Good afternoon
while the US corona-situation is at it´s worst, and the same for Brazil, some small counties are also experiencing second waves, or are doing badly, like for example South Africa, Chile or Peru. Unfortunately, Australia is also among them and expereinced 500 new cases yesterday - most of them in Victoria.
Markets don´t like that - and I can understand it. While companies like Moderna and Biontec, among others, seem to make excellent progress to develope a vaccine, many issues with the virus are still a mystery. It looks to me, that this story is not nearly over…and could cause longer damage than expected a few weeks ago. This could be fairly negative for the world economy, and the pace of recent spending to mitigate economic effects cannot be sustained for much longer. An interesting feature of many equity markets seems to be, that the recent weakness has been used by private investors to invest big time in equities, vs institutions, which have been selling mostly. This might also be unsustainable?
Equity markets, and also commodity markets ahve shrugged the effects off , to a large degree, and have normalized. Not sure, whether we will see more of that - the risks might shift to the downside!?
Sofar today, equity markets are just about holding their respective levels…base metals are a little weaker, and again, nickel is the worst metal. Gold feels like it will not do, what it did for most of the week - that is becoming stronger in early US-trading hours, but falling back towards the end! It´s currently - at lunch time New York - trading at 1809 US$/oz, and gold stocks are strong.
Daimler reported record sales in China in the last Quarter - the German car industry is living of China these days, like most of the world economy.
Chile´s two largest copper mines, accounting for 30% of Chilean production, have actually increased production last Quarter. Unsustainable, I guess, as tehy are working with 60-70% of the usual workforce - but nevertheless, it hardly smells like big interrutions in the moment - and the copper market is probably pricing some of it in. Apparently, virus infections are rising still very strongly in copepr producing areas, though.
Oceana - announced the review of the NZ-based assets. All good - but the real benefits will not be felt for years. Capital of 447 Mill US$ needs to be spent, most of it up-front, resulting in production of 2,2 mill oz until 2036. Most of the increased production will only be felt from 2024 or 2025 - that´s a long time off, and I am not convinced, that it will be that easy to find the capex. Didipio looks a long way off from coming back into production and cash flow! While it´s nice to have long mine life, I think Oceana is still somewhere in nowheres land it might well continue to be there for a while…
Not that much to report today…
Enjoy your weekend!
WS
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