Articles in Category: Automotive

Just like Oprah giving out cars, our January Metal Price Trends report was generous with the dead cat bounces this month. You get a dead cat bounce, copper! You get one, too, aluminum! You get a dead cat bounce, raw steels! Everyone gets a dead cat bounce!

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Okay, not everyone. Construction, stainless steel, renewables and rare earths all lost ground and automotive was merely steady.


Still, it’s the most positive movement we’ve seen for many of these metals since early last year. We say they’re dead cat bounces — a cruel-sounding investment term for a temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend (sorry, kitties) — because there is little reason to be optimistic that any of these gains will continue.

Stop Me Before I Bounce Again!

The main driver of commodity, and now stock market losses, has been the slowing Chinese economy and it’s looking worse this year than it did at the end of last. Financial institutions such as RBS are even advising clients to sell everything, save bonds, that’s not tied down.

This is great news for buyers but exactly what metal producers don’t want to hear. What’s worse, for them, is that everything the Chinese government is doing to try to turn their economy around, including a panic button system for its stock markets that actually caused more panic, isn’t working. My colleague Raul De Frutos also pointed out that purposely devaluing the yuan actually hurts metal prices.

How Low Can it Go?

The other big driver of the commodity price rout, the price of oil, shows no signs of turning around, either. Oil hit $30 per barrel this week stoking bankruptcy fears among US energy companies and it even temporarily created some nervousness among OPEC nations who clamored for an emergency meeting.

So don’t expect these price increases to continue as transportation and production costs follow oil’s race to the bottom. My colleague at our sister site Spendmatters, Kaitlyn McAvoy, reported that Goldman Sachs is predicting $20 per barrel for oil this year.  It’s not a very happy new year for metal producers… or cats.

US car sales in 2015 jumped to a record level last reached 15 years ago as cheap gasoline, employment gains and low interest rates enticed Americans to buy new vehicles.

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Automakers sold 17.5 million cars and light trucks in the US last year, a 5.7% increase, and, on average, they paid more for each one. Americans overall spent about $570 billion on new vehicles, fueling an industry revival putting more money in the pockets of auto workers, dealers and executives.


In China, a tax cut helped auto sales as new car sales became one of the few bright spots of China’s sputtering economy.

The Hold Steady

The gains couldn’t help our Automotive MMI do any more than hold its value from last month, as the index began the year 68, exactly where it ended 2015.

Low steel, copper and aluminum prices are another driver of discounts on automobile prices as automakers have seen their material costs plummet in 2015. Many dealers have been authorized to discount the already low prices of new cars, accordingly. Global surpluses of steel, aluminum and copper have not yet seen a significant dent despite a recent rally in aluminum.

It will take a sustained recovery in its component metal prices for the Automotive MMI to start seeing significant gains. The Justice Department also filed a civil suit against Volkswagen AG this week, signaling that the ongoing emissions scandal there will continue to affect platinum and palladium prices. Justice is pursuing $48 billion in fines against VW and any settlement for the embattled automaker would be in the billions.

Steady as she goes is not all bad news for automotive metals. The Commerce Department recently slapped tariffs of 255% on Chinese anti-corrosive steel, meaning that hot-dipped galvanized and other US automotive metals will be competing on a more even playing field with subsidized Chinese imports.

January Monthly Metal Price Outlook

Perhaps 2016 will finally be the year that the tide of cheap imports is finally stemmed.

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We wrote recently about the rapid inroads (if you will excuse the pun) aluminum has made into the automotive market, particularly for body parts that have been almost the sole domain of steel since before the Model T.

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Then we wrote more recently on the fight back being made by steel, spearheaded by the major steelmakers such as ArcelorMittal to develop high-strength alloy steels that can be used in ever thinner gauges without sacrificing rigidity or strength, and the use of hot stamping that reduces spring back and die wear.


Well now it is with some trepidation that we report both aluminum and steel are facing a new kid on the block, the new contender is not even a metal, it’s carbon fiber.

BMW is investing heavily in carbon fiber production research. Source: Adobe Stock/ GordonGrand.

BMW is investing heavily in carbon fiber production research. Source: Adobe Stock/ GordonGrand.

Ahh, but you will say carbon fiber has been around for at least a couple of decades. Goodness, aren’t half the world’s largest airliners made out of the stuff? And isn’t it dreadfully expensive and time consuming to make anything out of it? Read more

The House and Senate have passed a $305 billion compromise bill to fund highways and mass-transit projects for five years — the longest in nearly two decades and an unexpected show of agreement after years of clamoring by state transportation officials for infrastructure funding.

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The bill is expected be signed swiftly by President Obama, who has supported earlier versions of it, to avoid a shutdown of transportation funds to the states by the end of today.

Revives Ex-Im Bank

The measure also would renew the Export-Import Bank through September 2019, separate the budget for Amtrak’s Northeast Corridor from the rest of the passenger-rail network, and set traffic-safety priorities.


San Francisco’s Bay Bridge is one of the many projects that will benefit from a 5-year transportation bill.

Advocates have said the Ex-Im Bank is a crucial funding and shipment security institution that supports small businesses who want their goods to reach foreign markets. Others have called it corporate welfare that benefits large companies that do business overseas more than small merchants.

The bill would provide money for programs with strong regional constituencies, such buses and ferries, and for the first time set up a grant program guaranteeing funds for large freight projects, which typically haven’t garnered political support because they deliver goods and not people.

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Thomas J. Gibson, president and CEO of the American Iron and Steel Institute, said, “The steel industry is not only a user of the highway system, but it is also an important supplier to road, bridge and transit builders. This long overdue legislation will enable steelmakers and our customers to plan for the future, as the bill provides an increase in current investments levels — estimated at 15% for road, highway and bridge projects, and 20— for transit programs.”

Last week, I attended the Atlantic and SiemensBold Bets, billed as a conversation with Chicago Mayor Rahm Emanuel and industry leaders about the global marketplace and, as the workforce evolves, how the US is adapting to the challenges and opportunities changes in manufacturing present.

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It’s not the first time we have heard about how building a better workforce, through education that focuses on Science Technology Engineering and Mathematics (STEM) can help the US compete in the 21st century.


Is paying for community college a bold bet? Or just an old bet? The Atlantic Washington Editor-at-Large Steve Clemons and Chicago Mayor Rahm Emanuel talk it over. Photo: Jeff Yoders

Mayor Emanuel was his usual exuberant self, touting his initiatives that support students who go on to the City Colleges, Chicago’s version of community college, where they can get training for those popular STEM fields.

A STEM Job in Every Pot

“You need a 21st century infrastructure to move on education,” Emanuel said. “There’s nothing that China is doing that, on a manufacturing level, we can’t compete and win on.” Read more

In a graphic example of how ripples from the stone that was the Volkswagen emissions cheating scandal are spreading across the rest of the automotive pond.

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Johnson Matthey’s share price dropped further during September when the scandal first brook, but has since recovered as it dawned on investors that the result of VW’s emissions scandal is likely to be tougher controls… even if there is a marked swing to gasoline engines.

JM-share price

Source: Thomson Reuters

Johnson Matthey was already in trouble due to a combination of falling platinum group metals prices and slowing demand, notably in key automotive markets such as China, for jewelry and in the oil industry as investment has been cut back. Read more

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