Articles in Category: Automotive

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Before you head into the weekend, check out some of the stories that went up this week on MetalMiner:

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  • The London Metal Exchange (LME) is an institution steeped in tradition — but even the most tradition-rich entities have to change, eventually. Our Stuart Burns wrote about the LME and how it is changing (or, in some cases, staying the same).
  • The electric car industry continues to grow, but the move toward electric in China likely represents the biggest such move by a single nation to date.
  • Our Irene Martinez Canorea checked in on tin and other base metals. In short, many that boomed in August have come back down a bit this month.
  • Burns wrote about China Zhongwang and its ongoing efforts to build up its presence on the global stage.
  • The U.S. Department of Commerce opened countervailing duty and antidumping investigations into titanium sponge imports from Japan and Kazakhstan.
  • Meanwhile, the U.S. International Trade Commission, voted to uphold antidumping orders in a five-year sunset review related to CASSLP pipe from Japan and Romania.
  • The third round of North American Free Trade Agreement renegotiations kicks off tomorrow in Ottawa. United States Trade Representative Robert Lighthizer, during a question-and-answer session earlier this week, touched on the negotiations and what the U.S. is hoping to accomplish.
  • United Steelworkers issued a statement calling for the Trump administration to act vis-a-vis its ongoing Section 232 probe related to steel imports.
  • It’s been talked about for more than a year, but Tata Steel and Thyssenkrupp finally agreed to merge their European operations this week.

Free Download: The September 2017 MMI Report

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This afternoon in metals news, black cabs in London will be moving toward electric power, production of copper and steel is up in Kazakhstan, and Dr. Copper appears to be backsliding after its previously torrid pace.

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Electric Cabs?

Further adding momentum to the electric vehicle industry, black cabs in London will soon be powered by electricity.

Sapa SA’s aluminum plant in Wales will reopen this week and supply parts for automakers like London Electric Vehicle Co., the maker of black cabs, Bloomberg reported.

The move is part of the overall comeback for aluminum, which works in tandem with the rise of the electric vehicle, particularly the U.K.’s effort to phase out vehicles powered by fossil fuels by 2040.

Copper, Steel Output Up in Kazakhstan

Cooper and steel production have surged in Kazakhstan through the first seven months of the year, according to a Reuters report.

For January-August, copper production is up 5.5% and crude steel production is up 9.7% in Kazakhstan, according to Statistics Committee data.

Copper Price Begins to Slide

The metal often referred to as “Dr. Copper” boasted a healthy diagnosis as late as last month, when the metal hit a three-year high.

But political tensions on the Korean peninsula, among other things, have seen the metal’s price begin to backslide.

Free Download: The September 2017 MMI Report

The copper price has dipped 6% since Sept. 8, when President Donald Trump said the U.S. would not rule out a military option vis-a-vis North Korea’s latest nuclear test, according to Reuters.

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The announcement by the U.K. and France that they would prohibit the production of diesel and petrol cars by 2040 made for good headlines, but came as little surprise when you consider the pace of change in the automotive industry.

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China’s announcement last week that it was considering setting a timeline for phasing out traditional fuel cars will likely have a more profound effect on the development of new energy vehicles (NEV), for two reasons.

First, China is already the world’s largest car market, producing over 28 million vehicles in 2016, according to the Financial Times. Significant changes in a market of that size causes more than just ripples in the global automotive market.

Second, a centrally controlled command economy such as China’s has shown that policies that are robustly pursued by Beijing can achieve rapid change over short time frames. More than any other country in the world, with the possible exception of India, China has an imperative to address atmospheric pollution. The incentives in China to switch from traditional combustion engines to NEVs has already made China the world’s leading electric car market, with 507,000 NEVs sold domestically in 2016.

Beijing’s announcement, however, should not be seen as a purely altruistic move to improve the environment.

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The Automotive MMI jumped four points to 94, up from 90.

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Major price jumps in the basket of metals relevant to the automotive sector, particularly copper, paced a strong month for the sub-index.

LME copper jumped 6.8%, as the metal hit a three-year high in August. U.S. shredded scrap steel rose 4.5%, while U.S. hot-dip galvanized (HDG) steel jumped 1.1%. U.S. platinum and palladium bars also posted sizable price jumps.

U.S. Auto Sales

Auto sales in 2017 have trended downward, which hasn’t exactly been a surprise given the record sales figures posted in 2016. Sustaining last year’s sales totals would have been a tall task.

However, the news hasn’t been all bad.

According to Autodata Corp sales data released Sept. 1, General Motors had a good month, selling 275,326 units — a 7.4% increase from sales in August 2016. GM’s light truck sales carried the day, rising by 16.5% compared with August 2016. In the year to date, however, sales overall remain down by 2.4% compared with the same time frame last year.

Ford sold 209,029 units, down 2.1% compared with August 2016. Ford’s year-to-date sales are down 4% compared with the same time frame in 2016.

Fiat Chrysler posted a 10.6% drop in sales in August compared with the same month last year, and a 7.7% year-over-year decline.

Tesla, meanwhile, albeit in much smaller volumes, posted a 6.8% sales jump in August compared with August 2016, selling 227,625 units last month. Year-over-year, however, sales are down 1.3%.

Meanwhile, down the sales list, it continues to be a good year for Subaru (8.1% year-to-date increase) and Mitsubishi (5.4% year-to-date increase).

Automakers See Sales Growth in China

Meanwhile, automakers had a strong month in the massive Chinese market, continuing a solid multimonth sales run.

According to Reuters, GM’s sales in China were up 12% in August compared with August 2016, and its January-August sales (2.38 million vehicles) are up 0.3% compared with the same period last year.

August was also a good month for Toyota and and Honda. Honda’s August sales in China jumped 20.6% and Toyota’s jumped 13.2%, according to the report.

Impact of Hurricane Harvey

In addition to the large-scale humanitarian crisis inflicted by Hurricane Harvey in southeast Texas and southwest Louisiana, the storm also will have an impact on the automotive market.

As our Stuart Burns wrote earlier this week, many in the regions impacted by the storm will, eventually, need to replace their damaged vehicles — or, in some cases, some might be looking to go with models more capable of traversing through high levels of standing water.

Unfortunately, there is precedent for just this sort of sales spike on the heels of a natural disaster.

Burns wrote: “By way of a comparison, Reuters cites the experience of auto sales in New York following Hurricane Sandy in October 2012. The following month, auto sales rose 49% compared to the previous year, with all the replacement sales caused by the widespread flooding of the New York metropolitan area arising in the few months following the disaster.”

An uptick in sales in the Houston market, already one of the most robust auto markets in the country, is expected.

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Hurricane Harvey may have lashed Texas and Louisiana with 120 mph winds and record rainfall creating a disaster of near biblical proportions, but the Houston Automobile Dealers Association is already estimating the impact on the used car market.

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Quoted by CNBC, Stephen Wolf, chairman of the association, estimates that Harvey could have wrecked as many as half a million vehicles — resulting in, once the floodwaters recede and insurance companies pay out, a significant boost for the already robust used car market.

Houston alone is a top 10 market for new vehicle sales, according to Bloomberg, while the Houston metropolitan area ranks eighth nationwide in registered vehicles, with 5.6 million in operation prior to the storm. Bloomberg reports that more than 325,000 new vehicles were sold in the region during the last 12 months and as many as 130,000 new vehicles that were on dealer lots in the Houston area may have to be scrapped because of flood damage. Demand to replace dealers’ and owners’ lost vehicles would be a welcome boost to an industry that had seen its annualized selling rate drop to 16.4 million vehicles in August from 17.2 million a year earlier.

By way of a comparison, Reuters cites the experience of auto sales in New York following Hurricane Sandy in October 2012. The following month, auto sales rose 49% compared to the previous year, with all the replacement sales caused by the widespread flooding of the New York metropolitan area arising in the few months following the disaster.

Although all manufacturers could see an increase in demand for replacement vehicles, some brands are likely to benefit more than others.

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This morning in metals news, positive Chinese economic data means good things for metals found in steel, a former Alcoa aluminum plant site in Tennessee is being redeveloped for a new purpose and copper demand from electric carmakers is set to surge in a big way over the next two decades.

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China Industrial Outlook Offers Boost

Postive indicators for Chinese industrial activity are yielding good news for steel-related metals, according to Reuters.

The official Purchasing Managers’ Index (PMI) jumped to 51.7 in August (from 51.4 the previous month), according to the report.

Alcoa Redevelops Old Plant Site

A former Alcoa aluminum plant site will soon be used for a new purpose.

According to a Knoxville News Sentinel report, the former Alcoa West Plant site in Tennessee will be lined with retail and office space.

Copper Cars

Certain metals will see their stocks soar as electric cars build momentum.

One of those metals, according to a report in The Street, is copper.

Free Download: The August 2017 MMI Report

Quoting a Bloomberg Intelligence analyst, the report says demand from electric carmakers could grow 6,100% by 2040.

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This morning in metals news, August was a huge month for aluminum, zinc, and nickel; copper hit a three-year high on Thursday; and a South Korean company announced it will produce lithium-ion batteries with a greater percentage of nickel than before.

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An Anything But Dreary Month

August is typically a quiet month for many, as people take vacations before the end of the summer.

It was not a quiet month for metals, though.

In August, aluminum, zinc and nickel all posted significant price increases (10%, 12% and 15%, respectively).

Copper Hits Three-Year High

Copper kept rolling Thursday, hitting a peak not seen since 2014.

The metal thus closes a strong August  — during which its price rose 7.5% — on a record note.

From Cobalt to Nickel

As automakers look to meet growing demand for electric vehicles, some battery makers are turning to more nickel and less cobalt in the construction of lithium-ion batteries.

For South Korean company SK Innovation, that means using more nickel. The company announced Thursday that it has begun commercial production of batteries using an increased portion of nickel (as opposed to the expensive, and scarce, cobalt).

“The batteries will help extend a driving range of electric vehicles up to 500 kms, and we will also develop new batteries by 2020 that can provide a range of more than 700 kms,” Lee Jon-ha, principal researcher of the company’s battery R&D center, said in a statement quoted by Reuters.

Free Download: The August 2017 MMI Report

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The damage to brand is extending far beyond Volkswagen.

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The whole German car industry, once held up as the paradigm of quality and professionalism, is feeling the aftershocks of Volkswagen’s emissions testing deceit (popularly dubbed Dieselgate).

The challenge for the German auto industry is made all the more severe because of the industry’s reliance on the diesel engine.

According to a Financial Times article, Germany’s carmakers will upgrade 5.3 million diesel vehicles to reduce their harmful emissions as they scramble to save the country’s manufacturing image and the technology so badly tarnished by the Volkswagen test-rigging scandal.

The 5.3 million cars to be upgraded include 3.8 million Volkswagen vehicles — 2.5 million of which had already been recalled over the emissions issue.

Some 900,000 Daimler cars are involved, plus 300,000 BMWs, as well as a few Opel vehicles, the report states.

The urgency is compounded by reports that a number of German cities, fed up with high levels of air pollution, are contemplating driving bans on diesel vehicles — a move that would devastate the auto sector, the Financial Times reports.

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The Automotive MMI hit the gas in July, rising three points to 90, a 3.4% leap.

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The sub-index reached the 90-plus threshold for the first time since the February reading, when it jumped to 92.

Although automotive sales have fallen off the record pace seen in 2016, the basket of metals in this sub-index posted strong price gains throughout July. U.S. hot-dip galvanized (HDG) steel rose 1.3%, while U.S. platinum and palladium bars posted increases of 2.3% and 3.4%, respectively.

U.S. Automotive Sales Down From 2016 Figures

General Motors sales fell 15.5% in July compared with July 2016, according to Autodata Corp sales data released Tuesday. In the year to date, GM’s sales are down 3.9% compared with the same time frame in 2016.

GM is not the only automotive brand to see lagging U.S. sales this year.

Ford‘s July sales were down 7.4% in July compared with July 2016, and down 4.3% in the year to date compared with the same time frame in 2016. Fiat Chrysler sales were down 10.5% in July compared with July 2016, and 7.2% in the year to date.

Even Tesla, riding high off the hype from the forthcoming Model 3, saw its July sales fall 5.2% below its July 2016 figures. Even so, Tesla’s year-to-date sales are 34.7% higher than its sales for January-July 2016.

Honda also posted sales drops in July (1.2%) and in the year to date (0.2%). Volkswagen, still dealing with the PR quagmire of Dieselgate, saw its July sales fall 2.6%, although its sales are up 5.9% for the year to date.

Several automakers down the sales list did post sales jumps in July compared with July 2016. Subaru (6.9%), Toyota (3.6%) and Mitsubishi (1.7%) posted sales increases, while luxury vehicle brands Ferrari (20.7%) and Maserati (31.1%) also saw increases (albeit on relatively small volumes).

Meanwhile, in China, auto sales were up in June year-over-year by 4.6%, according to Reuters. In July, the Nikkei Asian Review reported surges in Chinese sales for Honda and Toyota. Riding a wave of interest in smaller models, Honda and Toyota year-over-year sales rose 11.6% and 11.4%, respectively.

Section 232 Hits the Brakes

The automotive market is just one industry sector that could be affected by trade measures that could come about as a result of the U.S. Department of Commerce’s Section 232 investigations into steel and aluminum imports.

Of course, those investigations have yet to reach a resolution.

Last week, President Donald Trump told the Wall Street Journal that “we don’t want to do it at this moment,” in reference to trade actions involving steel imports.

So, for now, that policy track seems to be stuck in park. With January deadlines for both the steel and aluminum investigations — per requirements set forth in Section 232 of the Trade Expansion Act — the steel and aluminum markets could remain in limbo for several additional months.

Feeling the Electricity

As electric car technology continues to advance, so, too, is consumer interest.

One model drawing consumer interest in the forthcoming Tesla Model 3. According to a report in CNNMoney, the Model 3, billed as a more affordable electric vehicle option, is garnering more than 1,800 net reservations each day. Tesla CEO Elon Musk told analysts Wednesday that the total reservations for the new model had reached around 455,000, including cancellations.

The base Model 3, without add-ons, is listed at $35,000 and has a range of 220 miles, according to the Tesla website.

Automated Transport Trucks On Hold

In addition to electric-powered vehicles, automation is also considered the wave of the future.

But what about automated trucks delivering goods across the highways of America?

According to a report in Material Handling & Logistics, that possibility might be a reality down the road, but not necessarily in the near future.

The report states that in a recent ABI Research survey, 44% of respondents were not aware of the use of automated vehicles for transport.

That doesn’t mean automation isn’t picking up steam overall. The study notes that 30% of all U.S. companies plan to incorporate robotics into their operations next year.

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Swedish carmaker Volvo is betting the farm on electric vehicles.

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In an announcement this week, Volvo cars said beginning in 2019, it will no longer launch new car models powered only by an internal combustion engine. According to the Financial Times, pure and electric hybrid cars will be the only game in town for the Swedish carmaker.

Following hot on the heels of Tesla’s launch of its most affordable mass-produced Model 3 — which, since March last year, has taken nearly 400,000 pre-orders, a remarkable vote of confidence in what has become one of the most exciting brands in the automotive industry — does Volvo’s announcement spell the end of the internal combustion engine?

Regardless of the headlines, Volvo is not turning its back on petroleum and diesel engines just yet.

Reading between the lines, the pledge is to launch five new models between 2019 and 2021, all of which will have petrol and diesel hybrid options, plus electric vehicle EV) versions, not five new models which are EV only. Although Volvo is owned by Chinese manufacturer Geely — and as such does not have to report to shareholders on a quarterly basis, giving greater flexibility to invest today for the longer term — the Swedish carmaker is still not saying it can achieve this on its own.

Rather, Volvo’s announcement is saying to the market it is seeking cooperation among battery manufacturers and infrastructure providers to provide solutions to the two biggest challenges EVs face: limited range and limited charging infrastructure.

The first challenge, range, requires continued massive investment in research and development to drive down battery costs and increase power density. The latter challenge requires a massive investment, not just in charging points, but also in configuring electricity grids to cope with demand if EVs achieve scale.

Volvo’s Chinese ownership probably influenced these strategic goals in another way.

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