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Gold makes run for record high as Ukraine concerns, inflation risks mount Published: 09 March 2022

  • Gold extended its rally towards a record high on Tuesday, after investors made a beeline for the traditional safe-haven metal on mounting fears around the Russia-Ukraine crisis, with the U.S. and Britain saying they would ban oil from Moscow. 
  • Meanwhile, worries over a palladium supply shortfall due to sanctions on Russia, the top producer of the auto-catalyst metal, kept its price near all-time highs. 
  • Spot gold was up 2.4% to $2,046.49 per ounce as of 01:36 p.m. ET (1836 GMT), after rising to $2,069.89 earlier in the session, a whisker away from a peak of $2,072.50 touched in August 2020. U.S. gold futures settled 2.4% higher to $2,043.30. 
  • David Meger, director of metals trading at High Ridge Futures has said that the combination of soaring energy prices, grain prices, base metal prices have culminated in dramatic inflationary pressures that continue to be the major underlying support behind gold moving higher.

(Source: Reuters)

Fontana’s H1 2022 performance supported by revenue growth Published: 08 March 2022

  • Fontana reported a net profit of $309.96Mn for its six months ending December 31, 2021, a 5.5% or $16.17Mn increase relative to the prior period.   
  • Much of FTNA’s growth can be attributed to the improvement in its top line as revenues grew by 19.0% but were partially eroded by a 22.2% rise in direct costs. The company’s Waterloo store continued to show very positive year-over-year growth. Additionally, its strategy of building inventory early enabled it to remain fully stocked during the busy holiday season. However, the rise in container freight charges caused by worldwide supply chain challenges translated into a significant expansion in costs and resulted in a slower pace of net profit growth. 
  • Going forward, Fontana is expected to see increased demand supported by the recovery and reopening of the economy as well as its new store opening in the Portmore Community. 
  • Fontana’s stock price has increased by 32.96% since the start of the calendar year. The stock closed Monday’s trading session at $9.93 and currently trades at a P/E of 23.6x earnings, which is below the Junior Market Distribution Sector Average of 25.8x

(Source: Company Financials)

Week Ahead: Sustained Inflationary Pressures In Latin America Likely To Spur More Rate Hikes Published: 08 March 2022

  • Brazil, Chile, and Mexico will release their consumer price inflation this week, and Fitch forecasts that price growth in February will likely remain well above their respective central banks’ target range, potentially accelerating to new multi-year highs, from 10.4% y-o-y, 7.7%, and 7.1%, respectively in January. 
  • The recent Russian invasion of Ukraine will likely exacerbate inflationary pressures in H1 2022 in Latin America, as the region continues to face surging global commodity prices and modest domestic production, which have caused food and fuel prices to soar. 
  • The agency expects that the Banco Central do Brasil, Banco Central de Chile, and Banco de México will remain hawkish and hike during their next rate-setting meetings in March. 
  • Nonetheless, if inflation continues to surprise to the upside, Fitch will likely consider upward revisions to their 2022-year end interest rate forecasts if the central banks view their recent series of rate hikes to be insufficient in containing inflation.

 (Source: Fitch Solutions)

Guyana Has US$1 Billion In Untapped Bauxite Potential Published: 08 March 2022

  • Despite past challenges, Guyana’s bauxite industry is poised to make a notable ‘comeback’, thanks to its substantial amounts of minerals yet to be extracted. Currently, the country’s bauxite reserves alone are estimated to be worth close to US$1Bn. 
  • Notably, although Guyana has been producing top-tier bauxite for decades, it is yet to become a notable aluminium producer; however, this could soon change, as the government pushes ahead to implement a comprehensive energy mix, using ‘renewables’ such as wind, solar, ‘hydro’ and natural gases to produce alternative energy, thereby making manufacturing investments feasible across a myriad of sectors including mining. 
  • With the government’s efforts to reduce the cost of electricity, the establishment of a smelter factory would not only be possible, but financially viable as well. Smelting is a process that uses heat and a chemical-reducing agent to decompose the ore, driving off other elements as gasses, or slag, and leaving just the metal behind. A smelter operation would also present the need for an aluminium plant, which would convert the extracted bauxite into aluminium. 
  • The government of Guyana has indicated that it is aware of the critical role of the mining sector in the economy, and will continue to invest in, and promote, the expansion of the sector, while also being mindful of the challenges and vulnerabilities, as illustrated during the 2021 floods when operating sites and access roads were inundated and rendered impassable for an extended time. Meanwhile, in its entirety, the mining and quarrying sector is forecast to grow by 86 per cent in 2022, driven by expansion across all subsectors, namely petroleum, gold and bauxite, along with other mining and quarrying.

 (Source: Guyana Chronicle)

Oil prices hit 14-year highs on Russia oil ban talks, Iran deal delay Published: 08 March 2022

  • Oil prices jumped on Monday to their highest levels since 2008 as the United States and European allies considered banning Russian oil imports, while it looked less likely that Iranian crude would return swiftly to global markets. 
  • Brent rose $5.1, or 4.3%, to settle at $123.21 a barrel, and U.S. West Texas Intermediate (WTI) rose $3.72, or 3.2%, to settle at $119.40 a barrel. During the session, both benchmarks hit the highest since July 2008 with Brent hitting $139.13 a barrel and WTI $130.50. 
  • Global oil prices have spiked about 60% since the start of 2022, raising concerns about global economic growth and stagflation. China, the world's No. 2 economy, is targeting slower growth of 5.5% this year. 
  • On Sunday, U.S. Secretary of State Antony Blinken said the United States and European allies were exploring banning imports of Russian oil. The White House on Monday said President Joe Biden has not decided on a ban on Russian oil imports. Oil prices could climb to over $300 per barrel if the United States and European Union ban imports of oil from Russia, Deputy Prime Minister Alexander Novak said on Monday.

(Source: Reuters)

Shipping Russia banned goods may lead to blacklisting, U.S. warns companies Published: 08 March 2022

  • The Biden administration is threatening to add companies to a trade blacklist if they skirt new export curbs against Russia, as it ramps up efforts to keep a vast array of technology out of the country after it invaded Ukraine last month. 
  • The U.S. Department of Commerce, which oversees export controls, is mobilizing staff around the globe to halt illicit shipments of computers, aircraft parts, marine equipment and other technology to Russia, partnering with allied countries and U.S. law enforcement agencies like the FBI and the Department of Homeland Security to crack down on the newly illegal trade, according to U.S. officials. 
  • The goal is to enforce sweeping new restrictions on shipments to Russia of both U.S. and foreign commodities, technology and software if produced with U.S. equipment, technology or software. The restrictions also apply to Belarus. 
  • Already some of the biggest names in tech, like Microsoft Corp (MSFT.O) and Intel Corp, have announced they will halt shipments to Russia. U.S. exports to Russia were under $5.0Bn in 2020, according to the Commerce Department but, a senior official has said, multilateral cooperation means more than $50.0Bn in key inputs to Russia may be curbed.

 (Source: Reuters)

Producer Price Index Published: 01 March 2022

  • Output prices for producers within the Mining and Quarrying industry decreased by 0.7% at the beginning of the 2022 calendar year, following an increase of 2.8% in December 2021, as reported by the Statistical Institute of Jamaica (STATIN). However, for the Manufacturing industry, producer prices increased by 2.0%, 1.8 percentage points above the 0.2% recorded in December 2021. 
  • The movement in the Mining and Quarrying industry index in January reflects a fall of 0.8% in the index for the heavier weighted major group Bauxite Mining & Alumina Processing. 
  • For January, the main contributors to the increase in the index for the Manufacturing industry were the major groups, Refined Petroleum Products up 8.8%, Chemicals and Chemical Products up 1.4% and Food, Beverages & Tobacco grew by 0.5%. 
  • For the period January 2021 – January 2022, the Mining & Quarrying industry PPI rose by 40.2%, due mainly to an increase of 41.5% in the index for the major group Bauxite Mining & Alumina Processing. The point-to-point index for the Manufacturing industry moved by up 22.1%. For the 2021/2022 fiscal year, April 2021 – January 2022, the index for the Mining & Quarrying industry increased by 36.2%, while the index for the Manufacturing industry advanced by 14.7%.

(Source: STATIN) 

Barbados Bracing For Impact From Ukraine Unrest Published: 01 March 2022

  • The Barbados government is already seeking to put measures in place to cushion any likely fallout from the war that has broken out in Ukraine with Russia, which could have implications for the cost of fuel and food, the supply of food and result in disruptions in the supply chain globally. 
  • Prime Minister Mottley noted that hat Barbados’ reserves stood at over $3 billion, representing about 37 weeks of import cover, giving the country adequate buffers to deal with increased prices at least for a period. 
  • Currently, the country has embarked on efforts undertaken by the Ministry of Agriculture, Food and Nutritional Security to boost food production in the country to ensure Barbados is in a better position to feed its citizens amidst the crisis which had led to increases in food prices. 
  • The Russia-Ukraine conflict is expected to have adverse effects on the local economy through higher inflation and surges in oil and prices of other commodities such as wheat and corn. This will inadvertently, lead to higher electricity and gas prices for both consumers and producers alike.

 (Source: Barbados Today)

Government Scraps US$12.5M Enmore Packaging Plant To Build New One At Albion, Expand Another At Blairmont Published: 01 March 2022

  • Chief Executive Officer (CEO) of the Guyana Sugar Corporation (GuySuCo), Sasenarine Singh revealed that the government is planning to build a new packaging plant at Albion along with the expansion of one at Blairmont for 2022. 
  • The project is aimed at Guyana being able to sell sugar at a higher value and to ensure the country has enough capacity to produce packaged sugar products to meet the demands of the new international market. 
  • The government has already made headway in opening new markets with GuySuCo successfully opening markets in Jamaica and Grenada. The company was also able to secure sugar sales for the first time to Germany. This new venture will lead to an increase in government revenues, exports, expansion of the sugar sector and overall economic growth.  

(Source: Kaieteur News)

The U.S. slaps sanctions on Russia's central bank, threatens more action Published: 01 March 2022

  • The United States on Monday imposed sanctions on Russia's central bank and other sources of wealth, dealing a crushing blow to the country's economy and further punishing Moscow over its invasion of Ukraine. 
  • The measures, blocking Americans from engaging in any transactions involving Russia's central bank, finance ministry or national wealth fund, are likely to push Russian inflation higher, cripple its purchasing power and drive down investments, U.S. officials said on Monday as the new measures took effect. 
  • The actions included a carve-out for energy payments. Last week Washington imposed several rounds of sanctions, including against Russian President Vladimir Putin and major banks, after Russia's forces invaded Ukraine in the biggest assault on a European state since World War Two. 
  • A senior U.S. administration official has said that their objective is to make sure that the Russian economy goes backwards if President Putin decides to continue to go forward with an invasion in Ukraine and that they have the tools to continue to do that. 
  • Washington and its allies said on Saturday they would take action against the central bank and bar some of Russia's banks from the SWIFT international payments system, a list officials said was still being finalized with EU partners. Russia's central bank more than doubled its key policy rate on Monday and introduced some capital controls, but its governor said sanctions had stopped it from selling foreign currency to prop up the rouble.

(Source: Reuters)