Automotive MMI – Supply Shrinks, Demand Rises

The September Automotive MMI (Monthly MetalMiner Index) traded sideways, falling a modest 2.13%. The same issues continue to affect manufacturing: rising demand and too few resources.

Car Manufacturing Supply Chain Woes

Supply chain shortages remain a persistent problem for the global automotive industry. Indeed, many companies are still struggling to find the necessary parts and components. On the consumer end, new cars remain short in supply. On the manufacturing end, sourcing components and price hikes plague the industry.

Toyota, for example, plans to raise prices on the automotive steel it sells to various part makers. According to company representatives, the ever-rising costs of coking coal and iron ore weighed heavily on Toyota’s decision.

Toyota isn’t the only company struggling. In many Southeastern Asian countries, production of automotive parts has been significantly reduced or, even worse, shut down entirely. To put this into perspective, GM and Toyota both source parts from Southeast Asia. But with widespread smelter shutdowns in numerous countries, all manufacturers face a long road to supply chain recovery.

Manufacturers like Toyota anticipate a price hike in materials, resulting in a stock-piling of parts for their own vehicles.

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Shrinking Supply, Growing Demand

With steel being one of the main components in most automobiles, the car manufacturing industry took a hit from slowed global production and smelter shutdowns. Meanwhile, Europe’s energy crisis continues to hinder industrial endeavors in many market segments, automobiles being no exception.

China also faces slowed production as well as energy reductions in areas that house many of the country’s steel smelters. Month over month, the trend has changed very little. Parts and components are more scarce as a result. Despite this, demand has not fallen. In fact, it’s quite the opposite.

Upcoming negotiations on your steel buy? Make sure you know how your service centers will negotiate with you.

Car Manufacturing Chip Demand Rises, Supply Drops

Microchip shortages continue to plague the car manufacturing industry. According to this recent article, shortages of chips between the price range of 𝇍50 – $10 greatly impact huge sections of the $600 billion industry. Low-end chips, in particular, are more and more scarce today.

Two factors affecting the situation are the shortage of raw supplies due to supply chain issues and lower industrial output due to energy shortages. Complicating the problem is the higher output of new, innovative features. These require more and more computer system advancements and place even more strain on chip inventories.

Biggest Automotive MMI Price Moves

• US platinum bars fell in price by 2.19%. Prices currently sit at $2,009 per ounce.
• US shredded scrap steel also fell in price. With a 2.06% drop in price, prices went from $436 to $427 per short ton.
• Korean aluminum remained stationary at $4.28 per kilogram.

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