MetalMiner’s basket of industrial metals used by the auto industry, the monthly Automotive MMI®, registered a value of 85 in June, a decrease of 2.3% from 87 in May.
As the chart shows, this move basically undoes May’s gains and puts the automotive metals index back where it was in April. The loss nearly erased the 2.4% gain last month as palladium and platinum prices either fell or traded sideways and the other metals tracked in the index weren’t really responsible for the recent movement, anyway.
Robust Car/Truck/SUV Sales
While automotive sales remain strong in the US and abroad, those sales are not creating the necessary demand for automotive materials to move the needle this year – even as companies such as Alcoa, Novelis, ArcelorMittal and others invest heavily in automotive aluminum and steel facilities worldwide.
US car buyers bought new cars and trucks at the fastest pace in nearly a decade in May, US auto sales data released by the automakers showed. General Motors, Fiat Chrysler and Honda reported increases. Toyota, Nissan and Ford saw declines.
Americans bought about 1.63 million new vehicles in May, up 1.6% from about 1.61 million in the same month last year, according to automotive statistics provider Motor Intelligence. Industry forecasts had expected a 1% decline in sales, to 1.59 million, in part because May was one sales-day shorter than it was last year.
May’s seasonally adjusted annualized rate came in at 17.8 million, well past analysts expected 17.3 million.
Steel Inventories Still High
The big drag on the index continues to be the price of steel, which reached another new low this month. Cheap imports and high inventories are to blame in that market, and those high inventories will continue to make the road just as hard to ride for automotive.
Domestic steel producers have filed anti-dumping and countervailing duty petitions against five countries related to corrosion-resistant steel, the type used in automotive applications.
The petitions charge that unfairly traded imports of corrosion-resistant steel from China, India, Italy, South Korea and Taiwan are causing material injury to the domestic steel industry. The petitions further charge that significant subsidies have been provided to the foreign producers by the governments of those countries.
It will take months to know if this action produces significant relief of the cheap imports and, even then, the anti-dumping and CVD determinations might not be high enough to have an effect. The end-use automotive market and its much of its material supply chain is intrinsically tied to the steel market.
Actual Automotive Metal Prices
Primary cash copper prices fell 2.5% on the LME to $6,088 per metric ton after rising the previous month. US platinum bar fell a slight 2.3% over the past month to $1,116 per ounce. After rising the previous month, copper 3-month prices dropped 2.1% on the LME to $6,090 per metric ton. Chinese primary lead prices fell 1.1% to $2,211 per metric ton after rising the previous month. After rising the previous month, US HDG prices dropped 1.0% to $619.00 per short ton.
Hovering around $3.52 per kilogram for the month, Korean 5052 coil premium over 1050 sheet remained unchanged. US palladium bar traded sideways last month, staying around $776.00 per ounce.
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.