Daily Brief Energy/Materials: POSCO Holdings, Iron Ore, Crude Oil, Copper, Gold, Condor Energies , Nanoco Group PLC and more

• Today’s surge in Korean battery stocks stems from sector rotation and improved fundamentals, with SK On’s healthier balance sheet and Samsung SDI’s new U.S. plant fueling optimism.
• But with POSCO affiliates showing standout performance relative to their peers., the value-up factor is once again shaking things up and driving those differences in relative performance.
• Today’s price action suggests using the value-up factor for long-short strategies, especially with KRX hinting at sector quotas in the value-up index.

• On 29 August, the three major POSCO Group companies including POSCO Holdings announced that they plan to provide detailed explanations of their Corporate Value Up plans in 4Q 2024. 
• In general, the companies that have provided more detailed plans for their Corporate Value Up plans have done better recently. 
• However, now there are cases such as the three main POSCO Group companies whose share prices are rising just by announcing that they will provide Corporate Value Up plans later.

• Iron ore futures rose 5.3% last week but declined 3% on September 2nd, signaling a potential continuation of the downtrend.
• Technical indicators such as RSI, MACD, and Bollinger Bands suggest a short-term downtrend, with price struggling to break above the 21-day moving average.
• Elevated historical volatility near a 4-month high indicates that market instability may persist, suggesting caution in trade setups.

• Despite sharp price moves, iron ore options activity was muted with a sharp decline in put volumes.
• The DCE/SGX spread widened from 4.6% to 7.5% as DCE futures traded at a premium.
• SGX Iron Ore options volume fell by 31.8% WoW, with increased call activity focused on September expiries at the 105 strike.

• Iron ore futures surged 5.3% last week but fell 3% on September 2nd, reflecting uncertain price sentiment.
• Chinese portside inventories rose by 3.4 million tons, reaching a two-year high, driven by high arrivals and reduced pick-up volumes.
• Heading into peak consumption season in China, supply headwinds may drive sentiment rather than demand tailwinds.

• US oil and gas rig count fell by two to 583 for the week ending 30/Aug, marking a decline in rig count for the third straight week.
• The US oil rig count remained unchanged at 483 for the second consecutive week. Meanwhile, gas rigs declined by two to 95, marking their lowest level since April 2021.
• For the week ending 23/Aug, US crude oil production declined to 13.3m bpd bpd, down from the record high of 13.4m bpd reached the previous week.

• There is a high level of bullish sentiment about copper in the market, with strong interest from companies and analysts.
• Demand projections for copper are driving the need for new deposits, but existing assets are currently meeting demand through resource growth.
• Contrarian views suggest that existing assets are outperforming new discoveries in meeting copper demand, with potential for production delays of up to 15 years for new deposits.

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• Talk of a 5-10% output cut in Tangshan to be maintained through year end causing steel prices in China to stabilize
• Accumulated losses in China’s steel industry at $400 million over the first seven months of the year, leading to concerns about forced consolidation
• Improvement in sentiment due to positive demand side news in the metals industry, including local governments using special purpose bonds to buy properties and a rare target set for housing completions in the second half of the year

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• Condor Energies is a ~US$75 mm market cap TSX-listed company focused on low carbon and energy transition opportunities in Central Asia.
• Condor was transformed in 2024 by the acquisition of >10 mboe/d production of natural gas in Uzbekistan.
• The key value driver for the shares is the imminent sanction of Condor’s 1st liquefaction plant in Kazakhstan to convert low-cost natural gas into high value LNG to displace expensive diesel for rail and mining haul truck transportation.

Nanoco Group’s announcement that the collaboration with its European partner is essentially coming to an end is clearly disappointing news. We reduce our FY25 revenues by £2.5m and FY25 net cash by £2.1m to reflect this, although the contractual unwinding and potential restructuring may prompt further changes. While Nanoco is now clearly in a significant transitional state, the partnership with the Asian partner continues. The group’s intellectual property, expertise, manufacturing and test capability provide it with potential strategic value, with Nanoco’s strong balance sheet and low-cost model providing a degree of optionality.