The latest Market Talks covering Commodities. Published exclusively on Dow Jones Newswires throughout the day.
0317 GMT - Paladin Energy "never expects" to sustain Langer Heinrich's nameplate production rate of 6 million pounds for a year, says a surprised Ord Minnett. "So we trimmed to 5.7" million pounds, the broker says of its annual production forecasts for FY28-FY30. It also raises projections for sustaining capex, citing new pits and tailings facilities. Ord's remarks follow an investor day, where it says it got a better grasp on "the strong resource upside" at Paladin's PLS project. Yet it thinks a capex estimate of US$1.2 billion is probably low. It expects other projects "will need to be deferred due to PLS funding challenges, which will no doubt include a significant capital raise." The broker downgrades to sell from lighten. Its target rises to 9.00 Australian dollars from A$8.50. The stock is up 3.1% at A$11.61. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)
0258 GMT - Iron ore prices are higher in early Asian trade. Prices are likely to stay range-bound in the near term, Baocheng Futures analysts say in a commentary. Elevated ocean freight costs and pre-holiday restocking expectations continue to support iron ore prices, they say, referring to China's week-long national holiday in October. However, high supply could put pressure on prices, they add. The most-traded iron-ore contract on the Dalian Commodity Exchange is 1.1% higher at CNY727.0 a ton. (tracy.qu@wsj.com)
0247 GMT - Palm oil rises in early Asian trading, driven by gains in soybean oil on the Chicago Board of Trade as well as palm olein on the Dalian Commodity Exchange, says David Ng, a trader at Kuala Lumpur-based Iceberg X. He expects the uptrend to continue due to concerns about El Nino's impact on plam oil output. Ng expects prices to be supported at 4,900 ringgit a ton with resistance at 5,080 ringgit a ton. The Bursa Malaysia Derivatives contract for November delivery is up 32 ringgit at 4,936 ringgit a ton. (yingxian.wong@wsj.com)
0208 GMT - The way for Rio Tinto to create more value from its big aluminum business is by improving returns, not volume growth, says Morgan Stanley. Today, Rio's aluminum division is "a high-quality but mixed-return business," MS says. The bank sees operational and brownfield projects as "the most practical levers" for creating value. It highlights the AP60 ramp-up, Weipa replacement and expansion, and Matalco utilization, among other possible drivers. "The key test is whether future spending can lift ROCE [return on capital employed] and free cash flow, rather than merely sustain the existing asset base," says MS. "The company owns a differentiated aluminium business; executing on operational improvements and brownfield expansions will determine whether it can sustain a durable earnings and cash-flow pillar alongside iron ore and copper." (rhiannon.hoyle@wsj.com; @RhiannonHoyle)
0146 GMT - China's commodity demand could accelerate in the short term, given an anticipated pickup in the rate of infrastructure spending in the coming months, says Commonwealth Bank of Australia's Vivek Dhar. Yet he's not sure there will be a sudden surge in buying. "While additional stimulus is still a possibility, especially if economic data in coming weeks doesn't turn positive enough, we remain cautious that more policy support will push China's commodity demand impulse materially higher," says Dhar. Most recently, China has sought to support consumption, which typically has a relatively low commodity intensity, he says. "The risk that any additional stimulus is more commodity-intensive is tied to the acceleration in the 'Six Networks' national infrastructure program to upgrade China's physical and digital systems," including electricity, water and telecommunications, he says. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)
0117 GMT - Gold rises in early Asian trade. Sentiment is likely supported by a weaker U.S. dollar and slightly more dovish comments from the U.S. policymakers, tempering rate hike expectations, ANZ Research writes in a note. Spot gold is 0.3% higher at $4,484.20 a troy ounce. (kimberley.kao@wsj.com)
Sunstone Metals's double dose of good news helps to entrench Shaw & Partners's bullish view of its stock. Firstly, metallurgical testwork returned materially higher recoveries of precious and base metals than previously assumed in an April scoping study. Recovery rates for copper is now at 80%, up from 75%. For gold, the recovery rate rises to 93%, from 85%. Secondly, recent assays have extended mineralisation outside the existing Bramaderos Resource, analyst Peter Kormendy says. "With only a handful of assays outstanding, we see limited scope for the December Quarter resource update to disappoint on grade or continuity," Shaw says. "The key swing factor remains how much of the 1.7-3.5 million oz Copete-Porotillo and Melonal-linked exploration targets convert to resource in the next update." (david.winning@wsj.com; @dwinningWSJ)
2237 GMT [Dow Jones]--NexGen Energy gets a new bull in Jefferies, which is drawn to the Rook I high-grade uranium project in Canada. Rook I, one of the world's largest undeveloped projects, hosts the Arrow uranium deposit. Jefferies says Arrow can underpin an operation producing 28 million lbs a year. A separate discovery, known as PCE, is around two miles away with the potential to share infrastructure. Analyst Daniel Roden says this would add scale and longevity. "At 28 million lbs Rook may supply 14% of global reactor demand," says Jefferies. "Shortfalls can influence incentive pricing on residual production, partially hedging execution risk." Jefferies says NexGen offers differentiated exposure to uranium, so should be a core sector holding of investors. It starts NexGen at buy, with a A$20.60/share price target. NexGen ended Thursday at A$14.30. (david.winning@wsj.com; @dwinningWSJ)
1921 GMT - U.S. natural gas futures fall despite a weekly inventory build that came in below average at 30 Bcf and was broadly in line with market expectations. The size of the price pullback "is difficult to justify from the storage number alone," Gelber & Associates says in anote. "With the contract unable to hold above the psychologically important $3 threshold, profit-taking and technical selling have likely amplified the move." Nymex natural gas settles down 1.5% at $2.913/mmBtu after reaching a session high of $3.026/mmBtu. (anthony.harrup@wsj.com)
1908 GMT - Live cattle futures on the CME settled the day up 1.9% at $2.16195 a pound. Cattle appears to be attempting to stage a rally after sinking to its lowest level since last year. The path of least resistance at this point may not be to continue trading lower, says Joe Davis of Futures International. "Live cattle remain in a firm daily-chart downtrend, although the large discount to cash could limit additional downside," Davis says. Lean hogs settled the day lower, dropping 0.6% to 73.85 cents a pound. (kirk.maltais@wsj.com)
1904 GMT - Oil futures end the session little changed as the market sees the U.S.-Iran conflict going on for longer with this week's resumption of military strikes. "Iran is trying to constrain the Strait of Hormuz, and the U.S. is trying to open it," says Simon Wong, portfolio manager at Gabelli Funds. "There's a dispute about how much oil is coming out, but I don't think Iran wants to let that card go because that's all the leverage they have at this point." WTI for October delivery rises 0.3%, to $91.30 a barrel, in a fourth consecutive gain. Front-month Brent for November delivery slips 0.1%, to $95.52 a barrel, snapping a three-session winning streak. (anthony.harrup@wsj.com)
1833 GMT - Gold futures rise for a second session as Treasury yields ease and the dollar weakens, with the market waiting to see Friday's August employment report and its implications for the Fed's mid-September meeting. Gold traders are also keeping a wary eye on events in the Middle East, where renewed fighting is pushing up oil prices, risking inflation pressures that could in turn lead to higher interest rates. Front-month gold settles up 2.9% in New York at $4,491.70 a troy ounce. Silver rises 3.5% to $66.973 a troy ounce.
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