Auto Metals Price Index Falls Despite Best US Car Sales Since ’09

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The monthly Automotive MMI® registered a value of 87 in February, a decrease of 2.2% from 89 in January.

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While prices of raw materials fall, end users continue to thrive. Major automakers with operations in the US all reported their best January domestic vehicles sales in at least 7 years, led by General Motors Co. low oil prices and falling unemployment have pushed sales higher at Ford Motor Co., Toyota Motor Corp., Honda Motor Co. and Nissan Motor Co., as well.

Automotive_Chart_February-2015_FNL

GM, the largest US automaker, was projected to increase sales by 19%, while No. 2 Ford’s deliveries were seen rising 13%, the averages of 9 estimates. Toyota deliveries increased 16%, topping the average estimate for a 13% gain.

While the US is a bright spot, sales growth is slowing in China and demand in Europe is weighed down by Russia’s struggling economy. The Russian auto market will shrink by a fifth this year, according to Bloomberg News. Sales of passenger cars and light commercial vehicles fell 10% in 2014 to about 2.5 million units, according to the Moscow-based Association of European Businesses (AEB). Still, Global car sales rose 3.4% last year to a record 81.6 million vehicles according to Macquarie Group Ltd.

So, will renewed automotive demand result in increasing steel, aluminum and copper prices, then? At least in the US market? Well, it doesn’t look like it will in the near future, even in the booming American auto marketplace. Automakers are not opening new plants, planning new lines or making expansions that will be felt in the near-term. Efficiency is still the name of the game as witnessed most recently by Ford and Novelis‘ new closed-loop automotive aluminum recycling line at Novelis’ existing Oswego, NY, facility.

If prices turn around for the base metals in other markets, however, auto could be the first to feel the residual bump as the US market is, at least, keeping it afloat with strong consumer demand and low fuel prices. The one market is that is an exception to the low commodity prices we have seen across the board so far this year, however, is palladium. Demand in 2015 will probably exceed supply for a 4th consecutive year, according to Johnson Matthey Plc, a maker of catalytic converters for automobiles.

Palladium has the distinction of being helped by low oil prices unlike its automotive brethren. As a precious metal it is both a hedge against inflation and as an industrial metal, car exhaust parts account for 70% of its use giving it even stronger demand as nations and states struggle with tougher fuel economy and pollution laws. It has been affected by the strong dollar just as the other precious metals have, but booming US automotive sales could mean increases if the Federal Reserve or other central banks tighten regulations and act against inflation.

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On the LME, the primary copper cash price fell 13% to $5,500 per metric ton. On the LME, the copper 3-month price closed the month at $5,460 per metric ton after dropping 12.9%. The price of US HDG closed the month at $711.00 per short ton after dropping 6.8%. A 4.8% decline for US palladium bar left the price at $769.00 per ounce.

The price of Korean 5052 coil premium over 1050 sheet jumped 9.5% last month to $3.87 per kilogram. After dropping the previous month, the price of US platinum bar prices rose 2.3% to $1,238 per ounce.

The Chinese lead price remained essentially flat for the month at $2,020 per metric ton.

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.

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