Articles in Category: Automotive

Lithium batteries. konok1a/Adobe Stock

We normally associate Cornwall in England with scones and cream teas … or, if we are really metal nerds, we associate the sometimes sunny southeast country of the British Isles with mining (particularly with tin mining).

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The area dominated with igneous morphology has been mined since Roman times for tin, copper and a number of other metals.

But one metal, not surprisingly, that has never featured is lithium. I say “not surprisingly” because up to the end of the last century, it barely featured as a metal of value.

Nickel metal hydride batteries dominated the small appliance world and lead acid still served the rest. This century has seen an exponential growth in the use of lithium-ion batteries, from iPhones to electric cars to massive storage barns. The growth has been such that fears are mounting of a market shortage in the next decade, fueled in no small part by state support for electric vehicles (EVs) in Asia.

In fact, so urgent has the situation become that Chinese and Japanese battery makers are quietly buying into or buying up lithium deposits around the world to ensure they have secure supplies.  Currently, Europe consumes around 25% of the world’s lithium, but is dependent on imports from Australia, Chile, Argentina and China.

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

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But first, if you plan on partaking in Cinco de Mayo celebrations tomorrow, you might want to check out our post from 2016 about stainless steel and … tequila.

“Why is stainless steel in tequila production? Of course, stainless vats are a sanitary choice; however, stainless does not impart any additional flavors into the mixture of blue agave juice and the distinctive water called the mosto,” MetalMiner’s Katie Benchina Olsen wrote in the 2016 post.

Check out the entire post for more about the link between stainless steel and tequila.

Now, to recap the week:

  • MetalMiner’s Stuart Burns touched on nickel fundamentals on Monday.
  • The United States Trade Representative’s office released its annual Special Section 301 report, in which countries are identified for special monitoring with respect to IP enforcement. Unsurprisingly, China made the Priority Watch List.
  • Remember Brexit? Well, that hasn’t gone away — in two parts, Burns offers an update on Britain’s Brexit effort and all it entails. (Part 1, Part 2.)
  • In the ongoing Section 232 saga, the U.S. announced earlier this week that the temporary tariffs exemptions for the E.U., Canada and Mexico, which were set to expire May 1, would be extended 30 days.
  • Kicking off our Monthly Metals Index (MMI) series for the month, we looked at the automotive market, which saw sales slump in April.
  • U.S. construction spending in March dropped from the previous month.
  • MetalMiner’s Katie Benchina Olsen delves into the case for a Section 232 exemption for the joint venture between ATI Metals and Tsingshan Stainless.
  • Demand for gold in Q1 this year was at its lowest since 2008, MetalMiner’s Taras Berezowksy noted.
  • So-called “floating solar plants” are gaining momentum in India as the country increasingly looks to grow its supply of renewable energy sources.

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The Automotive Monthly Metals Index (MMI) tracked back slightly this past month, losing one point to fall to a reading of 102 for our May MMI, as U.S. auto sales dropped in April.

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Within the basket of metals, U.S. HDG got a slight boost, as domestic steel continues to ride a wave of, at the very least, short-term support from the Trump administration’s Section 232 measures.

Elsewhere, LME copper bounced back 1.5% month over month, while U.S. shredded scrap steel jumped 3.0%. Meanwhile, Korean aluminum coil dropped 3.7%.

Also, palladium continues to trade at a premium to platinum, which, as we’ve now been saying for many months, isn’t typical. Our September MMI marked the last reading in which platinum traded at a premium to palladium.

U.S. Auto Sales

The first quarter was a good one for automakers in the U.S. market. As we reported last month, General Motors saw its March sales jump 15.7% year over year, while Ford was up 3.5% and Fiat Chrysler up 13.6% (just to name a few).

Sales in April, however, slowed down.

April saw 17.15 million units sold, down from 17.04 million units in April 2017, according to Reuters. Meanwhile, Ford saw its April sales drop 4.7% compared to April 2017.

As for top seller General Motors, the automaker recently announced it would no longer announce sales data on a monthly basis, instead reporting on a quarterly schedule. According to the Reuters report, estimates show GM’s April sales coming in anywhere between flat to a 0.8% drop.

A Strategy Shift for Ford

The U.S. auto market’s No. 2 seller, Ford, made a big announcement regarding its North American lineup.

For some time now, appetite has been high for trucks in the U.S., as sales data have showed. With that in mind, during the company’s recent Q1 earnings release, it announced that it would phase out a number of of its traditional sedans in what marks a narrowing of its offerings in the market.

“For example, by 2020, almost 90 percent of the Ford portfolio in North America will be trucks, utilities and commercial vehicles,” Ford’s Q1 earnings release states. “Given declining consumer demand and product profitability, the company will not invest in next generations of traditional Ford sedans for North America. Over the next few years, the Ford car portfolio in North America will transition to two vehicles – the best-selling Mustang and the all-new Focus Active crossover coming out next year. The company is also exploring new ‘white space’ vehicle silhouettes that combine the best attributes of cars and utilities, such as higher ride height, space and versatility.”

Mark LaNeve, Ford’s vice president for U.S. marketing, sales and service, noted 75% of Ford’s commercial sales are in trucks and vans.

Chinese Auto Sales

The Wall Street Journal last month reported Chinese auto sales posted a 4.7% year-over-year rise in March.

Meanwhile, Ford saw its Chinese sales drop significantly in March. Reuters reported Ford’s March sales in the country were down 11% year over year.

As for Japanese automaker Nissan, which posted a 28% year-over-year drop in U.S. sales last month, Bloomberg Gadfly speculated whether that could be part of a deliberate pullback from the U.S. market in favor of another market: China.

NAFTA Auto Developments

U.S. Trade Representative Robert Lighthizer said this week that he hopes to reach a deal on restructuring the North American Free Trade Agreement (NAFTA), the trilateral trade deal in place since 1994, sometime this month. Negotiators from the U.S., Mexico and Canada have engaged in talks on NAFTA since last fall, so pessimism regarding a tidy resolution this month is probably warranted.

Nonetheless, a point of contention in the NAFTA dialogue has been the issue of automotive rules of origin; that is, the percentage of automotive parts for a vehicle that must originate in North America.

Reuters reported earlier this week that a recent U.S. proposal called for a 75% mark for automotive parts, which would be up from the current 62.5% but down from a previous U.S. proposal of 85%. As part of the debate, Lighthizer has also applied pressure on Mexico to raise automotive workers’ wages in the country.

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According to the report, however, a deal on automotive content is still far off. Reuters quoted Eduardo Solis, president of the Mexican Auto Industry Association, who said the latest U.S. proposal was “not acceptable.”

The U.S. International Trade Commission late last week sent out a note that it is looking for input on a new investigation concerning proposed modifications to the U.S. Korea Free Trade Agreement (KORUS), specifically related to customs duties for motor vehicles.

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Recently, the U.S. and South Korea reached an agreement in principle to revamp the free trade agreement, which originally went into effect in 2012.

“The investigation, U.S.-Korea FTA: Advice on Modifications to Duty Rates for Certain Motor Vehicles, was requested by the U.S. Trade Representative (USTR) in a letter received on April 6, 2018,” a USITC release said. “The letter included an attachment detailing the articles affected by the proposed modifications.”

The USITC will submit its advice to the USTR by June 1, according to the announcement.

On March 28, USTR Robert E. Lighthizer and Republic of Korea Minister for Trade Hyun Chong Kim issued a joint statement announcing they had reached an agreement in principle regarding revisions to KORUS.

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U.S. goods and services trade with Korea was an estimated $144.6 billion in 2016, per the USTR. Exports were $63.8 billion; imports were $80.8 billion, making for a goods and services trade deficit with Korea of $17.0 billion in 2016.

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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 stories here on MetalMiner:

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  • Joseph Kabila, president of the Democratic Republic of Congo, is looking to rip up a 2002 mining charter in order to secure a larger piece of the revenue from the country’s vast natural resources.
  • Copper prices have been trending down since a December surge (when the LME copper price reached $7,215/mt).
  • There’s a battle going on between two rival manufacturers of the famous London black cab.
  • Hong Kong’s housing market is overstretched, MetalMiner’s Stuart Burns writes.
  • In case you missed it, it’s Monthly Metals Index (MMI) Week! We kicked our off monthly round of subindex reports this week, which are available at the following links: Construction, Rare Earths, Renewables, and Automotive. Look for the remaining six MMI reports next week.
  • India is among the list of countries still lobbying for exemptions from the U.S.’s Section 232 tariffs on steel and aluminum imports.

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The Renewables Monthly Metals Index (MMI) rose seven points on the month, hitting 107 for our April reading.

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Within the basket of metals, Korean, Chinese and U.S. steel plate posted price increases, while Japanese steel plate traced back slightly. U.S. steel plate jumped significantly, posting a 13.6% increase for the month.

U.S. grain-oriented electrical steel (GOES) coil fell on the month, while neodymium picked up by 0.7%.

The always volatile cobalt price shot up significantly last month, rising 10.6%.

Tesla Strategy Places Premium on Neodymium

As we mentioned earlier this week, growing demand for neodymium from electric vehicle (EV) maker Tesla will put even more pressure on what is already a constrained market.

In short, that means rising prices for the material, reflected in this month’s activity.

Tesla is looking to neodymium for magnetic motors in its Model 3 Long Range cars, as mentioned in the Reuters report we cited Tuesday. Last year, supply fell short of demand by 3,300 tons, according to that report.

DRC Looks to Shake Up 2002 Mining Charter

When it comes to anything cobalt, the Democratic Republic of Congo is typically at the center, being the source of the majority of the world’s cobalt.

Earlier this week, MetalMiner’s Stuart Burns wrote about President Joseph Kabila’s move to readjust the nation’s 2002 mining charter to, essentially, secure a bigger piece of the pie vis-a-vis the country’s vast mineral resources.

It comes as no surprise that the multinational miners doing business in the DRC aren’t exactly thrilled by the proposition of increased royalties and levies. However, as Burns noted, value of materials like cobalt and the demand they draw, combined with their relative scarcity, means such multinationals will continue to do business there, no matter what happens with the charter.

“If the state takes a little more of the pie, it will probably be reflected in prices,” Burns wrote. “But with limited alternatives for products like cobalt, it is unlikely to dent mining companies’ enthusiasm for investing in the DRC.”

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Actual Metal Prices and Trends

Within the basket of metals, Korean, Chinese and U.S. steel plate posted price increases, while Japanese steel plate traced back slightly. Korean plate rose 6.6% to $650.16/mt. Chinese plate ticked up only slightly, by 0.1%, to $716.64/mt.

U.S. steel plate jumped significantly, posting a 13.6% increase for the month, up to $920/st.

U.S. grain-oriented electrical steel (GOES) coil fell 1.9% to $2,597 on the month, while neodymium picked up by 0.7% to $71,265.50/mt.

The always volatile cobalt price shot up significantly last month, rising 10.6% to $98,274/mt.

The Automotive Monthly Metals Index (MMI) jumped three points for an April reading of 103 after a month that saw the U.S. impose Section 232 tariffs of 25% and 10% on steel and aluminum imports, respectively, in addition to escalating trade tensions between the U.S. and China.

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Within the basket of metals, U.S. HDG rose 12.3%. Meanwhile, palladium continues to outpace platinum in price, continuing the ahistorical trend that began last October.

U.S. shredded scrap jumped 3.1%, while LME copper continued its 2018 cooling down, dropping 2.5% month over month.

Chinese primary lead jumped 1.3%.

U.S. Auto Sales

According to monthly sales data release by Autodata Corp, it was a strong month for several of the top automakers in the U.S. market.

General Motors posted a 15.7% increase in sales year over year, and is up 3.8% in the year to date compared with the same time frame last year.

Ford Motor Co. saw its sales jump 3.5% year over year in March, but remains down 2.7% in the year to date.

Fiat Chrysler’s March sales jumped 13.6% year over year, and boasts an 0.8% increase for the year to date. Toyota’s sales jumped 3.5% in March year over year and is up 7.4% in the year to date. Honda also had a good month, posting a year-over-year sales increase of 3.8%; however, its year-to-date sales are down 0.8%.

Volkswagen, Mitsubishi and Mazda continued what has been a strong 2018 for each of them. Volkswagen’s March sales rose 13.5% year over year, while the German automaker’s year-to-date sales are up 9.9%. Mitsubishi jumped 21.7% in March and is up 22.7% in the year to date. Mazda, meanwhile, posted a 35.7% increase in March and is up 21.6% in the year to date.

In total, vehicle sales in March were up 6.3% year over year and are up 1.9% in the year to date. American consumers continue to prize light trucks, as sales of those vehicles rose 16.3% year over year in March and are up 9.8% for the year to date.

U.S.-China Trade Tensions Rise

Earlier this week, the Office of the United States Trade Representative released a list of 1,300 Chinese products that could be hit with tariffs (stemming from the administration’s Section 301 probe of Chinese trade practices).

Not long after, China announced it would place 25% tariffs on 106 U.S. products, including autos, Reuters reported.

Tesla and Tariffs

It’s been a rough couple of weeks for Tesla.

In late March, the fatal crash of a Tesla Inc. Model X led to a massive selloff, leading to an 8.2% drop in its stock and its lowest closing in almost a year, CNBC reported.

On top of that, the electric vehicle (EV) maker continues to struggle with the cold, hard reality of production timelines. CNBC reported that Tesla missed its quarterly goal of producing 2,500 Model 3s per week.

The stock price recovered Tuesday, but Wednesday’s news of $50 billion in tariffs from China — in retaliation to the U.S.’s own recent announcement regarding a potential $50 billion in tariffs on Chinese imports — is another hit to the EV firm.

According to Bloomberg, China accounted for 17% of Tesla’s 2017 revenue.

Actual Metal Prices and Trends

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The fight is on in the streets of London between two rival manufacturers of the iconic London black cab.

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Earlier this year the London High Court cleared an appeal made by the Chinese-owned London Electric Vehicle Company (LEVC) against British Metrocab that had delayed the launch of Metrocab’s new electric model by three years. Both companies are racing to create scale and secure market share of London’s black taxi fleet.

According to the Financial Times, the city’s transport authority Transport for London (TfL) announced plans in 2014 that require cabs to be zero-emissions capable by 2033. The 24,000 diesel-powered black taxi fleet accounts for almost one-fifth of the city’s vehicle nitrogen oxide emissions, the Financial Times reports. Replacing this fleet over the next 15 years is said to be worth £1.2 billion ($1.7 billion) and for the successful company would provide a springboard for a potentially lucrative export market.

Although LEVC, formerly called the London Taxi Company, has a three-year head start over Metrocab, it has struggled to get its manufacturing operation off the ground as quickly as it had hoped.

LEVC is owned by the Chinese group Geely, owners of Volvo cars, sports car maker Lotus, and with a stake in Mercedes-Benz.

Metrocab, on the other hand, is a family-owned minnow in comparison but ironically is contracting the manufacture of its vehicles to another British firm in Coventry called Cad Cam, which has secured £100m ($140 million) of funding from another Chinese company, Red Sun — it would seem increasingly all roads lead to Beijing.

The London Taxi Drivers Association welcome Metrocab’s success at the appeals court, saying “we think the more competition the better, right now we have to buy electric and we only have one choice, a monopoly is no good for anyone.”

Anyone who has traveled in one of London’s black cabs will have immediately noticed the slightly strange design compared to cabs everywhere else in the world. This is because London’s cabs, whether diesel or electric, face a unique set of requirements, the Financial Times notes.

All London black cabs must be capable of wheelchair access and have a turning circle of just 24 feet. More comically they must have sufficient headroom for a 5-foot-8 tall man to sit in the rear seat wearing a top hat – well, it is London.

The new electric cabs are expected to cost between £40,000 and £50,000 from Metrocab and are currently available at £63,000 from LEVC, but drivers can access a £7,500 subsidy from TFL with an additional £5,000 pounds if the cab they trade in is more than 10 years old.

Performance-wise the two companies’ current models are reasonably similar, as the graphic below shows.

Source: Financial Times

Both firms claim the 50- to 80-mile range on all electric is sufficient for a day’s operation within central London. However, based on the dodgy claims made by most car manufacturers on range (both ICE and EV, it must be said) we have our doubts. It is to be hoped that further technological development extends this range in the coming years.

There has been talk of London banning all diesel cars from the city center, an option being explored in other European cities seeking to reduce atmospheric pollution. Realistically, it would be hypocritical of the capital to ban diesel cars while it continued to permit 24,000 diesel-powered taxis.

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2033 may seem a long way off, but TfL’s plans are at least a step in the right direction. The competition between LEVC, Metrocab and other challengers (such as Nissan) can only spur innovation and help drive down costs.

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This morning in metals news, aluminum and steel compete in the electric vehicle (EV) market, copper stocks on the Shanghai Futures Exchange are surging and the list of Chinese products that could be subject to tariffs might include aerospace components.

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Aluminum vs. Steel

The two metals are going head to head in the world of EVs, particularly after Tesla launched its steel-based mass market model last year, Reuters reported.

The decision by Tesla was somewhat of a surprise given aluminum’s lighter weight. Now, the battle is not just about developing EVs, it’s about developing them at a price that works for consumers, the report indicates.

Copper Stocks Rising on SHFE

Copper demand is lagging while inventories are piling up around the world, according to a Bloomberg report.

LME inventories jumped to a four-year high on Tuesday, according to the report, while copper inventories in Shanghai Futures Exchange warehouses have jumped 90% this year.

Tariffs on Aerospace

President Trump last week announced the next steps in his administration’s Section 301 investigation, including the option for potentially up to $60 billion in tariffs on Chinese products.

The full list of what is expected to be around 1,300 products has not yet been released, but according to one report it could include aerospace components, USA Today reported.

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According to the report, the Chinese Embassy in Washington said it is “not afraid of and will not recoil from a trade war.”

If you thought allegations of emissions rigging were a thing of the past, think again.

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It appears what’s good for Volkswagen is probably good for BMW, too. According to an article in The Telegraph, BMW’s Munich office has been raided by German authorities investigating claims it cheated pollution controls.

The Telegraph reports prosecutors visited the company’s Munich base, as well as a satellite site in Austria, in relation to some 11,400 cars, which are thought to have passed emissions tests because they were fitted with so-called “defeat devices.” The software allows the car’s diesel engines to recognize when they were being checked and react by turning on pollution controls that are not employed during normal driving.

This is the same issue Volkswagen admitted to in 2015 and subsequently some 11 million cars worldwide have been shown to be fitted with similar devices. According to the report BMW confirmed the raids, saying they were related to a software update “mistakenly allocated” to high-end 750d and 550d models, adding the problem was discovered during internal tests and the cars have been recalled for an update.

It should be said that BMW strenuously denies the so-called defeat software was deliberately installed, saying it “assumes” the situation was caused by an incorrect allocation of software and was not a deliberate attempt to manipulate exhaust emissions.

Draw your own conclusions until such time as conclusive proof one way or the other is released. That may take months.

Volkswagen has not suffered much financially as a result of its “Dieselgate” revelations. It paid some fines, but a recent Bloomberg report states the company is aggressively investing $25 billion in batteries supplies to underpin a push into electric vehicles – hardly the sign of a company on the financial ropes.

Although diesel engine sales have taken a hammering in Europe, they still make up a substantial minority of total sales and VW is doing as well as other leading brands. The turnoff from diesel has more to do with buyers’ fears of future changes in taxation and threats by some German city authorities to ban diesel cars from the city centers. Such a development is unlikely, as the car lobby is phenomenally powerful in Germany. Just the threat of such a move, however, being copied by other European cities has been enough to sway some buyers to petrol and increasingly electric vehicles.

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Underlying all this, there is nothing wrong with Volkswagen’s development of its electric-battery capability, but we are left with the nagging worry Volkswagen, and possibly BMW, are not the end of the deceit regarding emissions figures.