Articles in Category: Automotive

The Steel Market Development Institute (SMDI), a business unit of the American Iron and Steel Institute (AISI), today released statements about the release of the draft Technical Assessment Report (TAR) by the U.S. Environmental Protection Agency, Department of Transportation and California’s Air Resources Board.

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The report is the first step in the mid-term evaluation of fuel economy and greenhouse gas emissions regulations and it examines a wide range of technology factors relevant to the 2022-2025 automotive model year standards.

Hybrid Car

Can a 54.5-miles-per-gallon average for all cars on the road be reached by 2025? Source: Adobe Stock/6th Gear.

The main question the report was created to address is should federal authorities adjust miles-per-gallon calculations in order to meet greenhouse gas reduction targets for the 2022-2025 model years. The stated goal by the Obama administration is to cut carbon emissions radically with rules that tighten to a nominal 54.5 mile-per-gallon average by 2025. Read more

This week, we saw nickel prices reach an eight-month high as metals suddenly became a sexy pick for investors again. Gold hit a two-year high as worried stockholders abandoned markets and looked for safe havens after the tempest created by Brexit.

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This week was more about markets shaking out from the initial shock of the U.K. actually voting to leave the European Union. U.K. politicians tried to stress stability, assuring India’s Tata Steel that the nation is still offering a lucrative equity stake and pension relief deal to keep the company’s sprawling Port Talbot, South Wales, steelworks open. Of course, Tata’s not buying it. At least not yet, as the whole steel deal making landscape has shifted in Europe. Could be that Tata just realized it has all of the leverage right now and U.K. politicians will have to sweeten the pot to keep Port Talbot’s doors open.

Are gold prices really going to keep rising? Source: Adobe Stock/Nikonomad.

Gold is up as investors look to shield their money from volatile stock markets.  Source: Adobe Stock/Nikonomad.

But things aren’t all unicorns and rainbows back in the E.U., either. Regulators in Germany are investigating the novel idea of a buyers’ price fixing cartel. You heard that right. Not a conspiracy of sellers to fix prices — like when Apple and several publishers colluded to set e-book prices and we all got Amazon credits for it — but one by German automakers and original equipment manufacturers such as BMW, Volkswagen, Robert Bosch, ZF Friedrichshafen and Daimler to somehow fix prices of the steel that they buy to create the cars they sell.

The fact that the buyers don’t have the power to set prices like sellers do did not deter the Federal Cartel Office, also known as the Bundeskartellamt, an independent “higher federal authority” established to protect competition in Germany.

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MetalMiner Executive Editor and Co-Founder Lisa Reisman pointed out that it’s highly unlikely that all six companies decided that they would collude to extract steel price concessions from Germany’s largest steelmaker ThyssenKrupp AG, leaving ThyssenKrupp without a home for all of that hot-dipped galvanized steel it’s trying to sell to automakers. In that scenario, where would Germany’s automakers go for all of their steel? China? The U.S.? Good luck with your investigation, Bundeskartellamt.

U.S. Auto sales through June were up 1.5% to 8.65 million, eclipsing last year’s record for the first half of the year of 8.5 million, according Autodata Corp.

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Although sales are back on pace to break last year’s record, there are still signs that the auto sector’s momentum might finally be flagging. Sales are not increasing over the previous year’s levels by as much as they were at this time in 2015.

Automotive_Chart_July-2016_FNL

After six straight years of growth and record sales of 17.5 million last year, U.S. sales are beginning to plateau. In the first six months of last year, for example, sales were up 4%, or more than double the pace of this year. Low gas prices, low interest rates, enticing new vehicles and strong consumer confidence are keeping sales high.

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Our Automotive MMI showed a 3% increase based mostly on increasing demand from automakers. General Motors Co. said its sales dropped 2% in June to 255,210, but Ford Motor Co.’s sales rose 6% to 240,109. Sales of its F-Series pickup truck, the nation’s best-selling vehicle, jumped 29% to nearly 71,000 vehicles, or more than one every minute. Fiat Chrysler said its June sales rose 7% to 197,073.

US Steel Separated From Global Prices

Backed by anti-dumping and countervailing duties, U.S. steel prices continue to enjoy price increases not available elsewhere in the global market. It will be interesting to see if automakers can continue to offer the level of discounts that consumers have grown accustomed as their own supply chain prices go up.

Automakers are getting a sales boost, however, from oil prices which — while they have gone up this year — are still hovering around $50 a barrel. Consumers are still being incentivized to buy new vehicles by gas prices around $2.00 a gallon in much of the nation.

Chinese Sales Soaring, Too

Overseas, growth in car sales in China reached a five-month high in May. Automakers delivered a total of 1.79 million passenger vehicles — sedans, sport-utility vehicles and minivans — to dealers in the world’s largest auto market last month, up 11% from a year earlier, the government-backed China Association of Automobile Manufacturers said on Monday.

Automotive metals are still in the sweet spot they’ve enjoyed for much of the year with low oil prices, strong demand for new vehicles and lighter, stronger metals available to create efficient, desirable cars, trucks and SUVs. Investors have bullishly moved into precious metals due to economic instability in world markets recently but those price increases for catalysts such as platinum and palladium have not yet been felt by automakers. While the auto market is still not growing as fast as it did last year, things could be far, far worse.

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Volkswagen has settled the U.S. portion of its emissions scandal litigation and the Securities and Exchange Commission has written new rules for disclosure of donations by oil, gas and mining companies.

VW Settles U.S. Lawsuts for Nearly $15 Billion

Volkswagen AG will spend more than $15 billion to settle consumer lawsuits and government allegations that it cheated on emissions tests in what lawyers are calling the largest auto-related class-action settlement in U.S. history.

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Under the settlement revealed Tuesday by a U.S. District Court in San Francisco, VW will pay just over $10 billion to either buy back or repair about 475,000 vehicles with cheating 2-liter diesel engines. The company also will compensate owners with payments of $5,100 to $10,000, depending on the age of their vehicles.

SEC Passes New Oil/Gas, Mining Disclosure Rule

The Securities and Exchange Commission on Monday approved a rule requiring oil, gas and mining companies to disclose payments made to foreign governments, capping a process stalled in the courts for years.The rule requires companies to state publicly starting in 2018 how much they pay governments in taxes, royalties and other types of fees for exploration, extraction and other activities.

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An earlier version of the rule was thrown out for being overly broad by a federal judge and the American Petroleum Institute said it is reviewing the new rule and would consider legal action if necessary.

For decades, the hospitality, retail, food and construction industries have taken particular advantage of the European Union’s rules allowing freedom of movement, meaning Europeans can work legally in any of the 28 countries that are members, even if they are unskilled laborers. Non-Europeans must obtain work visas under immigration rules that require graduate-level skills and a minimum annual salary of 20,800 pounds.

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Now that the U.K. has voted to leave the E.U., though, that could all change. When the U.K. does finally untangle itself from its E.U. member-state neighbors — a process that many are promising will be complete within two years — it’s likely to start requiring European citizens to clear the same visa hurdles as other foreign workers. Three-quarters of the 2.2 million people from other E.U. countries currently working in Britain wouldn’t make the cut, according to the Migration Observatory at Oxford University.

Migrants Take the Blame for UK Unemployment

The Leave campaign convinced a slim majority of U.K. citizens, 52%, that it has been too easy for “migrant workers” from Europe to waltz into the country and take British jobs.

Who would benefit from a Brexit? Not the EU. Source: Adobe Stock/Stephen Finn.

Now that the U.K. is officially leaving the European Union, what will happen to non-citizens with jobs on the island?  Source: Adobe Stock/Stephen Finn.

“We have absolutely no power to control the numbers who are coming with no job offers and no qualifications from the 28 E.U. countries,” former London Mayor Boris Johnson said in a speech before the vote. Read more

Almost no one seems to think this is a good idea, but the British people have gone and Brexited the European Union anyway.

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Britain has voted by a narrow majority 51.8/48.2 to leave the EU. What happens now is anyone’s guess. We are in uncharted territory, even those leading the charge for a Leave vote seem somewhat perplexed by the outcome and have been busy backtracking on promises and commitments made during the campaign about what they could deliver.

New Leadership

David Cameron, Britain’s prime minister, has announced he will step down before the conference season in October to make way for a new leader of the party’s choosing. The automatic assumption is this will be Boris Johnson with Michael Gove as Chancellor, but the party is deeply divided and a lot could happen between now and the Fall.

Screen Shot 2016-06-24 at 10.42.36

Source: BBC

In the meantime, the markets have taken the decision badly. The FTSE 250 — which is considered a close barometer of the UK economy — fell by 12.3% before paring losses back to 7.1%, while the pound tumbled to $1.30, before recovering slightly to $1.36 against the dollar. Read more

General Motors has released new advertisements for its Chevrolet Silverado truck line highlighting the difference between the “roll-formed, high-strength steel” bed of the Silverado and Ford Motor Company‘s F-150’s “military-grade aluminum” bed. This is a debate we’ve regularly chronicled here at MetalMiner.

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In one of the ads, two tests are performed on the competitor trucks’ payload beds without bedliners. First, a load of concrete cinder blocks is dumped from the hydraulic buckets of two waiting backhoes, a scenario that could conceivably be required of a truck used to pick up supplies for a construction site. While the Silverado suffers some dents and scratches, its bed is never punctured. The F-150, though? Several punctures, cracks and even a split are recorded in the video.

GM-youtube_Ford_F150_550_060716

The aluminum bed of a Ford F-150 after being punctured by a steel tool box dropped from the side of the truck in a new Chevrolet Silverado ad. Youtube image courtesy of GM.

Okay, so what? Some Ford partisans might say. Read more

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.

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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.

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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.

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“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.