Vehicle registrations and the steel industry
So far in this series, we’ve looked at Chinese and European PMIs (Purchasing Managers’ Index). In this part, we’ll analyze the recent trend in the European automobile industry. It’s important to remember that the automobile industry is a major end steel consumer.
Growth rate dips
The above graph shows the year-over-year change in passenger car registrations in the Eurozone. In May, vehicle registrations grew 1.3%, the lowest growth rate since November 2014. However, if you look at the first five months of 2015, vehicle registrations have increased 6.8%. May marks the 21st consecutive month that vehicle registrations have increased in the Eurozone.
Higher aluminum content
Automakers use high precision steel grades like galvanized steel. These sell at a higher price than standard steel products. The high margins in auto grade steel products make them important for steel companies.
Aluminum content in vehicles has increased steadily over the last few years. European (EFA) (EZU) auto manufacturers are among the earliest adopters of aluminum body vehicles. Earlier this month, ArcelorMittal (MT) hosted an investor event aimed at showcasing its auto grade steel capabilities. You can read more about that event in our series Are Steel Companies Ready for the Aluminum Challenge?
AK Steel (AKS) and Allegheny Technologies (ATI) are the other leading suppliers to the automobile sector.
How much steel did Europe produce in May? We’ll find out in our next part.
Source: Market Realist
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