The Stoxx Euro 600 Index is up 0.4% recovering from the biggest drop since the end of Nov on Thursday. FTSE 100 is also stronger this morning with miners up 0.9% based on FTSE 350 Mining Index.
Gold prices are slightly off this morning after having climbed in the last four of five days.
The US$ index is weaker consolidating at lower levels following four consecutive sessions of losses ahead of a long weekend.
US markets are closed on Monday for the Martin Luther King Day.
Brent is holding near $56/bbl following the biggest two-day rally in nearly six weeks on reports saying Saudis are cutting production in line with agreed OPEC terms.
Separate data showed Chinese crude imports climbed at the fastest pace since 2010 on the back of a decline in prices.
Import growth is expected to slow down as national reserves near capacity and officials are considering to re-introduce caps on purchases by smaller refiners.
Iron ore futures end the week on a strong note amid Chinese imports data showing record inbound iron ore shipments and on good growth momentum in the steel prices.
How long till Donald Trump leaves office?
Yesterday, we witnessed what was arguably one of the worst political press conferences in the history of the media.
Trump failed to convey any clear policy views and even hardened supporters of President Donald must have cringed at the performance.
Bookmakers are offering just 2:1 on Trump leaving office before the end of his term and 4:1 within six months.
The odds suggest Trump leaving office is highly likely indicating to us a further period of instability within global markets (good for gold)
The Republican party is then likely to be led by the Vice President who is still likely to maintain key ‘Republican’ policies.
It’s no surprise that Trump is not completely severing ties with his business empire as he may need to move back into it sooner rather than later.
It is a Presidency which is already surrounded by controversy and this is likely to create greater volatility in world markets.
Indonesia – potential U-turn on concentrate / ore export ban as revision to regulations may relax ban on mineral ore exports
Concessions on Indonesia’s concentrate export ban ran out yesterday meaning that mineral concentrate exports should have stopped yesterday
The Energy and Mining minister Ignasius Jonan may allow concentrate exports to continue for some companies.
The nationwide ban on un-processed raw materials has inspired the building of a number of new nickel pig iron plants but much ore production should remain suspended.
Technically smelter developments should have been completed by 2014 according to Indonesian legislation.
It looks as if Indonesia will allow nickel ore exports to resume if at least 30% is processed locally which is a softening of the existing policy
Freeport’s giant Grasberg copper mine is thought to likely to receive new permits within the next two to three weeks, though this may depend on the miners re-activating a former commitment to build a smelter in the region.
A civil society group is challenging Indonesia’s new mining rules in the nation’s supreme court today on the premise that the rules breach 2009 mining legislation
With mining in the Philippines in crisis following the closure of many coastal mines by the Mines Minister Gina Lopez Chinese processors have struggled to find new ore supply.
Exploration budgets fell 21%yoy to $6.9bn last year based on a survey of 1,580 mining companies in 2016, S&P Global Ratings reports.
This marks a fresh 10 year low.
Lithium:
Enertopia Corporation which is working in the fields of water treatment and brine recovery is working on a lithium recovery process which it claims could dramatically change the footprint of the Lithium industry
The new process has been tested in a lab at bench test scale with results due to be released on 3rd party verification.
Enertopia is also exploring a portfolio of three prospective lithium project in Nevada
We are not going to hold our breath on this one
Dow Jones Industrials -0.32% at 19,891
Nikkei 225 +0.80% at 19,287
HK Hang Seng +0.47% at 22,937
Shanghai Composite -0.21% at 3,113
FTSE 350 Mining -0.32% at 16,267
AIM Basic Resources +1.69% at 2,517
Economic News
US – The economy does not face serious near term issues with long term problems remaining historically low labour productivity and increasing inequality, Janet Yellen said yesterday during her meeting with local teachers.
“Unemployment has now reached a low level, the labour market is generally strong and wage growth is beginning to pick up.”
China – Dec exports fell more than expected (in US$ terms) with Nov figures significantly revised downwards taking the headline number in the negative territory.
Destination wise, only the US and South Korea posted increases with shipments to the EU and other Asian countries posted declines.
The latest decline saw the value of 2016 exports down 7.7%yoy.
In CNY terms, overseas shipments grew at a modest pace thanks to c.7% depreciation in the national currency.
Exports (%yoy, US$): -6.1 v -1.6 (revised from 0.1) in Nov and -4.0 forecast.
Exports (%yoy, CNY): 0.6 v 5.9 in Nov and -0.1 forecast.
Imports: (%yoy, US$): 3.1 v 4.7 (revised from 6.7) in Nov and 3.0 forecast.
Imports (%yoy, CNY) 10.8 v 13.0 in Nov and 4.2 forecast.
Iron ore – Chinese imports exceeded a record of 1bn tons in 2016 as local demand increased on state stimulus while domestic mines slowed.
Stronger domestic demand helped to redirect increased share of aluminium and steel exports to local market easing supply in overseas markets.
Total iron ore inbound shipments climbed 7.5%yoy to 1,024mt last year.
UK – 3 meter storm surge expected today at high tide (12:30)
Some low-lying villages have been evacuated in Essex.
Let’s hope the Thames Barrier holds back the high tide or Canary Wharf might be in for a liquidity event.
Currencies
US$1.0636/eur vs 1.0636/eur yesterday. Yen 114.69/$ vs 114.17/$. SAr 13.550/$ vs 13.627/$. $1.219/gbp vs $1.228/gbp.
0.749/aud vs 0.749/aud. CNY 6.900/$ vs 6.901/$.
Commodity News
Precious metals:
Gold US$1,196/oz vs US$1,202/oz yesterday - Gold hoard discovered in old piano
A hoard of gold has been discovered in a piano when it was being retuned in Shropshire
The hoard is thought to have been in the Piano for >100 years but is not being revealed while decedents of the piano’s original owners are being sought.
Gold ETFs 56.9moz vs US$56.9moz yesterday
Platinum US$974/oz vs US$985/oz yesterday
Palladium US$756/oz vs US$760/oz yesterday
Silver US$16.76/oz vs US$16.90/oz yesterday
Base metals:
Copper US$ 5,826/t vs US$5,787/t yesterday
Aluminium US$ 1,791/t vs US$1,773/t yesterday
Nickel US$ 10,215/t vs US$10,230/t yesterday
Zinc US$ 2,727/t vs US$2,745/t yesterday
Lead US$ 2,208/t vs US$2,171/t yesterday
Tin US$ 21,090/t vs US$21,140/t yesterday
Energy:
Oil US$55.9/bbl vs US$55.2/bbl yesterday
Natural Gas US$3.387/mmbtu vs US$3.358/mmbtu yesterday
Uranium US$23.00/lb vs US$23.00/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$77.0/t vs US$78.0/t
Chinese steel rebar 25mm US$489.6/t vs US$487.9/t
Thermal coal (1st year forward cif ARA) US$68.1/t vs US$67.4/t yesterday
Premium hard coking coal Aus fob US$184.9/t vs US$185.2/t
Ferrochrome – Gulf Mining plans to triple high-carbon ferrochrome capacity by 2020 according to ceo
Other:
Tungsten - APT European prices $187-198/mtu vs $187-198/mtu
Company News
Ariana Resources (LON:AAU) 1.7p, Mkt Cap £14.5m – Raises £900,000
Ariana Resources reports that it has raised £900,000 (gross) through the placing of 56.25m new shares at 1.6p. The additional shares represent approximately 6.3% of the enlarged company.
The funds will be used to help complete “a highly encouraging scoping study at Tavsan” and to assist in preparatory work at the recently acquired Salinbas project ahead of the onset of the exploration field season.
Salinbas, which was acquired from Eldorado Gold in late December, is located around 16km north of Mariana Resources’ Hot Maden project in north-east Turkey and is reported to contain “an approximately 10Mt Indicated and Inferred JORC resource, with an average grade of 2.0 g/t Au and 10.2 g/t Ag (for 650,000 oz gold and 3.2Moz of silver)”.
The Salinbas acquisition also includes the Ardala porphyry copper gold molybdenum target
A scoping study for Salinbas, presumably undertaken by Eldorado Gold, “demonstrated potential for production of approximately 50,000 ounces of gold and 100,000 of silver per annum over 10 years, providing an NPV(8%) in excess of US$100 million.”
Conclusion: Ariana is in the final stages of bringing its Kiziltepe mine in Turkey into production, albeit that heavy snowfall is slowing the completion. The fundraising should assist the company in progressing its project pipeline pending the start of cashflow at Kiziltepe.
*An SP Angel analyst has previously visited the Kiziltepe project in Turkey