Articles in Category: Automotive

We’re another month closer to the end of the calendar year, and there’s much to recap from the last month in metals.

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After four MMIs ticked upward for our November reading, five did so for our latest report.

Hitting some of the high points:

  • The biggest winners of the month were the Automotive, Construction and Raw Steels MMIs. Automotive picked up four points, while Construction and Raw Steels picked up five points apiece.
  • The Aluminum MMI tracked back down, losing four points after a five-point rise the previous month. As Irene Martinez Canorea wrote, a dropping LME aluminum price had much to do with the sub-index’s drop.
  • The Stainless MMI, meanwhile, fell five points on the month. In this case, a 10% decline in nickel prices contributed to the MMI’s fall. Trading volume for LME nickel is still strong, Martinez Canorea wrote, and the outlook for nickel remains bullish.

You can read about all of the aforementioned — and much more — by downloading the December MMI report below.

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This morning in metals news, Toyota and Panasonic are considering working together on developing electric car batteries, U.S. Steel did not test for toxic materials after a chemical spill into Lake Michigan in October and U.S. raw steel production last week was up 4.3% compared with the same week in 2016.

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A Toyota, Panasonic Partnership?

According to Reuters, Toyota and Panasonic are considering joining forcing in developing electric batteries for vehicles.

Panasonic already manufactures batteries for Toyota’s gasoline-electric and plug-in hybrid vehicles, according to the report.

U.S. Steel Didn’t Test Water After October Chemical Spill

Documents posted online by state regulators Tuesday show that following a U.S. Steel chemical spill in a Lake Michigan tributary in October, the company did not test the waters for toxic materials, according to the Chicago Tribune.

The October spill was the second of the year for U.S. Steel, the first affecting the same waterway in April.

According to the Tribune report, an inspector from the Indiana Department of Environmental Management visited U.S. Steel last month, when plant managers told the inspector they decided not to test for hexavalent chromium in the water.

U.S. Raw Steel Production Up 4.3%

U.S. raw steel production for the week ending Dec. 9 jumped 4.3% compared with the same week last year, according to a report from the American Iron and Steel Institute (AISI).

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Domestic raw steel production was 1,672,000 net tons, while it was 1,607,000 net tons in the week ending Dec. 9, 2016.

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This morning in metals news, ArcelorMittal and the state-run Steel Authority of India Ltd. (SAIL) are reportedly close to a joint-venture deal, officials in a northwest Indian town are threatening to sue U.S. Steel after a recent Lake Michigan toxic chemical spill, and despite the start of the winter season, Chinese steel mill profits have gone up.

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ArcelorMittal, SAIL Close to Deal

ArcelorMittal and India’s state-run SAIL have been in talks regarding a potential joint venture; according to Bloomberg, the two are expected to ink a deal soon.

According to Bloomberg, the two have agreed to terms on the deal, which features a $60 billion automotive plant.

Portage Officials Threaten to Sue U.S. Steel

After a second incident of dumping toxic chromium into Lake Michigan, U.S. Steel is facing lawsuit threats from a northwest Indiana town, not long after the City of Chicago said it would file suit.

Officials from Portage, Indiana, recently threatened to sue the company after the second spill, which occurred in October.

According to the Northwest Indiana Times, the Portage City Council approved a resolution Tuesday night demanding the steelmaker report any environmental spill or discharge to the city as it would to the Environmental Protection Agency or Indiana Department of Environmental Management.

Chinese Mills’ Profits Up

Profits by Chinese mills continue to rise after a warm start to the winter season, Reuters reported.

Warmer weather has allowed steel operations to continue when they would ordinarily be shut down by the colder winter weather.

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According to the report, physical spot prices for steel rebar for immediate delivery rose to 5,210 yuan ($787.72) a ton on Tuesday — its highest since August 2008.

The Automotive MMI, tracking metals and raw materials used within the automotive industry, jumped 4.3% to a value of 97 for May.

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Here’s What Happened

  • The U.S. HDG steel price tracked by the MetalMiner IndX jumped 11% to an 8-month high for December, last reaching its current level in April 2017. U.S. shredded scrap prices also spiked to an 8-month high, driving this sub-index higher.
  • Our Auto MMI has had a stalwart Q4, with sustained values in the 90s. In fact, the last time this sub-index reached 97 was in September 2014.

What’s Going On in the Background?

  • Auto sales in the U.S. were helped along by automaker and dealer incentives for consumers, with the return of the holiday shopping season — especially Black Friday, according to an AP report.
  • Edmunds.com predicted “November sales will rise 3.5 percent over last year to 1.4 million vehicles,” according to that report.
  • The historical picture, however, shows that while car sales are in a longer-term downtrend, light truck sales are in a longer-term uptrend, according to the WSJ.
  • As for the Chinese auto market, vehicle sales increased by 2% year-over-year in October, growing for the sixth consecutive month, according to MetalMiner’s monthly metal buying outlook report. New-energy vehicle sales also boomed this year, driven by government incentives to support the EV sector.

What Metal Buyers Should Look Out For

  • The state of how sales within the automotive market are structured could offer some hints as to what the future holds. Brandon Mason, a director at PwC’s automotive practice, told Reuters that, “a worrying trend for the industry was a rising number of deep subprime loans. He said subprime levels are at just over 20 percent of originations, against more than 30 percent prior to the Great Recession, but recent increases remain a concern.”
  • HDG prices, however, may be the biggest elephant in the room — not to mention often the single-biggest driver within our market basket of metals used in the auto industry. According to MetalMiner’s analysis in the monthly outlook, while 2016 saw a sizable increase in HDG prices, they’ve begun to level off to the point that real price strength is not yet evident. With slowing Chinese prices and pending circumvention cases, HDG prices may reverse this month’s uptrend just as quickly as it began.

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This morning in metals news, the Indian government says the country’s steel firms can meet the railway industry’s needs, copper hits a one-month high and the Japan Iron and Steel Federation says it doesn’t expect a decline in automobile steel sheet demand.

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Domestic Firms Can Meet Railway Demand, Indian Government Says

According to an Indian government panel, domestic steel companies like Jindal Steel and Power Limited can meet the railways’ demand if given an opportunity, Reuters reported.

According to Reuters, the state-run Steel Authority of India Ltd (SAIL) has struggled to supply the steel as India looks to expand its rail network, the fourth-largest rail network in the world.

Copper Hits One-Month High

Copper rose to a one-month high on Monday, Reuters reported, topping $7,000 in the process.
The jump comes “amid signs of resilience in China’s industrial sector,” Reuters reported.

Demand for Automotive Steel: Japan Iron and Steel Federation

Despite news that Nissan and Subaru did not comply with inspection procedures for decades, the top official of the Japan Iron and Steel Federation said they do not expect a decline in demand for automobile steel sheets.

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Despite steel producers’ best endeavors, aluminum continues to make inroads into the industry’s previously unassailable position as construction material of choice for the automotive industry.

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Stronger and, hence, thinner grades of steel allow automotive body formers to find new applications for steel where aluminum seemed like the obvious choice. However, at best this is slowing the uptake of the light metal, not turning the situation around.

Novelis’ announcement that it is bringing its automotive alloy Advanz 6HF – e/s200 to North America after successful development and uptake in Europe only re-enforces the impression that both steel and aluminum producers are innovating and investing like mad — but aluminum is gradually winning market share.

And it is not hard to see why. Aluminum has lower mechanical properties than steel when compared on samples of the same thickness, but has the far lower weight, 2.7g/cm3, compared to 7.85g/cm3. This means thicker sections or parts can be formed while still achieving substantial weight gains.

Novelis Advanz 6HF – e/s200 is one of a range of alloys the firm has developed broadly based on the 6000 series with careful control of alloying elements and production giving enhanced properties. But in some applications producers have developed 7000 series alloys as used by the aerospace industry in aircraft wings and bodies to achieve even higher properties.

7000 series alloys are harder to form and more expensive but have even higher mechanical properties — circa 600MPa compared to circa 300Mpa for 6000 series — and allow automakers to achieve better weight gains. In an Aleris presentation, the company illustrated how the use of 3.5 millimeter thick 7000 series alloy in the manufacture of B pillars achieved the same safety crash performance as 2 mm boron UHS steel, but resulted in a 40% weight saving.

As if to reinforce Novelis’ announcement, competitor Aleris has just opened its new $400 million auto body sheet production centre in Lewisport, Kentucky, and started delivering product to customers. Like Novelis, the firm uses primarily scrap as its feedstock, boosting its green credentials. Aleris produces a range of proprietary alloy grades with enhanced properties over common 6061 grades specifically tailored for a variety of automotive applications. The 6000 series is the industry’s grade family of choice, as they sit comfortably between cheaper and less strong 5000 series and stronger but more expensive (and often harder to form) 7000 series.

In Europe, manufacturers like Audi are going Body in White — meaning the whole structural body shell, plus closing panels like hood, trunk and doors, as wholly or largely in aluminum.

Not surprisingly, this is more at the premium end of the market, where the pressure to improve fuel economy from larger engines is greatest and where higher margins can more readily absorb the cost of using aluminum.

But you do not need deep research to show the direction — Repair and Drive in a recent article quoted a Ducker Worldwide study that predicted that aluminum doors will have gone from virtually zero use as a material in 2014 to 25% of the North American fleet in 2020.

Underlining how rapid the uptake is underway, the consulting firm also estimated 71% of hoods would be aluminum by 2020, up from 50% in 2015, and bumper beams would grow from 33% aluminum in 2015 to 54% in 2020, the article explained.

The current administration’s adverse reaction to broader climate change policies is not the issue here. Automotive is a global business and U.S. manufacturers need to be at the forefront of design and material use to maintain their global positions. The legislation for ever higher fuel efficiency is going to remain a relentless one-way dynamic, encouraging automotive construction to use ever lighter materials and aluminum producers to continue to innovate with alloys and production processes to meet the industry’s demand.

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For now, the focus is on improved 6000 series; in time, more components will justify the use of 7000 series alloys. Either way, the industry has shown it is willing to spend big bucks to stay in what is proving to be a very lucrative race.

Before we head into the weekend, let’s take a look back at the week that was:

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Free Download: The November 2017 MMI Report

Source: Adobe Stock / shutswis

This morning in metals news, Nucor announced a major project at its Bourbonnais, Illinois plant, Aleris has a new automotive sheet facility in Kentucky and Chinese automotive sales drop in October.

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Nucor Announces Plant Expansion in Illinois

Nucor is building a merchant bar mill at its plant in Bourbonnais, Illinois plant, the company announced Wednesday.

The full-range merchant bar quality (MBQ) mill will have an annual capacity of 500,000 tons and is expected to cost $180 million, according to the Nucor release. The project will take approximately two years to complete.

“This new MBQ mill is right in line with our long-term strategy for profitable growth. It takes advantage of our position as a low-cost producer to displace tons currently being supplied by competitors outside the region. It also builds on our market leadership position by further enhancing our product offerings of merchant bar, light shapes and structural angle and channel in markets in the central U.S.,” said John Ferriola, chairman, CEO and president of Nucor.

“Combined with our other full-range bar mills, we are now strategically located to supply all markets with high-quality bar products and exceptional service.”

Aleris Announces New Automotive Sheet Facility

Aleris opened a new automotive body sheet facility in Lewisport, Kentucky, the company announced.

The project represents a $400 million investment, according to the Aleris release.

Chinese October Automotive Sales Fall

According to data from the Chinese Association of Automobile Manufacturers (CAAM), yearly sales are up, while sales for October dipped from the previous month.

According to CAAM, In October, the production and sales of automobiles in China reached 2,604,000 and 2,704,000 units, respectively, down 2.5% and 0.2% from September. Meanwhile, production and sales were up 0.7% and 2% year-on-year.

Free Download: The November 2017 MMI Report

For the first 10 months of 2017, the production and sales of automobiles were 22,957,000 and 22,927,000 units, respectively, up 4.3% and 4.1% year-on-year.

An article in the Financial Times this week reporting on recent research done by the Trancik Lab at MIT and the Norwegian University of Science and Technology last year suggests that the future for low-emissions vehicles might simply be smaller vehicles.

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Both pieces of solid research support the fact that larger, electric-powered vehicles have a higher life cycle carbon footprint than smaller combustion engine autos.

Let us first define what the research is saying about life cycle emissions. To capture an electric car’s full environmental impact, the research says regulators need to embrace life cycle analysis that considers car production, including the sourcing of rare earth metals that are part of the battery, plus the electricity that powers it and the recycling of its components. The most crucial elements appear to be the source of the electricity used to charge the batteries and the size (and therefore quantity of lithium and cobalt) of the batteries.

Early early vehicles (EVs) were small vehicles with limited batteries and limited ranges, but Tesla changed all that with the model S. With the marker they laid down to the market, vehicle sizes and the range they can offer on a single charge have risen. As a result, so has the size of the batteries, to the point where a model S can weigh up to 2,250 kilograms, but a significant part of that is the massive battery that powers its impressive range.

Source: Financial Times

According to data from the Trancik Lab quoted by the Financial Times, a Tesla Model S P100D saloon driven in the U.S. Midwest produces 226 grams of carbon dioxide (or equivalent) per kilometer over its life cycle. That numbers comes in less than an equivalent large luxury internal combustion engine (ICE) saloon, but much more than a smaller ICE vehicle that may produce less than 200g/km over its life cycle.

Note the reference to the location, as part of the calculation takes account of the electricity-generating capacity — in a solar- or wind-rich environment like Spain or Nevada, it will have a lower carbon footprint than in a coal-rich area, like Poland.

And therein lies part of the problem for legislators, keen to drive our migration to a “zero emission” transport future.

Of course, that is a fiction — all power, even renewables, has a carbon footprint. Power sources, however, vary considerably. To guide both automotive policy and power generation, legislators need to start looking at this more holistically than simply just, in the case of cars, what comes out the tailpipe.

Source: Financial Times

Size for size, EV has some 50% lower life cycle emission signature than an equivalent size ICE. The MIT research acknowledges that fact, but the drive for ever longer ranges (required in only a tiny fraction of real life journeys) will reduce the benefit a switch to EV could deliver. The irony is that by the time legislators get around to working out how to incentivize and/or penalize better car choices, the market will be evolving to negate the benefits. The rise of sharing services will mean journeys will be completed less in our own vehicles and more in hired services, so that we do not make purchase choices based on range and where transport providers could coordinate vehicles for longer distances. Battery technology will also improve in the next decade, increasing power density per kilogram of lithium and potentially reducing, or even removing, the need to cobalt altogether.

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While legislators fumble forward trying to accommodate the fact they are encouraging poor buying choices and the development of technologies in the wrong direction, be prepared for the fact that we see about turns in EV incentives from the current “all EVs are good” to “some EVs are good —  but some are going to be taxed.”

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Much like governments encouraged millions to switch to diesels, only for them to heavily penalize diesel cars less than 10 years later, we could see an equally ham-fisted about change on EV tax legislation down the road.

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Before we head into the weekend, let’s take a look back at the week that was.

Benchmark Your Current Metal Price by Grade, Shape and Alloy: See How it Stacks Up

Free Sample Report: Our Annual Metal Buying Outlook