The aggregate market capitalisation of Western Australian listed companies declined during the month of May – decreasing 4.32% to close at $349.8 billion. The retreat was primarily seen within the Top 20 companies in the WA Index. The top 20 accounting for 72.73% of the WA Index’s fall during the month. The All Ordinaries and FTSE 100 also retreated during the month, whilst the Nikkei strengthened significantly, making this its fifth month of consecutive gains. The Nikkei benefited from a strong earnings season, as well as a strengthening Japanese Economy which has seen the Index overtake the WA Index as the strongest performing Index on a year-on-year basis, as of 31 May 2023.
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The commodity market suffered some significant losses through the month of May, particularly zinc, cobalt, LNG, coal and nickel. However, rare earth metals such as praseodymium neodymium oxide bounced back from its slow start to 2023 with large gains throughout the month. Falling demand from China has been a major contributor to this month’s poor performance with supply side issues around the world exacerbating this.
The praseodymium oxide price bounced back in May surging to US$70,160/T, representing an 11% price increase throughout the month for the rare earth metal oxide. This comes off positive export numbers from China. In addition to this, demand levels continue to grow globally as the world continues to look for greener alternatives.
The price of Uranium continued its strong run as it rose 5% closing at US$55/lb at the end of the month. Uranium has continued its rise as it is becoming a more viable clean energy option as nuclear power gains more mainstream acceptance. In addition the uranium market continues to face supply concerns as Namibia, one of the world’s largest producers of the commodity, considers nationalisation of their resource industry.
May saw the lithium price falling another 2% to close at US$53/kg. The price fall comes off the back of resistance at the current price, as well as bearish sentiment coming out of China, the world’s largest importer of the commodity.
The Iron ore price continued its recent fall from the highs of March down another 5% to close the month at US$101/T. The Chinese yuan suffered major losses against several key currencies throughout the month of May adding to concerns about the country’s faltering economic recovery. Concurrently, the Chinese construction industry did not meet expectations for the month as steel mills look to comply with Chinese production limits to curb emissions.
The nickel price came crashing down in the month of May falling from US$24,211/T to US$20,433/T representing a price decline of 16%. China, the world’s largest importer of nickel by a significant margin, saw import levels fall to the lowest levels in almost 20 years. This demand side factor combined with supply surpluses from Indonesia, continues to weigh on nickel price over the short-term.
Performance of WA Index and global indices
WA Index Movement
Top 20 performers of the month
Western Australian top performers over the past month by growth in market capitalisation
Lynas Corporate Limited(ASX: LYC) saw a 16.8% rise in market capitalisation, closing at over $7,012m. This month, Lynas was granted permission to continue importing and processing lanthanide concentrate into Malaysia until 2024, which came off the back of the previous licence forcing operations to cease in July.
APM Human Services Internal Limited(ASX: APM) experienced a notable gain in market capitalisation to $1,898m, reflecting a 9.8% change. APM secured a 5-year, A$720 million contract to provide Function Assessment Services within a number of UK regions. Acting on behalf of the Department for Work and Pensions, APM will assess the impact of disability and illness on individuals' lives, as well as evaluate their specific needs resulting from their conditions.
Pilbara Minerals Limited (ASX: PLS) ended May with a market capitalisation of $13,222m, up 4%. The increase in the company’s market capitalisation is primarily due to investors flocking back to lithium after Investment Bank Morgan Stanley stated lithium prices could be at a “turning point”, following a period of sustained weakness.
The top Deloitte WA Index Movers and Shakers in March were:
WA1 Resources Limited (ASX: WA1) experienced the most significant increase in market capitalisation among the top 100 companies during the month of May. The company's market capitalisation surged by over 210%, reaching $277m by the end of the month. WA1 has been actively exploring the West Arunta region and has discovered promising niobium deposits at the Luni prospects, exhibiting high-grade intersections. In an effort to further explore these mineralised horizons, the company plans to launch a diamond drill program in June.
Leo Lithium Limited (ASX: LLL) increased its market capitalisation $437m during the month of May, representing a 69.5% jump. This is largely due to the execution of a capital raising which was performed at a premium to the company’s 5-day VWAP and was strongly supported by Chinese lithium producer Ganfeng Lithium. Ganfeng are the largest lithium producer in China and the placement means that the company is fully funded for its share in Goulamina Stage 1 development in Mali.
Delta Lithium Limited (ASX: DLI) concluded the month of May with a market capitalisation of $289 million, experiencing a notable increase of 42.9%. This increase in value is linked to the company's strategic move of acquiring a larger land position at the Yinnetharra project for $25m. The company reported that exploration results from the project area have revealed that the Malinda prospect exhibits consistent, thick, and predictable lithium mineralisation.
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If you have any questions in relation to the Deloitte WA Index please contact Dave Andrews.
Dave is an integral member of Deloitte Energy & Resources team, providing over 15 years of service to the mining, engineering and construction sectors. Dave currently provides Audit & Assurance services to Deloitte’s energy & resources clients and is an active member of the Deloitte WA Mining Group. This specialised group is focussed on tailoring services to the WA based mining industry participants. Dave’s role has included the hosting of regular focus sessions on topical industry issues. Well known for his commercial and pragmatic, no-surprises approach to issue resolution, Dave is committed to providing exceptional client service and delivery, locally and globally.