Articles in Category: Automotive

U.S. new car and light-truck sales returned to the fast lane in April, setting a monthly high that put Detroit automakers back on track to claim a record for 2016 profits and our Automotive MMI increased as well.

Automotive_Chart_May-2016_FNL

Industry volume hit 1.5 million vehicles last month, a 3.6% increase year-on-year, according to data provider Autodata Corp., for a seasonally adjusted annualized pace of 17.4 million vehicles. That puts U.S. automakers on track for a second consecutive annual sales record.

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Honda led major automakers with a 14.4% sales increase as both its cars and SUVs sold well, while Nissan‘s sales rose 12.8%. Fiat Chrysler was up 6% on record Jeep sales, and Ford rode an April record for SUV sales to a 4% increase. Toyota sales rose 3.8% largely because of the RAV4 small SUV, which broke a monthly record with sales up nearly 32%.

Only General Motors and Volkswagen saw sales declines with GM blaming a 3.5% drop on a strategy of cutting low-profit sales to rental car companies. VW sales fell almost 10% as its emissions-cheating scandal continued.

The U.S. isn’t the only auto market on an upswing. European sales have been steadily rising for a few years and many of the markets in the Asia-Pacific region are growing, although at a more tepid pace than earlier this decade.

This month, we saw U.S. Steel file a section 337 case, alleging hacking and theft of intellectual property, against China. The suspected hacker stands accused of stealing the formula, production setup and even melting temperature for high-strength, automotive alloy Dual-Phase 980. U.S. Steel contends that the alloy showed up as a Baosteel product shortly after it was hacked.

Compare Prices With The April 2016 MMI Report

While individual cases like this one are not likely to affect the fundamentals of the automotive steel market, it does illustrate just how coveted a market automotive has become for high-strength steel, even as aluminum has not been as widely adopted as many predicted it would be by now, after Ford became the first automaker to make the jump.

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Details of another hack are at the heart of U.S. Steel‘s section 337 complaint, including what it calls theft of lucrative automotive alloy Dual-Phase 980. Chinese commodity futures trading volumes are hitting records despite attempts by regulators there to rein in speculation.

U.S. Steel Alleges Dual-Phase 980 Stolen by China

According to filings with the International Trade Commission, U.S. Steel claims a forensic analysis into an alleged 2011 illegal hack of its systems by culprits based in China — one that used a similar method as the confirmed 2014 hack of U.S. Steel and other companies by the Chinese military — included stealing plans for the chemistry for an automotive specialty steel alloy and its coating, the necessary temperature for heating and cooling the metal and the proper layout of its production lines.

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The automotive steel is one of U.S. Steel’s most popular products, Dual-Phase 980, that can withstand more than 140,000 lbs. per square inch, making it a light, strong metal coveted in the lucrative automotive market for its safety as well as its ability to meet government weight standards.

Two years after the 2011 hacking, China’s Baosteel Group, the world’s fourth-largest steelmaker, started selling a new line of products that included Dual-Phase 980. U.S. Steel says it can prove to the ITC that the product was stolen in the 2011 hack.

Chinese Commodity Futures Hitting Records

Commodity futures linked to China’s vast steel sector rebounded sharply on Friday, Reuters reported, led by iron ore and rebar, as robust construction demand spurred buying even as the country’s regulator ordered exchanges to rein in speculative trading.

Big bets on Chinese commodities futures this year from hedge funds, retail investors and others have driven up contracts on everything from iron ore to cotton, prompting many analysts to warn of parallels with a boom in China’s stock markets that ended in a sharp crash last summer.

Steelmaking raw materials iron ore, coking coal and coke ended April with their biggest monthly gain on record.

Free Download: The April 2016 MMI Report

Rebar, a construction steel product, also posted its biggest monthly rise ever, with volumes in the most-traded contract in Shanghai hitting a record 1.4 billion metric tons, enough to build San Francisco’s Golden Gate Bridge more than 15,000 times over.

U.S. Steel is accusing Chinese steelmakers of intellectual property theft and Germany is subsidizing its electric car industry.

U.S. Steel Files Section 337 Petition

U.S. Steel Corp. has launched a campaign to prevent imports from China’s largest steel producers, it said on Tuesday, the boldest step yet by a U.S. company as a trade brawl with the world’s largest steel producer escalates.

In a complaint to the U.S. International Trade Commission, the domestic steelmaker called on regulators to investigate dozens of Chinese producers and their distributors for allegedly conspiring to fix prices, stealing trade secrets and circumventing trade duties by false labeling.

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The petition, known as Section 337 is used to protect against intellectual property theft, listed some of China’s top producers, including Hebei Iron & Steel Group and Anshan Iron and Steel Group and Shandong Iron & Steel Group Co.

“We have said that we will use every tool available to fight for fair trade,” said U.S. Steel Corp President and Chief Executive Officer Mario Longhi in a statement.

Germany Subsidizes Electric Car Development

Germany’s auto industry risks being overtaken by foreign competitors unless it receives greater domestic support, the country’s economy minister said today, announcing a 1 billion euro ($1.13 billion) plan to subsidize electric cars that are seen as the technology of the future.

Electric vehicles have had a sluggish start in Germany, the country where the combustion engine-powered automobile was born. A government plan to get 1 million e-cars on the streets by 2020 is far behind schedule, with just 50,000 sold so far.

Free Download: The April 2016 MMI Report

“After a long debate we have agreed to a subsidy program that aims to show on the home market that we can master these new drive trains, from plug-in hybrid to battery-powered vehicles, and make them suitable for the mass market,” Economy Minister Sigmar Gabriel said at a news conference in Berlin.

Just a month after BMW proudly announced it was shifting its development strategy toward more all-electric vehicles (EVs) and autonomous technology in order to address a “new era” in the industry, the company was rocked by the defection of the core development team of its i3 and i8 electric vehicle lineup.

The embarrassing part is the defection isn’t to another automotive major but to Future Mobility Corp., a Chinese startup backed by Tencent Holdings, a Chinese investment company. The move underlines how established “old world” firms in the automotive sector are struggling to compete with start-ups and newcomers in the EV and hybrid market.

Who Left BMW for Future Mobility?

The WSJ reports that Carsten Breitfeld, a 20-year BMW veteran who developed the company’s i8 plug-in hybrid sports car, left the Munich-based automaker last month to become chief executive of the Chinese electric car company. Now, three key executives from the “BMW i” electric car group are following him. Dirk Abendroth, who developed electric powertrains for the i-series, Benoit Jacob, who was head of design at BMW i, and Henrik Wenders, head of BMW i product management.

AdobeStock_ joel_420_electric_car_550_042016

BMW is betting on electric cars for its future, but Future Mobility just poached its entire i team. Source: Adobe Stock/Joel 420.

One would like to think they are not being simply lured by money, creative professionals of this caliber will be more motivated by being at the cutting edge of development and technology than euros in the pocket and BMW, for all their media hype, have failed to make a success of their electric vehicles division.

BMW Slows Electric Car Development

According to the WSJ, BMW has slowed development of future models. Last year, BMW sold 24,057 i3 models, and 5,456 i8 models, a 66% increase in BMW i division sales but paltry by the standards of a volume automaker. Read more

U.S. auto sales increased 3% in March over a year earlier, but warning signs emerged that car companies are stretching to keep demand humming after record results last year.

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March’s selling pace came in at an adjusted annual rate of 16.57 million light vehicles, well below analyst expectations and the 17.5 million clip the industry reported in February. Detroit’s big three automakers each reported sales gains, but their results missed expectations, sending shares lower. Automakers overall sold 1.6 million light vehicles in March.

Automotive_Chart_April-2016_FNL

Automotive remains a coveted market for both steelmakers and aluminum smelters and the healthy price increase of 5.9% in our Automotive MMI reflects that. Automotive metals also got a boost from copper as the wiring metal also posted an increase this month, reversing a long flat streak.

Fiat Chrysler Automobiles said sales rose 8% to 213,187 vehicles in March. Ford Motor Co. sales rose 7.8% over a year earlier to 253,064 vehicles. General Motors’ sales edged up less than 1% to 252,128.

While those numbers might be cause for concern, long-term, they’re certainly not being felt in raw materials purchases by the Detroit automakers yet. Almost all of the component prices of our Automotive MMI were up in March and the phenomenon looks like it’s global with Chinese prices (mostly) joining U.S. and Korean ones in marching higher in lockstep.

Compare Prices With The March 2016 MMI Report

The China Automobile Dealers Association said at its monthly news briefing that one-third of dealers it surveyed said demand increased in March, up from 2.7% in February, with the survey predicting stable demand this month.

Expect steel and aluminum companies to continue to aggressively court automotive customers, especially as new automobile technology, such as Tesla Motors‘ new, less-expensive sedan is rolled out.

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Reading Toyota Motor Corp.‘s media releases, you would think the firm’s support of hybrids and fuel cell cars is all about saving the environment.

Free Download: The March 2016 MMI Report

While we don’t doubt the commitment of both, the firm and its management to such ethical pursuits, Toyota’s stated vision for the future has as much to do with hard-headed realism. Toyota is reading the writing on the wall with its environmental motives. The auto industry is engaged in the greatest technological endeavor since the early development of the gasoline engine 100 years ago.

Pioneering the Prius

Toyota can be said to have led the way with the commercial development of gasoline-electric hybrid technology, in the face of considerable skepticism when the firm pioneered it with the Prius in 1997. Since then, Toyota now has its fourth incarnation of the class-leading hybrid and has delivered more than 8 million cars according to the Fincancial Times, with the Prius in all its versions accounting for nearly half of it’s domestic sales.

Hybrid Car

Toyota changed the game with the Prius, can it do so again with hydrogen fuel-cell cars? Source: Adobe Stock/6th Gear.

Automakers are being driven by both public sentiment and government regulation to play their part in dramatically reducing global carbon emissions. The industry recognizes this and is quietly pouring an immense amount of resources, money and talent into finding solutions. Read more

The London Metal Exchange is looking to make large positions more transparent and India is not applying its new steel quality standards to automotive imports. At least not yet.

LME Wants Transparent Reporting

The London Metal Exchange said on Thursday it’s seeking views from its members and other interested parties about the potential for more transparent reporting of positions above certain thresholds.

Free Download: The March 2016 MMI Report

The LME monitors all positions held on its market, what it is proposing is a measure to put the onus of reporting any large positions on members.

India Sets New Steel Quality Standards

India imposed new quality standards on steel products sold in the country Thursday, but delayed bringing auto-grade steel imported by automakers under the purview of the new order by six months.

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Indian automakers import about 1 million metric tons of high-tensile steel annually, mainly from Japan and South Korea, and had sought an extension to avoid disruption in production.

It was a third flat month in a row for the Automotive MMI as strong sales in the US and surprisingly resilient ones in China paced end-user markets, but still couldn’t increase the prices of automotive metals as oversupply still plagues global markets.

Free Download: The February 2016 MMI Report

Here in the US, Ford Motor Co. sold 20.2% more new vehicles in February than a year earlier. Fiat Chrysler Automobiles posted a 12% gain, while General Motors sales fell 1.5% as it cut back on fleet sales.

Automotive_Chart_March-2016_FNL

Toyota Motor Corp. sales rose 4.1% on strong sales of its RAV4 compact SUV (up 16%), the 4Runner midsize SUV (up 32%) and the Tacoma midsize pickup truck (up 14.5%). The Lexus luxury brand was up 1%.

Nissan Group posted a 10.5% increase, fueled by a 12.9% improvement that more than offset an 11% decline at the Infiniti luxury brand. American Honda sales jumped 12.8% as its top selling Civic and Accord rose 32% and 19%, respectively.

Chinese Sales Resilient

In China, sales in the world’s biggest auto market rose 7.7% in January, as demand was driven by a lowered tax for small engines.

Sales of passenger and commercial vehicles jumped to 2.5 million units in China in January, according to data released by country’s Association of Automobile Manufacturers. Passenger vehicle sales rose 9.3% to 2.23 million units, while commercial vehicle sales declined 3.4% to 303,600 units, the body said.

Oversupply continues to be the culprit for flat automotive metal prices as products such as London Metal Exchange copper and hot-dipped galvanized steel still have large stockpiles available in major markets. The US scrap steel is markedly bearish even by the low standards of the overall sluggish commodity market.

There is also growing concern that end-product demand from large consumer markets such as the US and China cannot last at current rates. While finance costs in the US are expected to stay low, many are concerned that automakers have overextended themselves by investing in aluminum and steel production facilities and, if demand does fall in 2016, automakers will find themselves shuttering new production or borrowing to meet construction costs.

In China, growth has been fueled by the burgeoning used car market there, one whose sales do not trickle down to metal suppliers.

Free Sample Report: Our February Metal Buying Outlook

Continue to monitor automotive metal prices and be cautious with forward purchases as there’s still not any real indication that this is a flat bottom or just a plateau momentarily pausing a larger fall.

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Tata Motors‘ marketing division is breathing a bit easier these days.

Earlier this month, MetalMiner reported that one of India’s auto majors was suddenly saddled with a name problem for a key, new product. Its latest hatchback, named Zica, launched recently, sounded similar to the dreaded virus Zika.

Free Download: The February 2016 MMI Report

The top honchos at India’s fifth-biggest automaker, which owns the Jaguar and Land Rover brands, went into a huddle, wondering how they would be able to tackle the branding problem. Now, after an interesting exercise, the car has had an image makeover and has been renamed, officially, as Tiago. And, yes, this is the same car which is being endorsed by none other than world soccer player of the year Lionel Messi.

From Zica to Tiago

For months, the marketing division spent thousands of dollars promoting the former Zica’s, now Tiago, promotional activities, until that pesky Zika virus came along and infected not just its victims, but Zica’s worldwide brand value.

Tim Leverton and Mayank Pareek at the official unveiling of the new Tata Zica at an auto show in Goa last December. Source: Tata Motors

Tim Leverton and Mayank Pareek at the official unveiling of the new Tata Zica at an auto show in Goa last December. Source: Tata Motors

“Empathizing with the hardships being caused by the recent Zika virus outbreak across many countries, Tata Motors, as a socially responsible company, has decided to re-brand the car,” the company said in a statement.

The Tiago will cost about $5,800 and will come in gasoline engine and diesel versions. Tata Motors will apply for regulatory registrations, with the aim of formally launching Tiago to the market by the end of March, it said in a statement.

Still Fantastico?

So, how did the auto major zero in on the name Tiago? Here’s how: The Tata Tiago name was chosen after a global crowd-sourcing competition called “#FantasticoNameHunt” was conducted in which fans got to vote for their preferred new name from a shortlist of 3 suggestions — Tiago, Adore, and Civet. Tiago beat the other two.

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Auto analysts are hopeful that the name change may yet save the day for this new hatchback, after it was launched at the Auto Expo in New Delhi earlier in February. Zica, by the way, stood for “zippy car.”

The author, Sohrab Darabshaw, contributes an Indian perspective on industrial metals markets to MetalMiner.

After news of Toyota’s recent supply chain troubles, so ably covered by my colleague Lisa Reisman last week, news from the US car industry, by contrast, couldn’t be better.

Free Download: The February 2016 MMI Report

General Motors reported $9.7 billion net income for 2015 as it was bolstered by buoyant US light-truck sales. Results for the fourth quarter more than tripled from $1.99 billion to $6.27 billion although, admittedly, benefiting from $4 billion in favorable special items.

Even so, the underlying figures were also boosted by the strong sales for the core North American operations, where earnings before interest and tax adjusted for special items rose 25% to $2.77 billion, on revenue up 9.5% to $27.7 billion. The company said low fuel prices boosted sales of more profitable pickup trucks and sport-utility vehicles.

Sales Surging

A rising tide lifts all boats, they say, and a strong North American market has also benefited Ford Motor Co. whose sales of SUVs and pickups soared last year. Ford announced a 13.6% rise in SUV sales for its Ford and Lincoln brands and a 13% rise for pickups. GM’s GMC premium light-truck brand recorded 13% year-on-year sales growth, while Fiat Chrysler’s growth came nearly entirely from a 42% surge in sales for its Jeep SUV brand. All manufacturers finished the year on a high, but for Fiat Chrysler sales were its strongest in the month of December since Chrysler was founded in 1925.

Car Sales

Source: Wall Street Journal

The US car industry has been a major bright spot for metals consumption in recent years with rising volumes driving demand for both steel and aluminum. Indeed, for aluminum, so strong has the demand been many manufacturers have made investments in dedicated automotive-grade production facilities to meet demand.

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