Articles in Category: Automotive

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I know, it’s not really a metals topic — my editor will no doubt berate me for wandering off the reservation — but it has to be said the current speculation about which car Bond will drive in the next movie has got to be of the topic of the month, hasn’t it?

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According to the Financial Times, there is a battle royal developing between Aston Martin – long considered the only authentic wheels for our hero — and upstart Lotus, provider of Bond’s principal transport on two occasions (“The Spy Who Loved Me” in 1976 and in the 1981 film “For Your Eyes Only”).

We are not suggesting Lotus does not make fine cars, although arguably their road cars never quite lived up to the promise of their track record. From their racing debut in the late 1950s, a series of iconic drivers and Colin Chapman’s magic combined to create a dream team that competed at the highest level in the 1960s, ’70s and ’80s.

Drivers like Graham Hill, Jochen Rindt, Emerson Fittipaldi and Mario Andretti, not to forget possibly the greatest of them all Jim Clark (winner of two F1 titles for Lotus), firmly established the mark as an innovative and exciting brand that, from its humble origins in Norfolk, took on the might of Ferrari, Renault, Honda and other famous British teams, like Brabham and BRM.

There is no question Lotus has a fine racing pedigree. As a road car, however, they have never attained the same suave mix of power, prestige and understated competence that is and always has been Aston Martin.

Bond, though, is quintessentially British, and following a brief ownership by Ford, Aston Martin Lagonda has been privately held for over 10 years by a consortium including British and Kuwaiti investors. Soon to go public via an IPO, you too could buy a slice of history when it goes public later this year.

Not so for Lotus which, along with Swedish Volvo and British-based London cab company London Electric Vehicle Company is owned by Chinese Geely. To be fair, much like Volvo, Geely is a good steward of Lotus, allowing the firm to create its own direction and innovation while providing ample funding when needed. Still, diehards would argue it dilutes the Britishness of the brand.

Featuring in a Bond movie, though, would certainly help revitalize lackluster sales at Lotus and may create other one-off opportunities.

For example, Aston recently produced a series of 25 DB5 models — the same as used in “Goldfinger” — made at the car’s original home in Newport Pagnell, the company will sell the specials for £2.75 million apiece. Styling and design for the movies can, like technology developed for racing, feed back into road cars, according to the Financial Times. Much of the engineering for the DB10 car, a model created exclusively for the most recent Bond film “Spectre,” went into the company’s latest models (the DB11 and the Vantage).

Some argue that Bond should go back to Bentley, the brand used in his first film and in Ian Fleming’s books. A brand that in the heyday of the Bond series became a “poor man’s” Rolls Royce – if the buyer of a Bentley could ever be termed a “poor man.”

But in this decade, Bentley has emerged as a fine builder of high-powered executive saloons — maybe not quite what they were in Bentley’s own racing days, but that was well before F1.

No, for 50 years Bond and Aston Martin have been indivisible. Every attempt at substitution – Lotus, BMW, Ford, once a Lincoln convertible for goodness sake – has fallen flat.

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There really is no substitute — please, EON Productions, just don’t be tempted to make it electric.

There used to be a time when you were wary of parking your car in an unlit street or side road for fear you may come back to find it jacked up on blocks and all four shiny alloy wheels missing.

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Locking wheel nuts went a long way to alleviating that fear and theft of alloy wheels is mercifully much reduced … only, it would seem, to be replaced by a new worry: theft of your catalytic converter.

According to The Telegraph, thieves are cashing in on six-year highs in prices for the rhodium, palladium and platinum in your car’s catalytic converter — particularly if you own a BMW, Audi or Volkswagen, at least here in the U.K. — the article reports.

Thieves are becoming very discerning, choosing certain models because of their relatively higher precious metal content (such as older Honda Jazz and Accord models) or due to their greater road clearance and easy accessibility (such as the Mitsubishi Shogun SUV).

For reasons of accessibility alone, SUVs are a favorite target because a jack isn’t required to get underneath, speeding up the process and reducing the chance of being seen or heard.

Nor does it take long to do. Apparently, a gang using battery-powered saws can have your motor jacked up or slid under and the requisite parts cut out in around 5 minutes – probably the same nifty team that used to steal your alloy wheels have just found an alternative target.

Rewards are probably similar too, the article suggests. Thieves earn up to £300 (U.S. $400) from your stolen catalytic converter, with the devices often exported to jurisdictions where the traceability of materials sold for scrap is not as rigidly enforced as the U.K.

Catalytic converters have been fitted in the exhaust of the majority of petrol cars manufactured since 1992 and diesel cars since 2001.

According to the British Automobile Association, the metal case of the converter contains a ceramic honeycombed structure that provides a massive surface area across which exhaust gases flow. Precious metals like platinum, palladium and rhodium are coated onto this ceramic structure, exploiting their properties as catalysts with the intention of cleaning the exhaust gases of harmful pollutants.

To extract the precious metals is a complex and potentially toxic process that can only be done in a sophisticated recycling plant. However, as metal prices rise, these platinum-group metals (PGMs) become progressively more valuable as scrap; as such, our vehicles are now said to be more at risk than in the past.

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Beware parking up at a country fair, event or show where the vehicle is left all day among thousands of other vehicles. Apparently, there are vibration-sensitive alarm systems you can have fitted to pick up the vibrations from a saw, and you can get your catalytic converter welded to the vehicle frame to make it harder to remove.

Despite such precautions, thefts are rising, so keep away from those side roads, unlit streets or parking overnight on the front drive, or your car may sound more like a Sherman tank than a limousine next time you go to start it up.

The Automotive Monthly Metals Index (MMI) dropped three points this month, falling for our reading of 96.

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U.S. Auto Sales

August proved to be an uneven month for auto sales in the U.S.

General Motors no longer publicly reports sales on a monthly basis, instead reporting quarterly. However, according to a Bloomberg report, GM’s August sales dropped 13% year over year.

Meanwhile, Ford saw its sales jump 4.1% in August compared with August 2017. Truck sales were up 5.7% and SUV sales rose 20.1%.

Ford Sales Analyst Erich Merkle noted the company’s gains in SUVs were led by the Ford Expedition, which was up 94.6%, and the Explorer (up 19.2%).

Fiat Chrysler reported a year-over-year sales increase of 10% in August, selling 193,718 vehicles last month.

Toyota, meanwhile, saw its August sales fall 2%.

Honda saw its car sales drop 15.3% year over year.

Chinese Sales Picture

Meanwhile, auto sales in China soared through the first six months of the year (up 5.6%), according to Forbes, but that has slowed since.

As has been referenced with respect to individual metals, rising trade tensions have had a generally depressive effect on multiple levels of the Chinese economy. The U.S. and China have already traded $50 billion in tariffs apiece, and the U.S. is currently reviewing additional potential tariffs on Chinese goods valued at $200 billion.

NAFTA Talks

Speaking of trade tensions, the U.S. and Mexico recently agreed in principle to revise certain provisions of the North American Free Trade Agreement (NAFTA), the 24-year-old trilateral trade pact.

One ongoing point of dispute was regional auto content; that is, the percentage of an automobile that must be made using North American materials in order for that vehicle to be sold in the North American market without tariffs.

According to the agreement in principle, the threshold for regional auto content would increase from 62.5% to 75%.

Last week, Canada picked up negotiations with the U.S., which have spilled into this week.

In a phone conversation with Mexican President Enrique Pena Nieto, Trump zeroed in on Canada’s dairy industry and suggested the U.S. could impose tariffs on automobiles from Canada.

“You know, they have tariffs of almost 300 percent on some of our dairy products, and we can’t have that. We’re not going to stand for that,” Trump said.

“I think with Canada, frankly, the easiest thing we can do is to tariff their cars coming in. It’s a tremendous amount of money and it’s a very simple negotiation. It could end in one day and we take in a lot of money the following day.”

Actual Metal Prices and Trends

U.S. HDG steel fell 1.7% to $1,084/st. U.S. platinum bars fell 7.1% to $777/ounce, while palladium bars rose 5.5% to $979/ounce. U.S. shredded scrap steel fell 4.6% to $354/st.

LME three-month copper fell 6.2% to $5,849/mt.

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Chinese primary lead rose 3.0% to $2,805.43/mt.

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This morning in metals news, some steel stocks fell on the heels of President Trump’s proclamation on targeted tariff relief for quota countries, China looks to speak with its domestic aluminum foil makers as Mexico recently launched an anti-dumping probe and European Commission President Jean-Claude Juncker responds on the subject of automotive tariffs.

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Tough Thursday

U.S. steel stocks struggled yesterday on the heels of Trump’s proclamation affording “targeted relief” to three countries currently with steel quotas.

Companies in South Korea, Argentina and Brazil can apply for steel tariff exclusion requests, per the proclamation.

According to Markets Insider, U.S. Steel dropped 6%, AK Steel fell 4% and Steel Dynamics dropped 2%.

Beijing to Meet with Foil Makers

On the heels of Mexico’s announcement that it had launched an anti-dumping probe of aluminum foil imports from China, the Chinese government plans to meet with foil producers early next week, according to Reuters.

Back and Forth

The U.S. and E.U. remain at odds over automotive tariffs; the disparity in automotive tariff rates is a subject Trump has harped upon on numerous occasions.

Per a CNBC report, European Commission President Jean-Claude Juncker said the 28-member bloc would increase its automotive tariffs if Trump reneges on a previous reached agreement to not increase auto tariffs.

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MetalMiner’s Take: Not for the first time there appears to be contrarian positions, even within the European Commission.

Hours after European Trade Commissioner Cecilia Malmstrom offered to cut auto tariffs to zero if the US would do the same (see our post earlier this morning), cantankerous European Commission President Jean-Claude Juncker was issuing threats to reciprocate with higher auto tariffs if the U.S. went ahead with threats made last month to raise tariffs on E.U. cars coming into the U.S.

In practice, neither side should panic; the threat of tariffs on E.U. cars is a powerful bargaining tool the U.S. appears willing to use. But in reality a zero or tariff-free deal would be a major achievement for President Trump and could lay the groundwork for similar bilateral deals with Europe for other industries.

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Today is supposedly crunch time for negotiations between the U.S. and Canada to reconfigure the North American Free Trade Agreement (NAFTA).

With the imminent departure of Mexican President Enrique Peña Nieto, a deadline of this Friday has been set to conclude a deal or Mexico and the U.S. have threatened they will go it alone.

The deadline is to ensure that Peña Nieto could sign the deal with President Donald Trump before he hands over power to his successor Andrés Manuel López Obrador, the Financial Times reported. Peña Nieto and Trump have, it appears, reached an agreement — subject to ratification by their respective governments — that both sides can accept.

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But Canada still has many sticking points that have been the topic of fierce debate as the deadline looms.

A key part of the Mexico-U.S. agreement is that a minimum 75% of the content making up cars manufactured in Mexico and imported into the U.S. would in turn have to be made from U.S. manufactured components in order to qualify for duty-free entry into the U.S. In addition, 40-45% of the workers employed on those manufacturing lines in Mexico would have to be paid a minimum wage of $16 per hour, which represents an effort to level the playing field between higher-cost workers in the U.S. and low-cost workers in Mexico.

Such a condition would not present a problem for Canadian workers, but the sticking point for Canada is not so much around employment costs in the auto industry as it is the wider renegotiation of NAFTA terms impacting other industries. The Financial Times picks out Canadian concerns over protectionism for the dairy industry, investor dispute settlement procedures, and the U.S.’s continued imposition of national-security-based tariffs on steel and aluminum imports.

Both sides appear reasonably optimistic that the deal will be struck. However, quite how these issues will be resolved and whether the import tariffs on steel and aluminum will be dropped remains to be seen.

Meanwhile, the E.U. has surprisingly made an offer to remove all tariffs on cars in a free trade deal with the U.S., the Financial Times also reported this week. Cecilia Malmstrom, the E.U. trade commissioner, said Brussels would negotiate the zero-tariff deal on cars if the U.S. reciprocated.

The move was interesting in view of Trump’s earlier focus on the auto sector when criticizing U.S.-E.U. trade terms, saying that he saw the U.S. car industry as being unfairly treated by the E.U., which has imposed a 10% tariff on imports of passenger cars from the U.S. compared to U.S. duties of 2.5% on imports of E.U. passenger cars.

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U.S. import tariffs on other auto products, such as pickup trucks, are much higher than the 2.5% passenger car threshold. Nevertheless, the E.U.’s offer to bring all car tariffs, passenger and pickup, to zero if the U.S. will reciprocate could herald a wider move to remove even current modest tariffs between the two as part of a wider agreement.

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This morning in metals news, Chinese steel prices are not running in the same direction as the Chinese stock market, copper hit a two-week high and automaker shares were up on yesterday’s NAFTA news.

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Chinese Steel Surging

The Chinese stock market has been on the decline, but steel prices aren’t following suit, as CNBC reported.

The Nanhua rebar steel futures index is up 22% this year, while the Shanghai composite is down 16%, according to the report.

MetalMiner’s Take: From a domestic steel price perspective, the health of the Chinese economy remains less critical than the actual prices of Chinese steel. From a short-term perspective, buying organizations should pay much more attention to actual steel prices in China as opposed to the Chinese stock market, PMI or overall GDP numbers because they tend to lead domestic steel prices. The Chinese government will do its part to shore up the economy to keep China growing at 6.7 -6.8% GDP annually, despite the tariff situation. Meanwhile Chinese domestic steel prices — at least for HRC, CRC and HDG — remain on the rise.

Copper Rises

Copper prices showed signs of upward movement Tuesday, hitting a two-week high, Reuters reported.

LME copper rose 0.3% Tuesday and has risen nearly 6% since it hit a 15-month low Aug. 15, according to the report.

MetalMiner’s Take: The short-term downtrend in copper prices has been driven by sentiment. The threat of a future economic slowdown has driven the current copper price slide, rather than supply and demand issues. In fact, the current supply-and-demand picture is a deficit in 2018. The three major exchanges have registered stock shortfalls in the June-July period, with a 40% decrease in the SHFE. Chinese demand seems strong, with imports reaching records in July. Therefore, copper prices may start to recover again in the short term.

Automaker Shares Rise on NAFTA News

Automaker stocks were up Monday on the heels of the announcement of a preliminary deal between the U.S. and Mexico regarding certain provisions of NAFTA, Bloomberg reported.

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General Motors and Fiat Chrysler were up 4.8%, while Ford jumped 3.2%, according to the report.

MetalMiner’s Take: The North American automotive supply chain is a traditional sandwich with part suppliers, assemblers and OEMs in Canada, America and Mexico. The deal announced so far is more an open danish — just Mexico and the U.S. That is great news for automakers working across the Mexico-U.S. border. However, there is a large part of the equation still to be resolved: Canada. All the same, the Mexico deal — caveat details will be in the small print — heaps pressure on Canada to come to a deal. At least for automakers, the NAFTA renegotiation appears to be paying off.

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On Monday, the U.S. announced an agreement in principle regarding aspects of the North American Free Trade Agreement (NAFTA), albeit in a bilateral sense, as Canada remained on the sidelines of the talks between the U.S. and Mexico.

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“The United States and Mexico have reached a preliminary agreement in principle, subject to finalization and implementation, to update the 24-year-old NAFTA with modern provisions representing a 21st century, high-standard agreement,” the Office of the United States Trade Representative (USTR) said in a release. “The updated agreement will support mutually beneficial trade leading to freer markets, fairer trade, and robust economic growth in North America.”

Talks to modernize the 24-year-old trilateral trade agreement began in August 2017 and underwent numerous rounds, encountering challenges along the way.

Read more

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This morning in metals news, U.S. steel mills shipped 3.2% more steel in June 2018 than in June 2017, President Donald Trump announced the doubling of steel and aluminum tariff rates against Turkey, and Ford is feeling the effects of rising metals prices.

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Steel Mills See Year-Over-Year Shipment Rise

U.S. steel mills shipped 7,988,026 net tons of steel in June, according to data released by the American Iron and Steel Institute (AISI).

The total marks a 0.8% decrease from the previous month, but a 3.2% increase from June 2017.

In the year to date, shipments have amounted to 47,304,057 net tons, a 4.1% increase compared with the first six months of 2017.

Trump vs. Turkey

While much of the focus has been on the deterioration of relations or escalation of tensions with China and even the E.U., in recent weeks the U.S.’s relationship with Turkey has taken a hit.

President Donald Trump announced Friday that his administration will double the steel and aluminum tariffs on Turkey, bringing them to 50% and 20%, respectively.

The relationship between the two countries has taken a hit in recent months following the U.S.’s imposition of Section 232 tariffs on steel and aluminum. In addition, last week the U.S. imposed sanctions on Turkish officials in relation to Turkey’s detainment of American pastor Andrew Brunson on charges of espionage.

Price Pressure

Rising steel and aluminum prices are weighing on Ford’s business, one Ford official said this week.

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Jim Farley, president of global markets, called the rising costs a “significant headwind,” as quoted by Bloomberg, but added the automaker does not plan on passing on the added costs to consumers.

Before we head into the weekend, let’s take a look back at the week that was and some of the metals stories here on MetalMiner®:

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