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Today's Market View - Amur Minerals Corporation, Asa Resource Group PLC

Published: 10:31 06 Jan 2017 GMT

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Amur Minerals* (LON:AMC) – NED joins the Board

ASA Resource Group* (LON:ASA) – Company responds to press speculation

 

The US$ index is little changed this morning ahead of the US non-farm payrolls numbers due later today with estimates for the report to show strengthening momentum in labour earning growth.

Gold is off $6/oz trading around $1,175/oz following a three day rally.

Brent is flat consolidating around the $57/bbl level after climbing for two trading sessions and undoing most of losses posted on Tuesday.

Iron ore futures are down but only marginally with domestic stocks remaining at 2.5 years high with metal inventories at steel mills at between 8-10 days compared to 1 day only a month ago.

 

Tesla – New ‘2170’ battery measuring 21mm x 70mm gives advantage through lower cost and higher energy density

Tesla’s new batter shows how innovation and developing manufacturing processes can incrementally improve battery products

The move is a significant step towards the electrification of vehicles going forward.

Tesla’s new automated production process is delivering larger, more powerful batteries than previously seen.

The new cell replaces the standard ‘18650’ lithium battery format which is found in lithium car batteries, high-power torches etc.…

Not only do the new cells pack higher energy density but they are also cheaper to produce giving Tesla an advantage over its competitors.

Elon Musk’s great idea was to take the best creative engineers and get them to design the factory itself and not just the battery.

The Gigafactory is set to become the largest single building in the world though it is only 30% done at 4.9msqft.

 

Lithium:  Panasonic shows off new bendable lithium battery

The new battery could herald a new era in wearable electrical devices though the amounts of lithium to be used in each device will be small.

The batteries have capacity of up to 60mAh and can be flexed up to 1,000 while retaining 80% capacity.

 

Giant iceberg set to break off the Larsen B shelf

If the whole Larsen B ice shelf breaks up then global sea levels could rise by 10cm

 

With Donald Trump about to be sworn into the White House anything in the world might happen

Trump is backed by some hard-line republicans and they may push for more affirmative action shortly after he gets into power

We expect less diplomacy and more action

Risks:

Stronger US dollar if Fed rate hikes harder than expected

US sanctions against dumping of cheap goods by China. The US may sue China for copyright and counterfeiting (see Alibaba censure)

US pre-emptive strike against North Korea to prevent nuclear armament.

US sanctions against Iran, as a favour to Saudi Arabia and Israel.

IPO of Saudi Aramco as a pre-cursor to Saudi support of new US Treasury bond issue.

Russia: removal of sanctions against Russian and Russian individuals.

Israel: more US support for Israel may cause greater resentment for the US within the Middle East

Consequences: 

Fund inflows into the US dollar destabilising emerging markets and other regions

Potential currency collapses caused by fund flows

China is already taking action to stem money flows

Trade barriers

Inflation

 

Trump proposes Toyota Tax on cars built in Mexico in tweet

Donald Trump has proposed that Toyota should face a hefty tax on cars built in Mexico.

Toyota says it has no immediate plans to reduce production in Mexico.

 

Dow Jones Industrials  -0.21% at 19,899

Nikkei 225   -0.34% at 19,454 

HK Hang Seng   +0.21% at 22,503 

Shanghai Composite    -0.35% at 3,154

FTSE 350 Mining   -0.89% at 14,900

AIM Basic Resources   +2.17% at 2,438 

 

Economic News

US – The pace of weekly unemployment claims came in below estimates with a less volatile four week average (257k) holding below the trailing 52-week average equivalent (262k).

Claims are expected to trend upwards in the coming months as a number of companies in automotive, retail and government sectors announced planned layoffs, Bloomberg reports.

Germany – Good retail sales and factory orders numbers released this morning adding evidence the economy finished on a strong footing in Q4/16.

Retail Sales (%yoy): 3.2 in Nov v -0.8 in Oct and 1.2 forecast.

Factory Orders (%yoy): 3.0 in Nov v 6.3 in Oct and 3.6 forecast.

 

China - Tianjin – massive $17.6bn investment committed by 20 state enterprises to develop Tianjin area into mega-sity (Reuters)

Beijing is keen to move industry out of the capital to Tianjin and the new mega city which is currently known as Jing-Jin-Ji.

 

Australia – Higher commodity prices led to an improvement in the nation’s trade balance in Nov.

The surplus came in at A$1.24bn following a A$1.12bn deficit recorded in Oct and a A$0.55bn surplus forecast.

This marked the first positive trade balance since Mar/14 and the largest since Feb/14.

Despite positive trade data, the currency was little changed this morning.

 

Philippines – steel trader suing Philippine DTI for recall of import clearance on 20kt shipment of deformed Chinese sell bars

The case claims that the shipment Department of Trade and Industry ‘DTI’ regional office unilaterally recalled the import clearance and that the steel shipment already complied with import standards.

 

Currencies

US$1.0592/eur vs 1.0510/eur yesterday.   Yen 116.18/$ vs 116.36/$.   SAr 13.691/$ vs 13.591/$.   $1.238/gbp vs $1.228/gbp.

0.733/aud vs 0.730/aud.   CNY 6.926/$ vs 6.887/$.

 

Commodity News

Precious metals:

Gold US$1,176/oz vs US$1,174/oz yesterday – Traders and analysts are the most bullish on gold since 2015, according to the latest Bloomberg survey.

Gold ETFs 57.0moz vs US$57.0moz yesterday

Platinum US$965/oz vs US$953/oz yesterday

Palladium US$740/oz vs US$734/oz yesterday

Silver US$16.47/oz vs US$16.57/oz yesterday

 

Base metals:   

Copper US$ 5,568/t vs US$5,630/t yesterday

Aluminium US$ 1,700/t vs US$1,694/t yesterday

Nickel US$ 10,180/t vs US$10,195/t yesterday

Zinc US$ 2,589/t vs US$2,617/t yesterday

Lead US$ 2,038/t vs US$2,071/t yesterday

Tin US$ 21,080/t vs US$21,140/t yesterday – Chinese imports of tin concentrates rose 17% yoy to 44,533t containing some 5,300t of contained tin

• Refined tin imports fell 36% yoy to 8,396t vs 13,118t a year earlier

• Myanmar accounted for 99.7% of all Chinese tin concentrate imports last November according to a press report

 

Energy:

Oil US$56.7/bbl vs US$56.3/bbl yesterday

Natural Gas US$3.235/mmbtu vs US$3.267/mmbtu yesterday

Uranium US$21.65/lb vs US$21.65/lb yesterday

 

Bulk:    

Iron ore 62% Fe spot (cfr Tianjin) US$71.9/t vs US$71.2/t – Port Hedland iron ore shipments hit a new record high in Dec with 43.9mt exported during the month.

Exports to China increased to 37.4mt marking the strongest reading on record compared with 33.7mt in Nov/16 and 32.2mt in Dec/15.

Annual shipments hit a record of 478.9mt, up 7.3%yoy.

 

Chinese steel rebar 25mm US$480.1/t vs US$481.1/t – China Tangshan city to cut 8.6mtpa of steel capacity in 2017 (Reuters)

The city has also agreed to cut 9.33mtpa of iron smelting capacity and 1.1mtpa of coal mining capacity

Tangshan is China’s largest steel producing city producing >100mtpa in 2014 before forced plant closures started cutting production

This latest round of closures should help Tangshan meet its target to cut 40mtpa of steel capacity set in 2014.

Hebei province has pledge to cap total steel production capacity at 200mtpa by 2020 down from 286mtpa

China had got tough in recent months jailing officials if they do not comply with agreed capacity targets.

 

Thermal coal (1st year forward cif ARA) US$63.3/t vs US$63.0/t yesterday – Chinese miners holding off from signing long-term fixed price contracts

Apart from the tendency for the Chinese to gamble on just about anything, the miners feel they should get better prices in the spot market as the government closes polluting and uneconomic coal mines.

China Coal and Shenhua are reported to have signed contracts for just 40% of their production through 2017 with discounts applied to spot prices

China is keen to get miners to agree longer-term fixed price contracts to stave off a potential energy crisis over the winter.

Thermal coal prices are reported to have risen by more than a third to over RMB600/t in November from around RMB400/t in April last year

Contracts are reported to be struck at relatively high RMB100/t discounts given the tightening state of the thermal coal market

Premium hard coking coal Aus fob US$208.1/t vs US$217.9/t

 

Other:

Tungsten - APT European prices $187-198/mtu vs $187-198/mtu

 

Company News

Amur Minerals* (LON:AMC) 12.5p, Mkt Cap £64m – NED joins the Board

Ljupco Naumovski (60) joined the Board as a Non-Executive Director, effective 2 Jan/17.

Mr Naumovski has held a number of roles during his more than three decades work experience in Russia including:

VP and General Director of the Moscow office at Kinross being responsible for government relations and business development;

Senior Banker and Head of Mission for the Russian Team at EBRD being involved in more than half a billion dollars financing deals;

Senior VP and General Manager for the CEMEA region at Visa International.

Mr Naumovski has also been involved in Canadian diplomatic missions in the past acting as Commercial Secretary in Moscow Embassy and Deputy Director for USSR/EE in the External Affairs/International Trade office.

* SP Angel act as Nomad and broker to Amur Minerals

 

ASA Resource Group* (LON:ASA) 1.8 pence, Mkt Cap £31m – Company responds to press speculation

ASA Resources has issued a formal response to press speculation “about proceedings against the Company by Zindico Consortium in respect of the Group’s Freda Rebecca mine.”

The company “wishes to confirm that it has not been served with any court papers and has no knowledge of the alleged claim”. ASA Resources goes on to state “There has been no communication with Zindico or any other party about the allegations.”

We understand that the press report in question appeared in the business section of the “Herald” newspaper in Zimbabwe on 4th January and suggested that the Zindico Consortium had filed a $20m claim in respect of  an alleged agreement with the former management of the company, then known as Mwana Africa, under which Zindico could acquire a 26% interest in the Freda Rebecca mine. The news report does not disclose the price of the alleged transaction.

Conclusion:  The Company statement is an outright rebuttal of the allegations made in the newspaper article and confirms that there is, in fact, no outstanding legal action.

*SP Angel act as Nomad and broker to ASA Resources

 

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