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China expands car market capacity by increasing demand for steel and metals

Asia / Engineering / Analytics

Auto sales in China will continue to rise in September-October after rising 12% in August, improving the outlook for steel and metals prices.

China expands car market capacity by increasing demand for steel and metals

China's domestic car sales rose 12% year-on-year in August and are expected to continue to rise during the traditional September-October peak season as government stimulus policies including expansion of initiatives to increase the number of new energy vehicles in rural areas, increases consumer interest in both passenger and commercial vehicles, the China Association of Automobile Manufacturers (CAAM) said.

The positive outlook for demand for cars will be accompanied by an increase in domestic demand for steel, aluminum, copper and other metals for the production of cars.

China's auto production rose 6.3% year-on-year to 2.12 million units in August, while car sales rose 11.6% in the same period to 2.19 million, according to CAAM. units. On a monthly basis, production was down 3.7% and sales were up 3.5%.

Commercial vehicle production rose 42.8% year-on-year to 425,000 units in August, and sales rose 41.6% to 431,000 units, according to CAAM. This despite the fact that commercial vehicle production fell 10% and sales fell 3.5% month on month.

In January-August, car production decreased by 9.6% compared to the same period last year to 14.43 million units, while sales fell by 9.7% to 14.55 million units. However, compared to January-July, the decline decreased by 2.2 and 3 percentage points, respectively.

Steel, aluminum and copper are the main raw materials for automobiles, with automobiles accounting for 6% of steel consumption, and transport typically accounting for 20% of aluminum consumption and 10% of copper consumption.

China's aluminum and copper prices are expected to remain strong in the coming months as demand continues to rise during the traditional peak season.

Domestic lithium carbonate prices in China also rose for the first time since early March, amid recovery in liquidity and buying activity.

New electric vehicle production in China rose 17.7% year-on-year to 106,000 units in August, while sales rose 25.8% in the same period to 109,000 units, CAAM data showed, boosted by capacity expansion to recharge and incentivize local government policies.

Meanwhile, China's battery generation surged 11.7% year on year to 7.4 GWh in August, and 22.4% in August.

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