Articles in Category: Automotive

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This morning in metals news, Rio Tinto made a copper discovery at its Grasberg mine for the first time since 2014, automakers urge Trump not to withdraw from the North American Free Trade Agreement (NAFTA) and copper hits a 3 1/2-week low.

MetalMiner’s Annual Outlook provides 2018 buying strategies for carbon steel

Rio Makes Copper Find at Grasberg

Rio Tinto made a copper discovery at its Grasberg mine, marking the first discovery of copper at the location since 2014, Bloomberg reported.

The discovery comes as Rio is considering leaving its Indonesian mine operation, according to the report. Rio’s total mined copper output declined by 9% last year, according to the report.

Don’t Pull Out of NAFTA: Automakers

As renegotiation talks focusing on NAFTA continue, automakers once again urged the president not to pull out of the trilateral trade deal.

According to Reuters, automakers urged the president not to terminate the deal and were hopeful a renegotiated deal can be reached among the member nations (the U.S., Canada and Mexico).

Trump has threatened to withdraw from the deal, inked in 1994, as manufacturing and labor group in the U.S. have argued NAFTA has seen jobs leave the country for Mexico. Meanwhile, other groups, like automakers, have indicated a desire to see the deal modernized for the 21st century, as opposed to spiking the deal entirely.

Regardless, pulling out of NAFTA would have a significant impact on a wide range of interconnected supply chains across North America.

The parties involved in the renegotiation hoped to reach a deal by the end of 2017, but that schedule proved to be overly ambitious. Now, negotiators will look to hammer something out during what is an election year in all three countries.

Copper, Nickel Slide

Copper fell to a 3 1/2-week low and nickel dropped by more than 5% on Tuesday, according to Reuters.

After zinc closed out 2017 on a hot streak, it has come back down to earth a bit after not unexpected profit-taking, according to the report.

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Copper, too, also fell as the U.S. dollar steadied (the two are inversely correlated), hitting an index value of 90.61 as of 12:15 p.m. EST Tuesday.

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This morning in metals news, two new vehicles made mostly with steel represent a victory for the steel industry, iron ore prices are down and the U.S. International Trade Commission (ITC) voted to continue its investigation into common alloy aluminum sheet from China.

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New Ram Pickup, Chevy Silverado Made with Steel

As the steel industry battles to remain the dominant material in automotive construction, the news of two new models constitutes a win for the industry.

Fiat Chrysler‘s new Ram pickup and General Motors‘ new Chevrolet Silverado truck are made mostly with steel, Reuters reported. The announcements represent a big win for steel, which is seeing increasing competition from aluminum within the automotive industry.

As Reuters reported, in late 2014 Ford launched the all-aluminum body F-150. While the versatile metal offered improved fuel economy, it comes at a premium to steel. The interplay between steel and aluminum vis-a-vis automobile construction is something that will need to continue to be monitored going forward.

Iron Ore Prices Drop

As Chinese rebar steel futures fell, so too did prices of iron ore in the face of flagging demand, Reuters reported.

Iron ore on the Dalian Commodity Exchange dropped 2.3% to 535 yuan per ton, according to the report.

ITC Continues Aluminum Sheet Investigation

The U.S. ITC announced Friday that it voted to continue its investigation of common alloy aluminum sheet from China.

“The United States International Trade Commission (USITC) today determined that there is a reasonable indication that a U.S. industry is materially injured by reason of imports of common alloy aluminum sheet from China that are allegedly subsidized and sold in the United States at less than fair value,” the ITC release covering the announcement states.

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Now, a preliminary countervailing duty determination is due Feb. 1 from the Department of Commerce.

This morning in metals, a major player in domestic steel announced when its full-year earnings call will drop, China looks to be giving used cars some love, and Australia’s government appears a bit bearish on iron ore in the next couple years.

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Iron Ore Price Forecast for 2018-2019

Australia’s Department of Industry, Innovation and Science noted in recent commodities report that it expects iron ore prices to drop 20% in 2018 over this past year’s level, and continue that trend into 2019, according to Reuters.

A demand slowdown in China is much to blame, according to the department’s resource and energy analyst David Thurtell, as quoted by the news agency.

China Pivots to Used Cars

Speaking of demand slowdowns, China’s consumers may also be to blame for current — and future — automotive metals demand in Asia (and globally).

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The Automotive MMI posted no movement for our January reading, sticking at 97 after a four-point jump from November to December.

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The January MMI reading — which tracks the sector’s December performance — has risen significantly in the last 12 months. The sub-index posted an 82 for its January 2017 reading.

Within the basket of metals, U.S. HDG steel and LME copper had big months. For the former, the metal rose 5.5% during the period in question, while Dr. Copper jumped 6.4%.

U.S. Auto Sales

It was a down month for General Motors, which saw its sales drop 3.4% year-over-year in December 2017, with 308,112 units sold, according to sales data released Jan. 3 by Autodata Corp. GM thus closed the year with sales dropping 1.4% from its 2016 total.

Ford, meanwhile, saw its December sales rise 1.3% year-over-year, with 240,910 units sold in the month. As for the year-end numbers, Ford’s sales drop was less than GM’s, with a 0.9% dip compared to 2016 sales for the company.

Further down the sales list, Fiat Chrysler‘s December sales dropped 10.7% year-over-year and were down 8.2% for the year.

Fiat Chrysler wasn’t the only one to have a rough month. Toyota‘s December sales were down 8.3% year-over-year, while Honda‘s (7.0%) and Nissan‘s (9.5%) were also down.

Volkswagen dropped 5.4% in December compared with December 2016, but came out ahead in 2017, with sales rising 6.1% at year’s end compared with the previous year.

While Mitsubishi‘s absolute sales don’t come in near the top of the list, it had a good year in the U.S. market, selling 103,686 units in 2017 — up 7.7% from 2016 sales. In December, Mitsubishi’s sales rose 15.1% compared with December 2016.

Record Sales in 2017 for Tesla, But Struggles with Deliveries

Meanwhile, Tesla’s year was a two-sided tale.

As Business Insider UK reported, the electric vehicle (EV) maker hit record sales in 2017, but struggled with deliveries of its new Model 3.

The challenge for Tesla, of course, is transforming from a still relatively niche brand — catering to those who check the boxes of environmental mindfulness and being financially well off — to a mainstream automotive manufacturer capable of meeting demand with consistency.

It’s still unclear whether Tesla can do that, but EVs aren’t going away either way. Of course, Tesla isn’t the only player in the game, and competition in the EVs sector will only continue to grow in 2018 and beyond.

Eyes on China

A big year is ahead for automotive sales in China.

And it’s not just about this year — according to William C. Ford Jr., executive chairman of Ford, the future of EVs will be led by China.

“When I think of where E.V.s are going, it’s clearly the case that China will lead the world in E.V. development,” he told The New York Times.

Speaking of Ford, last month the automaker announced plans to collaborate with e-commerce conglomerate Alibaba. 

“Under the three-year agreement, both companies will jointly explore areas of cooperation that are re-shaping the automotive industry in China and around the world,” a Dec. 7 Ford news release states. “Ford will cooperate with Alibaba’s four business units in operation system, cloud computing, digital marketing and online retail respectively – namely AliOS, Alibaba Cloud, Alimama and Tmall – and jointly explore a variety of areas of cooperation including mobility services, connectivity, cloud computing, artificial intelligence and digital marketing.”

Ford President and CEO Jim Hackett also underscored the importance of China.

“China is one of the world’s largest and most dynamic digital markets, thriving on innovation with customers’ online and offline experiences converging rapidly,” he said in the release. “Collaborating with leading technology players builds on our vision for smart vehicles in a smart world to reimagine and revolutionize consumers’ mobility experiences.”

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This morning in metals news, Chinese steel futures start the year on the right foot, the automotive sales outlook for 2018 is not quite as bright as it has been in recent years and gold reaches a three-month high.

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Chinese Steel Futures Start ’18 Strong

Chinese steel futures started the year on the right foot, according to a Reuters report.

With that said, the report cites concerns about consumption levels of the metal going forward, particularly as the winter season sees construction activity slow down in China.

Outlook for Auto Sales Less Positive

After a record 2016 and strong 2017 in automotive sales, it wouldn’t be surprising to see the market take a step back in 2018.

According to Bloomberg, higher interest rates could dim the prospects of the automotive market in 2018.

Good as Gold

Gold, meanwhile, hit a three-month high on the heels of a solid December, Reuters reported.

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According to Reuters, the metal rose 4.4% in the last three weeks of 2017, with prices eclipsing the $1,310/ounce mark.

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Before we head into the holiday weekend, let’s take one last look at the week that was:

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Some base metals are poised to become hot commodities for their anticipated use in electric vehicles (EVs).

As demand increases and technology presses forward, certain metals could become big winners.

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Steel remains one of the most important industrial metals for the automotive industry. Currently, steel goes into the vehicle structure, such as the main body structure, hang-on panels (such as the door and hood), wheels, chassis and a variety of internal structures, such as seats. This means that most of the structure of the vehicle comes from steel.

Although some automakers have moved toward aluminum due to its lightweight properties, aluminum has a long way to go before it starts to eat into steel’s share.

The Demand for Steel

Steel also has a new life in the EVs revolution related to the electric propulsion system.

Despite the mania over the battery market, batteries are not the only relevant part of the electric propulsion system in EVs. Electrical steels get the power from the battery and transform it into mechanical energy (which allows the movement on the road).

Tata Steel forecasted steel demand based upon different scenarios regarding the growth of EVs in its report, titled “Charging towards a sustainable future?”According to the report, forecasted steel demand for structural steel, plated steel and electrical steels will grow considerably through 2050.

Source: “Charging towards a sustainable future?” Tata Steel

Structural steel takes the lion’s share, and will continue growing with the introduction of EVs. Moreover, electrical steel and plated steel demand will become stronger with the EVs.

This year, plate prices have performed the worst compared to other steel forms. However, prices increased this week and the increase appears sharp, partly due to low service center volumes.

Source: MetalMiner data from MetalMiner IndX(™)

U.S. plate exports increased by 18.8% in October, and are up by 53.3% compared to last year’s levels.

As For Today’s Steel Prices…

Despite the EV market sentiment, domestic steel momentum held flat during Q3.

Steel momentum has shifted and prices now show some upward momentum (MetalMiner recently assessed steel prices).

Source: MetalMiner data from MetalMiner IndX(™)

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HRC prices increased again this week, together with the other steel forms. The latest prices released also show a continuation of the uptrend.

Could this be the beginning of a new rally for steel? Buying organizations may want to subscribe to our Monthly Outlook or take a free two-month trial to identify buying opportunities.

The electric vehicles (EVs) market could increase by 3,400% by 2030 compared to 2015 EVs sales, according to the U.S. Department of Energy.

More powerful, reliable and cost-competitive batteries have driven EV growth. Lithium-ion batteries have effectively replaced lead batteries.

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MetalMiner analyzed the usage of base metals in EVs and their price performance this year. The EV boom has driven investor sentiment for these base metals.

Base Metals’ Role in EVs

The infographic below breaks down car parts by type of base metal. Aluminum, nickel, copper and tin serve as the four main base metal “winners” in which the market could expect demand to grow.

Source: MetalMiner analysis of Business Insider data

Aluminum, Copper and Nickel

Of the exchange-traded metals, all three of these base metals commonly have high trading volumes. Copper, in particular, tends to have high trading volume as the market considers it an economic indicator (often referred to by the nickname “Dr. Copper”).

Both aluminum and copper appear in an uptrend, especially since the summer when prices started to rally.

Nickel prices have also seen high volatility due to electric battery demand. This makes sense — if investors consider a metal  “hot,” then volume and transactions may increase. Prices may change based on  this, as they did for nickel.

Source: MetalMiner analysis of FastMarkets

And What About Tin?

Contrary to the other three base metals, tin prices do not look bullish.

Tin plays an important role in EVs, as it is used for electronic solder and batteries. However, tin prices appear both stagnant and weak.

Source: MetalMiner analysis of FastMarkets

Tin’s price momentum has diverged from EV supply/demand fundamentals and the LME price.

EV batteries have evolved toward technologies that include more tin alloys. According to the International Tin Research Institute (ITRI), tin used for batteries increased by 95% in 2016 compared to 2010 data (14,400 tons). Tin mine output has increased in 2017 compared to last year’s data (18% in China, 26% in Indonesia and 7% in Myanmar).

However, the ITRI forecasts a 7,300-ton deficit in 2017. Tin stocks remain low, with only a slight increase in SHFE stocks.

Free Download: The December 2017 MMI Report

Current macro indicators support the bullish rally. However, tin prices still seem reluctant to react.

Have investors forgotten about tin?

Judging by the reception for aluminum, copper and nickel, perhaps 2018 will bring tin into the bull party.

India represents one of the biggest automobile markets in the world, with about 3 million petrol and diesel vehicles having been sold last fiscal year.

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That pie is just too lucrative for the world to ignore.

The Players

It’s not only “regulars” such as Honda, Suzuki and Hyundai are planning launches and tie-ups for the Indian market; domestic players like Mahindra and Tata Motors are also around. With the Indian government having announced earlier that the country would move to an all-electric fleet of passenger vehicles by 2030, the timeline is more or less clear.

The most unlikeliest of the pack is Chinese smartphone brand Xiaomi. Indian media reports Xiaomi has “adopted an expansion roadmap revolving largely around plans to sell electric vehicles (EVs) in the country.”

While there was no immediate confirmation from the company itself, The Economic Times report pointed to a recent regulatory filing made with the Registrar of Companies that talked of Xiaomi potentially selling “all types of vehicles for transport, conveyance and other transport equipment, whether based on electricity or any other motive or mechanical power, including the components, spare parts.”

Next on this list is Swedish company Volvo. It announced plans to only sell hybrid, electric and battery-powered cars in India after 2019. Volvo is aiming to sell over 1 million electric vehicles worldwide by 2025, with India being a major target market.

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We’re another month closer to the end of the calendar year, and there’s much to recap from the last month in metals.

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After four MMIs ticked upward for our November reading, five did so for our latest report.

Hitting some of the high points:

  • The biggest winners of the month were the Automotive, Construction and Raw Steels MMIs. Automotive picked up four points, while Construction and Raw Steels picked up five points apiece.
  • The Aluminum MMI tracked back down, losing four points after a five-point rise the previous month. As Irene Martinez Canorea wrote, a dropping LME aluminum price had much to do with the sub-index’s drop.
  • The Stainless MMI, meanwhile, fell five points on the month. In this case, a 10% decline in nickel prices contributed to the MMI’s fall. Trading volume for LME nickel is still strong, Martinez Canorea wrote, and the outlook for nickel remains bullish.

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