Automotive MMI – Car Demand Growing, but Steel Supply Strained

The MetalMiner Automotive MMI (Monthly MetalMiner Index) dropped substantially in October, dipping by 9.08%.

Manufacturing limitations due to energy shortages and smelter shutdowns remain the ongoing trend in car manufacturing. However, consumer demand for cars, especially in the US, still holds firm. This leaves many in the automotive industry trying to find a balance between available supplies and consumer demand.

Car Manufacturing Fighting the Odds

Smelter shutdowns in China and Europe are impacting the production of the steel used to fashion cars. However, the demand to purchase vehicles remains strong. To satisfy this, sufficient steel supply must begin circulating globally before more vehicle manufacturing can occur.

Steel isn’t the only car material currently struggling. The automotive industry is plagued by the lack of parts and pieces for vehicle microchips. Fortunately, some microchips are starting to make a comeback. Still, chip production is a slow process, as the tiny devices contain many complex components.They also require numerous materials like tin, silicon, etc. Acquiring these different metals in the proper forms and grades could become challenging in potentially-recessionary conditions, especially when supply is already tight.

Stay on top of all the latest steel and industrial metal trends with MetalMiner’s monthly MMI Report. Sign up here to receive it FREE of charge.

Car Manufacturing Rising: UK on The Fence

There is even more good news for the car manufacturing industry, as consumer demand continues to rise globally. In the UK alone, car production rose for four months straight until August, rising a total of 34% from the previous year. EV demand also continues to aid the car manufacturing industry, meaning metals like lithium and cobalt remain highly coveted commodities.

Still, not everyone in the UK agrees on the efficiency of the EV vehicle increase. Up to 31% of Forbes’ surveyed audience, which consisted of UK EV drivers, complained about waiting in long charging lines. The same group agrees that the UK government needs to expand charging capabilities. Despite this, UK new vehicle registrations continue to rise, growing 9.6% in September compared to August’s 3.4% downturn.

Do you use cost breakdowns in your steel negotiations? See other tips in negotiating with mills for your 2023 contract renewals by reading MetalMiner’s free article, Five Common Pricing Scenarios… and How to Deal With Them.

China, Europe, and Ongoing Steel Shortages

Both the car and steel manufacturing industries saw a modest bounce in August. However, whether or not the trend will continue remains unclear. MetalMiner has noted the impact of supply chain shortages and steel smelter shutdowns numerous times, and those problems seem to be compounding rather than going away.

An ongoing trend for steel-reliant manufacturers seems to be finding alternatives to Chinese metals. After all, China’s property crisis and industrial limitations over the past 3-4 months continue to hit the global steel market particularly hard. And with Europe facing energy rationing this winter in light of the Nord Stream 1 fiasco, steel output in Europe will be limited.

Automotive MMI: Biggest Price Moves

• US palladium bars rose sharply in price. Prices shot up 13.37% and currently sit at $2,272 per ounce.
• Chinese lead dropped in price by 3.38%. Prices currently sit at $2070.90 per metric ton.
• Korean aluminum fell 4.72% in price. The cost per kilogram currently sits at $3.63.

MetalMiner’s weekly newsletter provides updates on steel price shifts, market trends, and other commodity news. Sign up here. MetalMiner’s Monthly Buying Outlook Report gives you pricing and specific buying strategies for ten metal types. Request your trial now.