US plant closures could cut 900,000 auto sales: Analyst

  • Friday, April 24, 2020
  • Source:ferro-alloys.com

  • Keywords:US plant closures, auto sale
[Fellow]Covid-19-related shutdowns of automotive plants across North America could cost US automakers at least 900,000 vehicle sales this year, reducing steel demand, according to industry estimates.

[Ferro-Alloys.com

Covid-19-related shutdowns of automotive plants across North America could cost US automakers at least 900,000 vehicle sales this year, reducing steel demand, according to industry estimates.
 
A six-week shutdown of US automakers, many of which have been offline since mid-March, would reduce the estimate for 2020 US auto sales to 15.6mn, down from 16.5mn prior to the coronavirus pandemic, said Bernard Swiecki, a senior automotive analyst at the Center for Automotive Research (CAR), on a conference call today hosted by Steel Market Update.
 
That means that in the best-case scenario in which automakers start up some US production in the next two weeks, automotive steel consumption would fall from prior estimates by about 921,000 short tons (st) and aluminum use would drop by about 205,000 st. The average US vehicle in 2018 contained 2,047 lbs pounds of steel and 455 lbs of aluminum, according to the American Iron and Steel Institute.
 
Longer shutdowns spell deeper cuts to demand, with a 12-week industry shutdown cutting sales by 1.4mn vehicles, and a six-month closure reducing sales by 3.4mn vehicles.
 
When automakers resume production, they are likely to focus on high margin trucks and SUVs, Swiecki said, vehicle types that consume a larger amount of steel.
 
A bigger issue for the automakers will not be planned restarts of their plants in specific states, but whether or not their domestic and international auto parts suppliers are able to restart, or whether they are still under coronavirus-related restrictions.
 
The US steel industry has been hammered by the sudden closure of auto plants and subsequent shutdown extensions. Initially, the Big 3 US-based automakers — Fiat-Chrysler Automobiles (FCA), Ford, and General Motors (GM) — had planned to close for two weeks beginning 19 March. Those closures have stretched well into April, with FCA announcing it plans to restart some operations on 4 May, while Ford and GM are continuing to evaluate the situation.
 
In response to the auto shutdowns, US steelmakers — the majority of them integrated — have idled more than 10mn short tons (st)/yr of flat rolled steelmaking capacity. (Argus Media)
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