EM LATAM CREDIT: Chile's SQM 1Q Earnings Call, Comments on Lithium Market
"*SQM SEES LITHIUM OVERSUPPLY DISAPPEARING: DIVISION HEAD DIAZ
*SQM: `WE ARE REALLY CONFIDENT' ON LITHIUM DEMAND, ITS EXPANSION" - BBG
Company reported earnings that showed Lithium pricing sequentially bottoming out at lower prices than a year ago.
Volumes were up sharply from a year ago but profitability was lacking due to declining lithium prices.
The company warned that lithium prices might decline "slightly" in the current quarter.
The companies other main businesses of Iodine and fertilizer were stable with Iodine benefiting from better prices.
Lithium is in demand globally as it is used in electric vehicle batteries and for battery storage of renewable energy.
Codelco has been seeking to expand its partnership with SQM in mining lithium in Chile.
Multi-national miner Rio Tinto has been expanding in both Chile and Argentina to increase capacity of lithium production.
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GOLD: Strong Intraday Recovery With USD and Equities Faltering
Spot Gold has recovered well through the European afternoon, with the USD faltering and global equity futures rolling over. Gold is now +0.4% on the session at $3330/oz. The move away from the April 22 all-time high of $3,500.10 is considered corrective and has allowed an overbought condition to unwind. With the positioning backdrop also cleaner, gold stands to benefit well from any re-intensification of tariff or geopolitical tensions.
- Although US Treasury Secretary Scott Bessent has issued a statement on social media touting "substantive movement" towards trade deals with India, South Korea, and Japan, underlying uncertainty surrounding any US policy action in the current environment remains high.
- Key support in Gold remains the 20-day EMA at $3219.4, with shallower pullbacks considered corrective.
- The latest CFTC COT report, covering data up to April 22, indicated a 27k pullback in non-commercial net longs – a function of both reduced long contracts and increased shorts. Net longs now stand at 175k contracts, with MNI’s 52-week Z score at a multi-year low of -2.6.
EUROPEAN INFLATION: MNI Eurozone Inflation Preview – April 2025
We've just published our preview of the April Eurozone flash inflation round - DOWNLOAD FULL PDF HERE
Energy Pullback To Outweigh Potential Services Re-Acceleration
- The Eurozone April flash inflation round sees Spain kick off proceedings on Tuesday (April 29), before France, Germany, and Italy follow on Wednesday (April 30). With much of Europe closed for Labour Day on Thursday (May 1), the Dutch and Eurozone-wide releases come on Friday (May 2).
- MNI consensus is for the core rate to accelerate slightly to 2.5% (vs 2.4% prior), with the late timing of Easter potentially adding upside risks to travel-related services components. However, a pullback in energy prices is expected to more than offset this dynamic, helping headline HICP ease to 2.1% Y/Y (vs 2.2% prior).
- More stringent-than-expected US tariff policy and a dovish April decision has resulted in a dovish tilt for near-term ECB policy expectations. A 25bps cut at the next meeting in June is now fully priced in ECB-dated OIS, and there is 64bps of easing priced through December. That’s almost a full 25bp cut more than what was priced at the beginning of this month, prior to the US’s reciprocal tariff announcements.
OPTIONS: Larger FX Option Pipeline
- EUR/USD: Apr30 $1.1375-95(E2.4bln); May01 $1.1270(E1.1bln), $1.1500(E1.0bln)
- USD/JPY: Apr30 Y140.50($1.7bln), Y142.00($1.7bln), Y145.00($1.5bln); May01 Y143.00($1.2bln); Y147.50($1.2bln)
- AUD/USD: Apr30 $0.6115(A$1.1bln)
