Auto industry recovery takes metals along on the ride

Mar 31, 2012 | 07:00 PM | John Ambrosia

Tags  auto industry, auto production, auto sales, flat-rolled steel market, Paul Taylor, National Automobile Dealers Association, Don Johnson, General Motors Ford

With the second quarter beginning, a key question for the metals sector is which gear is America in right now? By early March the answer appeared to be “drive.” The Dow Jones Industrial Average had reached a four-year high, jobless benefit claims were at a four-year low, the unemployment rate had fallen for four straight months and economists said that all 12 major economic indicators were pointing upward.

But well before all that news, the auto industry was in recovery throughout 2010 and 2011, leading the way in creating demand for steel, aluminum and other metals. The industry’s fortunes have a direct bearing on sales of flat-rolled steel, a staple of the automotive industry’s North American assembly plants.

Just a few months ago things looked much bleaker. But fears of a double-dip recession in the United States, a pending European economic collapse and supply chain interruptions caused by the Japanese earthquake and tsunami in March didn’t detour U.S. auto sales in 2011.

The auto industry is on track to sell about 14 million vehicles this year, analysts predict, well above the 12.7 million cars and light trucks sold last year and 11.5 million in 2010 and a significant rebound from 2009, when only about 10 million vehicles were sold (see graph). However, the figure is still far below the 17-million-vehicle level reached in the early 2000s, when the industry was riding high, credit was readily available and cars were racing out of showroom doors.....