[VIDEO] World Gold Council releases Q1 2015 Gold Demand Trends report
World Gold Council--In a generally quiet quarter, global demand dipped one percent to 1,079 tons. However, the gold market’s complex eco-system was well balanced in Q1 2015. Conditions differed from market to market but at an aggregate level, these differences broadly cancelled out. Growth in India and the US could not prevent a modest downtick in jewelry demand; light inflows into ETFs, the first since 2012, led to growth in investment.
The contrast between the global picture and the more granular demand data clearly demonstrates the multi-faceted nature of the gold market. The numerous and varying roles that gold plays means it responds to different cues in different ways, smoothing out the fluctuations occurring at a more localized level. Some of those localized fluctuations during the first quarter were challenging. Weaker economic growth, higher prices and rallying stock markets gave consumers in some markets reason to reappraise their gold buying intentions.
First quarter 2015 in summary:
Jewelry demand dipped by three percent in Q1 2015 to a shade above 600 tons
Jewellery demand for the first quarter totaled 601 tons, a level it has adhered to reasonably firmly since Q3 2013. Demand began the year by responding, in varying degrees according to specific local market conditions, to economic growth and price movements.
Investment demand rose four percent as ETF inflows offset a decline in bar and coin demand
Total investment demand grew moderately to 279 tons in Q1, slightly above Q1 demand in both 2013 and 2014 (at 260 tons and 268 tons respectively). The first quarterly inflow into ETFs since Q4 2012 outweighed a contraction in bar and coin investment.
Central bank net purchases of 119 tons extend buying run to 17th consecutive quarter
Central banks and other official institutions continued their buying momentum in Q1 with net purchases totalling 119 tons. This was virtually unchanged compared to the same period in 2014. Diversification continues to be the primary driver for the accumulation of gold reserves.
Technology slipped two percent to 80 tons as longer-term substitution trend continues
Demand for gold in technological uses slipped by two percent to 80 tons, the lowest quarterly level in our records (back to 2000). Substitution and thrifting in this sector continue to weigh on gold demand, as manufacturers seek out cheaper alternatives.
Total supply was virtually unchanged year-on-year at 1,089 tons; lower recycling offset growth in mine supply.
Mine production increased by two percent year-on-year to 729 tons in the first three months of 2015, with growth coming from a number of markets. This was offset by recycled gold supply, which fell by three percent to 355 tons in Q1. Overall, this left total supply virtually unchanged at 1,089 tons.
Global gold demand was down just 11 tons compared with Q1 2014. Moderate changes in demand at the sector level broadly cancelled out, as did variations in demand across different markets.
Mine production grew by two percent year-on-year to 729.2 tons, but is expected to tail off in the second half of 2015. The three percent drop in recycling was largely due to continued shrinkage in western markets.
ETFs (+26t) benefited from improved Western investor attitudes towards gold; Q1 2015 was the first quarter of positive net purchases since Q4 2012. Bar and coin demand, 10 percent weaker year-on-year, remains elevated compared with historical levels.
Alistair Hewitt, Head of Market Intelligence is interviewed on the findings of the World Gold Council’s Q1 2015 Gold Demand Trends report.
Read the full report here.
Lithium producers bullish as EV revolution ramps demand
Rising demand for lithium is stoking prices for the electric vehicle battery metal, fueling long-delayed expansions that still may not produce adequate supplies that automakers need to meet aggressive production plans.
Growing industry optimism from higher lithium prices is a change from last year when funding for mines and processing plants dried up during the pandemic.
Albemarle Corp, Livent Corp and other producers are scrambling to make more lithium, but some analysts worry the recent price jump will not spur a big enough expansion to meet a planned wave of new EV models by mid-decade.
Since January, General Motors Co, Ford Motor Co LG Energy Solution and SK Innovation Co, along with other automakers and battery parts manufacturers, have said they will spend billions of dollars on EV plants.
U.S. President Joe Biden has proposed spending $174bn to boost EV sales and infrastructure. The European Union has similar plans, part of a rush to catch up with global EV leader China.
Those moves have helped an index of lithium prices jump 59 percent since April 2020, according to data from Benchmark Mineral Intelligence, a commodity pricing provider.
The rising demand “reflects what feels like a real and fundamental turning point in our industry,” said Paul Graves, chief executive of Livent Corp, which supplies Tesla Inc. On Monday, it said it would more than double its annual lithium production to 115,000 tonnes.
Graves warned, though, that “it will be a challenge for the lithium industry to produce sufficient qualified material in the near and medium term.”
Albemarle, the world’s largest lithium producer, aims to double its production capacity to 175,000 tonnes by the end of the year when two construction projects are complete. Albemarle's Q1 profit beat expectations thanks to rising lithium prices. Chile’s SQM, the No. 2 producer, said its goal to expand production of lithium carbonate by 71 percent to 120,000 tonnes should be complete by December.
Australia’s Orocobre is paying $1.4 billion for smaller rival Galaxy Resources, a strategy designed to boost scale and help it grow faster in regions closer to customers.
“The next few years are going to be critical in terms of whether there’s enough available lithium supply, and that’s why you’re starting to see commodity prices start to ramp,” said Chris Berry, an independent lithium industry consultant.
The price gains helped Albemarle and other major producers, including China’s Ganfeng Lithium Co and SQM, post big gains in first-quarter profit and boost forecasts for the year.
Even China’s Tianqi Lithium Corp, saddled with debt due to years of low lithium prices, signaled that recovering demand should help it swing to a profit this year.
Forecasts call for demand for the white metals to surge from about 320,000 tonnes annually last year to more than 1 million tonnes annually by 2025, when many automakers plan to launch new EV fleets, according to Benchmark.
Still, demand is expected to outstrip supply in 2025 by more than 200,000 tonnes, so lithium prices may need to rise to encourage producers to build more mines. That could boost the prices consumers pay for EVs. “Companies across the lithium-ion supply chain are in the best position they’ve been in for the last 5 years,” said Pedro Palandrani of the Global X Lithium & Battery Technology ETF , which has doubled in value in the past year.