Day: 14 September 2020

Carmaker associations in the EU and UK have joined forces to voice their concern regarding a possible “no deal” Brexit. They calculate this event could cost €110 billion ($131 billion) in lost trade over the next five years.

The automotive sector is already suffering from the effects of the coronavirus pandemic, but a further shock to the trade system without a Brexit deal would be “…devastating”, the associations add.

“Without a deal in place by 31 December, both sides would be forced to trade under so-called World Trade Organisation (WTO) non-preferential rules, including a 10% tariff on cars and up to 22% on vans and trucks,” the associations say in a letter seen by Kallanish.

“Such tariffs – far higher than the small margins of most manufacturers – would almost certainly need to be passed on to consumers, making vehicles more expensive, reducing choice, and impacting demand,” they continue. “Furthermore, automotive suppliers and their products will be hit by tariffs. This will make production more expensive or will lead to more imports of parts from other competitive countries.”

The associations calculate that the production of 3.6 million units of vehicles has already been lost this year due to the coronavirus. Over the next five years a “no deal” Brexit could wipe away a further 3 million units of cars and vans production.

Combined, the EU27 and UK automotive sector is responsible for 20% of global motor vehicle production and spends some €60.8 billion on innovation per year. “Any deal should include zero tariffs and quotas, appropriate rules of origin for both internal combustion engine and alternatively fuelled vehicles, plus components and powertrains, and a framework to avoid regulatory divergence,” the associations conclude.

ArcelorMittal confirms it has decided to postpone the planned restart of blast furnace no.1 at its plant in Fos-sur-Mer, southern France. The facility was idled in March in response to the slump in demand linked with the coronavirus pandemic. It will now remain idled until further notice.

The company announced at the beginning of September the intention to restart the BF, together with other relaunches of idled capacities in Spain and northern France. ArcelorMittal did not give reasons for the restart postponement, but unions believe it is linked with economic reasons. In recent weeks numerous market observers have called for EU steelmakers to avoid rushing to restart idled blast furnaces as the market remains uncertain.

According to a recent calculation published by UBS bank, 20 blast furnaces were idled in Europe, mainly in response to the Covid-19 emergency. Slightly more than a third are being restarted, Kallanish notes.

Indian hot rolled flat products exports soared by over six-fold on-year in June to a mammoth 1.19 million tonnes in a single month, according to Indian commerce ministry provisional data seen by Kallanish. As with their 291% on-year surge in May, June exports were driven by deliveries to China which reached 520,115t versus virtually zero a year earlier.

Strong demand also continued from Vietnam, which increased intake over 12-fold to 459,195t. United Arab Emirates increased intake 7% to 54,204t and Taiwan took in 53,513t compared to zero last year. Nepal, however, decreased intake -36% to 34,306t.

Spain and Saudi Arabia also considerably increased intake in June, but intake by Belgium slumped.

The most-exported product was HR unpickled wide strip below 3mm thick under HS code 720839 whose shipments reached 966,069t. Their average value was $374/tonne versus $522/t in June 2019 and $376/t in May 2020.

Indian HR flats exports in January-June thus surged 74% on-year to 3.67mt, with top three markets Vietnam, China and UAE respectively all increasing intake. Fourth and fifth-placed markets Italy and Nepal decreased intake.

After the end of the first quarter Indian HR flats exports had slumped -17% on-year to 1.13mt (see Kallanish passim). Their revival in Q2 was driven by Vietnam and especially China. The latter sourced zero from India in Q1, yet in the first half of 2020 it took in 959,399t versus 41t in H1 2019.