Monsters of Rock: Big miners in the red to end a tempestuous week
Link copied to
There were few places to find solace among the big miners this week, as the heat came out of industrial commodities.
A bright spot was lithium plays who sailed through tempestuous weather but ended on a high on Friday in a week which started with positive news.
That came before Pilbara Minerals’ (ASX:PLS) twin announcements that it was set to head into a formal downstream JV in Korea with POSCO and its online Battery Material Exchange platform sold the most expensive cargo of lithium ever.
Core Lithium (ASX:CXO) also began construction of its Finniss Lithium Project in the Northern Territory this week, expected to come online late next year.
On the other hand Vulcan Energy’s (ASX:VUL) losses accelerated this afternoon to a 16.54% loss, wiping around $300 million off the value of the $1.5 billion-capped lithium developer.
It returned to trade today after entering a trading halt on Wednesday on the back of the release of a short seller’s report that was critical of the company and its public disclosures.
Power rationing in China has resulted in the temporary suspension of a number of metal smelters across the country, crunching supplies of everything from copper to zinc to aluminium and even magnesium.
Copper hit all time highs last week and nickel touched levels not seen in 7 years, but metals receded this week as China appeared to get a handle on its energy shortages.
“Despite a flurry of media reports in September hinting at widespread disruption, the data suggest that China’s recent power shortages have not been too severe,” Capital Economics senior China economist Julian Evans-Pritchard said in a note.
“Electricity output actually rose 0.6% in seasonally-adjusted m/m terms last month, the fastest pace this year.”
“But even with this ramp up in electricity generation, power plants were clearly struggling to keep up with rising demand amid dwindling thermal coal inventories, forcing them to ration power to some users.”
However, Evans-Pritchard noted that stockpiles of coal at power plants have started to rise again, along with inventories at Chinese ports.
And in a sign that power rationing is probably easing, domestic output prices in the parts of industry hardest hit by the shortages, such as cement and chemicals, appear to be levelling off.”
“While this may partly reflect a ramp up in coal production and imports, a slowdown in final demand for industrial goods, especially from the construction sector, is probably helping too.”
Benchmark 62% iron ore fines slid US$7.21 to US$112.65/t yesterday according to Fastmarkets MB after stricter emissions controls were issued for Tangshan, a key steel making city in China.
The ASX materials index was down 0.99% today on a downbeat day that left every sector in the red and off 2.19% for the week.