This morning in metals news, a law proposed in the U.K. could have a negative impact on the domestic steel industry as the country moves forward with Brexit talks, steel production in the U.S. Great Lakes region has jumped to start the year, four firms have submitted resolution plans for Electrosteel Steels and the U.S. […]
Fouad Egbaria
This Morning in Metals: China Issues Stricter Rules on New Capacity
This morning in metals news, China has issued stricter rules on building new steel capacity, Chinese steel production is expected to slow down in 2018 and LME copper rises as the dollar loses ground. New Rules to Put the Squeeze on New Capacity in China China has new, stricter rules on building new steel capacity, […]
Week in Review: Chinese Capacity Cuts, Podcast Ep. 4 and Bitcoin
Before we come to the end of the first business week of 2018, let’s look back at some of the stories on MetalMiner so far this year: Chinese supply-side reforms generally have a big impact on metal prices — such was the case for copper, as our Stuart Burns wrote early this week. In case […]
Construction MMI: Architecture Billings Index Hits 2017 High
The Construction Monthly Metals Index (MMI) lost a point for our January reading, falling to 94 from 95.
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In terms of metals prices, it was a mixed bag for this group. The Chinese rebar price fell 4.8%, while Chinese H-beam steel rose 3.1%. U.S. shredded scrap steel also dropped 3.5%. European commercial 1050 aluminum sheet posted gains of 1.1%, while Chinese aluminum bar fell 6.3%.
U.S. Construction Spending
According to U.S. Census Bureau data for November (the most recently available month), total construction spending amounted to $1,257 billion, up 0.8% from the revised October estimate of $1,247.1 billion.
The November spending figure was 2.4% above the November 2016 estimate of $1,227.0 billion. In addition, through the first 11 months of 2017, construction spending amounted to $1,138.3 billion, or 4.2% above the $1,091.9 billion for the same period in 2016.
Private construction spending in November was at a seasonally adjusted annual rate of $964.3 billion, or 1.0% above the revised October estimate of $955.1 billion. Residential construction was at a seasonally adjusted annual rate of $530.8 billion in November, 1.0% above the revised October estimate of $525.3 billion. Nonresidential construction was at a seasonally adjusted annual rate of $433.5 billion in November, 0.9% above the revised October estimate of $429.7 billion.
Meanwhile, public construction spending, at $964.3 billion, was 1.3% above its October total.
Meanwhile, public construction spending, at $964.3 billion, was 1.3% above its October total.
Strong Growth for Architecture Firms
As tracked by the Architecture Billings Index (ABI), put out monthly by the American Institute of Architects, November proved to be a strong month for architecture billings.
Per the November ABI report, the billings ABI rose to 55 from last month’s 51.7 (a score of 50 indicates no growth).
“New project inquiries, as well as new design contracts coming into architecture firms, also signified healthy growth,” the report states. “As such, indicators broadly point to very solid business conditions at architecture firms as 2017 winds down.”
The uptick in design activity is in large part attributable to the strength of the economy, the monthly ABI report indicates: “GDP has grown at a 3 percent annualized rate through the second and third quarters this year. In the fourth quarter, our economy is likely to grow at about this same pace, and 2018 looks to see overall domestic economic gains in the 2.5 to 3.0 percent range. Strong consumer sentiment scores suggests that households are getting more comfortable with the direction of the economy as well as with their own financial situation.”
The report adds a strengthening labor market as another factor behind the rise in design activity. According to the report, there was a net gain of 228,000 payroll positions nationally in November, and annual 2017 numbers likely will hit at least a 2 million net gain for the sixth straight year. In terms of construction, specifically, there was a net gain of 24,000 construction positions in November, with 2017 gains “potentially as high as 200,000.”
By region, November was a strong month for the West, which led the four regions tracked in the ABI. The West region tallied a score of 54.8, ahead of the South and Northeast (each at 52.8) and the Midwest (50.4).
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Automotive MMI: HDG Steel, LME Copper Post Big Price Increases
The Automotive MMI posted no movement for our January reading, sticking at 97 after a four-point jump from November to December.
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The January MMI reading — which tracks the sector’s December performance — has risen significantly in the last 12 months. The sub-index posted an 82 for its January 2017 reading.
Within the basket of metals, U.S. HDG steel and LME copper had big months. For the former, the metal rose 5.5% during the period in question, while Dr. Copper jumped 6.4%.
U.S. Auto Sales
It was a down month for General Motors, which saw its sales drop 3.4% year-over-year in December 2017, with 308,112 units sold, according to sales data released Jan. 3 by Autodata Corp. GM thus closed the year with sales dropping 1.4% from its 2016 total.
Ford, meanwhile, saw its December sales rise 1.3% year-over-year, with 240,910 units sold in the month. As for the year-end numbers, Ford’s sales drop was less than GM’s, with a 0.9% dip compared to 2016 sales for the company.
Further down the sales list, Fiat Chrysler‘s December sales dropped 10.7% year-over-year and were down 8.2% for the year.
Fiat Chrysler wasn’t the only one to have a rough month. Toyota‘s December sales were down 8.3% year-over-year, while Honda‘s (7.0%) and Nissan‘s (9.5%) were also down.
Volkswagen dropped 5.4% in December compared with December 2016, but came out ahead in 2017, with sales rising 6.1% at year’s end compared with the previous year.
While Mitsubishi‘s absolute sales don’t come in near the top of the list, it had a good year in the U.S. market, selling 103,686 units in 2017 — up 7.7% from 2016 sales. In December, Mitsubishi’s sales rose 15.1% compared with December 2016.
Record Sales in 2017 for Tesla, But Struggles with Deliveries
Meanwhile, Tesla’s year was a two-sided tale.
As Business Insider UK reported, the electric vehicle (EV) maker hit record sales in 2017, but struggled with deliveries of its new Model 3.
The challenge for Tesla, of course, is transforming from a still relatively niche brand — catering to those who check the boxes of environmental mindfulness and being financially well off — to a mainstream automotive manufacturer capable of meeting demand with consistency.
It’s still unclear whether Tesla can do that, but EVs aren’t going away either way. Of course, Tesla isn’t the only player in the game, and competition in the EVs sector will only continue to grow in 2018 and beyond.
Eyes on China
A big year is ahead for automotive sales in China.
And it’s not just about this year — according to William C. Ford Jr., executive chairman of Ford, the future of EVs will be led by China.
“When I think of where E.V.s are going, it’s clearly the case that China will lead the world in E.V. development,” he told The New York Times.
Speaking of Ford, last month the automaker announced plans to collaborate with e-commerce conglomerate Alibaba.
“Under the three-year agreement, both companies will jointly explore areas of cooperation that are re-shaping the automotive industry in China and around the world,” a Dec. 7 Ford news release states. “Ford will cooperate with Alibaba’s four business units in operation system, cloud computing, digital marketing and online retail respectively – namely AliOS, Alibaba Cloud, Alimama and Tmall – and jointly explore a variety of areas of cooperation including mobility services, connectivity, cloud computing, artificial intelligence and digital marketing.”
Ford President and CEO Jim Hackett also underscored the importance of China.
“China is one of the world’s largest and most dynamic digital markets, thriving on innovation with customers’ online and offline experiences converging rapidly,” he said in the release. “Collaborating with leading technology players builds on our vision for smart vehicles in a smart world to reimagine and revolutionize consumers’ mobility experiences.”
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