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31 May 2023
Mining Momentum Monitor
NORSK HYDRO (NHY:STO), 0 | Norsk Hydro ASA (NHY:OSL), 0 | Rio Tinto plc (RIO:LON), 5,019 | Eramet (ERA:EPA), 0 | Eramet SA (ERA:PAR), 0 | BHP Group Ltd (BHP:LON), 2,278 | Anglo American plc (AAL:LON), 1,950 | Newmont Mining (NEM:NYSE), 0 | Newmont Corporation (NEM:NYS), 0 | Freeport-McMoRan (FCX:NYSE), 0 | Freeport-McMoRan, Inc. (FCX:NYS), 0 | Antofagasta plc (ANTO:LON), 2,042 | Aurubis AG (NDA:ETR), 0 | Boliden Ab (BOL:STO), 0 | Boliden AB (BOL:OME), 0 | Barrick Gold Corporation (GOLD:NYS), 0 | Vale S.A. Sponsored ADR (VALE:NYS), 0 | First Quantum Minerals Ltd. (FM:TSE), 0 | Glencore plc (GLEN:LON), 436 | South32 Ltd. (S32:LON), 155
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Mining Momentum Monitor
NORSK HYDRO (NHY:STO), 0 | Norsk Hydro ASA (NHY:OSL), 0 | Rio Tinto plc (RIO:LON), 5,019 | Eramet (ERA:EPA), 0 | Eramet SA (ERA:PAR), 0 | BHP Group Ltd (BHP:LON), 2,278 | Anglo American plc (AAL:LON), 1,950 | Newmont Mining (NEM:NYSE), 0 | Newmont Corporation (NEM:NYS), 0 | Freeport-McMoRan (FCX:NYSE), 0 | Freeport-McMoRan, Inc. (FCX:NYS), 0 | Antofagasta plc (ANTO:LON), 2,042 | Aurubis AG (NDA:ETR), 0 | Boliden Ab (BOL:STO), 0 | Boliden AB (BOL:OME), 0 | Barrick Gold Corporation (GOLD:NYS), 0 | Vale S.A. Sponsored ADR (VALE:NYS), 0 | First Quantum Minerals Ltd. (FM:TSE), 0 | Glencore plc (GLEN:LON), 436 | South32 Ltd. (S32:LON), 155
- Published:
31 May 2023 -
Author:
Brunet Sylvain SBr | Zeng Qiang QZ | Spence Alan AS -
Pages:
12
VALE, NHY, and Gold miners the only ones with upside left at spot, downside elsewhere
On EBITDA mark-to-market points to potential revisions of -9/-7/+1% for 2023/24/25 (Fig.13): -10/-7/+2% for diversifieds (VALE the largest positive), industrial pure plays at -5/-11/-8% (NHY the positive contributor), and gold companies +2/+0/+11%. PMIs for May were another consensus miss with manufacturing in contraction (48.8 after 49.2 in April) and non-manufacturing at 54.5. In spite of market talk of some high-level financial expert meetings in Beijing to allegedly work on policy response, market sentiment across commodities remains bleak, in particular in the energy segment. Market participants reported some shorting activity in Oil/Gas and Coal compounding the effects of weaker underlying demand. The Politburo Economic Work meeting in July could provide an opportunity for a policy response through measures targeting manufacturing and infrastructure, while arranging financial support for a selection of property developers.
VALE and GLEN still in the lead on FCF yields at spot; lower prices weighing
Spot 2023 FCF yield for diversified miners stands at 10.4%, lower than the Street''s 12.4% (Glencore at 13.3% at current thermal coal price of USD135/t). For industrial pure plays, spot 2023 FCF yield comes at 3.3% compared to consensus at 4.1%. A 10% FCF 23e yield on VALE/RIO/BHP/AAL would require iron ore prices of USD60/116/129/145/t respectively.
What''s priced in?
In iron ore names, VALE/RIO/BHP are in the same ballpark discounting USD68/73/80/t versus AAL, disadvantaged by weak PGMs, implying USD102/t iron ore (spot USD104/t; our LT price at USD70/t). In copper, FCX (+) still the cheapest discounting USD7,600/t Copper, FQM most expensive relatively, discounting USD9,000/t (spot USD8,123/t; our LT price at USD8,500/t) while ANTO is discounting USD8,400/t.
The pair trades corner (new): risk aversion prevails
Newmont (+)/Barrick (=) and Freeport (+)/First...