Steel Demand Stable on Cautious Buying by Automakers

SHANGHAI, Dec. 15 (SMM) -- Automobile industry was stable this week. Orders and production at auto manufacturers were unchanged, with production of JV passenger cars still better than own-brand ones while production of commercial vehicles remaining sluggish. Most automakers have been consuming existing raw material inventories, leaving low inventory level, but they still showed little interest in buying given no signs of improvement in steel prices. Purchase prices were stable. Automakers are mostly pessimistic toward auto industry in 2012, and their production targets for 2012 are mostly flat with 2011 levels, with doubts that they can ultimately complete the production plan in 2012 still existing. In response, they still purchased raw materials on an as-needed basis.

In summary, Steelease believes automobile industry will remain stable next week. Even if China further eases the monetary policy, more time is still needed for enterprises to see eased cash flows. In addition, there is low possibility that demand will increase in the short term, and orders and production at automakers will unlikely improve significantly. Therefore, automakers will continue to make purchases on an as-needed basis.