Articles in Category: Automotive
Airbus plane

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Before we head into the weekend, let’s take a look back at the week that was and some of the metals storylines here on MetalMiner, including the AirbusBoeing subsidy saga, industrial production, Liberty Steel’s bid for German firm Thyssenkrupp’s steel division and much more.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

Week of Oct. 19-23 (Airbus-Boeing saga, industrial production and more)

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electric vehicle charging

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This morning in metals news: General Motors will invest $2 billion to transition its Tennessee plant for the production of electric vehicles (EVs); Rio Tinto announced its Q3 2020 production results; and Norsk Hydro has made a deal to merge part of its hydropower generation with that of Lyse. 

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

General Motors to invest $2B to repurpose Tennessee plant for EVs

General Motors will invest $2 billion to transition its Spring Hill, Tennessee plant for the production of electric vehicles.

The plant will be GM’s third to transition to producing EVs, after Factory ZERO in Detroit and Hamtramck, Michigan, and Orion Assembly in Orion Township, Michigan.

Rio Tinto releases Q3 output figures

Miner Rio Tinto recently released its output results for Q3, reporting iron ore production of 86.4 million tons.

The Q3 production figure marked a 5% decline on a both a year-over-year and month-over-month basis.

Rio Tinto’s Q3 bauxite production totaled 14.5 million tons, up 5% year over year and down 1% from the previous quarter.

Aluminum output reached 797 kt, up 1% year over year and up 2% from the previous quarter. In addition, copper output reached 129.6 kt, down 18% year over year and down 2% from Q2 2020.

Hydro, Lyse to establish hydropower company

Meanwhile, Oslo-based Norsk Hydro announced it will merge part of its hydropower capacity with that of Lyse.

The new firm, Lyse Kraft DA, will have annual power production capacity of 9.5 TWh. Hydro will own 25.6% of Lyse Kraft DA, while Lyse will own 74.4%.

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Ford Motor Co.

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This morning in metals news: Ford’s China sales posted their largest year-over-year increase in Q3 since 2016; overall automotive sales in China gained 12.8% year over year; and Liberty Steel Group announced it has made an offer to acquire German firm Thyssenkrupp’s steel business.

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Ford’s China sales rise 25.4%

Ford’s China sales rose 25.4% on a year-over-year basis in the third quarter, the automaker reported.

The year-over-year gain in China marked Ford’s strongest sales gain in the market since 2016.

“Ford is strengthening its sales momentum in China by building on growing consumer preference for our iconic brand and favorable product mix of luxury and near-premium utility vehicles,” said Anning Chen, president and CEO of Ford China. “Our localization strategy to produce in China world-class Ford and Lincoln vehicles, including the newly launched Ford Explorer, Lincoln Corsair and Lincoln Aviator, has further enhanced our competitiveness in delivering the best products and services that Chinese consumers are looking for.”

Auto sales in China up again

Meanwhile, overall automotive sales were up in China for a fifth straight month.

Auto sales in the country rose 12.8% year over year in September, according to the China Association of Automobile Manufacturers.

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cars lined up

Steven Husk/Adobe Stock

Before we head into the weekend, let’s take a look back at the week that was and some of the metals storylines here on MetalMiner, including coverage of: U.S. auto sales; potential Section 232 aluminum exemptions for the U.A.E. and Bahrain; oil majors’ struggles; and more.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

Week of Oct. 5-9 (auto sales, potential Section 232 aluminum exemptions and more)

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The Automotive Monthly Metals Index (MMI) gained 2.2% for this month’s index value, as Q3 2020 automotive sales showcased some basis for optimism.

October 2020 Automotive MMI chart

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

U.S. Q3 2020 automotive sales

Despite the May restarts of automotive manufacturers, U.S. showrooms faced low inventories this summer, putting a cap on sales despite solid demand.

“Available inventory is far below last year’s levels, yet sales continue to show surprising strength,” said Charlie Chesbrough, senior economist at Cox Automotive. “Going into the fourth quarter, the key question is: Can this continue? Clearly new vehicle buyers haven’t been hit as hard as other consumers during this recession, so demand is likely to remain stable over the near-term.”

General Motors, for example, reported Q3 2020 automotive sales fell 10% year over year to 665,192 vehicles.

“In a sign of a recovering industry, sales improved sequentially each month within the quarter,” GM said in a release. “Industry and GM sales rebounded significantly in September, finishing the month with year-over-year sales increases.”

Meanwhile, Ford reported Q3 2020 sales fell 4.9% year over year. Ford truck sales, however, showed growth. Total truck sales jumped 0.6%, while retail sales gained 8.3%. The quarter marked Ford’s best third quarter for truck sales since 2005, the automaker reported.

FCA US sales dropped 10% year over year in the third quarter. However, third-quarter sales rose 38% compared with the previous quarter.

Similarly, while Honda’s Q3 2020 sales fell 9.5% year over year, sales in September alone rose 11.5%.

“September marks a high-water mark for Honda sales this year with double-digit gains and our first month in positive territory since the pandemic began,” said Dave Gardner, executive vice president of National Operations at American Honda.

Nissan sales fell 32.4% in the third quarter on a year-over-year basis.

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mergers and acquisitions

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Before we head into the weekend, let’s take a look back at the week that was and some of the metals storylines here on MetalMiner, including: Cleveland-Cliffs’ acquisition of ArcelorMittal USA; a breakdown of the British automotive manufacturing sector’s struggles; the PSAFiat Chrysler merger; primary aluminum production; the U.S. steel capacity utilization rate; and Hurricane Laura’s impact on Gulf of Mexico crude oil production.

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Week of Sept. 28-Oct. 2 (Cleveland-Cliffs’ acquisition, primary aluminum production and more)

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

mergers and acquisitions

iQoncept/Adobe Stock

As we noted earlier this week, the Cleveland-Cliffs acquisition of ArcelorMittal USA came at a price tag of $1.4 billion.

This comes after Cleveland-Cliffs acquired AK Steel earlier this year (among other things, AK Steel is the lone remaining U.S. producer of electrical steel).

The deal includes nearly all of the ArcelorMittal subsidiary’s North American facilities (with a few exceptions, as we will elaborate on shortly). Cleveland-Cliffs expects to close the deal in Q4 2020.

Since the announcement, Cleveland-Cliffs shares are up over 12%.

So, what does the merger mean for the North American metals scene and relevant sectors, like automotive?

Are you prepared for your annual steel contract negotiations? Be sure to check out our five best practices. 

Initial reaction to Cleveland-Cliffs acquisition of ArcelorMittal USA

Overall, this seems to be a solid move for everyone involved.

ArcelorMittal offloads old assets that have a high cost structure for producing steel while still maintaining a mill with one of the lowest cost structures in the country.

On the other hand, Cliffs gains a large auto book of business with good margins. Furthermore, the steel market will see old, expensive capacity taken out. As such, that will make room for new capacity scheduled to come online in the near future.

Strengthening auto position

As noted previously, the acquisition makes Cleveland-Cliffs the largest flat-rolled steel producer in North America. The deal will also make Cleveland-Cliffs — the oldest iron ore mining company in the country — the largest iron ore pellet producer in North America, with 28 million long tons of capacity.

The deal further strengthens the company’s position in the automotive sector. The company likely controls 60%-65% of exposed auto sheet supply (think the steel used on the outside of a car).

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It is not often the world’s largest carmakers engage in mergers and acquisitions among themselves.

Fiat Chrysler and Renault Nissan announced a $35 billion plan to merge back in May 2019. The merger would have created the third-biggest carmaker, behind Volkswagen and Toyota.

But within 10 days of the announcement, FCA pulled out and it came to nothing.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

Take two: Fiat Chrysler, PSA to merge

Now, still keen for a tie-up, FCA has announced it will merge with the French group PSA.

PSA is the owner of brands like Peugeot, Citroen, Vauxhall, and DS. The deal, valued at $50 billion, would form a 50/50 partnership with a turnover of some €170 billion ($200 billion) a year and annual production of some 8.7 million units.

As such, the deal would put them, again, third. By other measures, they would be fourth, behind at least Volkswagen and Toyota, and possibly the Renault–Nissan–Mitsubishi Alliance (if you consider that one entity).

The combined FCA-PSA company will be renamed Stellantis. The name comes from the Latin “stello,” meaning “to brighten the stars.” (Yes, I know, who thinks up these names?)

According to AutoExpress, based on 2018 figures, Stellantis will have approximately 46% of its revenues from Europe and 43% from North America. PSA has long held ambitions to expand into North America. As such, a merger with FCA would make that much easier.

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We may be coming out of the first pandemic lockdown and business does, broadly, appear to be picking up; however, but some sections of manufacturing, including U.K. car manufacturing, are still suffering badly.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

U.K. car industry, supply chain face challenges

An article in the Financial Times starkly outlines the continued pain the U.K. car industry is experiencing and, by extension its extended supply chain.

U.K. car manufacturing fell 44% last month compared with a year earlier. Domestic orders and exports remain severely depressed. Last month’s performance marked the sector’s second-worst since car plants restarted after lockdown.

The Financial Times went on to advise that just 51,039 cars rolled off British production lines. The total fell from 92,153 in August 2019. Meanwhile, August output for U.K. buyers fell 58% to just 7,795 vehicles. The number of cars made for export fell 41% to 73,443 cars.

To be fair, several plants working during summer 2019 boosted August 2019 performance. Summer output followed a three-week closedown in the spring to prepare for the expected Brexit in 2019, which in the end did not transpire.

So, looking at the first half of each year gives a fairer comparison. Yet, even in that view the decline remains dramatic.

Between January and August, the U.K. produced 40.2% fewer cars than in the same months a year earlier. The period included several weeks of complete stoppages during the first lockdown in March and April.

Year-to-date production is now down by 348,821 units worth more than £9.5 billion to U.K. carmakers, according to the Society of Motor Manufacturers and Traders (SMMT). Furthermore, projections suggest U.K. car manufacturers are now on track to produce just below 885,000 cars this year – down 34% on 2019.

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cars lined up

Steven Husk/Adobe Stock

This morning in metals news: U.S. automotive retails sales appear to be on the rise this month for the first time since February; U.S. steel imports are down 21%; and the zinc price has slipped nearly 4% over the past month.

The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.

Automotive retail sales forecast to gain this month

According to a forecast released jointly by LMC Automotive and J.D. Power, U.S. new-vehicle retail sales this month are expected to rise on a year-over-year basis.

The increase marks the first gain since February, according to the forecast.

“Retail sales in September are poised to post the first year-over-year gain since February, a milestone in the recovery from the disruption that COVID-19 has had on the industry,” said Thomas King, president of the data and analytics division at J.D. Power.

Steel imports down 21%

U.S. steel imports this year through August fell 21% compared with the same time frame in 2019, according to the American Iron and Steel Institute (AISI).

Meanwhile, finished steel import market share reached an estimated 17% in August. For the first eight months of the year, import market share for finished steel reached 19%.

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