WA Index

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WA Index

Issue 202 | October 2021

Welcome to the 202nd edition of the Deloitte WA Index, a monthly review of Western Australian stocks and indices.

The Deloitte WA Index lost 8.7% during September as the effects of a sharp retraction in iron ore prices were felt locally this month. This represented a steeper drop than the All Ordinaries, US S&P 500, and FTSE 100 indices while the Nikkei bucked the trend gaining 4.6%.

Download the list of WA’s top 100 listed companies, as of 30 September 2021, explore the sections below and if you do not currently receive our WA Index,  please register to be added to our distribution list.

Highlights:

If you have any questions in relation to the Deloitte WA Index please contact Dave Andrews.

As of 30 September 2021

Commodity review

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  • Coking coal saw a significant price rise over the course of September, finishing at a 70% increase on August closing prices, rounding out the quarter at US$403.43/MT. This surge in price is owed to supply shortages and booming global steel production. Dangerous working conditions and industry fragmentation have impacted China’s production capabilities and further hiked up global prices as it turns to alternative sources to fuel its exploding investment in national infrastructure and development
  • LNG prices have continued to rise across September, finishing at US$30.01/MMBtu, representing a 65% increase over the month. Thankfully, with China still a viable customer for Australian LNG exports, and forecast to have a 7% increase in import volumes, strong market expectations pushed prices up steadily across the month. In fact, China’s internal energy crisis and consequent power rationing have triggered factory shutdowns across the nation, exacerbating global supply shortages. Industry news has also bolstered the market, with Beach Energy’s Waitsia Joint Venture Stage 2 Expansion signing a five-year deal to supply BP Singapore with 3.75 million tonnes of LNG.
  • Lithium prices have shown no sign of slowing down, with a September closing of US$22.10/KG, at an increase of 57% from August figures. In addition to the rapidly growing demand for electric vehicles across the globe, several other factors have also spurred the lithium price to new highs. The complexity of constructing lithium processing plants and currently highly fragmented production market are both factors that will ensure that supply shortfalls and variability remain a bottleneck to supply, leading to strong growth for the lithium price until at least 2025.
  • Thermal coal prices finished September with a 25% increase on August numbers, with a closing price of US$205.4/MT. China’s energy woes, including slim coal supplies and harsher emissions standards, have spurred the coal price to all-time highs. In addition to the resurgent market recovering from the impacts of Covid-19, Australia’s major competitors like Indonesia have dealt with supply and production issues, strengthening Australia’s position. Finally, strong demand forecasts for key consumers India and China have further bolstered price growth.
  • The downward trend of the iron ore price intensified over the month of September, closing out at US$118.50/T, representing a 25% decrease. In China, which produces half of the world’s steel, the doubtful future of property developer Evergrande Group placed significant pressure on the broader Chinese property market, translating into investor concerns about lower demand for steel. In addition to this, the iron ore price saw further downward movement due to ongoing policy and regulatory changes hampering the industry, including China’s crackdown on steel manufacturing pollution. China’s sweeping efforts to reduce emissions across the steel-making industry, have resulted in production cuts across all the nation’s major steelmaking provinces, which further drove down the ore price over September. Ongoing supply issues have also impacted prices, with several workplace accidents in Brazil and logistical delays slowing down movement of product.

Performance of WA Index and global indices

Performance of WA Index and global indices
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WA Index movement

WA Index movement
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Top performers of the month

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

  • Paladin Energy's market capitalisation increased 54% over September, reaching $2.1bn at month close. The uranium miner and explorer, which owns a 75% stake in the Langer Heinrich mine in Namibia, was added into the S&P/ASX 300, driven by a significant increase in the price of yellowcake uranium.
  • Liontown Resources market capitalisation increased by 48% over the month of September, closing at $2.74bn. This rise was driven by increased lithium price. Liontown shareholders have given their blessing for the company’s non-lithium assets to be spun-off into a new company, Minerals 260.
  • Woodside saw its market capitalisation climb 21% following a rise in crude oil and natural gas prices, with demand for crude oil forecast to reach pre-pandemic levels by the end of 2022.

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The top Deloitte WA Index Movers and Shakers in September were:

  • Genesis Minerals shareholders saw their holdings rocket 78% across the month following the announcement of its board reshuffle and financing deal, with ex Saracen Mineral Holdings boss Raleigh Finlayson to join as Managing Director from March 2022.
  • Arafura Resources market capitalisation grew 63% this month. The increase was speculated by press coverage in Bloomberg which points to ongoing discussions between the company and European automakers about rare earth supplies.
  • Bannerman Energy saw an increase of 60% in market capitalisation for September. As with Paladin Energy, the company benefited from increased uranium prices, with investors evidently betting that nuclear will have a greater role to play in solving global energy challenges and in the journey towards net zero carbon emissions.

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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 Dave Andrews.

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