Metals & Mining Monitor | Base and Precious Metals Prices Bounce Back; Freeport Cuts Q2 Outlook for Copper, Gold Sales

Moomoo News Canada wrote a column · 3 hours ago

Metals & Mining Monitor | Base and Precious Metals Prices Bounce Back; Freeport Cuts Q2 Outlook for Copper, Gold Sales

Hello mooers! Check out the latest market dynamics of the metals and mining industry over the past week.
•Base metals: Copper prices rebound by 3.5% in a week
•Energy metals: Nickel prices stabilize and surpass $17,000 per ton
•Precious metals: Gold and silver prices rise by 2.1% and 4.1% respectively last week
•Bulk commodity: Thermal coal prices up by 1.4% to $134 per ton

Spot Price Snapshot

Key Price Moves

The spot copper price on the London Metal Exchange (LME) saw a significant increase of 3.5% over the week, reaching $9809 per ton. Concurrently, $Copper Futures(SEP4)(HGmain.US)$ experienced a notable rise to approximately $4.60 per ounce this past Friday, marking a four-week peak. This surge in value is attributed to the growing likelihood that the US Federal Reserve may initiate interest rate reductions as soon as September. Additionally, the anticipation of further economic stimulus actions in China, the world's leading consumer of copper, has positively influenced market sentiments.

Investors are also anticipating a crucial political conference in China later in July, where it is expected that senior officials will disclose new initiatives to bolster the economy. It is worth noting that the inventory monitored by the LME have escalated to 186,450 tons, a figure not seen since October of the previous year.

Gold moderated on Monday, following a surge exceeding 1% in the prior session, yet it hovered near six-week peaks. This buoyancy is attributed to mounting anticipation of preemptive interest rate reductions by the Federal Reserve, spurred by recent weak economic indicators from the U.S. Friday's reports revealed a softening U.S. job market, with the unemployment rate escalating to its highest in two-and-a-half years and wage increases declining to their lowest in three years. Market sentiment is now leaning towards a 78% likelihood of the Fed initiating rate cuts in September, with additional expectations of a subsequent reduction before year-end.

Investor attention is pivoting to the forthcoming U.S. Consumer Price Index (CPI) and Producer Price Index (PPI) announcements this week. These key economic indicators will be complemented by Federal Reserve Chair Powell's biannual report on monetary policy to Congress, as well as further commentary from Federal Reserve officials over the course of the week. In Europe, the political landscape is under scrutiny as traders observe the aftermath of France's left-wing New Popular Front coalition's latest maneuver, which stymied a far-right progression on Sunday, yet fell short of securing a parliamentary majority.

Last week, thermal coal prices climbed to $134 per ton. This price increase was primarily triggered by an underground fire at a key coal mine in Australia. Compounding the situation, the industry faced additional supply chain challenges, including severe floods in Indonesia and incidents of train thefts in South Africa.

Concurrently, India—the world's second-largest coal consumer—is grappling with unprecedented peak power demand in the northern regions, fueled by an unrelenting heatwave. In a further development, the United States has intensified its economic pressure on Russia with a recent extension of sanctions targeting the Russian coal sector.

Top Company News

Freeport-McMoRan Adjusts Q2 Forecasts Downward for Copper and Gold Revenue

$Freeport-McMoRan(FCX.US)$ has revised its sales projections downward for the second quarter, attributing the change to a holdup in securing an export permit for its subsidiary, PT Freeport Indonesia. The corporation now anticipates that copper sales will fall short of initial estimates by 5%, a decrease from the expected 975 million pounds. Similarly, gold sales are projected to be approximately 30% lower than the earlier projection of 500,000 ounces. Looking ahead to 2024, the company has scaled back its gold sales forecast to approximately 1.8 million ounces from the previously estimated two million ounces. However, it has stated that the copper sales outlook for that year is not anticipated to undergo any significant adjustments.

Canada Greenlights Glencore's Acquisition of Teck's Coal Division with Conditions

The Canadian government has greenlit $GLENCORE PLC(GLNCY.US)$'s acquisition of $Teck Resources(TECK.US)$' steelmaking coal division in a deal valued at $6.93 billion, with stringent terms aimed at job preservation, announced the nation's industry minister on Thursday. To obtain consent, Glencore has committed to keeping the Canadian headquarters for Elk Valley Resources (EVR) for a minimum of ten years, guaranteeing that a majority of EVR's board members will be Canadian, and sustaining considerable employment numbers at EVR for at least five years, as stipulated by the ministry.

Saudi Aramco and ADNOC Assess Acquisition Prospects for Santos' LNG Assets

Sources familiar with the situation report that Saudi Aramco and Abu Dhabi National Oil Company (ADNOC) are independently contemplating potential offers for Australia-based Santos Ltd., with a particular focus on its liquefied natural gas (LNG) holdings. The state-owned entities, Aramco and ADNOC, are undertaking preliminary assessments of $Santos Ltd(STO.AU)$, considering it a viable acquisition candidate. These evaluations are part of their strategic investment plans, as they allocate billions of dollars towards natural gas ventures. Natural gas is widely regarded as a crucial transitional fuel within the energy sector, especially pertinent to Asia's market demands.

BHP Group Reduces Employee Incentives Following Unmet Performance Objectives

In the wake of falling short of its performance benchmarks, $BHP Group Ltd(BHP.AU)$ has announced a reduction in its incentive compensation across the organization. It is reported that the leading mining corporation has decreased bonus payouts to 80% of the potential short-term incentives for the fiscal year 2023-2024. This adjustment is anticipated to impact a substantial number of employees, with the total reaching into the tens of thousands.

Rio Tinto Finalizes Installation of Solar Plant at Diavik Diamond Mine

$Rio Tinto Ltd(RIO.AU)$ announced on last Tuesday that a new solar power facility has been successfully installed at the Diavik diamond mine located in the Northwest Territories of Canada. The solar plant, boasting a capacity of 3.5 megawatts, is set to supply approximately 25% of the mine's electricity needs as it undergoes closure procedures. The leading mining corporation anticipates that commercial production at the Diavik site will cease in 2026, with the closure process projected to continue until 2029.

FIRB Approves Sale of South32's New South Wales Project to Golden Energy

Australia's Foreign Investment Review Board, or FIRB, approved the sale of $South32 Ltd(S32.AU)$'s Illawarra metallurgical coal operations in New South Wales to an entity owned by Golden Energy and Resources. The transaction is expected to be completed in the first quarter of the financial year 2025, subject to the remaining foreign merger clearances, the filing said.