Articles in Category: Supply & Demand

auto sale

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The Automotive Monthly Metals Index (MMI) rose by 7.1% this month, as US auto sales were strong in February.

March 2021 Automotive MMI chart

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US auto sales

Ford Motor Co. reported its February US retail auto sales reached 163,520 vehicles, down 1.8% year over year.

Ford truck sales increased 10.2% year over year. Meanwhile, SUV sales ticked up 0.2%. Ford car sales fell 56.5%.

Ford’s estimated retail share in February reached 12%, up from 11.7% last year.

“Share gains came from trucks and new product offerings of Bronco Sport and the fully electric Mustang Mach-E,” Ford said.

Honda sales overall fell 11.4% to 106,328 vehicles. However, the automaker reported its best-ever February for Honda truck sales. Truck sales rose 5% year over year.

Electric vehicles (EVs) still represent a small percentage of Honda’s total sales. Nonetheless, the automaker reported EV sales rose 96.2%, with deliveries nearing 8,000 vehicles.

Nissan, which moved to quarterly reporting last year, in January reported Q4 2020 sales in the US fell 19.3% year over year.

US auto sales growth in February

Late last month, J.D. Power and LMC Automotive forecast sales growth in February.

The automotive intelligence groups forecast a 3.3% increase year over year when adjusting for differences in selling days.

“Despite challenges posed by inclement weather in most of the country, retail sales demand continues to be strong with the industry posting a second consecutive month of year-over-year gains,” said Thomas King, president of the data and analytics division at J.D. Power. “Typically, weather related sales disruptions are made up in the weeks following, so most of the sales lost at the beginning of February will be made up at the end of February and trail into early March.”

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supply chain chart

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When we first started reporting on global freight costs in Q4 last year, we expected that the pandemic bounce-back would probably be a relatively short-term effect, easing around the Chinese Lunar New Year. Around then, Chinese manufacturers closed down and the shipping industry had a chance to catch up on backlogs.

Unfortunately, in the meantime, the situation has not gotten better.

If anything, it has gotten worse.

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Supply chain woes

According to the Financial Times, the cost of shipping goods from China to Europe has more than quadrupled in the past eight weeks. Costs have hit record highs as a result of a shortage of empty containers disrupts global trade.

The post states the cost of shipping a 40-foot container from Asia to northern Europe has increased from about $2,000 in November to more than $9,000, quoting shippers and importers.

MetalMiner’s own research has found the worst increases are on the China to US West Coast and Northern Europe routes. Other origins, such as India, have doubled but not tripled since spring 2020, with the largest increase coming in the last 3-4 months.

The Chinese Lunar New Year closedowns barely happened this year. New COVID-19 outbreak containment measures in China encouraged Beijing to dissuade all but essential travel. As a result, a majority of workers in the cities were available to work over what would normally be a near two-week holiday period.

Product, therefore, continued to be delivered to the docks. Demand on shipping lines barely abated.

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U.S. trade

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This morning in metals news: the US international goods trade deficit moved up slightly from December to January; meanwhile, MetalMiner sister site SpendMatters took to LinkedIn for feedback on President Joe Biden’s executive order on supply chains; and, lastly, Sweden will be home to what will reportedly be the world’s largest “green hydrogen plant.”

US trade deficit rises in January

The US trade deficit in January reached $83.7 billion, the Census Bureau reported.

The trade deficit increased from $83.2 billion in December.

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Spend Matters analyst looks at Biden administration’s supply chain executive order

Speaking of the trade deficit and trade in general, in light of President Joe Biden signing an executive order to address US supply chain problems for semiconductor chips, large-capacity batteries for electric vehicles, rare earth minerals and pharmaceuticals, Spend Matters analyst Pierre Mitchell took to LinkedIn to get a conversation started.

“Hey, if a 78-year-old guy from Scranton gets it, maybe more C-level execs will finally now get serious about supply chain risk management,” Mitchell writes. “Actually, most do, especially after the pandemic, but it’s still depressing when so many wait until they get a major disruption. Is this finally a sea change … or ‘C-change’?”

MetalMiner’s Stuart Burns recently outlined the geopolitical chess game taking place over rare earth materials.

To be a part of the conversation, engage with Mitchell’s post on LinkedIn to voice your opinions.

World’s largest ‘green hydrogen plant’

Steelmaking is a traditionally high-polluting industry. But, slowly but surely, steelmakers around the world are touting newfound green bona fides.

CNBC reported yesterday that Sweden could soon be home to the “world’s largest green hydrogen plant.”

The firm, H2 Green Steel, will aim to provide the European market with steel made with a “fossil-free manufacturing process,” CNBC reported.

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President Joe Biden’s latest executive order seeks to secure a variety of important supply chains.

For example, in one higher-profile case, General Motors recently announced it would extend downtimes at several plants as a result of a semiconductor shortage.

As we’ve noted in our Rare Earths Monthly Metals Index (MMI) series, rare earths supply has long been a point of concern for the US, particularly the Pentagon. (Recently, MetalMiner’s Stuart Burns delved into China’s overwhelming control of the rare earths processing market and indications Beijing is considering tighter rare earths export regulations.)

In that vein, the president’s latest executive order — his 33rd in just over a month in office, which the White House said he would sign Wednesday — aims to secure those critical supply chains.

The White House said the order focuses on six key areas:

  • the defense industrial base
  • the public health and biological preparedness industrial base
  • the information and communications technology (ICT) industrial base
  • the energy sector industrial base
  • the transportation industrial base
  • supply chains for agricultural commodities and food production

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list of commodities prices

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Investment banks love a super cycle.

It spurs irrational investment and sucks in unwary investors. Furthermore, it encourages passive funds to up their allocation, even if only by fractions of a percent.

But with some $14 trillion invested in US equities alone, even a modest increase in passive investments into ETFs would reap significant rewards in fees.

As such, it may be not surprising that the big boys — like JP Morgan, as reported in Bloomberg, and Goldman Sachs, as reported in the Financial Times (admittedly focused more on oil) — are calling the start of the next commodities super cycle.

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Commodities super cycle?

On the face of it, they appear to have some foundation.

As a separate post in the Financial Times observes, metals, agricultural and oil commodity indices have risen up to 40% since last July.

In part, this is due to a surge of interest in green-energy projects.

The EU, US and China have all promised to spend big. Hydrogen projects alone could receive €30 billion from the EU.

Copper has rallied to eight-year highs, around $8,375 per ton. The metal is benefiting from strong Chinese demand and the prospects for a more rapid transition to electric vehicles gains momentum. Glencore is quoted as saying world copper demand will double by 2050 and that mine investment is insufficient,

All of that certainly makes for a bullish landscape.

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joint venture puzzle pieces

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This morning in metals news: officials held a groundbreaking ceremony at the AM/NS Calvert mill earlier this month; President Joe Biden is expected to sign an executive order that calls for assessments of several critical supply chains; and US housing starts fell in January.

AM/NS Calvert officials hail expansion project

Officials celebrated the imminent expansion project at the AM/NS Calvert mill in Alabama with a groundbreaking ceremony earlier this month, al.com reported.

The Alabama mill is a 50/50 joint venture of ArcelorMittal and Nippon Steel. In December, ArcelorMittal completed the sale of most of its North American assets to Cleveland-Cliffs.

However, the AM/NS Calvert mill is one of the few assets not included in the sale.

Last August, ArcelorMittal announced its intention to build an electric arc furnace at the mill.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Biden to sign executive order for supply chain assessments

President Joe Biden will sign an executive order calling for assessments of various US supply chains, Yahoo News reported.

The order will call for assessments of supply chains for semiconductors, medical supplies, rare earths and electric car batteries.

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rare earths loaded on cargo ship in China

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Although presented as the evil machinations of an enemy state, a recent Financial Times article lays out the rare earths dilemma China faces.

Rare earths in the crosshairs

Rare earths industry executives made unofficial statements indicating Chinese government officials had asked them how badly companies in the US and Europe, including defense contractors, would be affected if China restricted rare earth exports during a bilateral dispute.

The conversations should be seen against the backdrop of moves last month by the Ministry of Industry and Information Technology.

The ministry proposed draft controls on the production and export of 17 rare earth minerals from China. Although China doesn’t control the world supply of mined ores, it does dominate the refining into useable salts and metals, controlling about 80% of global supply.

Nonetheless, the country itself remains at risk to unstable ore supplies from countries like Myanmar. That may help explain Beijing’s tacit support for the recent military coup there.

The US even sends its ores to China for refining. That’s not because it doesn’t have the technical knowhow; the US simply lacks the facilities. Furthermore, China is more willing to tolerate the environmental damage from the dreadfully polluting refining process.

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Rare earths supply dependence

This lack of refining capacity leaves the US and most of its Western allies horribly exposed.

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Indonesia on a globe

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Electric vehicle manufacturers are wooing Indonesia to create a nickel-based battery supply chain in that country.

Elon Musk’s Tesla and China’s Contemporary Amperex Technology, otherwise known as CATL, and South Korea’s LG Chem are in the fray. 

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Firms look to secure Indonesian nickel supply

A senior Indonesian government official told news agency Reuters the government had recently received Tesla’s investment proposal. 

Since early last year, Tesla has been courting Indonesia because for the value of its strategic commodities, including nickel. Nickel is a critical metal used in batteries for EVs due to its properties enabling mass energy storage capabilities. Furthermore, nickel reduces the overall cost of batteries by limiting the amount of cobalt required. 

Tesla seems to have come back to the Indonesian government with a reworked proposal to the one it had submitted in May 2020. The latter had shown reluctance in just signing a raw material supply agreement. 

The minister told reporters, while acknowledging Tesla had sent its proposal, that Tesla’s engagement in Indonesia would extend past raw materials. If Tesla only wants to take raw materials, then the government was not too keen in pursuing a partnership.

Indonesia is also talking to CATL and LG Chem regarding their plans to create an EV battery supply chain, the Nikkei Asia reported. 

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US and UAE flags

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Before we head into the weekend, let’s take a look back at the week that was and the metals storylines here on MetalMiner, including the Biden administration reimposing a tariff on aluminum from the UAE, copper demand and much more.

The MetalMiner Best Practice Library offers a wealth of knowledge and tips to help buyers stay on top of metals markets and buying strategies.

Week of Feb. 8-12 (Biden administration reinstates UAE aluminum tariff, copper demand and more)

Stop obsessing about the actual forecasted aluminum price. It’s more important to spot the trend.

General Motors headquarters

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This morning in metals news: automaker General Motors is facing challenges related to semiconductor supply; meanwhile, Oslo-based Norsk Hydro reported its Q4 2020 financial results; and, lastly, the oil price continues to tick up.

Semiconductor supply

End users across sectors are dealing with material shortage challenges.

The automotive sector is no different.

This week, General Motors announced it would extend previously announced downtimes at its Fairfax, CAMI and San Luis Potosi.

“Semiconductor supply remains an issue that is facing the entire industry,” GM said in a release. “GM’s plan is to leverage every available semiconductor to build and ship our most popular and in-demand products, including full-size trucks and SUVs and Corvettes for our customers. Our supply chain organization is working closely with our supply base to find solutions for our suppliers’ semiconductor requirements and to mitigate impacts on GM.”

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Norsk Hydro reports Q4 results

Oslo-based aluminum firm Norsk Hydro reported Q4 EBIT of NOK 1,449 million (US $171 million).

Meanwhile, the firm reported Q4 2019 EBIT of NOK 560 million (US $66 million).

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