Metals & Mining Monitor | Gold prices exhibit stability; FCX, SCCO, CLF, NEM release earnings

Moomoo News AU wrote a column · Jul 30, 2024 11:03

Metals & Mining Monitor | Gold prices exhibit stability; FCX, SCCO, CLF, NEM release earnings

Hello mooers! Check out the latest market dynamics of the metals and mining industry over the past week.
•Base metals: Copper prices decline by 2.1% in a week
•Energy metals: Nickel prices drop by 3.4%
•Precious metals: Gold prices exhibite stability
•Bulk commodities: Iron ore prices fall by 2.3% in one week

Spot Price Snapshot

Key Price Moves

Since July, copper prices have persistently fallen, at one point plunging below $9,000 per tonne—their lowest in nearly four months—due to escalating demand concerns from China, its principal consumer. The Chinese government has opted not to introduce stimulus measures aimed at countering the sharp deceleration in the world's leading manufacturing sector. Instead, it has reaffirmed its commitment to transitioning the economy towards sectors specializing in advanced technologies and renewable energies, moving away from its traditional focus on construction and industry. Additionally, the prospect of trade barriers imposed by the United States and Europe has intensified the downward pressure on prices.

In the face of these immediate hurdles, UBS maintains a positive stance on the medium-term prospects for copper. Analysts from the firm have pointed out, "Secular demand drivers (renewables, grids, EVs) remain largely intact." They anticipate a contraction in the physical market within the next six to twelve months, which they believe will propel prices upward. $Copper Futures(MAY5) (HGmain.US)$

Nickel has experienced a notable decline, with prices plummeting to approximately $15,550 per tonne, representing a nadir not seen in the past five months. This downturn is attributed to a wave of liquidations by investment funds, who are shedding their long positions in the face of a robust US dollar coupled with disappointing manufacturing figures emerging from China.

Despite a series of ostensibly bullish developments, such as the European Central Bank's decision to slash interest rates, a halt in production activities in New Caledonia, and the looming threat of permit revocations in Indonesia, the commodity's value has suffered a precipitous fall. Market analysts have articulated concerns about the persistent challenge posed by an excess supply in the market. The forecasts point towards a swelling of total primary nickel stocks, anticipated to surge to the highest levels in four years by 2024. This burgeoning inventory is likely to stifle any significant recuperation in nickel's price for the duration of the current year.

Gold prices exhibited stability last week, climbing above $2,390 per ounce on Monday. This uptick extended the upward trend from the previous session, buoyed by optimism over potential rate cuts by the Federal Reserve. The US June Personal Consumption Expenditures (PCE) index, which the Fed prefers for tracking inflation, aligned with projections. However, the core inflation rate edged up by 0.2%, marginally exceeding the anticipated 0.1% rise.

Despite this slight increase, market sentiment for a reduction in interest rates remained firm. Investors have fully priced in a cut at the upcoming September meeting, with expectations of two further reductions before year-end.

Adding to gold's appeal as a safe-haven asset were the escalating geopolitical tensions in the Middle East. This followed an assertion from Israel of a robust response to any aggressions from Hezbollah, further bolstering the precious metal's allure amidst uncertainty. $Gold Futures(APR5) (GCmain.US)$

Iron ore prices for cargoes with a 62% iron content have plunged to a nadir unseen since April, primarily due to subdued demand signals and the lack of supportive measures for China's property sector, which has traditionally fueled consumption. This downturn has affected market sentiment significantly. In response to the stagnant domestic steel demand, Chinese steelmakers are increasingly turning to international markets. The outcomes of the recent Third Plenum have also left investors unenthused, as the meeting's resolutions upheld the status quo, offering no substantial policy changes to tackle prevailing economic hurdles. The investment community is now shifting its focus to the upcoming release of manufacturing and services activity data, seeking further insight into the trajectory of the world’s second-largest economy. $TSI Iron Ore CFR China (62% Fe Fines) Index Futures(APR5) (FEFmain.SG)$

Top Company News

Freeport-McMoRan Revises Production Outlook Downward, Surpasses Q2 Earnings Forecasts

$Freeport-McMoRan (FCX.US)$ has revised its annual production forecast downward even though it exceeded market expectations for its second-quarter earnings and revenue. The prominent copper and gold mining company announced a second-quarter profit of $616 million, translating to 42 cents per share, a notable increase from the previous year's $343 million, or 23 cents per share. The adjusted earnings were reported at 46 cents per share, surpassing the anticipated 40 cents per share projected by analysts, as per FactSet data. Revenue climbed to $6.62 billion, up from $5.74 billion, exceeding the $6 billion forecast by FactSet analysts. The firm attributed the variance in copper and gold sales volumes to the acknowledged shipping disruptions in Indonesia throughout June.

Looking ahead to 2024, Freeport-McMoRan has adjusted its gold sales projection to approximately 1.8 million ounces, down from the initial estimate of 2 billion ounces. Copper sales forecasts have been moderated to around 4.1 billion pounds, a slight decrease from the previously anticipated 4.15 billion pounds, while molybdenum sales are now expected to reach 82 million pounds, down from the first-quarter projection of 84 million pounds. The company cited alterations in mine sequencing to manage damp conditions at select extraction points in the Grasberg Block Cave underground mine as the reason for the revised guidance.

Southern Copper Surpasses Q2 2024 Earnings Forecasts

$Southern Copper (SCCO.US)$ has reported robust financial results for the second quarter of 2024, surpassing market expectations. The company's revenues reached US$3.1 billion, exceeding forecasts and demonstrating a strong financial performance. Furthermore, the statutory earnings per share exceeded analysts' predictions by a substantial 10%.

In light of these impressive figures, the consensus among the 15 financial analysts covering Southern Copper anticipates the company's revenues to climb to US$12.0 billion for the fiscal year 2024. This projection represents a significant 15% increase in revenue over the preceding 12 months. Additionally, earnings per share are projected to rise by 17%, reaching US$4.10, reflecting a positive outlook for the company's profitability.

Vale Commits $149M to Launch Nickel-Copper Open-Pit Mine in Canada, Aiming for 1.5M Ton Yield by 2025

$Vale SA (VALE.US)$ is embarking on the development of a new open-pit mine at the site of the historical Stobie mine in Sudbury, Ontario. The Stobie mine, which commenced operations underground in 1914 and concluded in 2017, has been a significant source of nickel and copper, with production exceeding 375 million tons throughout its history. Vale's division in Toronto, specializing in base metals, has allocated $149 million for the open-pit endeavor, planned over the upcoming four years. The anticipated output for the initial year is set at 300,000 tons of nickel and copper, with projections to increase the yield to 1.5 million tons by the year 2025. The project is also expected to produce valuable byproducts, such as cobalt and various precious metals.

Cleveland-Cliffs Reports Sharp Decline in Q2 Earnings Amid Shrinking Margins

$Cleveland-Cliffs (CLF.US)$ has reported a significant downturn in its profit for the second quarter, attributing the decline to diminishing steel prices that adversely affected the company's margins. The steel manufacturing firm, headquartered in Cleveland, disclosed a marginal profit of $2 million, or an equivalent of 0 cents per share, for the quarter ending on June 30. This figure represents a drastic reduction from the $347 million, or 68 cents per share, reported in the same period the previous year.

The company's revenue experienced a downturn, decreasing to $5.09 billion from the $5.98 billion recorded last year, and failed to meet the analyst projections of $5.18 billion. Moreover, Cleveland-Cliffs observed a contraction in its gross margin, which declined to $145 million from the previous quarter's $629 million.

Newmont Surpasses Earnings Forecasts with Increased Gold Output

$Newmont Corp (NEM.AU)$ outperformed analysts' earnings expectations for the second quarter, bolstered by vigorous gold production levels and appreciable market prices.

Furthermore, the leading gold producer disclosed an agreement to divest its stake in the entity overseeing deferred payment rights associated with Indonesia's Batu Hijau mine, valued at approximately $153 million.

Following the company's November completion of the substantial $17 billion Newcrest acquisition, Newmont has unveiled its strategy to generate a minimum of $2 billion through the strategic sale of select, non-essential assets of commendable quality.

Fortescue's Annual Iron Ore Shipments Remain Steady Despite Challenges

$Fortescue Ltd (FMG.AU)$ has reported a stable performance in its annual iron ore shipments, despite facing operational hurdles such as a train derailment and severe weather conditions. The Australian mining giant disclosed that it transported 191.6 million metric tons of iron ore during the 12-month period ending in June, a figure that aligns closely with the 192.0 million tons shipped in the preceding year. This outcome sits at the lower end of Fortescue's projected shipment range of 192 million to 197 million tons, which included an estimated contribution of approximately 2 million tons from the "Iron Bridge" project.

Despite these challenges, Fortescue showcased resilience with a record-breaking final quarter, during which iron ore shipments surged to a historic peak of 53.7 million tons. This impressive quarterly figure represents a 10% increase over the same quarter in the previous year, highlighting the company's robust performance amidst adversity.

Pilbara Minerals Records $305 Million in Revenue for Q4, Despite Annual Decline

$Pilbara Minerals Ltd (PLS.AU)$ announced a significant revenue increase to AU$305 million in the fiscal fourth quarter ending June, marking a 58% surge from the AU$192 million reported in the preceding quarter. Despite this quarterly upturn, the company's total revenue for the entire fiscal year experienced a 69% decrease, settling at AU$1.25 billion compared to AU$4.06 billion in fiscal year 2023.

The quarter under review witnessed the production of 226,200 tonnes of spodumene concentrates, with 235,800 tonnes successfully sold at a realized price of "$840 per tonne," according to the company's official statement.

Looking at the annual production figures, there was a 17% year-on-year increase, with the total reaching 725,300 tonnes, up from 620,100 tonnes. The volume of concentrates sold also rose by 16% to 707,100 tonnes, climbing from 607,500 tonnes. However, the realized price per tonne took a sharp decline of 74%, plummeting from "$4,447 per tonne" in the previous year to "$1,176 per tonne," as noted in the company's filing.