Copper prices continue to climb through US holiday in anticipation of China stimulus
MiFID II exempt information – see disclaimer below
Amaroq Minerals (AMRQ LN) – New CFO as Nalunaq mine moves closer to gold production
Blencowe Resources (BRESB LN) –– Graphite concentrate conversion
Eramet SA (ERA FR) – DLE lithium to start industrial scale production in November
Glencore (GLEN LN) – Approval for Teck coal acquisition
Metals hold higher levels as trade subdued on US holiday before Third Plenum in China
- Copper prices have strengthened to $9,940/t , supported by lower Treasury yields and a weaker dollar.
- Thin trading on US 4th July holiday has failed to limit copper’s rally, whilst Bloomberg reports LME trading in Q2 hit highs for the decade.
- Iron ore has been strong, climbing back to $113/t for the 62% index, with focus on China’s Third Plenum for additional policy measure indications.
- Analysts suggest fading seasonal impacts and weather impacts to weigh on Chinese iron ore demand going forward.
- Real estate remains under pressure in China, despite the May rescue package as developers struggle with oversupply.
- Steelmaking furnace rates are at high levels as steel demand improves.
Gold prices ($2,366/0z) push higher as US yields slide before key labour data
- Gold prices have pushed past $2,360/oz, climbing to recent highs as the dollar slides.
- US Treasury yields are falling, weighing on the dollar following its sustained rally.
- The 10 year sits at 4.345%, having neared 4.5% earlier this week.
- Today’s NFP data will be key for gold, with JOLTs data earlier this week showing a falling ratio of quits to unemployed below pre-COVID levels.
- Private payrolls will be focused on, with a slide below 150k expected to fuel concern over the widely viewed strength of the US labour market.
| Dow Jones Industrials | CLOSED | at | 39,308 | |
| Nikkei 225 | -0.00% | at | 40,912 | |
| HK Hang Seng | -0.91% | at | 17,864 | |
| Shanghai Composite | -0.26% | at | 2,950 | |
| US 10 Year Yield (bp change) | -0.4% | at | 4.35 |
Economics
US – NFPs are due later today and are to be closely watched as to the trend in unemployment and labour earnings amid Fed hesitation to start rates easing cycle.
- The NFP data is expected to significantly shape market sentiment over the potential timing and extend of future rate cuts.
- Markets are looking for 180,000 new jobs alongside 4% unemployment.
- We suspect the relatively high level of interest rates will be starting to bite leading to a higher risk on lower jobs growth.
China – The government is planning to hold a hearing later this month over claims that European brandy producers are selling into China at below market rates.
- The news follows the decision by the EU to introduce import tariffs on Chinese manufactured EVs and serves as a sign of incoming retaliation from one of its largest trading partners.
- Third plenary session the central committee
- The CPC Central Committee is expected to press on with reform and modernisation. Eg:
- Ongoing support and expansion of green technologies such as EVs, solar, wind farms, hydropower, nuclear etc…
- Common Prosperity – eg social housing
- Ongoing urbanisation
- Reform of rural agricultural systems.
- Property market: additional stimulus to support property sales
- Construction: more support to restart stalled housing projects.
UK – Labour takes 412 House of Commons seats out of 650 as of this morning while Conservatives are on course to have won 121 seats, less than a third compared to a 2019 vote marking the worst ever result.
- The pound is trading little changed against the € this morning at 1.18 and so is sovereign debt with 10y yields are at 4.2%, almost flat on the previous day.
- Property prices edged lower but only marginally in June, according to the lender Halifax.
- House prices were down 0.2%mom following two months of no change taking the average to ~£288k. House prices rose 1.6%yoy.
- Construction PMI falls to 52.2 in June from 54.7 in May. The PMI was lower than the 54.0 expected due to political uncertainty despite a degree of optimism in the sector and relatively low inflation.
- Election results:
-
- Labour 412 (+211 MPs on 2019)
- Conservatives 120 (-250)
- Liberal Democrats 71 (+63)
- SNP 9 (-38)
- Sinn Fein 7 (0)
- Democratic Unionist Party 5 (-3)
- Reform UK 4 (+4)
- Green Party 4 (+3)
- Plaid Cymru 4 (+2)
- Nigel Farage, a former metals trader with Drexel Burnham Lambert and Crédit Lyonnais Rouse was elected as an MP for Reform.
- A Chinese Foreign Ministry spokesperson said “Developing a stable and mutually beneficial China-UK relationship is in line with the fundamental interests of the two peoples, and is conducive to both sides responding to global challenges together and promoting world peace and development,”
Germany – Industrial production dropped 2.5%mom in May marking a worst than expected 0.2% fall.
- May data shows production was down 6.7%yoy and more than 11% lower than in pre pandemic times.
- Declines were led by sectors like autos, machinery and equipment as well as construction.
- High input costs and borrowing costs as well as slowing growth in China are likely culprits of headline numbers, although, a high number of bank holidays are likely to explain some weakness as well.
Currencies
US$1.0825/eur vs 1.0791/eur previous. Yen 160.79/$ vs 161.41/$. SAr 18.200/$ vs 18.421/$. $1.277/gbp vs $1.275/gbp. 0.673/aud vs 0.672/aud. CNY 7.269/$ vs 7.271/$.
Dollar Index 105.00 vs 105.29 previous.
- Dollar index falls on poor ISM services data.
- Investors now see a near 74% probability in a Fed rate cut in September despite FOMC minutes indicating that it is not yet appropriate to cut rates till there is greater confidence in achieving their 2% inflation target.
Precious metals:
Gold US$2,364/oz vs US$2,354/oz previous
Gold ETFs 81.3moz vs 81.2moz previous
Platinum US$1,008/oz vs US$1,004/oz previous
Palladium US$1,034/oz vs US$1,015/oz previous
Silver US$30.56/oz vs US$30/oz previous
Rhodium US$4,650/oz vs US$4,625/oz previous
Base metals:
Copper US$ 9,947/t vs US$9,814/t previous
Aluminium US$ 2,528/t vs US$2,542/t previous
Nickel US$ 17,365/t vs US$17,195/t previous
Zinc US$ 2,998/t vs US$2,979/t previous
Lead US$ 2,229/t vs US$2,211/t previous
Tin US$ 33,380/t vs US$33,180/t previous
Energy:
Oil US$87.5/bbl vs US$86.7/bbl previous
Natural Gas €33.7/MWh vs €32.3/MWh previous
Uranium Futures $85.5/lb vs $85.5/lb previous
Bulk:
Iron Ore 62% Fe Spot (cfr Tianjin) US$113.1/t vs US$113.1/t
Chinese steel rebar 25mm US$517.4/t vs US$517.7/t
Thermal coal (1st year forward cif ARA) US$116.5/t vs US$114.3/t
Thermal coal swap Australia FOB US$134.0/t vs US$134.0/t
Coking coal Dalian Exchange futures price US$214/t vs US$221.4/t
Other:
Cobalt LME 3m US$27,150/t vs US$27,150/t
NdPr Rare Earth Oxide (China) US$49,596/t vs US$49,923/t
Lithium carbonate 99% (China) US$12,038/t vs US$12,034/t
China Spodumene Li2O 6%min CIF US$1,030/t vs US$1,030/t
Ferro-Manganese European Mn78% min US$995/t vs US$995/t
China Tungsten APT 88.5% FOB US$345/mtu vs US$345/mtu
China Graphite Flake -194 FOB US$470/t vs US$470/t
Europe Vanadium Pentoxide 98% 5.1/lb vs US$5.1/lb
Europe Ferro-Vanadium 80% 26.75/kg vs US$26.85/kg
China Ilmenite Concentrate TiO2 US$313/t vs US$313/t
China Rutile Concentrate 95% TiO2 US$1,396/t vs US$1,396/t
Spot CO2 Emissions EUA Price US$69.6/t vs US$69.6/t
Brazil Potash CFR Granular Spot US$310.0/t vs US$310.0/t
Battery News
BYD to overtake Tesla in BEV sales in 2024
- BYD is expected to surpass Tesla in BEV sales in 2024.
- BYD’s Q2 BEV sales increased by 21% yoy to 426,039 units, compared to a decrease of 4.8%, to 443,956 vehicles, for Tesla.
- In 2023, BYD’s total production (including hybrids) was over 3m, surpassing Tesla’s 1.84m cars for the second consecutive year.
- BYD manufactured 1.6m battery-only cars and 1.4m hybrids, while Tesla led in BEV production.
- China is a dominant force in the BEV market, with BEV sales estimated to be four times higher than North America’s this year.
- China is expected to hold over 50% of the global BEV market share until 2027 and to top combined North America and Europe sales by 2030.
UK new car sales top 1 million in H1 despite commercial-private divide
- New car sales in the UK reached over 1m in H1 ‘24, the first time since 2019.
- June new car registrations rose 1.1% yoy to 179,263 units.
- The January-June total was 1,006,763, indicating a 6% growth rate for the first half of 2024.
- Growth was driven by commercial demand, with fleet and business sales increasing.
- However, private retail demand declined for the ninth consecutive month due to the cost-of-living crisis.
- EV demand grew robustly in June, with hybrid EV sales up 27.2% and plug-in hybrid sales up 30%.
- BEV sales increased by 7.4%, similar to last year’s levels, indicating subdued demand.
BEVs achieved their highest monthly market share since December 2023, making up 19% of new registrations in June.
- For the year, BEV market share is 16.6%.
LG to see EV battery breakthrough by 2028
- LG Energy Solution aims to commercialise its dry-coating technology by 2028, enhancing competitiveness with Chinese rivals.
- The technology replaces the energy-intensive wet process for making battery electrodes, reducing costs and environmental impact.
- LG plans to complete a pilot production line for dry-coating in Q4 2024, with full-scale production starting in 2028.
- Dry-coating can reduce battery manufacturing costs by 17% to 30%.
- Volkswagen claims the technology could reduce energy use by 30% and space by 50%.
Company News
Amaroq Minerals (AMRQ LN) 65p, Mkt Cap £211m – New CFO as Nalunaq mine moves closer to gold production
- Amaroq Minerals reports the appointment of Ellert Arnason as CFO from August.
- Ellert Arnason joins from Icelandic bank Landsbankinn, where he is currently Head of Corporate Finance.
- Mr Arnason has previously held senior positions at the Pension Fund of Commerce, Iceland’s second-largest pension fund, and at GAMMA Capital Management.
- He has a Master’s Degree in Financial Economics and a Bachelor’s Degree in Mathematics from the University of Iceland.
- Amaroq recently agreed heads-of-terms for three revolving credit facilities, totalling US$35m, with Landsbankinn.
- The financing replaces previously undrawn credit lines
-
- A US$28.5m facility to be used to complete the Nalunaq mine development in southern Greenland; and
- A US$6.5 million facility with a margin of 7.5% per annum, available for general corporate purposes once all other facilities have been fully drawn.
Conclusion: Amaroq is working towards the production of gold from Nalunaq later this year which looks like great timing assuming gold prices hold current levels.
Blencowe Resources (BRESB LN) – 5p, Mkt cap £11m – Graphite concentrate conversion
- Blencowe report they have converted 600t of in situ raw material to 30t of graphite concentrate.
- The 600t bulk sample conversion was conducted by Jilin, commercial graphite processor.
- The testing has generated a 96% Cg concentrate for small flake products and 96-97% for large flake.
- The company reports the concentrate mix at 55/45 small/large flake respectively.
- Jilin previously signed an MoU for 15ktpa large flake concentrate from Blencowe’s Orom-Cross
- Samples are currently being tested by SPG producer Taida to beneficiate 20t of small flake concentrate into 99.95% uncoated SPG.
- Blencowe is looking to secure offtake agreements with commercial partners.
Eramet SA (ERA FR) – €107, Mkt cap €3.1bn – DLE lithium to start industrial scale production in November
- Eramet provided an update on their Centenario DLE lithium project in Salta, Argentina yesterday.
- The project is a JV with Tsingshan split 50.1% Eramet and 49.9% Tsingshan.
- Eramet expects industrial scale battery-grade carbonate production in November 2024.
- The Company expects to produce 25ktpa at full capacity.
- Full capacity is expected by mid-2025 but is expected to be limited in 2024.
- The Companies have invested $870m in hase 1, with OPEX expected at $4,500-5000/t LCE>
- The Company has approved a second plant at Centenario to boost production by 30ktpa LCE, although this is dependent on permitting and fiscal regime.
- The Centenario-Ratones deposit reportedly holds a mineral resource of 15mt LCE with an average concentration of 407mg/L,
- The project has achieved 90% recoveries over five years of testing in a pilot plant.
Glencore (GLEN LN) – 485p, Mkt cap £60bn – Approval for Teck coal acquisition
- Glencore has received regulatory approval from the Canadian Government’s Investment Canada Act for the acquisiton of the 77% stake in EVR from Teck.
- The Company reports they have made ‘significant commitments to the Canadian government.’
- These terms hold a duration of five years and force EVR to remain incorporated under laws of Canada.
- CAPEX over the term will need to be >C$3bn exc. deferred stripping and R&D commitments of C$150m will be made to explore water quality treatment.
- The deal also ensures Canadian employment persists.
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
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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
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| 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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