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Manganese Outlook 2022: Expect Price Corrections, Recovery in Supply

Click here to read the previous manganese outlook.After uncertainty due to COVID-19 in 2020, the manganese space saw a strong rebound in demand in 2021. Despite not being widely known, manganese is extensively used in metallurgy. In fact, it is the fourth

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Click here to read the previous manganese outlook.

After uncertainty due to COVID-19 in 2020, the manganese space saw a strong rebound in demand in 2021.

Despite not being widely known, manganese is extensively used in metallurgy. In fact, it is the fourth most common metal by tonnage, just after iron, aluminum and copper.

What will happen to manganese this year? To find out, the Investing News Network (INN) reached out to analysts in the space to get their thoughts on what’s ahead for the battery metal in 2021.


Manganese trends 2021: The year in review


Volatility was high in the manganese market in 2020, with many analysts predicting at the end of the year that 2021 would see a recovery in steel demand and oversupply in the market.

Looking back at how the market performed in 2021, Clare Hanna of CRU Group told INN that prices for manganese ferroalloys and manganese metal rose to far higher peaks than expected and stayed elevated for longer because of the strength of demand and supply chain costs and bottlenecks.

“It was only in Q4 that we started to see prices begin to come off the peak, and even then not everywhere,” she said. “The US market with its high dependence on imports and its higher preference for contract over spot purchasing has been insulated from the falls elsewhere so far.”

Manganese metal price rises in 2021 were quite staggering. According to CRU, FOB China prices for manganese metal were 217 percent higher by the end of the year, and were 269 percent higher at their November peak.

“Chinese producers dominate supply of this product, and producers were affected by the power crisis and also some coordinated maintenance outages,” Hanna said. “Together, these drove prices up. European and US consumers then had to pay for the high additional container costs on top of this.”

Manganese is mostly mined in South Africa, Australia, Gabon and Ghana, with global production reaching around 18.5 million tonnes in 2020. About 90 percent of manganese is consumed in ferroalloys, while only around 10 percent is used for specialty products, including electrolytic manganese metal (EMM) and manganese sulfite monohydrate (MSM). High-purity EMM and MSM can be used in lithium-ion batteries.

According to CPM Group, global manganese ore production increased by 7 percent in 2021 (up to November), although China’s output went down 15 percent.

“That's significant, because China is the largest steel producer and the largest consumer of manganese for steel applications, so it's important for them to have their domestic production,” Andrew Zemek, special advisor at CPM, explained to INN. Production went down for all sorts of reasons, including power shortages, winter plant closures and environmental restrictions.

“China’s imports also went down, and that's significant because it very much relies on imports of manganese ore. China accounts for 74 percent of global imports of manganese,” he added.

In 2021, the main surprises that affected the manganese market were the speed and duration of the bounce-back in demand from the steel industry outside China. “(That was in contrast to) the extent of the slowdown in steel production in China in H2, and then the container and freight market crises that drove prices up and built huge delays into the shipping of manganese alloy products,” Hanna said.

As a result, manganese ferroalloy supply struggled to catch up with demand outside China, leading manganese alloy prices to rise right through to November.

“Initially this was because supply chain stocks were low and producers were operating at lower levels; then container shipping delays meant ordered material didn’t arrive when planned,” Hanna said.

By contrast, manganese ore prices were more closely linked to developments in China.

“Compared to iron ore, prices were relatively flat, even with higher freight costs,” Hanna said. “We had identified additional supply coming onstream from Eramet (EPA:ERA), and new mines in South African and potentially Australia ― all of this new capacity started and contributed to keeping supply in balance.”

The speed of the steel industry's recovery also took CPM’s Zemek by surprise, as all indicators pointed to demand staying flat or declining, with global demand growing by 7 percent. “But again, in China, there was a very mixed picture,” he said. “The first half of the year was about a 15 percent year-on-year increase, and the second half was a 16 percent year-on-year decline, so all in all no growth of steel in China.”

Within steel, stainless steel production grew by 17 percent during the first three quarters of the year, higher than the 6 percent seen in carbon steel ― a trend that Zemek has been following for some time. “Manganese ore prices were relatively stable compared to other manganese products, which is a reflection of the positive and stable situation on the mining side,” he said. “But nonetheless, prices went up 20 percent compared to January 2020.”

Even though ore prices didn’t grow as much in 2021 as they did the previous year, products made from manganese ore saw prices surge.

“Silicomanganese, the largest of the ferroalloys, had a price spike in October (last) year, trading at 100 percent higher than in January 2020, (and) increasing 14 percent during 2021,” Zemek said.

Meanwhile, high-carbon ferromanganese remained flat in 2021, but prices were still up 20 percent compared to January 2020. Refined ferromanganese had a price spike in October, coming in 150 percent higher than in January 2020, and ended the year 27 percent higher than it was in January 2021, according to CPM data.

“Production is up significantly and prices are not drastically up, but still going up ― to me this signifies a very healthy market,” Zemek said.

Manganese specialty products have also had an impressive run since January 2021, with EMM soaring 225 percent and high-purity MSM rising 68 percent.

Manganese outlook 2022: What’s ahead for demand, supply and prices


Looking over to how prices could perform in 2022, CRU is forecasting that manganese ferroalloy prices will correct significantly as the markets come back into balance and logistics bottlenecks ease.

“Manganese metal demand outside China will remain strong, but Chinese producers should be less affected by power shortages and emission control policies after Q1, so if they increase output we would expect prices to fall,” Hanna said. “If they continue with major maintenance shutdowns, the picture could be very different.”

CRU is expecting global steel production to grow in 2022, in spite of a forecast reduction in production in China, because India and Southeast Asia, along with new capacity coming onstream in the US and the continuing recovery in Europe, will all require more manganese.

“Construction is a key driver, but once the chip shortage eases, we expect steel consumption in the automotive sector to recover,” Hanna said. “However, we think there are a significant number of cars being completed except for the chips, so steel and therefore manganese requirements, such as manganese metal, may lag.”

With demand being strong and prices remaining high even after a correction, CRU expects good supply this year.

“New manganese alloy capacity is planned in Malaysia and India, and Satka are buying the mothballed Metalloys plant in South Africa with the intention of restarting it,” Hanna said. “Element 25 (ASX:E25,OTC Pink:ELMTF) are planning the next phase of the manganese mine development in Australia that will double capacity at this mine.”

CRU is also expecting manganese mine output in Brazil to recover. Looking ahead, the firm is forecasting ferroalloys markets to be more closely balanced; however, a slight surplus in ore markets is expected.

A major area of interest for investors has been the use of manganese in electric vehicle (EV) batteries. That said, as previously mentioned, it is important to note that not all manganese can be used in EV batteries — only high-purity specialty products can be used, mainly EMM and MSM.

Given the EV demand growth forecast, CPM is expecting a compound annual growth rate of about 43 percent for high-purity manganese products in the next five years.

Speaking specifically about the battery sector in coming years, CPM’s Zemek sees a huge deficit of high-purity manganese for the battery industry.

“When we look at the project pipeline, it's very thin. There are very few projects which are close to production; there are a few more which are early stage exploration,” he said. “The deficit is going to be so big that to fill it by 2030 the global production of high-purity manganese products, which is mostly the sulfate, will need to grow more than 10 times to meet that demand.”

These strong fundamentals will likely push high-purity manganese prices further up.

Manganese outlook 2022: Factors to watch


In terms of factors to watch that could impact the manganese market, Hanna said investors should look out for news of Chinese companies building ferroalloy capacity outside of China to take advantage of green energy.

“(Additionally), there are a number of projects to build manganese metal and manganese sulfate capacity outside of China to support EV supply chains,” Hanna said. “Watch for any of these moving to or beyond pilot plant phases.” She is also keeping an eye on Australia, where a number of mine projects have looked at how fast Element 25 was able to get its Butcherbird mine up and running, and are wondering if they could do the same.

Commenting on the biggest risk in the manganese market, Hanna said a sharper slowdown in China — especially the construction sector, which uses rebar, a heavy consumer of silicomanganese — is a catalyst to watch.

Don’t forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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Economics

5 Top Consumer Stocks To Watch Right Now

Are these consumer stocks a buy amid the earnings season?
The post 5 Top Consumer Stocks To Watch Right Now appeared first on Stock Market News, Quotes,…

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5 Trending Consumer Stocks To Watch In The Stock Market Now         

As we tread through the earnings season, consumer stocks could be worth watching in the stock market this week. This would be the case since a number of big consumer names such as Costco (NASDAQ: COST) and Macy’s (NYSE: M) will be posting their financials for the quarter. As such, investors will be keeping an eye on these reports for clues on the strength of consumer spending amid this period of high inflation.

However, despite the soaring prices across the economy, it seems that consumers are surprisingly showing resilience. According to the Commerce Department, retail sales in April outpaced inflation for a fourth straight month. This could suggest that consumers as a whole were not only sustaining their spending, but spending more even after adjusting for inflation. Ultimately, it could be a reassuring sign that consumers are still supporting the economy and helping to diminish the narrative of an incoming recession. With that being said, here are five consumer stocks to check out in the stock market today.

Consumer Stocks To Buy [Or Sell] Right Now

Nordstrom

retail stocks (JWN stock)

Starting off our list of consumer stocks today is Nordstrom. For the most part, it is a fashion retailer of full-line luxury apparel, footwear, accessories, and cosmetics among others. The company operates through multiple retail channels, boutiques, and online as well. As it stands, Nordstrom operates around 100 stores in 32 states in the U.S. and three Canadian provinces.

Yesterday, the company reported its financials for the first quarter of 2022. Starting with revenue, Nordstrom pulled in net sales worth $3.47 million for the quarter. This marks an increase of 18.7% from the same quarter last year. Its Nordstrom banner saw net sales rise by 23.5% year-over-year, exceeding pre-pandemic levels. Next to that, its Nordstrom Rack banner saw a 10.3% increase in net sales from last year. Besides, net earnings were $20 million, with earnings per share of $0.13 for the quarter. Considering Nordstrom’s solid quarter, should you invest in JWN stock?

[Read More] Best Stocks To Invest In Right Now? 5 Value Stocks To Watch This Week

The Wendy’s Company

best consumer stocks (WEN stock)

Next up, we have The Wendy’s Company. For the most part, it is the holding company for the major fast-food chain, Wendy’s. Being one of the world’s largest hamburger fast-food chains, the company boasts over 6,500 restaurants in the U.S. and 29 other countries. The chain is known for its square hamburgers, sea salt fries, and the Frosty, a form of soft-serve ice cream mixed with starches. WEN stock is rising by over 8% on today’s opening bell.

According to an SEC filing, Wendy’s largest shareholder, Trian Partners, is looking into making a potential deal with the company. Trian said that it is considering a deal to “enhance shareholder value.” Also, the firm adds that this could lead to an acquisition or business combination. In response, Wendy’s stated that it is constantly reviewing strategic priorities and opportunities. It added that the company’s board will carefully review any proposal from Trian. Given this piece of news, will you be watching WEN stock?

[Read More] 4 Semiconductor Stocks To Watch In The Stock Market Today

Foot Locker

FL stock

Another stock investors could be watching is the shoes and apparel company, Foot Locker. In brief, the company uses its omnichannel capabilities to bridge the digital world and physical stores. As such, it provides buy online and pickup-in-store services, order-in-store, as well as the growing trend of e-commerce. Some of its most notable brands include Eastbay, Footaction, Foot Locker, Champs Sports, and Sidestep. Last week, the company reported its results for the first quarter of the year.

For starters, total sales came in at $2.175 billion, a slight uptick compared to sales of $2.153 billion in the year prior. Next to that, Foot Locker reported a net income of $133 million. Accordingly, adjusted earnings per share came in at $1.60, beating Wall Street’s expectations of $1.54. CEO Richard Johnson added, “Our progress in broadening and enriching our assortment continues to meet our customers’ demand for choice. These efforts helped drive our strong results in the first quarter, which will allow us to more fully participate in the robust growth of our category going forward.”  As such, is FL stock one to add to your watchlist? 

Tyson Foods 

TSN stock

Tyson Foods is a company that built its name on providing families with wholesome and great-tasting protein products. Its segments include Beef, Pork, Chicken, and Prepared Foods. With some of the fastest-growing portfolio of protein-centric brands, it should not be surprising that TSN stock often comes to mind when investors are looking for the best consumer stocks to buy. 

Earlier this month, Tyson Foods provided its fiscal second-quarter financial update. The company’s total sales for the quarter were $13.1 billion, representing an increase of 15.9% compared to the prior year’s quarter. Meanwhile, its GAAP earnings per share climbed to $2.28, up 75% year-over-year. According to Tyson, these financial figures are a reflection of the increasing consumer demand for its brands and products. To top it off, the company was also able to reduce its total debt by approximately $1 billion. Thus, does TSN stock have a spot on your watchlist?

[Read More] Stock Market Today: Dow Jones, S&P 500 Rise, Wendy’s Stock Gains On Potential Deal

DoorDash

food delivery stocks (DASH Stock)

DoorDash is a consumer company that operates an online food ordering and delivery platform. In fact, it is one of the largest delivery companies in the U.S. and enjoys a huge market share. The company connects hundreds of thousands of merchants to over 25 million consumers in the U.S., Canada, Australia, and Japan through its local logistics platform. Accordingly, its platform allows local businesses to thrive in today’s “convenience economy,” as the company puts it.

On May 5, the company reported its first-quarter financials for 2022. Diving in, it posted a revenue of $1.5 billion, growing by 35% year-over-year. This was driven by total orders that grew by 23% year-over-year to $404 million. Along with that, it reported a GAAP gross profit of $662 million, an increase of 34% year-over-year. The company said that it added more consumers than any quarter since Q1 2021, due in part to the growth of its DashPass members. The growth in Monthly Active Users and average order frequency has helped it gain share in the U.S. Food Delivery category this quarter as well. Given DoorDash’s performance for the quarter, should you watch DASH stock?

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The post 5 Top Consumer Stocks To Watch Right Now appeared first on Stock Market News, Quotes, Charts and Financial Information | StockMarket.com.

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Economics

Philly Fed: State Coincident Indexes Increased in 50 States in April

From the Philly Fed: The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for April 2022. Over the past three months, the indexes increased in all 50 states, for a three-month diffusion index of 100. Additiona…

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From the Philly Fed:
The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for April 2022. Over the past three months, the indexes increased in all 50 states, for a three-month diffusion index of 100. Additionally, in the past month, the indexes increased in all 50 states, for a one-month diffusion index of 100. For comparison purposes, the Philadelphia Fed has also developed a similar coincident index for the entire United States. The Philadelphia Fed’s U.S. index increased 1.1 percent over the past three months and 0.3 percent in April.
emphasis added
Note: These are coincident indexes constructed from state employment data. An explanation from the Philly Fed:
The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing by production workers, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.
Click on map for larger image.

Here is a map of the three-month change in the Philly Fed state coincident indicators. This map was all red during the worst of the Pandemic and also at the worst of the Great Recession.

The map is all positive on a three-month basis.

Source: Philly Fed.

Philly Fed Number of States with Increasing ActivityAnd here is a graph is of the number of states with one month increasing activity according to the Philly Fed. 

This graph includes states with minor increases (the Philly Fed lists as unchanged).

In April all 50 states had increasing activity including minor increases.

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Economics

Finding Shelter in an Inverse ETF

As the old saying goes, “What goes up must come down.” Indeed, up until the recent selling wave caused by Russia’s war against Ukraine and the continued…

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As the old saying goes, “What goes up must come down.”

Indeed, up until the recent selling wave caused by Russia’s war against Ukraine and the continued effects of supply chain disruptions amid the COVID-19 pandemic, tech stocks, including semiconductors, were the darlings of the investment world. That is, it seemed as if the sky-high valuations of some tech stocks were sustainable in an atmosphere of seemingly perpetual growth.

That, of course, was not the case, and the too-good-to-be-true valuations were quickly brought down to earth by the forces of inflation and tight monetary policy. As a result, the tech-heavy Nasdaq entered a free-fall that has not yet found a bottom.

At the same time, that does not mean that we should abandon the sector as a lost cause. One such way to play the sector during its downhill slide is the exchange-traded fund (ETF) Direxion Daily Semiconductor Bear 3X Shares (NYSEARCA: SOXS).

As its title suggests, this is an inverse ETF, meaning that it is built to go up in value when its parent index goes down. Specifically, SOXS provides three times leveraged inverse exposure to a modified market-cap-weighted index of semiconductor companies that trade in American markets by using swap agreements, futures contracts and short positions.

While the index’s holdings are weighted by market capitalization, the fund’s managers cap the weights of the top five securities in the portfolio at 8% each. The weight of the remaining securities is capped at 4% each.

As of May 24, SOXS has been up 0.37% over the past month and up 24.73% for the past three months. It is currently up 60.47% year to date.

Chart courtesy of www.stockcharts.com

The fund has amassed $258.15 million in assets under management and has an expense ratio of 1.01%.

In short, while SOXS does provide an investor with a way to invest in an inverse ETF, this kind of ETF may not be appropriate for all portfolios. Thus, interested investors always should conduct their due diligence and decide whether the fund is suitable for their investing goals.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

The post Finding Shelter in an Inverse ETF appeared first on Stock Investor.

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