Industry News

automotive sale in dealership

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This morning in metals news: J.D. Power and LMC Automotive released their joint forecast on February US auto sales; meanwhile, US steel imports fell by 23% in January; and, lastly, Ford’s CEO urged the US government to support the implementation of electric vehicle applications.

February US auto sales forecast to rise

New-vehicle retail sales in February are forecast to rise by 3.3% when adjusted for selling days, LMC Automotive and J.D. Power said.

“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.

Meanwhile, the average manufacturer incentive is down. According to J.D. Power and LMC Automotive, the average incentive is on pace to be $3,562 per vehicle, or down $614 from a year ago.

Furthermore, as incentives decline, average transaction prices are going up. Per the report, the forecast calls for the average transaction price to rise 9.8% to $37,524, a February record.

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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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steel

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Like other economic indicators, metals shipments in the US and Canada have come a long way since the bottoming out that occurred last spring (prompted by the onset of the coronavirus pandemic).

According to the Metals Service Center Institute (MSCI), shipments have recovered both in the US and Canada.

However, shipments in January still came in below January 2020 levels.

Does your company have an aluminum buying strategy based on current aluminum price trends?

US metals shipments remain down year over year

U.S. service center steel shipments in January 2021 decreased by 11.8% year over year, MSCI reported earlier this month.

Meanwhile, shipments of aluminum products decreased by 5.6% year over year.

Canadian shipments

Meanwhile, Canadian metals shipments reflect a similar situation.

Canadian service center steel shipments in January 2021 fell by 6.4% year over year.

On the other hand, aluminum product shipments increased by 3.9% from the same month in 2020.

MSCI on Section 232 tariffs, global overcapacity

In other news, as the MSCI noted, 50 members of the Congressional Steel Caucus sent a letter dated Feb. 1 to President Joe Biden urging him to maintain the Section 232 steel tariff imposed by former President Donald Trump.

The lawmakers argued the tariff action has led to “significant reductions” in imports.

“However, we remain concerned that the industry remains at risk due to the lingering effects of the pandemic,” the letter stated. “We know that as the U.S. economy begins to recover that it will be an attractive market for foreign producers to pursue. This is why we want to ensure that the existing tariffs and quotas remain in place to ensure that imports do not take a significant share of the U.S. market as the nation begins its economic recovery.”

Meanwhile, the MSCI reiterated its stance on the matter, underlining its focus on global overcapacity, particularly from China.

“To address this circumvention, in 2017 MSCI advised federal officials to provide relief for producers up and down the supply chain and to consider the consequences of any new trade policy, including: the economic impact of global overcapacity on the entire domestic metals supply chain; transition times and implementation rules to any new policy; availability of domestic metals to meet U.S. national security needs, as well as general industrial and consumer demand; and trade flows under current free trade agreements, including the United States Mexico Canada Agreement (USMCA),” MSCI said in a release. “MSCI also asked that Canada and Mexico be excluded from any trade penalties.”

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earnings sign

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This morning in metals news: Arconic reported its fourth quarter and full-year 2020 financial results; meanwhile, the Census Bureau reported steel import totals; and, finally, hot rolled coil steel prices continue to rise.

Arconic reports Q4, 2020 financial results

Pittsburgh-based Arconic reported Q4 2020 revenues of $1.5 billion, up 3% from the previous quarter. However, the Q4 total marked a year-over-year decline of 14%.

Weaker aerospace volumes contributed to the decline, the manufacturer said. Growth in the industrial and packaging end markets partially offset the decline.

For the full year, revenues of $5.7 billion marked a 22% year-over-year decline.

The company attributed the slide to COVID-19 impacts and production declines due to delays associated with the Boeing 737 MAX.

“Our fourth quarter results demonstrate a steady climb in revenue since the onset of the pandemic as several indicators point to growing customer demand in many of the markets we serve, particularly in the ground transportation and industrial sectors,” Arconic CEO Tim Myers said.

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copper mine

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The copper price has resumed its rise this month after taking a brief pause in January.

Meanwhile, on the supply side, tightening began last year and could exacerbate in the year ahead. Strong demand from China, lack of new mine investment and enthusiasm about copper’s role in the renewables revolution are all contributing to the metal’s bullish run.

Copper’s outlook is strong, MetalMiner’s Stuart Burns explained earlier this week. However, it would not be a surprise to see short-term retrenchment.

“So, for investors to take profits and the copper price to fall back should not come as too much of a surprise after such a strong rise in prices,” he wrote.

“Furthermore, it does not undermine the longer-term bull narrative for the metal. It does suggest, however, copper consumers think carefully before fixing all their requirements for the year at today’s price.”

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Global copper mine production down 0.2%

Mine output — or lack thereof — is contributing to the copper price hot streak.

According to data from the International Copper Study Group, global copper mine production fell by 0.2% year over year during the first 11 months of 2020. The reduction narrowed as the year progressed after a 3.5% aggregate decline in April and May.

Furthermore, the global copper market recorded an apparent deficit of 590,000 metric tons.

By country, second-largest copper producer Peru has recovered after COVID-19 impacts earlier in 2020. Peru’s copper mine output reached its highest levels last year in October and November.

Meanwhile, top producer Chile saw a decline in output from July-November. However, output through the first 11 months of the year matched that of the first 11 months of 2019.

Indonesian output rose by 36%. Output in the Democratic Republic of the Congo and Panama also increased.

Refined copper production picks up

On the other hand, refined copper production rose by 1.8% during the first 11 months of 2020.

Chile’s electrolytic refined output picked up by 28%. Meanwhile, Indian refined output fell by 19%.

Copper price surge

After a sideways January, the copper price has picked up again in recent weeks.

The LME three-month price closed Tuesday at $9,126 per metric ton. The copper price is by more than 14% over the last month.

The ICSG noted the average LME cash price for January reached $7,970.50 per metric ton, or up 9.8% from the December 2020 average.

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Rusal logo

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One of the world’s leading producers of low-carbon aluminum, UC Rusal, announced a new collaboration with Japanese automotive component manufacturer Kosei, signifying yet another step in its over 30-year journey.

Last week, the Russian aluminum giant Rusal said Kosei had selected it to be its global supplier of high-quality aluminum alloys.

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Rusal-Kosei aluminum supply deal

Kosei, set up in 1950, designs and manufactures vehicle wheels and autoparts. The firm operates from seven countries.

In the last 30 years, Rusal has proved to be a key partner of Kosei. Rusal has supplied the Japanese company with primary foundry aluminum alloys. Kosei uses in the material in factories in India, Japan, Thailand, and the US.

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industrial production

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This morning in metals news: US industrial production picked up in January; global aluminum output also rose in January; and, lastly, General Motors reported a milestone in the construction of a new battery cell manufacturing plant in northeast Ohio.

US industrial production rises

US industrial production rose by 0.9% in January, the Federal Reserve reported.

Furthermore, manufacturing output rose by 1.0%. Meanwhile, mining output picked up by 2.3%.

Industrial sector capacity utilization reached 75.6%, up by 0.7 percentage point. The rate, however, is down 4.0% from the long-run average from 1972-2020.

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Aluminum output picks up

Global aluminum production totaled 5.71 million tons in January, the International Aluminum Institute reported this week.

Furthermore, the total marked an increase from 5.47 million tons in January 2020.

Meanwhile, China’s output reached an estimated 3.3 million tons, up from 3.09 million tons in January 2020.

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hot rolled steel

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The US steel sector capacity utilization rate ticked up to 77.0% for the week ending Feb. 20, the American Iron and Steel Institute (AISI) reported.

Steel capacity utilization gains

US steel production during the week ending Feb. 20 totaled 1.75 million net tons, AISI reported.

The total marked a 7.2% year-over-year decline. Furthermore, the weekly output total dipped 0.1% from the previous week.

Capacity utilization the previous week reached 76.9%. Meanwhile, for the same week in 2020, steel capacity utilization reached 81.3%.

Furthermore, production through Feb. 20, 2021, totaled 12.6 million net tons. Capacity utilization during the period reached 76.1%.

The output total marked an 8.5% year-over-year decline from the same period in 2020, when the rate reached 81.9%.

By region, production for the week ending Feb. 20, 2021, totaled:

  • Northeast: 153,000 net tons
  • Great Lakes: 637,000 net tons
  • Midwest: 183,000 net tons
  • Southern: 700,000 net tons
  • Western: 72,000 net tons

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

Raw steel production index continues to rise

The Federal Reserve’s industrial production index for raw steel has been gaining since bottoming out last May.

The index fell to a 2020 low of 65.6795 in May (an index reading of 100 is equivalent to 2012 activity).

raw steel industrial production chart from Federal Reserve Bank of St. Louis

Board of Governors of the Federal Reserve System (US), Industrial Production: Manufacturing: Durable Goods: Raw Steel

In December, the index reached 92.1730.

In Q4 2018, the index reached over 106.4, its highest level since Q4 2011.

Steel price gains

Steel prices have continued to gain, as some end users deal with challenges in securing supply for their operations.

HRC, CRC and HDG prices have continued to increase in recent weeks. The US HRC price reached $1,168/st, up 8.25% from the previous month. Similarly, the CRC price increased 13.25% to $1,342/st. The HDG price jumped 8.0% to 1,458/st. 

Meanwhile, plate rose by 4.23% to $984/st $1,036/st. Wire rod fell 1.26% to $39.27/cwt. 

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copper mine

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This morning in metals news: the copper price rally is going strong; meanwhile, Rio Tinto released its 2020 Annual Report; and, finally, Norilsk Nickel reported a fatal accident at one of its facilities.

Copper price rally

After a January lull, the copper price rally has resumed in February.

The LME three-month copper price closed Friday at $8,763 per metric ton, up 9.3% from the previous month.

Before the copper price rally, the price dropped to $7,748 per metric ton Feb. 2.

Meanwhile, Stuart Burns delved into the copper price rally earlier today.

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Rio Tinto releases 2020 Annual Report

Miner Rio Tinto released its annual report and Sustainability Fact Book today.

“Our strong performance during 2020 was overshadowed by the destruction of the ancient rock shelters in the Juukan Gorge and I reiterate our unreserved apology to the Puutu Kunti Kurrama and Pinikura (PKKP) people,” Rio Tinto Chairman Simon Thompson said. “We fell far short of our values as a company and breached the trust placed in us. It is our responsibility to ensure that the destruction of a site of such exceptional cultural significance never happens again.”

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aluminum ingot stacked for export

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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 storylines here on MetalMiner, including the aluminum industry and its efforts to curb emissions, China’s latest foray in the global rare earths chess game and much more:

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Week of Feb. 15-19 (aluminum industry, rare earths and more)

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