Mining

Weekly Report: A Glance at the Price of Different Minerals

Weekly Report: A Glance at the Price of Different Minerals
Mining News Pro - Despite holding steady throughout the week, gold is likely headed for another weekly loss of about 1% as the non-yielding safe-haven asset wrestled with the prospect of higher interest rates.
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According to Mining News Pro - On weekly reports we are trying to put an scoop on the metal market and find out what is happening in the global market.

Iron ore price up despite gloomy demand outlook

Iron ore price rose on Friday despite a gloomy outlook for demand from top steel producer China.

According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $115.44 a tonne, down 0.7% from Thursday’s closing.

The most-traded September iron ore contract on China’s Dalian Commodity Exchange ended wobbly daytime trade 1% higher at 736 yuan ($109.90) a tonne. The benchmark contract has slumped 11% this week, its steepest since mid-February.

After consecutive losses, prices rebounded on Thursday after Chinese President Xi Jinping pledged to take more effective measures to achieve the country’s economic and social development goals.

Xi’s remarks also buoyed the spot market, with the benchmark 62%-grade iron ore bound for China trading at $117.50 a tonne on Thursday. It had dropped to $112.50 the day before, the lowest since December 10, according to SteelHome consultancy data.

While “market confidence has been restored to a certain extent”, Sinosteel Futures analysts said the absence of any additional and specific economic stimulus measures from Beijing will limit any price gains for now.

In China’s steel production hub, Tangshan city, 56 of the 126 blast furnaces were shut for maintenance, according to Sinosteel, as mills struggled to cope with slumping margins amid weak demand and high inventories.

Covid-19 restrictions, which have put downward pressure on the property sector, and disruptions to construction activity caused by unfavorable weather are additional headwinds for China’s mammoth steel sector.

Gold price on track for another weekly loss as rate hikes loom

Despite holding steady throughout the week, gold is likely headed for another weekly loss of about 1% as the non-yielding safe-haven asset wrestled with the prospect of higher interest rates.

Spot gold had a slight gain of 0.2% to $1,828.11 per ounce by 11:15 a.m. ET, while US gold futures stayed level at $1,830.70 per ounce in New York. Boosting gold’s appeal was a weakening of the US dollar, with the dollar index falling by 0.2%.

“There are a confluence of forces that are driving gold prices in both directions, forcing it to remain in a small range,” said TD Securities’ commodity strategist Daniel Ghali in a Reuters note.

“We have risks of a recession and signs of an imminent slowdown in global growth driving inflows into gold as a safe haven. On the other hand we have Fed’s committed to fighting inflation, contributing to a significant rise in real rates,” Ghali added.

St. Louis Fed President James Bullard said earlier that the US central bank must act boldly in raising interest rates to contain inflation, which would further increase the opportunity cost of holding bullion.

“We do think that gold has some minor upward potential in the second half of the year, forecast is for $1,900,” said Commerzbank analyst Carsten Fritsch.

However in the short term, the Fed will hike rates aggressively, providing some headwinds for gold, Fritsch added.

In the physical gold market in Asia, dealers offered bigger discounts in India this week to lure buyers as the wedding season concluded, while some consumers in China bought bullion to hedge against economic concerns.

Lithium stocks rout continues despite fresh hard rock price record

At the end of May, Goldman Sachs rattled lithium stocks after the investment bank declared the battery metals bull market “over for now”. Goldman called today’s lithium levels a “fundamental mispricing [that] has in turn generated an outsized supply response well ahead of the demand trend.”  

Goldman predicted an average around $55,000 a tonne for this year, but its forecast for 2023 was particularly eye-raising – a very precise $16,372 a tonne. The widely quoted report prompted a sell-off in lithium stocks, and a flurry of reports taking on Goldman’s thesis.

Three weeks later, the bloodletting has not stopped, with Australian hard rock producers particularly hard hit. Many investors are nursing losses around 30% – and more among the smaller stocks – since the publication of the report (China’s Tianqi and Ganfeng, now the world’s most valuable lithium producers, being the obvious exceptions.)   

In a blog post, Matt Fernley of Battery Materials Review says equity markets are getting just about everything wrong about lithium.  

Fernley concludes that “until the penny drops with most investors, I’ll be enjoying myself doing some bottom fishing and picking up many of these oversold stocks at prices I never dreamt that I would be able to again in this cycle.”


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