Articles in Category: Automotive

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This morning in metals news, NAFTA renegotiation talks continued with the U.S. aiming to tighten automotive content rules in favor of North American-made metals, Allegheny Technologies Incorporated (ATI) commented on its Q3 earnings and Alcoa reached an early termination agreement for a power contract tied to one of its Texas smelters.

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U.S. Looks for Stricter Auto Content Rules

Trade negotiators from the U.S., Canada and Mexico are in Arlington, Va., until Oct. 17, engaged in a fourth round of talks focused on the North American Free Trade Agreement (NAFTA).

According to a Reuters report this morning, the U.S. is seeking stricter rules for automotive content, demanding a higher percentage of the materials — including aluminum and steel — that go into automotive manufacturing should come from North America.

According to the report, the proposal — which includes aluminum, steel, copper and plastic resins — would place those materials on the auto parts tracing list for the first time in the history of the 23-year-old trilateral trade agreement.

ATI Expects Q3 Results to Meet July Outlook

ATI commented on third quarter financial results on Thursday, and announced a non-cash net of tax charge of $114 million, or $(1.05) per share, for goodwill impairment related to the Cast Products business.

“Excluding the goodwill impairment charge, we expect our third quarter 2017 results to be in line with our outlook provided in July,” said Rich Harshman, ATI’s chairman, president and chief executive officer, in a company release.

Alcoa Announces End of Power Contract Agreement

On Friday morning, Alcoa announced power provider Luminant Generation Company LLC has terminated the electricity contract tied to Alcoa’s Rockdale Operations in Texas.

The smelter at Rockdale has been fully curtailed since the end of 2008, according to the Alcoa release. The termination of the contract was effective Oct. 1.

Free Download: The October 2017 MMI Report

Alcoa expects an annual improvement to net income and adjusted EBITDA of $60 million to $70 million as a result of the contract termination, beginning in the fourth quarter of 2017.

Life is full of ups and downs.

So, too, is the world of metals.

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Last month, all 10 of our MMIs saw upward movement. This month? Not so much.

Eight of 10 MMIs tracked back this month, albeit several of them fell by small amounts. The GOES MMI, meanwhile, picked up a point, while the Aluminum MMI posted no movement.

If you’ll remember, copper and aluminum had big months in August, as we detailed in last month’s MMI report. After a cooling period last month, though, so far in October copper has tracked back upward — so maybe it was just a September slump for the good Dr. Copper.

“However, market watchers can see a new rally taking place within the base metals industry,” wrote our Irene Martinez Canorea in her Copper MMI report. “Copper prices — along with lead and tin — increased sharply on heavy trading volumes. Buying organizations can expect upward movements within the bullish market.”

Meanwhile, as for aluminum, the flat month is actually an encouraging sign for the metal’s strength.

“Aluminum traded sideways in September,” Martinez Canorea wrote. “This trading pattern suggests resilience, as aluminum prices digest price gains and become strong again to continue the uptrend. Trading volumes continue to support the current rally, driving aluminum prices to a five-year-high in September.”

The aforementioned represents a small snippet of the analysis available in this month’s report.

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

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This morning in metals news, the world’s top copper producer expects a moderate rise in the metal’s price going forward, the Aluminum Association announces new leadership and Kobe Steel continues to reel from its data falsification scandal.

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Copper on the Rise

The price of copper is set to experience moderate increases, according to the mining minister of Chile, Reuters reported.

Aurora Williams, the mining minister of Chile (the world’s top copper producer), said Wednesday that there will be moderate increases in the metal’s price, but not enough to push it above $3/pound for the year.

According to the Reuters report, copper exports reached $3.18 billion in September, their highest level in nearly three years.

Changing of the Guard

The Aluminum Association announced new leadership on Wednesday.

Michelle O’Neill, senior vice president of senior vice president of global government affairs and sustainability at Alcoa, was elected as Aluminum Association Chair, becoming the first woman in the association’s 84-year history to hold the position. She replaced Garney Scott, president and CEO of Scepter, Inc., following a two-year term.

Kobe Steel Data Scandal Continues

It’s difficult to quantify lost trust, but it’s a problem Kobe Steel, Japan’s third-biggest steelmaker, is dealing with now on the heels of a data falsification scandal.

Now, the chief executive of the company is admitting the scandal is a serious hit on the company’s image, one that leaves it with “zero credibility,” The Guardian reported.

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According to The Guardian’s report, General Motors is the latest manufacturer to check whether its cars contain falsely certified parts or components sourced from Kobe Steel.

The Automotive MMI dropped for the first time since June, falling one point for an October reading of 93. 

Much of the automotive basket of metals was stuck in neutral this month, but a few did show some notable movement. U.S. HDG steel dropped 1.7% and LME copper, one of the darlings of August, dropped 4.2%.

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Chinese primary lead rose 8.7%. Our Irene Martinez Canorea wrote about environmentally-based smelter shutdowns in China, which supported the lead price.

“The Chinese environmental campaign has heavily impacted lead,” Martinez Canorea wrote. “According to research group Antaike, 80% of illegal secondary smelters have been shut down during the second half of 2017. China has also lost an important source of raw materials from North Korea due to its commitment to international sanctions.”

Palladium Pulls Past Platinum

One tidbit worth noting is the relationship between palladium and platinum. As of Oct. 1, palladium closed higher than platinum.

The last time that happened? Sixteen years ago.

According to a report by Kitco News, however, many analysts don’t expect palladium’s dominance over platinum to last.

The report attributes the price dynamic to a rise in demand in gasoline-powered vehicles and platinum’s fall alongside gold.

“Palladium is benefitting from its inclusion in catalytic converters in gasoline-powered vehicles, which is expecting robust growth from the shift from diesel engines following the 2015 Volkswagen emissions-rigging scandal, and hybrid electric vehicle demand,” according to a research note from commodities broker SP Angel quoted by Kitco.

Dr. Copper Loses Ground

After surging throughout the summer and hitting three-year highs, copper has been backsliding of late.

As of Oct. 1, LME copper dropped from the previous month’s closing price by 4.2%. The metal, often cited as a global indicator of economic health, lost steam in September like a number of other base metals, as Martinez Canorea wrote on Tuesday.

After a booming August, copper slowed down in September.

“Copper has retraced and the general downtrend has slowed down this month. However, the CRB commodities index has increased, something we had suggested might happen and something that signals a potential bull run,” Canorea wrote.

U.S. Auto Sales

In U.S. auto sales, light trucks continued to be a popular option for buyers. In the year to date, over 8 million units have been sold in the U.S., which is up 4.4% from the same time frame last year, according to sales data released Tuesday by Autodata Corp.

By month, September 2017 light truck sales hit 967,547 units, up 12.4% from September 2016. Meanwhile, sales of passenger cars dropped 3.3% last month compared with September 2016 and dropped 10.5% in the year to date (compared with the same time frame last year).

In short? Trucks continue to be in.

As for sales by manufacturer, General Motors led the way with 279,176 units sold, which was up 11.8% from its September 2016 sales total. On the year, however, GM’s sales are down 0.8%.

Similarly, Ford had a strong September, with sales jumping 8.9% from September 2016. However, like GM, Ford’s sales are down in the year to date (2.7%).

Reuters reported Tuesday that GM’s shares rose 3.1% and hit a record intraday high, while Ford’s stock rose 2.1%.

It wasn’t a great month for Fiat Chrysler. September sales dropped 9.7% year-over-year. In the year to date, the automaker’s sales are down 7.9%.

A number of other automakers boasted strong September 2017 sales figurers that raced past September 2016 sales.

Toyota (14.9%), Honda (6.8%), Nissan (9.5%), Volkswagen (22.8%) and Mitsubishi (17.2%) all had solid September year-over-year increases. In the year to date, all five of the aforementioned automakers have exceeded sales compared with the same time frame of last year — Volkswagen posted the largest year-to-date jump of that group at 7.8%.

Sales in China

According to the most recently available sales data from the Chinese Association of Automobile Manufacturers (CAAM), August automotive sales in China were up 5.3% year-over-year.

For the first eight months of the year, 17,511,000 units were sold, up 4.3% from the same time frame last year.

Volvo was among the big winners in China in September. Volvo’s September global sales rose 11.2% year-over-year. In China — Volvo’s biggest market — sales rose a whopping 29.8%, according to a company release. From January-September, Volvo’s Chinese sales are up 29.9% compared with the first three quarters of 2016.

Feeling the Electricity

Meanwhile, our Stuart Burns wrote about an announcement that could represent the rise of the electric vehicle (EV) in China, a shift that has massive implications for the automotive world.

China, the largest automotive market in the world, moving toward the EV constitutes a significant development, to say the least.

Burns covered the recent announcement from Beijing outlining the government’s plans to move toward EVs, as the country — and the world — prepares for the phaseout of vehicles powered by fossil fuels. The U.K. and France have made similar announcements this year, setting long-term goals to ban the sales of gas and diesel cars by 2040.

India, too, announced a push toward electrification earlier this year, with an ambitious goal of selling only electric vehicles by 2030.

For now, of course, these are merely government statements — actual implementation of the processes necessary, in both the public and private sectors, to reach these goals is another story entirely.

As for automakers, GM announced Monday its plans to move toward an all-electric fleet.

“General Motors believes in an all-electric future,” said Mark Reuss, General Motors executive vice president of product development, purchasing and supply chain. “Although that future won’t happen overnight, GM is committed to driving increased usage and acceptance of electric vehicles through no-compromise solutions that meet our customers’ needs.”

The automaker plans to introduce two new all-electric vehicles in the next 18 months, according to the GM announcement, and a total of at least 20 new all-electric vehicles by 2023.

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Like “electricity for all,” the Indian government’s latest ambitious plan is for a complete transformation of its auto segment and move towards all electric vehicles (EVs) by 2030.

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Toward this goal, the government has started making the right moves, but the question on every one’s mind is simple: Is the plan possible?

The political will is there, but to have all vehicles on the road running on battery by 2030 seems like a pretty impossible dream.

Nitin Gadkari, India’s road transport minister, made the government’s intentions clear, rather forcefully, when he said recently, “We should move towards alternative fuel … I am going to do this, whether you like it or not.” He was addressing delegates of India’s automobile lobby group, SIAM. Gadkari made it clear he would “bulldoze the plan through.”

It’s really all about numbers, say the experts. After all, how does a country of over 1 billion people, where over 20 million vehicles are sold annually, embark on such an ambitious drive?

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A New Defender on the Roads?

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“The king is dead, long live the king” — or so the headline may read if Jim Ratcliffe, founder and CEO of one of the U.K.’s largest companies, is successful in his bid to create an entirely new and modern Defender following the demise of the old Land Rover Defender in 2016.

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Fans of the long-running Defender bemoaned its loss when Jaguar Land Rover (JLR) finally called time on the model last year. Reports that they intend to bring out a replacement in two years are dismissed by Ratcliffe as likely to be more Chelsea Tractor (British slang for a road-only 4×4) than a real Defender. JLR will go for more of a volume SUV, not a vehicle totally committed to the off road, he believes.

Judging by the firm’s gradual expansion of its range into more road-focused models, he may well be right.

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Before you head into the weekend, check out some of the stories that went up this week on MetalMiner:

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  • The London Metal Exchange (LME) is an institution steeped in tradition — but even the most tradition-rich entities have to change, eventually. Our Stuart Burns wrote about the LME and how it is changing (or, in some cases, staying the same).
  • The electric car industry continues to grow, but the move toward electric in China likely represents the biggest such move by a single nation to date.
  • Our Irene Martinez Canorea checked in on tin and other base metals. In short, many that boomed in August have come back down a bit this month.
  • Burns wrote about China Zhongwang and its ongoing efforts to build up its presence on the global stage.
  • The U.S. Department of Commerce opened countervailing duty and antidumping investigations into titanium sponge imports from Japan and Kazakhstan.
  • Meanwhile, the U.S. International Trade Commission, voted to uphold antidumping orders in a five-year sunset review related to CASSLP pipe from Japan and Romania.
  • The third round of North American Free Trade Agreement renegotiations kicks off tomorrow in Ottawa. United States Trade Representative Robert Lighthizer, during a question-and-answer session earlier this week, touched on the negotiations and what the U.S. is hoping to accomplish.
  • United Steelworkers issued a statement calling for the Trump administration to act vis-a-vis its ongoing Section 232 probe related to steel imports.
  • It’s been talked about for more than a year, but Tata Steel and Thyssenkrupp finally agreed to merge their European operations this week.

Free Download: The September 2017 MMI Report

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This afternoon in metals news, black cabs in London will be moving toward electric power, production of copper and steel is up in Kazakhstan, and Dr. Copper appears to be backsliding after its previously torrid pace.

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Electric Cabs?

Further adding momentum to the electric vehicle industry, black cabs in London will soon be powered by electricity.

Sapa SA’s aluminum plant in Wales will reopen this week and supply parts for automakers like London Electric Vehicle Co., the maker of black cabs, Bloomberg reported.

The move is part of the overall comeback for aluminum, which works in tandem with the rise of the electric vehicle, particularly the U.K.’s effort to phase out vehicles powered by fossil fuels by 2040.

Copper, Steel Output Up in Kazakhstan

Cooper and steel production have surged in Kazakhstan through the first seven months of the year, according to a Reuters report.

For January-August, copper production is up 5.5% and crude steel production is up 9.7% in Kazakhstan, according to Statistics Committee data.

Copper Price Begins to Slide

The metal often referred to as “Dr. Copper” boasted a healthy diagnosis as late as last month, when the metal hit a three-year high.

But political tensions on the Korean peninsula, among other things, have seen the metal’s price begin to backslide.

Free Download: The September 2017 MMI Report

The copper price has dipped 6% since Sept. 8, when President Donald Trump said the U.S. would not rule out a military option vis-a-vis North Korea’s latest nuclear test, according to Reuters.

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The announcement by the U.K. and France that they would prohibit the production of diesel and petrol cars by 2040 made for good headlines, but came as little surprise when you consider the pace of change in the automotive industry.

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China’s announcement last week that it was considering setting a timeline for phasing out traditional fuel cars will likely have a more profound effect on the development of new energy vehicles (NEV), for two reasons.

First, China is already the world’s largest car market, producing over 28 million vehicles in 2016, according to the Financial Times. Significant changes in a market of that size causes more than just ripples in the global automotive market.

Second, a centrally controlled command economy such as China’s has shown that policies that are robustly pursued by Beijing can achieve rapid change over short time frames. More than any other country in the world, with the possible exception of India, China has an imperative to address atmospheric pollution. The incentives in China to switch from traditional combustion engines to NEVs has already made China the world’s leading electric car market, with 507,000 NEVs sold domestically in 2016.

Beijing’s announcement, however, should not be seen as a purely altruistic move to improve the environment.

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The Automotive MMI jumped four points to 94, up from 90.

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Major price jumps in the basket of metals relevant to the automotive sector, particularly copper, paced a strong month for the sub-index.

LME copper jumped 6.8%, as the metal hit a three-year high in August. U.S. shredded scrap steel rose 4.5%, while U.S. hot-dip galvanized (HDG) steel jumped 1.1%. U.S. platinum and palladium bars also posted sizable price jumps.

U.S. Auto Sales

Auto sales in 2017 have trended downward, which hasn’t exactly been a surprise given the record sales figures posted in 2016. Sustaining last year’s sales totals would have been a tall task.

However, the news hasn’t been all bad.

According to Autodata Corp sales data released Sept. 1, General Motors had a good month, selling 275,326 units — a 7.4% increase from sales in August 2016. GM’s light truck sales carried the day, rising by 16.5% compared with August 2016. In the year to date, however, sales overall remain down by 2.4% compared with the same time frame last year.

Ford sold 209,029 units, down 2.1% compared with August 2016. Ford’s year-to-date sales are down 4% compared with the same time frame in 2016.

Fiat Chrysler posted a 10.6% drop in sales in August compared with the same month last year, and a 7.7% year-over-year decline.

Tesla, meanwhile, albeit in much smaller volumes, posted a 6.8% sales jump in August compared with August 2016, selling 227,625 units last month. Year-over-year, however, sales are down 1.3%.

Meanwhile, down the sales list, it continues to be a good year for Subaru (8.1% year-to-date increase) and Mitsubishi (5.4% year-to-date increase).

Automakers See Sales Growth in China

Meanwhile, automakers had a strong month in the massive Chinese market, continuing a solid multimonth sales run.

According to Reuters, GM’s sales in China were up 12% in August compared with August 2016, and its January-August sales (2.38 million vehicles) are up 0.3% compared with the same period last year.

August was also a good month for Toyota and and Honda. Honda’s August sales in China jumped 20.6% and Toyota’s jumped 13.2%, according to the report.

Impact of Hurricane Harvey

In addition to the large-scale humanitarian crisis inflicted by Hurricane Harvey in southeast Texas and southwest Louisiana, the storm also will have an impact on the automotive market.

As our Stuart Burns wrote earlier this week, many in the regions impacted by the storm will, eventually, need to replace their damaged vehicles — or, in some cases, some might be looking to go with models more capable of traversing through high levels of standing water.

Unfortunately, there is precedent for just this sort of sales spike on the heels of a natural disaster.

Burns wrote: “By way of a comparison, Reuters cites the experience of auto sales in New York following Hurricane Sandy in October 2012. The following month, auto sales rose 49% compared to the previous year, with all the replacement sales caused by the widespread flooding of the New York metropolitan area arising in the few months following the disaster.”

An uptick in sales in the Houston market, already one of the most robust auto markets in the country, is expected.

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