Steel prices squashed as auto demand and output go into reverse

Almost everywhere you look, auto production and sales are falling and putting pressure on one of the major end-user segments of steel. News within the space of a fortnight that British Steel was insolvent and Ford’s Bridgend plant in the UK would cease production in 2020 was somewhat emblematic of the challenges faced by carmakers and their steel suppliers. According to the World Steel Association, a typical car comprises around 900 kg of steel, 34% of which is used in the body structure and 23% in the engine block and gear mechanism. On most estimates, more than 10% of UK steel is consumed by local car manufacturers. In the US and Germany, the proportion is far higher at around 25%. Almost 14% of ordinary carbon steel and 25% of special steel that Japan produces is destined for the country’s carmakers. But prices of hot-rolled coil, the base steel product used in car manufacturing, have slumped in nearly all major markets. In the US, Midwest HRC prices have dropped to $570/short ton, down 37% from a year earlier, according to S&P Global Platts. Prices are now well below where they were before the 25% import tariffs were imposed by the Trump… continue reading

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Source: CTRM Center

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