SUPPLY AND DEMAND

Lithium’s sharp decline to weigh on Australian exports

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Original article by Simone Grogan
The West Australian – Page: Online : 2-Jul-24

The federal Department of Industry, Science & Resources expects the total value of Australia’s lithium exports to have been just $10bn in the year to 30 June. This compares with $20bn in the 2022-23 financial year, with the latest result being affected by a sharp fall in the price of the battery metal. However, the department’s quarterly report concludes that the price of both lithium and copper may have bottomed. It also says the outcome of the US presidential election could potentially accelerate that nation’s transition to renewables and electric vehicles, which in turn could boost demand for Australia’s critical minerals.

CORPORATES
AUSTRALIA. DEPT OF INDUSTRY, SCIENCE AND RESOURCES

New home supply to hit decade low

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Original article by Larry Schlesinger, Michael Read
The Australian Financial Review – Page: 1 & 32 : 19-Mar-24

The Urban Development Institute of Australia has forecast that just 79,000 new home builds will be completed nationwide in 2026. This is 26 per cent lower than in 2023, and the slump in new housing supply is set to further reduce the affordability of homes and rental properties. The dire forecast also casts further doubt on the federal government’s target of building an additional 1.2 million homes over five years. Barrenjoey’s chief economist Jo Masters says this target is ‘aspirational’, and will require high rates of apartment construction; she adds that apartments have a longer construction and lead time than houses.

CORPORATES
URBAN DEVELOPMENT INSTITUTE OF AUSTRALIA, BARRENJOEY CAPITAL PARTNERS PTY LTD

More pain for nickel, lithium as deluge bites

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Original article by Cecile Lefort
The Australian Financial Review – Page: 27 : 28-Feb-24

The price of nickel fell by 44 per cent in 2023, and Sam Berridge of Perennial Value Management believes that it may not rebound for some time. He notes that Indonesia is continuing to ramp up its production of low-cost nickel, while the growing use of lithium ferrous phosphate in battery technology will reduce demand for the use of nickel in electric vehicles. Meanwhile, Vivek Dhar from the Commonwealth Bank says economic activity in China will be the key driver of the outlook for nickel, given that the nation accounts for 40-60 per cent of base metal demand. However, Berridge thinks the lithium price may have bottomed, after falling by 85 per cent in 2023.

CORPORATES
PERENNIAL VALUE MANAGEMENT LIMITED, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA

LNG party to end this year as glut looms

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Original article by Angela Macdonald-Smith
The Australian Financial Review – Page: 11 & 12 : 9-Jan-24

Bernstein Research has forecast that a looming increase in global LNG supply could potentially see prices fall by up to 47 per cent by 2027. The firm notes that global supply is set to increase by about 140 million tonnes by the end of 2024, and this is set to be sustained for the next three years. Neil Beveridge of Bernstein says the global LNG market is reaching a ‘turning point’, and it will revert from being net short to net long in the next several years. Australia exported a record $92.2bn worth of LNG in 2022-23, but expectations of lower export volumes and prices would have a significant impact on future government revenue.

CORPORATES
BERNSTEIN INVESTMENT RESEARCH AND MANAGEMENT

Iron ore tipped to hit $US130 a tonne this year

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Original article by Joanne Tran
The Australian Financial Review – Page: 23 : 2-Nov-23

Citigroup says there is potential for the Chinese government to provide further support for the nation’s property sector, after policymakers recently issued an additional one trillion yuan ($217.8 billion) worth of central government bonds. The firm contends that the iron ore price could rally if China pursues further stimulus in order to "engineer" a strong start to 2024. Citi has upgraded its short-term price forecast for the steel input from $US100 per tonne to $US120/tonne, but adds that further Chinese stimulus measures could see it test the $US130/tonne level by the end of 2023.

CORPORATES
CITIGROUP INCORPORATED

Power bill relief likely only if grid survives summer

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Original article by Mark Ludlow
The Australian Financial Review – Page: 10 : 24-Oct-23

Wholesale electricity prices are down as much as 70 per cent on a year ago, but Gavin Dufty from the St Vincent de Paul Society says he does not expect to see any easing in retail prices for households and small businesses until perhaps the start of the 2024-25 financial year. He says this is because most rates will have been locked in before July, while Josh Stabler from energy adviser Energy Edge says the 2023-24 summer is likely to be very hot, leading to possible record electricity consumption as a result of people using air conditioning.

CORPORATES
ST VINCENT DE PAUL SOCIETY, ENERGY EDGE

Goldman steels for iron ore slide into bear market

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Original article by Alex Gluyas
The Australian Financial Review – Page: 27 : 9-Aug-23

Iron ore futures in Singapore have fallen to below $US99 per tonne, down from a cyclical high of $US114.95 per tonne in July. Goldman Sachs expects the decline to be sustained, forecasting that the iron ore price will fall by another 12 per cent to $US90/tonne in the second half of 2023. Nicholas Snowdon of Goldman Sachs says factors such as lower steel production in China and an increase in global iron ore supply will result in a 68 million tonne surplus of the steel input in the six months to 31 December.

CORPORATES
THE GOLDMAN SACHS GROUP INCORPORATED

Chinese steel has peaked: Rio boss

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Original article by Nick Evans
The Australian – Page: 13 & 16 : 2-Aug-23

Official figures show that China’s crude steel production fell by 21.7 million tonnes year-on-year in 2022, to 1.01 billion tonnes. Rio Tinto CEO Jakob Stausholm believes that China’s steel production has peaked and output will be flat over the next several years, before starting to decline by the end of this decade. However, Stausholm expects global demand for iron ore to remain strong, as steel production in other developing countries increases. He adds that Chinese steel producers may also opt to build steel mills in other countries.

CORPORATES
RIO TINTO LIMITED – ASX RIO

Higher rates are unlikely to erase house price gains

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Original article by Nila Sweeney
The Australian Financial Review – Page: 30 : 15-Jun-23

Data from CoreLogic shows that house prices rose by 2.3 per cent nationally over the last three months, including 1.2 per cent in May. HSBC’s chief economist Paul Bloxham says factors such as rising interest rates and a slowing economy may affect the pace of growth in house prices but are unlikely to see the market retreat. The ANZ Bank’s senior economist Felicity Emmett notes that factors such as limited supply and strong demand due to immigration is putting upward pressure on housing prices, and this is likely to continue in the near-term.

CORPORATES
CORELOGIC AUSTRALIA PTY LTD, HSBC AUSTRALIA HOLDINGS PTY LTD, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ

Goldman slashes iron ore forecast 18pc on weak Chinese demand

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Original article by Joanne Tran
The Australian Financial Review – Page: 27 : 7-Jun-23

Investment bank Goldman Sachs has downgraded its three-month price target for iron ore to $US80 per tonne, and it now expects demand for the steel input to be flat in 2023. Goldman Sachs anticipates that there will be a global surplus of iron ore for the first time since 2018, and this surplus will increase in 2024. The firm also expects the iron ore price to average $US90 per tonne in the first half of 2023, compared with its previous forecast of $US110/tonne.

CORPORATES
THE GOLDMAN SACHS GROUP INCORPORATED