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Mining
Oh Happy Day. Not just a key plot driver in the Whoopie Goldberg vehicle Sister Act 2 (which features, by the way, a young Lauryn Hill of Fugees fame).
Sorry, got lost there a minute. It’s also how ASX resources investors are feeling after a catalogue of good news that reads like the pages of a silver age comic.
Gold whoop, lithium kapow, copper whango. Any other made up action words you want to use, you name it, this market’s got it.
We’re currently staring at fresh all time highs for three of the big four lithcos on the ASX, Mineral Resources (ASX:MIN), Pilbara Minerals (ASX:PLS) and IGO (ASX:IGO).
Allkem (ASX:AKE) is tantalisingly close.
The background is a 75% year on year rise in electric vehicle sales in October in China, with 556,000 electrics and hybrids sold in the past month according to Tuesday’s data from the China Passenger Car Association (PCA).
4.43 million New Energy Vehicle (NEV) cars have been sold in the first 10 months of the year in the world’s largest market with BYD shipping 217,518 cars and Tesla delivering 71,704, with 54,504 to be sent overseas.
The PCA has said over 700,000 sales should be made to dealers in November and December, placing the Chinese market at 6.5m units, equivalent almost to the whole global market in 2021.
Total vehicle sales in fell 4.4% to 1.86m from September, but that’s not a massive surprise given the issues Covid lockdowns have posed.
Those EV stats and some serious supply issues were also backing runs in the base metals with inventory drawdowns and mine disruptions in Peru seeing copper rise 2.5% above US$8000/t, nickel piercing US$24,000/t and aluminium up 1.5% to US$2372/t.
Which is back above US$1700/oz ahead of the results from the US mid-term elections and a new inflation report in the States later this week.
This bubble could yet burst, but analysts reckon the run on little more than a weaker US dollar is a good omen.
“The weakness in the dollar was more of a short-covering move and potentially on hopes that later this week we will have confirmation that inflation is headed lower,” OANDA senior market analyst Ed Moya said.
“Gold looks like it could be breaking out now and it will just need the macro backdrop to support the move higher. Gold’s rally above the $1700 was impressive as it comes before any exit polling data and well ahead of Thursday’s inflation report.
“Gold should find major resistance ahead of the $1750 level and that might prove to be difficult to reach before this week’s CPI data.”
Gold majors Northern Star Resources (ASX:NST) and Newcrest Mining (ASX:NCM) were, predictably, big winners, up 7.5% and 6.72% respectively.
Regis Resources (ASX:RRL), Capricorn (ASX:CMM), De Grey (ASX:DEG) and Evolution (ASX:EVN) were all up 8% or more, with Champion Iron (ASX:CIA) the only non-gold miner perforating the top-10 in the mid-caps.
The All Ords gold sub-index is up more than 7%, hitting its strongest level in three months.
Materials stocks are up 2.37% with Rio Tinto (ASX:RIO), BHP (ASX:BHP) and OZ Minerals (ASX:OZL) all moving higher.
Even on days like these someone has to disappoint you.
Today it’s high-flying coal miner Whitehaven Coal (ASX:WHC), which says wet weather has forced it to slash guidance from its New South Wales coal mines for FY23.
While guidance from the Narrabri mine has been revised up, overall ROM coal production will slip from 20-22Mt to 19-20.4Mt, largely led by the Maules Creek mine, which will see production slide from 11.7-12.6Mt to 10.3-11Mt.
Managed coal sales will drop from 17.5-18.5Mt to 16.5-18Mt, with equity sales sliding from 14.1-14.9Mt to 13.1-14.4Mt and unit costs lifting from $89-96/t to $95-102/t.
This bodes poorly for other miners in the region, all of whom are impacted by the current La Nina phenomenon, the third such one we’ve seen in three successive years.
There could be a silver lining for the miners, with supply shortages potentially putting the screws on an already tight market.
Whitehaven shares cratered by 9.46%, with Newcastle coal futures also sliding 1.9% to US$338.50/t yesterday.
New Hope (ASX:NHC) shares were off 6.05%, with Yancoal (ASX:YAL) down 1.54% and Stanmore (ASX:SMR) off 5.52%.
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