“Will All-Aluminum Cars Drive Metals Industry?” – Wall Street Journal, 13 January 2014

Obama’s 2010 mandate that obligates car manufacturers to double new-car average fuel economy by 2025 has pushed the car industry to produce more fuel efficient cars at a faster rate. Ford’s next F-150 — the US’s largest selling vehicle — is currently being redesigned and rebuilt with an all-aluminum body, a huge helping hand to both Obama’s fuel efficiency mandate and the aluminum industry.

Two big players in the Ford’s aluminum round-up are Alcoa and Novelis, the nation’s top aluminum sheet producers. In 2013, both companies spent $1 billion in opening new aluminum sheet factories, tailored to the auto industry. Raw aluminum prices have dropped by more than a third since 2011 — Alcoa and Novelis are hoping their new investments increase their profit margins.

The aluminum industry is making a huge bet. While aluminum is lighter, and better for fuel efficiency and the economy, it might not be better for pocketbooks — aluminum costs almost three times more than steel, the traditional metal used to manufacture cars. Moreover, using aluminum to produce vehicles requires new machinery; machinery used to manufacture cars from steel isn’t compatible with aluminum.

Only Audi and Jaguar — cars that a majority of the public can’t afford — have created all-aluminum vehicles. Ford’s new endeavor will likely trim 700 pounds from the currently-5,000-pound truck; this reduction will allow for a 7% growth in the truck’s fuel economy.

The aluminum market is now only valued at almost $300 per year. If more car companies choose to manufacture all-aluminum cars, then the market can skyrocket to $7.5 billion by 2025, a huge blessing for the aluminum industry, which is undergoing oversupply and low raw aluminum price issues.

The car industry is urging every aluminum company to invest, asking different manufacturers to produce different parts so there isn’t one that could dominate pricing. There is more than enough business for everyone: one contract for a mass-produced part can be valued at more than $50 million.

The question is, will there be enough raw aluminum materials and fabrication capacities to successfully undertake this venture, even though time has come to further enhance recycling and production of recycle-friendly automotive aluminum alloys in commerce? See a publication on this subject by Dr. Das – “The Development of Recycle-Friendly Automotive Aluminum Alloys“.

See also:
A Clean Car Boom
GM Planning Strict Diet for New Pickup Trucks

Developed and Written by Dr. Subodh Das and Tara Mahadevan

January 13, 2014

Phinix LLC

Copyright 2013. All rights Reserved by Phinix, LLC.

www.phinix.net    skdas@phinix.net

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Coin Hoarders – A New Class of Investors

Stocks and bonds are the normative routes people take to invest their money, sometimes also investing in metals that are traded everyday, such as silver and gold. However, a new class of metals investor is on the rise: the coin hoarder.

Why the sudden obsession with coins in America? American coins are composed of various base metals. Before 1965, the US Mint forged dimes and quarters from silver; but, silver costs soon skyrocketed, compelling the US Mint to employ a cheaper metal. Before 1982, pennies were mostly made from copper, until zinc became the replacement metal. Nickels are the hoarder’s favorite: they have always been composed of 25% nickel and 75% copper. In addition to nickels, pennies are the hoarder’s other preferred coin — both are still largely composed of copper.

Yet, there’s a catch. In 2006, the US government placed a ban on melting pennies and nickels. This has stopped hoarders from reaping the benefits from their investments; the value of their hoarded stash remaining hypothetical, at best.

Those who have taken a liking to coins come in two breeds: investor and hoarder. But make no mistake — there is most certainly a discernible difference between the two. While the hoarder is patiently waiting for the government to revoke the melt ban as to cash in on the value of the base metals, and continuing to amass as many coins as possible; the investor is collecting coins that are scarce and rich in history.

Though metal prices fluctuate daily, and sorting can be a time-consuming task for hoarders, there is no gamble in this investment. American coinage has yet to see an impact from coin hoarding, unlike other countries, such as Argentina and the Philippines, which are both experiencing coin shortages. If the US ever faced a similar shortage, then the US Mint could easily forge more coins, though it might be hesitant since it is an expensive process.

Unless individual metals can be economically and environmentally extracted from the coins, the best economic value is still the coins. No technologies exist right now to separate individual metals (such as copper from zinc in pennies, and copper from nickel in nickels) in coins. If the US Mint has to produce more coins due to a coin shortage, it could add costs to US Treasury’s budget; and we all know too well that we need to cut spending and not go over the fiscal cliff. Coins should be collected as a hobby and not hoarded as an investment.

(source)

Developed and Written by Dr. Subodh Das and Tara Mahadevan

January 3, 2013

Phinix LLC

Copyright 2013. All rights Reserved by Phinix, LLC.

www.phinix.net    skdas@phinix.net

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