Daily Brief Energy/Materials: Shougang Fushan Resources, SGX Rubber Future TSR20, LG Chem Ltd, S&P 500 INDEX, Crude Oil, Natural Gas, Base Oil, Aluminium and more

• Shougang Fushan Resources’ (639 HK) FY24 revenues/profits were down 14%/21% YoY due to the decline in coking coal prices, which were 14% YoY to 1666 RMB/ton (on similar volumes). 
• At 1295 RMB/ton, spot prices are 25% lower than last year’s average, yet the stock is supported by cash, which represents 80% of its market capitalization (10 billion HKD).
• The company provided a 100% payout of 30 HKD cents, resulting in a 12% dividend yield; however, at current spot prices, the yield is 7%.

• Trade war impacts the trade flow 
• Arbitrage narrows on wintering 
• Fluctuating inventory level indicates at a whimsical buying pattern 

• In this insight, we discuss numerous gap trade opportunities involving Korean preferred and common shares in 2Q 2025.
• The following five pairs (between common and prefs) have experienced more than 10% difference in their share prices in the past six months. 
• These five pairs (LG Chem, Amorepacific Corp, Amorepacific Group, CJ Cheiljedang, and Korea Investment Holdings) are more likely to revert to closing their gaps in the coming weeks. 

• Last week we discussed how evidence was pointing to a major low at 5500-5600 on the SPX, but now it appears more likely to just have been a local low
• Market dynamics have continued to deteriorate to the point where we no longer see this as a buying opportunity.
• We are cautious and would get defensive as long as the S&P 500 is below 5770-5780 and its 200-day MA; we believe we are in a “sell rallies” regime

• WTI futures rose 1.6% for the week ending 28/Mar, driven by escalating trade tensions and declining U.S. crude oil inventories.
• The U.S. rig count fell by one to 592. The oil rig count dropped by two to 484, and gas rigs rose by one to 103.
• WTI OI PCR grew to 0.91 on 28/Mar from 0.90 on 21/Mar. Call OI increased by 7.0% WoW, while put OI grew by 7.3%.

• For the week ending 28/Mar, U.S. natural gas prices gained 4.6% due to rising LNG exports and a drop in daily natural gas output.
• Henry Hub gained 1.7% on 27/Mar (Thu), driven by lower output, record LNG exports, and stronger demand forecasts, despite a build in U.S. natural gas storage.
• Henry Hub OI PCR decreased to 0.98 on 28/Mar from 1.05 on 21/Mar. Call OI fell by 10.1% WoW, while put OI dropped by 16.1%.

• Asia’s base oils prices extend dip versus feedstock/gasoil prices.
• Margins hold firm for heavy grades, pointing to still-strong supply-demand fundamentals.
• Firm margins partially cushion impact of weaker light-grade margins.

• Asia’s base oils demand could hold firm over the coming weeks as buyers replenish low stocks and lube consumption holds steady.
• Rising crude oil prices could provide additional support.
• Seasonal slowdown in demand from end of second quarter typically starts to curb buying interest several weeks before then.

• According to Graph 1, during the period February 4th, 2025 – March 4th, 2025, a slightly bearish trend, among strong fluctuations, was reflected in the price of aluminium futures.
• At the beginning of the timeframe, there was a significant increase in the price of the commodity, but after February 20th a steady downward momentum unfolded.
• The MA-10 line very initially performed above the MA-20 line, however at February 6th it crossed below the latter. 

Barton has continued to aggressively pursue its ambition to produce 125–150koz gold pa at Tunkillia via open pit production, completing a 5,064m reverse circulation drilling campaign targeting block model extensions, updating JORC mineral resources to 1.6Moz gold and 3.1Moz silver and identifying material available energy savings. At Tarcoola, it has discovered the new Tolmer gold system, added further pit floor gold mineralisation at the Perseverance mine, and made a surprise high-grade silver discovery alongside Tolmer’s gold – the best interval of 6m at 4,747g/t (152.6opt) Ag being exceptionally high by anyone’s standards. These will all contribute to an optimised scoping study at Tunkillia in Q2 CY25 and (from Tarcoola) feedstock for ’Stage 1’ operations, leveraging its fully licensed Central Gawler mill to 20–30koz pa as early as mid-CY26. Topping it off, Barton announced a A$3.1m net profit for the half year to 31 December, an unusual and impressive feat for a junior.