SP Angel Morning View -Today’s Market View, Thursday 4th January 2024

Gold rebounds after weak job openings as focus turns to labour data

MiFID II exempt information – see disclaimer below

First Quantum (FM CN) – Reports suggest Barrick is eyeing a potential bid

Gold rebounds after weak job openings as focus turns to labour data

• Gold prices climbed from recent lows of $2,030/oz to $2,047/oz.
• The move followed weaker-than-expected JOLTs data, which showed job openings at their lowest since November since 2021.
• However, Fed minutes held Treasury yields higher at 3.95%, with officials sticking to their higher for longer narrative.
• Focus turns to ADP payrolls and jobless claims today followed by nonfarm payrolls tomorrow.

Russian diamond producer Alrosa added to EU sanction list

• The EU added Alrosa and its CEO, Pavel Alekseevich Marinychev, to their sanction list yesterday.
• Alrosa produces c.90% of Russia’s diamonds.
• The move marked the Bloc’s 12^th round of sanctions intended to hit Russia and its oligarch’s amid the ongoing war in Ukraine.
• The direct ban started on the 1^st and a ban on indirect imports will begin from March.
• The EU is also introducing a system to trade gemstone origins from September.

Nickel continues to fall in 2024 as inventories pile up from Indonesian supply

• Nickel has fallen 2% ytd, having slumped over 40% in 2023. It currently sits at $16,300/t.
• Inventories have climbed 60% from November on the LME, having neared decade lows/
• Shanghai inventories are climbing past three-year highs.
• Indonesia continues to ramp up production, despite increasing appetite from steelmakers as the pricing environment improves.

Miners rally into seasonal strength despite underweight investors

• The Stoxx Basic Resources Index is up nearly 15% since October on signs of a manufacturing revival and lower rates.
• Mining stocks traditionally rally 1.3% in January and 3% in February on a seasonal basis.
• However, BoA’s monthly investor survey showed EU fund managers were net 26% underweight mining and chemical companies.
• Iron ore shrugged off seasonal weakness to hit 18 month highs at $142/t, supporting major miners including Rio and BHP.

Economics

US – Fed minutes highlighted good progress on the central bank managing inflation expectations, although, most monetary policy officials wanted to keep borrowing costs high “for some time”.

• Markets are expecting nearly six rate cuts over 2024 compared to three according to median Fed members’ projections.

China – Business activity gauge climbed in December with new business orders measure increasing at the fastest pace in seven months.

• Services sector, in particular, performed strongly expanding at the fastest pace in five months.
• Declines in new export orders continued to slowdown in a welcome news over the state of overseas demand.
• On the downside, employment continued to contract while final goods price inflation remained marginal amid lacklustre demand.
• “Looking to the new year, there is still room for adjustments in fiscal and monetary policies… Efforts to increase employment should be strengthened to alleviate pressure on the job market, improve people’s livelihoods, and ultimately foster long-term market confidence,” the report read,
• Caixin Manufacturing PMI: 50.8 v 50.7 November and 50.3 est.
• Caixin Services PMI: 52.9 v 51.5 November and 51.6 est.
• Caixin Composite PMI: 52.6 v 51.6 November.

Germany – Nationwide inflation is due later today with expectations for the measure to have picked up to 3.9% in December from 2.3% before.

• Regional data released so far points to a pick up in the rate of inflation last month.

France – Inflation climbed in December, in line with market estimates, led by higher prices of services as well as energy costs after the government reduced support for households.

• Inflation dynamics is closely watched by the ECB as the central bank assesses how long restrictive rates should be maintained for.
• CPI (%yoy): 3.7 v 3.5 November and 3.7 est.

UK – Mortgage lending picked up in November as interest rate expectations came down.

• Net mortgage approvals climbed to 50.1k in November, from 47.9k the previous month.
• Approvals are likely to continue to recover with lenders reported to be reducing mortgage rates following the rates market.

Currencies

US$1.0939/eur vs 1.0954/eur previous. Yen 143.63/$ vs 142.60/$. SAr 18.651/$ vs 18.585/$. $1.268/gbp vs $1.265/gbp. 0.674/aud vs         0.675/aud. CNY 7.153/$ vs 7.144/$.

Dollar Index 102.30 vs 102.17 previous.

Commodity News

BYD takes top spot despite record Q4 for Tesla

• Tesla delivered 484,507 EVs between October and December, a record Q4 for the US automaker.
• BYD delivered 526,409 in the same period, overtaking Tesla as the largest EV maker by sales.
• Tesla 2023 sales totalled around 1.8m vehicles – short of Elon Musk’s 2m target.
• BYD sales reached 3.02m, but this included 1.4m plug-in hybrid vehicles.

China sets out new regulations for EV-grid integration

• The Chinese state planner has issued new rules to strengthen the integration of EVs to the grid as it seeks to better manage its power demands amid the transition to renewable energy.
• It is estimated that EVs in China could provide tens of millions of kilowatts of regulation capacity for the grid.
• The country aims to have the potential of EVs as an energy storage resource validated through pilot schemes by 2025.
• According to the guidelines document publishes by the state planner, to achieve these goals, China will need to further develop battery technology, with battery life cycles reaching 3000 cycles.

Precious metals:

Gold US$2,047/oz vs US$2,061/oz previous

Gold ETFs 85.5moz vs 85.6moz previous

Platinum US$970/oz vs US$984/oz previous

Palladium US$1,067/oz vs US$1,086/oz previous

Silver US$23.02/oz vs US$23/oz previous

Rhodium US$4,425/oz vs US$4,425/oz previous

Base metals:

Copper US$ 8,506/t vs US$8,502/t previous

Aluminium US$ 2,296/t vs US$2,310/t previous

Nickel US$ 16,235/t vs US$16,600/t previous

Zinc US$ 2,558/t vs US$2,604/t previous

Lead US$ 2,041/t vs US$2,064/t previous

Tin US$ 25,360/t vs US$25,220/t previous

Energy:

Oil US$79.0/bbl vs US$75.4/bbl previous

Natural Gas €33.5/MWh vs €31.4/MWh previous

Uranium UXC US$91.00/lb vs US$82.30/lb previous

Bulk:

Iron Ore 62% Fe Spot (cfr Tianjin) US$142.8/t vs US$141.8/t

Chinese steel rebar 25mm US$579.1/t vs US$579.6/t

Thermal coal (1st year forward cif ARA) US$111.8/t vs US$94.5/t

Thermal coal swap Australia FOB US$127.0/t vs US$124.5/t

Coking coal swap Australia FOB US$317.0/t vs US$317.0/t

Other:

Cobalt LME 3m US$29,135/t vs US$29,135/t

NdPr Rare Earth Oxide (China) US$60,468/t vs US$61,938/t

Lithium carbonate 99% (China) US$12,094/t vs US$12,108/t

China Spodumene Li2O 6%min CIF US$1,090/t vs US$1,120/t

Ferro-Manganese European Mn78% min US$1,056/t vs US$1,057/t

China Tungsten APT 88.5% FOB US$305/mtu vs US$305/mtu

China Graphite Flake -194 FOB US$600/t vs US$610/t

Europe Vanadium Pentoxide 98% 6.0/lb vs US$6.0/lb

Europe Ferro-Vanadium 80% 26.25/kg vs US$26.25/kg

China Ilmenite Concentrate TiO2 US$315/t vs US$316/t

Spot CO2 Emissions EUA Price US$83.6/t vs US$83.7/t

Brazil Potash CFR Granular Spot US$290.0/t vs US$290.0/t

Company News

First Quantum (FM CN) C$13.3, Mkt cap C$9.3bn – Reports suggest Barrick is eyeing a potential bid

• First Quantum shares have rallied 23% over the past two days on rumours of a potential Barrick bid.
• Bloomberg reports that Barrick’s CEO, Mark Bristown, has been sounding out First Quantum’s major investors.
• First Quantum has been thrown into crisis following the shutdown of its main copper mine, Cobre Panama.
• FQM’s major shareholders include Capital Group with 22% and Jiangxi Copper with 18%.
• Both Barrick and FQM have declined to comment.
• Rumours of a takeover attempt by Barrick for First Quantum had circled last year, with Bristow’s desire for more copper exposure well documented.
• First Quantum is likely to be in breach of its debt covenants were Cobre Panama to remain shut through this year.

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

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

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

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