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US automotive production jumps supporting steel prices

The latest lightweight vehicle production data out of Ward’s Automotive has US production leaping by 54% from July and 15% from August of 2010.

This increase reflects seasonal gains as well as continued improvement from the automotive supply chain, which was heavily damaged by Japan’s earthquake and tsunami in March.

Auto sales in August were steady with July at a seasonally adjusted annual rate of 12.1 million while inventories remain tight at 49 days of supply. Production will need to continue to increase in order to support sales. Production year to date increased from 3.2% in July to 4.8% while YTD sales are at 12.3%.

Production is set to experience continued gains going forward to support sales as well as rebuild inventory to healthy levels. This continued increase in production will serve to tighten the spot market for steel as more tonnes go towards automotive needs and less tons are available in the spot market.

Steel prices have increased over the past few weeks and will continue to be supported by increased production rates of lightweight vehicles. Flat rolled steel in coil and sheet, such as hot rolled, cold rolled, and galvanized will be affected by increased auto production.

Sourced from steelreality.com

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