The economy is in a challenging position with persistent inflationary pressures that weigh on growth outlook along with power cuts and a diplomatic row with the US over a suspected arms shipment to Russia.
- The central bank expects the economy to grow only 0.3% in 2023.
Singapore – Q1 GDP fell 0.4% qoq vs 0.1% in Q4 and came in at 0.4%yoy in Q1 vs 2.1% yoy in Q4).
DRC – DRC looking to raise the nation’s stake in Chinese mines (Reuters).
- This may be done through Gecamines and could see DRC claw back up to 70% from 32%.
- More pressing is the impact of Chinese buying of cobalt and copper from child and indentured labour in artisanal mines (See Cobalt Red by Siddharth Kara).
Currencies
US$1.0743/eur vs 1.0717/eur yesterday. Yen 139.76/$ vs 139.47/$. SAr 19.679/$ vs 19.318/$. $1.235/gbp vs $1.234/gbp. 0.652/aud vs 0.653/aud. CNY 7.049/$ vs 7.075/$.
Dollar Index 104.11 vs 104.11 yesterday.
Commodity News
Precious metals:
Gold US$1,951/oz vs US$1,959/oz yesterday
Gold ETFs 94.0moz vs US$94.0moz yesterday
Platinum US$1,035/oz vs US$1,025/oz yesterday
Palladium US$1,445/oz vs US$1,411/oz yesterday
Silver US$23.07/oz vs US$23.09/oz yesterday
Rhodium US$6,900/oz vs US$6,900/oz yesterday
Base metals:
Copper US$ 8,081/t vs US$7,945/t yesterday – USGS reckons copper is not yet at critical mineral status in its report to Congress.
Aluminium US$ 2,258/t vs US$2,216/t yesterday
Nickel US$ 21,400/t vs US$21,230/t yesterday
Zinc US$ 2,318/t vs US$2,283/t yesterday
Lead US$ 2,088/t vs US$2,042/t yesterday
Tin US$ 24,875/t vs US$24,270/t yesterday
Energy:
Oil US$76.5/bbl vs US$78.0/bbl yesterday
- Crude oil prices edged lower going into the Memorial Day weekend in the US, which traditionally marks the start of the US peak driving season that ends on Labour Day in September.
- The US EIA storage report detailed a 96bcf build to 2,336bcf last week, with storage levels now 29.3% above last year and 17.0% above the 5-year average.
Natural Gas US$2.297/mmbtu vs US$2.386/mmbtu yesterday
Uranium UXC US$53.60/lb vs US$53.60/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$95.7/t vs US$95.5/t
Chinese steel rebar 25mm US$516.2/t vs US$514.4/t
Thermal coal (1st year forward cif ARA) US$98.0/t vs US$110.0/t
Thermal coal swap Australia FOB US$140.0/t vs US$150.0/t
Coking coal swap Australia FOB US$228.0/t vs US$228.0/t
Other:
Cobalt LME 3m US$30,180/t vs US$30,195/t
NdPr Rare Earth Oxide (China) US$68,446/t vs US$67,996/t
Lithium carbonate 99% (China) US$39,791/t vs US$39,653/t
China Spodumene Li2O 6%min CIF US$4,010/t vs US$4,010/t
Ferro-Manganese European Mn78% min US$1,273/t vs US$1,302/t
China Tungsten APT 88.5% FOB US$325/mtu vs US$325/mtu
China Graphite Flake -194 FOB US$760/t vs US$760/t
Europe Vanadium Pentoxide 98% 7.4/lb vs US$7.4/lb
Europe Ferro-Vanadium 80% 32.25/kg vs US$32.25/kg
China Ilmenite Concentrate TiO2 US$320/t vs US$319/t
Spot CO2 Emissions EUA Price US$86.3/t vs US$88.3/t
Brazil Potash CFR Granular Spot US$370.0/t vs US$370.0/t
Battery News
Company News
Wishbone Gold* (WSBN LN) 2.0p, Mkt Cap £3.9m – Magnetotellurics illuminate targets within 400m depth on Cottesloe prospect, Patterson Range, Western Australia
- Wishbone Gold report the identification of eight priority targets defined using Magnetotellurics at around 400m below surface on the Cottesloe prospect, Patterson Range, Western Australia.
- The expert team of geophysicists are aiming to identify Nifty Gold mine type mineralisation at Cottesloe.
- Wishbone is also starting a survey of ancient ‘Heritage’ sites within the area ahead of drilling on the prospect.
- Previous drilling and other exploration data is from areas mostly outside and peripheral to the Magnetotelluric anomalies.
- Future drilling will be directed in accordance with new 3D modelling incorporating the geophysical data.
- The Cottesloe MobileMT airborne electromagnetic survey covered 55 lines spaced 400m apart for 376 line-kilometres covering 143sqkm.
- Southern Geoscience have identified a central fold target zone for drilling in the 2023 field season using 2D final inversion results and a 3D project compilation incorporating drill results/soils/rockchips, geochemistry and MobileMT stitched resistivity isosurfaces.
- Eight primary MMT target area resistive zones have been outlined to date.
- MMT_C1 shows NW trending resistive zones which correlate with the local fold closure/axis of the known main mineralised units at Cottesloe. Drill targets should be defined following completion of geophysical interpretation.
- MMT_C2 is a more localised, moderate to deeper level, resistive zone also situated within the local fold closure/axis of the sequence ~2kms SE of the main Cottesloe known mineralised zone. Completion of geophysical interpretation dhould help define future drilling targets
- The MMT_C3 resistive zone is also situated within a clear, local fold closure/axis of the sequence ~7-8kms SE of the main Cottesloe known mineralised zone where there appears to be no historic soils or drill testing but further interpretation of the gravity and magnetic data is expected to aid target identification.
- MMT_C4 is a moderate depth level, fairly diffuse resistive zone elongate in a ~NW-SE sense situated again within a local fold closure/axis of the sequence ~4kms SE of the main Cottesloe known mineralised zone. In the absence of historic soils or drill testing near this MMT target further geophysical analysis may also aid target identification.
- MMT_C5 is a moderate depth level, discrete resistive zone along strike immediately NW of the MMT_C4 target. There is historic drilling and anomalous rockchip sample results immediately along strike to the NW of this MMT target zone.
- MMT_C6 is a moderate depth level, fairly diffuse broader resistive zone elongated in a ~NNW-SSE sense with no historic soils or drill testing situated along the NE fold limb/sequence ~1-2kms NE of the main Cottesloe known mineralised zone.
- A shallow depth-near surface, resistive zone at MMT_C7 is elongated in a ~NW-SE sense situated along the NE fold limb/sequence ~3kms E of the main Cottesloe known mineralised zone. There is limited historic drilling immediately SW of this MMT target zone.
- MMT_C8 is also a discrete, shallow depth-near surface, resistive zone elongated in a ~NW-SE sense situated along the NE fold limb/sequence ~2.5kms ENE of the main Cottesloe known mineralised zone. The absence of historic soils or drill testing in the vicinity require the assessment of magnetic and gravity data to help refine potential new drill targeting.
Conclusion: Recommendations by Southern Geoscience Consultants include the semi-regional scale gravity surveying as a useful additional technique to define either shallow sulphide bodies, alteration, carbonates or dolomites.
*SP Angel acts as Broker to Wishbone Gold
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 – [email protected] – 0203 470 0490
Simon Beardsmore – [email protected] – 0203 470 0484
Sergey Raevskiy –[email protected] – 0203 470 0474
Sales
Richard Parlons –[email protected] – 0203 470 0472
Abigail Wayne – [email protected] – 0203 470 0534
Rob Rees – [email protected] – 0203 470 0535
Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471
SP Angel
Prince Frederick House
35-39 Maddox Street London
W1S 2PP
*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 | Asian Metal |
DISCLAIMER
This note is a marketing communication and comprises non-independent research. This means it has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination.
This note is intended only for distribution to Professional Clients and Eligible Counterparties as defined under the rules of the Financial Conduct Authority and is not directed at Retail Clients.
This note is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published in whole or in part, for any purpose.
This note has been issued by SP Angel Corporate Finance LLP (‘SPA’) to promote its investment services. Neither the information nor the opinions expressed herein constitutes, or is to be construed as, an offer or invitation or other solicitation or recommendation to buy or sell investments. The information contained herein is based on sources which we believe to be reliable, but we do not represent that it is wholly accurate or complete. All opinions and estimates included in this report are subject to change without notice. It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. SPA is not responsible for any errors or omissions or for the results obtained from the use of such information. Where the subject of the research is a client company of SPA we may have shown a draft of the research (or parts of it) to the company prior to publication to check factual accuracy, soundness of assumptions etc.
Distribution of this note does not imply distribution of future notes covering the same issuers, companies or subject matter.
Where the investment is traded on AIM it should be noted that liquidity may be lower and price movements more volatile.
SPA, its partners, officers and/or employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time add to, or dispose of, any such investment(s).
SPA is registered in England and Wales with company number OC317049. The registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP. SPA is authorised and regulated by the UK Financial Conduct Authority and is a Member of the London Stock Exchange plc.
MiFID II – Based on our analysis we have concluded that this note may be received free of charge by any person subject to the new MiFID II rules on research unbundling pursuant to the exemptions within Article 12(3) of the MiFID II Delegated Directive and FCA COBS Rule 2.3A.19.
A full analysis is available on our website here http://www.spangel.co.uk/legal-and-regulatory-notices.html. If you have any queries, feel free to contact our Compliance Officer, Tim Jenkins ([email protected]).
SPA research ratings – Based on a time horizon of 12 months: Buy = Expec
