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How the Automotive Industry Impacts the Demand for Metal
The automotiveindustry has made it increasingly simple to purchase cars over the years; moreover the introduction to the world of various fuel-efficient and affordable car models. With such rise in demands, the automotive industry is manufacturing greater numbers of cars than ever before, which has in turn significantly affected the demand and supply of metals. Two types of metals are mostly used in car efficiency manufacturing; palladium and platinum.
Palladium is mainly used for the reduction of emissions in petrol-powered automobiles; on the other hand, platinum is used for the reduction of emissions in diesel-powered vehicles. However, the demand for platinum is strong because more than 66% of cars are manufactured with this type of metal, while the demand for palladium remains somewhere from 38% to 40%. The following scenarios describe how the automotive industry impacts the demand for different types of metals.
1. Improvements in Global Economy
Since the global economy has recently seen improvements, car sales are rising day by day. China and the USA are the two main countries where more vehicles are manufactured than any other countries across the globe. For the USA, September was the month for the highest number of sales of automobiles earning more than 18 million dollars in revenue; this is the highest since July 2005. The sales figures in China also looked very promising with total sales of more than 2.5 million in September only. If we see the figures globally, there is a 5% increase in the sales of vehicles this year.
This increase has severely impacted the demand for metals in car efficiencies, especially palladium; the expected consumption recorded of palladium is almost 10.88 million ounces in 2017. However, this consumption was not only for several automobile industries, a survey conducted showed that in 2017, there was a deficit of 1 million ounces of palladium – considerably increasing the demand for this metal.
2. Growing Numbers of Electric Vehicles (EV)
Since the launch of electric vehicles, the face of the automotive industry has completed changed. Everybody wants to know what will happen to vehicles made with internal combustion engines? (ICE).
Electric vehicle sales are also increasing as more and more people are becoming more conscious of the environment. This shift in the automotive industry will greatly impact the demand for metals used in efficiencies. Even though platinum is not used in any form of batteries of electric vehicles, several other metals are used such as lithium, cobalt, nickel, manganese, and zinc. The price of these metals is set to drastically increase in years to come. So will the price of these vehicles.
With sales of EV cars rising more than 59% since last year, the automotive industry will see a decline in platinum usage, but the demand for palladium is going to increase due to high demand in petrol powered cars.
According to a survey, the demand of nickel could increase from 200,000 to 300,000 tonnes by 2025 followed by the rise of consumption of copper from 850,000 to 1.25 million tonnes.
3. Increase in Demand for Aluminium
Since the automotive industry has been pressurized lately to make cars more environmentally-friendly, car makers are aiming to make these vehicles lighter in weight. Therefore the use of aluminium has tremendously increased as mild steel is heavier and significantly not environmental-friendly. With recent events like emissions fraud in the US, there is going to be a strict check and balance on all of the materials used for manufacturing light-weight cars. This will increase the demand for aluminium metals massively. It has been estimated by a recent survey that by the end of 2025 more than 75% of pickup truck parts would be made of aluminium, 24% for sedans, 22% for SUVs and 18% for minivans.