Articles in Category: Automotive

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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(™)

Free Download: The December 2017 MMI Report

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.

Michael Flippo/Adobe Stock

This morning in metals news, Toyota and Panasonic are considering working together on developing electric car batteries, U.S. Steel did not test for toxic materials after a chemical spill into Lake Michigan in October and U.S. raw steel production last week was up 4.3% compared with the same week in 2016.

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A Toyota, Panasonic Partnership?

According to Reuters, Toyota and Panasonic are considering joining forcing in developing electric batteries for vehicles.

Panasonic already manufactures batteries for Toyota’s gasoline-electric and plug-in hybrid vehicles, according to the report.

U.S. Steel Didn’t Test Water After October Chemical Spill

Documents posted online by state regulators Tuesday show that following a U.S. Steel chemical spill in a Lake Michigan tributary in October, the company did not test the waters for toxic materials, according to the Chicago Tribune.

The October spill was the second of the year for U.S. Steel, the first affecting the same waterway in April.

According to the Tribune report, an inspector from the Indiana Department of Environmental Management visited U.S. Steel last month, when plant managers told the inspector they decided not to test for hexavalent chromium in the water.

U.S. Raw Steel Production Up 4.3%

U.S. raw steel production for the week ending Dec. 9 jumped 4.3% compared with the same week last year, according to a report from the American Iron and Steel Institute (AISI).

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Domestic raw steel production was 1,672,000 net tons, while it was 1,607,000 net tons in the week ending Dec. 9, 2016.

Zerophoto/Adobe Stock

This morning in metals news, ArcelorMittal and the state-run Steel Authority of India Ltd. (SAIL) are reportedly close to a joint-venture deal, officials in a northwest Indian town are threatening to sue U.S. Steel after a recent Lake Michigan toxic chemical spill, and despite the start of the winter season, Chinese steel mill profits have gone up.

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ArcelorMittal, SAIL Close to Deal

ArcelorMittal and India’s state-run SAIL have been in talks regarding a potential joint venture; according to Bloomberg, the two are expected to ink a deal soon.

According to Bloomberg, the two have agreed to terms on the deal, which features a $60 billion automotive plant.

Portage Officials Threaten to Sue U.S. Steel

After a second incident of dumping toxic chromium into Lake Michigan, U.S. Steel is facing lawsuit threats from a northwest Indiana town, not long after the City of Chicago said it would file suit.

Officials from Portage, Indiana, recently threatened to sue the company after the second spill, which occurred in October.

According to the Northwest Indiana Times, the Portage City Council approved a resolution Tuesday night demanding the steelmaker report any environmental spill or discharge to the city as it would to the Environmental Protection Agency or Indiana Department of Environmental Management.

Chinese Mills’ Profits Up

Profits by Chinese mills continue to rise after a warm start to the winter season, Reuters reported.

Warmer weather has allowed steel operations to continue when they would ordinarily be shut down by the colder winter weather.

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According to the report, physical spot prices for steel rebar for immediate delivery rose to 5,210 yuan ($787.72) a ton on Tuesday — its highest since August 2008.

The Automotive MMI, tracking metals and raw materials used within the automotive industry, jumped 4.3% to a value of 97 for May.

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Here’s What Happened

  • The U.S. HDG steel price tracked by the MetalMiner IndX jumped 11% to an 8-month high for December, last reaching its current level in April 2017. U.S. shredded scrap prices also spiked to an 8-month high, driving this sub-index higher.
  • Our Auto MMI has had a stalwart Q4, with sustained values in the 90s. In fact, the last time this sub-index reached 97 was in September 2014.

What’s Going On in the Background?

  • Auto sales in the U.S. were helped along by automaker and dealer incentives for consumers, with the return of the holiday shopping season — especially Black Friday, according to an AP report.
  • Edmunds.com predicted “November sales will rise 3.5 percent over last year to 1.4 million vehicles,” according to that report.
  • The historical picture, however, shows that while car sales are in a longer-term downtrend, light truck sales are in a longer-term uptrend, according to the WSJ.
  • As for the Chinese auto market, vehicle sales increased by 2% year-over-year in October, growing for the sixth consecutive month, according to MetalMiner’s monthly metal buying outlook report. New-energy vehicle sales also boomed this year, driven by government incentives to support the EV sector.

What Metal Buyers Should Look Out For

  • The state of how sales within the automotive market are structured could offer some hints as to what the future holds. Brandon Mason, a director at PwC’s automotive practice, told Reuters that, “a worrying trend for the industry was a rising number of deep subprime loans. He said subprime levels are at just over 20 percent of originations, against more than 30 percent prior to the Great Recession, but recent increases remain a concern.”
  • HDG prices, however, may be the biggest elephant in the room — not to mention often the single-biggest driver within our market basket of metals used in the auto industry. According to MetalMiner’s analysis in the monthly outlook, while 2016 saw a sizable increase in HDG prices, they’ve begun to level off to the point that real price strength is not yet evident. With slowing Chinese prices and pending circumvention cases, HDG prices may reverse this month’s uptrend just as quickly as it began.

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This morning in metals news, the Indian government says the country’s steel firms can meet the railway industry’s needs, copper hits a one-month high and the Japan Iron and Steel Federation says it doesn’t expect a decline in automobile steel sheet demand.

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Domestic Firms Can Meet Railway Demand, Indian Government Says

According to an Indian government panel, domestic steel companies like Jindal Steel and Power Limited can meet the railways’ demand if given an opportunity, Reuters reported.

According to Reuters, the state-run Steel Authority of India Ltd (SAIL) has struggled to supply the steel as India looks to expand its rail network, the fourth-largest rail network in the world.

Copper Hits One-Month High

Copper rose to a one-month high on Monday, Reuters reported, topping $7,000 in the process.
The jump comes “amid signs of resilience in China’s industrial sector,” Reuters reported.

Demand for Automotive Steel: Japan Iron and Steel Federation

Despite news that Nissan and Subaru did not comply with inspection procedures for decades, the top official of the Japan Iron and Steel Federation said they do not expect a decline in demand for automobile steel sheets.

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Despite steel producers’ best endeavors, aluminum continues to make inroads into the industry’s previously unassailable position as construction material of choice for the automotive industry.

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Stronger and, hence, thinner grades of steel allow automotive body formers to find new applications for steel where aluminum seemed like the obvious choice. However, at best this is slowing the uptake of the light metal, not turning the situation around.

Novelis’ announcement that it is bringing its automotive alloy Advanz 6HF – e/s200 to North America after successful development and uptake in Europe only re-enforces the impression that both steel and aluminum producers are innovating and investing like mad — but aluminum is gradually winning market share.

And it is not hard to see why. Aluminum has lower mechanical properties than steel when compared on samples of the same thickness, but has the far lower weight, 2.7g/cm3, compared to 7.85g/cm3. This means thicker sections or parts can be formed while still achieving substantial weight gains.

Novelis Advanz 6HF – e/s200 is one of a range of alloys the firm has developed broadly based on the 6000 series with careful control of alloying elements and production giving enhanced properties. But in some applications producers have developed 7000 series alloys as used by the aerospace industry in aircraft wings and bodies to achieve even higher properties.

7000 series alloys are harder to form and more expensive but have even higher mechanical properties — circa 600MPa compared to circa 300Mpa for 6000 series — and allow automakers to achieve better weight gains. In an Aleris presentation, the company illustrated how the use of 3.5 millimeter thick 7000 series alloy in the manufacture of B pillars achieved the same safety crash performance as 2 mm boron UHS steel, but resulted in a 40% weight saving.

As if to reinforce Novelis’ announcement, competitor Aleris has just opened its new $400 million auto body sheet production centre in Lewisport, Kentucky, and started delivering product to customers. Like Novelis, the firm uses primarily scrap as its feedstock, boosting its green credentials. Aleris produces a range of proprietary alloy grades with enhanced properties over common 6061 grades specifically tailored for a variety of automotive applications. The 6000 series is the industry’s grade family of choice, as they sit comfortably between cheaper and less strong 5000 series and stronger but more expensive (and often harder to form) 7000 series.

In Europe, manufacturers like Audi are going Body in White — meaning the whole structural body shell, plus closing panels like hood, trunk and doors, as wholly or largely in aluminum.

Not surprisingly, this is more at the premium end of the market, where the pressure to improve fuel economy from larger engines is greatest and where higher margins can more readily absorb the cost of using aluminum.

But you do not need deep research to show the direction — Repair and Drive in a recent article quoted a Ducker Worldwide study that predicted that aluminum doors will have gone from virtually zero use as a material in 2014 to 25% of the North American fleet in 2020.

Underlining how rapid the uptake is underway, the consulting firm also estimated 71% of hoods would be aluminum by 2020, up from 50% in 2015, and bumper beams would grow from 33% aluminum in 2015 to 54% in 2020, the article explained.

The current administration’s adverse reaction to broader climate change policies is not the issue here. Automotive is a global business and U.S. manufacturers need to be at the forefront of design and material use to maintain their global positions. The legislation for ever higher fuel efficiency is going to remain a relentless one-way dynamic, encouraging automotive construction to use ever lighter materials and aluminum producers to continue to innovate with alloys and production processes to meet the industry’s demand.

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For now, the focus is on improved 6000 series; in time, more components will justify the use of 7000 series alloys. Either way, the industry has shown it is willing to spend big bucks to stay in what is proving to be a very lucrative race.