European car registrations up again in May as recovery continues

European car registrations rose year on year in May, for the third month in row, as sales recover from the low level registered in 2020 due to coronavirus lockdowns, according to data from the European Automobile Manufacturers’ Association (ACEA) on June 17.

Total EU, EFTA and UK sales were up 74% to 1.1 million new cars in May and 31% higher at 5.2 million over January-May.

Within that, EU new registrations in May were up 53% year on year to 892,000 units, which was below the May 2019 figure of 1.2 million new cars. The Spanish car market saw the biggest rise, of 178%, with France up 46.4%, Italy up 43.0% and Germany up 37.2%.

That meant January-May registrations rose 29.5% to reach 4.3 million units.

Year-on-year rises in March, April and May came after sharp falls in January and February, with the four major markets of Italy (62.8%), France (50.1%), Spain (40.0%) and Germany (12.8%) all recording double-digit gains in the first five months of 2021.

Automotive is a key industry for steel producers, with a turnover that represents over 8% of EU GDP and that generates a trade surplus of Eur74 billion ($90 billion) for the EU. On average, 900 kg of steel is used per vehicle.

According to ACEA data, automobile manufacturers source almost all their steel (over 90%) in the EU. The association recently underlined the difficulties finding raw materials, mainly coils as “since manufacturing restarted in summer 2020 there has been a serious shortage of steel in the European market”.

Market safeguards

ACEA, as others, associations of large steel buyers were vocally against of the European Commission proposal to the WTO regarding a possible three-year extension of market safeguards against imports. Buyers are concerned not only that prices will continue to increase but that raw material market will tightening even more.

On June 11 the EC notified the WTO about a proposal to extend the EU Safeguard Measures on Steel Imports, which is set to expire on June 30, reducing to 3% the annual liberalization of quota levels compared to 5% previously.

The current safeguards were put in place in response to the US Section 232 tariffs in July 2018 — using import data from 2015-2017 — to prevent economic damage to European steel producers, while analyzing the statistical data reported in the text of the European Commission proposal to the WTO it emerges that the period examined is now 2018-2020.

Because demand for products made with a large percent of steel is keep rising as marked also by ACEA last data on car registrations buyers said that the evaluation for new safeguards should consider also in somehow forecasts relating steel demand for the years 2021 and 2022.

According to S&P Global Platts data, European hot-rolled prices are at their higher historical level, after having been plateauing in the last few days, coils prices have registered further gains, with market sentiment that is now bullish, industry sources said.

North European HRC prices, Platts benchmark, increased Eur10.50/mt to Eur1,148/mt ex-works Ruhr on June 16. Since the end of last year prices have gone up by Eur483/mt.

— Annalisa Villa