The global semiconductor scarcity is causing automakers all over the world to cut back on manufacturing. China's already tight supply chains are being hampered by new and ongoing Covid-related lockdowns. As suppliers' facilities are obliged to close under tight virus containment procedures, the flow of material into the automotive industry is diminishing. This has a negative impact on both domestic and international markets.
The current war in Ukraine has hampered the supply of component parts to a number of European automakers. The drop in activity levels in the region is being exacerbated by this. Sales were down considerably year over year in the first quarter, with the downward trend increasing in March.
Strong order books at automakers suggest a significant level of unmet demand. Several car brands and models have lengthy delivery times. Many steel mills had believed that chip shortages would alleviate in the first few months of 2022, boosting steel demand from automobile makers and their suppliers. However, a number of analysts recently lowered their automobile production projections. This is especially true in Europe, where output is forecast to decline year over year.
As 2022 approaches, market players are growing anxious that rising inflation and tighter monetary and fiscal policies would result in a significant fall in global consumer expenditure. This will limit new vehicle purchases and, in turn, diminish the order backlog at several of the big automakers. However, if the automobile industry improves, the steel supply chain would tighten, perhaps leading to a sharp increase in steel prices.
The materials and information on this article have been prepared or assembled by Viet Nam Steel and are intended for informational purposes only.
