German car production ends 2024 flat on-year
German passenger production last year came to 4.1 million units, about the same as in 2023, German automotive association VDA reports. December alone, however, saw production drop by 10% compared with December 2023.
This means there was a notable slowdown in the rebound in production seen over the last two years. In 2023, output from German plants rose by 18% year-on-year. In 2022, production increased by 11% on-year, recovering gradually from the shortage of semiconductors that dominated 2021.
However, compared to the pre-Covid year of 2019, 2023/24 output was still 12% lower, the association notes.
In its latest report, VDA provides some detailed production data for electric vehicles until November 2024, broken down by drive type. They show that in November, more electric cars were produced in Germany than in any previous month. Output amounted to 155,700 electric cars, up 29% on-year.
At 120,500 units, more battery electric vehicles rolled off production lines in Germany in a single month than ever before, Kallanish hears. In addition, 35,200 plug-in hybrids (PHEs) were produced.
In total in the first 11 months of 2024, almost 1.3m electric cars were made in Germany. This is already more than in the whole of 2023, VDA notes.
Christian Koehl Germany
Turkey automaker Tofas pauses output for two weeks for maintenance
Major Turkish automaker, Tofas, a joint venture between Koc Holding and Stellantis, has announced two weeks of production stoppage as of Jan. 2.
“Due to the end-of-year stock taking and programmed maintenance activities, manufacturing activities at our Bursa factory will be suspended from Jan. 2 to Jan. 14,” the company said in a regulatory filing.
The plant would restart manufacturing operations from Jan. 15, Tofas said.
The producer previously announced Dec. 9 it laid off 13% of its workers after deciding in September to continue production with one shift after suspending production for more than a month from July 16 amid low demand.
Tofas has a vehicle production capacity of 450,000 units/year.
Turkey’s vehicle production declined 8.9% year over year to 1.36 million units over January-November 2024, while vehicle exports fell 1.2% to 1 million units, according to the latest Turkish Automotive Manufacturers’ Association data.
Platts, part of S&P Global Commodity Insights, assessed Turkish HRC at $565/mt ex-works Dec. 27, down 20% since the start of 2024.
Erste: European automotive suffers loses, Chinese industry booms
European automotive producers are losing out on the Chinese market, which is still crucial for their sales, according to Erste Group research.
In the past five years, the share of German brands in the Chinese market has decreased by 6 percentage points. “Earlier, for example, Volkswagen sold about a third of its global car production in China in 2023. Over the last ten years, passenger car production in Asia has increased by 33%, and in China even by 68%. By contrast, it has fallen by 11% in Europe and by 24% in Germany,” Erste notes in a report.
Moreover, Europe’s share of global passenger car production has fallen from 28% to 23%, while Asia’s has risen from 56% to 68% during 2012-2023, the document shows.
“The share of European passenger car production in total world production is falling, but European countries are still among the world’s major car manufacturers: Seven of the top-15 passenger car manufacturers are from Europe,” Erste Group notes. “Fortunately, Chinese companies have not yet established themselves in Europe. The most difficult situation today is in the German car industry. The point is that, in Germany, the unit labour costs in the automotive industry are two times higher than in Italy or Spain and three times higher than in the Czech Republic and other CEE countries.”
The most delicate situation is at Volkswagen, whose management plans to close up to three –of 10 – German factories, cut VW employee wages by 10% and conduct layoffs. The unions, on the other hand, want the carmaker to give pay rises, Kallanish notes.
According to the bank, one option is to move production to a cheaper foreign country. “This is already happening, as German production of passenger cars reached a peak before Covid-19 in 2016. It has been declining ever since. On the other hand, in countries like the Czech Republic and Slovakia, passenger car production has been rising,” the report observes.
Global motor vehicle production reached its all-time high in 2017, with 97 million motor vehicles produced worldwide, 70% of which were passenger cars, Erste Group says. Then came the pandemic and production fell by a quarter by 2020.
Production reached 93m units last year and was only 4% below the 2017 record.
Svetoslav Abrossimov Bulgaria
Worthington to acquire majority stake in Italy’s Sitem
Worthington Steel is acquiring a controlling interest in Italy’s Sitem SpA through subsidiary Tempel Steel Co, Kallanish learns.
In a statement, Worthington says it will own 52% of Sitem, a producer of automotive and industrial electric motor laminations and accessories.
Geoff Gilmore, Worthington Steel’s president and chief executive, explains that the Columbia, Ohio-based metals processor entered into the agreement to increase its exposure to the automotive market.
“This investment aligns with our strategic goal to grow our electrical steel lamination business and expand our customer reach. Sitem Group brings 50 years of experience and is one of the largest producers of electric motor laminations in Europe. The Worthington Steel and Sitem Group leadership teams bring valuable expertise and relationships to spearhead the expansion of our global automotive programs in the production of electric vehicles and hybrids,” states Gilmore.
“We are excited to partner with Worthington Steel,” adds Marco Bartoloni, ceo of Sitem Group. “This investment and partnership will enable us to better serve global automotive and industrial motor customers. Their philosophy aligns with our values and is a great fit for our employees.”
As the deal currently stands, Worthington is acquiring shares from Sitem Group’s existing shareholders and transaction is expected to close in early 2025, subject to the receipt of applicable regulatory approvals and customary closing conditions.
Latham & Watkins LLP served as legal counsel to Worthington Steel on the transaction. Sitem was advised by UniCredit as financial advisor, Antonello Marcucci as senior advisor and Bird & Bird as legal counsel.
Sitem Group operates six facilities across Europe: three in Italy, and one each in Switzerland, Slovakia and France.
Kristen DiLandro USA
Eurofer gives up on expectations for demand recovery in 2024
According to Eurofer’s latest report, demand is expected to shrink by 1.8% to 127 million tonnes in 2024. This is a downward revision from the previous forecast from end-July of a slight recovery by 1.4%.
At the beginning of the year, Eurofer predicted a recovery of apparent steel consumption in the EU by 5.6%, rising to 137 million tonnes in 2024. Since then, this has been the third time Eurofer has downgraded its forecasts.
“In 2024, due to poor developments in the industrial outlook and decreasing demand from steel-using sectors, particularly construction and automotive, apparent steel consumption is projected to experience another recession, albeit moderate,” Eurofer said, adding that a modest recovery is foreseen in 2025.
According to the association, apparent steel consumption in the EU in 2025 will increase by 3.8% to 132 million tonnes, still below the pre-pandemic volume of 145 million tonnes in 2019.
After a short-lived rebound of apparent steel demand in January-February 2024 related to restocking, activity in the European flat steel market has been deteriorating, with prices under pressure.
For example, in February, Fastmarkets’ steel hot-rolled coil index domestic, exw Northern Europe averaged €738.28 ($797.86) per tonne ex-works.
Since then, the average monthly HRC price has been decreasing gradually, and for September, it reached €567.22 per tonne. Similar levels were last recorded in November 2020, when the index averaged €530.72.
At the beginning of October, European mills tried to push prices up by increasing their offers.
But demand remained weak, and deals continued to be concluded at lower levels.
“Mills’ attempts for price increases were unsuccessful, but at least the HRC prices stopped dropping further,” a buyer source told Fastmarkets.
Industry sources commented that any hopes for a price rebound would be postponed to the first half of 2025. A potential positive impact on the domestic HRC price could be uncompetitive import offers combined with some output cuts in the local market, Fastmarkets understands.
End-user outlook
Automotive
Eurofer said that automotive output in the EU27 had previously increased by 8.3% overall in 2023, despite the overall subdued investment outlook.
“However, output levels have remained low in historical terms, far below the levels seen in 2018 and 2019,” Eurofer added.
The sector was expected to decline by 6.5% in 2024 (revised downward from a 3% decline in a previous outlook) and to increase by just 1.9% in 2025 (revised downward from a 2.3% growth).
According to Eurofer, the reasons for the negative trend were related to the protracted weakness of the manufacturing sector, overall EV standards uncertainty and lackluster consumer confidence.
“Demand is projected to remain weak until the macroeconomic picture and consumer disposable income substantially improve, given the rather unpredictable economic outlook and uncertain economic growth perspectives”, Eurofer said.
But according to the association, demand has shown some resilience against all the uncertainties around the implementation of EVs and preparing the ground for the ban of petrol cars by 2035.
Negotiations between steel mills and original equipment manufacturers (OEMs) in the automotive industry for HRC contracts for the first half of 2025 were still underway, and OEMs would likely seek substantially lower prices for the next year contracts, sources reported.
Notably, several sources told Fastmarkets that for the first half of 2025 contracts, OEMs were asking for discounts up to €200 per tonne, which were “unacceptable” from suppliers’ point of view.
For the second half of 2024, long-term contracts with automotive OEMs were closed at €730-750 per tonne — and even at €700 per tonne in some cases — in contrast with €800 per tonne in the first half of the year.
Construction
The largest steel-using sector — representing 35% of total steel consumption — construction consumption fell by 0.8% in 2023.
For 2024, Eurofer expected that construction activity would continue to decrease, falling by 1.3% rather than the previous prediction of a 1.4% decline.
The sector is expected to grow by 1.3% in 2025 (revised downward from 1.8%).
According to Eurofer, construction output has been under pressure since the third quarter of 2022.
“This is due to several factors, including rising construction material prices, labor shortages in some EU countries and increasing economic uncertainty. Most notably, higher interest rates in 2022 and 2023, driven by monetary policy tightening, have also played a key role,” Eurofer said.
All these factors impacted the sector negatively, especially the private non-residential sub-sector.
Fastmarkets’ price assessment for steel reinforcing bar (rebar), domestic, delivered Northern Europe averaged €635.63 per tonne at the midpoint in September, up slightly by €8.13 per tonne from a monthly average of €627.50 per tonne at the midpoint in August. But the assessment was sharply down from a monthly average of €589.38 per tonne at the midpoint in September 2023.
EU car registrations up 1,4% year on year, August down 18,3%
In August this year, new passenger car registrations in the EU decreased by 18.3 percent year on year to 643,637 units, according to the European association of car manufacturers ACEA.
In the given month, all four major markets, namely Germany. (-27.8%), France (-24.3%), Italy. (-13.4%) and Spain (-6.5%) posted declines.
In the first eight months of this year, new car registrations grew by 1.4 percent year on year to 7.2 million units.
Spain (+4.5%) and Italy (+3.8%) showed positive but modest performances. On the other hand, the French and the German markets saw their results stagnate (-0.5% and -0.3% respectively).
EU carmakers hammer components suppliers after steel drops
Steel-based automotive components suppliers say they are suffering in ongoing contract negotiations with carmakers, which are exerting their bargaining power to push prices down. This is having an indirect impact on automotive steel pricing talks.
This is a relatively customary scenario, but, in some cases this year, the squeeze for small and medium-sized suppliers is worse than in other years, Kallanish hears from a manager of one European automotive components supplier.
In this year’s negotiations, carmakers have been asking for a price reduction of €80 ($88) per component in comparison with prices one year ago. “This is a pretty bad attitude; we are standing with our backs against the wall already,” the manager says.
Although the contracts cover a full calendar year, negotiations can drag on far after the year has begun, sometimes even until September, meaning prices agreed will be applied retroactively to deliveries already executed. It can therefore happen that by mid-year, talks might be held up. One big German car brand, especially, is staying tough in the talks, the manager says.
These downstream side negotiations scratch against the upstream talks for steel supply from steelmakers, some of which are renewed around mid-year. Meanwhile, mills have mostly given up on their position, now accepting discounts over the last period. For the automotive suppliers, the reduction on the steel supply side for galvanized coil products is heard to be at between €20/tonne and €40/t, according to the manager.
The big carmakers had aimed to secure signatures early on in negotiations for direct steel supplies, and accepted higher prices at an early stage, the manager says. Carmakers are now pressuring automotive component suppliers to compensate for the fact steel prices have softened in the summer, the manager believes.
Christian Koehl Germany
Spain’s automobile sector dips in June
Spain’s car industry saw its performance decline in June, Kallanish notes.
According to national automotive association Asociación Nacional de Fabricantes de Automóviles y Camiones (Anfac), output in June was 218,950 units, compared to 249,515 vehicles in May. This was also 7.1% less than the same month in 2023. Of the total, 75.4% was gasoline and diesel-powered automobiles. Six-month production amounted to 1.33 million units, just 1.1% more compared to January-June last year.
“Despite the decline observed in the last two months, the overall annual rate remains stable and above that of the previous year,” says Anfac general director José López-Tafall.
He however notes there has been a decline in electrical vehicle business due to model changes and production readjustments. “It is a priority for manufacturers to sell more plug-in models, both in Spain and abroad. The end of purchase subsidies in countries like Germany, one of our main export destinations, is causing a sharp drop in demand, which is affecting orders at our factories.”
Spanish vehicle exports fell in June. Shipments were at 186,813 units, compared to 221,354 units in the previous month and 9% lower than in June 2023.
European markets had a 93.5% share in Spanish deliveries in June, unchanged on-month and 2.3 percentage points higher on-year. Six-month exports slipped 0.5% over the same period in 2023 to 1.17 million vehicles, Anfac data show.
Todor Kirkov Bulgaria
ArcelorMittal France tests MPI automotive steel blank line
ArcelorMittal France has inaugurated its Multi Part Integration (MPI) line assembled at its Montataire research centre, a line specifically designed for the production of automotive steel.
This laser ablation and welding facility will test different manufacturing processes and shapes of laser-welded blanks (LWB), also referred to as tailored blanks. It will produce prototypes for ArcelorMittal Tailored Blanks, the steelmaker’s division that supplies laser-welded and unwelded blanks to the automotive industry worldwide. In Europe, it has sites in Belgium, France, Germany, Slovakia, Spain and the UK, Kallanish notes.
The new MPI line caters to the requirements of automakers for simplified assembly and modular design in electric driving. An LWB is a sheet that combines different grades. Each grade can have different thicknesses and coatings. “The separate grades are laser welded together to create a single sheet of steel which has the best grade in the best place for strength and deformation. Each sheet can be hot or cold-stamped to give the part its final shape,” the steelmaker explains in a note. The result is a tailor-made solution employed in automotive manufacturing, specifically for the body-in-white and closures of a vehicle.
The new MPI now being tested at Montataire incorporates press hardened steel (PHS) grade and laser welding technology. This allows for the creation of a component that can be fine-tuned to meet various crash requirements and accommodate different types of motors.
The technology offers numerous benefits, such as reducing the number of structural parts and shaping steps, as well as minimising the surface area of the workshop. It also helps in reducing assembly times and weight, thanks to the utilisation of new-generation steel grades. The new line’s features will allow for the development of new laser welding processes on large blanks, ArcelorMittal concludes.
Natalia Capra France
Semiconductor shortages ease, bottlenecks to remain: Audi
The supply of semiconductors for the automotive industry, including in Germany, will continue to relax in 2023. This will be both in terms of the number of critical semiconductor types and the available quantity, according to German carmaker Audi, part of Volkswagen Group.
“We can see that our operational and strategic measures are having an effect and we assume that the supply situation with semiconductors will continue to ease this year,” a spokesperson of the company tells Kallanish. “However, we still have to assume that there will be significant bottlenecks in automotive-specific semiconductor technologies and in high-voltage semiconductors. The right semiconductors in the right quantities will be the key to future development.”
According to the Audi representative, the entire automotive industry is affected, not just the brands of the Volkswagen Group. “There is currently a structural undersupply of semiconductors across all sectors. This problem will not be solved in the short term, as building semiconductor manufacturing capacity takes several years and costs billions,” she added.
Last week, Taiwan Semiconductor Manufacturing Co (TSMC) announced it will spend €3.5 billion ($3.8 billion) to build a chip factory in Germany – its first in Europe.
TSMC said it will invest in a subsidiary called European Semiconductor Manufacturing Company (ESMC), of which it will own 70%. Germany’s Bosch, Infineon, and the Netherlands’ NXP will each have 10% stakes in the plant, which will make up to 40,000 chips per month. They will be used in cars, for industrial purposes and in products for the home. The plant is expected to open in 2027.
Germany will invest up to €5 billion in the factory in Dresden, capital of the eastern state of Saxony, authorities have announced. “There will be a real semiconductor manufacturing ecosystem in Germany,” said German Economy Minister Robert Habeck.
The European Union (EU) already passed the European Chips Act, a €43 billion subsidy plan aimed at doubling semiconductor manufacturing capacity by 2030.
TSMC has delayed the start of production at its plant in the US state of Arizona due to a shortage of skilled workers. Output of advanced microprocessors at the Arizona plant will begin in 2025, instead of next year.
Svetoslav Abrossimov Bulgaria