2013 proved a great year for automakers as well as a beacon of hope for metal producers that supply to that industry. MetalMiner’s Automotive MMI®, the best performing of all indexes throughout 2013, moved above its January 2012 baseline reading of 100 to 101.
Hot dipped galvanized steel, copper and lead pricing lent support during December, while key precious metals used in the automotive industry held relatively steady.
MetalMiner has consistently warned that the automotive sector has reached its peak, but the numbers continue to delight.
And despite profit warnings from companies such as Ford, the proverbial bloom is not off the rose.
Ford warned, not because of slowing US automotive sales (forecasted to continue to grow, albeit more slowly), but because of sluggish demand in Europe, a currency devaluation in Venezuela where Ford has a large plant and rising cost pressures, most notably in technology and factory expansions.
Ford has now idled new factories for its Fusion and Focus to reduce inventory (MetalMiner warned of the rising inventory levels back in August).
Automotive parts maker Johnson Controls also issued a 2014 profit warning. The company sees growth for automotive seating units rising 1-2% against higher US sales volumes. But a 2.5-3% drop in its automotive-electronic unit as well as a drop in its interiors business will drag earnings. The company still forecasts rising global auto production.
Meanwhile, Chrysler has announced a 6% increase in December sales, mostly due to truck sales.
Despite rising automotive inventory levels, increased competition from the Japanese OEMs – who have started to claw back at market share and big investments on behalf of many of the OEMs – the outlook remains positive.
Steel producers that serve the auto market such as AK Steel have seen their stock prices trade at a 52-week high against rising automotive production and sales.
What This Means for Metal Buyers
Automotive demand will likely remain solid at least through the first half of 2014. This will lend price support to US flat-rolled steel products.
Key Price Drivers
Following a 4.9 percent upswing on the LME, the 3-month price of copper closed the month at $7,370 per metric ton. US HDG prices inched up 2.5 percent to $771.00 per short ton. After dropping the previous month, the Chinese lead price prices rose 1.6 percent to $2,351 per metric ton. US platinum bar shifted up 0.4 percent last month to settle at $1,357 per ounce.
The price of US palladium bar drifted 1.4 percent lower to $706.00 per ounce.
Prices for Korean 5052 coil premium over 1050 sheet remained constant this past month, holding at around $4.14 per kilogram.
The Automotive MMI® collects and weights 7 metal price points used in automotive production to provide a unique view into automotive metal trends over a 30-day period. For more information on the Automotive MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.