World's Biggest Gold Miner Bets Big on Copper -- Commodities Roundup
NEW YORK (May 15) Newmont said it has agreed to acquire Australia's Newcrest Mining for $17.5 billion, concluding weeks of talks over a sweetened offer by the U.S. company that wants to complete the largest-ever merger and acquisition deal in the gold-mining industry.
Newmont's pursuit of Newcrest illustrates how gold producers are seeking to make deals as the industry is struggling to make large discoveries of the precious metal. It also extends a battle for control among miners for commodities essential for making electric vehicles and renewable-energy infrastructure, as Newcrest's gold mines also produce significant amounts of copper.
The global mining sector is experiencing a wave of deal making not seen for years, contrasting with a lull in overall global M&A activity. While gold producers, including Newmont, had been active seeking mines that could replace aging operations and lower costs, the industry's hunger for deals has broadened out to encompass many of the world's biggest mining companies, such as BHP and Glencore.
Platinum Market to Move to Near Million-Ounce Deficit on Tight Supply, Higher Demand
The platinum market is forecast to move to a nearly one million ounce deficit in 2023, amid stronger demand from the investment sector and constrained supply from South Africa.
The market is now expected to see a deficit of 983,000 ounces this year, a shift of 1.8 million ounces from the 854,000 ounce surplus seen in 2022, according to a new report from the World Platinum Investment Council released on Monday.
Much of the move has come from demand strengthening for the precious metal, WPIC said, with demand rising in the first quarter of 2023 to 2 million ounces--up from 1.691 million ounces in the fourth quarter of 2022--due to an upswing from the investment sector as well as continued improved buying in the auto and industrial sectors.
MARKET TALKS:
Grains Higher After Turkey Election Appears to Head to Run-Off
0739 GMT - Grain markets are pushing higher after Turkey's main candidates for president said they were both ready to accept a run-off election later this month. Wheat futures in Chicago are up 1.1% to $6.42 a bushel while corn is up 0.4% to $5.89 a bushel. The Black Sea Grain Initiative is due to expire Thursday and Turkey has been one of the key brokers so far in ensuring food has passed out of Ukraine. Negotiations around the corridor will be the main focus this week in agricultural markets, according to Dave Whitcomb, head of research at Peak Trading Research. "Wheat markets will follow Grain Corridor headlines all week," he says in a note. (yusuf.khan@wsj.com)
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Oil Weakness Continues on Demand Worries
0735 GMT - Oil prices edge lower, adding to sharp losses this month, as demand signals look weak while supplies have remained strong. Brent crude oil declines 0.4% to $73.88 a barrel, while WTI weakens 0.3% to $69.81 a barrel. Both have fallen over 8% so far this month. "The sell-off in the market has been unrelenting over recent weeks, with negative sentiment rising following concerns over the macro environment and what it could eventually mean for oil demand," ING says in a note. Oil supplies could also get a boost in the coming days if a pipeline linking them to Turkey restarts as suggested by Iraqi officials last week.
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Metals Are Mixed Ahead of Light Data Week
0722 GMT - Metal prices are mixed with concerns about the macroeconomic outlook still weighing on investors, ahead of what is a light data week for policy makers. Three-month copper is up 0.4% to $8,276.50 a metric ton while aluminum is down 0.2% to $2,239.50 a ton. Gold meanwhile is up 0.1% to $2,021.70 a troy ounce. Last week, copper fell more than 4%--the largest weekly fall since February for the red metal. "China's uneven recovery has weighed on sentiment in the base metals market," ANZ Research says in a note, but adds that physical demand indicators are showing signs of improvement. "Stockpiles held on exchange are down, while operating rates of downstream processors in China have bounced sharply."
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Chinese Lithium Producers' Outlook Likely Brightening
0525 GMT - Chinese lithium producers' earnings outlook is likely brightening, as EV battery makers are likely to start restocking their lithium supplies soon, Citi analysts say. Lithium sales and prices have been under pressure in recent months as China's EV sales slowed after the expiry of a government purchase subsidy program. The EV industry is a major source of demand for lithium, which is widely used in batteries. Citi notes that major battery manufacturer CATL has recently noted sequential order improvement, a sign that "an inflection point" may be emerging for EV battery production rebound and the consequent lithium demand recovery, Citi says.
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