SP Angel . Morning View . Tuesday 28 04 20
China offers subsidies to buy metal inventories
MiFID II exempt information – see disclaimer within PDF
Nokia joins partnership to improve mining communications in underground mining operations
Aura Energy* – (AIM:AURA) – Further issue of shares
Erris Resources (LON:ERIS) –Targets identified at Scottish gold project
European Metal Holdings (AIM:EMH) – CEZ investment completed
Metals Exploration (AIM:MTL) SUSPENDED – Updated mineral reserve
Phoenix Copper* (LON:PXC) – Second phase of drilling at Red Star
Sunstone Metals (ASX:STM) – Placing for A$1.73m
Chinese subsidise buying of substantial metal inventories
Local governments across China are offering incentives to companies purchasing base metals, in a move to avoid inventory pile ups.
China's Yunnan province said this week that it would set aside 1 billion yuan to help businesses stockpile 800,000 tonnes of nonferrous metals to boost the economy.
State funds will be used to cover interest on bank loans taken out for the one-year stockpiling drive, which will include copper, aluminium, lead, zinc, tin, as well as minor metals germanium and indium and other nonferrous metals (Reuters).
The money pledged will cover 80% of the interest on loans taken out to stockpile tin, germanium and indium, and 60% of the interest on loans to buy copper, aluminium, lead and zinc, the statement said.
The Northwest Gansu province is mulling a plan to encourage local companies to stockpile up to 436,000 tonnes of nonferrous metal through the use of subsidies for interests and warehousing fees (SMM).
According to Fastmarkets MB, more local governments such as Hunan and Sichuan are coming under pressure to introduce incentives to support base metal purchases.
This move by provincial governments could support base metals prices, however this morning nonferrous metals traded mostly lower in Shanghai as traders weighed the news.
Bank of China clients lose >$1bn in WTI oil futures
The Industrial and Commercial Bank of China ICBC has subsequently suspend all open positions for trading products linked to commodities futures. South China Morning Post
The bank has also warned investors of a possible loss of all investments or cash deposits in those products due to commodities market volatility.
The BoC report that some 46% of investors had liquidated their positions on 20 April. Over 600,000 clients are said to have invested in BoC products with Caixin reporting investors losing margins of Rmb4.2bn and owing the bank another Rmb5.8bn. Good luck in collecting that lot!
WTI oil market in turmoil as WTI June futures trade negative
Oil producers are turning off the taps as storage starts to run out
WTI June put contracts traded at negative prices yesterday
While the volumes traded are small the price printed may set the mark for a much, much larger volume of related ETFs indicating that the total value of these ETFs could be wiped out
Commodity trading indices are also looking to roll out contracts which may see negative pricing so as to provide greater stability for the instruments which trade on the back of these indices.
The US Oil ETF is rolling over all its WTI June contracts to July 2020 to June 2021
Jean Boulle company Medtech is testing a unique strategy for treating Acute Respiratory Distress Syndrome1 ARDS,
The new strategy could prove to be highly effective in saving the lives of COVID–19 patients.
Medtech is an immunotherapy biotech company founded by Jean Boulle who is best known for his discovery of the giant Voiseys Bay nickel project in Canada and his work at Sierra Rutile which provided employment and a safe working environment through the Ebola epidemic in Sierra Leone while continuing to produce Rutile for export.
Stimulus funding
$2tn US fiscal package approved by Congress. US may add $0.6t state aid for mortgage markets and travel industries
US – The House passed a $484bn aid package to rescue small small businesses, hospitals ($75bn) and coronavirus testing ($25bn).
$2tn US – Trump looking at $2tn infrastructure fund
$700bn – US + Fed rate cut to 0-0.25% last night. The $700bn QE to buy Treasuries and mortgage-backed securities.
$963bn (€750bn) ECB scraps limits on sovereign bond purchases. ECB PEPP buying running at around €250bn
EU Finance Ministers have so far failed to agree on a strategy to mitigate the economic impact of the pandemic.
$825bn (€756bn) Germany – Bundestag approved €156bn in extra borrowing and ~€600bn in emergency funds
$344bn – China stimulus + $127.2bn. China stimulus was $586bn in 2009
$996bn (108.2tn yen) – Japan + BoJ pledge for unlimited quantitative easing
400bn (£330bn) UK + $242bn (£200bn) UK QE from BoE & no business rates plus £25,000 cash grants for hospitality sector
$387bn (€304bn) France, $200bn (€200bn) Spain, $214bn (A$320bn) Australia, $78bn (C$107bn) Canada, $32bn Saudi Arabia, US$43.7bn Singapore, $22.6bn India, $19.3bn HK, $13.7bn South Korea, $10bn Switzerland, $8.4bn Italy, $7bn NZ, $3.5bn Ireland, $2bn Taiwan, $0.75bn Indonesia,
Argentina to default on $10bn of dollar debt issued til the end of the year. Does no affect the $70bn that Argentina is currently in talks to restructure.
$1,000bn – IMF available + $12bn World Bank,
>12.4tn Total
Fatalities year-to-date:
211,658 – Coronavirus
157,768 – Seasonal flu
318,050 – Malaria
347,709 – Suicides
437,705 – Road accidents
545,086 – HIV/AIDS
810,983 – Alcohol
1,620,945 – Smoking
2,663,058 – Cancer
4,209,353 – Communicable diseases
*Stats from Worldometers.info
Dow Jones Industrials
+1.51%
at
24,134
Nikkei 225
-0.06%
at
19,771
HK Hang Seng
+0.91%
at
24,502
Shanghai Composite
-0.19%
at
2,810
Economics
US – A 2-day FOMC meeting kicks off today with the Chairman monetary policy statement due tomorrow.
The Fed expanded its emergency lending programme aimed at offering short-term credit to state and local governments.
The central bank lowered the population thresholds for the programme to 500k for counties and 250k for cities, down from 2m and 1m, respectively.
The facility that is yet to be operational is among nine other programmes announced by the Fed earlier to limit the economic fallout of the pandemic, according to Bloomberg.
Fed stepping into the municipal bonds market helped to recover it from a record sell-off in March and lower local borrowings costs.
HSBC warned its bad loan charges may climb to as much as $11bn this year, the most since the subprime crisis.
US automakers in Detroit including GM, Ford and Fiat Chrysler pencilled in May 18 as the date to resume some production after shutting down plants in March, The Wall Street Journal reports.
Producers are continuing to negotiate with United Auto Workers leaders and the Governors office.
Last week, Governor Ms Whitmer extended an executive order closing the states nonessential businesses through May 15.
China – PBoC cut the rate charged on its targeted medium-term facility by 20bp to 2.95%.
Italy – The nation reported the lowest number of new COVID-19 cases since early March as authorities are on course to start gradually lifting the lockdown from May 4.
Spain – Unemployment climbed 0.63pp to 14.41% in Q1/20, the highest rate since Q1/19.
With the nation remaining in lockdown through April and some part of May the number is likely to grow further in Q2.
Nigeria to phase out lockdown in Abuja, Lagos & Ogun States
The lockdown in the FCT, Lagos and Ogun States remain in place until these new ones come into effect on Monday, 4th May 2020.
Enforcement of total lockdown in Kano which has seen a surge in COVID-19 cases for two weeks effective immediately..
Currencies
US$1.0820/eur vs 1.0846/eur yesterday. Yen 107.16/$ vs 107.15/$. SAr 18.863/$ vs 18.842/$. $1.243/gbp vs $1.244/gbp. 0.647/aud vs 0.646/aud. CNY 7.086/$ vs 7.080/$.
Commodity News
Precious metals:
Gold US$1,703/oz vs US$1,718/oz yesterday – Gold falls as economies edge towards reopening
Demand for the safe-haven fell on Monday whilst equities gained, as data showed coronavirus deaths fell in many major European economies.
Gold continued its decline on Tuesday morning, as spot gold fell 0.7% to $1,702/oz earlier this morning, after falling as much as 1.4% during the session (Reuters).
Whilst gold is at its highest price in over seven years, investors are assessing if there is scope for further gains as economies look to restart and US equities gain for the third straight day.
Despite the growing positive sentiment, volatility in financial markets remains elevated and precious metals remain a good hedge, as many public health experts believe it is too early to lift restrictions. (Bloomberg).
Gold ETFs 95.1moz vs US$95.5moz yesterday – Gold ETF holdings pull back off Fridays 95.5moz high on investor concerns over ETF products
Platinum US$759/oz vs US$764/oz yesterday
Palladium US$1,950/oz vs US$2,045/oz yesterday
Silver US$15.00/oz vs US$15.19/oz yesterday
Base metals:
Copper US$ 5,181/t vs US$5,221/t yesterday –
Continued withdrawal of copper out of LME and Shanghai warehouses with another 2,325t leaving the LME today and a further 4,975 cancelled warrants making less copper available for future sale.
The ICSG reported a January20 global refined surplus of 5kt (Dec 54kt), that is a balanced market,
Freeport cut 2020 copper output by 11% and Anglos Los Bronces mine saw Q1 copper production fall 25% to 69kt.
March Chinese copper concentrate imports rose 1% yoy to 1.78mt, with shortfalls from Chile and Peru made up by other sources.
Aluminium US$ 1,507/t vs US$1,514/t yesterday
Nickel US$ 12,210/t vs US$12,375/t yesterday – Philippines top nickel miners to resume work this week
The country's top two nickel miners, Nickel Asia Corp and Global Ferronickel Holdings, said on Tuesday that they expect to gradually resume activity starting on the 1st of May (Reuters).
LME nickel fell as much as 1.3% to $12,080/t this morning due to the anticipated rise in supply (Bloomberg).
Nickel – INSG reported a global nickel surplus of 13,400t looking like a relatively well balanced market
Zinc US$ 1,915/t vs US$1,912/t yesterday
Lead US$ 1,639/t vs US$1,638/t yesterday
Tin US$ 15,320/t vs US$15,305/t yesterday
Energy:
Oil US$18.9/bbl vs US$20.0/bbl yesterday – Just a few days ahead of the 1 May OPEC+ cuts enter into force, oil prices crashed again early yesterday
The market continues to see the imminent storage shortage problem as a bigger factor for prices than the potential effect of the OPEC+ cuts and the potential easing of the lockdown measures
However, OPEC retains is bullish outlook with Mohamed Arkab, Energy Minister of OPECs rotating president Algeria predicting US$40/bbl by 3Q/20
Arkab told Algerias national radio, as quoted by Turkeys Anadolu Agency that the global economy will not stay paralysed for too long, and together with the 9.7MMbopd cuts that OPEC and its allies pledged for May and June
In China, which was hit first by the coronavirus, and which exited the lockdown first, the return to normalisation in the transportation sector “is driving up global demand”
Last week, OPECs fourth-largest producer, Kuwait, said it had already started to reduce supply to the international markets ahead of 1 May “sensing a responsibility responding to market conditions”
Bloomberg has also reported that Saudi Arabia, OPECs top producer and the worlds top oil exporter, has also begun to reduce production earlier
Natural Gas US$1.811/mmbtu vs US$1.661/mmbtu yesterday – Natural gas prices experienced a volatile session yesterday initially moving lower in early trading and then surging higher into the close
Tomorrow is the last trading day of the May contract, whilst the June contract is trading at a 10% premium
This came following a report from the Commodity Futures Trading Commission that showed that hedge funds increased long positions and reduce short positions
The weather is expected to remain much colder than normal throughout the US east coast for the next 2 weeks while remaining warmer than normal throughout the US west and the south
Uranium US$32.25/lb vs US$33.30/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$81.3/t vs US$81.4/t – Chinese iron ore prices rise on falling inventories
Chinese iron ore futures gained as much as 0.7% to 612 yuan ($86.50)/t as port stocks fell to their lowest in over nine months (Hellenic Shipping News).
According to SteelHome, port inventories of seaborne iron ore across China stood at 118mt on Friday, the lowest since July 2019.
Iron ore arrivals to Chinese ports stood at 11.21mt last week, down 2.47mt YoY and down 820,000 tonnes compared to the prior week (SMM).
Chinese steel rebar 25mm US$525.8/t vs US$526.7/t
Thermal coal (1st year forward cif ARA) US$52.5/t vs US$53.3/t
Coking coal swap Australia FOB US$116.0/t vs US$116.0/t
Other:
Cobalt LME 3m US$30,000/t vs US$30,000/t
NdPr Rare Earth Oxide (China) US$37,191/t vs US$36,937/t
Lithium carbonate 99% (China) US$5,293/t vs US$5,368/t
Ferro Vanadium 80% FOB (China) US$27.5/kg vs US$27.5/kg
Antimony Trioxide 99.5% EU (China) US$4.9/kg vs US$4.9/kg
Tungsten APT European US$215-225/mtu vs US$240-245/mtu
Graphite flake 94% C, -100 mesh, fob China US$530/t vs US$540/t
Graphite spherical 99.95% C, 15 microns, fob China US$2,450/t vs US$2,550/t
Battery & Fuel Cell News
Solaris purchases 20 additional fuel cells from Ballard
Today Ballard Power Systems announced an additional order from Solaris Bus & Coach for 20 70kw heavy-duty FCmoveTM -HD fuel cell modules. (PR Newswire)
Solaris is a European bus and trolleybus manufacturer headquartered in Poland.
The 20 fuel cells will be used in Urbino 12 hydrogen (FCEB) buses to be deployed in South Holland, taking the total number of vehicles with such fuel cells to 40 in the Netherlands. (CNW Group)
The buses are part of the Joint Initiative for Hydrogen vehicles across Europe (JIVE 2) and will be operated by Connexxion which provides transport services in the province. (Market Screener)
FCEB buses run on two electric motors and the vehicle has a 350km range on a single refuel.
Xpeng to release Model 3 challenger in China
Xpengs P7 sedan was made available to order yesterday with deliveries slated for the beginning of June. (South China Morning Post)
The P7 will start at ~$36,000 making it significantly cheaper than the Model 3 which starts at $48,500.
Xpeng also claims the car has a 440 miles range, 200 additional miles compared to the Model 3 (Xpeng use an alternative battery benchmark standard to Tesla). (Yahoo)
The P7 is available in 3 versions: a 4WD High Performance trim, an RWD Super Long-Range vehicle and the entry level RWD Long Range. (Teslarati)
The P7 utilizes a lithium-ion battery from CATL with a 66.5KWh capacity and a faster charge of 30 mins. (Xpeng)
LG Chem to triple CNT capacity but expect 2020 EV to fall further
LG Chem will triple its carbon nanotube capacity to 1700tpa at its production facility in Yeosu. (Plastics Today)
The CNT market is growing 30% per annum.
The material possesses favourable characteristics including electric and heat conductivity equivalent to copper or diamond and is stronger than steel.
CNT boosts the capacity and lifespan of lithium ion batteries by enabling anode material to be a greater percentage of the whole.
Applications for CNT are wide ranging and include batteries, semiconductors and auto parts.
The South Korean battery maker expects sales from EV batteries to fall a further 10-15% compared to their previous target of 15 trillion won ($12.25bn). (Reuters)
Company News
Nokia joins partnership to improve mining communications in underground mining operations
Nokia has joined a global collaboration that will see the company deploy its private wireless known as Nokia Digital Automation Cloud – to improve communication in underground mining operations.
Nokia has joined forces with two Canadian companies to install and operate an industrial-grade private wireless network in an underground test centre, to demonstrate the new technology.
The network will support asset tracking and remote-controlled autonomous vehicles along with secure wireless communications between miners and surface workers.
According to Nokia, the network supports a larger amount of active connections with far greater reliability and security compared to Wi-Fi (Australian Mining).
Aura Energy* – (AIM:AURA) 0.17p, Mkt cap £3.2m – Further issue of shares
Aura Energy reports the issue of a further 115m shares on the conversion of Convertible Notes issued to the Lind Global Macro Fund.
ʺThe issue of shares referred to above relates to the twelfth Conversion Notice received from Lind to convert A$230,000 of convertible notes into fully paid ordinary sharesʺ
We estimate that the new shares represent approximately 6% of the enlarged capital of Aura Energy.
*SP Angel are Nomad and Joint-Broker to Aura Energy
Erris Resources (LON:ERIS) 6.35p, Mkt Cap £1.1m –Targets identified at Scottish gold project
Following the announcement in December 2019 that it had acquired an option to acquire 80% of the Loch Tay gold and associated base metals project in Perthshire, Scotland, the company has now received assay results from 121 rock samples over the area which have expanded the area of potential interest towards the east and helped refine target definition.
The company reports that ʺof a total of 118 samples collected, 30 had greater than 0.1g/t Au, 13 had greater than 1g/t Au and 9 samples had between 5g/t Read More – Source
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