Producers of flat-rolled steel expect
2007 to be a decent year in terms of supply to the automotive
market, but many are wary of lightweight substitutes and the
impact they could have on steel sales.
"We think '07 will be an OK year for
steel sales to automotive," Michael Wagner, chief commercial
officer of SeverCorr LLC, Columbus, Miss., said. "We're looking
at vehicle builds in the range of 15 million to 16 million.
Automotive definitely has slowed a little, but at that rate the
market would be OK."
SeverCorr's Michael Wagner
Vehicle builds, naturally, are the key indicator used by steel
producers to determine how much steel their automotive
customers will consume in a given year. The number of builds
has a direct impact on the amount of steel sold, but with
projections for 2007 builds around 16 million, most steel
producers view the market as steady, albeit down a bit.
"Any increase in demand from automotive
customers is based mostly on demographics," Daniel R. DiMicco,
chairman, president and chief executive officer of Nucor Corp.,
Charlotte, N.C., said. "A lot of what happens depends on the
economic state of the country. Right now we don't see a huge
increase coming in automotive sheet consumption."
DiMicco cited a potential wild card in
the automotive market a public desire for lighter, more
fuel-efficient vehicles. As more of those types of vehicles are
produced, he said, the potential exists for the amount of steel
used by automakers to slip.
The automotive application program of
the American Iron and Steel Institute's Market Development
Committee is attempting to make inroads to ensure steel doesn't
lose market share, even if vehicles get smaller and lighter.
And the committee is having some success in pushing the use of
lighter, advanced high-strength steels in automotive
construction; high-strength steels comprised an average of
about 415 pounds of vehicle weight in 2006, up 18.2 percent
from 351 pounds in 2001.
Wagner says consumer confidence holds
the key to the market. The SeverCorr mill, which is slated to
begin operations this summer, has pinned much of its growth
plan on an ability to sell steel to the so-called "new
domestics"-the growing number of foreign automakers who have
built, or are planning to build, manufacturing facilities in
the southeastern United States.
"Right now, I think it's fair to say
consumer confidence is a little shaky-it's certainly not going
gangbusters-so we see things tightening up a little," Wagner
says. "We think it will be a solid year, but not spectacular by