Articles in Category: Automotive

Back in 2014, MetalMiner posted a series of articles under the collective title of “Car Wars” covering a number of related issues around the use of steel, aluminum, and composite materials in the construction of automobiles.

Benchmark Your Automotive Metal Price by Grade, Shape and Alloy: See How it Stacks Up

A particularly perceptive post by my colleague Lisa Reisman countered the belief that aluminum would be the material of the future for automobile construction by exploring the development of advanced high-strength steels (AHSS) and their emerging impact on the combined holy grail of weight reduction and greater structural strength.

Three years is a long time in automobile design and manufacturing, so it’s not before time that we have returned to the topic to review the extent to which AHSS grades have been adopted by the industry. I was fortunate in gaining the insight of Dr. Jody Hall, automotive vice president of the Steel Market Development Institute (SMDI) during which Hall shared some of the latest statistics illustrating the extent to which, aided by relentless innovation and research, steel remains the material of choice for automotive construction.

Auto materials through the years

Source: SMDI

This chart, from a recent SMDI presentation illustrates how even by the industry’s optimistic projections back in 2010 the uptake of these new grades of high-strength steel have been even more rapid than anticipated.

Why Aluminum?

Although there are a host of reasons why an automotive designer may choose AHSS over aluminum, the two principal drivers have been safety and light-waiting. Read more

U.S. automakers’ sales figures for March came in below market expectations and gave early evidence that America’s long boom cycle for automotive sales may finally be losing steam. Automakers sold 1.56 million new cars and trucks in March, a 1.6% decline compared with the same month a year ago.

Ford Motor Company took the biggest hit among sales drops, seeing its March numbers fall more than 7% from February’s.

Industry consultant Autodata put industry Seasonally Adjusted Annual Rate at 16.62 million cars, trucks and SUVs for March.

That was below the 17.3 million analysts polled by Reuters had expected, and the first time since August that the SAAR – a crucial industry metric – had fallen below 17 million.

General Motors had the best month, reporting a 2% increase in sales to just over 256,000 vehicles, with sales of its Tahoe and Suburban SUV models seeing their best sales month since 2008.

Sales at Ford Motor Co. fell the aforementioned 7+% to 236,000 vehicles, with fleet sales to rental agencies, businesses and government entities down nearly 17% on the year. Sales of Ford’s F-Series pickup trucks rose 10% but that simply could not offset the losses elsewhere. Sales at Fiat-Chrysler Automobiles fell 5% in March. Automotive sales in the U.S. risen since end of the 2008 recession and hit a record last year of 17.55 million last year. Toyota Motor Corp. and Honda Motor Co. reported smaller losses.

The fall in new car sales is even more curious considering that consumer confidence is at its highest level since 2000. Could the level of vehicle replacement that had driven sales since 2008 finally be falling? Vehicle inventories at dealerships have risen to the highest point since 2004, according to Edmunds.com.

If auto sales have, indeed, plateaued, then prices for automotive steel and aluminum could as well, at least in the expansive U.S. market. Our Automotive MMI remained flat this month at 88.

For full access to this MetalMiner membership content:
Log In |

Ford Motor Company will invest $1 billion to upgrade and expand capacity at two assembly plants and $200 million to build a data center in Michigan. President Trump praised the move, which was part of a 2015 negotiation between the company and the auto union.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

The investments represent two strategies going forward: a traditional game plan that looks to create new models of high-demand trucks and SUVs; and a more forward-looking investment in the self-driving and connected vehicles that Ford and other companies are betting will drive the future.

Oil Traders Expect OPEC Cuts to Continue

Major oil traders gathered in Switzerland this week said they expected Organization of Petroleum Exporting Countries and non-OPEC producer-nations to extend their pact to curb output in the second half of this year, providing that main non-OPEC producer-nation Russia complies.

Two-Month Trial: Metal Buying Outlook

“I think the surprise so far this year is how quickly shale came back on a relatively modest price rebound,” Gunvor CEO Torbjorn Tornqvist told a panel at the FT Commodities Global Summit in Lausanne.

Two requests for proposals were released yesterday by Customs and Border Protection for the planned border wall between the U.S. and Mexico along the southern border in several states.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

New descriptions in the RFPs include this language: “CBP seeks highly qualified Contractors to assist in the development of a new border wall design standard as well as construct border wall and supporting tactical infrastructure/technology along the southwest border. CBP seeks highly qualified Contractors to propose a reinforced solid concrete wall that meets or exceeds CBP’s performance requirements. The proposed prototype designs shall not include the use of proprietary design or equipment. CBP plans to enter into multiple-award, indefinite-delivery, indefinite-quantity (IDIQ), task order contracts for Border Wall Design/Build Construction. The IDIQ may include various, simultaneous task orders ranging from $100,000 up to $275,000,000 per task order.

“CBP anticipates awarding IDIQ contracts to multiple Contractors. All selected Contractors will be awarded one (1) task order to construct its proposed prototype.”

The RFP goes on to state that “the prototypes will inform future design standard(s) which will likely continue to evolve to meet USBP’s requirements. Any and all prototypes will be designed to deter illegal entry into the United States. Through the prototyping process, CBP may identify new designs or influences for new designs that will expand the current border barrier toolkit that CBP will use to construct a border wall system. The border barrier toolkit is based on USBP’s requirements.”

Steel Industry Supports Revisiting Auto Emissions Standards

The American Iron and Steel Institute, the largest trade body representing the steel industry,  issued a statement in reaction to the Trump administration’s recent announcement that it is re-examining fuel-economy standards set by the Obama administration for 2022-2025 model year light-duty vehicles.

Two-Month Trial: Metal Buying Outlook

“AISI is pleased the administration has withdrawn the final determination of the EPA Light Duty Vehicle Emission Standards issued in January,” Thomas J. Gibson, president and CEO of AISI said in the statement. “As a key materials solutions provider, we look forward to a dialogue between EPA, National Highway Traffic Safety Administration, California Air Resources Board, auto manufacturers and other relevant stakeholders on the Mid-Term Evaluation. The steel industry is making investments in new grades of lightweight, high-strength steels to assist our automotive customers in reducing emissions and improving fuel economy performance.  We are confident that getting the partnership between the government and stakeholders back on track will result in a plan for the future which protects the environment by establishing a common sense, implementable single national program for CAFE and GHG standards.”

For off-road cognoscenti, there are few automobiles more iconic than Jaguar Land Rover’s Defender. Since its introduction in 1948, the rugged old workhorse has earned a reputation for go anywhere capability and durability as an article in the FT notes.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

The Defender’s engineering simplicity meant that the car could be repaired in the middle of the desert with the sparsest of resources and spare parts. But that rugged simplicity also led to its downfall. The SUV’s body-on-frame construction meant that it failed to meet modern safety crash tests and the engine just polluted the air too much to meet European emission rules. JLR consequently halted Defender production last year to the anguish of its diehard fans.

Land Rover Defender. Source: Autoexpress

Well, it would seem JLR has aspirations for a comeback. According to the FT, the group expect to relaunch the Defender in 2019 and its design group is working furiously to reconcept a new vehicle that meets modern environmental and safety standards, requiring a complete redesign from the ground up of the old Defender.

Aluminum Everywhere

It would be inconceivable if the new Defender was less capable than the old, a betrayal of that once iconic brand and, by all accounts, JLR has no intention of letting them down. Like the old Defender, a new version will employ considerable use of aluminum in the body, but unlike the old steel chassis will have an entirely new aluminum frame construction. Read more

The leaders of the Environmental Protection Agency and Department of Transportation said today that they will revisit Obama-era corporate average fuel economy standards on greenhouse gas emissions for 2022 to 2025 model cars and light trucks, a win for automakers that said the standards were too tough to meet.

Benchmark Your Automotive Steel Price by Grade, Shape and Alloy: See How it Stacks Up

President Donald Trump, speaking at the American Center for Mobility in Ypsilanti, Mich., went even further saying his administration would cancel Obama’s executive order establishing the standards outright.

“Today I am announcing we are going to cancel that executive action,” President Trump said. “We are going to restore the originally scheduled midterm review and we are going to ensure any regulations we have protect and defend your jobs, your factories. We’re going to be fair.”

The American Iron & Steel Institute, the largest industry association of steelmakers, which count themselves as important members of the automotive supply chain, praised the action.

“AISI is pleased the Administration has withdrawn the final determination of the EPA Light Duty Vehicle Emission Standards issued in January,” said Thomas J. Gibson, president and CEO of AISI in a statement. “As a key materials solutions provider, we look forward to a dialogue between EPA, National Highway Traffic Safety Administration, California Air Resources Board, auto manufacturers and other relevant stakeholders on the mid-term evaluation.”

The CARB’s inclusion is notable as California has said it will go forward with state emissions standards that are more stringent than the federal government’s, no matter if the federal CAFE standards are changed or not.

Federal Reserve Raises Interest Rates

For the first time this year, the Federal Reserve raised interest rates one quarter point to a range of .75% to 1%, a widely expected move following strengthening economic reports and signals from Fed officials.

After its two-day policy meeting, the Federal Open Market Committee voted to raise the range of the federal funds rate to 0.75% and 1.00%, citing progress in labor market growth, business fixed investment and inflation.

Two-Month Trial: Metal Buying Outlook

“In view of realized and expected labor market conditions and inflation, the Committee decided to raise…the fed funds rate,” the central bank wrote in its statement.

One member of the committee, Minneapolis Fed President Neel Kashkari, voted against the decision, preferring to keep the federal funds rate between 0.50% to 0.75%. Kashkari is a new voting member of the FOMC this year.

Automakers sold 1.33 million vehicles in the U.S. in February, down 1.1% from the same month a year ago, as consumers continued to shift away from buying cars in favor of trucks and SUVs.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Our Automotive MMI fell 4.3% as well, due in part to a pull back this month in steel prices, particularly the hot-dipped galvanized variety. There’s been plenty of analysis on our site about whether the steel price fall is merely a pause in an overall up trend or a sign of deeper issues in the individual North American product markets.

Automotive MMI

If major automotive products such as cold-rolled coil and HDG are, indeed, being squeezed then prices could increase quickly in the coming months as mills take advantage of short supply, even if more capacity comes online later in the year.

Two-Month Trial: Metal Buying Outlook

The other products that make up the index are still firmly in bull market territory with copper leading the way.

The other major automotive consumer market that creates supplier demand is China’s, the world’s largest automotive market. It saw auto sales decline by 1.1% year-on-year in January to 2.2 million units. Total vehicle sales, including trucks and buses, however, came in 0.2% higher year-on-year to 2.5 million units. Some of these numbers could be affected by the Lunar New Year holiday. China is also entering the planned final year of a major government automotive purchase rebate which could affect sales as the incentive winds down.

Actual Automotive Metal Prices

U.S. Hot-dipped galvanized steel fell 1.5% from $841 a short ton in February to $828/st this month. U.S. Platinum bars increased 2.92% from $993 an ounce in February to $1,022 an ounce this month. Primary three-month LME copper increased .08% from $5,930 per metric ton in February to $5.935/mt this month.

For full access to this MetalMiner membership content:
Log In |

The surprise announcement that PSA, holding company for the Peugeot, Citroën and DS brands, is in talks with General Motors to acquire GM’s European Opel and Vauxhall brands has set the cat among the pigeons in European capitals.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

One of the first justifications for any major merger or takeover is the opportunity for cost reduction from economies of scale and consolidation. PSA’s interest in the Opel/Vauxhall brands has some logic to it.

Constructeur Automobile Mondial?

Acquiring the brands would catapult PSA into the major league, closer to Volkswagen and Fiat in terms of automobile sales volume. Not surprisingly, the French publication Le Monde was one of the first to cover the story in depth (site est en francais, mes amis). As the newspaper explains, for GM, Opel and Vauxhall make up only 12% of the company’s production of roughly 12 million vehicles a year, but for PSA an additional 1.2 million units on top of the existing 1.9 million should create considerable opportunity for economies of scale, at least in the European market where PSA currently sells 1.9 million vehicles out of a total production of 3.1 million worldwide.

Will a deal selling Opel/Vauxhall to Peugeot mean more 308s? Source: Adobe Stock/mrivserg.

The worry in European capitals, though, is that those economies will be achieved by closing production facilities. With PSA 14% owned by the French government and Opel a major employer in Germany, the telephone lines between Paris and Berlin have no doubt been humming seeking reassurances that if European approval is to be given, no job losses will result in Germany or France. Read more

Our Automotive MMI took off in February, surging 12.2% along with strong gains in steel prices and all of the base metals in the automotive index saw gains in the first full month of 2017.

Hot-dipped galvanized steel was a particularly strong performer along with the catalyst metals, palladium and platinum. The tough talk about U.S. automotive production that President Donald Trump started during the campaign has only ramped up since his inauguration. Automakers could have to significantly alter their purchasing and supply chains if a border tax is enacted.

House Republican leaders have proposed what they call a “border-adjusted tax,” which would place a levy on vehicles imported into the U.S. and fully exempt those exported. Though Trump initially deemed the idea too complicated, White House Press Secretary Sean Spicer recently said it was under consideration and could help pay for a wall along the Mexico border.

An overhaul of the U.S. tax system could hand an advantage to Ford Motor Company, Honda America and General Motors, which rely the least on imported vehicles among the major automakers. The shake-up, if it is a border-adjusted tax, would clearly undermine Toyota America, which relies on shipments of RAV4 sport utility vehicles from Canada and Lexus luxury models from Japan, and deliver an even more damaging blow to companies with zero domestic production, including Mazda Motor Corp.

“The border adjustment piece of this is very intriguing for us,” Ford Chief Executive Officer Mark Fields told analysts after posting a $10.4 billion pretax profit for 2016. “The reason for that is we are the largest producer of vehicles here in the U.S. We’re a top exporter.”

About 79% of Ford’s domestic vehicle sales were built at home last year, according to researcher LMC Automotive, second only to the much smaller electric-car maker Tesla Motors. Honda ranks just behind Tesla and Ford, with 68% of its U.S. sales coming from domestic plants, followed by GM with 65%.

If the first weeks of the Trump administration are any indication, though, initial action on a tax plan could happen quickly via executive order and the lengthy process of legislation could be a post-executive order action plan.

January is typically the weakest month of the year for U.S. auto sales, and last month appeared to be no exception. Sales fell 2% to 1.1 million, according to Autodata Corp. Supply chain executives are clearly more worried about supply chains and a possible import tax this month than end-product sales.

For full access to this MetalMiner membership content:
Log In |

In addition to executive orders essentially reviving the Keystone XL and Dakota Access pipelines this morning, President Donald Trump signed a memorandum that will require the secretary of Commerce (his nominee, Wilbur Ross, still awaits confirmation) to come up with a plan to mandate American-made steel for all new, expanded or retrofitted pipelines in the U.S. The plan is due in six months.

Two-Month Trial: Metal Buying Outlook

“Going to put a lot of workers, a lot of steelworkers, back to work,” Trump said after signing the memo. According to the memo, “produced in the United States” shall mean:

  1. With regard to iron or steel products, that all manufacturing processes for such iron or steel products, from the initial melting stage through the application of coatings, occurred in the U.S.
  2. Steel or iron material or products manufactured abroad from semi-finished steel or iron from the U.S. are not “produced in the U.S.” for purposes of this memorandum.
  3. Steel or iron material or products manufactured in the U.S. from semi-finished steel or iron of foreign origin are not “produced in the United States” for purposes of this memorandum.

Trump also urged the chief executives of the Big Three U.S. automakers to build more cars in the U.S., pressing his pledge to bring jobs to America and discourage Ford Motor Company, General Motors and Fiat-Chrysler Automobiles from investing in Mexico.

Click Here for Current Metal Prices

Trump has threatened to impose 35% tariffs on imported vehicles and opened the White House meeting with General Motors CEO Mary Barra, Ford CEO Mark Fields and Fiat Chrysler Automobiles NV CEO Sergio Marchionne saying he wants to see more auto plants in the U.S.