Articles in Category: Automotive

In honor of Throwback Thursday, we are revisiting MetalMiner’s top 50 posts, including this one about one of the first vehicles designed specifically for emerging markets, the Renault Kwid. It’s become one of our most clicked and commented on since its publication last July. Happy #TBT!

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Priced at Rs 300,000 ($4,700) is it certainly pitched price-wise at the emerging markets and at first glance should prove popular in its first market, India, but also in other emerging markets in time such as Indonesia, Vietnam and others.

Emerging Auto Markets

The attractions are clear, all have massive populations, low per-capita car ownership markets with huge medium-to-long term potential. A Financial Times article explains that Renault had to start from the ground up in designing the Kwid to achieve such a low price.

They based the whole design team in Chennai, the city known as the Detroit of India – a first for a western car maker – using mostly Indian designers and sourcing Indian parts. The concept they say is frugal, innovation and required a completely new clean sheet approach.

Illustrating the problem, the FT quotes Navi Radjou, a management theorist in saying “companies don’t like to learn new things, to be blunt. They try to exploit their existing knowledge, not to rethink what they do from scratch.”

Why Automakers Miss

Western businesses see developing economies mostly as new markets where they can sell more of what they already produce. Those that try to come up with something new tend only to tweak existing offerings, which rarely works. GM and Volkswagen may well be cases in point, having poured millions into the market with limited success.

Even Indian firms get it wrong. Tata Motors‘ Nano was certainly cheap when it was introduced in 2009, but it flopped. Spurned, the article says, by rudimentary features and a poor safety record.

Screen Shot 2015-06-03 at 12.38.16

The Renault-Nissan Kwid, a crossover SUV that breaks the $5,000 barrier.

Renault’s design team has focused on what emerging market buyers place priority on, roomy interiors to accommodate large families, heavy duty air-conditioning to cope with summer temperatures and fancy navigation and media systems.

Read more

This is a Throwback Tuesday post from MetalMiner’s Top 50, updated with new information since it initially ran January 15, 2014. Hope you enjoy the first of many #tbt posts! This was the first of several posts about the new aluminum Ford F-150 that have since graced our pages.

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If there’s any reason at all to be anywhere near Detroit during Winter (believe me, I’m from the Metro D and can say such things with more than passing conviction), it’s to attend or be involved in the North American International Auto Show.

If it’s not sports, it’s cars, and at least the city keeps the lights on at the Cobo Center, where the latest designs are unveiled, human models awkwardly complement the exhibitions, and concept cars are the main attraction.

(It’s where I’ve spent many hours of my youth, to be followed by a Ride to Nowhere on the Detroit People Mover and coney dogs at Lafayette).

However, arguably, the biggest story from the Auto Show this year, although quite a concept, was not exactly a concept car – it was Ford’s all-aluminum F-150 truck.

How’d That Happen?

Apparently, after designing and building the new F-150, Ford “secretly” distributed the vehicles to a number of test subjects to see if their lightweighting efforts would hold up.

“The automaker was looking to test how lightweight aluminum alloys would hold up on the job, at a gold mine, an energy utility and a construction firm…What Ford learned from 300,000 total miles convinced the world’s biggest seller of full-size pickups to make wholesale changes to the F-Series,” writes Jerry Hirsch for the LA Times.

The new F-150 weighs 700 pounds less than the previous model, featuring an engine compartment, doors, hood, side panels, truck bed and tailgate all made of aluminum alloys. The way they’re marketing the featured material is by calling it “military-grade aluminum.”

Back to Car Wars: Aluminum vs. Steel 

So how do advanced high-strength steel (AHSS) producers – and the steel industry in general – respond to Ford’s move?

Read more

The Raw Steels MMI fell 5.9% to 48 points, the first time our index has ever fallen below 50 points and, of course, another all-time low.

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Steel prices continued to fall in October, stressing the risks of buying large quantities when prices look “cheap” while the market is in bearish mode.

Raw-Steels_Chart_November-2015_FNLAs with any other metal, China continues to be the main price driver. Chinese exports of finished steel keep rising. The latest figures showed a 27% increase on the year-to-date compared to the same period last year. Moreover, while exports keep increasing, production in the country hasn’t declined significantly, underscoring that the extra material is a direct result of weaker demand in China.

Declining Market-Based Production

Cheap Chinese imports combined with the glut of inventory explains the decline in US steel production. Capacity utilization fell to 71.3% in October. Adjusted year-to-date production through October is down 8% while capacity utilization is also significantly down from the same period last year. Capacity utilization remains persistently below 80% this year, hurting the revenues of American steel mills.

Not only domestically, but low prices continue to hurt steel manufacturers around the globe. In October, steelmaker Tata Steel announced 1,200 job cuts in the UK. The decision came only weeks after Sahaviria Steel Industries announced 2,200 job cuts due to the closure of one of its facilities. It is estimated that less than 50% of global steelmakers are profitable at current levels. High-cost mill closures have already taken place, but they are minimal in the context of overall capacity.

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Other than the oversupply, and the continuous lack of demand, production costs are also helping bring prices down. In October, crude oil was unable to rise, remaining below $50/barrel for the third consecutive month. In addition, iron ore prices remain at low levels and capacity expansions won’t likely help to push iron ore prices up. Total iron ore supply is estimated to increase by 105 million metric tons in 2015 with more to come in the following years, with some analysts calling for iron ore prices below $40/ metric ton next year.

What This Means For Metal Buyers

Steel prices are at very low levels but that doesn’t mean that we’ve hit bottom. Other than lower production costs, steelmakers keep producing in order to avoid job destruction and giving away market share. Hopes that demand improvements will help prices might never become a reality. Prices might have to drop further down until forcing a tide of closures.

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The battle lines are being drawn. On one side are ranged automotive giants Toyota, Honda and Hyundai pouring billions into hydrogen fuel cells (FCEV), on the other are new upstarts like Tesla and established automotive firms like Nissan committed to the Electric Vehicle (EV) market.

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A bit like the Sony Betamax versus the JVC VHS video cassette recording formats in the ’70s — or Sony and Blu-Ray vs. Toshiba and HD-DVD more recently — the outcome of this monumental tussle will have far reaching ramifications for the industry and the competition will drive innovation and automotive advancement to the benefit of us all.

Unlike Beta/VHS where competing technologies hit the market at more or less the same time, EV has a clear head start on FCEV but like the video cassette market it may be the eventual winner if it is due to the quality of the product as much as the longevity of the experience. With video cassettes, Beta was generally reckoned to offer a better picture quality, in part because it recorded at a higher tape speed, yet its eventual failure had more to do with the fact Beta 1 only lasted 60 minutes compared to VHS’s 120 minutes. That’s the reason Beta is still used today in television production long after it ceded the home video market to VHS. Read more

It was a big week for government regulatory bodies here at MetalMiner.

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States 1, EPA 0

Things got started Monday when the Sixth Circuit Court of Appeals stayed the Environmental Protection Agency’s new controversial Waters of the US rule in all 50 states. EPA has been accused over overstepping its authority to regulate new bodies of water and 16 states have already challenged the new water rules in court. The circuit court’s action extends a stay on the rules in those states to the entire nation.


While Back to the Future day is over, our producers would like to go back to the days when cheap imports weren’t killing their markets.

The National Association of Manufacturers called it a “tremendous victory,” as the rule would put manufacturers on the hook to get permits for storm drains, manmade ponds and other “waters.” Good luck in court, EPA. You’re going to need it. Expect more skirmishes like this in the months ahead before the full court decides on the legality of the law.

Speaking of Waters, Alcoa Owns a Riverbed

That’s right, not only is Alcoa, Inc., a huge primary aluminum smelter, and an added-value services provider but it’s also in the hydroelectric power business!

In another case of a court saying “not yours, government,” the state of North Carolina was on the receiving end of the legal smackdown as Alcoa successfully argued it owns the bottom of the Yadkin River, where the aluminum giant was attempting to renew its federal hydroelectric license.

Alcoa had a smelter along the river in Badin, North Carolina for decades before they closed it in 2010. Hydroelectric dams on the river fueled its operations. Since then, Alcoa has taken the power the dams generated and sold it on the wholesale market as Alcoa Power Generating, Inc. Read more


Get your long-term price outlook for copper!

Copper has been in steady decline since 2011, and so we have to remain bearish on the metal heading into 2016. But there are still several factors to keep in mind that could play a role in copper’s potential price recovery, including China’s economic recovery and their manufacturing and construction projects planned for the year ahead.

We’ve identified the main price drivers for copper next year as:

1. China GDP & PMI Data

2. China export volumes

3. Dollar to Euro exchange rate

4. Automotive and construction growth

For a long-term industrial buying strategy for copper, complete with specific support and resistance levels, download your complimentary copy of our 2016 Annual Metals Outlook report!

This report also includes commodities markets and industrial metals market analysis, in addition to key price drivers and commentary on aluminum, nickel, lead, zinc, tin and various forms of steel, in addition to copper.

MetalMiner has long reported on product developments within the metals industry. Years ago, (okay, we’re not that old, 7 years ago), my colleague Stuart Burns discussed several types of rare earth extraction processes that would enable rare earths recycling.

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At the time, all 3 processes lacked commercial viability for several reasons – typically because of cost or not yielding pure metals on the back end or both.


Marion Emmert and her team at Worcester Polytechnic Institute have come up with a new way to extract rare earth elements for recycling. Source: WPI

Today, a team of researchers at Worcester Polytechnic Institute may have developed both a technically viable means for recycling rare earths – specifically neodymium, dysprosium and praseodymium from the drive units and motors of discarded electric and hybrid cars – as well as a commercially viable one. Read more

AluminumSmelter_565In response to the bearish aluminum market, perhaps the most drastic action to date has been taken wby Alcoa Inc., reporting it will split in 2 in an effort to isolate the company’s profitable aspects from its aluminum smelting operations.

Aluminum prices have been hit hard by the economic crisis in China, a major consumer of the metal. Add to that China’s own manufacturing of aluminum leading to a surplus, which needs to be traded off, causing a further depressed market and you have a perfect storm that is causing companies like Alcoa to take such drastic measures.

Want a short- and medium-term buying outlook for aluminum, copper, tin, lead, zinc, nickel and several forms of steel? Subscribe to our monthly buying outlook reports!

Alcoa isn’t the only company to break up into smaller units, and it is doing so with the expectation that narrowing its focus will lead to a better end result. This will not be without its own set of challenges, however, as Alcoa’s smelters will have to pass on raw aluminum price changes to its customers and will continue to suffer as prices do.

“That’s still their biggest problem,” Bill Selesky of Argus Research told The Wall Street Journal. “If prices continue to suffer, they’ll just have to keep closing smelters.”

Automotive MMI Impacted by Low Prices

We recently reported on the far-reaching effects the bearish aluminum market has had on the automotive market. The automotive MMI continues to fall despite surging supply and demand in the US. Low steel and aluminum prices, compounded by weakening supply and demand overseas, have made their mark on the automotive industry.

You can find a more in-depth aluminum price forecast and outlook in our brand new Monthly Metal Buying Outlook report. For a short- and long-term buying strategy with specific price thresholds:

The Automotive MMI fell again in October, inching down 1.4% from its previous all-time low of 73.

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It’s more of the same for an automotive metals market that, while strong on both the supply and demand sides here in the US, is being dragged down by falling demand in other large markets. Automotive specialty metals have been cited as the savior and the future demand driver for many a steel or aluminum company in this bear market.

Automotive_Chart_October-2015_FNLGerdau is practically staking its entire Indian business on it. Aerospace and automotive are also regularly cited as the growth markets for stainless and aluminum overseas, too. The aluminum-bodied Ford F-150 continues to be the darling of the US automotive market with its lighter corporate average fuel economy (CAFE) load and its Denis Leary commercials about “military-grade” aluminum. Even the Super Duty is getting in on aluminum. The emerging markets were on the aluminum train before Ford was, too, and that trend is only growing.

US, European Auto Sales

So, what gives?

In September, US vehicle sales topped a SAAR (seasonally adjusted annual rate) of 18 million vehicles. Leading automakers reported the healthy year-over-year increase in sales number thanks, in part, to big gains over the Labor Day holiday weekend.

It wasn’t just us yanks buying cars constructed cold from specialty metals, either. The Czech Republic will report its highest car sales ever this year. The Volkswagen scandal might be hurting platinum prices but it’s clearly not denting overall vehicle sales, even in Europe where the scandal hits close to home with more diesel cars on the road.

VW has a market share of around 48% in the Czech Republic, a country of roughly 10.5 million people, with the company’s domestic maker Skoda Auto the top seller.

Chinese Demand Collapses

The fly in the automotive metals ointment is demand in China. Like steel, aluminum and other markets, the economic collapse in China has eroded what was once healthy automotive – and automotive metal – demand there.

The urbanization that economists counted on to fuel more Chinese car purchases went away with housing demand there, as well as the un-manipulated renminbi. Beijing is looking entirely to exports now (hence the purposeful devaluation) to pull its economy out of the doldrums, and isn’t even trying to goose those domestic markets much.

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Sad to say, but no matter how strong the US or European automotive markets are, they can’t make up for the loss of Chinese demand, which numbers sales (and people) in the neighborhood of a billion. That’s one of the reasons so many steel companies are looking to India, with its large population, to make up for that demand. The problem there is India’s urbanization isn’t as far along as China’s was. Still, automakers and steel companies such as Gerdau are digging in there for the long haul. Here’s to hoping it’s not as long as some predict.

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The monthly Raw Steels MMI® registered a value of 51 in October, a decrease of 1.9% from 52 in September.

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Even though the 1.9% decline is not very big, we keep seeing sharp declines among steel products. A recent example was plate prices in the US, one of the steel products featured in our monthly forecast. Toward the end of the month, plate fell from $561 per short ton to $519/st. That’s a 10% decline in only one week.

Raw-Steels_Chart_October-2015_FNLSharp declines are par for the course in our current bear market. Over the past few years, placing forward buys has only served to reduce profit margins, not to manage risk. It is critical to understand the market we are in, because different buying strategies work for different markets.

Foreign markets have provided a home for the glut of steel that the oversupplied Chinese market has created with its overcapacity and weak demand. Chinese exports continue to grow year-over-year. In September, the vice-chairman of the China Iron Steel Association (CISA) said that they expect Chinese steel product exports to exceed 100 million metric tons this year. So far, during the first 8 months, product exports reached 71.87 mmt, up 26.5% compared to the same period in 2014.

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Solid automotive and construction data simply don’t make up for the slowdown in the same sectors in China. On top of that, we have a steel production cost declining thanks to lower oil, scrap and iron ore costs. In September crude oil fell again, remaining below $50 a barrel. Similarly, iron ore prices remained at low levels in September, below $55/mt.

What This Means For Metal Buyers

Based on the latest numbers, Chinese automotive, construction and manufacturing activity keep pointing down. As long as we don’t see improvements in China, more steel price declines might be around the corner. It seems like the time to start buying forward hasn’t come yet.

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