Steel Demand from Automobile Industry Stable

SHANGHAI, Nov. 21 (SMM) -- Recently, operations at automobile manufacturers were stable, and new orders and production were little changed, with sales of some commercial vehicles sluggish. Overall purchases of raw material were limited due to no increases in orders and since some auto manufacturers still have inventories, and most of auto manufacturers only make purchase plans after signing contracts. Purchase prices for steel products by auto manufacturers were stable last week, with prices for SPCC 1.0mm*1250 cold-rolled coil from Anshan I/S at RMB 4,570/mt (excluding tax) and prices for Q235 5.5*1500mm common carbon hot-rolled coil from Anshan I/S at RMB 3,800/mt (excluding tax). One auto maker from Anhui Province purchased common carbon hot-rolled coil at RMB 4,150/mt (including tax) from the Shanghai market. 

Some large auto manufacturers said they will arrange some production in December, but the production will be much lower than previous years. Production at SMEs will be unable to improve during the remainder of 2011 since cash flows remain tight, so they will continue to purchase to orders and will not build raw material inventories.

In general, Steelease believes steel demand from automobile industry will not likely improve in the short term, and auto manufacturers are mostly pessimistic toward future market outlook, leaving a low possibility of building raw material inventories.