WA Index


WA Index

Issue 171 | December 2017

Welcome to the 171st edition of the Deloitte WA Index, a monthly review of Western Australian stocks and indices.

Download the list of WA’s top 100 listed companies, as of 30 November, explore the sections below and if you don’t currently receive our WA Index, please register to be added to our distribution list.


If you have any questions in relation to the Deloitte WA Index please contact Sam Wardle.

As of 30 November 2017

Commodity review

The month of November saw some dramatic commodity price increases, offset by much lesser commodity price decreases. The biggest gains were seen in the prices of Uranium, Iron Ore, Coking Coal and Cobalt, while Nickel and Aluminium saw downwards price movements.

Uranium prices saw the biggest commodity price increase in the month of November, climbing 26.6% or US$5.35 per pound to $US25.50 per pound. Early in the month, the world’s largest uranium producer, Cameco, announced it would be temporarily shutting down production from next year at two of its key operations. Cameco chose to close down its MacArthur River mine and Key Lake milling operations due to current unsustainably low uranium prices. Given the volume of global uranium production these mines supply (approximately 17% of global production), the news of their closure caused the uranium price to spike on speculation of supply/demand trend rebalancing.

The Iron Ore price also saw a significant rise this month, increasing 15.5% to US$69 per tonne. The source of this upsurge was a shift in Chinese demand to higher grade steel as a result of China’s drive to control pollution, forcing mills to use higher grade ore. This measure has also culminated in the closure of less efficient steel mills in the northern part of the country. Furthermore, the iron ore price appears to reflect the expectation that demand for steel will rise from March because of enforced winter production cuts in China which is predicted to create low levels of inventory supply.

Following the price of iron ore, the other key raw material to steel production has also increased, with coking coal up to US$178 per tonne (an increase of 11.9%). In line with China’s efforts to meet pollutions targets, coking coal imports to China dropped 21 per cent in October. This reduction in imports is yet to be reflected in the price of the commodity as noted the price climbed higher this month, hinting that something may be causing disruptions to supply from Australia as the biggest supplier of coking coal. This was the case, with supply from Australia limited due to congestion at Darlymple Bay Coal Terminal in Queensland. This congestion saw 40 plus ships anchored off the terminal waiting to be loaded.

Cobalt prices increased 10% this month to a price of US$67,280 per tonne. Lifts for the cobalt price relate to the battery technology boom, as it currently is a key element in producing lithium batteries. Cobalt production was halted late in the month at a key mine belonging to Gécamines in the Congo. Earlier this year Gécamines attempt to switch its mining partners which led to both parties taking legal action and this court action could see production halted until at least 2020. The Congo supplies about two-thirds of the world’s cobalt.

Previous increases in the aluminium price were reversed this month, falling 5.1% to US$2,034 per tonne. September had seen price increases based off a cut to supply due to crackdown on illegal operations in the Chinese provinces of Shandong and Xinjiang. The month of November saw the US announce that they were to begin a trade investigation on the Chinse aluminium industry. The inquiry will investigate potential unfair Chinese trade practices, specifically whether aluminium alloy sheets are being sold with government subsidies as support or below cost. US Commerce Secretary Wilbur Ross said that the Chinese government subsidising the production of aluminium sheets has meant that the US market is swamped with products sold far below fair value. The investigation could result the introduction of duties which aim to compensate for Beijing's subsidies.

Nickel prices fell US$581 per tonne (5%) to a price of US$11,050 per tonne. This fall was caused by current demand and supply concerns, with worries over weaker demand from Chinese steel mills as well as increasing supplies Indonesia. Another element to the nickel prices downfall was the realisation that the electric car market is unlikely to control nickel demand for some years.

Commodity and Precious Metal Prices

Select above image to enhance the Commodity and Precious Metal Prices
Select above image to enhance the Commodity and Precious Metal Prices

Performance of WA Index and global indices

Select above image to enhance the Performance of WA Index and global indices
Select above image to enhance the Performance of WA Index and global indices

WA Index movement

Select above image to enhance the WA Index movement
Select above image to enhance the WA Index movement

The Deloitte WA Index had another prosperous month in November as the market capitalisation of Western Australian listed companies increased by 3.3% to close at AU$173.1bn.

Deloitte Clients & Markets Partner - Western Australia, Tim Richards, said: “The WA Index has further strengthened this month. Much of this continues to be driven by greater interest in the battery technology space and progress of a number of lithium explorers towards production.”

“We have seen a number of potential customers come out of the woodwork showing an interest in Western Australian lithium, with several memoranda of understanding and agreements being announced to the market. This has been met with support from investors, who see the WA region contributing strongly to swelling global demand over the next few years.”

Among the major index players in November:

  • Pilbara Minerals Ltd experienced a fruitful month of growth, with market capitalisation increasing AU$321m (22.9%) by the end of the month. The company signed a preliminary Memorandum of Understanding (MoU) with Polaris Shipping and LG Chem, beginning discussions for a lithium chemical conversion joint venture. In addition, telecommunications and content solutions provider Swift Networks Group Limited announced new major contracts with three lithium producers, including Pilbara Minerals, as the mine upgrades entertainment and connectivity services on site, further reassuring investors of the expected production years ahead
  • Galaxy Resources Ltd also continued its upswing, finishing AU$251m (19.2%) higher. Despite a short drop in price mid-month as investors began to correct what was anticipated to be an overpricing, a series of binding long-term offtake agreements announced at the end of the month brought investors rushing back. A minimum of 200,000 tonnes per annum offtake of lithium concentrate was agreed upon, beginning in 2018
  • It was a variable month for Saracen Minerals Holdings Ltd, overall finishing with a market capitalisation of AU$1,074m, 13.1% higher than the beginning of the month. The company’s share price took a sharp dive at the start of November, as investors became concerned the company’s price had peaked. Market reaction to results of a drill program at the Pinnacles Gold Project was initially slow, but the price climbed throughout the remainder of the month, with a final boost following positive drill results from their Whirling Dervish Ore Reserve.

The equity markets surveyed saw mixed results throughout November:

  • The All Ordinaries gained 1.4% for the month, propelled by IT, real estate and energy firms all performing well. Values were bolstered as Chinese manufacturing activity picked up, with Purchasing Managers Index increasing to 51.8 points. The financial sectors dragged however, with the banks shedding 1.5% as investors begin to consider the impact of a Royal Commission on share prices
  • There have been further gains on the US S&P 500, closing 2.0% up for the month. Expectations of tax reform policies promised under Donald Trump’s regime passing have fuelled investor confidence, with the index reaching record highs during the month
  • November saw a backtrack on the FTSE 100, falling 2.2% to 7,327 points, after a very strong performance in October. As the pound sterling strengthened against the euro, reaching a two-month high, mainland Europe is becoming a more attractive marketplace to invest in equities than the UK
  • The Nikkei has maintained its momentum with a 3.2% increase, driven by a strong uptick in manufacturing activity, domestically and across the East Asian region more generally. November manufacturing activity grew at its fastest rate in nearly four years, demonstrating signs of a steady expansion of the Japanese economy.
LED board

Top performers of the month

Western Australian top performers over the past month by growth in market capitalisation

Top performers of the month

Top performers of the month

Top performers of the month

Top performers of the month

Western Australian top performers over the past month by growth in market capitalisation

Select above image to enhance the Top performers of the month
Select above image to enhance the Top performers of the month

The top Deloitte WA Index Movers and Shakers in November included:

  • Westoz Investment Company Ltd experienced a strong month of trading, with market capitalisation increasing by AU$22m (17.0%). The investment company holds shares in several entities sitting in the top 50 of the WA Index, bringing its net tangible assets up to 120.8 cents (pre-tax) from 118.0 cents for October 2017
  • Fleetwood Corp Ltd market capitalisation rose by AU$22m (16.3%) over the month following the award of an AU$100m Department of Finance panel contract for state-wide modular building relocation and refurbishment services, shared between four companies for an initial period of three years
  • Millennium Minerals Ltd’s share price skyrocketed this month, with its market capitalisation finishing at AU$149m, 14.8% higher than at the start of the month. The increase follows encouraging results from exploration at Millennium’s Nullagine site, with a new discovery of high-grade mineralisation at Yates and visible gold indicating development for Bartons Underground on target for March 2018. Further discoveries at the Gold Project supported the potential for expansion and increased mine life.
Elevator Reflection

WA Index Feature Articles

2017-18 Western Australian Budget Briefing Note

The new State Treasurer, Ben Wyatt, handed down his first Budget on 7 September 2017. Few WA Treasurers have inherited a worse set of books. The new State Government has had to make a number of difficult decisions to continue the process of repairing the WA State Budget.

Download the full report.

If you don’t currently receive our WA Index, you can register to be added to our distribution list.

If you have any questions in relation to the Deloitte WA Index please contact Angela McIlroy.

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