Automotive MMI: US auto sales strong in February despite inclement weather

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The Automotive Monthly Metals Index (MMI) rose by 7.1% this month, as US auto sales were strong in February.
March 2021 Automotive MMI chart
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US auto sales

Ford Motor Co. reported its February US retail auto sales reached 163,520 vehicles, down 1.8% year over year.
Ford truck sales increased 10.2% year over year. Meanwhile, SUV sales ticked up 0.2%. Ford car sales fell 56.5%.
Ford’s estimated retail share in February reached 12%, up from 11.7% last year.
“Share gains came from trucks and new product offerings of Bronco Sport and the fully electric Mustang Mach-E,” Ford said.
Honda sales overall fell 11.4% to 106,328 vehicles. However, the automaker reported its best-ever February for Honda truck sales. Truck sales rose 5% year over year.
Electric vehicles (EVs) still represent a small percentage of Honda’s total sales. Nonetheless, the automaker reported EV sales rose 96.2%, with deliveries nearing 8,000 vehicles.
Nissan, which moved to quarterly reporting last year, in January reported Q4 2020 sales in the US fell 19.3% year over year.

US auto sales growth in February

Late last month, J.D. Power and LMC Automotive forecast sales growth in February.
The automotive intelligence groups forecast a 3.3% increase year over year when adjusting for differences in selling days.
“Despite challenges posed by inclement weather in most of the country, retail sales demand continues to be strong with the industry posting a second consecutive month of year-over-year gains,” said Thomas King, president of the data and analytics division at J.D. Power. “Typically, weather related sales disruptions are made up in the weeks following, so most of the sales lost at the beginning of February will be made up at the end of February and trail into early March.”

Semiconductor shortage

Among a bevy of supply-chain issues impacting end users right now is the semiconductor shortage for the automotive industry.
Demand for semiconductors from the automotive industry is only increasing as vehicles become more complex.
As we noted last month, the problem has gotten so severe that General Motors announced it would extend downtimes at several plants due to the shortage. The automaker extended downtimes at its Fairfax (Kansas), CAMI (Canada) and San Luis Potosi (Mexico) plants.
Today, the automaker offered an update on the semiconductor shortage.
“GM continues to leverage every available semiconductor to build and ship our most popular and in-demand products, including full-size trucks and SUVs for our customers,” GM said in a statement released today. “GM has not taken downtime or reduced shifts at any of its truck plants due to the shortage. We continue to work closely with our supply base to find solutions for our suppliers’ semiconductor requirements and to mitigate impacts on GM.”
Furthermore, GM said it would extend the downtime again from the earlier mid-March target to the end of March for the Mexico plant. For Fairfax and CAMI, the automaker will extend downtimes through “at least mid-April.”
“Our intent is to make up as much production lost at these plants as possible,” GM concluded. “We contemplated this downtime when we discussed our outlook for 2021 last month.”

White House takes notice

The semiconductor crisis has garnered the White House and the new administration’s attention.
Last week, President Joe Biden signed an executive order that calls for reviews of several critical supply chains. Among the key materials the administration will review are semiconductors and critical minerals.
The reviews will also focus on pharmaceutical products and large capacity batteries (like those used in EVs).
“The United States is the birthplace of this technology, and has always been a leader in semiconductor development,” the White House said. “However, over the years we have underinvested in production—hurting our innovative edge—while other countries have learned from our example and increased their investments in the industry.”
The executive order called for a review within 100 days of supply chain vulnerabilities for semiconductors.
“The Secretary of Commerce, in consultation with the heads of appropriate agencies, shall submit a report identifying risks in the semiconductor manufacturing and advanced packaging supply chains and policy recommendations to address these risks,” the order stated.

Ramping output back up

According to the Semiconductor Industry Association (SIA), the US’s global share of semiconductor manufacturing has slipped from 37% in 1990 to 12% today.
Falan Yinung, director of industry statistics and economic policy for the SIA, said the semiconductor sector is in the process of ramping fabrication capacity utilization back up.
“When market demand runs high, such as in a cyclical market upturn like the one the market is in now, front-end semiconductor fabrication facilities, or fabs, will typically run above 80 percent capacity utilization, with some individual fabs running as high as between 90-100 percent,” the director said. … “Higher fab utilization will increase chip output and allow the industry to fully meet the increased demand in the market.”
The SIA is urging the Biden administration to invest in domestic semiconductor manufacturing incentives and research initiatives.
“Doing so will make more resilient America’s economy, national security, global technology leadership, and semiconductor supply chains,” Yinung added.

Actual metals prices and trends

The US HDG price rose by 7.1% month over month to $1,475 per short ton as of March 1. In addition, the US shredded scrap steel price fell 10.2% to $412 per short ton.
Meanwhile, the LME three-month copper price surged by 15.8% to $9,121 per metric ton.
The Korean 5052 aluminum coil premium dipped 0.9% to $3.45 per kilogram.
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