Articles in Category: Automotive

The headline of this article from The Telegraph provocatively reads “The end of petrol and diesel cars? All vehicles will be electric by 2025, says expert.”

However passionately the argument is made, the 2025 deadline that comes from a report entitled “Rethinking Transportation 2020–2030” by Stanford University economist Tony Seba is almost certainly wildly optimistic. Nevertheless, it makes a good headline, and The Telegraph loves nothing better than good attention grabber.

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Seba is well known for his challenging and — some would say — self-publicising proclamations. But the basic logic of his argument that a combination of trends and converging technologies will have a transformational effect on the energy and transportation markets sometime in the next decade is probably out only in terms of timing.

Long a vocal advocate for renewable technologies, the professor has repeatedly pointed to the falling cost of solar power supported by wind, hydro and, in some cases, geothermal and biomass as sounding the death knell for conventional carbon fuels such as coal, oil and natural gas. In that respect, his case is hard to argue against.

As an outlier, the British government remains stubbornly committed to subsidising a nuclear power station at Hinckley Point at a cost of around £92.50/MWh ($120/MWh) — when even in the overcast U.K., solar was being won at £71.00/MWh in 2015 and prices have fallen further since.

Wind power can be even cheaper, at least in windy Britain. Although it is widely acknowledged that the power delivery from both wind and solar is intermittent, renewables can be made increasingly viable through a combination of improving storage technology and greater integration of power grids and smart technologies allowing transmission companies to partially even out the generation and consumption over a wider area. Read more

Earlier this decade, there was no lack of hype around electric and hybrid cars. Sales were expected to take off, driving demand for lithium, nickel, cobalt and a host of rare earth elements above supply.

That was, in part, motivation for a rare earths bubble, but demand have remained manageable as high sales of electric vehicles have failed to materialise. In reality, electric and hybrid cars have gained traction only gradually as the range of EVs grew and as hybrids struggled to make dramatic improvements in fuel efficiency resulting from advances in internal combustion, particularly diesel engine technology.

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Sooner or later, however, a combination of improving technology and pressure from legislation forcing changes in buyer choices should result in electric vehicles merging into the mainstream. A sure sign that the day is drawing nearer would be when established main brands set targets for themselves.

Well, this week Volkswagen did just that. The Financial Times covered an announcement made by Herbert Diess, head of the VW brand (the largest part of the VW Group), that the brand would sell one million electric cars by 2025 and leapfrog Tesla as the world’s premier volume EV manufacturer. As part of VW’s central plan, the FT reports, the firm is going to sell electric cars at the price of today’s diesel models and intends the entire electric fleet to be profitable from day one. Read more

Source: Gildor Elendill. Licensed under CC-BY

Now that Black Sails has signed off and Long John Silver is on to new adventures, it’s time to turn our attention to a different type of silver — one type of material that Silver himself spent many of his buccaneer days trying to amass.

But whereas Silver and his crew may have preoccupied themselves with coins, bars and doubloons (the former two are still big in 2017; doubloons? not so sure), we here at MetalMiner like to see how the precious metal factors into industrial end-use sectors and applications.

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Turns out that one of those applications — solar panel installations, specifically — made quite a splash in the Silver Institute’s World Silver Survey 2017, produced by the GFMS team at Thomson Reuters and released just this morning.

But first, a quick high-level overview.

Topline Takeaways

Global silver mine production declined by 0.6% in 2016 to a total of 885.8 million ounces — the first such decline since 2002, according to the report.

In addition, although primary silver production increased 1% last year, silver scrap supply, despite higher silver prices, fell to 139.7 million ounces in 2016. This is a level that has not been seen in 20 years, according to the Silver Institute’s press release for the report.

“If we look forward, we don’t think [this overall mine production drop] will be a one-off, either,” said Johann Wiebe, lead analyst of metals demand at the GFMS Team/Thomson Reuters in London, in an interview. “It’ll be a prolonged drop in supply until 2019-ish. Not large, but maybe a 2% drop annually. That’s quite a shift.”

It’s not surprising, Wiebe added, if one has seen the capital expenditures retreating over the past few years, with miners looking to protect their margins. Other non-precious metal production of base metals such as lead, zinc and copper, among others, affects the silver market — the link between precious metal and base metal commodities, in other words, is tighter than at first glance when it comes to production trends. Read more

Here’s What Happened

  • The Automotive MMI, our sub-index of industrial metals and materials used by the automotive sector, dropped by one point for a May reading of 8, a 1.1% drop.
  • This is the third straight month of declines for this index. Back in February 2017, the Automotive MMI hit 92 — its highest level since November 2014. But now, flagging HDG steel, copper and shredded scrap prices are dragging on the rest of the index.

What’s Going On in the Background?

  • The U.S. auto market is officially slowing. Car sales dropped 4.7% to 1.43 million units, according to Autodata Corp. That is a bigger drop than forecasted by both Edmunds and Kelly Blue Book, according to several news outlets.
  • Meanwhile in China, the first quarter of 2017 saw a 7% overall increase in car sales. As we reported in our Monthly Metal Buying Outlook (free trial here), that was the strongest showing since 2014. The Chinese government has extended tax cuts for small vehicles, which should keep citizens buying cars through the year.

What Metal Buyers Should Look Out For

  • Many factors coming down the line — including increased construction projects in China — portend longer-term support for key automotive constituent metals such as HDG steel.
  • Even though HDG has slipped a bit this month, prices for that metal form in China could see room for improvement.

Key Price Movers and Shakers

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This morning in metals news, we’ve seen a major U.S. auto supplier snap up a European counterpart just before the weekend, the EPA Clean Power Plan’s swan song stalled a bit, and more.

Lear Corp. and Grupo Antolin Marriage Consummated

Lear Corporation, one of the world’s leading suppliers of automotive seating systems and electrical distribution systems, went final on its acquisition of Grupo Antolin’s automotive seating business just last Friday.

According to a press release, Grupo Antolin has a large footprint with Europe’s largest carmakers, including Daimler, Peugeot Citroen, Renault Nissan and Volkswagen, and the acquisition will help Lear double down on its core business. “The transaction is valued at €286 million on a cash and debt free basis and is forecasted to be accretive to 2017 earnings per share,” according to the release.

Incidentally, Lear Corp. is not only one of the biggest auto suppliers, but one of the most resilient — the company is celebrating its 100th anniversary this year.

EPA Clean Power Plan Court Battle on Pause?

A federal court’s recent ruling has given environmentalists a bit of a reprieve to look over their options, as the impending court battle to get rid of the Obama administration’s chief piece of environmental regulation takes a break (paywall).

President Trump used an executive order in late March to dismantle the Obama administration’s climate change agenda, according to Environmental Protection Agency Administrator Scott Pruitt. As MetalMiner reported at the time, the action will order several other federal agencies to undo the Obama administration’s climate change work: It will tell the Interior Department to end a moratorium on new coal leasing on federal land, the official said, and the Obama administration’s assault on methane emissions — outlined in early 2014 and overseen by Interior and EPA — will be ended, too.

EPA’s CPP, as it came to be known, could have had far-ranging consequences on U.S. manufacturing, especially on heavier emitters such as the steel industry, if enacted to its fullest.

China’s Copper Appetite Shifting from Refined Metal to…?

Reuters’ Andy Home examines how the 28 percent year-on-year drop in China’s imports of refined copper in Q1 2017 don’t tell the whole story of that country’s love affair with the red metal. In fact, China has shifted its focus to copper scrap, among other things. Read Home’s full analysis here.

And don’t forget to check back in tomorrow morning, May 2, to get a free trial of the latest edition of our Monthly Outlook Report — including forward-looking copper market analysis and buying strategies.

Think of Indian automotive manufacturing and you may think of a Japanese auto parts hub for the southeast Asia region, like Thailand only less successful. Or, you may think of failed projects like the home grown Tata Nano, but one sector that has been a rip roaring success story is motorcycles.

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According to the Financial Times, more than 16 million motorcycles and scooters were sold in India during the 2016 financial year, far more than in any other country and nearly six times the number of passenger cars sold. For many people, the motorcycle is their first and often only form of motorized transportation.

It’s a motorcycle or nothing. A car is still too much of a financial stretch for millions. So, a strong home market is to be expected but it is the growth of domestic brands and manufacturers that is the most encouraging. Those same manufacturers have been far more successful than their automotive peers in export markets. Indian motorcycle exports in that same 2016 period reached 2.5 million, up from 1.5 million five years before.

Venu Srinivasan, chairman of TVS, a particularly innovative and successful Chennai-based manufacturer, is quoted by the FT as saying “We’re hoping that within the next three years, exports should be 35 to 40% of our sales,” up from 20% today.

Image courtesy of www.bikepanthi.com.

Siddartha Lal — chairman of Eicher Motors, owner of motorbike producer Royal Enfield — has overseen the opening of showrooms in London, Paris and Madrid, hoping to capitalize on the retro appeal of the world’s oldest surviving motorcycle brand. The first Royal Enfield motorcycle was made in the U.K. in 1901, and while production in the U.K. ceased in 1970, it thankfully continued at the company’s Indian joint venture.

Royal Enfield image courtesy of www.motorivista.com.

Royal Enfield’s international ambitions have been fueled by surging sales at home of its relatively expensive (by Indian standards) bikes. The popular Classic 350 retails for about $2,000 (Rs130,000), compared with the even-less-expensive Hero Motocorp Splendor, the Indian market leader. Royal Enfield sold 60,113 motorcycles last month, compared with fewer than 52,000 in the whole of 2009. As the technology used in Royal Enfields improves, particularly the reliability of the electric motorcycles, the iconic brand is appealing to retro buyers in mature markets looking for something different, as much as poorer buyers looking for a rugged if simple motorcycle.

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But the TVS range is appealing to an altogether different buyer. Price is key, but in order to compete with its more sophisticated Japanese competitors, such as Honda Motor Co. and Yamaha, in its home market TVS has invested heavily in product development, outsourcing design to the U.K. and made extensive use of robots on the production line. Even BMW has outsourced production to TVS for motorcycles to be sold under the BMW brand in Europe. That’s confirmation, if any was required, that motorcycles are becoming one of an increasing number of industries in which India is making its mark as a global, not just domestic, player.

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.

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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.

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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.

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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.

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“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.

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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.

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“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.”