Tronox tops list; RPM drops on guidance decline

The S&P 500 Materials index closed the first week of 2023 on a positive note at +3.69%, with the Materials Select Sector SPDR (XLB) also up +3.49%.

Copper futures (HG1:COM) helped with a +3.07% gain to close the week at $3.92/lb. Prices of the key metal had a rebound during the week after a four-session losing streak, following news about fresh stimulus plans in top metals consumer China.

Benchmark three-month copper on the London Metal Exchange also closed in green after touching a two-month low on Wednesday on worries about a slowing global economy. Iron ore (SCO:COM) also had a positive week closing at +1.28% in part on optimism over China’s new efforts to boost its ailing property sector.

China is planning to relax restrictions on borrowing for property developers, Bloomberg reported Friday, easing the stringent “three red lines” policy that exacerbated its recent real estate meltdown.

But analysts said weak market fundamentals and a difficult economic environment due to COVID outbreaks likely will keep prices volatile ahead of China’s week-long New Year celebration starting January 21.

Among precious metals, February Comex gold (XAUUSD:CUR) closed +2.29% at $1,865.45oz, the highest since June. March silver (XAGUSD:CUR) settled -0.46% to $23.82/oz although it reached an intraday high at $24.775/oz – the best in nearly nine months – during the week.

Precious metals prices gained despite a stronger dollar as traders focused instead on lower U.S. Treasury yields, while purchases by the People’s Bank of China are said to have raised hope among traders that some central banks might increase the share of their reserves allocated to gold.

Take a look at this week’s top gainers among basic material stocks ($2B market cap or more), helped by strength in iron and gold prices:

• Tronox Holdings (TROX) +16.32%
• Scotts Miracle-Gro (SMG) +15.87%
• Gold Fields (GFI) +13.92%
• Cleveland-Cliffs (CLF) +14.35%
• Celanese (CE) +14.05%

Here are the top losers among basic material stocks:

• RPM International (RPM) -11.22%; Shares declined after a forecast that sales growth would slow in its fiscal Q3.
• Enviva (EVA) -8.17%
• Avantor (AVTR) -3.79%
• Linde (LIN) -3.07%; Shares lost ground after a Russian court ordered freezing nearly $500M of the company’s assets.
• Triple Flag Precious Metals (TFPM) -2.82%

Other materials ETFs to watch: iShares Global Timber & Forestry ETF (WOOD), Materials Select Sector SPDR ETF, Vanguard Materials ETF (VAW), iShares Global Materials ETF (MXI), SPDR S&P Metals and Mining ETF (XME), VanEck Vectors Gold Miners ETF (GDX), iShares MSCI Global Gold Miners ETF (RING), Global X Copper Miners ETF (COPX).