Up, Up, Down, Down: It’s gold, gold, gold for… gold
Mining
Up, Up, Down, Down is Stockhead’s regular check-up on how metals produced and explored for by ASX miners fared in the past month. All prices correct as at July 31, 2024.
Price: US$2426.30/oz
% Change: +4.09%
Gold returned to record highs again during the month of July, emerging as one of the few commodities with a bit of backbone in the face of adversity.
The hope of rate cuts spurred the latest run, as well as the precariously timed assassination by Israel of Hamas political leader Ismail Haniyeh on Wednesday, an act which sent safe-haven betting into overdrive.
US Fed chair Jerome Powell finally said yesterday that his board of governors was looking at rate cuts in September. That’s bullish for gold, which doesn’t generate interest and therefore becomes more attractive when cash and bonds are pulling in lower yields.
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Pic: LBMA
Price: US$141.40/t
% Change: +6.16%
Thermal coal prices rose slightly in July after a shift to what the IEA said was a rare period of stability set in over the first half of 2024.
“With spot prices approaching levels driven by fundamentals in early 2023, backwardation vanished. Instead, the expectation was for future API2 prices to remain rather flat, slightly over USD 100/t,” it said in its mid-year update.
“This did not change significantly until June 2024, when the forward curve showed a slight increase over the next two years. In summary, following the tumultuous conditions of recent years, the financial market now shows stability similar to the physical market.”
Premium hard coking coal futures spiked immediately after the fire on June 29 at Anglo American’s Grosvenor mine, but reverted due to mild steel demand to US$219/t at the end of the month.
For intermediary products like PCI and semi-soft, miners like Stanmore Coal (ASX:SMR) say relativities against PHCC prices, previously impacted by Russia’s flooding of the latter markets, have improved as sanctions against product of Russian origin have tightened.
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Price: US$50.65/kg
% Change: +1.69%
NdPr oxide, the flagship rare earth product linked to permanent magnets used in EV motors, wind turbines and electronics, continues to sit near cyclical lows.
But few producers are making real cash at these prices, with Australia’s Lynas (ASX:LYC) still stockpiling uncontracted material at its Malaysian processing plant in the aim of selling it at higher prices later down the line.
But Lynas’ latest move, announcing a $25m investment in a heavy rare earths circuit at its Kuantan facility shows where the market is heading, with Western companies keen to invest early to supply metals like terbium and dysprosium, previously the near exclusive domain of Chinese miners.
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Price: US$9225/t
% Change: -3.91%
Copper fell in July amid concerns it had previously run ahead of fundamentals and amid a slowdown in Chinese purchasing. It staged a late recovery on the aforementioned rate-cut hopes – base metals tend to do well with a weaker US dollar since they’re typically traded in the greenback.
The drain of some Chinese inventories also reinforced long bets.
“There are some positive signs of narrowing export parity and retreating inventories, which supported prices,” ANZ said yesterday.
“Mine supply issues continued in Chile, with production falling 1.2% y/y to 453kt in June.”
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Price: US$11,530/t
% Change: -9.92%
Lithium endured yet more struggles in the month of July, with chemicals off the boil and SC6 spodumene concentrate heading back towards its January lows at US$910/t.
Big players remain confident in the long-term outlook despite concerns some of the lustre is coming off the EV growth story.
“The bottom line is some of the doomsday headlines just don’t reconcile with the broadly strong growth markets that you can see,” Pilbara Minerals (ASX:PLS) MD Dale Henderson said in a quarterly call.
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Price: US$16,604/t
% Change: -3.97%
Nickel’s short-lived revival crumbled in the June quarter and was compounded by BHP’s decision last month to mothball its Nickel West division later this year.
Oversupply from Indonesia has been one factor, but stainless steel demand in China – which has been hit by unfavourable weather conditions and economic problems – has not helped either.
Hundreds of thousands of tonnes have recently been pulled from the market in the form of announced cuts, raising hopes a supply side response could shore up the currently flimsy nickel market.
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Price: US$82.28/lb
% Change: -3.39%
Uranium continues to trade in and around the US$80-85/lb range, a limbo it’s been stuck in for most of 2024 after briefly charging early this year to over US$100/lb.
But term contracting levels have hit US$79/lb, the highest in over a decade. Those prices are closer linked to the value of new contracts being inked between utilities and miners which make up a far larger portion of the supply picture than spot sales.
Cameco, the west’s largest uranium producer, increase earnings around 2.5x year on year in June to US$36 million.
CEO Tim Gitzel said the supply picture longer term continues to look poor.
“Today, we’re not seeing investments in significant Greenfield projects that will be needed to satisfy growing demand from reactors being saved and restarted, reactor life extensions and new reactor builds. There are a few idle production centers restarting, but new supply sources take time,” he said.
“The recent cancellation of permits and the negative developments in Niger, the refusal to renew the lease at Jabiluka in Australia, and the unexpected significant tax increase in Kazakhstan contribute even more to the uncertainty.”
Cameco owns a share of the Inkai JV in Kazakhstan, where volumes have been hit by sulphuric acid shortages.
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Price: US$100.92/t
% Change: -5.11%
Iron ore continued to threaten a plunge below US$100/t only to be pulled back up at each attempt to tear up the floorboards.
Many iron ore miners now think the marginal point in the cost curve is between US$80-100/t, with swing supply to replace Vale’s pre-Brumadinho tonnages having come more from small swing suppliers than the low-cost Pilbara majors.
Steel demand in China remains the big concern, with MySteel reporting rebar prices at more than four year lows last month. East China’s Shagang Group dropped longs prices by US$21/t (150RMB) this week after a 100RMB dip the week before.
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Prices correct as of July 31, 2024.
Silver: US$28.56/oz (-2.76%)
Tin: US$30,056/t (-8.20%)
Zinc: US$2675.50/t (-8.92%)
Cobalt $US26,125/t (-3.78%)
Aluminium: $2290.50/t (-9.27%)
Lead: US$2083.50/t (-6.32%)
Graphite (Fastmarkets flake) US$480/t (+3.23%)
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