WA Index

Issue 219 | September 2023

Welcome to the 219th 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 31 August 2023

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The aggregate market capitalisation of Western Australian listed companies declined marginally during the month of August – down 0.2% to close at $368.8 billion. The WA Index faired better than other tracked indexes. The All Ordinaries, US S&P 500, FTSE 100 and Nikkei all regressed during August. The FTSE 100 posted the largest retreat, declining 2.9%. This now places the FTSE 100 as the weakest performing index on an August 2022 to August 2023, year-to-date basis.

Download the list of WA’s top 100 listed companies, as of 31 August 2023, explore the sections below, and if you do not currently receive our WA Index, please register to be added to our distribution list.

Commodity review

During August, commodity pricing exhibited mixed trends across key markets. Energy commodities experienced a significant surge with LNG being the standout performer for the period, up 20%. Uranium and iron ore also saw growth, owing to tightening supplies and uncertainties around the future of China’s property sector.

Conversely, metals faced slowed movement amid weakening demand due to concerns around inflation and uncertainties around China’s stimulus measure; nickel, tin and zinc slowed, with the largest drop for the period coming from lithium carbonate, falling 11%.

LNG

LNG prices rose 20% to US$13/MMBtu driven by increasing demand as the Northern hemisphere enters the cooler months and Japanese LNG inventories dropped to their lowest levels since April. Chinese demand for gas has also increased, with imports up 7% year on year and reforms within China’s domestic gas distribution system further spurring growth. Late August saw the threat of workers’ strikes at major Woodside and Chevron-operated facilities in WA drive up prices in the short term, as the market braced for disruptions to Australian exports.

Iron ore

Iron ore prices climbed 7% to reach US$118/T. Fluctuating prices across the month were influenced by newly implemented support policies for China's property sector, which led to a late-August surge. Furthermore, the absence of steel production limitations has contributed to an optimistic market sentiment. Questions remain around the long-term price outlook, however, as iron ore prices are closely linked to steps taken as part of China’s economic stimulus measures.

Uranium

Uranium prices rose 4% in August to $59/LB, marking the sixth week of gains on heightened demand and supply concerns. China's power plant projects and France's reactor extensions have boosted demand, while the European Commission's nuclear endorsement strengthened long-term prospects. Supply risks include a detained uranium ship in St. Petersburg and dependence on Rosatom Corp, which supplies nearly 50% of global enriched uranium. Geopolitical tensions and a coup in uranium-rich Niger added to supply uncertainties.

Nickel

Nickel prices dropped 6% to US$20,087/T due largely to China's economic woes and high supply levels. The price sank to a one-year low in mid-August, spurred by vague economic stimulus measures announced by China, followed by underwhelming economic data releases. Across the Pacific, high inflation in the U.S. weakened demand, and potential oversupply following expansions in Indonesia and the Philippines also impacted pricing.

Lithium carbonate

Lithium carbonate prices fell 11% to $44/KG, mirroring global trends of declining demand, economic struggles, and inflationary pressures. Buyers are hesitant to purchase amid expectations of future price drops. Although some buying from European grease manufacturers occurred, they lacked the bargaining power of East Asian battery producers. In East Asia, particularly China, slower demand has empowered buyers, further driving down prices.

Performance of WA Index and Global indices

Top 20 performers of the month:

Bellevue Gold Limited (ASX: BGL) rose 16.8% across August off the back of strong quarterly results that saw significant high-grade results returned from all underground production areas, further bolstered by strong progress reports across the month, including production of the first bar of gold from toll-treatment of Bellevue material at the Gwalia gold mine poured during mid-August.

Paladin Energy Ltd (ASX: PDN) saw a market cap increase of 15%, driven by a strong quarterly performance announced during the month. The latter half of the month also saw market sentiment further bolstered by the release of annual results, highlighting strong cash reserves, lack of corporate debt and the business’ competitive position considering increasing interest in uranium and the supply gap in market expected to grow.

Gold Road Resources Limited (ASX: GOR) closed out the month with a 12.7% increase in market cap, owing to strong results announced for the half year. The Gruyere mine saw total of 4.2 Mt of ore mined, a record 4.8Mt processed during the half, with a 92% gold recovery rate.

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

4DS Memory Limited (ASX: 4DS) experienced the most significant increase in market capitalisation among the top 100 companies during the month of August. The company's market capitalisation rocketed over 381%, closing the month at $251.46m. On 23 August, 4DS announced significantly better than expected analysis results from its ‘Fourth Platform Lot’. As a result of this success, the company is scheduling a meeting with ‘Imec R&D’ (world leading R&D company in nanoelectronics and digital technologies) to discuss strategic plans.

Wildcat Resources Limited (ASX: WC8) increased its market capitalisation $130m during the month of August, representing a 111.4% jump. This is largely due to the commencement and extension of the highly anticipated drilling campaign at the company’s Tabba Tabba lithium project in the Pilbara, WA. The drilling campaign is designed at targeting outcropping pegmatites in the northern and central areas of the mining lease.

Azure Minerals Limited (ASX: AZS) concluded the month of August with a market capitalisation of $1,111 million, up 55%. August was a busy month for the company, announcing impressive drill intersections at its Andover lithium project. In addition, the company confirmed it had received an expression of interest from Sociedad Quimica y Minera de Chile S.A. (‘SQM’) regarding a possible change of control involving Azure with an indicative offer price of $2.31 cash per share.

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