Good afternoon
equities continue their recent race! But now the market is bidding up the travel sector around the world!
Gold is slowing down and feels like it is loosing it´s momentum for now! ETF inflows are continuing to slow…We could see a reaction, but the ultra-low interest rate enviroment will continue to see interest in gold - and obviously, recent government/central bank action around teh world will and should also continue to make gold as the only currency, not backed by a government or a central bank, very much on the radar screen.
Base metals are slightly stronger, especially copper.
Consumer Confidence is still very low in Germany, but strongly rising.The same in the US - at least for their expectations. New Home Sales in the US much stronger than expected.
Not all that much to report from the micro-side…only
Metro Mining - had their AGM today. Management was very cautious on the shorter term price outlook for bauxite. I share that view in the short run - Aluminium is not doing well, as the end product from bauxite, and the intermediate product, Alumina, has been under pressure therfore as well. But Chinese imports ( and that´s where 100% of MMI´s bauxite goes ) continue to rise strongly. I emphasize, how vulnerable the massive rise of China´s dependence on bauxite from Guinea is - this is a very difficult country, also having elections later this year. For now, excellent production numbers are making up for a good deal of price weakness, as well as much lower freight rates. But obviously, Guinea-product is benefitting more form it than Australian product, due to the much longer transport. Production for MMI in April was roughly 240.000t vs 150.000t in the previous year, and May has been forecast today to produce 450.000t vs 310.000t last year. So the mine is going extraordinary well, despite corona impact. This should reduce production costs. But in light of the uncertain price outlook for Bauxite, the company has not pushed the button as yet on the ( fully financed ) mine expansion.
Metro have a very strong balance sheet with net cash - so no trouble at all is expected here. Alumina prices seem to be past the worst - and I think, that you should buy straw hats in winter! This is a very well-run company….
Have a nice evening
WS