24 avril 2008
Steel imports creep up 1% in March
Steel imports remained low again in March at 2.51 million tons, increasing only 1.2% from February’s 2.48 million tons. While buyers are gagging over 2008 prices, domestic transactions remain lower than international prices and that is keeping foreign-made steel out of the U.S. marketplace.
According to year-to-date figures, imports have decreased 11.5% compared to 2007—or from 8.66 million tons in 2007 to 7.66 million tons in 2008. First-quarter imports are down 12% from Japan, 53% from Brazil, 59% from Russia, 29% from South Africa and 41% from China.
An analysis of Census Bureau data shows that products showing increases versus the same period in 2007 were line pipe (up 43%), oil country goods (up 14%) and such heavy structural shapes as wide-flange beams (up 9%). A review of the data by the American Institute for International Steel (AIIS) suggests that import arrivals in March were ordered from nations other that Mexico or Canada late in 2007.
“With the recent surprising run up in prices, those who received imports in March probably are benefiting by having missed some of the price increases,” says David Phelps, president of AIIS in a statement. Based on Purchasingdata.com statistics, steel prices in March were 16% higher than the fourth quarter of last year. Total steel imports in March were 17.4% below those of March 2007.
Looking ahead, independent analyst Michelle Applebaum expects imports to be up in April but suggests that “strong global prices, a weakening dollar and disciplined inventory management by service centers will lead to fewer imports into the U.S. during the summer months.” Analyst Timna Tanners at UBS Investment Research agrees that “importers continue to see limited import activity to the U.S. over the next few months.”
Automotive decline could be deeper than expected
North American motor vehicle production dropped 9% during the first quarter due to the overall drop in consumer spending and the ongoing strike at parts supplier American Axle & Manufacturing Holdings, suggests analyst David Leiker at Baird Research.
This explains why bookings are in disarray for makers of automotive-grade plain and zinc-coated steel, common alloy aluminum sheet, copper wiring harnesses and lead for batteries. About 3,600 United Auto Workers union members have been on strike at American Axle's five U.S. facilities since Feb. 26. American Axle makes axles, drive shafts, stabilizer bars and other components for automakers.
The auto assembly cutback is much higher than the 5% forecast earlier by numerous automotive analysts and is pinned to weaker-than-expected sales. The Detroit News this week reported that “automotive sales are falling harder and faster this year than anyone anticipated because of a toxic combination of factors not seen since the oil shock of the 1980s”—citing a weak economy, sagging consumer confidence, record-high gasoline prices and hard-to-get credit.
Automakers, consultants and financial analysts have been cutting their forecasts after the weaker-than-expected start to the year. But they have not arrived at a consensus about this sales slump because it defies the usual patterns. "It's an unusual downturn. It's probably the deepest since the 1980s, but technically, this is still not a recession," Jesse Toprak, director of market analysis at online automotive research site Edmunds.com tells the Detroit newspaper. “Nothing like this has ever happened before.”
Economists Carlos Gomes at Scotiabank.com tells Purchasing.com this morning that “the deterioration in the auto marketplace probably will continue until summer,” when his forecast suggests stabilization and a slight pickup in assembly and sales in the fourth quarter. However, he still sees a 5% slide in U.S. and Canadian motor vehicle sales for 2008 to 15.3 million units from 16.1 million in 2007.
Normally, in a weakening economy, demand for oil falls and prices subside. And interest-rate cuts usually encourage banks to lend more generously, enabling consumers to keep spending. But this time, there's no such relief to encourage car buyers. Oil prices keep rising, pushed by strong demand in huge emerging economies such as China. In the United States, the impact of high gas prices has been magnified this time around because light trucks make up half the market.
And the Detroit Free Press says that Ford Motor Co. is forecasting a drop-off in industrywide sales of minivans to a 23-year low this year while large pickups decline to the fewest in a decade as more consumers turn to smaller cars. Minivan sales may drop below 600,000 for the first time since 1985 and large pickups may slide to fewer than 2 million, a level they have topped annually since 1998, says George Pipas, Ford sales analyst. Pickup sales have been hurt by a declining housing market.
08 avril 2008
Auto makers are watching sales slide
The U.S. auto market continued to slump in March, with light-vehicle sales falling 19% at General Motors, 10% at Toyota and 14% at Ford. The month had two fewer selling days than in March 2007, which magnified the declines. But analysts tell The Wall Street Journal they were expecting weak monthly results in what is shaping up to be one of the toughest years for U.S. auto sellers in at least a decade. Some economists tell Purchasing.com that the consensus forecast of a 15.5 million sales year may be too optimistic.
Sales last year were 16.1 million units. But the continuing downturn in the economy is dampening demand in general, while high gasoline prices continue to cut deeply into sales of traditional SUVs and pickups. “This is a very challenging external environment, reflecting a seismic shift in consumer preferences,” says Ford marketing executive Jim Farley. “These conditions will likely persist in the near future.”
Also, the fact that Toyota has seen sales decline for the seventh of the past nine months is signal of the malaise now afflicting automakers in the U.S.— as the troubles on Wall Street and in the housing market take a rising toll on the economy. The WSJ says that when people see the value of their homes decline -- and real-estate executives say home-price falls around the country are the worst since the 1930s -- expensive purchases such as a car are often the first to get postponed.