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Up, Up, Down, Down is your monthly roundup of winners and losers in the metals markets.
Gold was a winner in June, if only because it’s the king of losers, a slightly terrible 0. 75% drop against an emerging U. S. dollar and growing disenchantment among market bettors who were hoping for rate cuts to ease credit woes.
Bullion, of course, tends to do well when the proverbial hits the fan: its immunity to sovereign threats and defaults leads investors and central banks to lean on yellow steel in times of crisis, like, oh, now.
It also works well when interest rates are low, as gold doesn’t yield. But gold costs remained high, hitting $2,300 per ounce for a 2024 high, even as interest rates stubbornly remained near their multi-year highs.
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Copper is so close to a long-promised breakout that banks and institutions such as BlackRock, Goldman Sachs and ANZ raised their value forecasts to record levels of $12,000/t, and Goldman expects that figure to come later in the year.
That may still be the case, but expanding inventories in China, the main driving force behind copper demand, appears to have halted the surge in June as waning enthusiasm for the country’s long-buoyant and now morbid asset sector wiped out the month’s peak in commercial products. of June.
The role of red steel in the energy transition continues to generate a lot of excitement and demanding source situations continue to dash hopes of gathering calls for long-term forecasts, which are on the rise. Chile’s Codelco, until recently the world’s largest producer, has lost 8. 6% of its production target for May, according to Reuters.
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Photo by : LME
Thermal coal has been going through a rough patch lately.
After reaching unthinkable heights in 2022 following Russia’s invasion of Ukraine, the lack of new sources related to ESG considerations and Covid-related labor, climate, and supply chain issues that have hurt production at existing mines have kept costs at a sustained level.
At the same time, emerging market prices have eroded the supergains seen a year ago.
Metallized coal has been stronger, with uncertainty over the source of Queensland’s premium hard coking coal resurging after a fire at Anglo American’s Grosvenor mine, which may lead to higher prices, at least in the short term.
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Lithium soared in June as stocks fell and investors lost patience waiting for lithium’s next rally.
At the same time, incumbents with lower charging bases continue to expand their expansion plans, to a more potent market share to prepare for future shortfalls as demand for EVs increases globally, but not at the speed seen in 2022 and 2023.
Some of the most curious stories come with the resurgence of Rio Tinto (ASX:RIO) and its assignment Jadar in Serbia. Canned in early 2022, the Serbian government now appears willing to negotiate a deal to expand Europe’s largest lithium allocation in the face of network opposition that threatened to overshadow national elections two years ago.
Spodumene prices, which fell from a recent low of $850/t in January to about $1,200/t a few months ago in reaction to miners’ auctions, had fallen back to $1,005/t as of June 28.
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The value of nickel is once again in pickle territory, falling by 13% in June to once again exceed 17,000 dollars/ton.
The effect of mine closures in Washington state and civil unrest in New Caledonia appear to have been tempered by broader pessimism in the base metals sector, which dominates sentiment.
There is a sense that even some Indonesian projects will struggle at that rate. For example, BASF and Eramet’s resolution to abandon an HPAL nickel-cobalt refinery in Indonesia’s Weda Bay industrial park.
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The uranium rally has seen turbulence in recent weeks, with spot costs moderating after exuberance pushed them to a 16-year high of $107 a pound in January.
This is arguably where the advances that matter matter: futures hit $77/lb in May.
According to Sprott, while a “healthy” pullback in spot value has been observed, contracts between miners and utilities are set with maximum and minimum limits.
The month ended on a high note when Paladin Energy (ASX:PDN) announced an (immediately unpopular) deal to acquire TSX-listed Fission Uranium in a C$1. 14 billion merger that would add a progressing asset in Canada’s high-grade Athabasca Basin to its portfolio.
Also in late June, Silex Systems (ASX: SLX) suffered a setback following the announcement of the U. S. government’s plan to purchase $2. 7 billion worth of enriched uranium. The Australian company has a uranium enrichment joint venture with Cameco.
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Iron ore remains in shambles in 2024, fueled by hopes that the Chinese Communist Party will inject economic steroids into its long-suffering property sector.
So far, the shortfall has been covered by necessary resources such as infrastructure, auto production and exports, but emerging inventories this year are cause for concern.
MinRes chief Chris Ellison last month shut down Yilgarn’s most expensive iron ore operation in Washington state, but at the same time opened the larger-scale Onslow Iron project.
The opening of 35 Mtpa is a sign of confidence on the part of the Pilbara manufacturers in their ability to make big profits while keeping prices low.
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Rare earth costs continue to pose a challenge for new entrants to identify in the Chinese-dominated sector, and have declined for two consecutive months.
This comes at the same time that governments outside China are looking to get miners to act.
The latest is a $150 million loan announced to Arafura Rare Earths (ASX:ARU) through the Korean export bank to help finance the Nolans rare earth mine in the Northern Territory.
Arafura is seeking $775 million in debt financing and already has conditions for significant debt servicing from the Commonwealth Government and Export Development Canada. It is expected to become a supplier of magnetic fabrics for electric vehicle parts produced by Hyundai and Kia of Korea.
In the broader market, the Shanghai metals market says low prices are making participants nervous about taking action, and most investors are waiting to see what direction primary manufacturer China Northern Rare Earths takes with its July directory prices.
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Correct as of June 30, 2024.
Silver: US$29. 37/oz (-6. 08%)
Tin: US$32,739/t (-0. 92%)
Zinc: US$ 2,937. 50/t (-1. 08%)
Cobalt US$27,150/t (0. 00%)
Aluminum: $2,524. 50/t (-4. 83%)
Lead: US$2,224/t (-2. 16%)
Graphite (Fastmarkets Flakes) 465 US$/t (-1. 27%)
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