In today’s briefing:
- The End-April TOPIX Rebalance – US$2.1bn a Side
- Know Your Rare Earth Elements As China Restricts Exports
- Anglo American: Initiation of Coverage- Copper Production Expansion & Optimization Driving Our Optimism!
- MOIL Ltd: Plans to Double Output Well Supported
- Asia base oils supply outlook: Week of 14 April
- Expecting SPX Rally to Fizzle at 5490-5500 or 5785; Still Bearish/Cautious and Defensive
- Global base oils margins outlook: Week of 14 April
- Asia base oils demand outlook: Week of 14 April
- Americas/EMEA base oils demand outlook: Week of 14 April
- Global base oils arb outlook: Week of 14 April
The End-April TOPIX Rebalance – US$2.1bn a Side
- This year there are 10 Free Float Weight Changes for April. There are 20 Liquidity Factor Changes, 2 Inclusions, and 3 M&A-related downweights. There are 90+ Share Count Change Downweights.
- This is a bigger Big April Basket than normally comes around. And there are some big flows. All trades are 28 April at the close.
- Total flow is ~US$2.1bn a side. 64 trades of >2 days of ADV, and of those, 27 with >US$10mm to trade (7 of US$50mm+). Top 20 in USD average 5dADV.
Know Your Rare Earth Elements As China Restricts Exports
- China recently escalated restrictions on the export of rare earths. Not just to the US as the two global players go toe-to-toe on tariffs; but to all countries.
- China’s latest round of restrictions target critical materials used in defense, electronics, and EVs.
- Apart from China, the world’s largest refining – not just the largest miner – who else refines rare earth elements, specifically heavy rare earths?
Anglo American: Initiation of Coverage- Copper Production Expansion & Optimization Driving Our Optimism!
- The 2024 results for Anglo American highlight a year marked by strategic shifts and operational execution, albeit with mixed outcomes.
- Safety remains a priority, yet the company faced three fatalities, underscoring ongoing safety challenges.
- Leadership changes have impacted the structure, with board addition Anne Wade contributing her expertise to strategic committees.
MOIL Ltd: Plans to Double Output Well Supported
- MOIL is India’s largest manganese ore producer, contributing over 50% of the country’s production. Its dominant position provides a competitive advantage in meeting domestic demand.
- Planned a capex of Rs24 billion until FY30. This investment will support brownfield expansions, greenfield projects, and modernization efforts, including shaft-sinking projects at Balaghat and Gumgaon mines.
- Valuations: Trades at a marginal premium to historic valuations. Debt-free balance sheet, 25yr+ mine life gives confidence over LT execution of expansion plans.
Asia base oils supply outlook: Week of 14 April
- Asia’s base oils prices surge relative to feedstock and gasoil prices.
- Surge in margins include light-grade base oils, for which supply is more readily available.
- Increasingly high margins and closed arbitrage to other markets by contrast points to tight supply.
Expecting SPX Rally to Fizzle at 5490-5500 or 5785; Still Bearish/Cautious and Defensive
- Since late-February(2/25/25) we were expecting an 8-10% pullback to provide a buying opportunity.However,after getting the 10%+ pullback, we discussed 4/1/25 that we no longer saw it as a buying opportunity
- We downgraded our outlook to bearish/cautious. We then discussed last week(4/8/25)how it was a logical spot for a local bottom to develop at 4800-4820 on SPX and $402-$412 on QQQ.
- A rally sparked from there, but we now are looking for SPX rally to fizzle, either here at 5490-5500 (20-day MA) or the 200-day MA (currently 5754) or 5785 level
Global base oils margins outlook: Week of 14 April
- Global base oils prices rise sharply vs feedstock/gasoil prices.
- Price premiums climb at time of year when they typically rise strongly in response to firmer supply-demand fundamentals.
- Rise in price premiums in April 2025 coincides with slump in crude oil prices.
Asia base oils demand outlook: Week of 14 April
- Asia’s base oils demand likely to be more muted as unusually extreme market volatility boosts incentive for buyers to keep inventories at lower levels.
- Uncertainty about outlook and sharp fall in crude oil prices so far this month add to incentive to hold back.
- Blenders could face lower-than-usual inventories at start of Q2 2025 because of tight supply and firm demand in Q1 2025.
Americas/EMEA base oils demand outlook: Week of 14 April
- US base oils demand could face more pressure from concern about growing disconnect between base oils prices and crude oil and feedstock prices.
- Widening base oil premium to feedstock and diesel prices points to sudden improvement in demand and tightening supply.
- Timing of surge in base oils premium suggests it is linked more to slump in crude oil prices than to marked change in supply-demand fundamentals.
Global base oils arb outlook: Week of 14 April
- US base oils export price discount to Asia base oils prices stays wide so far this year.
- Wide price discount facilitates shipment of surplus supplies to markets like India.
- US base oils and lube exports to India surge in Feb 2025, reflecting that dynamic.
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