Steel Markets
Auto Demand Exceeds Expectations in October
Written by Sandy Williams
November 1, 2018
Robust demand offset increased vehicle pricing and higher interest rates last month, keeping U.S. auto sales strong in October, although weaker than a year ago.
October sales were expected to be impacted by replacement buying due to hurricane damage in the South. There was also one extra selling day in the month.
“Many signs in the economy would suggest that vehicle demand should be moderating – higher interest rates, import tariffs, weak housing market, stock market volatility, elevated gas prices – yet vehicle buying remains strong,” said Charlie Chesbrough, senior economist for Cox Automotive.
FCA turned in the best results for October, with a year-over-year sales gain of 16 percent. Ford sales fell 4.9 percent and General Motors, which no longer reports monthly, is estimated to be down 4.0 percent.
Annualized auto sales are down about 2 percent from a high of 17.55 million in 2016 and are likely to fall further by the end of 2018. The consensus among analysts is that sales will remain above 17 million, however, for the fourth consecutive year.
Affecting affordability are annual loan percentage rates that have climbed to an average of 6.2 percent for new financed vehicles.
“We haven’t seen interest rates hit the 6 percent mark in nearly 10 years, and zero percent finance loans have been cut down by nearly a third of where they were in 2016,” said Jeremy Acevedo, Edmunds’ manager of industry analysis. “It’s getting harder and harder for shoppers to afford a new car, and if the economy starts to slip, we’re at a point now where we really could start to see some significant impacts in the auto market.”
Sandy Williams
Read more from Sandy WilliamsLatest in Steel Markets
Hot-rolled coil buyers continue seeking certainty
Steel market participants contend that buyers will remain in “wait-and-see" mode until some market stability is restored.
Latin American steel advocates warn on cheap import flood
Subsidized Chinese steel imports and cheap steel products from Association of Southeast Asian Nations (ASEAN) entering Latin American (LATAM) are threatening the region's steel market.
CRU: Steel prices fall amid global demand weakness
The forceful headwinds bearing down on steel markets across the globe have created demand challenges and sent prices southward. The US, however, challenged the global trend.
Hot-rolled price hikes garner mixed reactions from the market
Several steel market sources say they were blindsided when mills increased spot prices for hot-rolled coils this week.
Steel market participants mull the impact of US/Mexico S232 negotiations
Steel market participants learned that negotiations between the US and Mexico include discussions about Section 232 tariffs on steel and aluminum despite President Trump’s June 3 proclamation increasing the tariffs from 25% to 50% for all steel and aluminum imports—except for those from the UK.