(MENAFN- ProactiveInvestors) Economic News
US – Non farm payrolls are due today with estimates for another strong monthly reading (230k v 214k in Oct).
• Unemployment rate is estimated to hold at 5.8%.
• Average hourly earnings growth is expected to accelerate to +0.2%mom/+2.1%yoy v +0.1%mom/+2.0%mom in Oct.
ECB – The ECB is studying the merits of buying government debt but is not currently prepared to commence the programme.
• Should policy makers decide on more stimulus “this would imply altering early next year the size pace and composition of our measures” Draghi said.
• The broad-based asset purchase programme including sovereign borrowings may be proposed as early as next month two ECB officials told Bloomberg.
• For now the bank will be offering the round of long term loans to banks next week. Funding in the Dec 11 is planned at €170bn.
• Mario Draghi released new inflation and growth forecasts.
• Inflation is expected to come in at 0.5% this year and 0.7% in 2015 way below the 2% ECB target. The bank forecast inflation would be 1.1% in 2014.
• Economic growth will growth 0.8% in 2014 and 1.0% in 2015. Again this marks a downgrade on last year’s estimates for a 1.1% growth in 2014. In Sep the ECB released its gorwht forecasts for 1.6% in 2015.
Germany – factory orders growth accelerated strongly in Oct beating expectations for slower rate of expansion (+2.5%mom in Oct v +1.1%mom in Sep and +0.5%mom forecast).
• Despite good economic news this morning Bundesbank is reported to have cut Germany’s economic growth forecasts.
• The economy is expected to expand at .4% in 2014 1.0% in 2015 and 1.6% in 2016.
• This compares to previous forecasts for 1.9% 2.0% and 1.8% increases respectively.
Russia – The central bank released the numbers for its interventions in the forex market on Dec 1 ($700m) and Dec 3 ($1900m) trying to arrest the depreciation of the ruble.
• The USDRUB exchange rate has not broken the 55 mark but is trading close to historical low levels (53.73 as of this morning).
US$1.2365/eur vs 1.2317/eur yesterday. Yen 120.37/$ vs 119.91/$. SAr 11.218/$ vs 11.161$. $1.567/gbp vs 1.569/gbp
A$0.8372 vs 0.8372 yesterday
Commodity News
Precious metals:
Gold US$1204/oz unch vs US$1204/oz on Friday –
Platinum US$1236/oz vs US$1239/oz yesterday –
Palladium US$802/oz vs US$802/oz yesterday
Silver US$16.44/oz vs US$16.48/oz yesterday
Base metals:
Copper US$6486/t vs US$6427/t yesterday –
Aluminium US$2001/t vs US$1970/t yesterday –
Nickel US$17143/t vs US$16885/t yesterday –
Zinc US$2238/t vs US$2229/t yesterday -
Lead US$2034/t vs US$2037/t yesterday –
Tin US$20400/t vs US$20430/t yesterday
Energy:
Oil US$69.20/bbl vs US$70.30/bbl yesterday –
Natural Gas US price US$3.704/mmbtu vs US$3.791/mmbtu yesterday –
Thermal Coal $70.80/t vs $71.00/t
Uranium US$38.25/t unch vs US$38.25/t
Other:
Iron ore spot price index (62% fines) $70.8 vs $69.9/t –
Seabourne Coking coal (quarterly) – US$119/t unch vs US$119/t
Tungsten APT European US$285.0/mtu vs US$320.0/mtu last week – big fall in tungsten price this week with the price falling $35/mtu.
• We believe there is an element of moving inventory off balance sheet over the Christmas period and into the new year by some consumers
• There is also an unsubstantiated story that some tungsten material without conflict-free documentation might be dragging prices lower looking for buyers. We do not believe there would be much of this material around and we are not sure why it would have such effect on tungsten prices.
• This is a substantial and surprise fall bringing prices to their lowest level since 2010. We are surprised to see such a large pull back in tungsten prices.
The price move may also reflect sentiment among machine tool manufacturers mainly in Germany and Japan.
Ferrochrome HC $1.15/lb Cr Q4 vs $1.19/lb Q3 quarterly Benchmark pricing
Company News
() – Results of Drilling Programme
• The company reported results from a 9 holes programme totalling 1248m.
• Four of the holes were planned on the outer contact at depths of between 150-200m below surface.
• The holes have helped to delineate the shape of the upper kimberlite in more detail.
• The drill holes have been integrated into the in house 3D mode.
• The model looks at a maximum depth of 100m (2500m Above Sea Level) 295m x 215m 200m depth 275m x 195x an d300m at 260m x 150m.
• The kimberlite maintains a planar sectional area in excess of 3 hectares at 350m below surface and is open at depth below.
• The results of the drilling will enable either an improvement in the overall tonnage or lowering the strip ratio.
Conclusion: It is useful to have these drill results to inform the model on the upper part of the kimberlite – the company plan to do Stage 1 production down the a depth of 350m.
() – Closing of Refinancing for BEE Loan
• The company confirmed the financing by ABSA and RMB bank for the loans due to Petra of R 1078m (US$98m) from BEE partners.
• ABSA and RMB will be financing the loans directly with the BEE partners releasing cash for Petra.
Conclusion: This is confirmation of an earlier announcement but underscores the balance sheet strength of Petra and the scope for bringing forward dividends.
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