Automakers Scramble for Steel Supplies to Keep Up with Consumer Demand
- October 7, 2022
- Posted by: Quatro Strategies
- Category: Manufacturing
Manufacturing issues due to energy shortages and smelter shutdowns are still limiting automakers, but consumer demand for cars, especially in the United States, is still going strong. This trend leaves many automakers trying to find a balance between available supplies and consumer demand. Smelter shutdowns in China and Europe have been impacting production of steel, used to manufacture cars, and as demand remains strong, global production of steel must increase before automakers can manufacture more vehicles.
Moreover, automakers are not only scrambling to find more steel, but the industry has also been hit by the lack of parts and pieces for vehicle microchips. While some chips have started to make a comeback, their production is a slow process as they contain many complex components. They also require numerous materials like tin, silicon, etc. Acquiring these different metals in the proper forms and grades could become challenging in potentially-recessionary conditions, especially when supply is already tight.
Good news for automakers is that consumer demand continues to rise globally. In Britain, car production rose year-on-year for four months straight, rising a total of 34% from the previous year. Electric vehicle (EV) demand also continues to aid the car manufacturing industry, meaning metals like lithium and cobalt remain highly coveted commodities.
Still, many EV users in the UK have been complaining about the infrastructure. They have been urging the government to expand charging stations, as there can be long waiting lines at these stations. Despite some complaints, new vehicle registrations in Britain continue to rise, growing 9.6% in September compared to August’s 3.4% downturn.
While automotive and steel industries saw a slight uptick in August, it remains unclear whether this trend will continue. Supply chain shortages and smelter shutdowns seem to be compounding rather than going away.
Another issue for Western steel reliant manufacturers is to find alternatives to Chinese metals. China’s property crisis and industrial limitations over the past 3-4 months continue to hit the global steel market particularly hard. And with Europe facing energy rationing this winter, steel output in Europe will also be limited.
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