Articles in Category: Automotive

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Not everyone agrees with the use of tariffs to achieve changes in trade relations.

However, a recent article in The New York Times article reports the threat of 25% import tariffs on the U.S.’s main automotive trading partners could prove to be spectacularly successful.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Autos are the soft underbelly of major auto economies like Germany, Japan, South Korea and Mexico in their trade relations with the U.S. Although the first three have invested heavily in U.S. manufacturing facilities over the years, they still ship huge volumes into the U.S. from their home countries and have largely perpetuated an unfair reciprocal relationship in terms of tariff barriers.

The E.U., for example, exported $42.8 billion worth of motor vehicles to the U.S. in 2018 — more than one-fifth of the cars imported by the U.S. — at a tax rate of 2.5%. Meanwhile, the E.U. imposes a 10% tariff for cars exported in the reverse direction.

In response to the threat of 25% tariffs, the E.U. offered to scrap tariffs in both directions, a step it has resisted in all previous negotiations.

But with carmakers’ backs against the wall, the Trump administration was not about to let up with a simple scrapping of tariffs, long overdue as that may be.

The administration is in discussions with the E.U. and its carmakers about increasing their investment and employment in the U.S. The more cars foreign carmakers manufacture in the U.S., the less they will ship in from abroad, benefiting the balance of payments and creating employment stateside.

Consumers benefit from continued access to a wide range of manufacturers without the cost implications of the threatened tariffs being imposed, estimated to be between $1,400 and $7,000 per vehicle if applied at 25%, the article notes.

Even U.S. carmakers are in favor of removing all tariffs, as they see a reduction in overseas import tariffs as an opportunity worth the increased domestic competition that foreign carmakers setting up in the U.S. may pose.

The only losers, should the deal be agreed, could be said to be foreign carmakers who will lose domestic exports, an impact that Germany is expected to feel the significance of more than any other country. Germany runs the second-largest trade surplus after China, with autos making up a sizable portion of that mercantilist trade structure.

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Foreign carmakers are being asked to provide details of proposed investments and plans already in the pipeline.

The German car industry is promising to create 25,000 jobs at factories in the United States, according to The New York Times. However, the Trump administration is looking for new jobs and investments, not simply plans that were already in the pipeline before the current negotiations were started.

A deal has not yet been reached; unofficially, both sides are making encouraging noises, raising the prospects for some good trade news to lift the spirits of investors who have been disproportionately depressed by a barrage of negative media coverage on the topic in 2019.

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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 coverage here on MetalMiner, including coverage of: Freeport-McMoRan’s use of artificial intelligence (AI), U.S. steel production, aluminum prices, U.S. automotive sales, construction spending and India’s decision to back away from the proposed RCEP trade pact.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

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The Automotive Monthly Metals Index (MMI) ticked up one point for an MMI reading of 86.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

U.S. Auto Sales

As mentioned in previous reports, the top three automakers in the U.S. — General Motors, Ford and Fiat Chrysler — all now report sales on a quarterly basis.

GM reported net income of $2.3 billion in the third quarter, down 8.7% on a year-over-year basis. GM delivered 739,000 vehicles in the third quarter, up 6% on a year-over-year basis.

Ford reported third-quarter net income of $400 million, down from $1 billion in Q3 2018.

Fiat Chrysler’s worldwide shipments fell 9% “primarily due to continued dealer stock discipline in North America.”

Honda’s U.S. sales rose 7.6% in October, with its truck sales rising 15%. For the year through October, Honda’s U.S. sales are up 0.6% compared with the same period in 2018.

Toyota Motor North America saw its October sales drop 1.2% on a volume basis and by 4.9% on a daily selling rate basis.

Nissan’s October sales dropped 5.8% on a year-over-year basis.

According to a forecast report by J.D. Power and LMC Automotive, new-vehicle retail sales in October were forecast to decline by 0.9% year over year (when adjusted for number of selling days).

Average transaction prices, however, are at a record high. According to the jointly released report, the average transaction price moved above $34,000 for the first time ever in October and was up nearly $1,300 compared with October 2018.

GM Strike Comes to an End

After 40 days, the nationwide strike at General Motors finally came to an end.

“The work stoppage in the U.S. negatively affected North American business results in the third quarter and expected results for the year,” GM said in its third-quarter earnings release. “In the third quarter, about two weeks of vehicle production was lost.”

According to GM, the strike resulted in a net EBIT-adjusted impact of $1 billion, or $0.52 per diluted share; GM expects the full-year impact to come in at $2.00 per diluted share.

In September, the United Auto Workers union initiated the first nationwide strike at GM since 2007.

On Oct. 25, UAW announced it had ratified a new four-year labor deal.

“General Motors members have spoken,” said Terry Dittes, UAW vice president and director of the UAW-GM department. “We are all so incredibly proud of UAW-GM members who captured the hearts and minds of a nation. Their sacrifice and courageous stand addressed the two-tier wages structure and permanent temporary worker classification that has plagued working class Americans.”

According to UAW, the approved deal included “an economic package of an $11,000 per member signing bonus, performance bonuses, two 3% annual raises and two 4% lump sum payments and holding the line on health care costs.”

Fiat Chrysler to Merge with PSA Groupe

As MetalMiner’s Stuart Burns explained earlier this week, Fiat Chrysler and France’s PSA Groupe — maker of Peugeot — have plans to merge.

According to Fiat Chrysler, the merger would create the world’s fourth-largest OEM by annual unit sales.

“FCA abandoned attempts to merge with Peugeot’s French rival, Renault, earlier this year when the French government, a 15% shareholder, blocked the move,” Burns explained.

“But the FCA has long held that consolidation within the European car industry, if not globally, is inevitable as the industry goes through unprecedented disruption in terms of a switch to electric and competition from Asia.

“There is arguably a better logic to a Peugeot-FCA merger than a Renault-FCA tie-up.”

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Actual Metal Prices and Trends

U.S. HDG fell 7.2% month over month to $746/st as of Nov. 1.

LME three-month copper rose 3.7% to $5,840/mt. U.S. shredded scrap steel fell 11.4% to $225/st.

The Korean 5052 aluminum coil premium rose 2.2% to $3.21/kg.

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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 coverage here on MetalMiner, which included a PwC report on mining and metal deals, global steel production, lead and zinc forecasts, and an automotive merger of PSA Groupe and Fiat Chrysler.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Looking for metal price forecasting and data analysis in one easy-to-use platform? Inquire about MetalMiner Insights today!

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This morning in metals news, the United Auto Workers (UAW) union has a tentative labor deal with Ford, the U.S. Office of Inspector General says the Section 232 tariff exclusion process needs more transparency and U.S. Steel officially completed the acquisition of a 49.9% ownership stake in Big River Steel.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

UAW Announces Tentative Ford Deal

Not long after UAW members voted to ratify a new labor deal with General Motors late last week, the union now appears to be close to finalizing a deal with Ford.

In a statement this week, the UAW said it had reached a tentative agreement with Ford.

“Our national negotiators elected by their local unions have voted to recommend to the UAW-Ford National Council the proposed tentative agreement,” UAW Vice President Rory Gamble. “Our negotiating team worked diligently during the General Motors strike to maintain productive negotiations with Ford. The pattern bargaining strategy has been a very effective approach for UAW and its members to secure economic gains around salary, benefits and secured over $6 billion in major product investments in American facilities, creating and retaining over 8,500 jobs for our communities.”

Ford confirmed UAW’s announcement but did not provide further details.

“Ford can confirm the UAW’s announcement that the UAW and Ford have reached a proposed tentative agreement on a four-year contract,” said Bill Dirksen, vice president for labor affairs at Ford. “Further details will be provided at a later date.”

IG: More Transparency Needed in Section 232 Exclusions Process

U.S. importers have been applying for Section 232 tariff exclusions over the last year — a process that has come in for criticism.

Criticism has focused on the Commerce Department’s capacity to process the thousands of applications and accusations that some domestic firms are asserting an outsized influence on the Commerce Department’s decisions with respect to exclusion requests.

In a letter and management alert to Commerce Secretary Wilbur Ross, Carol Rice, assistant inspector general for audit and evaluation, shared her office’s concerns.

“Attached is a management alert regarding a lack of transparency that contributes to the appearance of improper influence in decision-making for tariff exclusion requests under Section 232 of the Trade Expansion Act of 1962, as amended,” Rice wrote. “Issues regarding this topic came to our attention during fieldwork for the ongoing audit of the Bureau of Industry and Security’s and International Trade Administration’s processes and procedures for reviewing and adjudicating Section 232 exclusion requests.”

The Inspector General’s office initiated an audit of the process Oct. 29, 2018. The management alert lists some of the findings unearthed by the audit, which include:

  • Evidence of an “unofficial appeals process”
  • Communications with an objector “prompted a change in internal review criteria”
  • No documentation for off-record conversations between “interested parties and Department officials”

U.S. Steel Finalizes Big River Steel Deal

U.S. Steel has finalized its $700 million acquisition of a 49.9% ownership stake in Arkansas-based Big River Steel (initially announced Oct. 1).

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“Today is a true milestone for our 118-year old company,” said David B. Burritt, president and CEO of U. S. Steel. “The closing of our investment in Big River brings us one step closer to creating a differentiated, world-competitive company that can offer our customers, employees and stockholders the ‘best of both’ integrated and mini mill steel making technology. We have done more than make an investment in the newest and most advanced flat-rolled mill in North America … we have invested in the future of U.S. Steel. We are gratified by the positive response we have received from our stakeholders recognizing the strategic rationale of this transaction since we announced it on October 1. We now look forward to executing the next phase of our strategy with our new partners at Big River.”

GM workers month went on a nationwide strike, the first since 2007 at the Big 3 automaker. Photo by Jeffrey Sauger for General Motors

Members of the United Auto Workers (UAW) voted Friday to ratify a new labor contract with General Motors, the United States Trade Representative offered a mixed reaction to the latest gathering of the Global Forum on Steel Excess Capacity, and a copper mine in Ecuador plans to make its first shipments in November.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

UAW, GM Reach Deal; Focus Shifts to Ford

After over a month, General Motors and the members of the United Auto Workers (UAW) finally have a new labor deal.

UAW members ratified a new four-year deal on Friday, officially ending the nationwide labor stoppage.

“We delivered a contract that recognizes our employees for the important contributions they make to the overall success of the company, with a strong wage and benefit package and additional investment and job growth in our U.S. operations,” GM Chairman and CEO Mary Barra said in a prepared statement. “GM is proud to provide good-paying jobs to tens of thousands of employees in America and to grow our substantial investment in the U.S. As one team, we can move forward and stay focused on our priorities of safety and building high-quality cars, trucks and crossovers for our customers.”

The UAW hailed the details of the deal.

“General Motors members have spoken,” said Terry Dittes, UAW vice president and director of the UAW-GM Department. “We are all so incredibly proud of UAW-GM members who captured the hearts and minds of a nation. Their sacrifice and courageous stand addressed the two-tier wages structure and permanent temporary worker classification that has plagued working class Americans.”

According to UAW, the approved deal includes an “economic package of an $11,000 per member signing bonus, performance bonuses, two 3% annual raises and two 4% lump sum payments and holding the line on health care costs.”

Now, the union will shift its focus to bargaining with Ford.

USTR Mixed on Global Forum on Steel Excess Capacity

The Office of the United States Trade Representative, as it has in the past, released a statement showcasing mixed feelings with respect to the efficacy and purpose of the Global Forum on Steel Excess Capacity.

The forum recently gathered for ministerial meetings in Tokyo, after which Deputy U.S. Trade Representative Dennis Shea indicated the forum’s policy efforts are be enough to tackle the problem of excess capacity.

“The United States will continue to work with like-minded partners to seek long-term solutions to the crisis of global excess capacity and the market distortions and global imbalances that it causes,” Shea said. “This includes, but is not limited to, exchanging information on the policies and practices of countries at the root cause of the crisis, whose measures generate and sustain steelmaking capacity misaligned with market forces.  At the same time, we will continue to take necessary action to address the harmful impact of this ongoing crisis on U.S. companies and workers as well as our essential security interests.”

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Ecuador Copper Mine to Begin Exports

A copper mine in Ecuador owned by a Chinese consortium could be set to begin exporting the metal in the near term, Reuters reported.

The El Mirador mine plans to make its first copper shipments by Nov. 14, Reuters reported.

The U.S. Department of Commerce. qingwa/Adobe Stock

This morning in metals news, the U.S. Department of Commerce announced rulings in investigations of stainless steel kegs from China and Germany, copper prices rose on labor tensions in Chile, and the UAW’s strike continues as it mulls ratification of a tentative deal with General Motors reached last week.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

DOC Makes Final Determinations on Stainless Steel Keg Imports

The U.S. Department of Commerce on Friday announced it had made affirmative final determinations in its anti-dumping and countervailing duty investigations of imports of stainless steel kegs from China and Germany.

The DOC determined the countries sold the kegs at less than fair values, ranging from 0 to 77.13% and 7.47%, respectively.

The DOC also determined that exporters from China received countervailable subsidies at rates ranging from 16.21% to 145.23%.

Copper Rises on Chile Labor Developments

LME copper reached a one-month high amid strikes at Chilean copper mines operated by Antofagasta and Teck Resources, Reuters reported.

LME three-month copper rose as much as 0.5% Monday, Reuters reported, up to $5,837.50 per ton.

GM Awaits UAW Vote on Deal

Last week, General Motors and the United Auto Workers (UAW) union announced they had reached a tentative deal that could potentially end the strike that has lingered for well over a month.

However, the strike continues, for now, as UAW members must vote on the deal.

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If the deal is approved, talks will then shift to Ford and Fiat Chrysler, the Detroit Free Press reported.

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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 coverage here on MetalMiner, including coverage of global steel demand, Trafigura’s bet on cobalt, electric vehicles and a potential detente in the General MotorsUAW saga.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

Looking for metal price forecasting and data analysis in one easy-to-use platform? Inquire about MetalMiner Insights today!

GM workers month went on a nationwide strike, the first since 2007 at the Big 3 automaker. Photo by Jeffrey Sauger for General Motors

General Motors and the United Automobile Workers (UAW) union have reached a tentative agreement that would end the strike that has run for over four weeks.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

“We just reached a Tentative Agreement with GM a short time ago, today, Wednesday, October 16, 2019,” UAW Director and Vice President Terry Dittes wrote in a statement posted on the UAW website Wednesday. “We will go over the details when the Council meets tomorrow morning in Detroit.

“On behalf of the entire staff here in Negotiations, we want to thank you for your support.

“In the meantime, continue the picket lines until after the UAW-GM National Council concludes business tomorrow, Thursday, October 17, 2019, and then you will receive further instructions.”

The nationwide strike — GM’s first since 2007 — included approximately 46,000 workers.

“We can confirm the UAW’s statement regarding a proposed tentative agreement,” the automaker said in a statement on its website. “Additional details will be provided at the appropriate time.”

From Sept. 13, the last trading day before the strike, GM’s shares had fallen nearly 13% by Oct. 8. Since then, GM shares have recovered, paring losses since Sept. 13 to 5.7%.

According to several analyst estimates, the strike has cost the Big 3 automaker more than $1 billion, CNBC reported.

Among the list of grievances brought by UAW were fair wages, health care costs and a pathway for temporary workers to become permanent.

“We stood up for General Motors when they needed us most,” Dittes said on Sept. 15. “Now we are standing together in unity and solidarity for our Members, their families and the communities where we work and live.”

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Once a deal is ratified, the union will move to securing deals with the other Big 3 automakers, Ford and Fiat Chrysler.

The October 2019 Monthly Metals Index (MMI) report is in the books.

Keep up to date on everything going on in the world of trade and tariffs via MetalMiner’s Trade Resource Center.

This month, just one of the Monthly Metals Indexes (MMIs) increased, while six declined and three held flat.

Some highlights from this month’s MMIs:

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