Commodities Roundup: Auto sales surge; Shipping market woes; Biden administration releases supply chain review

Here’s a quick rundown of news and thoughts from particular commodity markets, including auto sales, the shipping market and the Biden administration’s supply chain review.

MetalMiner, a sister site of ours, scours the landscape for what matters. This week:

ArcelorMittal eyeing Liberty Steel assets in France

In M&A news, MetalMiner’s Christopher Rivituso delved into steelmaking giant ArcelorMittal’s interest in acquiring Liberty Steel’s assets in France.

Per his reporting, ArcelorMittal is interested in Liberty’s Ascoval and Hayange plants.

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“Rothschild & Co (Paris) is managing sale of the assets on Liberty’s behalf, a spokesman for the steelmaking group told MetalMiner in an email,” he wrote.

“A reduction in working capital support since the collapse of Greensill Capital prompted Liberty Hayange and Ascoval up for sale, the spokesman noted.”

Automakers’ sales momentum continues in May

May proved to be another strong month for US auto sales.

J.D. Power and LMC Automotive projected May new-vehicle retail sales would increase by 34% compared with May 2020. Furthermore, they projected a 10.6% increase compared with May 2019 sales.

“The US auto industry is showing tremendous adaptability in maintaining a record sales pace, despite historically low inventory levels,” said Thomas King, president of J.D. Power’s data and analytics division. “May is usually one of the highest-volume sales months with buying activity peaking around the Memorial Day weekend when manufacturers typically offer incremental incentives.”

Ford Motor Co. reported May total sales rose by 4.0%, while retail sales dropped 11.2%. Despite being on relatively small volume, Ford touted a 184% increase in electric vehicle sales, up to 10,364 vehicles.

Aluminum prices retrace

As MetalMiner’s Maria Rosa Gobitz explained this week, aluminum prices surged to a nine-year high last month before cooling off during the second half of the month.

“LME aluminum prices reached a nine-year high May 10 when it reached $2,565/mt,” Gobitz wrote. 

“Since then, prices dropped below the $2,500/mt mark, averaging $2,434/mt throughout May.

“Chinese prices behaved similarly to the LME. They reached a peak of CNY 20,030/mt on May 10 but have declined since then.”

Biden administration releases supply chain review

Earlier this year, President Joe Biden called for agency heads to initiate 100-day supply chain reviews.

The review was to focus on several key products, including critical minerals, semiconductors, pharmaceuticals and large-capacity batteries.

“The COVID-19 pandemic and resulting economic dislocation revealed long-standing vulnerabilities in our supply chains,” the report’s introduction states. “The pandemic’s drastic impacts on demand patterns for a range of medical products including essential medicines wreaked havoc on the US healthcare system. As the world shifted to work and learn from home, it created a global semiconductor chip shortage impacting automotive, industrial, and communications products, among others.”

The 250-page report is available online.

Shipping woes

Burns also outlined the challenges faced by the global shipping market.

“Back in the early part of this year, many observers, us included, expected the market would improve,” Burns wrote. “Indeed, freight rates – a barometer of demand – had started to come down early last month. That encouraged some to believe the worse was past.

“Meanwhile, India has been going through a well-documented second wave of Covid infections and now China is facing disruption due to infections. India appears, from an infection rate, to be getting on top of its recent wave. However, with vaccination rates so low, the country is already preparing for a third wave.

“Shipping rates and delays have increased since the start of Q2. There are delays of up to two weeks to get space on vessels.”

US considering Section 232 for neodymium magnets

Neodymium magnets are used in a wide variety of critical high-tech functions, from MRIs to wind turbines to automotive motors.

In its recent supply chain review, the Biden administration touched on neodymium magnets and the possibility of launching a Section 232 investigation.

In 2018, then-President Donald Trump deployed the infrequently used Section 232 of the Trade Expansion Act of 1962 to eventually impose tariffs on steel and aluminum.

“Neodymium (NdFeB) permanent magnets play a key role in motors and other devices, and are important to both defense and civilian industrial uses,” the administration’s supply chain report states. “Yet the US is heavily dependent on imports for this critical product. We recommend that the Department of Commerce evaluate whether to initiate an investigation into neodymium permanent magnets under Section 232.”

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