China’s domestic vehicle sales surged 12% year on year in August and are expected to continue rising through the traditional September-October peak season as government stimulus policies increase buying interest for both passenger and commercial vehicles, the China Association of Automobile Manufacturers said Sept. 10.
Government stimulus polices are expected to include expansion of new-energy vehicle initiatives into rural areas.
The positive outlook for vehicle demand was expected to increase domestic demand for steel, aluminum and copper for vehicle production, market sources said.
China's vehicle production rose 6.3% year on year to 2.12 million units in August, while vehicle sales rose 11.6% over the same period to 2.19 million units, CAAM data showed. It was the fifth consecutive month of year-on-year increase for both output and sales, and the fourth consecutive month the growth in sales was above 10%.
Compared with July, output was down 3.7%, while sales rose 3.5%.
The year-on-year increases in August were attributed mainly to a rise in commercial vehicle demand, market sources said.
Commercial vehicle output surged 42.8% year on year to 425,000 units in August, while sales rose 41.6% to 431,000 units, the CAAM data showed. This was despite commercial vehicle output falling 10% and sales falling 3.5% on a month-on-month basis.
Over January-August, vehicle output was down 9.6% on year at 14.43 million and sales were down 9.7% at 14.55 million units.
Steel, aluminum and copper are major raw materials for vehicle production in China, with vehicles accounting for 6% of steel consumption and transportation generally accounting for 20% of aluminum consumption and 10% of copper consumption.
Strong demand from automakers was lending some support to flat steel, aluminum and copper markets in September, market sources said.
One industry insider said HRC producers had a profit margin of around Yuan 400/mt ($59/mt) currently, while profit margins for China's aluminum smelters were as high as Yuan 1,500-2,000/mt.
China's new energy vehicle output rose 17.7% year on year to 106,000 units in August, while sales surged 25.8% over the same period to 109,000 units, CAAM data showed, boosted by the expansion of recharging facilities and the stimulus policies of local governments.
-- Lucy Tang, Crystal Hao
Source : Steel Business Briefing
