WCA September 2016

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76 Wire & Cable ASIA – September/October 2016
From the Americas
But even as the Detroit Three collectively showed
improvement, Kia commanded the spotlight with its
first-place finish among all brands. With an overall score
of 83, Kia finished ahead of Porsche, Hyundai, Toyota and
BMW, which rounded out the top five in that order.
This was the first time in 27 years that a mainstream
automotive brand achieved the highest score in the
rankings; and the second consecutive year that Kia, which
ranked second in 2015, led all non-premium brands in initial
quality. (“Kia Ranks First, Detroit Three Rise in JD Power
Study,” 22nd June)
 The study also found that all automakers are making
better cars. This year, the initial quality of new vehicles
improved six per cent, double the three per cent rate
of improvement in 2015 and the largest increase since
2009.
 The week in which Power published its results was good
for Ford on another count. On 19th June, the brand-
new Ford GT sports car took first, second and fourth
place in its class in the 24 Hours of Le Mans endurance
race in France. The No 2 spot was claimed by a
Ferrari, recalling – a half-century on – the high point in
Ford history when its GT40 racers topped Ferrari’s
entries to score the top three finishing spots in the 1966
event.
Buying a new car would compel the
typical American household to live
beyond its means
According to the vehicle valuation firm Kelley Blue Book,
the average price of a new car or light truck in the USA in
2016 is about $34,000. A new analysis from the personal
finance site , published 1st July, found that a
median-income USA household couldn’t afford a new car in
any of the 50 largest cities in the country. To calculate an
affordable purchase price for major cities, Bankrate used
median incomes from federal Census data and factored in
sales taxes and insurance costs.
By these criteria, the median income of around $84,000 in
San Jose, in California’s Silicon Valley, allows for a new car
purchase price of $33,000. In Hartford, Connecticut, with a
median income of about $29,000, the affordable purchase
price is about $8,000 – not even a quarter of the sticker
price of a new car.
Accordingly, many Americans are borrowing more, for
longer periods, to finance the purchase of a car. Experian
said that, in the first quarter of this year, the proportion of
new cars bought with the help of financing rose to more
than 86 per cent; and the average loan amount topped
$30,000, the highest since the credit services firm began
tracking the data. The average term for a new-car loan is
now about five-and-a-half years, and some loans stretch
out seven years.
Again according to Experian, auto leases, which often
offer lower payments than traditional car loans, are
becoming more popular in the USA. Leases were reported
as accounting for more than 30 per cent of new-car
transactions in the first-quarter 2016.
Aluminium
While China’s steel overproduction
draws all the attention, its exports
of semi-finished aluminium products
continue unabated
“Excess aluminium production there is damaging the
prospects of aluminium producers in the rest of the world,
purely because of the size of China’s massive aluminium
industry.”
In the matter of aluminium, Stuart Burns of MetalMiner
was calling attention to another Chinese industry that both
produces and exports too much product. Citing recent
reporting by Reuters, Mr Burns noted that, as with China’s
exports of steel, its aluminium exports have clouded
prospects for producers elsewhere, forcing closures and
losses and delaying investments.
Reuters pointed out a number of similarities between the
two Chinese industries. In April, the world’s largest producer
in both markets accounted for 51.5 per cent of global
steel output and 54.4 per cent of global primary aluminium
output. In both industries, China has been exporting excess
production in the form of semi-manufactured products. In
2015 its steel product exports of 112.4 million metric tons
(mmt) represented around 14 per cent of the rest of the
world’s output; its aluminium product exports of 4.2 mmt,
around 17 per cent of the global total.
In the case of steel, though, wrote Mr Burns, the fear
of jeopardising China’s application to the World Trade
Organization (WTO) for market economy status “has
forced a more conciliatory response by Beijing in recent
discussions, and the promise of large-scale closure of older
[steel] capacity in China.”
How effective this will be remains to be seen, the
MetalMiner founder acknowledged. Even so, he said, the
Chinese position on steel presents a marked contrast
vis-à-vis aluminium, where Beijing seems unable or
unwilling to curtail new investment. As prices on the
Shanghai Futures Exchange rose this year, idled smelters
have restarted and new capacity has continued to come
on-stream.
By the Reuters reckoning, annualised run rates increased
by almost 650,000 metric tons (mt) over April and May, with
May’s average daily output of 86,290mt the highest since
November 2015. (“Chinese Aluminium Exports Increase
Even as Oversupply Remains,” 22nd June)
 The rapid rise in China’s aluminium capacity derives
largely from the new state-of-the-art low-cost smelters
in the north western provinces. Employing cutting-edge,
world-class technology, they are commanding good
prices for their output ($1,600/mt at midyear, up from the
$1,450-1,500/mt levels of late 2015). As a result, Reuters
concludes, capacity is unlikely to be trimmed anytime
soon – at least not by government fiat.
Mr Burns summed up: “For aluminium producers outside of
China, that is not good news.”