Articles in Category: Automotive

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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U.S. Automakers sales numbers were down substantially in August, not that a drop wasn’t wholly unexpected — the industry has been growing strongly in recent years and at some stage was bound to peak — but the scale of the drop was enough to make the market sit up and notice.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

According to the FT, Ford’s drop was the first to report, down 8% year-on-year for the month of August to 214,482, GM was down 5% to 256,429 vehicles and Volkswagen, possibly suffering from the emissions scandal, was hit the most down 9.1% to 29,384 vehicles. Of the majors only Fiat Chrysler bucked the trend, buoyed by a strong line up of SUVs to post a 3% increase to 197,000. Read more

Apart from lithium consumption and aluminum for light-weighting, it is unusual for the hybrid car market to cross paths with metals consumption stories but a recent article in the Economist details a technological development in the automotive industry that will be of interest to both.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

To anyone of even a mildly geeky nature, the Economist makes interesting reading drawing on history, new developments and the future path of electrical automotive technology. In brief, the issue is car voltage.

AdobeStock_ joel_420_electric_car_550_042016

Electric cars and hybrids are touted for their fuel capabilities, but the ability to optimize energy use in operation might be their real killer app. Source: AdobeStock_/joel 420.

Historically, cars started with six-volt systems but in the ’50’s — as vehicle’ electrical systems increased in complexity — the voltage was increased to 12-volt to cope with more onboard appliances, electric starters and so on. Well few things stand still in the automotive market and in spite of acute cost pressures, designers are starting to introduce 48-volt systems and are hoping, as adoption picks up, costs will come down.

What Are Those Extra Volts For?

First, what is driving it? Well, as the Economist explains, one reason is that cars are packed with more and more components, demanding more and more electrical power. A modern vehicle may have as many as 150 electric motors and new features like stop-start technology. These are putting strain on car systems, particularly those with high-compression diesel engines. Read more

In the largest foray by a Chinese company into the U.S. aluminum market since the financial crisis, Zhongwang USA LLC said this week that it would buy U.S. aluminum company Aleris in a $2.33 billion deal, expected to close Q1 2017.

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Zhongwang USA is owned by Liu Zhongtian through his Chinese group Zhongwang International Group Ltd. but he is also the founder of Asia’s second-biggest extruder, Hong Kong-listed aluminum products maker China Zhongwang, a firm embroiled in anti-dumping cases in the U.S. Liu has been angling to get a toe in the U.S. market for some time, there was talk of a $120 million aluminum casting plant in Barstow, Calif., as part of an earlier attempt to get into the U.S. but it came to nothing in the end.

Automotive Demand

Zhongwang is making a bet on the growing automotive aluminum sheet market, being a substantial manufacturer of automotive extrusions in China and recently building a rolling mill for automotive sheet to service the Chinese automotive body market. Read more

Apparently, when the government is a shareholder in your business. Questions are being raised as to why the French government has gone soft on Renault‘s emissions probe, omitting crucial details a Financial Times article states.

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The government report, published last month, concluded that some Renault models emitted nitrogen oxide at nine to 11 times higher than European Union limits, the article states. But three of the 17 members of the commission said that the published report did not include the full details of their findings, including the fact that a NOx “trap” in the Renault Captur went into overdrive when the sport-utility vehicle was prepared for emissions testing but not during normal driving conditions.

It was similar software that induced changes in behavior that tipped off U.S. authorities investigating Volkswagen “defeat devices” last year.

Apparently, Renault was not the only manufacturer to fare badly in the probe, which covered some 86 vehicles from a dozen automakers; yet the report did not find any cases of intentional attempts to cheat emissions, admitting that the government tries to give a positive brand image to firms it was invested in and hoped to push manufacturers in the right direction rather than seek prosecution.

One wonders what their attitude would be if it were Toyota or General Motors found to be posting erroneous data? The same article said the Fiat 500x registered NOx emissions almost 17 times European Union limits.

In Renault’s case, the Captur’s NOx trap purged five times in rapid succession at the end of scripted test preparations, allowing the car to produce much lower emissions than on the road the article explained, suggesting the car’s software could have detected that a test was being performed.

“Everything in a car is controlled by software now,” one commission member said, many of whom asked to remain anonymous. “We can’t be sure that Renault’s software detected the test like Volkswagen’s, but it seems that Renault has optimized the NOx filter to target this very specific set of conditions.”

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It would seem it may well have benefited Renault to have both the judge and jury in the dock with you, but does it benefit the wider community the government was elected to represent? This story, no doubt, has further to run.

The decision to set up a modern, state-of-the-art auto shredding/recycling plant in India could not have come at a more opportune time. Many Indian provinces, led by New Delhi, are starting to come around to the view that older vehicles, especially those running on diesel, need to be banned.

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Older cars pollute more than the ones that adhere to the India’s latest “Bharat Stage” (pollution control) norms. The Mahindra/MSTC joint-venture is also planned to be able to scrap ships and machines.

India’s National Green Tribunal (NGT) recently asked the New Delhi local government to deregister diesel cars 10 years or older. That’s a large chunk of the approx. 8.5 million cars registered in New Delhi, which would end up being either sold outside New Delhi or totally scrapped.

The number of cars sold in India was expected to grow from 2.2 million vehicles back in 2010 to 10.6 million units by 2020. At present, about 28 million vehicles are said to be over 15 years old and ready for the scrap heap.

India’s Cash for Clunkers

The Indian Government was actively contemplating better policies in the organized and mandatory vehicle recycling business when this project came along. India had the potential to become one of largest car recycling regions, according to SteelMint Events, and the rise of recycling-friendly legislation was one of the topics to be discussed at the Scrap Recycling – Emerging Markets conference to be held in September in New Delhi.

The vehicle scrapping policy is formalized in legislation as the Voluntary Vehicle Fleet Modernization Plan (V-VMP). The bill is currently in its draft stage but, when passed, it would apply to all vehicles, regardless of engine type, bought on or before March 31, 2005. The Ministry of Road Transport and Highways (MoRTH) submitted the draft policy to the Ministry of Finance for approval. The government also recently proposed offering consumers an incentive of $375 for any passenger car handed in for scrapping to boost recycling rates.

When the policy is implemented, analysts predict about 28 million older, polluting vehicles will be taken off the roads. So, while automakers moan the NGT’s order on diesel cars in the short term, in the long-term, companies such as Maruti Suzuki India Ltd. are very happy that the policy means sales of more cars.

Maruti Suzuki India Ltd. is India’s largest car maker. It believes the local car market will reach 5 million units in annual sales by 2020, making the country the fourth-largest market in the world, if the V-VMP is passed.

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The automaker’s forecast is in line with the central government’s Auto Mission Plan II that forecasts the passenger vehicle (PV) market to more than triple to 9.4 million units by 2026 from 2.8 million now if the economy grows at an average rate of 5.8% a year. If the economy grows at an average yearly pace of 7.5%, the size of the passenger vehicle market is forecast to rise to 13.4 million units, making it the world’s second-largest after China.

The boost that the Automotive MMI recently felt from platinum and palladium continues as automotive catalyst prices continued to post strong increases, bolstering our sub-index to a 3% increase.

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Yet, end user automotive sales are starting to show signs of plateauing after years of increases. Sales for the top three automakers selling in the U.S. increased, but slipped off their record pace in July as the strong growth rate that defined the past six years slowed to a crawl.

Automotive_Chart_Aug-2016_FNL

Declines at General Motors Co., Ford Motor Co. and Toyota Motor Corp. overshadowed increases by smaller rivals, including Nissan Motor Co. and Honda Motor Co. Sales were on pace to set another record this year but that’s in serious doubt after this report.

Analysts say sales incentives and fleet sales need to play a bigger role in the market to get back on that record pace. Overall sales increased modestly in July, rising 0.7% to 1.52 million, according to research firm Autodata Corp., translating to a seasonally adjusted annualized selling pace of 17.9 million.

While higher than the prior July, the adjusted sales pace has leveled off compared with the sizable year-over-year increases from 2015’s final six months, which drove the U.S. light-vehicle market last year to its first record in a decade and a half.

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Meanwhile, prices of automotive metals are still being buoyed by the bull run in precious metals. Catalysts are no exception and platinum and palladium prices posted strong increases while offsetting losses by other automotive metals, such as hot-dipped galvanized steel. With no sign of an increase in interest rates from the Federal Reserve anytime soon, expect the calalyst metals — and gold and silver — to continue increasing.

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A major merger in green power and automobile manufacturing saw Elon Musk’s Tesla Motors buy his other green company, panel manufacturer SolarCity. Japanese steelmakers increased output for the first time since 2014.

Tesla to Buy SolarCity

Tesla Motors said it will buy solar panel installer SolarCity for $2.6 billion in shares to form a one-stop clean energy shop.

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The deal is a major part of Tesla Chief Executive Elon Musk’s master plan “part deux” that calls for the company to offer consumers a single source of hardware to power a low-carbon lifestyle. Musk is also a major shareholder in SolarCity. The combined entity will offer consumers solar panels, home battery storage systems and electric cars under a single brand.

The actual purchase price in the all-stock deal is $25.83 a share for Tesla to buy SolarCity’s stock. SolarCity actually closed at $26/share on Friday.

Japan’s Top Steelmakers Boost Output

Japanese steelmakers boosted output over April to June, with top producer Nippon Steel & Sumitomo Metal posting its first such increase since 2014 on improved prices, but their annual profits are expected to be eroded as a firm yen hurts key customers.

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Higher Japanese output, at a time when the world’s biggest producer China is also churning out record volumes, could dent a recovery in Shanghai steel futures that have risen 40%t in 2016 after plunging 70% over the past six years on a global supply glut.

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