(MENAFN- ProactiveInvestors - UK) China's Central Bank cut interest rates for the third time in 6 months
€¢ The People's Bank of China cut the one year lending rate by 0.25% to 5.1%.
€¢ The one year deposit rate was cut by the same amount to 2.25%.
€¢ The move is based on subdued inflation and poor trade figures last week.
€¢ Moves in interest rates have been combined with lower bank reserve ratios and liquidity injections to banks.
Greece meets European Finance Ministers Today
€¢ Greece is meeting European Finance Ministers today to discuss their finances and pending payments.
€¢ Greece is due to pay ‚¬750m to the IMF tomorrow.
€¢ Chancellor Merkel is under pressure from her own party to harden the German line on Greece.
€¢ Her party is said to challenging her stance to keep Greece within the European Union.
Main Economic Figures out on Wednesday this week
€¢ Wednesday brings the main data for this week with growth data out on the Eurozone and Industrial Production from China.
€¢ GDP is expected to expand in the Eurozone for the first quarter of this year compared to final quarter of last year.
€¢ Concensus is for 0.5% against 0.3% in the fourth quarter.
€¢ Spain is expected to perform well with 1st quarter of 0.9%.
€¢ Germany is expected to slip from 0.5% to 0.7%.
€¢ In China industrial production for is expected to improve to 6% from 5.6% in March.
Economic News
Greece € IMF is seeking contingency plans for Greek default scenario
€¢ The IMF are said to be working with national authorities in SE Europe on contingency plans in event of a Greek default.
€¢ This is to contain any spill over into countries such as Bulgaria where Greek Banks own around 22% of banking assets.
€¢ European officials expect no breakthrough at a meeting of the currency union's finance minister today.
€¢ Overall the IMF expect subsidiaries of Greek Bank in SE Europe to be able to withstand the failure of their parent companies.y
US € Retail sales data on Wednesday followed by Industrial production on Friday following strong unemployment report last week.
€¢ Weekly claims climbed to 223,000 versus a Bloomberg survey of 228,000.
€¢ Unemployment rate dropped to 5.4% as expected v 5.5% in Mar.
€¢ Employment in health services was strong increasing by 55,600 in April.
China € Surpasses US as the biggest oil importer
€¢ Chinas surpasses the US as the biggest importer of crude oil.
€¢ In April, China consumed 7.4m barrels a day against the US at 7.2m barrels a days.
€¢ However, this is not expected to a consistent trend till the second half of the year.
UK € The BoE is expected to announce no change in rates later today.
€¢ Wednesday should see inflation data for the second quarter.
US$1.1211/eur vs 1.1237/eur yesterday. Yen 120.17/$ vs 120.02$. SAr 11.982/$ vs 12.016/$. $1.5409/gbp vs 1.547/gbp
0.7892/aud vs 0.791/aud
Commodity News
Vale € While the company like BHP has helped the iron ore market recently by announcing a revision of ambitions to grow production further, the company are now pushing to produce higher grade ore.
The company expects to produce 340 Mt of iron ore this year.
The company are pushing ahead with development of higher grade product while managing their standard offering.
Precious metals:
Gold US$1,185/oz vs US$1,187/oz yesterday
Platinum US$1,136/oz vs US$1,138/oz yesterday
Palladium US$795/oz vs US$789/oz yesterday
Silver US$16.44/oz vs US$16.41/oz yesterday
Base metals:
Copper US$ 6,490/t vs US$6,416/t yesterday € Rio Tinto says potential for market to be balanced this year.
€¢ Rio Tinto's head of copper thinks that slower production in response to market weakness could help balance the market.
€¢ Disruptions to supply and decisions to slow the market is reducing potential supply into the market.
€¢ This could result in demand outstripping supply in the next two years rather than three to four years.
Aluminium US$ 1,894/t vs US$1,894/t yesterday - Chinese unwrought aluminium and aluminium products exports climbed 30%yoy in Apr with YTD growth coming in at +39.6%.
Nickel US$ 14,440/t vs US$14,270/t yesterday €
Zinc US$ 2,359/t vs US$2,380/t yesterday
Lead US$ 2,055/t vs US$2,084/t yesterday
Tin US$ 16,110/t vs US$16,145/t yesterday
Energy:
Oil US$65.6/bbl vs US$65.6/bbl yesterday € China crude oil imports hit new record in April at 7.4m bbs per day up 8.6% yoy partly due to lower oil prices
Natural Gas US$2.90/mmbtu vs US$2.738/mmbtu yesterday
Uranium US$36.45/lb vs US$36.75/lb yesterday - $800bn is being invested in Asia on new nuclear reactors. The new reactors should generate massive demand for new uranium as they come on stream.
Bulk commodities:
Iron ore 62% Fe spot (cfr Tianjin) US$59.02vs US$58.4/t € Chinese iron ore imports fell 4%yoy in Apr as traders were reluctant to put in new orders amid volatile prices.
€¢ The nation imported 80.2mt last month versus 83.4mt in Apr/14 and 80.5mt in Mar/15.
€¢ YTD imports totalled 307.3mt compared to 305.0mt last year.
Thermal coal (1st year forward cif ARA) US$57.7/t vs US$57.7/t yesterday € China coal shipments fall 26% yoy in April due to slower economic activity and despite low coal prices
Seaborne hard coking coal index (quarterly) US$109.5/t unch vs US$109.5/t
Speciality metals and alloys:
Ferrochrome € Stainless steel prices in East Asia recover on the back gains in the nickel prices.
€¢ However, demand in the stainless steel sector "has yet to recover" according to an exporter based in eastern China.
Company News
Aureus Mining (LON:AUE) 26.4 pence, Mkt Cap £96.7m € Enlargement of Mining Licence and Ebola Update
€¢ The Bea Mountain licence has been increased from 457 km2 to 478 km2 to include the Leopard Rock South target.
€¢ Leopard Rock is sited around 40 km East North East of the New Liberty deposit.
€¢ The Leopard Rock deposit in contiguous to the Ndablama deposit and is part of a 13 km mineralised corridor.
€¢ Ndablama which is the only deposit so far drilled along the corridor has a Mineral Resource of 386,000 oz at 1.6 g/t gold at 0.5 g/t cut off.
€¢ It also has an inferred resource of 515,000 oz at 1.7 g/t gold located in a shallow dipping shear zone.
€¢ A 400m long mineralised zone has been defined at Leopard Rock South through trenching.
€¢ Liberia has been declared Ebola free by the WHO after a period of 42 days of no new confirmed cases.
€¢ Liberia has reported 10,500 clinical cases and 4,700 deaths over the period of having Ebola.
€¢ This accounted for 43% of the deaths from Ebola in West Africa.
Conclusion: Two pieces of good news for Aureus this morning € the extension of the Bea Mountain licence gives them more regional opportunity outside the New Liberty Mine where first gold pour is expected at the end of May. In addition, Liberia is now free of Ebola. The country has been badly affected by Ebola and the company should be congratulated on being able to progress the construction of the mine in such circumstances.
Kefi Minerals* (LON:KEFI) 0.95 pence, Mkt Cap £12.5m € Financing Update
€¢ The board of Kefi have decided not to extend the deadline for the settlement of the £3m subscription on previously agreed terms with Goldfields.
€¢ Goldfields Resource Fund has asked for re-extension of the payment date from 8th May to 2 June 2015.
€¢ The board has decided to raise funds through an alternative source.
€¢ The company has placed 66.6m shares at a price of 1 pence raising £666,106.
€¢ Directors will be subscribing to £250,000 of the shares.
€¢ The company will also be seeking to raise its authority to issue shares on a non pre-emptive basis to fund on-gong working capital.
Conclusion: The funding for the Goldfields Resource fund was first committed at the end of November last year with the timing for payment continuing to be moved. It is sensible therefore for the company to move on and find alternative sources of funding. The Tulu Kapi project now has a mining agreement signed and we expect the company to be able to put together the financing for the project to be constructed.
*SP Angel act as Nomad to Kefi Minerals. An SP Angel analyst has visited the Tulu Kapi mine site with Kefi Minerals.
Lonmin (LON:LMI) 141 pence, Mkt Cap £824m € Implementing capital and operating cost cuts in expectation that low US$ PGM prices may persist for two years
€¢ Lonmin reports a significant H1 recovery in operations compared to the strike affected previous first half. The total ore tonnes mined increased by 72% to 5.7m tonnes and platinum metal in concentrate rose to 381,984 oz, a 77.6% increase and the highest H1 production since 2007.
€¢ The company is maintaining its production guidance for the year at 750,000oz (and platinum sales of 730,000 oz) and cost guidance of R10,800/oz which is consistent with the R10,516/oz achieved during H1.
€¢ The company was, however, affected by lower sales volumes and the impact of smelter outages resulting in a 12% reduction of revenues to $508m, an underlying operating loss of $70m and a sharp rise in net debt to $282m from $29m in September 2014.
€¢ In response to these pressures, Lonmin is further reducing its capital expenditure forecast for the year to $160m from the $185m projection announced at the publication of the Q1 results in January when expectations were brought down from the $250m level.
€¢ Lonmin expects to reduce debt during H2 as concentrate stockpiles are unwound and management imposes restrictions on capital expenditure and implements workforce reductions of up to 3500 through voluntary redundancy and early retirement, saving around 10% on labour costs.
€¢ Refined metal production has been affected by continuing disruptions to smelter output during H1 with disruption at No.1 Furnace in December due to a leak. The furnace was brought back on line by early March. The No.2 Furnace was also shut down in December due to electrode issues and brought back on line in January. Much of the resulting shortfall in capacity was met by the restart of the Pyromet furnaces which are expected to remain on line to cover a planned shutdown of the No2 furnace to replace refractory bricks and implement design upgrades on the roof and gas system.
€¢ The company expresses continuing confidence in the underlying strength of PGM markets but is "planning on the basis that these low PGM prices will persist for at least two years."
Conclusion: Lonmin is showing improvements from the strike hit previous year and implementing capital and operating cost savings which should help it to weather what it expects to be a two-year period of weak PGM prices. One of the key elements in reducing its debt will be processing the build-up of concentrates through its smelters and so the ability to deliver uninterrupted smelter operations may well prove to be crucial.
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