The automotive MMI (monthly metals index) remained stable from April to May. This was largely the result of a number of factors working in concert. Below, we’ll dive deeper into the auto market to see if we can work out what to expect for the rest of 2022.
MMI automotive: Chinese car sales and production drop in April
Source: China Automobile Manufacturers Association
The data resulting from China’s COVID-zero policies continues to look grim. According to the China Association of Automobile Manufacturers, auto sales and production fell in April. Specifically, the latter index fell 46.2% month over month, while overall auto sales fell 47.1%.
Amazingly, Tesla saw sales across mainland China drop 98% from March. Meanwhile, the automaker’s output has also taken a hit, with Chinese production dropping 81% from 55,462 automobiles to 10,757. As shutdowns and other strict policies continue, experts predict a Much of the impact seen in April will carry over into May.
However, there is good news on the horizon. For example, the number of COVID-19 cases in Shanghai continues to decline. According to data released on May 11, daily infections managed to fall below 1,500 cases, an 18-day low. Meanwhile, around 612,500 people have tested positive for the virus since March 1.
The sharp drop in daily infections signals the possibility of an end to lockdowns in the city. However, officials in Beijing continue to increase pressure on the population. Along with the closure of businesses and schools, all residents are now required to work from home.
Semiconductor shortage may not end until 2024
According to Intel CEO Pat Gelsinger, the current shortage of semiconductor chips will likely persist until at least 2024. This is a tragic prediction considering the impact of the current shortage on equipment manufacturing.
Gelsinger previously expected the shortage to subside by 2023. However, in an interview with CNBC’s TechCheck, she revised her estimate, saying, “That’s part of the reason why we think the shortage semiconductor industry will now drift in 2024 from our previous estimates in 2023. More shortages are now hitting equipment, and some of those factory ramps will be tougher.
Related: China’s COVID lockdowns force Aramco to cut oil export prices
So far, the semiconductor shortage has severely affected global automotive production, especially given the multitude of other factors at play. In response, AutoForecast Solutions has again lowered its production estimates for 2022.
The company now expects production in North America and the Asia-Pacific region to fall 2% to 14.82 million and 46.68 million units, respectively. In Europe, Western and Eastern production estimates now stand at 11.16 million and 6.26 million.
UK imposes 35% tariff on Russian palladium and platinum
Palladium and platinum prices rose slightly after the British government announced a new round of sanctions against Russia and Belarus. As part of the package, the UK will increase tariffs on products including platinum and palladium by 35%.
Russia produces about 40% of the palladium mined in the world and nearly 16% of the world’s platinum. This makes the country the largest and the second largest producer in the world when it comes to the two precious metals. As such, the ongoing war in Ukraine and its effects are a major driver of most price swings this year.
Indeed, the two metals had already surged in early April following a decision by the London Platinum and Palladium Market to suspend two major refiners belonging to the Russian government.
By AG Metal Miner
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