Have you ever heard the saying that steel drives the auto industry? It’s more than just a good pun, it’s reality.

According to The American Iron and Steel Institute, steel makes up about 54% of the average vehicle. And if you want to know precisely how much steel that equates to, check out this analysis from Argus Media group:

    • Ford Motor, General Motors (GM), and Stellantis sold an average of 552,800 vehicles in the second quarter of this year.
    • Based on these sales, according to Argus Media, U.S. consumption of flat steel could shrink by as much as 409,000 short tons (short ton)/month without automotive demand.

So, what could a strike by the United Auto Workers (UAW) union against Ford, GM, and Stellantis mean for the metal buyer? Here are three perspectives:

Steel: Carbon sheet prices fell to their lowest point of the year in early September, at around $699/ton. It follows a similar pattern to the previous strike in 2019 (see below). Brian Crane, Ryerson’s product manager of carbon flat roll and plate, believes that disruptions due to strikes or plant shutdowns could have significant repercussions throughout the steel supply chain.

 


However, he sees silver linings amid these concerns, citing the fact that many sectors have large backlogs, which suggests a positive outlook for steel demand.

 

steel capacity rates


Scrap: Nick Webb, Ryerson’s director of risk management, commodity hedging, points to the impact on scrap prices. He says that the automotive sector is the largest generator of scrap steel, which means a strike could reduce the production of scrap steel. A reduced supply of scrap steel could result in higher scrap prices.

 

Aluminum: Jay Springman, Ryerson’s product manager of specialty metals, points out that there is a fair amount of aluminum that goes into the manufacturing of cars. A strike could have disruptive impacts on the price of aluminum as well.

 

The Two-Speed Economy

 

There's a concept called the "2-speed economy," which means that while manufacturing is showing signs of weakness, services like consumer spending, travel, and hospitality are experiencing modest growth.

This trend is evident in the U.S. and China, where manufacturing PMIs remain below 50, indicating year-over-year weakness.

In the U.S., around 80% of the economy is centered around services. This is important because even if manufacturing is slowing down, the overall economy is still in a growth phase due to the strength of the services sector.

In comparison, Europe looks to be facing a softer economic situation, with both manufacturing and services PMIs showing weakness. For instance, Germany is officially in recession.

The unemployment rate is a crucial indicator and currently does not suggest a recession. Typically, recessions are associated with a significant increase (around 150 basis points) in the unemployment rate. As of now, the unemployment rate doesn't signal a recession.

Stainless Tariffs and Imports

 

The European Union recently began a probe of stainless steel cold-rolled flats imports from Taiwan, Turkey, and Vietnam to circumvent antidumping and countervailing on Indonesian products. This prompted a question for Ryerson product managers:

Could such a move foreshadow similar actions in the United States?
Angie Gomez, Ryerson’s product specialist for non-ferrous metals, believes that Europe's actions are seen as protective measures to support its domestic mills and counter-circumvention tactics where the material is produced in one country, processed in another (e.g., Taiwan, Vietnam, Turkey), and then imported into Europe. This investigation aims to disrupt such import supply chains.

It is uncertain whether the United States may take similar measures. However, the U.S. already has anti-dumping and countervailing measures in place, along with Section 232 tariffs, so pursuing further actions in response to global developments is not out of the question.

In terms of other industrial metals, we asked product managers to discuss the latest:
On the steel front, Brian Crane, Ryerson’s carbon flat roll and plate product manager, discussed how Mexico has raised its steel tariffs from 15% to 25%. This move is seen as an effort to align with the U.S., like what happened with Section 232 tariffs in the past. Some exclusions exist, mainly for countries with free trade agreements with Mexico. However, this new tariff could affect countries like Korea, impacting the supply chain.

For aluminum, Jay Springman, a Ryerson product manager for specialty metals, talked about how 232 tariffs remain in place. This restricts aluminum imports, particularly from China and certain Asian countries. The U.S. has implemented a quota-based system for some European countries, allowing limited aluminum imports without tariffs.

The consensus is that these trade measures will remain in place as the U.S. aims to protect its domestic manufacturing and steel and aluminum industries, even under new administrations.


Ryerson: The Metal Supplier of Choice

Ryerson is a leading North American metal supplier that provides more than just metal. We respond to the ever-changing needs of manufacturing today.

With a vast inventory of steel, stainless, aluminum, alloy, and more, we are committed to providing our customers with the metal and services they need to succeed. We stock a range of shapes and sizes, or we can provide processing and fabrication for every product we sell.

Order online at Ryerson.com for comprehensive pricing and fast delivery, or contact us today to learn more about how we can meet your metal needs.






 
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