It was a third flat month in a row for the Automotive MMI as strong sales in the US and surprisingly resilient ones in China paced end-user markets, but still couldn’t increase the prices of automotive metals as oversupply still plagues global markets.
Here in the US, Ford Motor Co. sold 20.2% more new vehicles in February than a year earlier. Fiat Chrysler Automobiles posted a 12% gain, while General Motors sales fell 1.5% as it cut back on fleet sales.
Toyota Motor Corp. sales rose 4.1% on strong sales of its RAV4 compact SUV (up 16%), the 4Runner midsize SUV (up 32%) and the Tacoma midsize pickup truck (up 14.5%). The Lexus luxury brand was up 1%.
Nissan Group posted a 10.5% increase, fueled by a 12.9% improvement that more than offset an 11% decline at the Infiniti luxury brand. American Honda sales jumped 12.8% as its top selling Civic and Accord rose 32% and 19%, respectively.
Chinese Sales Resilient
In China, sales in the world’s biggest auto market rose 7.7% in January, as demand was driven by a lowered tax for small engines.
Sales of passenger and commercial vehicles jumped to 2.5 million units in China in January, according to data released by country’s Association of Automobile Manufacturers. Passenger vehicle sales rose 9.3% to 2.23 million units, while commercial vehicle sales declined 3.4% to 303,600 units, the body said.
Oversupply continues to be the culprit for flat automotive metal prices as products such as London Metal Exchange copper and hot-dipped galvanized steel still have large stockpiles available in major markets. The US scrap steel is markedly bearish even by the low standards of the overall sluggish commodity market.
There is also growing concern that end-product demand from large consumer markets such as the US and China cannot last at current rates. While finance costs in the US are expected to stay low, many are concerned that automakers have overextended themselves by investing in aluminum and steel production facilities and, if demand does fall in 2016, automakers will find themselves shuttering new production or borrowing to meet construction costs.
In China, growth has been fueled by the burgeoning used car market there, one whose sales do not trickle down to metal suppliers.
Continue to monitor automotive metal prices and be cautious with forward purchases as there’s still not any real indication that this is a flat bottom or just a plateau momentarily pausing a larger fall.
Actual Automotive MMI Prices
US scrap steel was flat at $188 per short ton, the same price as in February. US HDG steel increased to $560 per st from $548 per st in February, a jump of 2.1%.