Articles in Category: Automotive

Global automotive giant Volvo is currently taking part in a European Union research project which involves replacing the various cables in trucks with wireless sensors.

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The result is expected to be a dramatic reduction in the amount of copper and plastic used. Every year the Volvo Group should be able to dispense with around 3,000 miles (5,000 kilometers) of cabling, which is the equivalent of 18 metric tons of copper and 33 metric tons of plastic.

Volvo is saying goodbye to miles of cabling in its truck division. Can IoT sensors replace all that expensive copper and plastic? Source: Volvo.

Volvo is saying goodbye to miles of cabling in its truck division. Can IoT sensors replace all that expensive copper and plastic? Source: Volvo.

“The savings could amount to a large number of hours, sometimes even days. In the factory, the cables are awkward to handle and time-consuming to fit in the right place,” said Jonas Hagerskans, a development engineer at the Volvo Group. “The wireless sensors are much simpler to install. The cables are also sensitive to dirt and rust and prone to faults. By replacing the cables with wireless sensors, it is possible to prevent all the potential cabling faults. When trucks come into the workshop for repairs, identifying faults in long cables that are difficult to access is very time-consuming. In the future, our customers could get their trucks back from the workshop more quickly.” Read more

Republican control of the White House and both chambers of Congress in January will put the GOP in a tenable position to pass significant tax reforms it has been pushing for years, such as lower corporate rates and a simpler tax code, experts say.

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It could be the most significant rewrite of the tax code since the Reagan administration.

The House Republican overhaul of the tax code is being written to expand the economy and avoid increasing budget deficits, U.S. Rep. Kevin Brady (R., Texas), who is leading the effort said on Tuesday.

“We designed our blueprint to break even within the budget, considering that economic growth,” said Brady, the chairman of the House Ways and Means Committee,at The Wall Street Journal’s CEO Council. At the same time, Brady said, if there are some deficits, he would accept them if the result was stronger growth. Avoiding long-run deficits could make it easier for Republicans to pass their plan under budget rules that avoid a Senate filibuster and forbid increasing future deficits.

Johnson-Matthey: Platinum Could See Surplus Next Year

The platinum market could return to surplus for the first time in six years in 2017 as lower auto catalyst loadings and weakness in Chinese jewellery purchases pull demand lower, refiner Johnson Matthey said in a report on Monday.

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Mine supply is expected to be flat next year, but supply of recycled metal from auto catalysts has the potential to rebound, it said.

For some time now, a debate over the use of rebar, specifically or Glass-Fiber Reinforced Plastic (GFRP ), instead of other forms of steel reinforcement, has been on in Asian industry circles.

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Recently, two events seemed to inflame this ongoing debate. Galvanized rebar was part of the topics taken up for discussion at an international meeting on galvanized steel in India, while a research report, released about the same time, talked of the latest trends in the market in the increased use of GFRP rebar.

rebarforconcretepour_550

Galvanized steel is the gold standard for construction rebar such as this rebar web waiting for a concrete pour. Can glass-fiber reinforced plastic seriously compete? Photo: Jeff Yoders.

The second international galvanizing conference in Kolkata in eastern India saw participation from a cross section of zinc and alloy industries, including the U.S. Delegates talked about ways to expand the zinc market in India and also how to use zinc in automobile industries, fertilizers, and in rebars.

Zinc in Construction

The Indian Government is showing some interest in the role of zinc in building important infrastructure such as bridges. India’s demand for galvanized steel structures will keep rising because of its growing infrastructure. Steel becomes rust-proof (or corrosion resistant, as the industry says) when coated with a layer of zinc, hence galvanization. If done properly, galvanization extends the useful life of rebar and other products for decades. Read more

An interesting pair of articles in the financial times last week covered a disturbing rise in auto repossessions following the failure of borrowers to meet repayments in the sub-prime automotive market.

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Repossessions in the U.S. totaled 1.6 million in 2015, the third-highest level on record according to data going back 20 years, and only just falling short of the 1.8 million and 1.9 million peaks seen during and immediately after the financial crisis in 2008 and 2009.

That number, the FT says, is predicted to rise to 1.7 million this year as large numbers of individuals simply failed to repay the loans.

Source: Financial Times

Source: Financial Times

As competition in the auto loan market has grown, lenders have tended to relax standards, offering bigger loans to consumers and giving them more time to pay it back, the FT says. As a result, the sub-prime auto ABS market has grown to $38.1 billion, with net losses across the sector hitting 9.29% in September, according to Fitch ratings. That’s 23% higher than a year ago.

Fitch defines sub-prime ABS as a deal with expected net losses above 7% and, although the model builds in a considerable level of delinquency before lenders lose money, the trend is still a worrying one. Not so much because the sub-prime auto market represents systemic risk to the financial system but more because it illustrates two things:

  1. The financial services industry has not learned much from the last financial crisis. It is still packaging up essentially junk loans and palming them off on lenders greedy for a high-return on a low-interest rate market. Nor does it say much for the authorities who are clearly policing this market no better than the mortgage market in the middle of the last decade.
  2. It also says something about a rising level of debt overreach building up in the economy. U.S. growth has been supported by the consumer. Indeed, personal consumption is by far the largest sector of the US economy and has remained positive even in an economy experiencing relatively stagnant wage inflation. If defaults are rising it should be a red flag that limits are being reached for sectors of the good old US consumer to continue spending, and that is a worrying signal for future growth.

Automotive sales fell 5.8% in October, marking the first time since the beginning of the recession that sales of new cars and trucks in the U.S. declined for three consecutive months.

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The yearly rate of sales for October was 18.02 million, according to Autodata Corp. That’s in line with the 18.18 million in October 2015. Nearly every major automaker posted sales declines in October. Ford Motor Co. and Fiat Chrysler Automobiles NV both posted double-digit declines of 11.9% and 10.3%, respectively. General Motors Co. beat analyst expectations, with sales down only 1.7%.

We had warned last month that last month that while our Automotive MMI was flat, that could signal a plateau for end-user automotive sales and this month we saw the other side of that plateau, as the sub-index fell 4%.

Automotive_Chart_November-2016_FNL

Automotive metals are still a lucrative market for steelmakers and aluminum smelters, but the drop in sales could be a bit worrying as any prolonged drop in demand could for vehicles could eventually be felt down the supply chain.

However, most analysts are still bullish on automotive sales despite the fact that the sales record of 2015 will mostly likely not be met.

“Key fundamentals like job security, rising personal incomes, low fuel prices and low interest rates continue to provide the environment for a very healthy U.S. auto industry,” GM Chief Economist Mustafa Mohatarem said in a statement. “The U.S. auto industry is well positioned for sales to continue at or near record levels for the foreseeable future.”

Automotive demand is strong in Europe and other mature markets, too.

BMW AG recently reported higher profit in the third quarter even though a decline in sales in the U.S. and increased investment in electric vehicles and other technology eroded earnings at its automotive division. Fellow German automaker Daimler (maker of Mercedes-Benz automobiles) and BMW are benefiting from the strong recovery in Europe’s car markets and renewed demand in China.

Austria’s Voestalpine AG, a company that supplies both with automotive steel and hot-briquetted iron ore, recently held an event wherein its CEO Dr. Wolfgang Eder said that their automotive metal sales, most of which are to European customers, are strong.

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“We do not see it different than what we see and here in U.S. auto markets,” Eder said. “We do not see any weakness. These deliveries are lower than U.S. domestic production, and while we do WANT to do more business with American automakers, those customers (BMW and Daimler) are paramount right now because we know that people, especially in the U.S. market, like those cars.”

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The Commerce Department has placed anti-dumping and countervailing duties on mechanical drive parts from Canada and China, some as high as 400% for the latter. U.S. auto sales are forecast to fall this month.

The Auto Sales Plateau Begins to Slope

U.S. auto sales are forecast to drop more than 7% in October from the same period in 2015, the sixth monthly decline so far this year, as automakers offer steep discounts and adjust production to manage inventories, J.D. Power and LMC Automotive said on Friday.

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This may be the fall from the plateau we have seen over the last few months of flat auto sales.

The two auto industry consultants said October U.S. new vehicle sales will number 1.347 million, down 7.3% from 1.453 million units a year earlier. The seasonally adjusted annualized rate for October will be 17.7 million vehicles, down from 18.1 million on the same basis a year earlier. This October has two fewer auto sales days than October of 2015. Read more

Chinese aluminum companies are looking to get into the lucrative aerospace and automotive markets while U.S. oil drillers are ramping up production with oil above $50 per barrel.

China Eyes Automotive, Aerospace Aluminum Markets

China’s giant aluminum makers are pushing into the global automotive and aerospace markets, with industry sources expecting their presence to heat up competition and possibly spark a buying spree for Western metals companies.

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China’s top aluminum companies are venturing into the more lucrative parts of the global value chain.

US Drillers Extend Rig Recovery

The number of oil rigs drilling in the U.S. rose again this week, extending one of its best recoveries with no cuts for 16 straight weeks, with analysts expecting more additions as crude prices hold over $50 a barrel. Drillers added 4 oil rigs in the week to Oct. 14, bringing the count up to 432, the most since February, but still below 595 rigs a year ago, according to energy services firm Baker Hughes Inc. on Friday.

Our Global Precious MMI was up a point this month, climbing to 86 from 85 last month, an increase of 1.2%, but this may be the last increase we see for awhile as gold experienced its biggest single-day post-Brexit drop yesterday. It closed at $1,268.40 an ounce, a slide of 3%, down from $1,311.20 on Monday. It’s around $1,275 as of this writing.

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The yellow metal was dragged to its lowest point since the Brexit vote in June which was driven mainly by a bounce in the U.S. dollar after upbeat data triggered a break of key support at $1,300 an ounce. As speculation grows that the Federal Reserve may finally raise interest rates in December, the dollar has been given a boost and a selloff in gold has ensued. Losses in silver and platinum group metals have followed, although none fell as dramatically as gold this week.

Global-Precious-Metals_Chart_Ocotber-2016_FNL

We warned, earlier this month, that the first half investment appeal of precious metals was waning. The relatively tepid increase in September was a sign that the metals, as a group, simply could not keep the momentum of the first half. Most are blaming this pullback on the dollar, and that certainly has a lot to do with it, but the fact that economic fears about the U.S. economy have been quelled might be the real culprit.

U.S. manufacturing rebounded in September after contracting in August. New orders and production at factories increased, although employment fell. The Institute for Supply Management said Monday that its manufacturing index rose to 51.5 in September from 49.4 in August. Any score above 50 is a net expansion in manufacturing activity.

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While gold is the most for-investment metal of the group, the others are experiencing similar effects as gold and their supply/demand fundamentals aren’t much better. Silver is more industrial, but acts as a safe haven, too, a veritable poor man’s gold. Platinum and palladium are more tied to the automotive and other catalyst markets. Still, they are moving largely in lock-step right now and have been doing so since the dollar bottomed out in May. Platinum is receiving a particularly cold shoulder from investors. The metal is well-supplied even if investment demand increases.

What Does This Mean for Precious Buyers?

A stronger dollar and better economic data about the U.S. economy is bad for the investment appeal of precious metals. More data will come out in the days leading up to the presidential election but precious metals’ gains of the first half are likely a thing of the past.

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You get the sense speaking with Trevor Raymond, Director of Research at the World Platinum Investment Council that the Platinum market is like a ticking time bomb – they are my words not his but during an interview prior to the release of the WPIC’s Platinum Quarterly Report for Q2, Trevor disclosed details about the supply side to the platinum market that bear further scrutiny.

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The platinum market has been in deficit for five years now, a series of strikes and outages have consistently led to poor supply side numbers and 2015 was no different running a 520,000 ounce deficit. Investors looking for price increases have been thwarted by large, above-ground stocks that, while difficult to accurately quantify, are estimated by the WPIC as dwindling from some 4 million ounces to a current level of 2 million ounces over the period. Read more

U.S. Automakers sales numbers were down substantially in August. The drop is something that’s usually expected as the summer sales season winds down, but the steepness of said drop is what’s more concerning to economists and automotive executives.

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Ford Motor Co. saw the biggest drop, down 8% year on year for the month of August to 214,482, General Motors was down 5% to 256,429 vehicles and Volkswagen was the most down 9.1% to 29,384 vehicles. Of the majors only Fiat Chrysler showed any growth, buoyed by a strong line up of SUVs to post a 3% increase to 197,000.

Automotive_Chart_September-2016_FNL

While automotive metals remain a lucrative and sought-after market for both steelmakers and aluminum smelters, the pace of sales is slowing. Sales are still on a pace to beat last year’s record of 17.5 million, but the seasonally adjusted annual sales rate dropped to 17 million last month, according to Autodata Corp. That’s the slowest pace for an August since 2013, and far below the 17.9 million pace set in July and 17.7 million in the same month last year.

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Increases in precious metals had buoyed the Automotive MMI for much of this year, but the catalytic converter metals stalled this month and that was the cause of much of the drop in our index. Steel prices remain bifurcated between U.S. and global prices and a summer of uncertainty over U.S. Steel‘s section 337 case has led to little clarity for metal buyers of Chinese automotive steel. U.S. Steel’s case centers on an allegation that Chinese steel companies stole the formula and process for an automotive alloy.

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